Download Due Dilligence: A Legal Perspective

Due Diligence: A Legal
Perspective
Roy F. Viola, Jr., Esq.
McGivney & Kluger, P.C.
Rules of Effective Presentations
Start with humor
and stay current
1.
Never alienate your
audience
2.
Staying current
What is Product Liability
1. Design Defect cases
2. Manufacturing
Defect cases
3. Failure to Warn
cases
Why study New Jersey Law?
Henningsen v. Bloomfield Motors
(1960)
Under modern marketing conditions,
when a manufacturer puts a new
automobile in the stream of trade
and promotes its purchase by the
public, an implied warranty that it is
reasonably suitable for use as such
accompanies it into the hands of the
ultimate purchaser."
Defective Product: N.J. Test
TWO PART TEST:
A. DID CONSUMER HAVE
REASONABLE EXPECTATIONS
CONCERNING A PRODUCTS DESIGN?
B. IF NOT, USE RISK-UTILITY
FORMULA
Whitehead v. St. Joe Lead Co.
Wade-Keeton Prudent-Manufacturer
Test
“A product is not reasonably
safe/duly safe if a defendant with
constructive knowledge of its
dangerous condition would be
negligent in putting it on the market”
Risk-Benefit Analysis
1. Product’s usefulness;
2. Safety aspects (likelihood it will
cause injury and seriousness of
injury);
3. Availability of substitute product;
4. Manufacturer’s ability to eliminate
unsafe character without impairing
its use or making it too expensive;
Risk-Benefit (cont.)
5. User’s ability to avoid danger by
exercise of care in product use;
6. User’s anticipated awareness of
dangers in product and avoidability
based upon:
– a.
– b.
General Public Knowledge, or
Warnings or Instructions;
Risk-Benefit (cont.)
7. Feasibility, on the part of the
manufacturer, of spreading the loss
by setting the price of the product or
carrying liability insurance.
EASY TO UNDERSTAND?
Other Jurisdictions
PA - Riley v Warren Mfg., whether a product is
unreasonably dangerous is a question of law.
Therefore, in answering this question the court is
making a “social policy” decision. In Buongiovanni v.
GMC the court discusses the risk-utility analysis used
in Pennsylvania. In determining whether a plaintiff
has shown a product to be unreasonably dangerous,
the court employs a risk-utility economic analysis in
accordance with social policy. This risk-utility analysis
involves weighing the utility of the product against the
seriousness and likelihood of the injury and the
availability of precautions that, though not foolproof,
might prevent the injury.
Other Jurisdictions
NY - Rainbow v Albert Elia
Building Co. there is a 7
part analysis used to
determine if the product in
question is unreasonably
dangerous.
Other Jurisdictions
Woods v. General Motors
Corp. Under Connecticut law to
be considered unreasonably
dangerous the product must be
dangerous to an extent beyond
that which would be
contemplated by the ordinary
consumer who purchases it, with
the ordinary knowledge common
to the community as to its
Other Jurisdictions
Haas v. United Technologies
Corp. Delaware uses a 7 factor
test to determine whether a
product is unreasonably
dangerous as well. The factors
considered are similar to hose
considered pursuant to NJ and
NY case law.
Conclusion
Thank You
Roy F. Viola, Jr.
McGivney & Kluger, P.C.
23 Vreeland Road
Florham Park, NJ 07932
(973) 805-6670
[email protected]
Rules of Effective Presentations
Start with humor and
stay current
• 1.
Never alienate your
audience
• 2.
Staying current
What is Product Liability
1. Design Defect cases
2. Manufacturing
Defect cases
3. Failure to Warn
cases
Why study New Jersey Law?
Henningsen v. Bloomfield Motors (1960)
Under modern marketing conditions, when
a manufacturer puts a new automobile in
the stream of trade and promotes its
purchase by the public, an implied
warranty that it is reasonably suitable for
use as such accompanies it into the hands
of the ultimate purchaser."
Defective Product: N.J. Test
 TWO
PART TEST:
 A. DID CONSUMER HAVE
REASONABLE EXPECTATIONS
CONCERNING A PRODUCTS DESIGN?
 B. IF NOT, USE RISK-UTILITY
FORMULA
Whitehead v. St. Joe Lead Co.
Wade-Keeton Prudent-Manufacturer Test
 “A product is not reasonably safe/duly
safe if a defendant with constructive
knowledge of its dangerous condition
would be negligent in putting it on the
market”

Risk-Benefit Analysis




1. Product’s usefulness;
2. Safety aspects (likelihood it will cause
injury and seriousness of injury);
3. Availability of substitute product;
4. Manufacturer’s ability to eliminate
unsafe character without impairing its use
or making it too expensive;
Risk-Benefit (cont.)
 5. User’s ability to avoid danger by
exercise of care in product use;
 6. User’s anticipated awareness of
dangers in product and avoidability
based upon:
 a.
 b.
General Public Knowledge, or
Warnings or Instructions;
Risk-Benefit (cont.)
7. Feasibility, on the part of the
manufacturer, of spreading the loss
by setting the price of the product or
carrying liability insurance.
EASY TO UNDERSTAND?
Other Jurisdictions

PA - Riley v Warren Mfg., whether a product is
unreasonably dangerous is a question of law.
Therefore, in answering this question the court is
making a “social policy” decision. In Buongiovanni v.
GMC the court discusses the risk-utility analysis used
in Pennsylvania. In determining whether a plaintiff
has shown a product to be unreasonably dangerous,
the court employs a risk-utility economic analysis in
accordance with social policy. This risk-utility analysis
involves weighing the utility of the product against the
seriousness and likelihood of the injury and the
availability of precautions that, though not foolproof,
might prevent the injury.
Other Jurisdictions

NY - Rainbow v Albert Elia
Building Co. there is a 7
part analysis used to
determine if the product in
question is unreasonably
dangerous.
Other Jurisdictions

Woods v. General Motors Corp. Under
Connecticut law to be considered
unreasonably dangerous the product must
be dangerous to an extent beyond that
which would be contemplated by the
ordinary consumer who purchases it, with
the ordinary knowledge common to the
community as to its characteristics.
Other Jurisdictions

Haas v. United Technologies
Corp. Delaware uses a 7 factor
test to determine whether a
product is unreasonably
dangerous as well. The factors
considered are similar to hose
considered pursuant to NJ and
NY case law.
Conclusion
Thank You
Roy F. Viola, Jr.
McGivney & Kluger, P.C.
23 Vreeland Road
Florham Park, NJ 07932
(973) 805-6670
[email protected]
Due Diligence Defined
And by whom?
Due Diligence Defined
A Random Engineering Website
definition
An OSHA definition
General Definition
New Jersey’s Model Jury Charge
Model Jury Charge
Negligence may be defined as a
failure to exercise in the given
circumstances, that degree of care
for the safety of others, which a
person of ordinary prudence would
exercise under similar circumstances.
Model Jury Charge
A reasonably prudent person is not
meant the most cautious person or
one who was unusually bold but
rather one of reasonable vigilance,
caution and prudence.
2A:58C-4 . No liability if
warning provided
An adequate product warning or
instruction is one that a reasonably
prudent person in the same or similar
circumstances would have provided with
respect to the danger and that
communicates adequate information on
the dangers and safe use of the product,
taking into account the characteristics of,
and the ordinary knowledge common to,
the persons by whom the product is
intended to be used.
How to address standards issue
Include every possible warning in the
world
Recommend to the client that safety
studies be performed well beyond
the expected norm*
– * start looking for new client when
he gets the bill for the study
Set standards well above the
industry norm to CYOA
But I complied with OSHA and ANSI
standards, why am I being sued?
Standard in the Industry
The general custom of the industry,
although evidential as to what is the
reasonable standard in such
industry, does not conclusively
establish the care the defendant was
required to exercise in the
performance of its operations.
Compliance with an industry
standard is not necessarily
conclusive as to the issue of
negligence, and does not, of itself,
absolve the defendant from liability.
The defendant must still exercise
reasonable care under all the
circumstances.
Unfortunately, the converse is not
true. A jury may consider, as
evidence of negligence, violation of
any federal state or local regulation
although it would not constitute
negligence per se.
My Lawnmower
Stop Mower
Disconnect sparkplug
Drain gasoline
Remove bag
Move 500 yards from mower and empty
grass
Reinstall plug
Add gasoline
Mow lawn
2A:58C-4 . No liability if
warning provided
An adequate product warning or
instruction is one that a reasonably
prudent person in the same or similar
circumstances would have provided with
respect to the danger and that
communicates adequate information on
the dangers and safe use of the product,
taking into account the characteristics of,
and the ordinary knowledge common to,
the persons by whom the product is
intended to be used.