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The Manufacturer's Paradox: Safer Society, More Product Liability
By David H. Wright and Peter Gray, attorneys, Halleland Lewis Nilan & Johnson, PA, Minneapolis, MN
As a society, we have conquered many of the health and safety risks faced by previous generations. Vaccines guard against previously widespread diseases such as smallpox, polio, measles, and diphtheria. New technologies, and increased attention to safety, have greatly reduced product-related injuries and deaths. Even so, we are bombarded with stories of "risks" to our health and well-being.

Media outlets, with the advent of 24-hour news channels, have fostered a heightened awareness of safety issues. But, this does not mean society is less safe today. In fact, the opposite is true. By objective measures, today's Americans and their "First World" counterparts enjoy the highest living standards of any previous society. On average, Americans will live nearly twice as long as their early 20th Century forebears, and in a measure of comfort and security that our great-grandparents scarcely could have imagined. This should be cause for celebration, yet polls reflect that many Americans believe they are worse off today than were their parents before them, and that circumstances in the future will continue to worsen. Consequently, as the average American's life becomes objectively better and safer, many Americans feel subjectively "worse off" and less safe.

And, this mindset contributes to increases in product liability litigation. In Product Safety — More of a Worry, a recent survey of 1,000 adults by Thomson West, confirms that "Americans are getting more wary about product safety."

The survey found that 61 percent of the respondents are "worried or very worried" about product safety, and that over half are "more worried" than they were a year ago. Media reports of recalls have undoubtedly — and rightfully — increased consumer awareness of product safety issues. In the survey, nearly three-fourths of the respondents owned a recalled product, led by automobiles (42 percent), followed by food (27 percent) and toys (15 percent). Yet, this heightened consumer awareness concerning recalls also helps explain, as one recent news story put it, "why the number of product liability lawsuits are skyrocketing."

Indeed, product-related lawsuits more than doubled in the first five years of this century, reaching a record 28,274 in 2006.

More Worries, More Lawsuits
The recent flood of product liability litigation is often premised on a standard of "perfect product safety." But, tort law is not meant to provide societal guarantees of safety. Rather, it is intended to deter objectively unreasonable risks of injury and to compensate for injuries resulting from unreasonable risks of harm. Product liability laws are, in short, intended to provide reasonable protections for consumers and workers, along with practicable standards of conduct for those who produce goods. As a matter of law, commercial product sellers and distributors may be held liable only for harm caused by defective products. In that regard, there are three distinct categories of product defect:

* Manufacturing Defects — when the product departs from its intended design, even if all possible care was exercised.
* Design Defects — when the foreseeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design, and failure to use the alternative design renders the product not reasonably safe.
* Inadequate Instructions or Warnings Defects — when the foreseeable risks of harm posed by the product could have been reduced or avoided by reasonable instructions or warnings, and their omission renders the product not reasonably safe.


Risk Management Primer
In the face of impending product liability lawsuits, leading manufacturers continuously improve their products and processes. They implement quality programs, and some have created their own labs for designing and testing the new products and materials of tomorrow. "And yet, with all of these quality and engineering programs in place, numerous manufacturers continue to be hit by major product liability lawsuits. Some are even put out of business."

In our increasingly litigious society, product manufacturers should practice "preventive medicine" by implementing practical, preventive measures to avoid or reduce risks associated with their products. This involves investigating the safety features of the product, finding out how the product might fail, providing adequate warnings, and fixing problems in the field. It may also involve reporting to governmental agencies with jurisdiction over the type of product involved.

Product manufacturers should consider the following steps, understanding that some steps may not apply to particular products or processes:

* Evaluate product design, including a hazards analysis and risk assessment, and make necessary product modifications.
* Implement reliability testing on new products.
* Provide appropriate warning labels, instructions, and (if needed) material safety data sheets.
* Understand the ramifications of express and implied warranties.
* Review pertinent contracts and agreements.
* Incorporate protections through supplier selection and agreements.
* Monitor marketing and advertising programs.
* Develop integrity procedures for the creation of documents and electronic data.
* Develop a sensible records retention program.
* Establish a system of communication with end users, and ensure appropriate consumer/customer interactions.
* Create ongoing educational programs.
* Monitor pertinent medical and legal developments.
* Anticipate and investigate liability incidents.
* Establish a system for receiving and acting on field reports.
* Establish a recall system, to evaluate and potentially implement a product recall.
* Prepare for claims handling and litigation.


For many companies, the challenge is to not just ensure that these steps occur during a product's creation, but permeate the life cycle of the product. The goals of a risk management program are "accomplished by comprehensive and ongoing risk analysis at each stage of a product's life, including design, production, packaging and storage, distribution, servicing, and disposal, and proper application of the lessons learned in that process."

Turning Back the Tide
One of the great ironies of today is that as our society becomes safer, many of us feel less safe. This is due, in part, to the media-driven phenomenon of constantly reporting threats — serious or otherwise — to our health and well-being. As a result, Americans now perceive threats that were barely noticeable in years past.

Manufacturers need to know where to draw the line when it comes to litigation. Companies with a view to long-term success should fight dubious cases, standing behind the safety and integrity of their products — even if the cost of winning exceeds what the plaintiff might receive from a jury in the worst-case scenario. This sends a message to the plaintiff's bar that the manufacturer is not an easy mark for settlement; and that even if the plaintiff obtains a verdict, the plaintiff's lawyer faces the prospect of losing money on the case. In the end, fewer product liability cases will be filed against a manufacturer who refuses to settle dubious claims, ideally allowing the manufacturer to focus on developing new and improved products to advance our collective well-being.

For more information, contact: Halleland Lewis Nilan & Johnson, 600 U.S. Bank Plaza South, 220 South Sixth Street, Minneapolis, MN 55402-4501 612-338-1838 fax: 612-338-7858 Web: http://www.halleland.com  

 
 
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