In 1970, NHTSA proposed a new standard requiring all vehicles to meet a 20 mph fixed barrier crash standard with the eventual goal of meeting a 30 mph fixed barrier crash standard (21). Ford decided to leave the Pinto design unchanged because management believed it was unlikely that the government would adopt the fixed barrier standards and Ford would have incurred a significant cost to redesign the Pinto (22).
Nevertheless, Ford assigned engineers to work on developing ways to meet a 30 mph moving barrier stand. A 30 page study called the “Pricor Report” listed several specific recommendations for how to make Pinto substantially safer from fuel leakage the fire in rear-end crashes (23). These recommendations include an over the axle gas tank, a repositioned spare tire, installation of body rails, a redesigned filler pipe, and an “inner tank” rubber bladder (24).
In August 1973, NHTSA announced a proposal for a 30 mph moving barrier, rear-end fuel system integrity standard, effective September 1976 for all 1977 models. The fuel system integrity standard was also applicable to rollover accidents. In 1977, Standard 301 was fully enacted (25).
In September 1977, NHTSA opened an investigation into the Pinto’s fuel tank system and ran an engineering analysis of the pre 1977 Pinto. The agency found that “the fuel tank’s location and the structural parts around it permitted easy crushing or puncturing of the tank in a crash and the short fuel tank filler pipe could easily pull away from the tank in an accident” (26). Ford management countered that in a 1974 investigation, NHTSA had determined that no action concerning Pinto fuel system integrity was necessary (27).
In February 1978, a California jury handed down a verdict that assessed $125 million in punitive damages against Ford in a case involving the rupture and explosion of the fuel tank on a 1972 Pinto. A judge later reduced punitive damages to $3.5 million (28).
In February 1978, NHTSA conducted experimental crash test of 11 Pintos manufactured from 1971 to 1976. The Pintos were staged at speeds between 30 and 35 mph and they all resulted in significant fuel leakage after the crash with 2 cars caught fire (29). Similar test on GM’s Chevrolet Vega resulted in minimal gasoline leakage (30).
In March 1978, NHTSA notified Ford that the 1976 Pinto had failed a 30 mph front-end barrier test. The test revealed that a front-end impact could cause occasional fuel leakage in the engine compartment, led Ford to a recall of 300,000 Pintos (31).
On May 9, 1978, NHTSA announced that it had made an initial determination that a safety defect existed in the fuel systems of Ford Pintos built between 1971 through 1976. NHTSA claimed that it was aware of 38 cases in which real-end collisions of Pintos had resulted in fuel tank damage, leakage, and/or ensuing fires. Of the 38 cases, there were 27 fatalities among occupants and 24 instances in which individuals suffered nonfatal burns (32).
On June 9, 1978, Ford announced the recall of 1.5 million Pintos to end public concern that had resulted from criticism of its fuel system. Ford was ready to replace the fuel filler pipe and install a polyethylene shield across the front o the fuel tank (33). In response to Ford’s recall, the government closed its investigation without making a final determination (34).
II. CRITICAL LEGAL ISSUES
The legal issues are:
- Is it legal to market and sell products with design defect?
- Is it legal to refute warrantable products?
III. LEGAL RULES
Legal Issue 1 & 2
The law of products liability is found mainly in common law, state judge-made law, and in the Uniform Commercial Code. Article 2 of the UCC deals with the sales of goods and it has been adopted by most states. In it, the most important products liability sections are the implied and express warranties of merchantability in the sales of goods §§ 2-314 and 2-315 (ILL).
Products liability refers to the liability of any or all parties along the chain of manufacture of any product for damage caused by that product. This includes the manufacturer of component parts, at the top of the chain, an assembling manufacturer, the wholesaler, and the retail store owner, at the bottom of the chain. Many states have enacted comprehensive products liability statutes. These statutory provisions can be very diverse such that the United States Department of Commerce has promulgated a Model Uniform Products Liability Act (MUPLA) for voluntary use by the states. There is no federal products liability law (ILL).
Since that time, businesses have operated under an understanding that because they knowingly market products which affect the interests of consumers, they owe a legal duty of caution and prudence to consumers. Since manufacturers may foresee potentially harmful product effects, they are responsible for attempting to minimize harm.
Establishing this legal duty between the manufacturer and the consumer made it possible for plaintiffs to argue the negligent breach of that duty. These principles are now accepted throughout the country and followed by all American courts. Eventually, the concept of "inherently dangerous" products fell into disuse and the concept of negligence was expanded beyond production to include labeling, installation, inspection, and design.
There are three major theories that claimants can use to bring product liability claims: 1, negligence; 2, breach of warranty of fitness; or 3, strict liability (LII).
Negligence, legally it means that the defendant has acted contrary to the way that a prudent person would have in similar circumstances. In negligence cases, the plaintiff must show that the defendant had a duty to exercise reasonable care and failed in that duty, resulting in injury to the plaintiff (LII).
A warranty is an obligation that an article or service sold is as factually stated or legally implied by the seller, and that often provides for a specific remedy such as repair or replacement in the event the article or service fails to meet the warranty. A breach of warranty occurs when the promise is broken and the seller should honor the warranty by making a timely refund, repair, or replacement (Wikipedia).
Unlike negligence, strict liability wrongs do not hinge on whether or not the defendant exercised reasonable care. A defendant is liable when it is shown that the product is defective. If there is a defect in the product that causes harm, he or she will be liable for it. Legally, a “defective” product is defined as any product which is unreasonably dangerous for its intended use (Beasley, 2000; LII). Although products are not defective merely because they are dangerous, the use of the term “unreasonably” is important and indicates that the law recognizes that some products e.g., knives, gas tanks, etc. are inherently dangerous.
Further, product defects involved in strict liability claims can be grouped into three categories: 1, design defects; 2, manufacturing defects; and 3, marketing defects (LII).
Marketing defects are defects in the way that a product is sold e.g., failure to warn consumers of product dangers. Manufacturing defects are “unplanned defects” which occur during the construction or production of the item, usually only a few of many products produced are defective. Design defects, are in a sense, “planned defects” since the defect is inherent in the design of the product and challenges the manufacturers’ own design standards as inadequate and unreasonable (Beasley, 2000; LII).
IV. OBSERVATIONS
The applicable product liability law in the Pinto case is that of a design defect, specifically, a defective fuel system design. While there is some question as to the specific number of persons killed or injured as a result of collision-related fires in Pintos, there is no question that people were injured as a result of their use of the product, Pinto.
Victories in a variety of civil suits as well as charges leveled by consumer groups and the initial findings of the NHTSA gave the strong impression that the Pinto was a defective product. The presumed defect is related to the design of the fuel system and is inherently present in all Pintos with the design. The key legal question in this case, is whether the design led to the creation of an unreasonably dangerous product.
During Pinto’s initial design phase, there were no regulatory standards on fuel system design. The proposed standards initially promulgated by the NHTSA in 1969 called for limitations of fuel leakage in 20-mph moving barrier rear impact collisions. The Pinto was tested to this standard, and modifications were made to ensure that it met this standard. When the NHTSA subsequently proposed much stricter standards, Ford tested the cars and found that they could not meet the standards without significant, costly modifications.
In February 1978, NHTSA conducted experimental crash test of 11 Pintos manufactured from 1971 to 1976. The Pintos were staged at speeds between 30 and 35 mph and they all resulted in significant fuel leakage after the crash with 2 cars caught fire (29). Similar test on GM’s Chevrolet Vega resulted in minimal gasoline leakage (30).
In March 1978, NHTSA notified Ford that the 1976 Pinto had failed a 30 mph front-end barrier test. The test revealed that a front-end impact could cause occasional fuel leakage in the engine compartment, led Ford to a recall of 300,000 Pintos (31).
On May 9, 1978, NHTSA announced that it had made an initial determination that a safety defect existed in the fuel systems of Ford Pintos built between 1971 through 1976. NHTSA claimed that it was aware of 38 cases in which real-end collisions of Pintos had resulted in fuel tank damage, leakage, and/or ensuing fires. Of the 38 cases, there were 27 fatalities among occupants and 24 instances in which individuals suffered nonfatal burns (32).
On June 9, 1978, Ford announced the recall of 1.5 million Pintos to end public concern that had resulted from criticism of its fuel system. Ford was ready to replace the fuel filler pipe and install a polyethylene shield across the front o the fuel tank (33). In response to Ford’s recall, the government closed its investigation without making a final determination (34).
V. CONCLUSIONS
From a legal standpoint, the Pintos manufactured from 1971-76 cannot be labeled as defective products and Ford should not have been found strictly liable for a product design defect. The standards Ford adhered to in designing the product were reasonable at the time.
Although, once standards changed, and once it had been established that the Pintos had a relatively low “flashpoint”, Ford had a legal obligation to warn customers and/or to fix the product. Ford’s 1978 press release made in conjunction with the recall claiming that the Pinto was not unsafe thus constitutes a marketing defect and Ford could be held liable under this theory of product liability. However, since Ford recalled the vehicles, there would be no injuries resulting from this marketing defect and Ford could still not be held liable.
ETHICAL CASE ANALYSIS
I. ISSUES
The ethical issues are:
- Did Ford have an ethical obligation to design a safe fuel system?
- Was it ethical to place a value on human life?
- Was it ethical for Ford to deny the safety risk posed by the Pinto?
II. EVIDENCE
During the 1970s, the US auto industry was under both micro and macro challenges. Ford believed that most of its problems were the result of external forces, not a consequence of its own operational failings or management shortcomings. Even the company’s chairman, Henry Ford, II, lamented that “it’s the mess in which we live.”
Ford blamed the government for conflicting regulations which placed unreasonable burdens on domestic automakers. Ford blamed the imports for pricing pressure and lowered profit margin. Ford blamed the industry watchdogs for unfairly targeting its cars and the media for stirring up public controversy.
This sort of corporate atmosphere seems highly unlikely to cultivate Ford managers’ concern in the welfare of those outside of the corporation, including customers. Even when Ford’s own internal testing revealed that the car was susceptible to fuel leakage.
Assuming $200,000 per death, $67,000 per injury and $1,919 per vehicle, Ford made a cold-blooded calculation that the costs of the modifications at $130 millions far outweighed the dollar value assigned to the 180 burn deaths, 180 serious burn injuries, and 2,100 burned vehicles.
When it needed to find a better set up for the fuel tank that would minimize the possibility of fire, Ford should have delayed production and gone back to the drawing board. They never should have kept going. Their accelerated design process and the limit of 2000 were all about getting the car into the showrooms than releasing a car that was safe for their customers.
Ford knew that people were being killed and injured as a result of the fuel system design of the Pinto. Ford had studied its design problem and determined that there were a number of alternatives which could be deployed to reduce the safety risk. One possible modification would have cost less than $6 per vehicle but Ford decided against making these modifications.
In all likelihood, Ford made a cold-blooded calculation of another sort by assuming that recalling the Pinto would cause irreparable harm to its reputation and adversely affect its competitive position at a time when it desperately needed strong subcompact sales. Knowing that there was a problem and knowing that it could partially “fix” the problem with some relatively inexpensive modifications, Ford continued to maintain in public that its vehicles were safe, or at least as safe as other comparable products on the market. Ford had an ethical duty to warn its customers of the known safety risks with its product. Likewise, once the NHTSA had made its initial determination that the product was defective, Ford had an ethical obligation to acknowledge the problem.
III. ASSUMPTIONS
From a utilitarian perspective, designing a safer fuel system would have resulted in the most happiness and the greatest utility. However, it is clear that Ford's intention was to maximize profit; otherwise, they would have been concerned about the devastating effects that would occur as a result of not modifying the gas tank design and placement.
Although the use of a cost-benefits analysis is not in itself unethical, a cost-benefits analysis could also fit within a utilitarian framework. Since NHTSA itself advocated the use of cost-benefit analyses in the evaluation of safety modifications. However, when the analysis failed to put a premium on human life and emphasized the quantity of repairs vs. the quality of life, Ford exhibited a selfish, egotistic and individualistic behavior attempting to justify the continuation of maximizing self good.
Finally, Ford had an ethical responsibility to the society to start recalling once the danger was apparent. Ford did not consider the stakeholders involved and when they did come into consideration, they were analyzed against profits. Ford’s goal should not have been a race to make the most affordable subcompact car. Instead, it should have been to make the most affordable but safest subcompact.
IV. ETHICAL ALTERNATIVES
A 1971 internal engineering study determined that a $5.80 “rubber bladder” could significantly improve fuel system safety, although there were potential problems with the bladder in very cold or very hot weather. Ford could have begun installing these bladders on cars beginning with the 1972 models, while continuing to work on perfecting the design so that it would function properly at cold and hot temperatures. The direct costs would have been minimal and Ford could have behaved ethically while still adhering to its own cost limitations.
During the period 1973-1977, when it became apparent that the Pinto design was associated with vehicle fires following rear-impact collisions, Ford could have sent out a warning to customers and made an offer to install modifications which would have improved the car’s safety. Ford could have done this while simultaneously pointing out that the car as designed met existing safety standards. While issuing the recall and the admission of safety problems, Ford could have publicly apologized for any deaths or injuries which had resulted from use of its product.
V. JUDGMENT AND RATIONALE
Prior to 1978, Ford had no legal obligation to make improvements on the design of its Pinto’s fuel system since it was not legally a “defective product”. Ethically, however, once the Pinto was found to be associated with fire deaths and injuries, Ford had an obligation to make any reasonable, practical, and cost-effective modification which could improve the safety of system.
It was also ethically obligated to warn customers of the inherent dangers of rear-impact fires in small cars with this type of fuel system design and to offer customers the choice of paying more for increased safety. A Ford education program might well have encouraged a more focused consumer movement to compel industry-wide standards that would have ensured all manufacturers produced safer small vehicles. Ford, which would have done a service to the consumer at large, would also face a level playing field among its competitors.
As a moral musing, it would be interesting to make Ford managers and engineers drive the Pinto, or be on the receiving end of a rear-end collision. Ford’s protracted failure to acknowledge the safety risks in its Pintos is especially troubling from an ethical standpoint. Ford and its managers appear utterly cut off from the real human beings who lived and died in their products. They should be compelled to personally apologize to the victims’ family members for making a terrible decision and a defective product which killed or injured their loved ones.
Notes
Davidson, D. (1984). Managing Product safety: The Ford Pinto. Harvard Business School, 383-129.
(1) Ibid.
(2) Ibid.
(3) Ibid.
(4) Ibid.
(5) Ibid.
(6) Ibid.
(7) Ibid.
(8) Ibid.
(9) Ibid.
(10) Ibid.
(11) Ibid.
(12) Ibid.
(13) Ibid.
(14) Ibid.
(15) Ibid.
(16) Ibid.
(17) Ibid.
(18) Ibid.
(19) Ibid.
(20) Ibid.
(21) Ibid.
(22) Ibid.
(23) Ibid.
(24) Ibid.
(25) Ibid.
(26) Ibid.
(27) Ibid.
(28) Ibid.
(29) Ibid.
(30) Ibid.
(31) Ibid.
(32) Ibid.
(33) Ibid.
(34) Ibid.
Bibliography
Wikipedia. (n.d.) Product Liability. Retrieved on February 3, 2007 from
http://en.wikipedia.org/wiki/Product_liability
Beasley, D.J. (2000). Product liability: manufacturing defects vs. design defects. FindLaw library. Retrieved February 3, 2007, from http://library.lp.findlaw.com/articles/file/00752/003315/title/Subject/topic/Injury
(LII) Legal Information Institute. (n.d.) Products liability law: an overview. Legal Information Institute. Retrieved February 3, 2007, from http://www.law.cornell.edu/wex/index.php/Products_liability
