Swords and Shields: Impact of Private Standards for Liability Determinations of Autonomous Vehicles

3.1 Existing Case Law on Role of Private Standards in Liability Determinations

Compliance with applicable voluntary standards can provide evidence of the product or manufacturer’s reasonableness, whereas failure to comply with applicable industry standards may be evidence of unreasonableness. Indeed, legal precedent in most jurisdictions establishes that compliance with applicable standards can provide at least a partial shield against liability, whereas non-compliance can be a partial sword that can increase liability risks. Private or voluntary standards have been found admissible to help evaluate the reasonableness of the defendant’s conduct in both negligence^[56] and strict liability actions.^[57] As one appellate court stated, “[e]vidence of industry standards, customs, and practices is ‘often highly probative when defining a standard of care.’”^[58]

Starting with the shielding effect of standards compliance, a tort defendant can use its compliance with voluntary programs or standards as evidence that it exercised reasonableness or due care.^[59] In litigation, “industry standards and best practices are the minimum standard of care to which [an] organization is likely to be held.”^[60] Compliance with voluntary standards will usually not provide a complete shield against liability,^[61] but can provide helpful evidence that the company acted with due care.^[62] This is particularly true in areas like AVs without any technology-specific government standards, in which case private standards can “suggest [] a standard of care as a yardstick in emerging areas where the legal standard is not as clear against which the conduct of organizations can be measured.”^[63] In a much publicized case involving the safety of a Toyota vehicle, the California Supreme Court ruled that evidence of industry custom and practice can be admitted to show that the manufacturer acted reasonably.^[64] However, a court may exclude reference to private standards on which a manufacturer relies if the standards do not directly address the risk that the alleged product defect created.^[65]

Just as compliance with a voluntary standard may help shield a defendant from liability, a manufacturer’s failure or refusal to comply with a voluntary standard can be used as a sword by a plaintiff to argue that the manufacturer did not act reasonably.^[66] For example, a federal district court upheld a plaintiff’s reliance on the defendant’s failure to comply with private standards and industry guidelines in a walkway accident on a cruise ship, holding that “advisory guidelines and recommendations, while not conclusive, are admissible as bearing on the standard of care in determining negligence.”^[67] In another case where stairs designed by a defendant failed to comply with an ASTM voluntary standard, the court concluded:

Although the ASTM standards are non-binding and a reasonable jury could discredit their persuasiveness, for summary judgment purposes, the standards as applied to the stairs satisfy Plaintiff’s burden of presenting evidence of defect. By failing to comply with the ASTM standards, a jury could conclude that the stairs were not reasonably fit, suitable and safe for their intended purpose.^[68]

Violation of industry standards can therefore be probative of negligence or a product defect, but does not conclusively establish liability.^[69]

Of course, the party opposing reliance on private standards to demonstrate the exercise or lack of reasonableness can challenge the relevance and weight to be given to such standards on cross-examination and rebuttal.^[70] For example, an opponent of reliance on private standards could argue that the private standards at issue are outdated, a potential concern in a rapidly evolving industry like AVs.^[71] Another counter-argument is that the private standards at issue are not sufficiently well-accepted as the standard of care in the industry. A private standard that has been accepted by all companies in an industry will therefore be more persuasive.^[72] Voluntary or private programs that have not received “industry-wide” recognition are entitled to less weight.^[73]

Courts also generally give more weight to voluntary standards adopted by recognized international and national standard-setting bodies such as SAE, IEEE, ISO, ASTM and ANSI than to ad hoc standards created by a group of individual companies.^[74] It is also relevant that the purpose of the private standards was to define and promote product safety.^[75]

One state that is an outlier in the role of private standards is Pennsylvania.^[76] Although Pennsylvania, like other states, allows industry standards to be introduced in negligence cases, its Supreme Court has held that private standards are not admissible as a defense in strict liability cases.^[77] The Court applies the risk-utility test to determine design defects, and the state Supreme Court has held that this risk-utility test evaluates the product, not the manufacturer, and thus information about whether the manufacturer acted reasonably in following an industry standard relates to the manufacturer, not the product, and is not admissible.^[78]

The most devastating potential impact of product liability litigation for a product manufacturer such as an AV manufacturer is the award of substantial (and possibly repeated) punitive damages. Punitive damages are awarded over and above any compensation award when a liable defendant acted with “reckless disregard” or “wanton misconduct.”^[79] Punitive damages not only can impose large economic losses on a manufacturer, but can also create a very negative public expression that the company is a bad actor. As the U.S. Supreme Court has noted, punitive damages awards “serve the same purposes as criminal penalties.”^[80]

Compliance with industry or private standards can provide a strong bulwark against awarding of punitive damages.^[81] As a leading scholar on punitive damages has advised, “[i]n a typical case, compliance with a universal industry custom should be held conclusively to establish good faith against a punitive damages claim.”^[82] The implementation of private standards is one major tool to assure due diligence and signal that firms are taking all reasonable precautions to prevent incidents from occurring.”^[83] Regulatory or private industry standards can help “anchor” the legal factfinder in determining an otherwise uncertain standard of care.^[84]

While the standards for awarding punitive damages vary between states, most states recognize that compliance with standards provides a presumptive defense against punitive damages. In Georgia, for example, “as a general rule, punitive damages are ‘improper where a defendant has adhered’ to the relevant safety regulations and industry standards.”^[85] The 8th Circuit Court of Appeals has stated that where a defendant proves that it has complied with industry standards and custom, such proof “serves to negate conscious disregard and to show that the defendant acted with a nonculpable state of mind.”^[86] Other states likewise hold that compliance with industry standards is evidence against awarding punitive damages.^[87]

Compliance with industry standards is not a complete shield against punitive damages however. “Although the issue of whether or not a manufacturer followed industry standards and complied with state of the art techniques is probative of the wantonness, willfulness, and maliciousness of the manufacturer’s conduct … it does not necessarily follow that abiding by industry standards insulates a manufacturer from punitive damages.”^[88] There are some narrow exceptions to the effects of compliance with private or industry standards in shielding a company from punitive damages. For example, courts have allowed punitive damages to be awarded even where there has been compliance with private standards where there is evidence the manufacturer has actively resisted safer designs based on purely “economic considerations,”^[89] where a company that complied with industry standards nevertheless knew about a remaining risk but failed to warn about it^[90] or remedy the risk,^[91] or where a manufacturer engaged in a deliberate course of conduct that knowingly endangered the victims.^[92] In contrast, a company’s failure to comply with government or industry standards may arguably be evidence of irresponsible conduct warranting punitive damages.^[93]

3.2 Private Standards Should be Relevant to Determining Liability in AV Accident Litigation

In motor vehicle accident litigation, a variety of legal claims and doctrines may apply, but the two primary causes of action are strict liability design defect and negligence. In a design defect claim, the injured plaintiff asserts that the vehicle design was defective, and this defect caused or contributed to the accident and resulting injuries. There are two different tests used to determine whether there is a design defect depending on the state in which the law suit is brought. The “risk-utility” test asks whether there was a reasonably available alternative design choice available which have avoided or lessened the severity of the accident. Here, the legal fact-finder is evaluating the “reasonableness” of the manufacturer’s design. In some states, a design defect is evaluated under a “consumer expectation” test, which is based on the public’s assumptions about the level of safety that consumers would expect reasonable manufacturers to provide. Once again, perfect safety is not expected by consumers, only a reasonable level of safety. An alternative or additional claim that a plaintiff may assert is a negligence claim, which is based on whether a manufacturer acted reasonably by exercising due care.

The common denominator of all these causes of action is that they require some evaluation and determination of the “reasonableness” of the product (design defect) or manufacturer (negligence) by the legal factfinder (i.e., jury and/or judge). This inquiry, unaided by any benchmarks, would be very challenging for judges and juris without technological training.^[94] Private AV safety standards can provide a benchmark for “reasonableness” that courts and litigants will seek.^[95]

The more detail and industry participation in AV safety standards, the more deference those standards would receive by courts. Even if there is not industry consensus or participation by major vehicle standard-setting bodies such as SAE, more informal standards or guidance adopted by less well-recognized industry or other private entities can nevertheless be admissible and relevant in some cases.^[96]

Over and above the specific case sentiments reviewed above, successful litigation strategy involves telling a compelling story.^[97] Experienced litigators know that overall judges and juries want to do what is right, and to achieve a just result. Thus, each side strives to frame its case within a narrative that tells a story that convinces the decision-maker to hold in their favor. An AV manufacturer will tell a story that AVs are a beneficial technology that will save many lives overall, even though it involves complex technology that must be developed cautiously and carefully. The manufacturer who complies with private safety standards will point out that with the lack of regulatory standards, private AV safety standards represent the best available guide to developing and deploying the safest feasible AV technology. Thus, the manufacturer’s compliance with all relevant AV safety standards shows that it is responsible and took the best available due care.

In contrast, a manufacturer who fails to conform to private AV standards will be vulnerable to an attack from plaintiff’s counsel that it failed to take due care. Plaintiff’s counsel will point out, quite effectively in most cases, that private standards represent the best available technical expertise on how to produce the safest possible AVs, and that contrary to the manufacturer in this case, other manufacturers have conformed to these important standards. Thus, the plaintiff will be well-positioned to argue that “the company cut corners and decided to market and sell a more dangerous product that was cheaper to make.”^[98]

These normative arguments will be even more influential in the litigation of punitive damages. The defendant AV manufacturer will have a persuasive case they did not act wantonly if they conformed to the existing industry standards, the best available benchmark of recommended safety practices. Alternatively, a manufacturer that refuses to conform to the safety standards followed by its competitors will run the risk of punitive damages. AVs have many of the features that tend to result in punitive damages when they cause harms, including lay jurors disproportionate fear of “exotic” technologies,^[99] and the phenomenon of “betrayal aversion” in which jurors are particularly unforgiving and harsh towards products that are marketed as improving safety but nevertheless cause harm.^[100] Awareness of these factors are why AV manufacturers are so concerned about liability risks from AVs, particularly punitive damages.^[101] If conformance with private standards help to shield against such liability concerns, manufacturers would be strongly incentivized to conform to such standards.

Given the value of potential standards in the AV accident litigation to help factfinders determine both culpability and damages, courts should admit and give weight to such private standards, especially in an area like this involving highly complex technical systems like AVs that are beyond the understanding of lay judges and jurors, and where no government regulations exist. State legislatures should also adopt legislation to recognize the admissibility and significance of private standards in civil litigation, especially with respect to punitive damages.

There are however a number of limitations and complexities in using private standards as a liability sword or shield in AV litigation, including:

1. How widely adopted does the standard need to be to be admissible? What if only some of the companies in an industry such as AVs have adopted the standard? Does it still represent evidence of industry custom or expectations? If only some companies adopt a standard that seems to improve product safety, don’t we want to give it effect and reward those companies that act responsibly to implement the standard while punishing those companies that refuse to adopt the standard?

2. What if there are competing private standards? For many technologies, there are multiple private standards promulgated by different organizations. This is the case for AVs, but fortunately the different AV private standards tend to complement rather than compete with each other.^[102] For other technologies, however, private standards often compete, and companies must adopt one or the other.^[103] How should courts deal with this? Give weight to any private standard? The most adopted one? The most stringent one?

3. What if a manufacturer only conforms to some but not all of the AV private standards? As noted above, there are now five major private standards for AV safety that fit together like pieces of a jigsaw puzzle.^[104] What if an AV manufacturer only adopts and conforms to one, two, three or four of these available standards? Should the liability shielding effect apply only if the manufacturer adopts all five standards? Or should a pro-rated partial shielding effect be applied based on the percentage of the available standards the manufacturer commits to?

4. How does the judge or jury court know the defendant conformed to standard? Many technology standards are complex, and conformance with such standards is also very technical and complex.^[105] Juries and judges may be challenged in determining whether a particular AV manufacturer is actually conforming to a private standard it claims to follow. Some private standards have third party certifications – but that does not yet exist for any of the AV private standards. That may be a useful step to help courts evaluate conformance with such standards.

5. Do private standards (often driven by industry) represent society’s view of standard of care? Standard-setting bodies for technical topics such as AVs are primarily composed of experts from industry, so there is a risk that the resulting standard could exhibit a pro-industry bias. The experts who participate in these standard-setting bodies usually are committed to using their technical expertise to advance safety (in the case of AV standards), rather than to tilt the outcome of future litigation in favor of their employers.^[106] Moreover, these standard-setting organizations are open to non-industry participants from academics, think tanks, non-governmental organizations and government, and generally operate on a consensus-based procedure, which helps balance any industry bias.^[107] Nonetheless, when a standard appears to be biased in favor of industry interests, the plaintiff attorney can argue, and the judge and jury can consider, whether a particular private standard is too pro-industry.

6. Will the court and jury have access to full standard? Private standards are usually not available for free, but have to be purchased, usually for a couple hundred dollars. The fees to purchase standards are what pays for the staff needed by the standard-setting organizations to coordinate and oversee standards development. These standards are also copyrighted, so they cannot be simply copied and distributed to the judge and jury. Although it is not a lot of money to procure enough copies of a standard to use in a court case, someone will have to provide that funding.^[108]

These and other practical questions, such as ensuring that private standards are sufficiently up to date and that they address the risk at issue in a particular case, will have to be resolved if private standards are going to be an effective shield or sword in private litigation.