Product Liability Claims: Statistics and Substantial Certainty

/ / Expert Statistical Analysis, Publications

By Jerome M. Staller, Ph.D. and Lawrence M. Santucci, M.A.

A recent case in New Jersey might have provided an answer to a significant question on employers’ liability under workers’ compensation statutes and, by association, manufacturers’ liability under defective-design theories. The issue: How does a plaintiff prove “substantial certainty” of injury in order to proceed under common-law standards against the employer, as opposed to recovering under workers’ compensation?

Workers injured in workplace accidents often make a claim against the manufacturer of equipment or machinery involved in the injury as well as against the employer, since in virtually all jurisdictions an employer’s liability is substantially limited by workers’ compensation statutes. However, manufacturers of workplace equipment are not so protected, allowing the worker to sue the manufacturer under common-law standards.

A dramatic example of this occurred in New Jersey in 1985, when a jury found that a machinery manufacturer was only 5 percent at fault (due to defective design), while the employer was 95 percent at fault for failing to install a guard on the equipment. The machinery manufacturer was required to pay the entire claim, while the employer was actually reimbursed for the workers compensation it had paid to the plaintiff. Stephenson v. A. Jones & Co., Inc., 103 N.J. 194 (1986).

Under New Jersey’s workers’ compensations statutes, an injured employee must show that the employer committed an “intentional wrong” in order to bring the claim under common law, rather than recovering under workers’ compensation. In Millison v. E.I. duPont de Nemours & Co., 101 N.J. 161 (1985), the court held that in order to show “intentional wrong” on the part of the employer, the plaintiff must show that there was both (1) wanton or reckless conduct on the part of the employer and (2) a “substantial certainty” that an injury would occur.

A matter recently remanded for retrial by the New Jersey Supreme Court addressed, among other issues, how the “substantial certainty” standard is to be met. The plaintiff in Laidlow v. Hariton Machinery Co., Inc. et al., 170 N.J. 602, 790 A.2d 884 (2002) was an employee of AMI-DDC, Inc. (AMI). In 1992, his hand was caught in a rolling mill being operated without a safety guard. AMI had installed a guard in 1979, but the guard was never engaged during normal operation. The only time the guard was engaged was when Occupational Safety and Health Administration (OSHA) inspectors came to inspect the plant. Laidlow operated the machine with the safety guard disengaged for a period of 12 to 13 years. During that time, there were no reported injuries, but there were a number of close calls, and Laidlow himself had on three occasions spoken to his supervisor regarding the safety guard. AMI conceded that the guard was removed for “speed and convenience.”

Laidlow sued AMI on an intentional tort theory. He also named his supervisor in the suit (in order to compel discovery). Both AMI and the supervisor moved for summary judgment, claiming that the Workers’ Compensation Act barred Laidlow from suing under common-law standards. The trial court held that Laidlow failed to demonstrate an “intentional wrong” and that Workers’ Compensation was the exclusive remedy. The trial court granted both motions for summary judgment.

An appellate court affirmed the dismissals, concluding that there was no evidence of an intentional wrong by AMI. The appeals court noted that OSHA violations alone, in the absence of proof of deliberate intent to injure, did not meet the intentional-wrong standard, noting that there had been no accidents in 12 years. The court dismissed the suit against the supervisor.

The sole dissent noted that the record presented a jury issue regarding intentional wrong, and that the lack of injuries over the twelve-year period was, among other issues, not dispositive of the issue of substantial certainty of injury.

The New Jersey Supreme Court agreed with the dissent. “A reasonable jury could conclude,” the court wrote in its opinion remanding for a new trial, “that AMI knew that it was substantially certain that the removal of a safety guard would result eventually in injury to one of its employees.”

Before the case reached the retrial stage, however, the parties settled, so the question of how to prove “substantial certainty” must wait until another day.

How would the trial court have decided the issue of proof of “substantial certainty”? At the initial trial, defendants argued that the fact that the plaintiff had performed the operation without a safety guard for a period of 12 to 15 years — upwards of 30,000 times — without an injury. Thus, they maintained, clearly demonstrated that an injury was far from substantially certain.

One way to demonstrate “substantial certainty” might be via statistics. A statistical expert can analyze production data in an attempt to ascertain, empirically, the company’s knowledge of the likelihood that an injury would occur during some potentially hazardous stage of the production process. For example, an expert might examine data on the frequency of work-related injuries occurring as a result of a particular task or operation compared to the total number of times the task was performed. In Laidlow, the plaintiff had operated the machinery without incident roughly 30,000 times. A statistical expert can view each instance the plaintiff operated the machinery as a series of trials resulting in a “success” if the operation is performed without injury, or a “failure” if an injury occurs. It can then be shown that the estimated probability that an injury would occur during the stage is equal to the number of “failures” divided by the total number of trials. Thus, if the expert observes one failure in 30,000 trials, the probability an injury would occur is equal to 1/30,000, or .0033%. In this case, the expert would conclude that not only is there no substantial certainty of an injury, there is virtually no probability of injury.

In instances where the estimated probability of an injury is high enough to warrant further consideration, a statistical expert will find it useful to compare the probability to a benchmark injury rate. Data collected by organizations such as the Department of Labor’s Occupational Safety and Health Administration (OSHA) or the National Transportation Safety Board (NTSB) provide useful sources of such information. Each year, OSHA publishes incidence rates for nonfatal occupational injuries and illnesses by industry. Thus, the expert might compare a company’s incident rate, measured by the estimated probability of an injury, to the incident rate of the entire industry to which it belongs. The expert can then determine whether the company’s incident rate is above or below the industry standard. If the rate is found to be close to or above the industry standard, the statistician may then compute the statistical significance of the difference in rates. An incident rate which is significantly below the industry standard would suggest that the company is relatively more safe than the industry as a whole, while an incident rate significantly above the industry standard would suggest the opposite.

Obviously, depending on the issue being addressed, a benchmark injury rate may be difficult if not impossible to ascertain. In such a case, while the statistician may still be able to estimate a probability of injury, the issue of whether or not the probability constitutes substantial certainty is in the hands of the courts.

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This article originally appeared in Products Liability Law & Strategy Vol. 23, No. 11, May 2005. Reprinted with permission of ALM Properties Inc.

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