LOVE ME TENDERStrategies to Transfer or Avoid Liabilityin Product Claims

Daniel E. TranenPartner

April 27, 2016

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The Highlights of this Webinar

• Why tender in a product liability claim?• How, when and to whom to make a tender?• Strategies for effective tenders (including

insurance).• Ways to respond to, delay and/or defeat

tenders.• A checklist for being prepared for this process.

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What is a Tender?

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Why Tender in a Products Claim?

• Shift focus to responsible party.• Contractual/statutory/common law rights to

do so.• Share/shift risk to other insurers.• Consolidate defense.• Reasons not to tender?

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Bases For Tender Requests

What to look for:• Statutory/common law risk shifting.• Contractual duties – most common.• Via responsible party’s policy of insurance.The key is to make sure to identify each and every tender opportunity and employ them all

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Tender: How, When and To Whom?

• Make the request in writing explaining the basis for the tender.

• Make tender as soon as possible with thought to mounting expenses, but with strategic considerations for timing of tender.

• Focus on parties “upstream” and review all contracts.

• Look for insurance.6

• “The agreement provided…”• Request to “indemnify, defend and hold

harmless”.• “From any and all liabilities, claims, damages

and/or expenses”.• Explain why the tender applies in this case.• Issue deadlines and be prepared to force the

issue!

Language of the Tender

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Typical Product Liability Tenders:Tender From Distributors to Manufacturers

• Generally, manufacturers have a greater exposure. • Pass-through exposure?• State law analysis: At least twenty-five states have

enacted some form of legislative protection to shield non-manufacturing sellers from liability.

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Tender from Product Manufacturers to Component Part Manufacturers

• Where did the defect come from?

• Quality agreements.• Are product

manufacturers “vendors” of products sold by component part manufacturers?

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Case Study: Distributor Tender to Manufacturer

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Insurance and Tenders

• Many insurance policies cover a policyholder’s “insured contracts” under which the policy holder has an obligation to indemnify.

• Other routes to coverage…– Through vendor coverage.– Definition of “who is an insured?”

• In general, an insured indemnity obligation makes an indemnitor’s insurance primary.

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Insurance Tender Strategies

• Tender to both indemnitor and its insurer.• Tendering to indemnitor does not trigger

coverage under indemnitor’s policy.• Insurers take duty to defend more seriously.• Leverage “additional insured” status.• If necessary, force key insurer to file

interpleader.

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Case Study:The Insurance Tender

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Other Insurance Strategies

• Make sure all indemnity agreements are backstopped by insurance.

• Request a copy of the policy (now and later).• If no insurance, review business contract for

insurance language – (you might have a separate claim for breach of contract on top of indemnity claim – which may offer benefits).

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Strategies to Respond to Tenders

• Is the indemnity provision enforceable?• What is the scope of the indemnity provision?• Is the indemnity promise

backstopped by insurance?• Gather all applicable insurance policies and compare

“other insurance” clauses.• Are there benefits to delay?

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Case Study:A Tender Response

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A Checklist to be Prepared for Future Tenders

• Audit your relationships up the supply chain.• Use Quality Agreements (and make certain others do so

up the supply chain).• Ensure that indemnity obligations are backstopped by

insurance.• Understand the insurance that backstops these

agreements.• Audit your relationships down the distribution chain and

make sure your insurance protects you from tenders that may come your way.

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Q&A

Daniel E. Tranen, Esq.PartnerWilson Elser Moskowitz Edelman &

Dicker LLPEdwardsville, IL/St. Louis, MOdaniel.tranen@wilsonelser.com

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LOVE ME TENDER�Strategies to Transfer or Avoid Liability�in Product ClaimsThe Highlights of this WebinarWhat is a Tender? Why Tender in a Products Claim?Bases For Tender RequestsTender: How, When and To Whom?Language of the TenderTypical Product Liability Tenders:�Tender From Distributors to ManufacturersTender from Product Manufacturers to Component Part ManufacturersCase Study: �Distributor Tender to ManufacturerInsurance and TendersInsurance Tender StrategiesCase Study:�The Insurance TenderOther Insurance StrategiesStrategies to Respond to TendersCase Study:�A Tender ResponseA Checklist to be Prepared for Future TendersSlide Number 18