Third Circuit Affirms Its Prediction That Pennsylvania Will Apply The Third Restatement In Product Liability Actions

In past product liability actions, Pennsylvania courts had consistently followed the approach that “negligence concepts have no place in products liability.”  Indeed, the Supreme Court of Pennsylvania would refer to Section 402A of the Restatement (Second) of Torts, which instructed courts to ignore evidence that the seller “exercised all possible care in the preparation and sale of his product.”  The Second Restatement of Torts therefore, created a “strict liability regime that insulated product liability cases from negligence concepts.”  However, as the Supreme Court of Pennsylvania found, it was increasingly difficult to determine whether a product was “unreasonably dangerous” without some sort of reference to evidence that the seller did or did not exercise “care in the preparation” of the product.  The American Law Institute, therefore, tackled this conflict in section 402A by publishing the Restatement (Third) of Torts.  Section 1 of the Third Restatement makes sellers liable only for the sale of products that are “defective” and section 2 provides that a product may qualify as “defective” if it meets one of three sets of criteria, which incorporates negligence concepts such as “foreseeable risk” and “care.”

This past Tuesday, the Third Circuit addressed whether its prediction that Pennsylvania courts would adopt the Third Restatement of Torts, instead of the Second Restatement, should be affirmed.  The facts of Covell v. Bell Sports, Inc. stemmed from a horrific bike accident that left David F. Covell with serious brain injuries, despite the fact that he was wearing a helmet.  His parents, who were appointed legal guardians, filed a products liability suit against Bell Sports, Inc., the manufacturer of the “Giro Monza” bike helmet Covell was wearing during the accident.  Their suit alleged that the helmet was defectively designed and that it lacked adequate warnings.  A trial commenced in the Eastern District of Pennsylvania according to Pennsylvania substantive law.  At trial, the District Court permitted Bell to introduce expert testimony based on the United States Consumer Product Safety Commission’s Safety Standard for Bicycle Helmets (“CPSC Standard”).  The District Court found that the CPSC Standard was relevant to the amount of care exercised by Bell.  Furthermore, at the end of the trial, the District Court instructed the jury pursuant to sections 1 and 2 of the Restatement (Third) of Torts.  In doing so, the Court instructed the jury that in determining whether the helmet was defective, it could consider evidence of standards or customs in the bike helmet industry, including the CPSC Standard.  The jury found that the helmet met the CPSC Standard and thus, returned a verdict in favor of Bell.

The Covells appealed the District Court’s decision, claiming that the District Court wrongly applied the Restatement (Third) of Torts, and not the Restatement (Second) of Torts.  The Covells argued that section 402A has been the law in Pennsylvania and that no decision of the Pennsylvania Supreme Court had changed this law.  The Covells claimed that the District Court should not have permitted Bell to admit evidence of the CPSC Standard because under the Second Restatement due care is irrelevant.  Furthermore, the Covells claimed that the District Court should not have instructed the jury to consider whether the helmet was “unreasonably dangerous” because the only relevant inquiry under the Second Restatement is whether the product itself was defective.  Moreover, the Covells argued that the Supreme Court’s dismissal of Bugosh v. I.U. North America, Inc. was evidence that the Third Circuit’s prediction to apply the Third Restatement was incorrect.  There, the petitioner sought a holding from the Supreme Court declaring that the Restatement Third and not the Restatement Second reflected the law of Pennsylvania.  Although the Court granted cert. on the issue in 2008, the Court dismissed the appeal in 2009 as improvidently granted.  Thus, the Covells claimed that such dismissal was evidence that the Pennsylvania Supreme Court would continue to adopt the Second Restatement.

The Third Circuit, however, disagreed with the Covells’ contentions and affirmed the District Court’s application of the Third Restatement of Torts.  In doing so, the Third Circuit adhered to its decision in Berrier v. Simplicity Manufacturing, Inc., 563 F.3d 38, 40 (3d Cir. 2009). There, after reviewing relevant state precedents, analogous decisions, and scholarly works, the Third Circuit concluded that if the Supreme Court were confronted with this issue, it would adopt the Restatement (Third) of Torts, and not Section 402A of the Restatement (Second) of Torts.  The Court explained that such predictions by a federal court sitting in diversity were permissible absent a controlling decision by a state’s highest court.  Lastly, the Third Circuit rejected the Covells’ argument with respect to Bugosh, noting that “reading the tea leaves of a certiorari dismissal is risky business: one could just as reasonably conclude that the dismissal [t]here indicates the Court’s approval of Berrier as much as it indicates its approval of section 402A.”

Thus, until the Pennsylvania Supreme Court holds otherwise, stare decisis dictates that federal courts sitting in diversity and applying Pennsylvania law to product liability cases should look to the Third Restatement for guidance, which is significantly more favorable for defendant manufacturers.