ANALYSIS OF MARCH 22, 2018 SUPREME COURT OPINIONS

(Posted March 22, 2018) On a day when the calendar cruelly mocks us by insisting that it’s spring, while temperatures here in Tidewater hover 12 degrees below normal, the Supreme Court helps warm us up with three new opinions.

Products liability

The justices hand down the latest in a growing string of products-liability victories for manufacturers in Evans v. NACCO Materials Handling Group, Inc. This is an appeal in a wrongful-death action; the victim was crushed to death by a lift truck at a paper plant in Lynchburg. His personal rep sued on three theories: negligence, breach of implied warranty, and failure to warn.

The claimed defect in the product was a parking brake on the truck; the brake didn’t hold the parked truck on a 12-degree incline, causing it to slide backward. The estate’s expert opined that because it was operator-adjustable by hand, instead of being adjustable only by mechanics using tools, it was unreasonably dangerous. A jury agreed, returning a verdict on the negligence claim only and fixing damages at $4.2 million.

The manufacturer moved the trial court to set aside the verdict, a move with a low probability of success. But it paid off here: The court ruled that the decedent was contributorily negligent as a matter of law, so it entered judgment for the manufacturer. The personal rep got a writ, and the justices also granted the manufacturer’s assignments of cross-error.

Today the justices affirm the judgment, but for a different reason. Instead of tackling the thorny issue of contrib as a matter of law – something that’s usually in the jury’s domain – the Supreme Court rules that the plaintiff failed to prove that the product was defective.

There are a few key aspects to this analysis, but the ones you probably need to know are these:

The court rules that “a design is not objectively unreasonable unless the plaintiff can show that an alternative design is safer overall than the design used by the manufacturer.”

Second, it’s not enough for a plaintiff to show that another design would have been safer in preventing injuries of the particular kind sustained by the victim. The proposed alternative design has to make the product safer overall. Justice McCullough, who writes today’s unanimous opinion, gives the example of air bags. Since air-bag deployments can injure babies and children, it would be safer for them to design cars without air bags. But that would generate a greater safety risk to a far larger number of adults who would be protected by the bags.

Third, and of particular significance to lawyers drafting pleadings in this field, the court completes its embrace of Kentucky products-liability law – a process that began with Dorman v. State Industries in 2016, advanced significantly last year in Holiday Motor v. Walters, and now emerges into the open today. This circumstance deserves an explanation.

In 1991, the Fourth Circuit decided a products case, Alevromagiros v. Hechinger Co., that purported to apply Virginia law, but actually cited a Kentucky-law decision (Sexton v. Bell Helmets, Inc.). While federal courts understandably cited Alevromagiros as defining Virginia law, the Supreme Court of Virginia never acknowledged the decision, perhaps because its use of consumer expectations to define a product’s acceptance in the marketplace didn’t fit within Virginia products jurisprudence.

Then in Dorman, the SCV for the first time held that evidence of the number of units sold is admissible to show acceptance of a product in the marketplace. Dorman still didn’t cite either of the federal decisions, but it gave the justices a stepping stone to do so in the next major products case, Holiday Motor. There, the court briefly cited Alevromagiros in a footnote, the first time it had even tentatively embraced Kentucky products law, explaining that reasonable consumer expectations are a factor in defective-product analysis.

Today’s opinion in Evans throws off any shyness on the subject: The court openly cites with approval Sexton, Alevromagiros, and several other federal decisions for the premise that reasonable consumer expectations can help define whether a product is unreasonably dangerous. Kentucky law has arrived.

This is a major victory for manufacturers, for the simple reason that a large number of product sales will always cut in favor of the defense in products litigation. My own view is that this is a highly imperfect lens to decide such an issue – for example, would Ford be able to assert that its Pinto was presumably safe because 3 million customers bought one? But from now forward, manufacturers will be able to cite those sales figures as a form of passive evidence to show that a product is safe, or at least not unreasonably dangerous.

There’s one other aspect of this decision that merits mention here. I noted above that the personal rep pleaded three theories of recovery. The jury based its ruling on negligence and rejected the implied-warranty claim. That leaves the failure-to-warn claims. Today’s opinion notes that that’s a separate issue from design defect. But for whatever reason, the parties submitted a jury-verdict form that listed only the negligence and warranty claims. This effectively shut off the failure-to-warn claim. Justice McCullough explains, “On these instructions, the jury’s defense verdict on breach of implied warranty, of necessity, was a defense verdict on the failure to warn.”

Actual innocence

Because of my travel schedule today, I only have time here to mention the outcome of an actual-innocence petition in In re Brown. The court dismisses the petition for two reasons. First, the petitioner relied on biological evidence that had been tested by a private laboratory. The court rules today that the actual-innocence statute only allows it to consider testing that has been certified by the Division of Forensic Science. Second, even with the evidence considered, the court finds that the petitioner has failed to show that a reasonable jury would not have convicted him, given the other evidence in the case. Justice Kelsey’s opinion for a unanimous court concludes with a quote from a recent SCOTUS opinion: “DNA testing alone does not always resolve a case. Where there is enough other incriminating evidence and an explanation for the DNA result, science alone cannot prove a prisoner innocent.”

Taxation

Finally, the court issues a revised opinion in Kohl’s v. Dept. of Taxation, a decision first handed down on August 31. There, by a 4-3 vote, the court held that a company was subject to payment of taxes on royalties paid to a foreign (Illinois) subsidiary. The taxpayer petitioned for rehearing, noting that the majority based its decision in part on agency interpretations, and a statute forbids that consideration.

At least one justice from the August majority voted to grant rehearing, but today, the court again rules 4-3 against the taxpayer.