A federal district court judge in New York City’s Southern District, applying Virginia law, recently invoked the concept of a manufacturer’s “post-sale duty to warn” to hold an automobile company potentially liable for failing to warn about an alleged defect in a car that it technically did not even manufacture. The ruling came in the context of the General Motors Ignition Switch multidistrict litigation (14-MD-2543).

Manufacturer versus Post-bankruptcy Successor

The plaintiff’s compact car went off the road, but its airbags failed to deploy because of an alleged defect in the car’s ignition switch that caused the airbags to move to the “off” position. Judge Jesse Furman denied a motion for summary judgment brought by the “new” GM, the post-bankruptcy successor to the “old” GM (OGM), the car’s actual manufacturer, noting, for example, that “new GM” (NGM) had assumed OGM’s warranty obligations to its customers when NGM entered into the 2009 sales agreement with OGM. The Court further noted the contacts between the plaintiff and NGM under Virginia state law might indeed recognize a post-sale duty to warn about OGM’s allegedly defective ignition switches. Additionally, he stated, “there is evidence that new GM had ‘actual knowledge’ of the ignition switch defect when it acquired the assets of old GM.”

Judge Furman’s ruling by itself is not surprising inasmuch as a manufacturer’s post-sale duty to warn has been recognized for many years. While opponents of the rule often make note of the practical difficulties inherent in a manufacturer’s attempt to identify customers in the case of a product that often changes hands, proponents of the rule stress that product manufacturers have access to post-sale information about previously unknown product defects and are in the best position to transmit the necessary information to consumers who could then make an informed choice as to whether to continue to use the product.

Even the Restatement (Third) of Torts: Products Liability codified the duty in 1998. It requires a warning “after the time of sale or distribution of a product” when the seller knows that the product poses a substantial risk of harm; users can be identified and would otherwise be unaware of the risk of harm; a warning can be effectively communicated; and the risk of harm is not outweighed by the burden of providing the warning. Many states now recognize a post-sale duty to warn by common law, statute or some combination of the two.

If a manufacturer’s responsibility for a product does not end when the product leaves the manufacturer’s hands, just what circumstances then might trigger a post-sale duty to warn? Reports of post-sale accidents may provide information about defects and hazards in products that have already been sold.  Changes in the state of the art over time – for example, in the case of automatic braking systems in cars, where new technology is developed that would make accidents and/or injuries less likely to occur. Taken together, they may give a manufacturer pause to consider the safety of its previous design and to realize that warnings about a defect or hazard that could not have been known at the time of manufacture are now necessary to prevent future harm.

Analysis of the Duty to Warn

In my home state of New York, the Cover v. Cohen (61 N.Y. 2d 261) decision from 1984 remains the seminal case on the topic. The Court of Appeals held that the duty to issue a post-sale warning may indeed be found, depending on factors such as the degree of danger posed by the product, the number of reported accidents, the burden of providing the warning, and the burden and ability to track the product after sale. Applying these factors, a manufacturer faced with the potential of issuing a post-sale warning might want to undertake the following analysis:

• Is an injury likely to happen if a warning is not given? This is first part of the “degree of danger” that the Cover court mentioned. The more likely that an injury will happen without a warning, the more likely that a court will find that the manufacturer should provide the post-sale warning. If the chance for an injury remains remote even without a post-sale warning, it is less likely that the warning will be required.

• Is the likely injury a serious one? This is the second part of the “degree of danger” factor. If the lack of a post-sale warning will likely result in death or serious bodily injury, then you can bet that a post-sale warning is more likely to be required. A minor injury? Less likely.

• Is the product mass produced? This is the first part of the Cover court’s mention of “the burden and ability to track the product after sale.” A court will more likely find that a post-sale warning is required in the case of a unique and specialized item – say, a large industrial machine – as opposed to a product that is manufactured in the millions. The burden and expense of warning about a mass-produced product may outweigh the danger in not warning about it.

• Can the product be identified and traced to specific owners? This is the second part of Cover’s “burden” analysis. Products that carry individual serial numbers and/or lot numbers allow the manufacturer, when needed, to identify the ones that require the warning. If the product is one that allows the consumer to register it with the manufacturer by mailing in one of those postcards – think of a large appliance – then the manufacturer is in a position to match a given unit to a given name and is more likely to have a duty to issue a post-sale warning.

A manufacturer’s responsibility does not necessarily end once the product leaves its possession. The cautious product manufacturer must keep abreast of developments in the state of the art and cannot ignore incidents involving its products. With the assistance of seasoned counsel, the manufacturer may identify circumstances that require a post-sale duty to warn. The questions above are merely suggestions and serve to illustrate the type of analysis that a manufacturer and its legal team should undergo in determining whether a post-sale duty to warn exists.