Chapter 15 Product Liability

Chapter 15Product Liability

Brad CurryMark Medlyn

Number of product accidents estimated to be

50 million per year Cost of 50 billion dollars Lawsuits filed as a result of faulty design

(Ford Pinto gas tank–a 10.00 repair was turned down for cost )

Introduction

http://www.youtube.com/watch?v=VS8hWQImD9w



Three area’s for product injuries1. Behavior or knowledge of product user2. The environment where it is used3. Factory design using safety analysis and

safety controls

Human behavior hard to control

Best recourse is to design products that are idiot proof

Area’s of Product Injuries

Examples: Lawn mowers with guard chutes Redesigning car interiors to reduce sharp

edges Safety glass on vehicles that does not

shatter into sharp edges

Design products to reduce liability

Lawsuits filed as a result of Faulty design ( Ford Pinto gas tank)– (a

10.00 repair was turned down for cost )

Manufacturing process- a defect in a part Firestone 500 tire which failed

Liability Due to Poor Design

History Ancient times: sample of grain shipments

tested for quality By 14th century, textiles were sampled If they passed, then they received a seal

Product Liability Background

Middle of 18th Century two concepts Caveat emptor (let the buyer beware) Followed Adam Smith “invisible hand” theory Purchaser was to take care of his or her own

interest Under this doctrine, the consumer could not

sue the manufacturer Could only sue the retailer Who then could sue the wholesaler Who then sues the manufacturer


Under this doctrine, the consumer could not sue the manufacturer

Could only sue the retailer Who then could sue the wholesaler Who then sues the manufacturer


This began to change in 1916 Macpherson vs. Buick Motor car Court held that Buick ( rather than the

component manufacturer) was responsible for injuries to plaintiff due to defective wheel

Buick failed to inspect a defective wheel before it was put in the car

Macpherson vs. Buick Motor Car

Product Safety law Consumer Product Safety Commission

Established 1972 Designed to protect public From unreasonable risks and injuries Assist in evaluating safety of products Promote research and investigation into Causes and prevention of accidents,

illnesses and injuries

Current Product Safety Law

Factors juries use to determine product design

is defective and unreasonably dangerous Utility of the product Feasibility of cost of improvements Frequency and severity of injuries Adequacy of warnings Environment in which product is used Consumers reasonable care in using product


Defenses Defendant must prove that product not

responsible for injury Bad judgment (using a chair as a stepstool) Plaintiff's failure to maintain the equipment Improper use of the product by owner Accident caused by alterations of product i.e. removing safety features


Legal theories Comparative negligence: the user did

something wrong.. As a result, the verdict is split….80% fault of

consumer 20% on the product Assumed risk of injuries i.e. bungee jumping

or parachuting Misuse of product by consumer i.e. flying

Cessna 182 into a thunderstorm


Expert Witnesses Used by both sides Must be technically competent in area of

testimony Personal character must be above reproach Most important is that they must be able To communicate with the jurors and Judge


Statutes of repose Product does not injure person within a

period of time Then there is no liability for the producer


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Consumer Product Safety Improvement Act (2008) CERTIFICATION OF COMPLIANCE 1. Identification of the product covered by this certificate: 2. Citation to each CPSC product safety regulation to which this

product is being certified: 3. Identification of the U.S. importer or domestic manufacturer

certifying compliance of the product: 4. Contact information for the individual maintaining records of

test results: 5. Date and place where this product was manufactured: 6. Date and place where this product was tested for compliance

with the regulation(s) cited above: 7. Identification of any third-party laboratory on whose testing

the certificate depends:


1. 600 ppm within 180 days2. 100 ppm with in 3 years if able3. Exemptions for lead that cannot be

accessed by consumer by coverings ( not paint)

4. 300 ppm one year after enactment5. Limit now down to 90 ppm for paint down

from 600 ppm.

CSPIA :Lead in Children Products

Lead paint and total Lead content Full and non full cribs: and pacifiers Small parts Children’s metal jewelry Baby bouncers Products subject to all other children

product rules

Mandatory Testing: Products

One year after law goes into effect Manufactures must place Permanent distinguishing marks/labels that

allows the consumer to know where/when and by whom the

product was manufactured

Tracking labels: Children’s products

Requires that consumers have cards or electronic means

To register their purchase Manufacturer must then keep that

registration and notify consumer of any recalls

Product registration

Requires that there be safety standards enacted

Including flammability Uses existing standards

Child Safety Standards

Products that contain Pthalates and lead1. In toys2. Child care article (sleepwear)3. Clothing4. Bedding5. Every product intended for children under

the age of 12

Prohibition on sale of certain products

Stipulates type of language to be used Must be used at point of sale and in

advertising

Labeling requirements for Child product

Financial loss Award compensates plaintiff for current And future medical expenses For pain and suffering Loss of earning

Results of Liability Litigation

Used by both sides to bolster their argument

Requires that the person who testifies Be technically competent in the area Either through training or education Should be able to communicate well with

the Judge or Jury

Expert Witnesses

Actual vs. Punitive Actual loss is what the Plaintiff ( or his

family)Is out of money for. Can be for wages lost Loss of limbs Death Property that is damaged or lost

Financial Loss

Goes beyond what the actual loss is Very rare and usually only when the Defendant knew the product that is being Manufactured has a high potential for

failure Pinto gas tanks Simple 10.00 brace wasn’t used despite

Engineers saying needed Result was rear impacts caused tank to split Potential for fire and death

Punitive Damages

Increased insurance Cost of recall, replacement or repair of

product Cost of damage to reputation to company Cost of holding back production Cost of increased quality efforts for

prevention or appraisal

Additional costs

Product Liability Prevention Program Program is part of organization structure Product safety committee Members should be from legal, design,

manufacturing, marketing and quality areas Safety engineer should be chair person

Product Liability Prevention ProgramChair person’s responsibility Liaison between insurance and government

regulators Participates in injury cases Maintains education programs Conducts audits Acts as consultant Keeps informed of trends

Safety Engineer Needs a thorough understanding of

products Background in manufacturing Professional and diplomatic Direct access to senior management Respect of everyone in organization Be able to take charge of a project Team player

Components of Prevention Program Education New-Product Review Initial Production Review Periodic Production Audits Control of Warranties, ads, agreements Warning Labels and Instructions Complaints and Claims Records ISO 9000 Documents Product-Recall Plan Subrogation Risk Criteria Standards Audit Customer Service Redress

Education Employees need to be aware of product

safety both internally and externally Train employees on how to handle product-

related incidents Inform employees of laws and lawsuits that

may have an impact on the company

New Product Review Product safety is a design parameter Must be considered first Adopt product safety design techniques Document, Document, Document Have a product review team List all the possible hazards Design control is required for ISO 9000

Initial Production Review and Audits Start with a limited production run Control the distribution The more people involved in evaluating the

product the better Process control is required for ISO 9000 Perform regular audits on all products

Warranties, Advertisements, and Agreements This documentation is legally binding for

organizations Reviews must be performed regularly to

protect the company interest All of these documents can and will be used

in court Evaluate the cost problems of these

documents

Warning Labels and Instructions Largest cause of manufacturer’s negligence

is inadequate warnings Consider the knowledge level of the

average user A product is not defective if it has an

adequate warning that when followed makes the product safe to use

ANSI has established guidelines to follow

Warning Labels and InstructionsProduct safety signs Type of hazard Degree of hazard Consequence of involvement with hazard How to avoid the hazard

Warning Labels and Instructions Warning labels and instructions are not the

same Care should be taken to develop both Overuse of warning will dilute the message

Complaints and Claims Alerts the organization that a change is

needed Complaint or claim should trigger a review

for:◦ Cause◦ Nature and seriousness of injury◦ Failure mode causing situation◦ Was defect present when product was sold◦ Any negligence by the parties involved

Document ControlMaintain records on all of the following1. Product development and testing2. Audits3. Verbal and written communications4. Original design data and revisions5. Service life6. Outside organization acceptance and

approvals7. Raw material acceptance records

Document Control Records provide traceability Records must be protected from loss Records must be maintained over time Record retention procedure is required for

ISO 9000

ISO 9000 Documents Can be used to show that a company is

diligent in design validation and corrective procedures

Can also be used to show that a company is negligent if the company is not following it’s own quality manual

Product Recall Plan Minimizes costs and potential liability The decision to recall is based on 3 things1. Exposure to personal injury or property damage2. Form of communication used to notify users of

recall3. Will the product be repaired, replaced or

reimbursed Traceability is important to find affected

products

Subrogation Suppliers are just as important to the

product liability prevention program Buyers and suppliers should work together

to visit and audit prevention programs Buyer needs to make supplier aware of all

relevant documentation.

Risk Criteria, Standards, Audits Determine what the risk is for each product Involve employees in developing standards Continuously audit for improvement

Customer Service and Redress First line defense against a potential lawsuit Better to make friends than enemies Provide customers with a policy that

addresses their needs in a timely manner Provide repairs quickly and fairly

Chapter 15 Product Liability

Documents

Transcript of Chapter 15 Product Liability