Product%20Liability

1
Product Liability

• Jacob Bervig
• Donny Moberley
• Steve Staskiewicz

2
Introduction

• 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.

3
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.

4
Introduction Cont.

• Three main reasons for product injuries
• Behavior or knowledge of product user.
• Environment
• Designed poorly, defective.

5
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.

6
History

• 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.

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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

8
History Cont...

• 1916 MacPherson V. Buick
• Buick held negligent by failing to inspect
  defective wheel from supplier.
• Ended privity of contract and buyer beware.

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Product 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.

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Product Safety Laws

• Many states and municipalities have their own
  laws.
• Similar laws
• Refrigerator Safety Act
• Flammable Fabrics Act

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Exempted Products

• Cars
• Boats
• Airplanes
• Food
• Drugs
• Cosmetics
• Tobacco and Poisons.

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Product 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.

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Defenses

• Negligence
• Assumption of risk
• Misuse
• Statutes of Repose (useful life) 8,10, or 12
  years.

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Financial Loss

• Defendant losses more than money.
• Costs
• Recalls, replacements, reputation, production
  delays, quality.

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The Future

• Asbestos, Dalkon shield, and Bendectin grow 4
  each year.
• Synthetic and toxic products.
• Europe adopting strict liability laws.

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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

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Organizational Structure

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

• Legal
• Design
• Manufacturing

• Marketing
• Quality
• Safety engineer

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New-Product Review

• Prototype
• First least expensive
• Consumer safety first
• Function, cost, sales appeal second
• Will product work under conditions that
• Are adverse
• Have been considered abusive
• A plaintiffs attorney will consider foreseeable
• Product Review Team

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Product Review Team

• No preconceived notions about product
• Evaluate products compliance with
• present and foreseeable standards
• Applicable codes, laws, and regulations
• Consumer requirements and anticipated use
• Past injury data

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• 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

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Initial Production Review

• First production items
• Limited production run
• Determine adequacy of factors

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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

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Warning labels/Instructions

• Inadequate/nonexistent negligence
• Engineers are a no go
• Symbols and pictures
• Warning calls attention to danger
• Instructions prescribe procedures

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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

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Retention of Records

• Shipment, operator, machine, time, etc.
• Expected useful life of product plus 18 years.

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Other considerations

• Product-Recall plan
• Customer Service
• Redress

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