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Products
Liability
Presented by:
Joe Bails, Jackie Flowers,
Scott Harden
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?
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)
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?
Reasons Manufacturers are
Liable
• Manufacturers are in best position to know:
–
–
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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
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)
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
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
CPSA helps protect against
things like this!
Video clip from Consumer Product Safet commission web site:
http://www.cpsc.gov/mpeg.html
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
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
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
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
Express or Implied
You Decide!
Video clip from Consumer Product Safet commission web site:
http://www.cpsc.gov/mpeg.html
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
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
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
Punitive Damages Example
Ford Motor Company
Ford Pinto
Pictures from MotherJones.com web site:
http://www.motherjones.com/news/feature/1977/09/dowie.html
How to Prevent Products
Liability Lawsuits
1. 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
How to Prevent Products
Liability Lawsuits
2. Education
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•
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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
How to Prevent Products
Liability Lawsuits
3.
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)
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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
How to Prevent Products
Liability Lawsuits
4.
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
How to Prevent Products
Liability Lawsuits
5.
Periodic Production Audits
•
Verify effectiveness of quality control system
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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
How to Prevent Products
Liability Lawsuits
6.
Control of Warranties, Advertisements, Agreements
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Review warranty, advertising literature, dealer agreements,
catalogs, and technical publications
•
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Do not use the word “safe” or “ensures safety”
Legal counsel should analyze materials
•
•
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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
How to Prevent Products
Liability Lawsuits
7.
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
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: http://rinkworks.com/said/warnings.shtml
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: http://rinkworks.com/said/warnings.shtml
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.
How to Prevent Products
Liability Lawsuits
8.
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
How to Prevent Products
Liability Lawsuits
Complaints and Claims – corrective action required by
ISO 9000
10. Retention of Records and Document Control – record
retention required by ISO 9000
11. ISO 9000 Documents – failure to have quality plan may
be proof of negligence
12. Product Recall Plan – traceability is a required by ISO
9000
9.
How to Prevent Products
Liability Lawsuits
13. Risk Criteria – focus preventive efforts where most
needed
14. Standards – employees need to be involved in
development of standards
15. Audits of prevention program, requirement of ISO 9000
16. Customer Service – must report product problems and
any misuse
17. Redress – handling of complaints, returns, claims fairly
with the customer
Questions?