Is this the case that will rewrite AI laws in products liability? That’s what this author contends will happen in this consolidated case.

In The National Law Review (The AI Reckoning Has Arrived: The Case that Will Rewrite AI Laws in Products Liability, written by Harshita K. Ganesh and available here), the author discusses how a consequential legal development in AI rapidly unfolding in “the corners of the San Francisco’s Superior Court… is something every AI developer, deployer, and corporate counsel needs to be watching with laser focus.”

Specifically, the California Superior Court of San Francisco County entered an order to coordinate twelve cases pending against OpenAI in February of 2026 to the case In re: ChatGPT Product Liability Cases, JCCP No. 5431. The author contends: “This consolidation signals that litigation involving AI harms has graduated from isolated, individual complaints to coordinated, large-scale products litigation. The tobacco playbook. The silica playbook. The asbestos playbook. The opioid playbook. Time to welcome the AI playbook.”

In this case, Plaintiffs allege that ChatGPT is unreasonably dangerous and caused psychological harm by reinforcing delusional beliefs, endorsing suicidal ideation, providing information to decedents about how to harm themselves, and contributing to users’ psychological deterioration. They also allege that ChatGPT has a “sycophantic design” – it’s optimized to please and validate users, which will likely produce catastrophic outcomes especially in vulnerable individuals by telling them what they want to hear instead of what they need to hear – and that OpenAI rushed ChatGPT to market without adequate safety testing and lack of safety features on individuals’ mental health and physical safety.

Novel legal questions at stake include:

• Is a chatbot considered a product or a service?: Traditional product liability law generally applies to products, not services. In a related case involving Character.AI, the court ruled that the chatbot could be treated as a product because the claims focused on how the chatbot was designed. But OpenAI has argued that ChatGPT is a software-based service, not a product. If courts agree with it, then products liability laws won’t apply.
• Does Section 230 protect AI companies?: AI companies are expected to argue that Section 230 of the Communications Decency Act shields them from liability. However, Plaintiffs are increasingly focusing their claims on the design and functionality of AI systems rather than simply on the content they generate. That strategy has already gained traction in litigation involving social media platforms and claims related to addictive product design. So, that argument may not succeed.
• Does the First Amendment protect AI-generated content?: In the Character AI case, the company argued that chatbot responses were protected speech under the First Amendment. While the court acknowledged that users may have First Amendment rights related to receiving information, it stopped short of ruling that AI-generated responses themselves are protected speech. This is a dispute that could eventually reach the US Supreme Court.
• Can traditional design defect rules apply to large language models (LLMs)?: AI developers argue that traditional product defect standards may not fit generative AI systems very well. Unlike physical products, it can be difficult to identify exactly why an LLM produced a specific response. Because AI systems operate through highly complex and probabilistic processes, proving that a particular output resulted from a specific design flaw may be far more challenging than in traditional product liability cases.

Where does discovery fit in all this? As the author states “Discovery will be the real battleground… Coordinated plaintiffs will seek internal safety evaluations, model cards, red-teaming records, product roadmap communications, and any documentation of known risks. The “sycophantic design” allegation suggests that plaintiffs are confident that they will be able to find internal records showing OpenAI knew about these issues and made some deliberate trade offs.”

She also notes: “Companies that can demonstrate robust, documented, iterative safety testing will be in a materially better position than those that cannot. A paper trail will make or break a company.”

We’re already seeing production of different types of ESI in AI cases, with OpenAI being ordered to produce 20 million user chats to The New York Times in their litigation, and – in a ruling last week – another court ruling that prompts generated by an expert to identify materials for review are discoverable under Rule 26 and do not qualify as protected under the parties’ Rule 29 agreement. The ESI sources here promise to be more diverse than ever.

This case – and other AI products liability cases like it – will not only be interesting to watch from a legal perspective, but also from an eDiscovery perspective. Grab your popcorn! 😊

So, what do you think? Is this the case that will rewrite AI laws in products liability? Please share any comments you might have or if you’d like to know more about a particular topic.

Image created using DALL-E 3, using the term “a robot lawyer wearing a suit arguing their case before a robot jury and a robot judge”.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by my employer, my partners or my clients. eDiscovery Today is made available solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Today should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.