Exclusive Q&A on Product Liability with Kenneth Ross

What Are The Product Warning Label Requirements? What Needs To Be Considered In Order To Write A Legally Adequate Warning Label?

The law and standards that pertain to warnings are pretty clear and consistent. They require that the warning contain four elements: a description of the hazard, a statement about the probability that the hazard will cause harm, a statement about what injury or damage will occur if the hazard is encountered, and a description of how to avoid the hazard.
 
It is possible to omit one of these elements if the information is obvious to the reader of the label. For example, if you have a chain saw, do you need to warn the user that touching the chain while the saw is running will cause serious injury? Or that the probability of harm is 100% if you touch a running saw chain? In any case, manufacturers need to be careful before they leave out one of the elements.
 
It is impossible before an accident to determine whether a label is legally adequate. If the case goes to trial, the jury gets to decide that question. And the injured party will always say that they didn’t know about the hazard or consequences and therefore the warning was inadequate. It is very easy for the jury to conclude that if the warning were adequate, the accident would not have happened.
 
The warning is related to the product’s design and the instructions that accompany the product. They all should be finished near the same time. U.S. law says that the manufacturer must first design out the hazard or provide some protection on the product. If that can’t be done easily and cost-efficiently, then they can warn and instruct about the hazard. If the jury believes that the product should have been designed more safely and that adding a warning label was less effective (because users may not read or follow the warning), then the jury can say that the product is defective and award money to the injured party. In that case, the legal adequacy of the warning is not even considered. 
 
Has The Recent Rise In Multi-Jurisdictional Litigation And Class Action Litigation Altered The Product Liability Landscape? What Impact Has Globalisation Had On Product Liability Exposure? 

Multi-jurisdictional litigation and class action litigation have been in existence for many years. There have been enormous fights in the courts and in legislatures over how to put limits on some of this litigation. And they have been somewhat successful. However, many individual lawsuits now result in class actions filed on behalf of people who own the allegedly defective product. The theory can be that the value of their product is now diminished because it has been deemed to be dangerous by the government or a jury someplace or even just because lawsuits are being filed. These no-injury class actions have resulted in huge settlements giving money to owners of the products and huge sums of money to the plaintiff’s lawyers. All of this is occurring even though very few, if any, people are being hurt.
 
In addition, over half of the cases being considered to be combined into multi-jurisdictional litigation are product liability and consumer litigation. This combination results in greater efficiencies which encourages plaintiff’s lawyers to try to combine them to increase their chances of a favourable outcome. This results in so-called “bellwether” trials that can have a huge impact on the future of these cases.
 
Another development is the globalization of product liability. In addition to many countries adopting some laws that allow injured parties to sue manufacturers and product sellers for injuries or damage, the governments in many countries have adopted product safety regulatory laws. These laws result in many more reports to the government resulting in recalls. Recalls in a foreign country have an adverse effect on product liability litigation and regulatory compliance in the U.S.
 
With most U.S. government agencies, a manufacturer must report to the U.S. government if they undertake a recall in any foreign country. And, a recall in the U.S. will usually result in a recall in the foreign countries where the product has been sold. The regulators communicate with each other frequently and generally they are aware of recalls anywhere in the world. 
 
What New Challenges Are Posed From Supply Chains Becoming Increasingly Convoluted And Complex? Can You Provide An Example Of Best Practice Case Studies In Supply Chain Risk Management?

Supply chain safety management has always been complex. However, the increase in litigation and regulatory requirements around the world has made it even more difficult.
 
Most products have many components. These components are manufactured by other companies, many of them in a different country. It is difficult for a finished product manufacturer to select and supervise these independent companies who are selling them components or raw materials. While quality control techniques are important and well developed, they usually deal mostly with preventing manufacturing defects. They are less able to detect and prevent design defects and defects in warnings and instructions.
 
In addition, since supply chains can be very long (we refer to them as Tier 1, 2, 3, 4 suppliers), ensuring that your supplier is also buying components and raw materials from responsible companies who have adequate safety and quality procedures in place can be very difficult, if not impossible.
 
Best practices dictate that you use rigorous criteria to qualify your immediate supplier which should include some evidence that they qualify their suppliers. Then you monitor their compliance with your requirements and have some contractual or insurance protection in case your immediate or remote suppliers produce a defective part that results in injuries and litigation or a recall of your product.
 
Also, as a finished product manufacturer, you need to have adequate procedures in place to monitor any changes in the parts you buy and to monitor the quality and safety of such parts. Of course, you must be sure that the finished product you sell complies with all of the requirements and specifications that have been established for that product.
 
Lastly, on the sales and distribution side, you need to sell to entities that do not alter your products and make them unsafe or sell them in a way that could result in injuries or damage. You should also obtain contractual and insurance protection which will protect the manufacturer in case the distributor or retailer does something that creates a safety problem. 

How Are Product Recalls And Product Defects Different?

Product defects in products do not always result in recalls. For example, if the paint colour does not comply with specifications, it is clearly a defect, but not safety related. While no one would expect such a situation to result in a recall, it is possible that the consumer could sue for breach of warranty or contract because of the defect. Since it would not cause any injuries, there would be no product liability risk.
 
The U.S. Consumer Product Safety Commission (“CPSC”) looks to whether the defect has or could result in a “substantial product hazard.” Even if accidents have occurred and people injured, it is possible that the injuries are minor and therefore might not be considered a substantial product hazard. The National Highway Traffic and Safety Administration (NHTSA) requires reports and recalls for safety-related defects that create an unreasonable risk of serious injury or death.
 
Even if recalls are not required by government agencies, there is a common law duty in most U.S. states to warn consumers and product users of hazards in products that the manufacturer discovered in their products after sale. It is a tricky balancing test based on the level of risk and whether the product user will identify the risk before they are injured. 

While No Enterprise Intentionally Sets Out To Manufacture A Hazardous Or Defective Product, Even The Largest And Most Sophisticated Manufacturers Sometimes Fall Foul Of This. How Would You Set About Handling A Product Recall For Your Clients?

There are many guidelines on how to undertake a recall. They are usually specific to a particular type of product such as medical devices, drugs, automobiles, consumer products and industrial products. Therefore it is impossible to come up with the best way to run a recall. Each company needs to evaluate the factors below and develop an appropriate recall program that makes them adequately prepared to perform a recall in the event one is ever necessary.
 
The type of recall or safety notice depends on the type of product, the risk involved, the future probability of harm, the way in which the product was distributed, knowledge of the identity of consumers and how to reach them, and whether the product can be fixed or must be thrown away or returned.
 
If the product is regulated by a government agency, you need to work with that agency to develop and approve a program that they believe adequately deals with the safety issue. For unregulated products (such as industrial machinery), the company must consider the factors described above and develop a program that makes sense for the risk involved. Since there is no government agency to provide guidance, they have more flexibility in designing a program. However, along with this flexibility, comes the risk that it will not be effective and deemed inadequate by some jury. 

What Key Trends Do You Expect To See Over The Coming Year? In An Ideal World What Would You Like To See Implemented Or Changed?

Regulatory issues have become very important and are having a hugely negative effect on the company’s reputation and legal issues such as product liability litigation, shareholder litigation, class actions, and enormous civil and criminal penalties levied by government agencies.
 
The number of lawsuits based on a single accident have diminished over the years as products have gotten safer. However, where a company or an industry has huge pattern problems that result in accidents, government fines, and recalls, these have attracted many plaintiffs’ lawyers because of the huge potential payoff.
 
I don’t see that much can be done about this. The U.S. legal system allows all of these things to happen. What is new is that they are happening to many manufacturers who are allowing it to happen. What needs to change is for manufacturers to be more proactive in trying to anticipate and prevent problems before they occur. Once a problem arises in an entire product line, it will turn into a huge problem even if few people are hurt.
 
Therefore, rather than waiting for the problem to occur and then spending lots of money defending yourself, it is better to spend resources to try to prevent the problem in the first place. The problem with such an approach is that many companies do not believe these problems will happen to them and they are not willing to spend significant resources to prevent a problem they have never had. Unfortunately, with some products, if a problem arises, it is too late to do much about it except to defend the company or settle all of the cases. 

Kenneth Ross is one of the world’s most experienced and well-known lawyers and consultants practicing in the areas of product safety, product liability prevention, and regulatory compliance.  For over 30 years, he has advised U.S. and international manufacturers, product sellers, and the insurance industry on ways to identify, evaluate, minimize and avoid the risk of liability, especially product liability, regulatory liability and contractual liability. This advice is provided during product development as well as after sale.

Ken is a former partner and now Of Counsel to Bowman and Brooke LLP, one of America’s premier product liability defense law firms.
 
Kenneth can be contacted on +1 952.933.1195 or by email at kenrossesq@gmail.com