Indiana Law Review 1979] SURVEY-PRODUCTS LIABILITY 227 ment and legislative efforts in other jurisdictions related to this issue. 93 A complete analysis and application of the reasoning underlying this problem to Indiana statutes is beyond the scope of this discus- sion. Larson's consideration of the issue is noted only to illustrate the significance and complexity of the matter presented to the court. By alluding to the limited standard of review of ad- ministrative decisions, the court failed to confront the issue. The court did give the impression that if the Industrial Board were to change its interpretation, at least with respect to the Occupational Diseases Act, to find industrially caused gradual hearing losses to be compensable, the court might sustain that interpretation as well. In the meantime, if this decision is to remain unchanged on further appeal, such hearing losses are not compensable under either the Workmen's Compensation Act or the Occupational Disease Act in In- diana. XII. Products Liability John F. Vargo* Jordan H. Leibman** During this survey period few products liability cases were decided under Indiana law, 1 but these few may prove to be highly significant because specific doctrines of Indiana products liability law appear to have been modified or redefined. In addition, the Indiana General Assembly enacted a new products liability statute2 which promises to have a major impact on products liability practice in this state. 93IB A. Larson, supra note 91. Member of the Indiana Bar. B.S., Indiana University, 1965; J.D., Indiana University School of Law — Indianapolis, 1974. **Former Vice President and General Manager, Imperial Packaging Company, Inc. A.B., University of Chicago, 1950; M.B.A., University of Chicago, 1955. Two cases decided during the survey period are not discussed because they either did not raise any new issues or did not discuss issues concerning products liability. See Cates v. Jolley, 373 N.E.2d 877 (Ind. 1977) (negligence case involving lad- der); American Home Prod. Corp. v. Vance, 365 N.E.2d 780 (Ind. Ct. App. 1977) (primarily discussing issue of inconsistent jury verdict). 2Act of Mar. 10, 1978, Pub. L. No. 141, § 28, 1978 Ind. Acts 1308 (codified at Ind. Code §§ 33-1-1.5-1 to 8 (Supp. 1978)). The full text of this chapter is reprinted as an ap- pendix following this article. 228 INDIANA LAW REVIEW [Vol. 12:227 A. Judicial Developments 1. Assumption of Risk, Misuse, and Contributory Negligence. — In Fruehauf Trailer Division v. Thornton, 3 the plaintiff received a jury verdict against the defendant tire manufacturer for injuries sustained when his tire blew out, causing his semi-trailer to overturn and burn. The verdict was affirmed on appeal.4 One issue considered was the trial court's refusal to tender instructions con- cerning misuse and incurred risk. The court of appeals stated that if the plaintiff user has knowledge of the defect, misuse becomes a part of the defense of assumption of risk (incurred risk).5 Assump- tion of risk is, in turn, based upon voluntary consent as tested by a subjective standard. 6 In contrast, contributory negligence is prem- ised on unreasonable conduct of the plaintiff as tested by an objec- tive standard. 7 In other words, contributory negligence requires an objective determination that the plaintiff has failed to guard against a known defect when under a duty to do so. Because there was no evidence that the plaintiff voluntarily drove an excessive distance after the tire blew out, he could not have legally incurred the risk. Although plaintiff presumably had knowledge of the defect after the blowout, there was insufficient evidence to conclude that he subjectively determined to continue driving so as to constitute a misuse in the presence of a known defect. 8 Thus, significantly, the Thornton court held that, although an instruction for contributory negligence was given under the negligence count, an instruction for misuse where the defect is known is not appropriate under a strict tort count unless sufficient evidence of plaintiffs voluntariness and subjective determination of continuing conduct is presented at trial.9 The defense of assumption of risk (incurred risk) was analyzed in an outstanding opinion in Kroger Co. v. Haun.10 Haun, a negligence case, thoroughly discussed the difference between contributory negligence and assumption of risk. The Haun court observed that strict definitional differences between contributory negligence and assumption of risk might not be important in ordinary negligence ac- tions inasmuch as both are valid defenses, but emphasized that the distinction is important in situations in which assumption of risk is a 3 366 N.E.2d 21 (Ind. Ct. App. 1977). 'Id. at 25. 5 Id. at 29. 6/d Ud. *Id. 9 IcL at 29-30. 10379 N.E.2d 1004 (Ind. Ct. App. 1978). 1979] SURVEY-PRODUCTS LIABILITY 229 defense, and contributory negligence is not, such as guest statute cases and strict liability cases. 11 Recognizing that some Indiana decisions have repeatedly held that the doctrines of contributory negligence and assumption of risk are separate and distinct, while others have stated that assumption of risk is merely a species of contributory negligence, the Haun court allocated these conflicting views to definitional differences. 12 The Haun court then redefined both contributory negligence and assumption of risk in their classic senses. Contributory negligence was defined as unreasonable conduct as tested by the objective reasonable person. Assumption of risk was defined as consenting to undertake a risk with actual knowledge, understanding, and ap- preciation of the risk involved and a voluntariness in accepting that risk. 13 The Haun court said the confusion in distinguishing the two defenses under Indiana law has been in large part due to two fac- tors. First, there has been an infusion of the objective reasonable person test into the assumption of risk concept. Second, Indiana courts have erroneously incorporated the requirements of knowledge and appreciation of a peril into contributory negligence.14 In Stallings v. Dick/5 for example, the court stated that assumption of risk included the proposition that knowledge of a risk may be im- puted if such a risk would have been "readily discernible by a reasonable and prudent man under like or similar circumstances." 16 The Haun court, in rejecting this definition, opined that to hold that one may incur a risk of which he had no actual knowledge, yet was required to know in the exercise of ordinary care, is a perversion of the doctrine. 17 The Haun court stated that dangers which are so obvious that knowledge of them may be imputed as a matter of law do not constitute assumption of risk, but should be treated as unreasonable conduct in failing to recognize an obvious risk or danger, therefore constituting contributory negligence.18 u Id. at 1013-14 (citing Ridgeway v. Yenny, 223 Ind. 16, 57 N.E.2d 581 (1944); Fruehauf Trailer Div. v. Thornton, 366 N.E.2d 21 (Ind. Ct. App. 1977); Gregory v. White Truck & Equip. Co., 323 N.E.2d 280 (Ind. Ct. App. 1974) (strict liability); Collins v. Grabler, 147 Ind. App. 584, 263 N.E.2d 201 (1970) (guest statute)). 12379 N.E.2d at 1008. n Id. at 1007. u Id. at 1008. 15 139 Ind. App. 118, 210 N.E.2d 82 (1965). 18ta at 129, 210 N.E.2d at 88. 17379 N.E.2d at 1009. 18/d 230 INDIANA LAW REVIEW [Vol. 12:227 The court then allocated the various types of plaintiff-conduct within the above definitional framework.19 The court noted that in some situations a plaintiff may expressly or impliedly consent to a risk, thereby eliminating the defendant's duty to protect him from that risk. These situations were characterized as "primary assump- tion of risk." 20 In "primary assumption of risk" cases, the issue of whether the risk was reasonable is not relevant since the defendant owed no duty to the plaintiff. Thus, both assumption of risk and con- tributory negligence, when used in the "primary" sense, are properly analyzed as a "no duty" concept and not as defenses.21 Once the defendant has been charged with a duty, however, any breach of that duty constitutes negligence. Under this situation the defendant may still avoid liability by asserting: (1) The plaintiff came upon a risk created by defendant's negligence, knew of and ap- preciated its magnitude, but nevertheless accepted it voluntarily; or (2) the plaintiff's conduct failed to conform to that of a reasonable person under the circumstances.22 The former situation is "second- ary assumption of risk," while the latter situation is contributory negligence. 23 In certain situations, "secondary assumption of risk" and contributory negligence will "overlap."24 This overlap occurs when the plaintiff's conduct has been voluntary and knowing, as well as unreasonable, in other words, when the plaintiff has incurred an unreasonable risk. In such "overlap" situations, either defense may be asserted.25 The Haun court stated that in situations where assumption of risk, but not contributory negligence, is available as a defense, the defenses should be analyzed as follows. "While contributory negligence (unreasonable conduct) is not a defense in such cases, it may, nevertheless, be present in the form of conduct which includes 19The Haun court listed the following possible situations: (1) [T]he existence or non-existence of a duty owed by the defendant to plain- tiff for the prevention of the danger in question; (2) the voluntariness of plaintiffs conduct and his knowledge and appreciation of its possible consequences, or lack thereof, and (3) the reasonableness of the risk entailed or conduct engaged in by the plain- tiff. Id. at 1011. 20 Id. 21 Id. at 1012. 22 Id. 23 Ia\ 24The "overlap" area, wherein both contributory negligence and assumption of risk exist at the same time, is more fully explained in Vargo, The Defenses to Strict Liability in Tort: A New Vocabulary With an Old Meaning, 29 Mercer L. Rev. 447, 451-55 (1978). 25 Id. at 451. 1979] SURVEY-PRODUCTS LIABILITY 231 the additional elements of voluntary and knowing incurrence."26 Such conduct would be a defense, not because it is unreasonable, but because it constitutes a voluntary assumption of a known risk. The decision is consonant with the Restatement (Second) of Torts section 402A, Comment n, which describes only the "overlap" area as a defense to strict liability in tort. 27 The decision provides an excellent analysis of contributory negligence and assumption of risk, and clarifies Indiana law concern- ing the types of defenses available to the defendant in products liability and guest statute cases. However, the question still remains whether the pure type of "secondary assumption of risk," where the plaintiff reasonably assumes the risk, is a defense.28 Although most situations involve the overlap area, it is still theoretically possible that a plaintiff may reasonably assume a risk arising out of defend- ant's negligent conduct or defective product, and, in this situation, reasonable assumption of risk has traditionally been considered a defense. 29 Recent decisions in other jurisdictions have refuted the use, in some circumstances, of reasonable assumption of risk as a defense on policy and social grounds. For example, in Blackburn v. Dorta,30 the Florida Supreme Court theorized the situation in which the plaintiff rushes into a burning building to rescue a child as an example of reasonable assumption of risk.31 In this situation the ap- plication of the defense of reasonable assumption of risk would bar the plaintiff from recovery. The Dorta court found no policy justification for the defense under these circumstances and rejected its use. 32 The question of whether there is an area of defense for a reasonable risk incurrence in Indiana, apparently, remains open. 26 379 N.E.2d at 1014. 27The Restatement (Second) of Torts § 402A, Comment n (1965) states: Contributory Negligence. Since the liability with which this Section deals is not based upon negligence of the seller, but is strict liability, the rule applied to strict liability cases (see § 524) applies. Contributory negligence of the plaintiff is not a defense when such negligence consists merely of a failure to discover the defect in the product, or to guard against the possibility of its existence. On the other hand the form of contributory negligence which con- sists in voluntarily and unreasonably proceeding to encounter a known danger, and commonly passes under the name of assumption of risk, is a defense under this Section as in other cases of strict liability. If the user or consumer discovers the defect and is aware of the danger, and nevertheless proceeds unreasonably to make use of the product and is injured by it, he is barred from recovery. 2SSee Vargo, supra note 24, at 451-60. 29 Id. 30348 So. 2d 287 (Fla. 1977). 31 Id. at 291. 32/d at 291-93. 232 INDIANA LAW REVIEW [Vol. 12:227 Finally, the Haun court, in a limited discussion of the volun- tariness element of assumption of risk, implied that a plaintiff in an employment situation, who is following directions as to how he is to fulfill his job requirements, may not always be acting voluntarily.33 In other words, when a person is required, by an employer or by others, to perform his work in a specified way and whose only choices are to continue to work in the specified manner, to quit his job, or to suffer substantial sanctions from his employer, there is a question whether there is really any choice at all. Other jurisdic- tions, when faced with this issue, have determined that no true choice is presented and that, consequently, the employee did not incur the risk.34 As one court explained: " '[I]t was 'his poverty, not his will,' " that made him consent.35 2. Statute of Limitations and Disability Statute. —In D 'Andrea v. Montgomery Ward & Co., 36 the Seventh Circuit Court of Appeals reversed the trial court's grant of summary judgment for the defend- ant. In DAndrea the plaintiff received her injuries shortly before her sixth birthday. Under the Indiana disability statute,37 a minor plaintiff has two years after his disability is removed within which to bring his action. D'Andrea filed her complaint on February 14, 1975, ten months before her twenty-third birthday. On July 26, 1973, when the plaintiff was twenty years of age, and before the filing of her complaint, the age of majority in Indiana was reduced from twenty-one to eighteen years of age.38 Thus, under the amended law a minor has until his twentieth rather than his twenty-third birth- day within which to commence his action. The trial court held that the plaintiff was bound by the modified law and, therefore, was barred 33The Haun court stated: However, the evidence adduced at trial does not as a matter of law mandate the finding that Haun either incurred the risk of his injuries or was con- tributorily negligent. First, there is a factual question as to the voluntariness of Haun's conduct. Kroger was responsible for requiring Haun to unload the pallets in the limited area. 379 N.E.2d at 1014. 3iSee Rhoads v. Service Mach. Co., 329 F. Supp. 367 (E.D. Ark. 1971); Wood v. Kane Boiler Works, Inc., 150 Tex. 191, 238 S.W.2d 172 (1951); Brown v. Quick Mix Co., 75 Wash. 2d 833, 454 P.2d 205 (1969). 35Rhoads v. Service Mach. Co., 329 F. Supp. 367, 381 (E.D. Ark. 1971) (quoting 2 F. Harper & F. James, The Law of Torts 1177 (1956) (quoting Thrussell v. Handyside, 20 Q.B.D. 359, 364 (1888))). 36571 F.2d 403 (7th Cir. 1978). 37 Ind. Code § 34-1-2-5 (1976) provides that persons under legal disability have two years after the disability is removed within which to file their actions. At the time of plaintiffs injury, Act of Apr. 7, 1881, ch. 38, § 857, 1881 Ind. Acts 388 (amended 1973), defined persons under the age of twenty-one years as being under a legal disability. 3*See Ind. Code § 34-1-67-1 (1976), as amended by Act of Apr. 16, 1973, Pub. L. No. 313, § 3, 1973 Ind. Acts 1717. 1979] SURVEY-PRODUCTS LIABILITY 233 by the statute of limitations. On appeal, the Seventh Circuit pointed out that under the disability statute the two-year grace period does not begin to run until the disability is removed.39 The D'Andrea court then held that plaintiffs disability (minority) was removed by legislative act on July 23, 1973, when the amendment became effective, and that the plaintiff still had two years from the effective date of the amendment, or until July 23, 1975, within which to bring her action. 40 Since the plaintiff had commenced her action on February 14, 1975, her suit was timely under the amended statute. 41 Attorneys should be aware that the present state of Indiana law concerning disability statutes has been modified in two important ways. If the action does not come under the new products liability statute, 42 the age of majority for minors is eighteen years of age, and the two-year grace period will extend the time within which to bring the action until age twenty. If the action is within the ambit of section 5 of the statute, and if this section is held constitutional, there will be no extension of time for minors.43 3. Successor Corporations ' Liability. — In Travis v. Harris Corp.," the defendant corporation, successor corporation, had pur- chased the assets of a prior corporation, predecessor corporation, which had manufactured and marketed an allegedly defective prod- uct which had injured the plaintiff.45 The decision of the Seventh Circuit Court of Appeals, holding the successor corporation not liable for the plaintiffs injuries, was based upon traditional doc- trines of corporate law. These principles "were developed primarily for the purposes of creditor protection, tax assessment, and the resolution of dissenting shareholder claims." 46 These policy con- siderations underlying corporate law and the rule of non-liability for successor corporations were established before the concept of strict tort liability for products was generally adopted.47 The ability of the 39571 F.2d at 404. 40/d "Id. 42 Ind. Code § 33-1-1.5-1 to 8 (Supp. 1978). *3 Ia\ § 33-1-1.5-5 states in pertinent part: "Statute of Limitations. This Section ap- plies to all persons regardless of minority or legal disability." The constitutionality of this provision is discussed at notes 181-96 infra and accompanying text. "565 F.2d 443 (7th Cir. 1977). 45The Travis court also discussed the liability consequences when "merger and consolidation" are involved in the acquisition. This aspect of the case and a full ex- planation of the factual background are more fully discussed in Corporations, 1978 Survey of Recent Developments in Indiana Law, 12 Ind. L. Rev. 94, 105-10 (1978). 46 Note, Products Liability— Corporations—Asset, Sales and Successor Liability, 44 Tenn. L. Rev. 905, 908 (1977). "See id. 234 INDIANA LAW REVIEW [Vol. 12:227 manufacturer to absorb or spread the cost of such injuries, safety in- centives, consumer expectations, and plaintiffs problems of proof, were the primary policy considerations for the establishment of strict liability for products. 48 Thus, the policy considerations of cor- porate law and strict tort liability were established on a completely different policy basis. The Travis court chose to reject the policy behind strict liability and grounded its decision on corporate doc- trines. 49 Recent decisions in other jurisdictions, however, have analyzed the problem of successor corporations, including mere cash purchases of assets, in a different manner.50 These jurisdictions have found corporate law principles inadequate because the issue of suc- cessor liability for defective products should be governed by the policies underlying products liability law.51 Jurisdictions which have rejected the use of corporate law in the successor corporation situa- tion have established two new approaches to the problem: the prod- ucts liability continuity principle 52 and the product line53 theory. Under the products liability continuity principle, the successor cor- poration may be held responsible by showing: (1) [A] continuity of management, personnel, location, assets and general business operations, (2) the prompt cessation, liquidation, and dissolution of seller, (3) and assumption by the buyer of those liabilities and obligations ordinarily necessary for the uninterrupted conduct of the business, and (4) a representation by the purchasing corporation that it is the effective continuation of the seller. 54 The product line theory would hold the successor corporation liable if: (1) [T]he plaintiff would face insuperable obstacles in attempt- ing to obtain satisfaction from the predecessor, (2) at the time of the acquisition, the successor possessed adequate knowledge to gauge the risks of injuries from previously iSSee Campbell & Vargo, The Flammable Fabrics Act and Strict Liability in Tort, 9 Ind. L. Rev. 395, 407-08 n.75 (1976); Fischer, Products Liability— The Meaning of Defect, 39 Mo. L. Rev. 339, 339-40 (1974). 49565 F.2d at 448. 50See Ray v. Alad Corp., 560 P.2d 3, 136 Cal. Rptr. 574 (1977); Turner v. Bituminous Cas. Co., 399 Mich. 406, 244 N.W.2d 873 (1976). See also Cyr v. B. Offen & Co., 501 F.2d 1145 (1st Cir. 1974). 51 See, e.g., Turner v. Bituminous Cas. Co., 397 Mich. 406, 416, 244 N.W.2d 873, 877 (1976). 52 Ia\ at 424, 244 N.W.2d at 881. MRay v. Alad Corp., 560 P.2d 3, 11, 136 Cal. Rptr. 574, 582 (1977). 54 Note, supra note 46, at 913-14 (discussing Turner v. Bituminous Cas. Co., 397 Mich. 406, 244 N.W.2d 873 (1976)). 1979] SURVEY-PRODUCTS LIABILITY 235 manufactured products, and (3) the successor corporation ac- quired the good will and other intangible assets of the predecessor to which responsibility could fairly be attached.55 Because of the completely different purposes for the corporate non- liability rule, it would seem a better approach to analyze successor corporations' liability for injury from continuing products using prod- ucts liability policies under one of the above theories. k. Warnings and Standards for Strict Liability in Tort — Travis , in addition to discussing the successor corporation issue, raised an interesting question regarding the defendant's failure to warn. The plaintiff contended that the successor corpora- tion had on one occasion performed service on the allegedly defec- tive product produced by the predecessor corporation. Under these circumstances, the plaintiff alleged that the successor corporation failed to warn concerning the dangers in the product. The Travis court stated, as one ground for rejecting plaintiff's argument, that the successor corporation had no knowledge of the defect and, ab- sent such knowledge, nothing is known to warn against.56 The Travis approach to finding or rejecting a "warning defect" seems to conflict directly with all generally accepted theories for establishing the defect element in strict tort cases. Because of vagueness and ambiguity in the "consumer expectation test" as set forth in Comments g, h, and i to section 402A, 57 two alternative ap- proaches have been advanced to establish the standards of defec- tiveness. The first alternative was proferred by Deans Wade58 and Keeton.59 This "Wade/Keeton" standard states that the primary dif- ference between negligence and strict liability is one of knowledge 55Note, supra note 46, at 914-15 (discussing Ray v. Alad Corp., 560 P.2d 3, 136 Cal. Rptr. 574 (1977)). M565 F.2d at 448-49. 57The term "consumer expectation test" seems to have arisen from the comments to Restatement (Second) of Torts § 402A (1965). Comment g states in part: "The rule stated in this Section applies only where the product is, at the time it leaves the seller's hands, in a condition not contemplated by the ultimate consumer, which will be unreasonably dangerous to him." (Emphasis added). Id. Comment h states in part: "A product is not in a defective condition when it is safe for normal handling and consumption." Id. Comment i states in part: "The article sold must be dangerous to an extend beyond that which would be contemplated by the ordinary consumer who pur- chases it, with the ordinary knowledge common to the community as to its characteristics." 6SSee Wade, On the Nature of Strict Tort Liability for Products, 44 Miss. L.J. 825 (1973). 59See Keeton, Product Liability and The Meaning of Defect, 5 St. Mary's L.J. 30 (1973). 236 INDIANA LAW REVIEW [Vol. 12:227 or scienter. 60 Dean Wade contends that, in strict liability cases, knowledge of the injuring defect should be imputed to the manufac- turer or seller whether or not he had actual knowledge.61 The issue then becomes whether the seller with such knowledge would have been negligent for marketing the product. Thus, strict liability dif- fers from negligence in that actual or constructive knowledge of the defect is usually required in negligence cases, whereas, in strict liability, the knowledge of the defect is assumed.62 The second ap- proach for setting a standard for strict liability in tort was estab- lished by the California Supreme Court in Barker v. Lull Engineer- ing Co.™ The California standard states that liability in products cases involving design defects may be established if: (1) The plaintiff proves "that the product failed to perform as safely as the ordinary consumer would expect when used in an intended or reasonably foreseeable manner,"64 or (2) the plaintiff proves that "the product's design proximately caused his injury and the defendant fails to establish, in light of the relevant factors, that, on balance, the benefits of the challenged design outweigh the risk of danger in- herent in such design."65 Under either the Wade/Keeton approach or the California ap- proach, knowledge of the defect in the product is either imputed or wSee Keeton, supra note 59, at 37-38; Wade, supra note 59, at 834-35. * lSee Wade, supra note 58, at 834-35. °2 Id. at 835. 63573 P.2d 443, 143 Cal. Rptr. 225 (1978). M Ia\ at 455-56, 143 Cal. Rptr. at 237-38. The California Supreme Court stated that the consumer expectation test is the floor, not the ceiling on the manufacturer's responsibility, ie., it is merely the minimal requirement. In addition, the consumer ex- pectation test may frequently be used in situations where circumstantial evidence is resorted to, especially where the accident itself precludes identification of the specific defect. The court recognized, however, that the consumer expectation test may be a poor yardstick because, in many situations, the consumer has no idea how safe the prod- uct could be made. Id. at 454, 143 Cal. Rptr. at 236. 65 Ia\ at 456, 143 Cal. Rptr. at 238. The court, in specifying what factors are rele- vant, stated the jury may consider: (1) The gravity of danger of the design, (2) the likelihood of the danger occurring, (3) the mechanical feasibility of a safer alternative design, (4) the financial cost of an improved design, and (5) the adverse consequences resulting from any alternative design. Id. at 455, 143 Cal. Rptr. at 237. The California court made it clear tht the defendant had the burden of proving, not merely the burden of producing evidence, that the benefits of the challenged design"outweighed the risk of danger inherent in such design. Id. The court stated further that tnexjury's focus should be directed at the product and not at the reasonableness of the manufac- turer's conduct. Id. at 456, 143 Cal. Rptr. at 238. Thus, the fact that the manufacturer acted as a reasonably prudent manufacturer by taking reasonable precautions in at- tempting to design a safe product would not preclude the imposition of liability under strict liability principles if, upon hindsight, the trier of fact concluded that the product's design was unsafe to consumers, users, or bystanders. 1979] SURVEY-PRODUCTS LIABILITY 237 irrelevant. Under the Wade/Keeton approach, for example, the manufacturer in Travis would have been charged with the knowledge of the defect and might have been liable for failing to warn of the dangers in the product. 5. Foreseeability and Intended Use. — In Huff v. White Motor Corp. 66 the trial court had found that the plaintiff could not recover for "enhanced injuries"67 (death) when a tractor overturned and its fuel tank caught fire. The plaintiff alleged that the fire resulted from a defectively designed fuel tank and that, absent such a defect, decedent's injuries would have been less severe. The trial court re- jected this argument and applied the rationale of Evans v. General Motors Corp. 68 In Evans, the Seventh Circuit Court of Appeals denied recovery based upon an extremely narrow foreseeability con- cept and "intended use" rationale.69 Under the Evans approach, the "intended use" of a product was determined from the subjective viewpoint of the manufacturer. This "intended use" approach predated the modern view of strict liability and was an archaic rem- nant of early negligence law.70 In addition, the Evans approach severely limited the foreseeability concept in products cases to such an extent that the sellers of products could practically ignore the consequences of placing their product in various environments.71 The Seventh Circuit, in reversing the trial court, noted that only Indiana, Mississippi, and West Virginia72 followed the Evans doc- trine, while thirty jurisdictions had rejected the Evans case.73 Over- ruling both Evans and Schemel v. General Motors Corp.,™ the Huff court stated that the "intended use" construction was too narrow and unrealistic and that, henceforth, reasonable foreseeability, in- cluding a manufacturer's consideration and anticipation of the environment in which its product will be used, would be the rule for products liability cases.75 The Huff court concluded: "No rational 66 565 F.2d 104 (7th Cir. 1977). ""Enhanced injury" or "second collision" cases are situations in which the defect does not cause the original collision or impact, but the defect does increase the severi- ty of plaintiffs injury after the original collision. See Vargo, Products Liability in In- diana: In Search of a Standard for Strict Liability in Tort, 10 Ind. L. Rev. 871, 877-78 (1977). 68 359 F.2d 822 (7th Cir.), cert, denied, 385 U.S. 836 (1966). 69/d at 825. See Vargo, supra note 67, at 878-81. 10See Vargo, supra note 67, at 878-81 n Ia\ 72 565 F.2d at 111 app. B (citing Walton v. Chrysler Motor Corp., 222 So. 2d 568 (Miss. 1969); McClung v. Ford Motor Co., 333 F. Supp. 17 (S.D. W. Va. 1971), aff'd, 472 F.2d 240 (4th Cir.), cert, denied, 412 U.S. 940 (1973). 73For a list of the jurisdictions rejecting Evans, see 565 F.2d at 110-11 app. A. 74 384 F.2d 802 (7th Cir. 1967), cert, denied, 390 U.S. 945 (1968). 75 565 F.2d at 108-09. 238 INDIANA LA W REVIEW [Vol. 12:227 basis exists for limiting recovery to situations where the defect in design or manufacture was the causative factor of the accident . . ." and that the "enhanced injuries" (second collision cases) and the acci- dent itself were all foreseeable events.76 With the overruling of Evans and Schemed the narrow "intended use" and foreseeability doctrines have been overcome. In addition, the Huff decision implies that other narrow and restrictive doctrines of bygone days, such as the obvious danger rule, are now subject to change.77 6. Chain of Custody. — In both Smith v. Crouse-Hinds Co. 78 and Fruehauf Trailer Division v. Thornton, 19 the Indiana Court of Ap- peals discussed the "chain of custody" of a product. In Thornton, the court pointed out that, under the evidentiary standards, it is necessary for the plaintiff to show that the product has not been altered or tampered with from the time of injury until trial.80 The Crouse-Hinds court further stated that the admission of an item or product as "real evidence" may be based upon circumstantial evidence. Thus, authentication of the product as being "the" product producing the injury may, in discretion of the trial court, be ac- complished with evidence which shows a "reasonable probability" that the product is the one in question.*81 B. Indiana's New Product Liability Statute 1. A Brief History. — Shortly before the end of the 1978 ses- sion, the Indiana General Assembly enacted Public Law 141 82 to amend title 33 of the Indiana Code.83 This Act, approved March 10, 1978, in- cludes a chapter, effective June 1, 1978,84 which governs products liability actions "including those in which the theory of liability is ™Id. at 108 (emphasis added). 77For an explanation of the "obvious danger rule" and its genesis in Indiana law, see Vargo, supra note 67, at 884-88. 78373 N.E.2d 923, 926-28 (Ind. Ct. App. 1978). 79366 N.E.2d 21, 30-31 (Ind. Ct. App. 1977). 80M at 31. 81373 N.E.2d at 928. 82Act of Mar. 10, 1978, Pub. L. No. 141, § 28, 1978 Ind. Acts 1308 (codified at Ind. Code §§ 33-1-1.5-1 to 8 (Supp. 1978)). 83 In Indiana Statutes Annotated, the compiler transferred the products liability chapter to Title 34, "Limitations of Actions." See Ind. Code Ann. § 34-4-20A-1 to 8 (Burns Supp. 1978). The transfer apparently reflected the compiler's view that the sub- ject matter of products liability is not substantially related to that of courts and court officers and that the Act's statute of limitations provision is its most significant feature. m Ind. Code § 33-1-1.5-8 (Supp. 1978). 1979] SURVEY-PRODUCTS LIABILITY 239 negligence or strict liability in tort," but "does not apply to actions arising from or based upon any alleged breach of warranty." 85 Also excluded are actions accruing before June 1, 1978. 86 The products chapter was enacted following a six-month period of testimony before the Select Joint Committee on Product Liability created by the Indiana Legislative Council. 87 The Committee heard from manufacturers,88 manufacturing engineers, 89 manufacturing90 and selling associations, 91 and manufacturers' attorneys.92 These witnesses generally asserted that, while product liability premiums were skyrocketing,93 there was no corresponding deterioration in manufacturing practices that could justify the premium increases.94 Representatives of the insurance industry testified that the explo- sion in premiums was the result of the increasing frequency of claims and the increasing size of awards.95 They were joined by the manufacturers and sellers in urging the legislature to enact various m Ia\ § 33-1-1.5-1 (Supp. 1978). s °Id. § 33-1-1.5-Kb). 91See Lyst, Businessman's Liability Issue to be Debated, Indianapolis Star, June 9, 1977 at 63, col. 1. (noting that Robert J. Fair, president pro tempore of the Indiana Senate, had pocket vetoed a earlier House-introduced bill which he felt was hastily enacted). 88See Minutes of the Select Joint Committee on Products Liability, 1977 Indiana Legislature (minutes of July 25, 1977) (statements of Clint Hartman, CTS Corp.; Franklin Greb, Bucyrus — Erie; Bill Kennedy, Kennedy Tank) (minutes available from the Indiana Legislative Council, 301 State House, Indianapolis, Ind. 46204) [hereinafter cited as Joint Committee]. 89See Joint Committee, supra note 88, (minutes of July 25, 1977) (statement of Clark Roggie, Hugh J. Baker & Co.); id. (minutes of Aug. 24, 1977) (statements of Bill Derner, FMC Corp.; Max Rumbaugh, Schwitzer Engineered Prod.). 90See Joint Committee, supra note 88, (minutes of July 25, 1977) (statement of David H. Raridan, Indiana Mfr. Ass'n); id. (minutes of Oct. 14, 1977) (statement of Brian J. Krenzke, Indiana Mfr. Ass'n). 91See Joint Committee, supra note 88, (minutes of Aug. 24, 1977) (statements of H.D. Shafer, Truck Equip. & Body Distrib. Ass'n; Normagene Murray, Indiana Tire Dealers & Retreaders Ass'n). 92See Joint Committee, supra note 88, (minutes of Aug. 24, 1977) (statements of Frank Gilkison, representing Maxon Corp.; Dick Nettleingham, representing Thunder- bird Prod.). "See generally Joint Committee, supra note 88, (minutes of July 25, 1977) (statements of every testifying manufacturer or manufacturer representative). 9iSee statements cited in note 89 supra. 95See Joint Committee, supra note 88, (minutes of Sept. 19, 1977). The statement of Mavis Walters, Ins. Serv. Office, provided in part: "[T]he increases in claim costs and/or claim frequency exceeded the general increase in inflation. For product liability insurance we know that both of these considerations were factors in the recent rate level increases . . . ." The statement of William F. Burfeind, American Ins. Ass'n pro- vided in part: "Not only has the dollar value of products liability suits risen, but the number of suits and claims filed has multiplied . . . ." See also Note, When the Product Ticks: Products Liability and Statutes of Limitation, 11 Ind. L. Rev. 693, 694-99 (1978). 240 INDIANA LAW REVIEW [Vol. 12:227 modifications to the tort laws which would, in effect, cut off claims that had been previously considered meritorious.96 The Committee also heard testimony from a public interest group97 and from organized labor,98 both urging that there be no erosion of claimants' rights. In addition, two legal scholars in the area of tort law99 at- tempted to explain the doctrines and defenses underlying the law of products liability to the Committee. 2. Codification of the Common-Law Strict Tort Doctrine.— a. Strict Tort and Warranty. — The chapter, as enacted, includes product liability actions brought under negligence and strict tort theories, but excludes alleged breach of warranty actions. 100 Professor Reed Dickerson urged the Select Committee to integrate the strict tort elements of section 402A of the Restate- ment (Second) of Torts into the Indiana version of article 2 of the Uniform Commercial Code (UCC)101 so as to create a single strict liability theory to govern product liability actions.102 His preference for warranty was based on the affirmative duty of the seller, under the UCC, to market a merchantable product in contrast to the judicially created doctrine of section 402A which emphasizes the negative consequences of selling a defective product. He advised the legislature to amend the Indiana version of the UCC, because, in his opinion, the judicial adoption of section 402A could be subject to a constitutional challenge as being an unlawful attempt by the courts to amend the UCC without legislative enactment.103 The Committee rejected Dickerson's proposal to promulgate a single strict product theory under the UCC, but the legislature did purport to legislatively enact the common law strict tort doctrine. Section 3 of the chapter states that it is a codification and restate- ment of the common law "with respect to strict liability in tort." 104 ™See, e.g., Joint Committee, supra note 88, (minutes of July 25, 1977) (statements of testifying manufacturers and manufacturer's representatives); id. (Sept. 19, 1977) (statements of insurance industry representatives). 91See Joint Committee, supra note 88, (minutes of Aug. 24, 1977) (statement of Thomas Wathen, Indiana Pub. Interest Research Group). 96See Joint Committee, supra note 88, (minutes of Aug. 24, 1977) (statements of Willis Zagrovich, AFL-CIO; Buford Holt, UAW). "See Joint Committee, supra note 88, (minutes of July 25, 1977) (statement of Professor Reed Dickerson, Indiana University School of Law); id. (minutes of July 8, 1977) (statement of John Vargo, Indianapolis attorney & lecturer). 100 Ind. Code § 33-1-1.5-1 (Supp. 1978). 101 Ind. Code §§ 26-1-1-101 to 26-1-2-725 (1976). 102See Joint Committee, supra note 88, (minutes of July 25, 1977) (discussion of Professor Dickerson's testimony and his proposed amendment to Indiana's Uniform Commercial Code). m Ia\ 104 Ind. Code § 33-1-1.5-3 (Supp. 1978). 1979] SURVEY-PRODUCTS LIABILITY 241 Unresolved by the statute, however, is the status of another judicial theory which has evolved in Indiana as a hybird of tort and warranty. Under this theory, claims for personal injury and property damage from defective products under breach of warranty can be characterized to sound in tort. 105 In such actions, the usual UCC con- tract defenses of notice, 106 disclaimer, 107 limitation of remedy,108 privity limitations, 109 and the four-years-from-date-of-sale statute of limita- tion 110 are no longer applicable. 111 The resulting action is so similar to the one brought under strict liability in tort that both are virtually congruent under the case law.112 But, as will be discussed, the new products chapter departs significantly in a number of areas from the developed Indiana products liability common law. The question re- mains whether these new provisions are to govern "tort- warranties," or whether the warranty action exclusion in section 1 will continue to permit plaintiffs to bring actions with elements similar to "old 402A" under the warranty-sounding-in-tort theory. Although the latter result would appear inconsistent, the legislature could easily have clarified its intent by stating that the chapter was to exclude warranty actions under the UCC.in Its failure to do so would seem to make the issue litigable. b. Duty to Bystanders?— Section 3 of the chapter,114 purporting to codify and restate Indiana's common law with respect to strict liability in tort, tracks, with one important difference, section 402A of the Restatement (Second) of Torts which has been expressly adopted by the courts of this state.115 Section 402A provides for pro- tection to any user or consumer whose person or property is harmed 106See Wright-Bachman, Inc. v. Hodnett, 235 Ind. 307, 133 N.E.2d 713 (1956); Fruehauf Trailer Div. v. Thornton, 366 N.E.2d 21 (Ind. Ct. App. 1977). 106 Ind. Code § 26-1-2-607 (1976). m Id. § 26-1-2-316. 10SId § 26-1-2-719. 109ta § 26-1-2-318. no IcL § 26-1-2-715. inSee Greeno v. Clark Equip. Co., 237 F. Supp. 427, 429 (N.D. Ind. 1965); Fruehauf Trailer Div. v. Thornton, 366 N.E.2d 21, 27 (Ind. Ct. App. 1977). n2See Withers v. Sterling Drug, Inc., 319 F. Supp. 878, 883 (S.D. Ind. 1970); Greeno v. Clark Equip. Co., 237 F. Supp. 427, 431 (N.D. Ind. 1965). 113The Digest to a products liability bill, Ind. H.B. 1258 (1978) introduced into the General Assembly in February 1978 stated it "would not apply to breach of warranty actions, which are brought under the Uniform Commercial Code (IC 26-D." Section one of the bill, however, excluded only actions "arising from or based upon any alleged breach of warranty." 114 Ind. Code § 33-1-1.5-3 (Supp. 1978). 115See Huff v. White Motor Corp., 565 F.2d 104 (7th Cir. 1977); Greeno v. Clark Equip. Co., 237 F. Supp. 427 (N.D. Ind. 1965); Cornette v. Searjeant Metal Prods., Inc., 147 Ind. App. 46, 258 N.E.2d 652 (1970). 242 INDIANA LAW REVIEW [Vol. 12:227 by an unreasonably dangerous defect in a product; the chapter limits the protected class to those users and consumers who are in "the class of persons that the seller should reasonably foresee as be- ing subject to the harm caused by the defective condition . . . ," 116 Use of the negligence term "reasonably foresee" in this strict tort context suggests that the class of injured users and consumers to be protected by this statute is to be delineated by reference to the manufacturer's conduct rather than the condition of his product. It would be difficult to find recent common law support for that prop- osition. Nowhere in the chapter, however, is any provision made for the extension of protection to bystanders although Indiana case law has expressly developed that protection.117 An early draft provision presented to the Select Joint Committee did not so limit the class of users and consumers to those reasonably foreseeable, but instead added the following clause: "(or to any other person or his property if that person is in the class of persons that the seller should reasonably foresee . . .)." 118 The following staff comment makes clear that the purpose of the added clause was to impose liability on the seller for injuries to bystanders: "Indiana courts, along with the courts of most other states, have extended the application of section 402A to bailors, lessors and bystanders." 119 The reasonable foreseeability provision as applied here to bystanders indicates judicial recognition that this class of potential plaintiffs may be far too large to include under strict liability without some appropriate foreseeability limitation. Although the legislature is certainly empowered to reverse an expansive provision to one of vague limitation, its stated purpose in enacting this section was to restate and codify Indiana common law. 120 Because the new user-consumer limitation clause appears in- consistent with the common law, an ambiguity clearly exists. 118 Ind. Code § 33-M.5-3(a) (Supp. 1978). ulSee Gilbert v. Stone City Constr. Co., 357 N.E.2d 738 (Ind. Ct. App. 1976). The court stated: "In Indiana bystanders 'whom the . . . supplier should reasonably foresee as being subject to the harm caused by the defect' may recover under § 402A for in- juries caused by a defective product." Id. at 742 (quoting Chrysler v. Alumbaugh, 342 N.E.2d 908, 917 (Ind. Ct. App. 1976)). nsSee Memorandum to members, Select Committee on Products Liability, Oct. 7, 1977, from John R. Molitor, Staff Attorney (attached product liability bill) (memoran- dum available from the Indiana Legislative Council, 301 State House, Indianapolis, Ind. 46204). This language (without the parentheses) was adopted by the Committee's bill drafting sub-committee. See Joint Committee, supra note 88, (minutes of Oct. 31, 1977) (attached proprosed bill —A Bill For An Act to Amend IC 26, § 2.(a)) [hereinafter cited as Committee Final Draft]. n9See Memorandum, supra note 118, (attached product liability bill) (§ 7, staff com- ment). 120 Ind. Code § 33-1-1.5-3 (Supp. 1978). 1979] SURVEY-PRODUCTS LIABILITY 243 3. Definitions. — a. User or Consumer. — The chapter definition of "user or consumer" begins by including "a purchaser; any in- dividual who uses or consumes the product . . . ." 121 The initial ques- tion raised is whether "a purchaser" is limited to one who actually uses or consumes the product, or does this definition also include a wholesaler or retailer who merely buys the product for resale. The resolution of this question is necessary not only to determine the ex- tent of the protected class, but is also necessary to determine "the date of delivery of the product to the initial user or consumer," 122 which is when the chapter's outer cutoff statute of limitations begins to run. Comment 1 to section 402A makes clear that the persons covered are those who use or consume the product whether they acquired the product through purchase or in some other way, or whether they acquired the product "directly from the seller" or "acquired it through one or more intermediate dealers."123 Dealers are thus distinguished, in Comment 1, from users or consumers. Comment 1 also clearly states that a user may be one passively enjoying the benefit of the product "as in the case of passengers," or may be one who holds, prepares, or repairs a product for another.124 The chapter definition does not address these perhaps marginal classes of user or consumer, although a Select Joint Committee final draft bill did. 125 The chapter definition does, however, include as users or con- sumers "any other person who, while acting for or on behalf of the injured party, was in possession and control of the product in ques- tion." 128 What the legislature intended in this clause is far from clear. The source of the language appears to be a Massachusetts in- surance industry sample statute.127 That statute seems to be aimed mId § 33-1-1.5-2. 122M § 33-1-1.5-5. 123Restatement (Second) of Torts § 402A, Comment 1 (1965) (emphasis added). Ui Ia\ mSee Committee Final Draft, supra note 118, § 2. 128 Ind. Code § 33-1-1.5-2 (Supp. 1978). 127The sample statute provides: "User" shall include: a purchaser; any individual who uses or consumes the product; where the injured party is a minor or incompetent, anyone acting for or on behalf of such party; any employer or co-employee while acting within the scope of their employment, or any other person who, while acting for or on behalf of the injured party, was in possession and control of the product in question. Sample Statute, Independent Ins. Agents of Mass., reprinted in part in Product Liability Insurance: Hearings on S. 403 Before the Sub-Comm. for Consumers of the Senate Comm. on Commerce, Science and Transporation, 95th Cong., 1st Sess. at 475 [hereinafter cited as S. 403 Hearings]. 244 INDIANA LAW REVIEW [Vol. 12:227 at permitting employees, co-employees, and persons similarily situated, who have possession and control of products, to maintain product liability actions, presumably for purposes of indemnification, against product manufacturers if an employee is injured by a defect in the product. One can only speculate how the courts will interpret the Indiana version of this provision since even the more complete Massachusetts definition is murky. b. Products Liability Action. — Section 2 of the chapter lists the injuries for which product liability actions may be brought: "[Per- sonal injury, disability, disease, death or property damage."128 It then sets out the types of defects which may be alleged to have caused the harm: "[Manufacture, construction or design of any prod- uct." 129 Notably absent from the defect class is the failure to warn or give adequate instructions.130 Comment j to section 402A imposes a duty on the seller to warn of dangers not "generally known and recognized." 131 Failure to warn of latent defects is fully recognized in Indiana case law as a defect under strict tort and as a breach of du- ty under negligence.132 Although this section of the statute is writ- ten inclusively, the omission by the legislature of the warning defect must be given some weight. Plaintiffs may now find it expedient to bring warning cases under a warranty theory or argue that a failure to warn or give adequate instructions is a design defect. c. Physical harm. —A number of injuries to be covered by the chapter are listed under the definition of product liability action.133 Two of these, "disease" and "disability" are omitted from a list of 128 Ind. Code § 33-1-1.5-1 (Supp. 1978). m Ia\ 130T °For a statute which specifically includes failure to warn or instruct, see Utah Code Ann. § 78-15-3 (1977). The actions subject to the statute are: "(a) Breach of any implied warranties; (b) Defects in design, inspection, testing or manufacture; (c) Failure to warn; (d) Failure to properly instruct in the use of a product-, or (e) Any other al- leged defect or failure of whatsoever kind or nature in relation to a product." Id. (em- phasis added). Although this section prohibits bringing these actions after the repose periods, it does recognize that failure to warn and properly instruct are grounds for timely products liability actions on a par with defective design or manufacture. See also Sample Statute, American Ins. Ass'n, reprinted in part in S. 403 Hear- ings, supra note 127, at 471, which provides: " 'Products liability action' shall include all actions brought for or on account of personal injury, death or property damage caused by or resulting from the manufacture, construction, design, formula, prepara- tion, assembly, testing, warning, instructing, marketing, packaging or labeling of any product." ""Restatement (Second) of Torts § 402A, Comment j (1965). 182See Greeno v. Clark Equip. Co., 237 F. Supp. 427 (N.D. Ind. 1965); Gilbert v. Stone City Constr. Co., 357 N.E.2d 738 (Ind. Ct. App. 1978); Nissen Trampoline Co. v. Terre Haute First Nat'l Bank, 332 N.E.2d 820 (Ind. Ct. App. 1975). 133 Ind. Code § 33-1-1.5-2 (Supp. 1978). 1979] SURVEY-PRODUCTS LIABILITY 245 "physical harms" under the definition of that term.134 Both the physical harm and product liability action definitions are written in- clusively so that where the plain sense of physical harm clearly in- cludes disease and disability a court is likely to include them. Perhaps more serious, however, is the listing of loss of services as a physical harm, but not as a product liability action. 135 The omis- sion is not so readily remedied by a plain sense understanding of what is a "products liability action." Although section 3 of the chapter makes a seller liable for physical harm,136 it might be argued that section 3 should not be applied to an action for loss of services inasmuch as that injury does not, under the statutory definition, lead to a product liability action. d. Seller.— Section 2 includes "manufacturer, a wholesaler, a retail dealer or a distributor." 137 Unlike Comment f to section 402A, section 2 does not include the operator of a restaurant or a seller of services who also sells some goods on the premises. The chapter definition also does not specifically exclude, as does Comment f, the casual seller and the seller who sells "out of the usual course of business." 138 The status of these additional and omitted classifica- tions will presumably be left to Indiana case law. 3. Defenses. — Although section 1 states that the chapter is ap- plicable to both negligence and strict liability in tort, section 4 pur- ports to list defenses applicable only to strict tort actions 139 with burden of proof to be placed on the defendant.140 Presumably com- mon law defenses will continue to apply to claims brought under a negligence theory. a. Assumption of Risk (Incurred Risk). — The first defense listed is section 4(b)(1): "It is a defense that the user or consumer discovered the defect and was aware of the danger and nevertheless proceeded unreasonably to make use of the product and was injured by it." 141 This language does not include all of the elements required under any traditional approach to assumption of risk. The language does, however, seem to be an attempt to follow the language con- tained in Comment n of section 402A.142 Absent is any mention of the 1S4ta mld mId § 33-1-1.5-3. 187 /<£ § 33-1-1.5-2. 138Restatement (Second) of Torts § 402A, Comment f (1965). 139 Ind. Code § 33-1-1.5-4 (Supp. 1978). li0 Ia\ § 33-1-1.5-4(a) states: "The defenses in this chapter are defenses to actions in strict liability in tort. The burden of proof of any defense raised in a product liability action is on the party raising the defense." U1 I