Strict Liability and Judicial Resources

Abstract

UNDER strict liability for manufacturers of defective products, no longer must the injured party prove that the defect is attributable to the manufacturer's lack of reasonable care in fabrication or assembly. Recovery of damages will be allowed if the product was defective and if the defect caused the injury.' This article investigates empirically the effect of the change in legal doctrine on the amount of judicial resources-the number of court cases and the court time taken by each case-devoted to products liability litigation. The subject warrants attention because these resources represent part of the cost of administering products liability law and should be included in a complete assessment of the social merit of replacing the negligence rule with strict liability for manufacturers of defective products. And empirical inquiry is particularly appropriate because offsetting forces make it impossible to predict the direction of change in a principal index of the amount of judicial resources-the number of products liability cases decided by the courts. On the one hand, for example, dispensing with the negligence requirement enhances an injured party's incentive to sue the manufacturer and could lead to more court decisions, given a constant settlement rate. But with negligence no longer an issue, the fraction of claims settled out of court could increase. Parties fail to settle legal disputes in advance of a trial when, because they hold divergent expectations of how the court will decide their case, the plaintiff's minimum demand exceeds the maximum the defendant is willing to pay. By reducing the number of litigable issues, strict liability could also reduce the possibility of such disagreement and facilitate settlement prior to a court decision.2