Utilizing statutory defenses for potential product liability claims.

Author:Hardy, James S.
 
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Attorneys practicing in the product liability field should be aware of all statutory affirmative defenses to product-related claims and how those defenses inform product manufacturing and marketing, as well as the benefits to clients of early preparation for litigation. This article informs the product liability attorney preparing a client to roll out a new product.

A firm grasp of product liability defenses is essential both in preparing for future claims against the client for product failure or defect and in preparing the product for market in a fashion tailored to minimize potential liability. Accordingly, this article has two focuses. The first focus is on the front end of the product roll out when clients should be advised to expend resources up front to prepare for and reduce the cost of future litigation. The second focus is on the back end of a product's life on the market where familiarity with product liability affirmative defenses benefit a client faced with litigation. The recommendations presented apply to any product roll out, but are particularly pertinent for an inherently dangerous product.

  1. INTRODUCTION (1)

    This article is intended to inform the product liability defense attorney preparing a client to roll out a new product. A firm grasp of product liability defenses is essential both in preparing for future claims against the client for product failure or defect and in preparing the product for market in a fashion tailored to minimize potential liability.

    This article has two distinct focuses. The first focus is on the front end of the product roll out when clients should be advised to expend resources up front to prepare for and reduce the cost of future litigation. Investing resources prior to product roll out also may enable the client to assert an advice of counsel defense in certain jurisdictions to preclude punitive damages.

    The second focus is on the back end of a product's life on the market where familiarity with product liability affirmative defenses benefit a client faced with litigation. This article also includes specific applications to inherently dangerous products because these products present more daunting product liability concerns. (2)

    The recommendations presented in this article apply to any product roll out. These recommendations are especially relevant, however, to the roll out of an inherently dangerous product. Attorneys practicing in this field should be aware of all statutory defenses and how those defenses inform product manufacturing and marketing, as well as the benefits to clients of early preparation for litigation.

  2. ADVISING THE CLIENT PRIOR TO PRODUCT ROLL-OUT

    Identifying potential sources of product liability and minimizing exposure to product liability claims through advising the client prior to entry into the marketplace can be the difference between product success and failure. Highly visible recent cases of product defects illustrate the dangers in products both seemingly benign and inherently dangerous.

    For instance, in 2007 the discovery that lead-based paint was used in plastic toys made for preschool-aged children led to a nationwide recall. (3) The recall involved 967,000 toys of 83 different types. (4) More recently, Wal-Mart recalled about 39,000 key chains due to a risk of lead exposure. (5) The charms on the key chain contained high levels of lead, which is toxic if ingested and can cause adverse health effects. (6) Similarly, Hewlett-Packard recalled approximately 367,000 fax machines in June 2008 because of an internal electrical component failure which could cause overheating of the product, posing a risk of burn or tire. (7) The impact on the manufacturers of the negative press and future litigation connected to the recalls will be substantial.

    Inherently dangerous products, such as high tech self-defense devices, present further exposure issues. In 2007, a 47-year-old Denver real estate agent died when a police officer shot him with a supposedly non-lethal stun gun manufactured by Taser International. (8) Seventy people in the United States died from Taser stun gun shots in 2006 alone. (9) In fact, Taser bas been named a defendant in over 100 cases as of June 2008. (10) The company recently suffered its first litigation defeat, a $6.2 million judgment that sent Taser stock sharply downward. (11) While Taser had emerged from all previous suits without an adverse judgment, (12) its litigation costs alone are surely substantial.

    Other, more pedestrian products have inherently dangerous characteristics that can cause problems. For example, the U.S. Consumer Product Safety Commission recently announced a recall of 9,700 Bosch Hammer Drills, which continued to operate after the trigger had been released, posing a risk of injury to customers. (13) Such product recalls are costly and often are only the first of various escalating costs when product defects arise.

    Whether seemingly benign products such as toys or inherently dangerous products such as stun guns and hammer drills, there are constant reminders of the unforeseen dangers and risks of injury that accompany products when they enter the marketplace. These reminders come in the form of product recalls, post-release government regulation, and litigation.

    Sometimes the inherent dangers of new products are open and obvious. Often, however, those dangers are concealed. Such dangers are difficult to foresee and manufacturers preparing to release novel products into the marketplace confront a great deal of uncertainty. Potential liability for injuries caused by a new product is one of the primary factors affecting a product's profitability. Consequently, extensive client advisement benefits both attorneys and clients.

    Attorneys representing product manufacturers stand in a unique position to help their clients prepare for the possibility of product liability litigation. Clients releasing new products into the marketplace should be prepared for potential product liability claims well before they arise and take all reasonable steps to protect themselves from liability. Although it is impossible to eliminate the possibility of product liability claims, manufacturers should enlist legal counsel to advise them prior to a product's release on how to best limit their exposure. Early advisement is mutually beneficial when properly performed, as it should help clients limit their liability, increase the breadth of the attorney-client engagement, and create a self-perpetuating attorney client relationship.

    Attorneys can help clients guard against excessive and unexpected litigation costs by researching the defenses that clients may assert should litigation arise. Advance knowledge of affirmative defenses will benefit clients in several ways. Pre-release advisement of product liability defenses serves as a client primer to defend against future claims. Clients can prepare the product, its packaging, and the written materials accompanying the product with an eye towards invoking and strengthening future defenses. Then, if claims arise later, clients will already be familiar with the defenses that they may assert and will have a leg up in preparing a quick and effective response. (14) Because a product's market often has a national or worldwide reach in the age of globalization and electronic communication, research must have a wide scope for preparation to be effective.

    Additionally, clients should seek out the advice of counsel prior to a product's release because it may allow clients to raise the "advice of counsel" defense, a complete protection from punitive damages in certain jurisdictions. "The fact that a product liability defendant sought the advice of counsel before acting is relevant to the defendant's knowledge and intent. Thus, exemplary damages have been found to be not recoverable against a defendant who acts in good faith and under the advice of counsel." (15)

    Finally, advising the client prior to a product's release is beneficial for the attorney-client relationship, particularly for the attorney engaged in general litigation practice. Pre-release advisement helps establish an ongoing relationship with clients and familiarity with the client's product such that, when litigation does arise, the attorney is well-positioned to represent the client. Because so many products are vulnerable to claims, early and proper attorney advisement will create business for the product liability litigator down the road.

  3. STATUTORY DEFENSES

    Statutory defenses to product liability claims vary widely from state to state. While some state legislatures have passed thorough statutory schemes in product liability, others rely completely on the state's common law. For clients to understand and make meaningful use of the wide range of defenses available from state to state, it is useful to categorize them and note their jurisdictional applicability. (16)

    For the purposes of this article, we group statutory defenses to product liability claims into two general categories, based on the two most common types of product liability claims: 1) defenses to actions regarding a defect in the product's design and 2) defenses to actions regarding inadequate warnings. These two categories of defenses are then broken down into smaller subgroups reflecting statutory law in the various U.S. jurisdictions.

    We provide a brief description of each subgroup of defenses and present examples from various states that provide a general roadmap of the statutory language the states employ. We follow the descriptions of each defense with practical recommendations that lawyers should make to their clients based upon statutory law. The recommendations that a lawyer makes to a client depend on the client's specific circumstances, the product under consideration, and the timing of the consultation. Certain recommendations make sense in the early stages of product development that will be of little use on the eve of a product's...

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