1. ASME C&S Training Module C3 MODULE C - LEGAL SUBMODULES C1. Conflict Of Interest/Code Of Ethics C2. Antitrust C3. Torts C4. Intellectual Property C5. Speaking For The Society

2. ASME C&S Training Module C3 REVISIONS CHANGESLIDEDATE “accreditation” changed to “conformity assessment” “accreditation” changed to “conformity assessment (accreditation and certification) ” Last bullet, first listed item revised. “accreditation” changed to “conformity assessment” and last bulleted item deleted. “accreditation” changed to “conformity assessment” and notes added “accreditation” changed to “product certification” “accreditation” changed to “product certification” in the heading; “An accreditation body” changed to “A certification body”; and Note revised. “accreditation” changed to “product certification” in heading and second listed item revised. First paragraph revised. 3 & Notes, 4, 9, 14, 24 4 Notes 8 Notes 9 Notes 14 Notes 15 15 Notes 16 & Notes 17 Notes 6/16/06

3. C3. Torts

4. ASME C&S Training Module C3Slide 3 OBJECTIVES This submodule will –Describe the potential tort problems that can arise in standards development and conformity assessment activities –Provide guidance in how to avoid these liabilities

5. ASME C&S Training Module C3Slide 4 AGENDA I.What is a Tort? II.Potential Tort Problems in Standards Development III.Potential Tort Problems in Conformity Assessment IV.Potential Tort Problems in the Timely Implementation of New Technology

6. ASME C&S Training Module C3Slide 5 I. WHAT IS A TORT?

7. ASME C&S Training Module C3Slide 6 WHAT IS A TORT? Definition –Civil wrongs recognized as grounds for a lawsuit filed by an injured party Example –“Negligence” resulting in harm to persons or property

8. ASME C&S Training Module C3Slide 7 WHAT IS A TORT? Purpose of tort law –To provide monetary relief for damages incurred –To deter others from committing the same harms Source –Primarily, state court decisions –Some national consensus on issues affecting ASME

9. ASME C&S Training Module C3Slide 8 TORT - POTENTIAL APPLICABILITY Negligent Tort –Defendant’s actions were unreasonably unsafe –Plaintiff must demonstrate that the defendant Owed a duty of care Breached or failed to discharge duty Breach of duty was direct or proximate cause of injury to plaintiff’s person or property

10. ASME C&S Training Module C3Slide 9 ASME AND TORT LAW Source of liability –Fostering reliance creates a duty to use reasonable care Activities creating potential problems –Promulgating voluntary codes and standards –Administering conformity assessment programs

11. ASME C&S Training Module C3Slide 10 II. POTENTIAL TORT PROBLEMS IN STANDARDS DEVELOPMENT

12. ASME C&S Training Module C3Slide 11 NEGLIGENT STANDARDS DEVELOPMENT Party must –Demonstrate a failure to exercise reasonable care –Demonstrate this failure increased the risk of harm

13. ASME C&S Training Module C3Slide 12 NEGLIGENT STANDARDS DEVELOPMENT Potential applicability –Adoption of a standard could be held to constitute approval of an “unsafe” level of safety –Especially likely when manufacturers, regulators, insurers and users rely on the standard –Standard of care Higher standard for a professional than for “reasonable person” Conduct judged by what a “reasonable engineer” would have done

14. ASME C&S Training Module C3Slide 13 AVOIDING LIABILITY Guidelines –Members must exercise reasonable care by Carefully weighing all views Using their best professional judgment –Objective, documented technical basis for the standard or code

15. ASME C&S Training Module C3Slide 14 III. POTENTIAL TORT PROBLEMS IN CONFORMITY ASSESSMENT

16. ASME C&S Training Module C3Slide 15 NEGLIGENT MISREPRESENTATION IN CONNECTION WITH ASME PRODUCT CERTIFICATION Party must demonstrate –Either that there was a failure to exercise reasonable care in ascertaining whether a stamp was to be issued –Or that inadequate care was taken in overseeing the use of the stamp

17. ASME C&S Training Module C3Slide 16 Issues –The presence of an ASME symbol may be misinterpreted as a ASME’s representation that the stamped item meets the ASME standard. –The actual certification of a product’s compliance is made by the ASME-authorized manufacturer. –Misinterpretation is likely where others rely on the stamp as an assurance of code compliance. NEGLIGENT MISREPRESENTATION IN CONNECTION WITH ASME PRODUCT CERTIFICATION

18. ASME C&S Training Module C3Slide 17 AVOIDING LIABILITY Guidelines –Reviews and surveys must be carried out by competent and qualified personnel. –ASME must act promptly, within the limits of due process, upon the receipt of a report of non- conformance Curtail Code Symbol use “Quarantine” stamped products

19. ASME C&S Training Module C3Slide 18 IV. POTENTIAL TORT PROBLEMS IN THE TIMELY IMPLEMENTATION OF NEW TECHNOLOGY

20. ASME C&S Training Module C3Slide 19 TIMELY IMPLEMENTATION OF NEW TECHNOLOGY Potential liability –Exists where new safety-enhancing technology is introduced but the consensus process delays a revision to the standard –New Jersey Supreme Court’s decision in Snyder vs. American Association of Blood Banks (cont’d)

21. ASME C&S Training Module C3Slide 20 TIMELY IMPLEMENTATION OF NEW TECHNOLOGY Potential liability (cont’d) –Suit against the National Spa and Pool Institute NSPI is a trade organization NSPI failed to change a standard

22. ASME C&S Training Module C3Slide 21 AVOIDING LIABILITY Guidelines –Take advantage of advances in communication technology –Streamline the standards development process

23. ASME C&S Training Module C3Slide 22 POP QUIZ #1 Name three “Do’s” that will help avoid tort liability when developing standards or running an accreditation program. 1. __________________________________ 2. __________________________________ 3. __________________________________

24. ASME C&S Training Module C3Slide 23 CLOSING REMARKS Things to keep in mind –Operation of standards development process and accreditation programs involves risk –Constant vigilance is required on the part of all individuals involved in the process –Direct questions to ASME officers or staff

25. ASME C&S Training Module C3Slide 24 SUMMARY I.What is a Tort? II.Potential Tort Problems in Standards Development III.Potential Tort Problems in Conformity Assessment IV.Potential Tort Problems in the Timely Implementation of New Technology

26. ASME C&S Training Module C3Slide 25 Legal Implications of Codes and Standards Activities: “A Guide to Tort Law Compliance for ASME Volunteer and Staff Members” adopted by Codes and Standards Board of Directors March 23, 1982 REFERENCES