Risk-Utility Analysis Applied in Favor of Subrogee

On defendant manufacturer’s motion for summary judgment, the Middle District of Pennsylvania recently applied the risk-utility analysis, finding in favor of Plaintiff, Donegal Mutual Insurance Company (“Donegal“), subrogee of its insured’s claim that a electric clothes dryer manufactured by Electrolux North American (“Electrolux“) was defective. Donegal Mut. Ins. Co. v. Electrolux N. Am., 2010 WL 3169291 (M.D. Penn. Aug. 10, 2010). In November 2006, Donegal’s insured’s house caught fire from a dryer manufactured by Electrolux 10 years earlier due to its bearing assembly design. Donegal instituted a subrogation action against Electrolux, asserting causes of action for negligence, strict liability, and warranty/breach of contract. Electrolux moved for summary judgment on Donegal’s strict liability claim.

On a motion for summary judgment, a court in Pennsylvania first determines “whether the evidence is sufficient for purposes of the threshold risk-utility analysis, to conclude as a matter of law that the product was not unreasonably dangerous.” Id. (citing Surace v. Caterpillar, Inc. , 111 F.3d 1039, 1044 (3d Cir. 1997). If the analysis favors the manufacturer, the product is not unreasonably dangerous and the the plaintiff’s claim does not go to a jury.

Judge Yvette Kane was meticulous in her analysis of each of the 7 factors of the risk-utility test, finding six of the seven factors weighted in favor of plaintiff and against the manufacturer. First, the parties conceded that the clothes dryer had a high utility to its users — only factor in favor of Electrolux. Second, the court was not able to evaluate the statistical rate of injury because Electrolux had not provided it with the number of units it sold similar to the one at issue. Therefore, the court found in favor of the plaintiff on the second factor due to the extent of injury a fire from a dryer could cause. Third, the court found that the bearing assembly design that caused the fire at issue could have been designed safer, finding in favor of plaintiff on this factor. Fourth, the court found in favor of plaintiff because Electrolux had already replaced the bearing assembly design with a different assembly in its newer models. Fifth, the court found that an ordinary user could not avoid the danger posed by an internal mechanism that could cause fires. Therefore, this factor went in favor of plaintiff. Sixth, similar to the fifth factor, the court found insufficient warning of the dangerous condition to an ordinary consumer. Finally, the court found the burden of spreading loss is better placed on the manufacturer.

As a result of the court’s analysis, it found that the risk of harm from the bearing assembly design outweighed its social utility and denied Electrolux’s motion for summary judgment. It appears that this type of test and analysis will often go in favor of plaintiff when the “defect” is an internal mechanism that could have been designed differently and the manufacturer gave no notice to the consumer. Further, the last element, spreading the loss, will almost always go in favor of an plaintiff versus manufacturer. Clearly, manufacturers moving for summary judgment in jurisdictions applying this test face a distinct disadvantage.

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