Anticipating the product liability wave

UK claimants are taking more interest in product liability litigation due to changing priorities and legislation. Is the country set to follow the US and an increasingly active European market?

“We have got this perfect storm of the sharpening of liability laws: the tightening of the screws around regulation, consumers being told ‘you have got these rights that you should exercise’, and tools being put in place for the consumers to exercise those rights. It is changing everything at the moment,” says Rod Freeman, a partner with Cooley.

Product liability litigation has a long history, but until recently it has been difficult to bring successful claims in the United Kingdom. Fellow common law jurisdictions in the United States and Australia have produced high-profile victories since the 1990s, but in the UK, as in Europe, lack of precedent and regulation, and poor economics were obstacles.

That is changing, driven by newer regulation, greater cultural and prominent claims elsewhere.

A secret history

The European Product Liability Directive dates back to 1985, while the UK’s own Consumer Protection Act (CPA) arrived in 1987. Despite this there was little uptake, unlike in the US, where a well-established claimant bar emerged.

Freeman, began his career working on breast implant litigation in his native Australia during the 1990s, cases that soon spread abroad and came to typify product liability as “big class actions that centre around a particular product that has been sold to lots of people”.

That door remained closed in the UK. As recently as 2018, a collective action against hip manufacturer DePuy faltered in the High Court, and despite the CPA, the failure of big group litigations means that “we have a lack of developed jurisprudence”, says Sarah Moore, a partner at Hausfeld. 

For the past 20 years we have been quite a light touch jurisdiction in terms of holding corporates to account in the product liability sphere, contributing to a vicious cycle in which funders are wary of such cases, in turn making them less likely to succeed. 

Sarah Moore, Partner at Hausfeld

Freeman agrees: “One of the features of the UK historically has been a lack of incentive for claimant lawyers to bring claims and to fight them hard, compared with some other parts of the world, whether it is a perception that it is difficult to win cases, or they are too expensive to run.”

The Consumer Rights Act 2015 changed that, making collective actions possible and attracting the interest of experienced operators from the US and Australia. Initial progress has been tentative while early cases such as and have made their way through the courts, establishing important precedents about and eligibility, but claims are “more likely to be brought and pursued vigorously than a few years ago”, says Freeman.

Public awareness has also grown, perhaps due to high-profile matters such as the infected blood inquiry and the Grenfell tower disaster, and prominent cases in the US and elsewhere, creating what Moore calls “the rise of collective potential”. No longer focused on personal injury, product liability now incorporates a wider range of failings including recalls, prosecutions and data privacy.

European doors open

This pattern has been repeated across the channel. Although wary of the perceived excesses of the US system, the European Union introduced the 2020 Representative Actions Directive. Against a backdrop of tighter regulation, the European Commission and national regulators have begun proactively tackling new technologies, creating an opportunity for follow-on claims.

The game changer on this front was the prosecution of Volkswagen. The German investigations were followed by other countries, leading to civil and group litigations around the world.

Then again, relying on regulation places a potential cap on new civil claims, and companies are used to facing down regulators: “If a manufacturer gets it wrong with their products or their consumer rights policies, the regulatory regime will hammer them hard in Europe, that risk is always there,” says Freeman. Nonetheless, the Commission is reviewing the Product Liability Directive, with an eye on expanding its remit into issues such as privacy and mental health.

Challenges remain

Despite the progress, the jurisprudence remains underdeveloped and the economics are still enough to put off all but the most committed claimants.

Brexit also creates questions. The 2019 Product Safety and Metrology Regulations transferred European product liability law into UK statute and has remained substantively the same for now. Freeman believes “the imperative from the UK policy makers will be to be seen to be doing more, to try to show British consumers that they are not worse off after leaving the EU”, and Moore agrees, hoping that an influence from tougher European jurisdictions, particularly the Netherlands, will remain.

There are some universal questions that impact all jurisdictions. It is unclear who bears liability for products sold in online marketplaces, and if the marketplaces themselves are held responsible, the end result may be fewer sellers, less choice and higher prices. Meanwhile, the definition of, and liability for, software products, robotic surgery and other medical devices, all remain grey areas, as does liability for harm caused when no rules were broken.

In Europe, the Commission has proposals for artificial intelligence liability but whether those prove workable is unclear. “We are going to see some policy discussion turn into real law around the regulation of AI in the foreseeable future,” Freeman adds.

Just last month (23 May) the UK Office for Product Safety and Standards (OPSS) published its Study on the Impact of Artificial Intelligence on Product Safety, which noted the breadth of products under the AI banner. The report acknowledged the many benefits, but identified concerns over AI products’ robustness and predictability, transparency, security and resilience, particularly the risk of either physical or mental harm to users.

“The characteristics of more complex AI systems, in concert with general technological trends, pose challenges across all elements of the regulatory regime,” it said, highlighting a lack of clarity around these products’ liability and the need for more understanding of them on the part of regulators.

Regulation

What is certain is that there will be plenty of regulatory activity to fuel the UK market. The 2018 creation of the OPSS signalled increased government interest, while Baroness Cumberlege’s Independent Medicines and Medical Devices Safety Review produced recommendations for patient safety and redress in July 2020. 

In March 2021 the Government announced its intention “to review and strengthen the UK’s product safety laws and ensure they are fit for the 21st century”. The subsequent OPSS report opined that “change is needed to ensure that consumers are protected”, promising greater communication and consumer clarity. Following the exit from the EU, the OPSS promised “to consult on an ambitious and multi-faceted reform programme” focused on a risk-based and technology aware approach. Whether that materialises and in what form will do much to shape the long-term future of product liability litigation in the UK.

If there is more regulatory support for consumers than before, claimants are also thinking more creatively about the tools they use. The Environment Act 2021 brings the potential for claims, particularly over product lifespans, safe disposal and overall damage to the environment, as activists seek to use a wider range of laws to tackle climate change.

Cases relating to medical devices or personal protection should also emerge from the Covid-19 pandemic. “Brexit, pandemic, climate – those answers could be for any area of law, but we are going to see litigation in all those spaces,” says Moore in summary.

No fear

In the past, the UK media and politicians have been sceptical of the US litigation culture. Despite that, neither Moore nor Freeman anticipates resistance against increased product liability from this government, despite it, theoretically at least, being ideologically committed to looser regulation.

You can’t be an ambulance chaser in this field because you can’t just go out and find a defective product and mount an action, there are so many checks and balances. There is natural corrective in this market because it is so difficult to get product liability cases off the ground. You have to be very certain of your arguments, there has to be a real need and there has to be numbers of people because of the economics.”

Sarah Moore, Partner at Hausfeld

Both expect that corporate and consumer behaviour will change as a result of the unavoidable increase in claims. Freeman says: “Inevitably companies in Europe are going to be facing much greater litigation risk over the coming years than they have ever in the past,” although he reiterates that “the greater risk will always be regulatory”.

Moore adds: “To get a litigation funder interested the case needs strong merits. As soon as we can show that the claim can be run economically and profitably, that’s when the scope to do more in this space really begins to grow." "If we can do that, we are going to see some very worthy cases evolve in the next 12 to 24 months,” she concludes.

Sarah Moore spoke to Andrew Mizner, Editor of CDR, Corporate Dispute Resolution, as part of his article 'Anticipating the product liability wave', first published on 8 June 2022.