Chapter 15 Product Liability

1. Chapter 15Product Liability Brad Curry Mark Medlyn

2. Introduction • 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 )

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

4. Area’s of Product Injuries Three area’s for product injuries • Behavior or knowledge of product user • The environment where it is used • Factory design using safety analysis and safety controls Human behavior hard to control Best recourse is to design products that are idiot proof

5. Design products to reduce liability • Examples: • Lawn mowers with guard chutes • Redesigning car interiors to reduce sharp edges • Safety glass on vehicles that does not shatter into sharp edges

6. Liability Due to Poor Design • 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

7. Product Liability Background • History • Ancient times: sample of grain shipments tested for quality • By 14th century, textiles were sampled • If they passed, then they received a seal

8. 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

9. Product Liability Background • 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

10. Macpherson vs. Buick Motor Car • 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

11. Current Product Safety Law • 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

12. 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

13. Current Product Safety Law • 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

14. Current Product Safety Law • 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

15. Current Product Safety Law • 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

16. Current Product Safety Law • Statutes of repose • Product does not injure person within a period of time • Then there is no liability for the producer

17. http://www.youtube.com/watch?v=QkfVrqas6qI&feature=related

18. Current Product Safety Law • 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:

19. CSPIA :Lead in Children Products • 600 ppm within 180 days • 100 ppm with in 3 years if able • Exemptions for lead that cannot be accessed by consumer by coverings ( not paint) • 300 ppm one year after enactment • Limit now down to 90 ppm for paint down from 600 ppm.

20. Mandatory Testing: 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

21. Tracking labels: Children’s 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

22. Product registration • Requires that consumers have cards or electronic means • To register their purchase • Manufacturer must then keep that registration and notify consumer of any recalls

23. Child Safety Standards • Requires that there be safety standards enacted • Including flammability • Uses existing standards

24. Prohibition on sale of certain products • Products that contain Pthalates and lead • In toys • Child care article (sleepwear) • Clothing • Bedding • Every product intended for children under the age of 12

25. Labeling requirements for Child product • Stipulates type of language to be used • Must be used at point of sale and in advertising

26. Results of Liability Litigation • Financial loss • Award compensates plaintiff for current • And future medical expenses • For pain and suffering • Loss of earning

27. Expert Witnesses • 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

28. Financial Loss • 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

29. Punitive Damages • 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

30. Additional costs • 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

31. 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

32. Product Liability Prevention Program Chair 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

33. 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

34. 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

35. 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

36. 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

37. 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

38. 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

39. 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

40. Warning Labels and Instructions Product safety signs • Type of hazard • Degree of hazard • Consequence of involvement with hazard • How to avoid the hazard

41. 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

42. 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

43. Document Control Maintain records on all of the following • Product development and testing • Audits • Verbal and written communications • Original design data and revisions • Service life • Outside organization acceptance and approvals • Raw material acceptance records

44. 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

45. 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

46. Product Recall Plan • Minimizes costs and potential liability • The decision to recall is based on 3 things • Exposure to personal injury or property damage • Form of communication used to notify users of recall • Will the product be repaired, replaced or reimbursed • Traceability is important to find affected products

47. 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.

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

49. 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