Evidence of Industry Custom May Be Relevant and Admissible in a Strict Products Liability Action Depending on the Nature and Purpose for the Evidence

In Kim v. Toyota Motor Corp., 2016 No. B247672, the California Court of Appeal, Second District, held that a jury could consider evidence of industry custom to determine whether a product was defective under the risk-benefit test in a strict products liability claim.

Plaintiffs were injured after they swerved to avoid another vehicle and lost control of their 2005 Toyota Tundra pickup truck. Plaintiffs sued Toyota, arguing their Tundra had a design defect because it was not equipped with electronic stability control (ESC) technology. The jury returned a verdict in favor of Toyota.

On appeal, Plaintiffs challenged the trial court’s denial of their motion in limine to exclude evidence of the automotive industry’s custom not to include ESC as standard equipment in pickup trucks. The Court of Appeal rejected this challenge, holding that, “evidence of industry custom and practice may be admissible in a strict products liability action, depending on the nature of the evidence and the purpose for which the proponent seeks to introduce the evidence.” The Court explained that evidence of compliance with industry custom may tend to show product safety, while evidence of noncompliance may tend to show that a product is unsafe.

In analyzing the different purposes of industry custom for this case, the Court explained that proof of competitors’ attempts to produce a safer alternative design that malfunctioned or functioned only at an unsustainable cost was admissible and relevant to the mechanical feasibility factor of the risk-benefit analysis. Also, evidence of industry custom offered to show that a competitor’s alternative design made the product less efficient and desirable to a consumer was relevant to the adverse consequences factor. Additionally, Toyota was allowed to use such evidence to rebut Plaintiffs’ contention that SUVs, which had ESC, are similar to pickup trucks.

Conversely, the Court explained that evidence of industry custom cannot be used as proof of the manufacturer’s competitive disadvantage because the adverse consequences factor focuses on the disadvantage to the consumer, not the manufacturer. Also, industry custom could not be used to argue that if the 2005 Tundra was defective, it meant every truck from the 2005 model year was defective. The Court reasoned that “[t]his is actually a prime example of when industry custom and practice would not be admissible. The fact that all of the manufacturers in an industry make the product the same way is not relevant because it does not tend to prove the product is not dangerous: All manufacturers may be producing an unsafe product.”

This case is significant because it departs from a long line of California Court of Appeal decisions which found that evidence of industry custom is always inadmissible in a strict products liability action. The Kim Court also disagreed with a recent case suggesting such evidence was always admissible. Rather, the Kim Court opted for the middle ground in concluding that industry custom may be relevant and admissible in a strict products liability action at the trial court’s discretion, depending on the nature and purpose of the evidence. In sum, the answer is the all too familiar: it depends.

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February 19, 2016