1. Presented by: Joe Bails, Jackie Flowers, Scott Harden
Products Liability
Presented by:
Joe Bails, Jackie Flowers, Scott Harden

2. Let’s Play: “Name that Famous Product Liability Case”
“BBQ on wheels”?
Ford Pinto
“scalded crotch”?
McDonald’s coffee
“rollovers”?
Firestone tires
Can you think of others?

3. Products Liability Facts
Lawsuits are at record numbers
Jury verdicts for injured parties continues to rise
Judgment/settlement values keep rising
Fifty million product accidents/year
Annual cost of $50,000,000,000 (fifty billion)

4. Products Liability Causes
Reasons for product injuries:
Behavior/knowledge of product user
Environment where the product is used
Product design and construction
Which of these can an organization control?
How?

5. Reasons Manufacturers are Liable
Manufacturers are in best position to know:
Safest designs
Safest materials
Best construction methods
Safest modes of use
Products are more complex than ever
Consumers expect products to be designed with safety as a priority

6. Products Liability History
Ancient times, producers of grain were liable, sampling used to determine quality
14th century, sampling and government seals used for verification, economic damages awarded
18th century
caveat emptor, “let the buyer beware”, purchaser was responsible for themselves
legal doctrine of privity of contract, could not directly sue the manufacturer
1916 MacPherson vs. Buick Motor Co. began the end of privity of contract (similar to Firestone lawsuit)
1972, Consumer Product Safety Act (CPSA)

7. Consumer Product Safety Act
Protect public against unreasonable risk of injury
Assists consumers in evaluating safety of products
Develop uniform safety standards
Research/investigate causes and prevention of product safety issues
Maintains injury information clearinghouse
All products used in or around home or school covered by CPSA

8. Items not covered by CPSA but by other Agencies
Cars – NHTSA – National Highway Traffic Safety Administrstion
Boats – U.S. Coast Guard
Airplanes – NTSB – National Transporation Safety Board
Food, Drugs, Cosmetics, Tobacco – FDA - U.S. Food and Drug Administration
Poisons – EPA – U.S. Environmental Protection Agency

9. CPSA helps protect against things like this!
Video clip from Consumer Product Safet commission web site:

10. Product Liability Law
Involves tort law of negligence or strict liability and contract law of sales or warranty resulting from:
Defect in design or manufacturing
Improper service
Breach of warranty
Negligence in marketing due to improper directions, warnings, or advertising
Plaintiff must prove causation – 51% likely that product caused the injury

11. Negligence “Classic” theory of products liability
Manufacturer owes a duty of care to the consumer when designing and constructing products
Consumer must prove manufacturer was careless or lax in its duty and thus produced a defective product

12. Doctrine of Strict Liability
One who sells a product in defective condition is liable for harm caused to user or user’s property
Focus on defective product not careless manufacturer
Injured party must prove:
The product was defective and unreasonably dangerous
The defect was present at the time of manufacture
The defect caused the injury

13. Warranties Controlled by Uniform Commercial Code Two types:
Express warranty – material statement made voluntarily by manufacturer to induce sales
Implied warranty – product is generally fit for the purpose for which it was designed, implied by law and part of every sales contract

14. Express or Implied You Decide!
Video clip from Consumer Product Safet commission web site:

15. Products Liability Defense
Comparative negligence – apportions fault and damages to injured due to negligent use of product, ex. 30% user fault, 70% manufacturer fault, pays 70% of damages
Assumption of risk – injured consumer assumed the risk of injury, ex. Use of chainsaw, involves assumed risk
Misuse – injured misused product, ex. Using chair as a ladder to change lightbulb
Statutes of Repose – useful life defense, usually 8, 10 or 12 years, ex. 20 year old drop cord catches fire

16. Defense Aids Technical experts Records pertaining to:
Product design
Test and inspection results
Customer complaints
Sales history
Sales literature
Use of Quality concepts
Products and systems based on government or industry standards

17. What is there to lose? Monetary awards for: medical expenses
loss of earning capacity
mental pain
punitive damages
Legal expenses
Bad publicity
Competitiveness of product in marketplace
Higher insurance premiums
Cost of product recall
Damage to reputation
Cost of production redesign
Cost of quality efforts for prevention or appraisal

18. Punitive Damages Example Ford Motor Company Ford Pinto
Pictures from MotherJones.com web site:

19. How to Prevent Products Liability Lawsuits
Organization: Formal product safety committee
Safety Engineer or outside consultant as committee chair
Members from legal, design, manufacturing, marketing, quality areas
Everyone must be made aware of committee and chairperson
Direct access to senior management
What Quality Principle does this illustrate?
LEADERSHIP

20. How to Prevent Products Liability Lawsuits
Education
All employees must be made aware of the importance of product safety
Initial use of purchased materials, training sessions, and printed materials
New or transferred employees need to be exposed to same educational effort
Employees need to know how to handle first notifications of product incidents
What Quality Principle does this illustrate?
EMPLOYEE INVOLVEMENT

21. How to Prevent Products Liability Lawsuits
New Product Review
First and least expensive chance to correct product
Safety of product for consumer is paramount in review process
Adopt safety design techniques ( listed on page 416)
Include written description of product by designer
Product review team with no preconceived notions about the use of the product
Review customer requirements and customer’s known use of the product
Design control is a requirement of ISO 9000
What Quality Principle does this illustrate?
CUSTOMER SATISFACTION, EMPLOYEE INVOLVEMENT, CONTINUOUS IMPROVEMENT, PERFORMANCE MEASURES

22. How to Prevent Products Liability Lawsuits
Initial Production Review
Check for defects in first production items not found in prototype
Limited production run for inherently hazardous products to gage risk exposure to customers
Involve more people in this review than design review
Evaluates manufacturing plan (elements listed on page 418)
Should evaluate product safety for potential liability exposure
Process control is a requirement of ISO 9000
What Quality Principle does this illustrate?
CUSTOMER SATISFACTION, EMPLOYEE INVOLVEMENT, CONTINUOUS IMPROVEMENT, PERFORMANCE MEASURES

23. How to Prevent Products Liability Lawsuits
Periodic Production Audits
Verify effectiveness of quality control system
Performed on recently manufactured products that have been through the distribution systems and in customer use for substantial period of time
Inspection and testing is based on customer use
Feedback is sent to the product safety committee
Production audits are a requirement of ISO 9000
What Quality Principle does this illustrate?
PERFORMANCE MEASURES

24. How to Prevent Products Liability Lawsuits
Control of Warranties, Advertisements, Agreements
Review warranty, advertising literature, dealer agreements, catalogs, and technical publications
Do not use the word “safe” or “ensures safety”
Legal counsel should analyze materials
Other items listed on page 419
Feedback is sent to the product safety committee
Production audits are a requirement of ISO 9000
What Quality Principle does this illustrate?
Trick question! None directly, but perhaps it could be PERFORMANCE MEASURES

25. How to Prevent Products Liability Lawsuits
Warning Labels and Instructions
Largest cause of manufacturer’s negligence due to inadequate or nonexistent warnings
A product is not defective when it has a warning that when followed makes the product safe to use
American National Standards Institute issues guidelines for warning labels
Distinction between warnings and instructions, both must be provided
Warnings should not be overdone

26. Real Product Warning Labels Try to name the product
"For use by trained personnel only."
On a can of air freshener
"For external use only!"
On a curling iron.
"For indoor or outdoor use only."
On a string of Christmas lights
"Do not use orally."
On a toilet bowl cleaning brush
From Things People Said, Warning Labels web site:

27. Real Product Warning Labels Try to name the product
"Fragile. Do not drop."
Posted on a Boeing 757
"Do not iron clothes on body."
On packaging for a Rowenta iron
"Do not use intimately."
On a tube of deodorant
"Wearing of this garment does not enable you to fly."
On a child sized Superman costume.
From Things People Said, Warning Labels web site:

28. Group Exercise Get into 3 groups.
Write applicable product warning labels for items given to your group.
Each group will present their items and their labels to the class.
Make up at least one obscure and invalid warning label like those we just saw for one of your items.

29. How to Prevent Products Liability Lawsuits
Subrogation (to put in the place of another)
Refers to raw materials and components
Suppliers need to follow same safety criteria
Should visit suppliers and audit their operation
Communication concerning defective materials from supplier should be made in writing
Purchasing oversight is a requirement of ISO 9000
What Quality Principle does this illustrate?
Supplier Partnership

30. How to Prevent Products Liability Lawsuits
Complaints and Claims – corrective action required by ISO 9000
Retention of Records and Document Control – record retention required by ISO 9000
ISO 9000 Documents – failure to have quality plan may be proof of negligence
Product Recall Plan – traceability is a required by ISO 9000

31. How to Prevent Products Liability Lawsuits
Risk Criteria – focus preventive efforts where most needed
Standards – employees need to be involved in development of standards
Audits of prevention program, requirement of ISO 9000
Customer Service – must report product problems and any misuse
Redress – handling of complaints, returns, claims fairly with the customer

32. Questions?