New Jersey Law Journal  VOL. 214 - NO 11           MONDAY, DECEMBER 16, 2013

How Internet Use Can Ameliorate Mass-Tort Litigation Difficulties

E-commerce may expose vendors and manufacturers to more product-liability lawsuits, but it can also work in their favor

By Jonathan Bick Bick is of counsel at Brach Eichler LLC in Roseland. He is also an adjunct professor at Pace and Rutgers law schools, and the author of 101 Things You Need to Know About Internet Law (Random House 2000).

Internet use normally increases prod­uct liability by escalating prod­uct use by nontraditional users.

Nontraditional product users are more likely to be harmed by products than traditional product users, who have ben­efited from formal or informal use and training. Such harm may translate to product-liability and toxic-tort litigation against manufacturers and distributors. However, proper Internet use can result in more favorable outcomes for manu­facturers and distributors who face such litigation.

Many companies benefit from sell­ing products via e-commerce, which involves the elimination of traditional storefronts in favor of lower-cost vir­tual storefronts. Such virtual store­fronts, commonly known as Internet sites, allow product manufacturers and distributors to offer products to non­traditional market segments, including buyers who reside in communities that have little or no personal experience with a product.

But, the same Internet use that increases the likelihood of product-lia­bility and toxic-tort litigation against manufacturers and distributors also attenuates the resulting litigation dif­ficulties in three ways. First, Internet use allows the posting of disclaimers that may prevent harm related to prod­ucts, thus reducing the likelihood of product-liability and toxic-tort litigation. Second, Internet use allows the distri­bution of educational content through social media channels that may prevent harm related to products, again reduc­ing the likelihood of litigation. Third, Internet use allows defendants to show that the plaintiff knew or should have been aware of information that is favor­able to manufacturers and distributors facing product-liability and toxic-tort litigation.

Product liability arises when manu­facturers and distributors make or dis­pense a product that causes damage. A toxic tort is a particular type of per­sonal injury lawsuit in which the plain­tiff claims that exposure to a chemical caused the plaintiff’s injury or disease. Most toxic-tort cases arise either from exposure to pharmaceutical drugs or occupational exposures, whereas a buy­er-seller relationship is usually the basis for product liability. Product-liability and toxic-tort causes of action may be predicated on negligence, strict liability, breach of warranty or various consumer-protection claims. Most product-liability laws are determined at the state level and therefore vary from state to state.

Central to negligence claims are evi­dence of: (1) the existence of a manufac­turer’s or distributor’s duty; (2) a breach of that duty; and (3) that the breach caused harm to the product user. These negligence claims are habitually those claiming a design defect, a manufactur­ing defect or a failure to warn about a potential defect.

Product liability resulting from a theory of strict liability focuses on the product rather than the behavior of man­ufacturers or distributors. In this type of claim, the product user must prove that the product itself is defective or unrea­sonably dangerous.

A breach of warranty occurs when an assurance fails to transpire. Normally either a product is flawed or it is not what the buyer anticipated. The latter is more common among nontraditional product users.

Government regulation of certain products requires businesses to disclose detailed health and safety information about products. Failure to comply with such regulations may result in both prod­uct-liability and toxic-tort litigation.

While posting of notices—whether traditional or online—that purport to dis­claim any liability is typically not con­sidered by courts, the Internet allows manufacturers and distributors to cost effectively post disclaimers that may pre­vent harm related to products, thus reduc­ing the likelihood of product-liability and toxic-tort litigation.

Manufacturers and distributors are legally bound by the “implied warran­ty of merchantability” and the “implied warranty of fitness for a particular pur­pose.” Thus, manufacturers and distribu­tors promise their products are safe and designed well enough to be used in the manner intended by the designer. However, manufacturers and distributors may specifically prohibit the use of prod­ucts for health and safety purposes.

In addition to the liability basis noted for product liability, toxic-tort liability may also be based on intentional mis­representation or fraud. Evidence may show that a defendant knew that a sub­stance was dangerous, but deliberately concealed the danger or marketed the product using misleading statements.

Internet disclaimers are faster, more cost effective and more flexible than traditional disclaimers for communicat­ing such prohibited product uses. Thus, Internet use is likely to be more effective than traditional disclaimers in reducing the likelihood of product-liability and toxic-tort litigation.

In particular, emails to product users cost as little as $100 for a million Internet messages. This allows manufacturers and distributors a fast, low-cost and flex­ible method for warning users of behav­ior that has been connected with the recent misuse of products. Such emails may constitute certifiable notice. Product users may only ignore such notice at their peril, under the doctrine of assuming the risk. For toxic-tort liability purposes, the revelation of danger eliminates the claim of intentional misrepresentation or fraud.

New Jersey recognizes assumption­of-risk defenses. One such defense occurs when the defendant warns the plaintiff of a danger, or advises him to take specific precautions. Following such notice, the plaintiff has willingly assumed the risk.

State law is usually relevant to the assumption-of-risk defense. The New Jersey courts hold that the issue of whether a plaintiff assumed the risk will generally be one for a jury. This is dis­tinguished from New York, which rec­ognizes the “express assumption of risk” as a complete bar. The New York courts regularly grant summary judgment upon a finding of express assumption of risk by the plaintiff.

Internet use allows the distribution of educational content through social media and other channels, which may prevent harm related to products, thus reducing the likelihood of product-liability and toxic-tort litigation. Product-liability and toxic-tort cases typically include liability related to design defects, manufactur­ing defects and defects in marketing. Judicious Internet use has been found to eliminate or ameliorate each type of defect.

In particular, one method of using the Internet to reduce the likelihood of product-liability and toxic-tort litigation is “crowd sourcing.” Crowd sourcing is the practice of obtaining ideas to fore­see coming defect difficulties by solicit­ing contributions from a large group of people, and especially from an online community, rather than from traditional sources, such as employees or suppliers.

Manufacturers and distributors regularly use the Internet to communicate to an unknown group of solvers in the form of an open call for users to identify design and manufacturing defects. In some cases, the contributor of the solution is compensated monetarily.

Such use of the Internet decreases defects in the areas of design, manufac­turing and marketing. Evidence of such solicitation may be used by manufactur­ers and distributors to demonstrate efforts to mitigate design and manufacturing defects in the event litigation difficulties arise.

Internet use leaves a discoverable trail, sometimes known as an Internet footprint. As more and more personal information is put online, attorneys are increasingly turning to the Internet to investigate and research what a defen­dant knew and when he knew it. Such Internet evidence attenuates the resulting litigation difficulties for manufacturers and distributors who use the Internet for marketing, by giving rise to evidence sup­porting traditional litigation defenses.

The Federal Rules of Civil Procedure include the phrase “electronically stored information” in Rules 26(a)(1), 33 and 34, to acknowledge that electronically stored information is discoverable. This phrase has been widely interpreted to include any type of information that can be stored electronically.

In the case of product-liability and toxic-tort litigation, the defendant may show that the plaintiff knew the danger of using a certain defective product and con­tinued to use the product anyway, indicat­ing that the plaintiff may have assumed the risk. Discoverable Internet activity, such as email, website posting and other Internet communication and publishing applications make the assumption of the risk a feasible defense, because they are evidence that the plaintiff actually knew of the particular danger involved in using the defective product and voluntarily con­tinued to use that product anyway.