Against Liability for Private Risk-Exposure

Article excerpt

"Proof of negligence in the air, so to speak, will not do."

Palsgraf v. Long Island Railroad Co. (1)

INTRODUCTION
I.   "THE GREAT TOYOTA PANIC OF 2010".
II.  DECADES OF DIVIDE OVER
     NO INJURY SUITS
     A. Starting with Standing
     B. Damages or Defect Manifestation
        as an Essential Element
        1. Damages or Injury as
        Essential Element
        2. Malfunction as an
           Essential Element
        3. Maybe There is a
           Lack of Causation?
     C. No Lost Benefit of the Bargain,
        Therefore No Diminished Value
III. ALLOWING NO INJURY CLAIMS:
     RISK-LIABILITY
     A. Fraud Claims-"A
        Class By Themselves".
     B. Timing Is Everything
     C. Express Recognition
        of Risk-Liability
IV.  AGAINST LIABILITY FOR
     PRIVATE RISK-EXPOSURE
     A. Risk Is Not Harm
     B. Risk Should Not Be
        Cognizable Harm
        1. Consequentialist Theories
        2. Individual Justice Theories
CONCLUSION

INTRODUCTION

In March 2010, Saturday Night Live ran a fake television commercial that showed a young couple driving home after a leisurely walk in the woods. All is well until their Toyota Prius suddenly accelerates out of control and the couple screams in terror. The commercial ends with the logo for one of Toyota's competitors and the words: "Ford. We make hybrids too." (2) The skit parodied what some have called "The Great Toyota Panic of 2010" (3) concerning allegations that Toyota vehicles had a defect causing sudden unintended acceleration (SUA). Although government agencies later concluded that most SUA incidents were the result of driver error, Toyota owners filed more than 200 SUA cases against Toyota. (4)

Though it is not unusual for high-profile product incidents to result in mass litigation, (5) what is notable about the claims against Toyota is that many of the plaintiff-vehicle owners seeking damages for SUA never actually experienced a SUA problem. (6) Nor did they allege that they suffered emotional harm--distress or anxiety caused by the perceived risk that their Toyota might experience SUA. (7) To those unfamiliar with this type of litigation, the Toyota cases might prompt an obvious question: Can a plaintiff who has not yet suffered an injury sue based on the risk of future harm? One would think this question is easily settled. As Judge Frank H. Easterbrook of the United States Court of Appeals for the Seventh Circuit famously stated, "[n]o injury, no tort." (8) And indeed, many courts have rejected these suits on grounds ranging from lack of constitutional standing (9) to lack of causation. (10) Yet the courts are intractably divided over whether these "no injury" or "unmanifested defect" suits are cognizable. This conflict has created incentives for forum-shopping as plaintiffs search for a jurisdiction friendly to no injury lawsuits and class certification. (11) Numerous manufacturing industries, including automobiles, (12) beds, (13) cosmetics, (14) pharmaceuticals, (15) and medical devices., (16) have faced claims for damages now based on allegations that their products might malfunction in the future.

This Article attempts to clear the confusion surrounding these claims. Stripped to their core, these no injury lawsuits permit plaintiffs to pursue private tort and warranty claims based on mere exposure to risk. As I explain, however, such a fundamental change is not justified by either economic or moral rationales. Rather, I argue that manifested harm is an essential element of tort and warranty claims and thus these no injury cases should be rejected. (17) Part I of this Article describes the Toyota litigation, the most recent example of the no injury genre. Part II provides a brief history of no injury lawsuits. These cases exist at the "borderland of tort and contract." (18) These suits originated as tort claims in the 1980s but mostly were dismissed for failure to allege injury. …