1. Product Liability 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.

7. 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.

9. 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.

10. Product Safety Laws  Many states and municipalities have their own laws.  Similar laws –Refrigerator Safety Act –Flammable Fabrics Act

11. Exempted Products  Cars  Boats  Airplanes  Food  Drugs  Cosmetics  Tobacco and Poisons.

12. 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.

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

14. Financial Loss  Defendant losses more than money.  Costs –Recalls, replacements, reputation, production delays, quality.

15. The Future  Asbestos, Dalkon shield, and Bendectin grow 4% each year.  Synthetic and toxic products.  Europe adopting strict liability laws.

16. 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

17. Organizational Structure  Dependent on size & talents  Specify responsibilities  Necessary authority  Product-safety committee -Legal -Design -Manufacturing -Marketing -Quality -Safety engineer

18. New-Product Review  Prototype  First & least expensive  Consumer safety first –Function, cost, sales appeal second  Will product work under conditions that: 1.Are adverse 2.Have been considered abusive 3.A plaintiff’s attorney will consider foreseeable  Product Review Team

19. Product Review Team  No preconceived notions about product  Evaluate product’s compliance with: 1.present and foreseeable standards 2.Applicable codes, laws, and regulations 3.Consumer requirements and anticipated use 4.Past injury data

20.  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

21. Initial Production Review  First production items  Limited production run  Determine adequacy of factors

22. 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

23. Warning labels/Instructions  Inadequate/nonexistent = negligence  Engineers are a no go  Symbols and pictures  Warning calls attention to danger  Instructions prescribe procedures

24. 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

25. Retention of Records  Shipment, operator, machine, time, etc.  Expected useful life of product plus 18 years.

26. Other considerations…  Product-Recall plan  Customer Service  Redress