O'BRIEN v. Muskin Corp.

The opinion of the Court was delivered by

POLLOCK, J.

Plaintiff, Gary O’Brien, seeks to recover in strict liability for personal injuries sustained because defendant, Muskin Corporation, allegedly marketed a product, an above-ground swimming pool, that was defectively designed and bore an inadequate warning. In an unreported decision, the Appellate Division *176reversed the judgment for defendants and remanded the matter for trial. We granted certification, 91 N.J. 548 (1982), and now modify and affirm the judgment of the Appellate Division. In reaching that result, we conclude that state-of-the-art evidence is relevant to risk-utility analysis and admissible in a strict liability case involving a defectively designed product.

O’Brien sued to recover damages for serious personal injuries sustained when he dove into a swimming pool at the home of Jean Henry, widow of Arthur Henry, now Jean Glass. Ultimately, plaintiff sued as defendants not only Muskin Corporation, the manufacturer, but also Kiddie City Inc., the distributor of the pool, charging them with placing a defectively designed pool in the stream of commerce. Kiddie City filed a third-party complaint for contribution against the owners of the pool. Defendants filed cross-claims for contribution and indemnification against each other, and Muskin filed a cross-claim against the owners.

At the beginning of the jury trial, the claims against Kiddie City were dismissed with the consent of the parties. At the close of the plaintiff’s case, the trial court determined that he had failed to prove a design defect in the pool. Accordingly, at the close of the entire case, the court refused to charge the jury on design defect. Instead, the court submitted the case to the jury solely on the adequacy of the warning.

In response to special interrogatories, the jury found that Muskin had “manufactured a product that was not reasonably fit, suitable and safe for its intended or reasonably foreseeable purposes or use,” that the defect existed when the product left Muskin’s control, and that the defect was a cause of O’Brien’s injury. The jury found further that O’Brien was a trespasser, rather than a social guest, at the time of the accident, thus exculpating the Henrys. Finally, the jury found that O’Brien was guilty of contributory negligence, and allocated fault for the injury as 15% attributable to Muskin and 85% attributable to O’Brien. Thus, under New Jersey’s comparative negligence *177statute, O’Brien was barred from recovery. See N.J.S.A. 2A:15-5.1. The trial occurred before our decision in Roman v. Mitchell, 82 N.J. 336 (1980), and the court did not give an “ultimate outcome” instruction; that is, the court failed to instruct the jury on the effect on plaintiff’s recovery of its allocation of fault.

On appeal, the Appellate Division found that the trial court erred in removing from the jury the issue of design defect. Consequently, that court reversed the judgment against Muskin and remanded the matter for a new trial. The Appellate Division also determined that plaintiff was a trespasser at the time of the accident and resolved that the issue of his status need not be relitigated at a new trial. Furthermore, the court below vacated the consent judgment dismissing the complaint and cross-claim against Kiddie City. Finally, the Appellate Division ruled that at the re-trial the trial court should include a charge on the effect of the allocation of fault between plaintiff and defendant. See Roman v. Mitchell, 82 N.J. 336 (1980).

We agree that the status of the plaintiff need not be relitigated, but disagree with vacating the dismissal against Kiddie City. For the reasons set forth in this opinion, we affirm the remand of the matter for a new trial.

I

Muskin, a swimming pool manufacturer, made and distributed a line of above-ground pools. Typically, the pools consisted of a corrugated metal wall, which the purchaser placed into an oval frame assembled over a shallow bed of sand. This outer structure was then fitted with an embossed vinyl liner and filled with water.

In 1971, Arthur Henry bought a Muskin pool and assembled it in his backyard. The pool was a twenty-foot by twenty-four-foot model, with four-foot walls.. An embossed vinyl liner fit within the outer structure and was filled with water to a depth of approximately three and one-half feet. At one point, the *178outer wall of the pool bore the logo of the manufacturer, and below it a decal that warned “DO NOT DIVE” in letters roughly one-half inch high.

On May 17, 1974, O’Brien, then twenty-three years old, arrived uninvited at the Henry home and dove into the pool. A fact issue exists whether O’Brien dove from the platform by the pool or from the roof of the adjacent eight-foot high garage. As his outstretched hands hit the vinyl-lined pool bottom, they slid apart, and O’Brien struck his head on the bottom of the pool, thereby sustaining his injuries.

In his complaint, O’Brien alleged that Muskin was strictly liable for his injuries because it had manufactured and marketed a defectively designed pool. In support of this contention, O’Brien cited the slippery quality of the pool liner and the lack of adequate warnings.

At trial, both parties produced experts who testified about the use of vinyl as a pool liner. One of the plaintiff’s witnesses, an expert in the characteristics of vinyl, testified that wet vinyl was more than twice as slippery as rubber latex, which is used to line in-ground pools. The trial court, however, sustained an objection to the expert’s opinion about alternative kinds of pool bottoms, specifically whether rubber latex was a feasible liner for above-ground pools. The expert admitted that he knew of no above-ground pool lined with a material other than vinyl, but plaintiff contended that vinyl should not be used in above-ground pools, even though no alternative material was available. A second expert testified that the slippery vinyl bottom and lack of adequate warnings rendered the pool unfit and unsafe for its foreseeable uses.

Muskin’s expert testified that vinyl was not only an appropriate material to line an above-ground pool, but was the best material because it permitted the outstretched arms of the diver to glide when they hit the liner, thereby preventing the diver’s head from striking the bottom of the pool. Thus, he concluded that in some situations, specifically those in which a diver *179executes a shallow dive, slipperiness operates as a safety feature. Another witness, Muskin’s customer service manager, who was indirectly in charge of quality control, testified that the vinyl bottom could have been thicker and the embossing deeper. A fair inference could be drawn that deeper embossing would have rendered the pool bottom less slippery.

At the close of the entire case, the trial court instructed the jury on the elements of strict liability, both with respect to design defects and the failure to warn adequately. The court, however, then limited the jury’s consideration to the adequacy of the warning. That is, the court took from the jury the issue whether manufacturing a pool with a vinyl liner constituted either a design or manufacturing defect.

II

Strict liability law, a relatively recent but rapidly growing legal phenomenon, has received uneven treatment from scholars, legislatures and courts. Underlying the various responses is a shared concern about the allocation of the risk of loss upon manufacturers, distributors and others in the stream of commerce for injuries sustained by the public from unsafe products.

One of the policy considerations supporting the imposition of strict liability is easing the burden of proof for a plaintiff injured by a defective product, a policy that is achieved by eliminating the requirement that the plaintiff prove the manufacturer’s negligence. Keeton, “Product Liability and the Meaning of Defect,” 5 St. Mary’s L.J. 30,34-35 (1973). Generally speaking, a plaintiff has the burden of proving that (1) the product was defective; (2) the defect existed when the product left the hands of the defendant; and (3) the defect caused injury to a reasonably foreseeable user. Michalko v. Cooke Color & Chemical Corp., 91 N.J. 386, 394 (1982). Proof that the product was defective requires more than a mere showing that the product caused the injury. The necessity of proving a defect in the product as part of the plaintiff’s prima facie case distin*180guishes strict from absolute liability, and thus prevents the manufacturer from also becoming the insurer of a product. See Caterpillar Tractor Co. v. Beck, 593 P.2d 871, 877 (Alaska 1979); Birnbaum, “Unmasking the Test for Design Defect: From Negligence [to Warranty] to Strict Liability to Negligence,” 33 Vand.L.Rev. 593, 600 n. 32 (1980).

Fundamental to the determination of a products liability case, including one predicated on a defective design or inadequate warning, is the duty of the manufacturer to foreseeable users. The duty includes warning foreseeable users of the risks inherent in the use of that product, see Michalko, 91 N.J. at 403, and not placing defective products on the market. Cepeda v. Cumberland Engineering Co., Inc., 76 N.J. 152, 163 (1978); see Restatement (Second) of Torts § 402A (1965). A manufacturer who breaches these duties is strictly liable to an injured party. That liability reflects the policy judgment that by marketing its product, a manufacturer assumes responsibility to members of the public who are injured because of defects in that product. Restatement (Second) of Torts § 402A comment c (1965).

In determining whether a manufacturer has breached its duty, we focus on the product. Michalko, 91 N.J. at 394; Freund v. Cellofilm Properties, Inc., 87 N.J. 229, 238 (1981); Suter v. San Angelo Foundry & Machine Co., 81 N.J. 150, 169 (1979); see Wade, “On Product Design Defects and Their Actionability,” 33 Vand.L.Rev. 551, 553 (1980). Under strict liability, a manufacturer that produces defective products is liable even if those products are carefully produced. Thus, the legal standard for evaluating whether a product is defective becomes the touchstone of strict liability.

Critical, then, to the disposition of products liability claims is the meaning of “defect”. The term is not self-defining and has no accepted meaning suitable for all strict liability cases. Implicit in the term “defect” is a comparison of the product with a standard of evaluation; something can be defective only if it fails to measure up to that standard. Birnbaum, *181supra, at 603. Speaking generally, defects may be classified as design defects or manufacturing defects. In cases alleging manufacturing defects, as distinguished from design defects, defining the standard, and thus the meaning of “defect,” is relatively easy. For example, the injury-causing product may be measured against the same product as manufactured according to the manufacturer’s standards. If the particular product used by the plaintiff fails to conform to those standards or other units of the same kind, it is defective. An apt illustration is a mass-produced product that comes off the assembly line missing a part. The question in those cases becomes whether the product as produced by the manufacturer conformed to the product as intended. See Cepeda, 76 N.J. at 169.

The considerations are more subtle when a plaintiff alleges that a product is defective due to any feature of its design, including the absence or inadequacy of accompanying warnings. In design defect or failure-to-warn cases, the product has been manufactured as intended and cannot be “defective” by comparison to a standard set by the manufacturer. See Suter, 81 N.J. at 170. Rather, the standard to measure the product reflects a policy judgment that some products are so dangerous that they create a risk of harm outweighing their usefulness. From that perspective, the term “defect” is a conclusion rather than a test for reaching that conclusion. Wade, supra, 33 Vand.L.Rev. at 552.

Although the appropriate standard might be variously defined, one definition, based on a comparison of the utility of the product with the risk of injury that it poses to the public, has gained prominence. To the extent that “risk-utility analysis,” as it is known, implicates the reasonableness of the manufacturer’s conduct, strict liability law continues to manifest that part of its heritage attributable to the law of negligence. See Suter, 81 N.J. at 171; see generally Birnbaum, supra, at 609-10. Risk-utility analysis is appropriate when the product may function satisfactorily under one set of circumstances, yet because of *182its design present undue risk of injury to the user in another situation.

Another standard is the consumer expectations test, which recognizes that the failure of the product to perform safely may be viewed as a violation of the reasonable expectations of the consumer. Suter, 81 N.J. at 170-71. In this case, however, the pool fulfilled its function as a place to swim. The alleged defect manifested itself when the pool was used for diving.

As stated in Cepeda, some factors relevant in risk-utility analysis are:

(1) The usefulness and desirability of the product — its utility to the user and to the public as a whole.
(2) The safety aspects of the product — the likelihood that it will cause injury, and the probable seriousness of the injury.
(3) The availability of a substitute product which would meet the same need and not be as unsafe.
(4) The manufacturer’s ability to eliminate the unsafe character of the product without impairing its usefulness or making it too expensive to maintain its utility.
(5) The user’s ability to avoid danger by the exercise of care in the use of the product.
(6) The user’s anticipated awareness of the dangers inherent in the product and their avoidability, because of general public knowledge of the obvious condition of the product, or of the existence of suitable warnings or instructions.
(7) The feasibility, on the part of the manufacturer, of spreading the loss by setting the price of the product or carrying liability insurance. [76 N.J. at 174],

By implication, risk-utility analysis includes other factors such as the “state-of-the-art” at the time of the manufacture of the product. See Cepeda, 76 N.J. 174. The “state-of-the-art” refers to the existing level of technological expertise and scientific knowledge relevant to a particular industry at the time a product is designed. Robb, “A Practical Approach to Use of State of the Art Evidence in Strict Products Liability Cases,” 77 Nw.U.L.Rev. 1, 4-5 & n. 15 (1977). Although customs of an industry may be relevant, Suter, 81 N.J. at 171-72, because those customs may lag behind technological development, they are not identical with the state-of-the-art. See Michalko, 91 N.J. at 397-98; Robb, supra, 77 Nw.U.L.Rev. at 4-5. A manu*183facturer may have a duty to make products pursuant to a safer design even if the custom of the industry is not to use that alternative. Michalko, 91 N.J. at 397.

State-of-the-art relates to both components of the risk-utility equation, Suter, 81 N.J. at 171-72. Although the focus is on the product, our attention is drawn to the reasonableness of the manufacturer’s conduct in placing the product on the market. Id. In that regard, the risk side of the equation may involve, among other factors, risks that the manufacturer knew or should have known would be posed by the product, as well as the adequacy of any warnings. The utility side generally will include an appraisal of the need for the product and available design alternatives. Furthermore, some products are unavoidably unsafe: the need for a product may be great, but the existing state of human knowledge may not make it safe. Restatement § 402A, comment k. With those products, the determination of liability may be achieved more appropriately through an evaluation of the adequacy of the warnings. In brief, risk-utility analysis is not a petrified, but a dynamic process. Where a particular product falls on the risk-utility continuum will depend on the facts of each case. A toy that poses undue risks to infants may be viewed differently from a therapeutic device that protects or prolongs life. As we proceed, as we must, on a case-by-case basis, risk-utility analysis provides the flexibility necessary for an appropriate adjustment of the interests of manufacturers, consumers, and the public.

Although state-of-the-art evidence may be dispositive on the facts of a particular case, it does not constitute an absolute defense apart from risk-utility analysis. See Beshada v. Johns-Manville Products Corp., 90 N.J. 191, 202-05 & n. 6 (1982). The ultimate burden of proving a defect is on the plaintiff, but the burden is on the defendant to prove that compliance with state-of-the-art, in conjunction with other relevant evidence, justifies placing a product on the market. Compliance with proof of state-of-the-art need not, as a matter of law, compel a *184judgment for a defendant. State-of-the-art evidence, together with other evidence relevant to risk-utility analysis, however, may support a judgment for a defendant. In brief, state-of-the-art evidence is relevant to, but not necessarily dispositive of, risk-utility analysis. That is, a product may embody the state-of-the-art and still fail to satisfy the risk-utility equation.

The assessment of the utility of a design involves the consideration of available alternatives. If no alternatives are available, recourse to a unique design is more defensible. The existence of a safer and equally efficacious design, however, diminishes the justification for using a challenged design.

The evaluation of the utility of a product also involves the relative need for that product; some products are essentials, while others are luxuries. A product that fills a critical need and can be designed in only one way should be viewed differently from a luxury item. Still other products, including some for which no alternative exists, are so dangerous and of such little use that under the risk-utility analysis, a manufacturer would bear the cost of liability of harm to others. That cost might dissuade a manufacturer from placing the product on the market, even if the product has been made as safely as possible. Indeed, plaintiff contends that above-ground pools with vinyl liners are such products and that manufacturers who market those pools should bear the cost of injuries they cause to foreseeable users.

A critical issue at trial was whether the design of the pool, calling for a vinyl bottom in a pool four feet deep, was defective. The trial court should have permitted the jury to consider whéther, because of the dimensions of the pool and slipperiness of the bottom, the risks of injury so outweighed the utility of the product as to constitute a defect. In removing that issue from consideration by the jury, the trial court erred. To establish sufficient proof to compel submission of the issue to the jury for appropriate fact-finding under risk-utility analysis, it was not necessary for plaintiff to prove the existence of *185alternative, safer designs. Viewing the evidence in the light most favorable to plaintiff, even if there are no alternative methods of making bottoms for above-ground pools, the jury might have found that the risk posed by the pool outweighed its utility.

In a design-defect case, the plaintiff bears the burden of both going forward with the evidence and of persuasion that the product contained a defect. To establish a prima facie case, the plaintiff should adduce sufficient evidence on the risk-utility factors to establish a defect. With respect to above-ground swimming pools, for example, the plaintiff might seek to establish that pools are marketed primarily for recreational, not therapeutic purposes; that because of their design, including their configuration, inadequate warnings, and the use of vinyl liners, injury is likely; that, without impairing the usefulness of the pool or pricing it out of the market, warnings against diving could be made more prominent and a liner less dangerous. It may not be necessary for the plaintiff to introduce evidence on all those alternatives. Conversely, the plaintiff may wish to offer proof on other matters relevant to the risk-utility analysis. It is not a foregone conclusion that plaintiff ultimately will prevail on a risk-utility analysis, but he should have an opportunity to prove his case.

In considering a motion to dismiss, the trial court should decide whether, viewing the evidence in the light most favorable to the plaintiff, Dolson v. Anastasia, 55 N.J. 2, 5 (1969), the jury might conclude that the plaintiff had proved the existence of a defect. If not, the court could grant the motion as a matter of law. R. 4:37-2(b). Otherwise, the resolution of those facts under an appropriate charge based on the risk-utility analysis is for the trier of fact. Cf. Freund v. Cellofilm Properties, Inc., 87 N.J. 229 (1981); see Birnbaum, supra, at 638-39.

Our concurring and dissenting colleague, Justice Schreiber, disagrees with the majority opinion in several respects. His opinion begins with the correct statement that the *186imposition of strict liability in a products liability case requires proof of a defect in the product. We depart from our colleague, however, because he believes that proof of a defect through risk-utility analysis is tantamount to absolute, not strict, liability. The majority opinion concludes that risk-utility analysis is one means of proving the existence of a defect. That is, under risk-utility analysis, if the risks outweigh the utility of the product, it is defective.

A second difference between the two opinions is that Justice Schreiber would find that no matter how dangerous a product may be, if it bears an adequate warning, it is free from design defects if there is no known alternative. Under that hypothesis, manufacturers, merely by placing warnings on their products, could insulate themselves from liability regardless of the number of people those products maim or kill. By contrast, the majority concludes that the judicial, not the commercial, system is the appropriate forum for determining whether a product is defective with the resultant imposition of strict liability upon those in the commercial chain.

Still another difference between the opinions is that the majority finds a proper place for both the court and jury in risk-utility analysis. See J. Wade, “On the Nature of Strict Liability for Products,” 44 Miss.L.J. 825, 838-41 (1973). If the minds of reasonable men could not differ on whether the risks posed by a product outweigh its utility, or vice versa, then the court could make the appropriate determination as a matter of law. Thus, as Professor Wade states, “[i]f a plaintiff sues the manufacturer of a butcher knife because he cut his finger, on the sole ground that the knife was so sharp that it was likely to cut human flesh, the court would probably take the case out of the hands of the jury and not give it an opportunity to find that the knife was unsafe.” If, however, there is a fact question whether the risks outweigh the utility of the product, then the matter is for the trier of fact. Contrary to Justice Schreiber’s assertion, Professor Wade not only recognizes that some cases *187should be submitted to the jury, but actually proffers a suggested charge and sets forth other charges as examples. Wade, supra, at 839-40. Our colleague, however, would never permit the jury to resolve those fact issues.

With the deepest respect for Justice Schreiber, who was the author of the majority opinion in Suter v. San Angelo Foundry & Machine Company, we believe that our reading is closer to the language of Suter: “Although the considerations for the jury are somewhat comparable to those of the trial court, their decisional functions differ. The court decides what protection should be given and the jury is concerned with reaching a just result as between the parties.” 81 N.J. 150, 173 (1979).

This approach, reflecting the current understanding of the trial bench, is expressed in different forms in the Model Jury Charges, Products Liability, No. 5.27, May 1980, provided to all state court trial judges, and in W. Dreier and H. Goldmann, Products Liability Law in New Jersey: A Practitioner’s Guide (N.J. Inst, for Continuing Legal Educ. 1982), distributed to those judges at the 1982 Judicial College. Justice Clifford, in his concurring opinion, quotes the two publications and discusses apparent differences between them. Post at 191. The fact remains, however, that both publications find proper places for the judge and jury in determining the existence of a design defect through risk-utility analysis.

Finally, we disagree with that part of Justice Schreiber’s opinion that purports to transplant into strict liability for defective products, the subject of analysis in section 402A of the Restatement (Second) of Torts, the principles pertaining to the strict liability for damages caused by abnormally dangerous activities. Restatement (Second) of Torts §§ 519-20.

In concluding, we find that, although the jury allocated fault between the parties, the allocation was based upon the consideration of the fault of Muskin without reference to the design defect. Perhaps the jury would have made a different alloca*188tion if, in addition to the inadequacy of the warning, it had considered also the alleged defect in the design of the pool.

All parties consented at trial to a dismissal of all claims against Kiddie City, on the assumption that it did not manufacture the vinyl liner and that it was merely a conduit between the manufacturer and the purchaser. That assumption was based on Muskin’s acknowledgment throughout the pre-trial proceedings that it made the vinyl liner. In the course of the trial, the purchaser testified that all parts of the pool, including the liner, arrived in Muskin boxes, but a Muskin witness testified, to everyone’s surprise, that the liner was not a Muskin product. To avoid possible prejudice to Muskin and plaintiff, the Appellate Division vacated the dismissal of the claims as to Kiddie City. We believe the appropriate disposition is to reinstate the dismissal as to Kiddie City and to preclude Muskin from denying that it made the vinyl liner.

We modify and affirm the judgment of the Appellate Division reversing and remanding the matter for a new trial.