Quality Responsibilities in Product Liability

Presented by

Jack B. ReVelle, Ph.D.

ReVelle Solutions, LLCOctober 23, 2006

2

Agenda -I

• Factors Contributing to Growth in Product Liability Litigation

• Company Sources of Defensive Actions• Tips for Limiting Product Liability• Elements of a Product Liability Prevention

System • Liability• Product Liability

3

Agenda - II

• Defensive Actions Against Product Liability Lawsuits

• Research Results

• Sources of Plaintiff & Defense Experts

• Becoming a Product Liability Expert

• Step-by-Step Case Description

• Conclusion

• References

4

Factors Contributing to Growth in Product Liability Litigation

• Based on Injuries Resulting From Use or Exposure to Manufactured Products

• Litigation Growth Due to:Population Explosion of New ProductsErosion of Manufacturers’ Defenses

5

Company Sources of Defensive Actions

• Senior Management• Designers• Manufacturing• Quality• Marketing• Advertising• Customer Service• Documentation

6

Tips for Limiting Product Liability - I

• Company Leadership Should:Visibly Exercise Organizational Power Demonstrate Passion for Company’s

Product Liability Program• Product Liability Program Champion:

Is Best Selected From Quality Organization Should be Obviously DrivenShould Chair Product Liability Program

Steering Committee

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Tips for Limiting Product Liability - II

• Steering Committee MembershipUpper Limit of 3 to 4 Members Source Functions: Quality, Reliability,

Finance, Risk Management, R&D • Steering Committee Objectives

Develop Total Prevention ProgramManage External Insurance Reps &

Assigned Defense Attorneys Handling Company’s Cases

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Tips for Limiting Product Liability - III

• Fully Document Your Company’s Commitment to Product Safety

• Make Certain Every Step in the Production Process Can Be Traced

• Regularly Compile & Review Complaint Files

• Maintain Proper Documentation Throughout Every Product’s Life Cycle

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Tips for Limiting Product Liability - IV

• Develop a Formal, Written Product Recall Procedure

• Have Your Legal Counsel Review Product Literature, Warnings, Etc.

• Review Contractor & Subcontractor Agreements Periodically

10

Elements of a Product Liability Prevention System - I

• Company Policy & Organization

• Design, Research & Development

• Purchasing

• Quality

• Warning Labels & Instructions

• Packaging & Shipping

• Marketing & Sales

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Elements of a Product Liability Prevention System - II

• Field Service, Sales & Repair

• Field Monitoring

• Product Recalls

• Recordkeeping & Documentation

• Complaints, Incidents & Claims

• Legal & Contractual

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Elements of a Product Liability Prevention System – IIIA

• Prevention Program: Internal Training of All Management - Key Elements of Seminar:

Dangers of Deceptive Advertising & Marketing

Understanding Customer AgreementsSelection of Suppliers & SubcontractorsDesign Review Procedures

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Elements of a Product Liability Prevention System - IIIB

• Prevention Program: Internal Training of All Management - Key Elements of Seminar

Performing Hazard AnalysesEffective Warnings & InstructionsReliability Tests & Written ReportsSelection & Maintenance of Important

Documents

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Elements of a Product Liability Prevention System - IIIC

• Prevention Program: Internal training of All Management - Key Elements of Seminar

Recognition of Dangerous DocumentsRecognition & Handling of Potential

Incoming Product Liability Phone CallsHandling Accident InvestigationsHandling Product Recalls

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Liability - I

• Defined as Being Legally Accountable, i.e., Being Legally Obligated by Law to Perform Dependably

• Cases Can be Tried in Either Civil or Criminal Court

• Types of LiabilityOrganizational vs. ProfessionalCivil vs. CriminalProducts

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Liability - II

• Liability Needs to be Distinguished From the Following Concepts:

Culpability: Infers Intent ( Purposely, Knowingly, Recklessly, Negligently)

Capacity: Diminished Capability (Infancy, Intoxication, Insanity)

Responsibility: Presumptions (Volition, Free Will, Competency)

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Product Liability - I

• Legal Principle - A Person or Company That Sells a Product in a Defective Condition When It is Unreasonably Dangerous to the Ordinary User May be Liable for Resulting Property Damage or Physical Injuries

• Exists Even When There is No Proof of Negligence

• Generally Considered a Strict Liability Offense

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Product Liability - II

• Claims Can be Based on:NegligenceStrict Liability (No Proof of Negligence) Breach of Warranty of Fitness

• Types of Product Defects That Incur LiabilityDesign ManufacturingMarketing

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Defensive Actions Against Product Liability Lawsuits

• Reconstruction of Events Leading to Injury:Study of Relevant DocumentsAnalysis of Field Performance InformationPhysical Examination of Pertinent FacilitiesStudy of the Failed Hardware

• Performed by Qualified Experts:Accomplished PromptlyEarly Notification of Insurance Company

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Research Results - I

• Estimated Cost of Product Recalls to Consumer Products Companies is Over $6 Billion a Year PLUS Public Relations Damages & Lost Sales

• Most Safety Defects Could Have Been Prevented During Design & Development

• Companies with Best Practices Have Lower Recall Rates, Better Quality & a Competitive Advantage

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Research Results - II• Product Liability Prevention Process –

Maturity Matrix

Level Phase Description

1 Troubled Key Processes Not in Place

2 Siloed Lack of Coordination Among Functions & Groups

3 Integrated Suboptimal Coordination Among Functions & Groups

4 World Class Optimized Coordination Among Functions & Groups

and Across Enterprise

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Research Results -IIIOverall Recall Rate for Consumer Products Companies

0.69

0.5

0.28

0

0.18375

0.3675

0.55125

0.735

0.91875

1.1025

1.28625

1.47

Siloed Integrated World Class

Company's Product Stewardship Assessment Framework

No.

of R

ecal

ls pe

r Com

pany

(per

$1

Billi

on

in S

ales

)

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Research Results - IV

0

50

100

150

200

250

300

No.

of R

ecal

ls

Consumer Products Safety Recalls

1999 2000 2001

218

248267

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Sources of Plaintiff & Defense Experts

• Where do Attorneys Find Their Experts?Technical Advisory Service for Attorneys

(TASA)EWitnessExpertLawExpertPagesFindExpertsForensisGroupOther Attorneys

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Becoming a Product Liability Expert

• Education

• Experience

• Publications (Articles, Texts & Handbooks)

• Recognitions (Awards, Certifications & Registrations)

• Availability

• Connections to Sources

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Step-by-Step Case Description

• Accident/Incident Description

• Plaintiffs vs. Defendants

• Depositions by Both Sides

• Product & Process Testing

• Expert Reports

• Depositions of Experts on Both Sides

• Trial by Jury vs. Out-of-Court Settlement

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Conclusion

• Need for Product Liability Prevention Presents Quality Professionals with Major Opportunities for Career Enhancement & Progression

• Product Liability Prevention Effectively Limits Both Company & Individual Exposure to Potential Lawsuits

• Consider What Your Role in Product Liability Prevention Should Be

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References - I

• “Elements of a Product Liability Risk Control Program (Manufacturers).” 14 pages. http://cna.com/riskcontrol.

• “Gain a Competitive Edge by Preventing Recalls.” Tavor White & Renata Pomponi. Quality Progress. August 2003. pp.41-49.

• “How a Good Quality Management System Can Limit Lawsuits.” Randall Goodden. Quality Progress. July 2001. pp. 55-59.

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References - II• “Quality and Society.” J.M. Juran. Juran’s

Quality Control Handbook. Fourth Edition. 1988. pp.34.19-34.22.

• “Thorough Defense Planning Against Product Liability Claims.” 8 pages. http://cna.com/riskcontrol.

• “Tips for Limiting Liability.” The Hartford. http://mb.thehartford.com/reduce_risk/risk_tips_product.asp.

• “Understanding the Focus of Product Liability Prevention.” Randall Goodden. http://www.refresher.com/!liability.html.