Chapter 19: Consumer Protection
Answers to Select Case Questions
ETHOD OF ECONOMICS
2. The Colorado supreme court remanded for new trial. It held that the first trial finding that the drug caused the plaintiff's injuries was sufficiently supported by the evidence. It is up to the jury to determine the facts, the credibility of the witnesses, and weigh the evidence. Their finding in that regard is not upset. The court cited the California supreme court which held that the jury may find "a product is defective in design if 1) the plaintiff proves that the product failed to perform as safely as an ordinary consumer would expect when used in an intended or reasonably foreseeable manner, or 2) the plaintiff proves that the product's design proximately caused injury and the defendant fails to prove, in light of the relevant factors, that on balance the benefits of the challenged design outweigh the risk of danger inherent in such design." The first part is the "consumer expectation test," the second is a "risk-benefit analysis to measure the reasonableness of a danger." The second test applies here. The trial court failed to make that clear to the jury, so the verdict for plaintiff is reversed. Plaintiff must convince a jury that the drug was defectively designed using the risk-benefit analysis, not the consumer expectation test. Then the drug maker must be allowed to raise the "unavoidably unsafe products" case, which often is applied to drugs. The four factors to be considered in this defense are: "The product's utility must greatly outweigh the risk created by its use; the risk must be a known one; the product's benefits must not be achievable in another manner; and the risk must be unavoidable under the present state of knowledge." Hence, the maker may be liable despite FDA approval.
4. The practice described in the question is common in some retail industries, such as jewelry and furniture. Consumer protection authorities do not do much about such tactics. It would be hard to argue that they do much harm. There is no deception about the actual price the consumer is being charged for the products they purchase in such cases. Only a very ignorant consumer will not know that the prices are in fact ordinary and do not represent any unusual deal. But even in that case, as long as the transaction was voluntary, little harm has been done. Most consumers search prices enough and keep information in their heads about various products and stores' practices so that they are likely to know that such "big sales" are nothing special. In some cases, such tactics make some consumers angry, so they no longer patronize the stores that do such things. If such a reaction takes place in sufficient numbers, the store may be forced to abandon such tactics.
6. Dismissal vacated; remanded for further proceedings. To recover on a false advertising claim under the Lanham Act, the plaintiff must show: 1) that the defendant made false or misleading descriptions of fact or representation of fact in commercial advertisements about its product; 2) that this statement actually deceived or had a tendency to deceive a substantial segment of its audience; 3) that this deception was material, in that it is likely to influence purchasing decisions; 4) that the defendant placed this false or misleading statement in interstate commerce; and 5) that plaintiff was, or is likely to be, injured as a result of false or misleading statements, either by direct diversion of sales from itself to defendant or by lessening of goodwill associated with its products. Clorox has shown enough to bring a claim under this Act and so the suit should not have been dismissed without giving the company an opportunity to argue the validity of its claims.