Product LiabilityProduct Liability

Jacob BervigJacob Bervig

Donny MoberleyDonny Moberley

Steve StaskiewiczSteve Staskiewicz

IntroductionIntroduction Competition causes premature release

of products. Technical complexity has increased

severity and frequency of injuries. 50 million product accidents a year. Annual cost of $50 billion.

Introduction Cont….Introduction Cont…. Jury verdicts favor injured party. Sympathy vote. Manufacturers try to presume these

costs and pass it on to the customer. Smaller companies forced into

bankruptcy.

Introduction Cont….Introduction Cont…. Three main reasons for product

injuries– Behavior or knowledge of product user.– Environment– Designed poorly, defective.

Introduction Cont….Introduction Cont…. Companies can not totally account for

behavior or knowledge. Safety and quality must be engineered

into the product. Manufacturers are able to see safest

design better than product user.

HistoryHistory Grain producers were held liable for

quality in ancient times. Quality was based on one sample. By fourteenth century textile sampling

was common. Seals and official stamps were used.

History Cont...History Cont... In the fourteenth century there product

lawsuits. By the middle of the eighteenth

century there were two concepts.– Caveat emptor (Let the buyer beware)– Privity of contract

History Cont...History Cont... 1916 MacPherson V. Buick Buick held negligent by failing to

inspect defective wheel from supplier. Ended privity of contract and buyer

beware.

Product Safety LawsProduct Safety Laws Consumer Product Safety Act of 1972. Protect public against unreasonable

injury. Assist in comparing safety of products. Develop uniform safety standards. Promote research and investigate

product safety.

Product Safety LawsProduct Safety Laws Many states and municipalities have

their own laws. Similar laws

– Refrigerator Safety Act– Flammable Fabrics Act

Exempted ProductsExempted Products Cars Boats Airplanes Food Drugs Cosmetics Tobacco and Poisons.

Product Liability LawsProduct Liability Laws Plantiff must prove causation in every

case. 51% likely to have caused the injury. Proving defectiveness is the heart of

most court cases. Warranties help limit liability.

DefensesDefenses Negligence Assumption of risk Misuse Statutes of Repose (useful life) 8,10,

or 12 years.

Financial LossFinancial Loss Defendant losses more than money. Costs

– Recalls, replacements, reputation, production delays, quality.

The FutureThe Future Asbestos, Dalkon shield, and

Bendectin grow 4% each year. Synthetic and toxic products. Europe adopting strict liability laws.

Prevention Program Organization New-Product Review Initial Production Review Periodic Production Audits Control of Warranties, Advertisements,

Agreements, etc. Warning Labels/Instructions Complains/Claims Retention of Records Product Recall Plan

Organizational Structure

Dependent on size & talents Specify responsibilities Necessary authority Product-safety committee

-Legal

-Design

-Manufacturing

-Marketing

-Quality

-Safety engineer

New-Product Review Prototype First & least expensive Consumer safety first

– Function, cost, sales appeal second Will product work under conditions that:

1. Are adverse2. Have been considered abusive3. A plaintiff’s attorney will consider foreseeable

Product Review Team

Product Review Team

No preconceived notions about product

Evaluate product’s compliance with:1. present and foreseeable standards

2. Applicable codes, laws, and regulations

3. Consumer requirements and anticipated use

4. Past injury data

Crushing hazards Shearing hazards Cutting hazards Entanglement haz. Drawing-in hazards Trapping hazards Impact hazards Puncture hazards Abrasion hazards Exposed live part

Thermo hazards Noise hazards Exposure hazards Fire hazards Explosion hazards Unexpected start-

up hazards Electrostatic

exposure

Initial Production Review

First production items

Limited production run

Determine adequacy of factors

Warranties, Advertisements, Agreements

Terms & conditions are limited to statement of merchantability

Legalists analyze all advertising Special warranty provisions? Analysis of dealer distributorship/franchise

agreement of “defective” items Nonconformity (unit) Evaluation of cost problems of warranties

Warning labels/Instructions

Inadequate/nonexistent = negligence Engineers are a no go Symbols and pictures

Warning calls attention to danger

Instructions prescribe procedures

Complaints/Claims

Product safety engineer– Cause of complaint

– Nature & seriousness of complain

– Failure mode

– Age of defect, present when sold?

– Negligence of parties

The quicker the better

Retention of Records

Shipment, operator, machine, time, etc.

Expected useful life of product plus 18 years.

Other considerations…

Product-Recall plan

Customer Service

Redress