Seven Ways to Avoid Getting Sued for Product Liability
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Holland & Hart LLP attorney Dennis W. Brown shares seven ways for companies to avoid getting sued for product liability or consumer fraud.
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Seven Ways to Avoid Getting Sued for Product Liability
- 1. Seven Ways to Avoid Getting Sued for Product Liability PRESENTED BY: DENNIS W. BROWN, ESQ. HOL LAND AND HART, L LC DBROWN@HOL LANDHART.COM
- 2. DISCLAIMER • This is Not Legal Advice • There is No Attorney-Client Relationship • No Privilege Exists
- 3. Objective of Today’s Talk To help you and your company avoid getting sued for product liability or consumer fraud.
- 4. Face Reality…How Juror’s Think
- 5. The Danger…How Juror’s Think “I think that the manufacturer has a duty to prove that they have TESTED the equipment…and done everything within their reasonable ability to make it safe. [I]f you can find something that they short cut… that’s negligence in my view.” [emphasis added] Source: Persuasion Strategies 2013 National Juror Survey
- 6. Jurors Expect Significant Testing
- 7. Who Can Be Sued? • Manufacturer • Component part manufacturer • Distributor • Retailer/Seller • Installer • Owner/Operator • Maintenance/Repair Person
- 8. Where Can You Be Sued? State Court – State where product was made – State where product was sold – State where Plaintiff lives – State where product was advertised – State where injury occurred Federal Court – If diversity exists Foreign Country
- 9. The Seven Ways to Avoid Getting Sued 1. DESIGN is in accordance with standards 2. MANUFACTURE in accordance with specs 3. WARNINGS, labels & manuals are thorough & clear 4. REPRESENTATIONS must be accurate and truthful 5. COMPLAINTS must be monitored and addressed 6. RECALLS are implemented where appropriate 7. LAWS are followed
- 10. Design Specification – Legal Claim Product design is unreasonably dangerous.
- 11. Design Defect - Protections Follow the Recognized Safety Hierarchy 1. Design Out the Potential Hazard 2. Guard Against the Potential Hazard 3. Warn About the Potential Hazard
- 13. WARNING – USER AND BYSTANDER ALWAYS WEAR SAFETY GOGGLES • Use only to drive and pull common unhardened nails. Any other use, such as striking this tool with or against another striking tool, nail puller, hardened nail, or other hard object or using a chipped hammer, may cause the hammer to chip, possibly resulting in blindness or other serious injury to the user or bystander. Discard hammer immediately if chipped.
- 14. Design Defect – Protections (con’t) • Product design should follow the standards and industry practice
- 15. Design Defect – Protections (con’t) • Foreseeable Misuse must be considered • Monitor accidents reported in trade magazines, trade organizations, blogs
- 16. Design Defect – Protections (con’t) • Subsequent remedial repairs/changes
- 17. Design Defect – Protections (con’t) Lawsuits against outdoor equipment manufacturers alleging design defect – Harness – Helmets – Camp stove
- 18. Manufacturing Defect – Legal Claims Product not manufactured in accordance with design or material specifications.
- 19. Manufacturing Defect - Protections QA Program
- 20. Manufacturing Defect - Protections Quality Vendors
- 21. Manufacturing Defect - Protections Record Keeping
- 22. Warnings, Labels & Manuals- Legal Claims
- 23. Warnings, Labels & Manuals- Claims Hazard should have been designed out or guarded against No warning provided Warning was - insufficient - in wrong location - words not a pictorial - only in English - information overload
- 24. Juror Views When Warnings Are Used
- 25. Juror Views When Safety Instructions not Followed
- 26. Here are some actual labels on consumer goods: • “Do not iron clothes on body” -- Rowenta iron packaging
- 27. • “Do not attempt to stop chain with hands” -- Swedish chain saw
- 29. Warnings, Labels & Manuals- Protections BE CAREFUL Follow Warnings in Standard Information Overload Words v Symbols Colors Languages Printed Word v. CD
- 30. Warnings, Labels & Manuals Lawsuits against outdoor equipment manufacturers or retailers alleging failure to warn: – Rope – Tent – Ski Bindings
- 31. False Representations – Legal Claims Advertising or Promotion or Product Literature Contains – Promotions that • are not 100% verifiable • make promises or guarantees • are incorrect
- 36. False Representations - Protections Representations must be absolutely verifiable Medical claims universally accepted 100% = 100% Marketing, Engineering + Legal must all work together
- 37. Customer Complaints – Legal Claims Defective product Fraud Breach of Warranty Class Actions
- 38. Customer Complaints – Protections To Protect Yourself – Go Where the Plaintiff Attorneys Go to Find Their Cases? • Regulatory Investigations • Enforcement Proceedings • Recalls – Create websites “investigating” companies/products • Disgruntled Customers – web postings – Ripoffreport.com
- 39. Customer Complaints - Protections Where do Plaintiff Attorneys Find Their Cases? • Your website • Materials supplied with the product • Web search for “complaints regarding ________” (insert company or product name)
- 40. Customer Complaints (con’t) Social media & internet postings criticizing outdoor equipment manufacturers – Harness – Ski pole with steel pick – Kayak paddles
- 41. Customer Complaints - Protections Effective customer call-in line
- 42. Customer Complaints - Protections Monitor and Track Customer Complaints
- 43. Customer Complaints - Protections Monitor the CPSC Product Incident Database = http://www.saferproducts.gov
- 44. Meaningful and Effective Warranty
- 45. Keep an Eye on Social Media and Internet Postings
- 46. Customer Complaints – Protections (con’t) Sue the offender: Texas Firm Sues Client For Negative Yelp Review LITIGATION Weekly Alert July 29, 2014
- 47. Recalls – Legal Claims • Voluntary recalls • Involuntary recalls
- 48. Recalls - Protections Proactive Monitor Your Customer Complaints and Claims Work with the regulatory agencies
- 49. Recalls (con’t) Recalls involving outdoor equipment – Camming anchor – Harness – Sea kayak paddle floats – Kayaking helmets
- 50. Follow the Law – Legal Claims Product design, manufacture or sale violated the law
- 51. Follow the Law - Protections Know and follow the law wherever your product is sold – sounds easy enough
- 52. In Closing
- 53. Questions
- 54. Thank you for attending! PLEASE USE THE OR APP TO RATE THIS SESSION
Notes de l'éditeur
- LAWYER EXP lawyer 30 years 20+ years product liability former prosecutor tried 100 +/- jury trials OUTDOOR EXP Avid outdoor person Entire adult life = Rock climber, WW kayaker, rafter, camper, mountaineer OB instructor for 5 years – Minnesota and Colorado Bd Directors – COBS BOEC
- NOT A LAW 101 PRESENTATION See me or Call me if want an overview of our legal system
- A focus group discussion of sports product manufacturers’ duties to design and test product.
- MUST BE ABLE TO DEMONSTRATE EXTENSIVE AND THOROUGH TESTING TESTING = ESSENTIAL GREATER THE RISK, THE MORE THOROUGH THE TESTING SHOULD BE WHO SHOULD TEST? EMPLOYEES v. GROUP REPRESENTATIVE OF USERS? Kid’s golf clubs – owner tested by having his own kids use the clubs
- RETAILER = Depends some state statutes prohibit unless Manufacturer foreign and not subject to US jurisdiction Retailer altered product Retailer knew of potential hazard and did not warn
- INTERNET = ANYWHERE
- WILL THE WARNING BE FOLLOWED? BYSTANDER = SERIOUSLY?
- Compliance with standards and industry practice ANSI, CSA/UL NO STANDARDS → FOLLOW INDUSTRY PRACTICE NO INDUSTRY PRACTICE → DO YOUR BEST DOCUMENT WHY YOU DID WHAT YOU DID TEST MONITOR PERFORMANCE
- Rule 407 of Rules of Evidence – subsequent remedial measures inadmissible Hyjek v. Anthony Industries (K-2 corp), 944 P.2d 1036 (Wash. 1997) – K2 change of binding design (unrelated to lawsuit) was inadmissible to support design defect claim
- Design defect claims against outdoor equipment manufacturers or retailers: Harness: Anaya v. Town Sports International, Inc., 44 A.D.3d 485 (N.Y. App. Div. 2007): Plaintiff established prima facie case for strict product liability based on manufacturer’s (Petzl’s) defective design of rock climbing harness. It was reasonably foreseeable that a climber might attempt to attach the safety line to the gear loop. Triable issues of fact existed regarding whether the defective design and/or the inadequate warnings caused the injuries. York v. Petzl America, Inc., 353 S.W.3d 349 (Ky. Ct. App. 2010): Firefighter sued manufacturer (Petzl) based on a claim of defective design after rappelling harness came open causing him to fall 15 feet. MSJ reversed b/c Q of fact. Camp stove: Wallace v. Parks Corp., 212 A.D.2d 132 (N.Y. App. Div. 1995): Plaintiff brought suit against camp stove manufacturer after stove ignited in her kitchen. The court held that defendants’ summary judgment motion was properly denied. There were questions of fact regarding the design of the stove, including whether the fuel had a dangerously low flash point and whether the container should have had a spring-loaded trigger closing mechanism. Running Shoes: Faryniarz v. Nike, (USDC-SD NY 2002) – Plf claimed laces too long causing him to fall. MSJ denied b/c Q of fact HARNESS = anticipate misuse. Anticipate someone tying rope to gear loop. So, design out problem? guard against it? warn against it? If warn, how ensure warning follows harness?
- QA PROGRAM FEMCO golf shaft “Spot Checks” = Does your company have a “spot check” of its QA personnel or QA practices? Audits = Do you have an outside company do a periodic review of your QA practices? * e.g., every 5 years? * many of you have an outside company conduct a financial audit, what about a QA audit or safety audit? AUDITS Small company, cannot afford outside audit – COBS/BOEC has professionals in industry conduct audit
- QUALITY VENDORS Facilities = Have you visited vendor’s manufacturing facilities? Robertson v Rheem – Ed Golick testify visiting Robertshaw facility Certifications = Requested and reviewed vendors certifications (ANSI certified? UL certification? ISO certification?) Changes = did your vendor change suppliers or materials? Buy cheaper screws (Robertshaw) Perfection drain valve – from brass to plastic Indemnification = do you have an Indemnification Agreement with your vendor? require vendor carry liability insurance? is your company an additional insured on vendor’s policy?
- RECORD KEEPING Can you document and prove your QA practices? RETENTION POLICY = kept documents for “X” years b/c of file drawer storage space Today – computer storage space virtually unlimited
- PLF ATTORNEY’S FAVORITE CLAIM WARNINGS NEVER ENOUGH, NEVER RIGHT IF WARNING EFFECTIVE ≠ ACCIDENT
- When the potential hazard cannot be designed out or guarded against Warning necessary? Hazard open and obvious Foreseeability of hazard or misuse (J&J Baby Oil) Warning effective? Words vs. pictographs How much to say Black and white vs. color (if color, what colors?) Tested with focus group? Warning in proper location? Can product be used w/o reading warning? Label, manual, both? Does the manual get to the end user? Risk Waiver
- STUPID WARNINGS = but you know created because someone did this and then sued
- Failure to warn claims against outdoor equipment manufacturers or retailers: Rope Columbian Rope Co. v. Todd, 631 N.E.2d 941 (Ind. Ct. App. 1994): Tree worker brought action against manufacturer of rope to recover for injuries caused by the rope breaking. The evidence supported the jury verdict of $207,039.36. The rope manufacturer failed to warn the Plaintiff about the effects of knots upon the rope’s ability to withstand dynamic loading. Tent Goehring v. Target, 91 Fed.Appx. 1 (9th Cir. 2004): Warning adequate where writing on the side of tent warned consumer not to use a flame inside of the tent, instructed the consumer to keep all flame and heat sources away from the tent fabric, and warned user not to use an open flame in or near the tent. Retailer of tent discharged its duty to warn customers about the dangers of using a flame inside of the tent. Skis/bindings Salomon North America, Inc. v. Persons, 265 Cal.Rptr. 773 (Cal. App. 1990): Warning adequate where manufacturer warned rental shop that the bindings were incompatible with thermoplastic ski boots. (Accord Lunt v Mt Spokane Skiing Corp, 814 P.2d 1189 (Wash App 1991) – manuf duty to warn satisfied by providing warnings to ski operator) Rafting Service Ferrari v. Gd Canyon Dories, 32 Cal App 4th 248 (1995)): Plaintiff hit head on metal frame in rapid. MSJ affirmed b/c assumption of risk since metal frames std in industry, risk of being thrown around inherent in activity
- FALSE REPRESENTATIONS LEAD TO CLASS ACTION Assert medical benefits that are not verified by respected medical science, e.g., employees/customers claim design ↓ injuries Claims that are absolute, e.g., product is “absolutely safe” Ads that are not 100% accurate, e.g., “Made in USA” Assertions of fact not just advertising “puffery” Be Careful Regarding: Promises, e.g., “designed for rugged terrain” – BUT product never tested for rugged terrain Medical claims or guarantees , e.g., “strengthens body” Puffery v. misleading, e.g., “mace instantaneously incapacitates” Class Actions - consumer protection and deceptive trade practices Cox v Gruma Corp, (USDC-ND Cal 2014 )(class action alleging “all natural” tortilla chips contain GMO corn) Cal. Bus & Prof. Code §17200 – “unfair competition = unlawful, unfair, deceptive busin practice
- [Include examples of cases where companies sued for “Made in USA” etc]
- Jones v. ConAgra (USDC – ND CA 2014) – class action re “all natural” dismissed b/c lack of purchase information or means to ID class
- Regulatory Agencies CPSC FDA various State agencies
- Newton Running – Plf atty reviews Newton’s website and materials threatens to sue unless Newton pays “X”. Newton refuses because settlement with only one customer and no release of a class. Plf atty offers to rewrite Newton’s materials for “X”. Newton refuses because Plf atty refuses to “stand behind his work” if Newton sued.
- Social Media & Internet postings Climbing Harness (Arc’teryx Warp R320): On an equipment review website, a consumer posted a letter that he had sent to a harness manufacturer. The consumer alleged that the protective covering on the leg-loops was sewn on upside down constituting a design defect. This caused the tie-in points to wear through. The consumer knew of two other friends that had the same problem with the same harness. The consumer included the response he received from the manufacturer in his post. Manufacturer sent consumer a new harness because it was under warranty. Consumer posts c/o – did not want a replacement b/c harness is “defective” Return form requested social security # and customer said “no f___ing way” giving manufacturer that info Climbing Harness (Black Diamond Aspect) leg loops came undone with fall. Compared to Petzl Adjama Harness. BD webbing too thin so buckles had too much play Climbing Harness (Petzl Adjama) harness is defective b/c loops not even. Petzl refused to replace b/c not defective Ski pole with stainless steel pick (Black Diamond): Consumer/blogger posted picture of sheared stainless steel pick. Blogger documented other consumers with the same problem, suggesting a defect in the design. A comment on the page directed readers to another website where a second blogger posted about several broken stainless steel crampons from the same manufacturer. Kayak Paddle: Blogger cautioned readers about a design defect on several kayak paddles. The alleged defect was a protruding release button that caused the two halves of the paddle to separate. The paddle would separate when kayakers tried to rest weight on the paddle to get back into the kayak. The blogger noted a persistent pattern of broken paddles. Skis (Black Diamond): ski rep said one ski might be defective so return to BD. Problem, already mounted. Kayak for fishing (Jackson): Horrible design, doesn’t track, people selling after only 2 months. Climbing rope: Posts photos and says new rope fraying – is this normal? (Q. why post on web vs. return to store?) Ice Axe: Spike at bottom bent after climbing in Patagonia. Manufacturer says damage due to intensive use. Customer posts blog saying no way, lost respect for manufacturer for not standing behind product.
- Do you have a system in place to monitor/track? Do you document c/o’s?
- Do you track c/o’s for frequency, patterns, by production lot #? Based on c/o’s – Modify the product design? - Rewrite your warnings and/or user manual * If you have “X” customers have problem, are your instructions inadequate?
- Do you visit CPSC site and monitor for your company, your competitors, by product description?
- Offer repairs, replacement, refund? 90 days? One Year? Lifetime? Is it better in the long run to just refund the money?
- RECALLS ARE SERIOUS BUSINESS IF NOT INVOLVED IN ONE BEFORE – NEED WORK WITH A LAWYER OR SOMEONE VERY EXPERIENCED IN HANDLING RECALLS Monitor recalls – “lessons learned” 8/16/06 – Black Diamond recalls 18,000 “Speed Buckle Harnesses” b/c “harness could be threaded incorrectly” allowing buckles to loosen and climbers slip out of harness 4/18/06 – CCH recalls camming anchor – cables can fail (Q. How does this happen? Proper testing done?) 9/21/04 – Wild Country recalls carabineers – gate can open and break under load (Q. How does this happen? Proper testing done?) 2/27/13 – Liberty Mtn recalls climbing lanyards – can deteriorate and break (Q. How does this happen? Proper testing done?) 2/27/14 – Mammut recalls crevasse rescue device (batch #s 12-12 and 03-13)– pull cord lock cam can fail (Q. How does this happen? Proper testing done?)
- REGULATORY AGENCY – know when and how you must report
- Voluntary Recall examples: CCH, Inc. recalled Mountain Climbing Camming Anchor after it received one report of an anchor cable failing a climber during use. Black Diamond recalled Speed Buckle Climbing Harness: the harness could be threaded incorrectly causing the webbing to easily slip when loaded which could cause climbers to slip out of the harness and fall. NRS recalled Sea Kayak Paddle Floats because the plastic tubes used to inflate the paddle float could break and deflate, posing a drowning hazard to consumers. NRS received five reports of the paddle floats breaking and deflating. WRSI recalled Whitewater Kayaking and Rafting Helmets after receiving reports of ten incidents of chinstrap failures, posing a head injury hazard to consumers. Lawsuit following a recall: Jenish v. Monarch Velo LLC, 05-CV-73648, 2007 U.S. Dist. LEXIS 34120 (May 9, 2007): Plaintiff brought suit against helmet manufacturer after manufacturer voluntarily recalled the helmet through the CSPC. Summary judgment was entered for defendant because plaintiff only relied upon the CSPC recall to prove causation.
- FEDERAL Statutory = no one statute governing product liability Case Law STATE Statutory = Most states have their own product liability law, e.g., Colorado Product Liability Act, C.R.S. § 13-21-401, et. seq Case Law ADVISORY Restatement of Torts - BUT, some courts have adopted US Dept of Commerce has issued a Model Uniform Products Liability Act (MUPLA). Uniform Commercial Code can effect warranties CASE LAW Anaya v. Town Sports Intl., Inc. Misuse foreseeable Warning inadequate Petzl harness Employee operating a rock climbing wall attached safety line to non-weight-bearing gear loop on harness “Since the harness was undoubtedly meant to bear the weight of a climber, it was reasonably foreseeable that a climber might attempt to attach a safety line to various parts thereof and expect those parts to bear his weight” Skull and crossbone warning on gear loop possibly inadequate Flimsy design of gear loop possibly inadequate Possible failure to warn claim & defective design claim
- More than 7 ways to avoid getting sued for Product Liability Waiver/release Resolve a legal claim early Toro goes to site and settles then/there
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