Protecting Your Business from Product Liability Claims

Think your business is protected against product liability claims? Think again.

Are you occasionally a bit insulted by product labels? "Wow, this nighttime sleeping aid may cause drowsiness." "It says here that I shouldn't iron my clothes while I'm wearing them." Condescending or not, business owners have two very good reasons to write seemingly obvious warning labels: customer safety and liability prevention.

Consumer protection advocates will remind us of the importance of product liability law in promoting product safety in America. Our kids are no longer in schools that use asbestos insulation; infant car seats are recalled by their manufacturer when dangerous design flaws are discovered; and products with unexpected negative side-affects (Fen-Phen comes to mind as a recent example) are quickly removed from the market to protect the health of consumers.

Simply stated, product liability law holds manufacturers legally accountable for damages related to their defective products. The damage can be to users, bystanders or to property, and the defect can be in manufacturing, design, or warning and instruction. But what are defective products? Is a product defective if a user is injured while blatantly disregarding warning labels? Is a product design unsafe if a competitor's model is designed safer, or even if a safer design is conceivable? Some recent court decisions answer these questions in the affirmative.

Some things to remember:

• Warning labels alone are no longer adequate

Some recent court decisions have favored the plaintiff in cases where the injured party participated in an activity expressly warned against on a product label. The message: warnings will not protect a manufacturer from any liability caused by its defective product design.

• Keep detailed notes of the design process

Your company should keep records of the design process, paying particular attention to conversations about product safety. An engineer may see in a moment that a proposed safety feature is dangerous or inadequate, but failure to document that moment can favor the plaintiff. A jury may not believe a manufacturer that does not have documentation of the safety features that were proposed, implemented or rejected along the product development path.

• Keep liability questions in mind at each stage of the design process

It is expensive to consider alternative designs and safety devices at every step of the way, but so are product recalls, legal fees and damages. Remember, design defect occurs when there is an inherent flaw or error in a product’s design. That error then renders the product unreasonably dangerous. 

Maintaining Your Product's Reputation 

Product liability lawsuits can diminish your product's reputation. Think of the notorious Phillip Morris tobbacco case from 2002. That ended up costing the company over $28 billion in punitive damages (that amount was later reduced), but moreover, it lessened customer goodwill and faith in the product. 

Hire an Attorney to Help Manage Your Exposure to Product Liability Risk

You might spend a lot of time analyzing your products for safety. Always remember to record your analysis so you can defend it in court, should the need arise. A skilled business and commercial law attorney that specializes in products liability will be able to assist you in mapping out your exposure to risk.