Products Liability & the Middle Market


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  • A way of evaluating an entity’s Product Liability Exposures/Hazards to ensure that effective controls are in place to minimize loss potentials. Tailor this program to fit the need since our ‘target’ manufacturers may not require a complete claim defense program as outlined here. Medium to Heavy manufacturers would require the whole program but this is not our target market. Objectives: 1. Assist management in developing a program to accomplish this. 2. Improve availability and completeness of records for claim defense. 3. Establish and maintain lines of communication within management and between management and Nationwide/Allied staff.
  • #9 - I see this slide as representing the increase in verdicts in the Products Liability arena. The percentage change from 1997-1999 and 2002-2003 is quite large. Tort Costs – Tillinghast-Towers Perrin’s “2008 Update on US Tort Cost,” is its 12 th annual study highlighting trends and findings on the cost of the US tort system. The study found that tort costs rose by 2.1% in 2007, compared with a 5.5% decline in 2006. The 2.1% increase is less that the year’s overall growth of 4.8%, meaning that the ratio of tort costs to gross domestic product grew smaller in 2007, as it had in the three previous years as well. The shrinking ratio reflects, to some extent, moderating costs in personal lines of insurance, where there has been a lowering in the number of auto accident claims, and in commercial lines, which has benefited from lower asbestos-related costs over the past few years. The study predicts annual torts costs will increase by about 4.0% in 2008 and 5% in 2009 and 2010. It identifies the number of issues that affected tort costs in 2008 and may continue to do so in the coming years. They include gasoline prices (affecting miles driven), the credit crunch (causing an increase in shareholder lawsuits, for example) medical malpractice claims, employment practices liability claims, restrictions on products liability suits and the potential shift in the administration in Congress.
  • Safety and Loss Prevention Sound safety and loss prevention practices are a company’s first line of defense and must keep pace with emergent threats. Loss prevention practices come into play even before a company transacts business. For instance, importers of foreign goods must weigh the potential cost savings gained from foreign labor and raw materials, less stringent safety standards and reduced governmental oversight against the corresponding risk of potentially faulty or defective products or product components. Their reputation, recall expenses, revenue and litigation costs are all at stake. In the courtroom, plaintiffs can be expected to assert novel theories of liability and damages, including costly medical monitoring programs and special and/or exemplary damages. Even one adverse verdict or large class action settlement can negate any hard won cost savings associated with purchasing abroad. Contractual Arrangements Potential liability must be contemplated in contractual arrangements. For example, U.S. manufacturers, distributors and retailers that deal with foreign suppliers should negotiate detailed contracts which clearly delineate specifications on issues such as responsibility for recall costs. Whether the remedy includes all costs associated with a recall or merely replacement of defective component parts must be assessed. Specific indemnity and hold-harmless provisions should be included in a contract in case litigation ensues. Even if a defense is offered, manufacturers and retailers must consider whether they are willing to cede control of their defense to a foreign supplier or whether and to what degree they would maintain control of their own defense. Given the likely involvement of insurance, manufacturers and retailers should require that the supplier’s insurer be U.S.-based and financially capable of responding to a potentially large number of severe liability lawsuits and to provide additional insured and vendors’ coverage. Jurisdictional considerations should be carefully evaluated within the contractual framework, wherever possible. U.S.-based individuals and companies often find it impossible to win damages or other legal redress when forced to litigate abroad. In some countries, for example, targets of lawsuits are often companies that are partly owned by the government or aligned with regional governors whose influence may outweigh legal considerations. A foreign company’s agreement to jurisdiction in the U.S. can and should be sought. Contracts must also contemplate safety issues. For example, quality assurance testing and certification should be addressed within suppliers’ contracts. Specific remedies and damage provisions should be included. Finally, contracts should reflect the foreign manufacturer’s agreement to cooperate with its domestic customer in all aspects of any pending lawsuit or governmental investigation. Similarly, for those involved in food supply, prudent risk management suggests carefully negotiated contract terms, including indemnity and hold harmless clauses, choice of law and forum selection, quality assurance and specific remedy and damage provisions, among other considerations.
  • A products LC - CDP must have management’s active support. Management must adopt and maintain a policy of producing the safest product possible, and must inform its staff of its intent through a positive and realistic statement of policy. The statement should be simple, and reflect management’s attitude. Insured’s should provide an Org chart to identify key decision makers and “where the buck stops”.
  • Management should establish a Products LC – Claims Defense Committee to represent the various corporate line and staff functions with play an important part of this program. It should become involved with accident reports, test results, new products, complaints and other information pertaining to product quality or safety. The committee, with active management support, provides a strong centralized authority for the programs implementation and establishes well-defined channels of communication within the organization. The committee will be small on accounts where each person has more than one area of responsibility. For a very small shop, the committee may consist of only one or two (owners/partners/supervisors) who are responsible for all functions. For large formal committees, written documentation of activities would be expected.
  • Management should appoint a coordinator. The coordinator, as the representative of management, must have authority to cut across lines to insure that each line and staff function continues to fulfill its respective role in the corporate program. Whether or not there is a committee, the coordinator is the key individual to keep the lines of communication open and moving between the various departments. It is the coordinators responsibility to see that the program is working properly and to measure the results. Where there is no committee, the coordinator has the added function of working directly with the areas or departments noted in the preceding section. The PL coordinator is responsible to implement mechanisms, which may cut across lines of authority, designed to handle the possibility of the necessity of product recall or post sale safety improvements. Product Recall – Voluntary or Mandatory: Consumer Products Motor Vehicles Aircraft Food Drugs Medical Equipment Recalls Done To: Increase Product Safety Decrease Chance of Loss/Injury Enhance Company’s Image/Reputation Upgrade to Meet New Safety Regulations – Long Life Products Maintain Product Liability Insurance Improve Defense for Future Claims Essential Elements: Management Support and Direction Traceability Critical Part ID Critical Records Decision Making Performance Audit
  • Defectiveness is the most important factor in determining strict liability. According to the warranty theory, a product is defective if it is not reasonably fit for the ordinary purpose for which it is sold and used. Under the tort theory, a product is defective if it presents a condition not contemplated by the consumer that is unreasonably dangerous to them. In most cases, defectiveness can be traced back to the manufacturers engineering, research and design personnel. Therefore, it is important that these persons be qualified for their work. Although engineering personnel are primarily concerned with the function ability of a product, they must be equally concerned with the safe use of the product by the consumer. An alleged defective design by a claimant means that the product was not as safe as it should have been or could have been. The importance of safety considerations and documentation in prototype development cannot be overstressed. Safety must be considered in development. Alternative designs considered and rejected should be documented. Therefore, when designing a product engineering personnel should consider the following: 1. Is the product fit for its reasonably foreseeable uses? Have uses been researched through testing programs? 2. Has the product been designed so as not to cause accidents? Are adequate safeguards built into the product? 3. Has the product been designed to minimize danger from the product when involved in an accident? 4. Has product misuse been considered in the design? 5. Have environmental conditions been considered? 6. Is the product reliable? Has design or testing confirmed common life expectancy of all essential components and parts? 7. Does the product conform or surpass established standards? 8. Is the product designed to keep abreast of latest scientific knowledge? 9. When a product’s dangerous qualities are neither observable nor commonly known, have warning been incorporated? Incomplete warnings render a product legally defective. 10. Has the product’s ordinary wear and tear been considered? 11. Are installation, operating and maintenance instructions complete and easily understood? The engineering department must maintain records showing why an existing product design was accepted or another rejected.
  • Should Be: Explicit – Simple – Clear – Understandable - In Multiple Languages Good Product Manuals Assembly – Correct/Safe Methods No Substitution of Parts Warnings – No Modifications or Latent Hazards Describe Limitations Stress Dangers of Not Following Instructions Trouble Shooting Procedures ID Safety Precautions Recommend Antidotes Maintenance Procedures and Frequency Consequences of Misuse All Departments Contribute to Manual Reviewed by Legal Counsel Product Manuals – Our greatest concern is with the product manuals that are issued with the product and provide the consumer with the data necessary to assure safe product operation. They include parts lists, and assembly, installation, operation, maintenance and service instructions. The instructions must be as explicit as possible and written in simple, clear, understandable language. These manuals must do the following: Highlight correct and safe methods for assembling the product. Warn that parts supplied must be used for the assembly and that substitutions are dangerous. Warn against modification of the product. Describe the products limitations. Warn of latent hazards to the user. Stress the danger in not following the printed procedures and instructions. Clearly define trouble-shooting procedures and mention appropriate safety precautions. Recommend antidotes, when applicable. Specify maintenance procedures and frequency. Warn against using unauthorized parts or materials or repairs. Stress the consequences of misuse. Each department involved with a product should contribute information to the manuals to assure completeness and accuracy, and to guard against misstatements. Finally, the manuals should be reviewed by legal counsel familiar with products liability.
  • Type of Quality Control Program (QCP) – Varies with: Size of Facility Type of Product Resources Number of Plants Areas/Departments Included in Quality Control Programs R&D Purchasing Service Production Inspection Test Engineer/Design Suppliers Instrumentation Process Control Planning for Manufacture Sales/Marketing (discussion cont on next slide)
  • The Engineering Department is the "first line of defense" against losses, since the best control technique is to design a safe product. The most important information to obtain for the survey includes: An explanation of how the product works and its intended use - Standards used for developing the product - Advantages over competitive products - Data on research and tests performed - Methods of mitigating foreseeable hazards - Certification tests performed by impartial organizations. Records on all of these items should be maintained in an engineering notebook or the equivalent. 3. Supplier Quality – Conforms to Specs Testing – In House/External - Certification of Materials - COI’s – Audits - Inspections of Suppliers Plants 4. Manufacturing Quality - Instructions Component List – Drawings 5. Process Control – Processes Change Characteristics of Product 6. Calibration of Measuring Equipment – To Standards/Standards Review Committee - Adjust, Replace, Repair Before Becomes Inaccurate - ID/Serialize - Schedule for Calibration - Documentation 7. Sample Inspection – 100% - Feasible? Costly, Timely (random, batch, sampling #) 8. Non-Conforming Items – ID – Label/Tag – Segregate - Disposition – Rework, dispose, sell as is - Documentation 9. Error/Analysis and Corrective Action - Follow-Up on Non-Conforming Goods - Why Did Defect Occur - Implement Corrective Actions - Analyze Rejection Rate 10. Preservation, Packaging, Shipping – Conforms to Packing Order - Packed to Prevent Damage - Warnings Provided/MSDS/Caution Notes/Symbols - Special Instructions - Parts List, Assembly, Installation, Operation Manual 11. Records – On Everything – Photographs - QC – Test/Inspection Sheets - Product ID - Change Data - Shipping Information
  • Packaging and shipping is the last line of management control before the market place and it often get the least attention. Although considerable time and effort are taken to design and manufacture a safe product, and prepare proper technical and legally suitable manuals, the shipping department may ‘blow it’ by failing to properly preserve and package the product. Packaging and Shipping involves getting the completed product from the producer to the customer without damage, in the time specified, and as economically as possible. It further involves assuring that the product being shipped conforms to the customer’s purchase order, is complete with all parts, and that the parts list, and the assembly, installation, operation, maintenance and service manual are included. Of equal importance are the correct address, special shipping and handling instructions, and adequate warnings, and caution notes and symbols on the package exterior. The packaging and shipping program should include standards and personnel training.
  • Labeling and instructions must be an integral part of any complete Products Liability LC and CDP. Manufacturers must warn purchases and other contemplated users of a product’s dangerous characteristics. The most common means is labeling. In many instances, labeling must comply with one or more Federal or State regulations, such as the Pure Food and Drug Act and Flammable Fabrics Act. If the product incorporates hazardous properties, complete and conspicuous warnings must be given on the label, and antidotes for drugs and chemicals should be included. Occasionally, the very function of the product precludes installation of safety devices. In this situation, it should be featured on the label. The basic requirements noted above for labeling also apply to all instructions supplied by the manufacture. Incomplete, inadequate or poorly worded instructions are a menace to the consumer and can open the door to all types of products claims. Summed up the rules for labeling are these: 1. make sure your warnings are conspicuous and complete, 2. make your labels both durable and legible, 3. include any foreseeable danger in your warning – even those that seem remote, 4. make your label conform with all governmental and industrial standards and regulations, and 5. be sure your warning is current. Your label should reflect any new technical information; revisions and changes in models or contents. Labels should be redesigned to reflect customer complaints and customer injuries.
  • Sales and advertising literature is the primary contact between customer and manufacturer, and can easily become the opening scene of a products liability case. Advertising and the marketing personnel must always present an accurate picture of the product since the manufacturer is held responsible for inaccurate or misleading statements. Over-enthusiasm in advertising, whether prepared by manufacturer’s personnel or outside agencies, may negate the care taken in labels and manuals. All proposed advertising literature should be reviewed by both the engineering department and legal department for technical accuracy or exaggerated performance statements. Terms such as ‘absolutely safe,’ ‘fool-proof,’ and ‘nontoxic’ are not justified in advertising literature. Generally these terms are inaccurate and should be avoided because they provide the user an unwarranted sense of safety. In the event of an accident, such terms may support the allegations that the hazards associated with the use of the product were misrepresented or concealed. Exhibits (sketches, photos, diagrams, etc) in sales promotion, advertising or public relations material should carefully reflect necessary accident prevention features, such as safe operating practices, proper protective devices and approved guarding.
  • Document: Start to Finish WHY? Usage in Recalls/Retrofits - Note Problems so Corrective Measures Can be Made Claims Defense: Disproving Claimants Contention - Convince to Drop Claim - Attain Advantageous Settlement - Records Available as Evidence Retention: How Long - Safe Place - Types of Information Adequate - Computer Records – backed up/storage? One of the most important means of protection is to maintain accurate and complete records. They are helpful during the claim investigation stage in assisting the Claims Department to 1) disprove claimant’s contentions, 2) perhaps convince claimant to drop the claim, or 3) attain an advantageous settlement. If a company must go to court, the records are admissible as evidence in most jurisdictions. They can have a beneficial effect on a jury because they graphically demonstrate the care that has been taken by the company. If records are incomplete or inaccurate, they could be detrimental to the manufacturer’s cause. The manufacturer’s personnel should understand why records are necessary, what they should contain, the accuracy and legibility requirements, how long the records should be maintained, and that records are subject to subpoena and use the plaintiff. Records should be maintained on the following: 1) engineering design data including formulas, 2) engineering test data, 3) engineering change data, 4) manufacturing data, 5) QC data; a) product configuration, b) raw materials, c) manufacturing operations, d) receiving inspection, e) manufacturing inspection, f) final inspection, g) shipping, h) process control, i) calibration, j) non-conforming material, k) error analysis and corrective action, 6) customer complaints, 7) service reports, 8) product claims, 9) product loss control committee or coordinator meeting minutes, 10) manuals and instructions, 11) labels, 12) advertising literature, 13) copies of contracts and purchase orders, 14) copies of all hold harmless agreements.
  • Complaint Analysis – Customer complaints and service and field reports are excellent sources of information on the performance of a product, and are a treasury of data for liability prevention. The feed-back information can tell how the product performs under a variety of environmental and use conditions; what errors and abuses are the most frequent in the operation and control of the product; what, if any, accidents occurred and their causes; which components fail most frequently under various use conditions; etc. This information should be promptly analyzed and maintained for as long a time as possible. The conclusions from this analysis should be used for product improvement. These records may be a valuable asset in case of a liability claim or suit. Although they may not relieve the manufacturer of liability, they may prove the rarity of problems and the intention to build safe products, and may refute the allegations of negligence. This will be true only if the data is disseminated to all corporate functions which need it, it is adequately evaluated by competent personnel, and appropriate corrective action is instituted when necessary. Customers, dealers, field service, and sales personnel should be requested to report all accidents, product malfunctions, and product misuse or abuse promptly. If possible, the product should be obtained and returned to the manufacturer for inspection and verification that product was actually produced by the company. OBTAIN PRODUCT FOR INSPECTION
  • The first indication that a claim may be forthcoming is the receipt of a complaint and/or the return of a product. Sometimes, however, the first notification is when a company is served with a summons. Upon receipt of a complaint involving bodily injury or property damage, the insured should immediately report to the local Nationwide Claim Department, and, if possible, obtain the product. The manufacturer should provide the Nationwide Claims Department with complete information concerning the product, including complaints, known defects, design changes, critical areas, test data, etc. The manufacturer should freely give all available information and provide other assistance, and identifying industry experts to examine and test the product. If the product examination reveals defects, they should be promptly reported to the appropriate department so that corrective action can be initiated immediately. If the investigation indicates that a product is creating a hazard, it should, depending upon degree of danger, be withdrawn from the market, modified, or labeled with appropriate waning to the potential customer. Legal Posture The legal and claims posture of the manufacturer are also important. The following information should be assembled: Was the product designed in accordance with recognized standards? Was it evaluated by a recognized testing organization? Were records kept on all phases of the design, preliminary testing, quality control, production and field testing of the product? Do these records indicate a strong quality control effort? Were all warranties, disclaimers and hold-harmless agreements reviewed by an attorney? Were all advertising and sales brochures reviewed by an attorney and an engineer? Were all labels and instruction manuals reviewed by an attorney and engineer? Were any product lines deleted because of poor safety records? Was a recall necessary? How many units are still in the field? Did the insured maintain a record of all complaints and corrective actions taken? Did the insured communicate with trade associations concerning state-of-the-art developments in the product field? Does the insured have a recall program that may be readily put into action?
  • Product manufacturers with significant exposures should be able to provide expert witnesses in the area of product claims. These may be in-house technical specialists with recognized credentials, or they may be outside consultants. In their selection, technical knowledge of the product and ability to credibly present it are very important. As part of the defense plan you should identify experts who could be used in claims concerning target products, and could work with the Nationwide Claims Department in their defense.
  • No business can operate safely and efficiently by only assuming it is operating safely and efficiently. An essential element of a successful PL LC and Claim Defense Program is an operations audit on a regularly scheduled basis. The product liability coordinators audit should produce overall conclusions on the effective operation of the program and offer suggestions for improvement. Although audits must emphasize completeness, timeliness and periodicity, they are definitely not rigid. The auditor should be flexible about what they find. They have to be able to bear down harder on areas of apparent weakness. The auditor must be able to produce necessary changes and revisions in the program as a result of these audits.
  • No business can operate safely and efficiently by only assuming it is operating safely and efficiently. An essential element of a successful PL LC and Claim Defense Program is an operations audit on a regularly scheduled basis. The product liability coordinators audit should produce overall conclusions on the effective operation of the program and offer suggestions for improvement. Although audits must emphasize completeness, timeliness and periodicity, they are definitely not rigid. The auditor should be flexible about what they find. They have to be able to bear down harder on areas of apparent weakness. The auditor must be able to produce necessary changes and revisions in the program as a result of these audits.
  • Products Liability & the Middle Market

    1. 1. Products Liability (PL) & the Middle Market:A Programmatic Structure for Loss Control & Claims Defense Damon P. Schneider Consultant, Loss Control (SELC)
    2. 2. AGENDA The “big issues”. Risks from the past. Products liability in the news. Why is a structure / process needed? Programmatic elements. Products Liability – LC survey perspective. Conclusion.
    3. 3. The “big issues” Scalability of controls for the exposure. Confidence in agents to “field underwrite” & effectively pre-qualify risks with higher PL exposure. Internal recognition of issues (exposure, frequency, severity). Functional area staff support: (is there a “wheel”?)  Underwriting  Loss Control
    4. 4. Risks with varying levels of exposure Manufacturing:  Beauty products.  Dog food.  Woven material for use in parachutes. Craft breweries. “Picker-packer-grower-shipper”. “Killers”- poultry processing industry. Wood frame wall systems (3 hr fire rating). Modular high rise construction.
    5. 5. PL “in the news” Liquid fuel gel.  “Green” building & “energy mgmt” devices:  Performance guarantees & LEED.  “Smart” devices are making me sick (EMF?). Asbestos in engine gaskets (China / Australia). Exterior Insulation Finishing Systems (EIFS):  IAQ, moisture intrusion, mold. Baby strollers – strangulation hazard:  8 yrs between death & official recall!
    6. 6. Trends in Million Dollar Verdicts
    7. 7. Why is a formal structure around PL needed?Identify/Evaluate:• Exposures / Hazards.• Assess the potential for loss.• Controls in place?• Develop Recommendations.Planned Service Approach:• Gather Facts.• Evaluate Facts.• Set a Plan of Action.• Recommendations.• Follow-through (P-D-C-A).
    8. 8. Why is a formal structure around PL needed?Active Participation:• Question.• Observe.• Maintain records.• Collaborate.
    9. 9. The 14 Basic Elements of a Products Liability Loss Control and Claim Defense Program1. Corporate Policy Statement.2. Products Loss Control Committee.3. Products Liability Coordinator.4. Product Design Review.5. Manuals & Procedures.6. Quality Control.7. Packaging & Shipping.
    10. 10. The 14 Basic Elements of a Products Liability Loss Control and Claim Defense Program8. Labeling & Instructions.9. Sales & Advertising.10. Recordkeeping Procedures.11. Complaint Analysis & Handling.12. Claim Analysis & Handling.13. Development of Expert Witnesses.14. Auditing Results.
    11. 11. 1. Corporate Policy Statement Management commitment. Concise. Clear. Conveyed to all employees. “Produce the safest product possible”. Live the values (restate the policy) Motivate employees to comply.
    12. 12. 2. Products Loss Control Committee Members Must be cross-functional & have management support / commitment:  Management, Engineering, Purchasing, Manufacturing, Quality Control, Safety, Legal, etc. Activities:  Review – Accident Reports, Test Results, New Products, Complaints, New Standards, QC & Safety. Frequency of Meetings:  Based on need but … at least annual basis.
    13. 13. 3. Products Liability Coordinator Position should be appointed by management. Authority to act & oversee is needed. They must be a conduit, not a bottleneck:  Establish & maintain communication between functional areas. Measures results & document. Assess plans for recalls, retrofitting, alteration of product(s).
    14. 14. 4. Product Design Review1. Defective Product – Strict Liability.2. Not Reasonably Fit for Purpose for Which It’s Sold/Used.3. Presents Condition Unreasonably Dangerous to User – or – Others.4. Defects Traced Back to Engineering and Research & Design.5. Consider Safety in All Aspects of Design/Development6. Document Alternative Designs.7. Design Considerations.8. Fit for Reasonably Foreseeable Use.9. Researched Thoroughly & Tested.10. Designed Not to Cause Accidents.
    15. 15. 4. Product Design Review1. Adequate Safeguards.2. Misuse Considered.3. Environmental Conditions4. Reliability.5. Life Expectancy – All Components.6. Conform to Standards (ANSI, ASME etc.)7. State of the Art.8. Adequacy of Warnings of Dangerous Qualities.9. Wear & Tear.10. Installation, Operation & Maintenance Instructions Complete & Understandable .
    16. 16. 5. Manuals & Procedures – Two Types 1. Within the manufacturing area:  These establish the company policy, programs & operating procedures. Intended for the day-to-day operation of the company. 2. Product Manuals – Issued with Product  Includes a Parts List:  Assembly.  Installation.  Operation.  Maintenance & Servicing Instructions.
    17. 17. 6. Quality Control QC – Provides product/service that meets design parameters AND protects user by providing product fit for use. Conception - - Production - - Use. Effective QC Program will decrease (maybe eliminate) the marketing of product not fit for use.
    18. 18. 11 Functions of a Quality Control (QC) Department 1. QC Manual:  Policies & Procedures. 2. Engineering:  Assist in R&D - Design Specs. 3. Supplier Quality:  Conforms to Specs. 4. Manufacturing Quality:  Instructions.
    19. 19. 11 Functions of a Quality Control (QC) Department 5. Process Control:  Processes change characteristics of the product.  Six Sigma. 6. Calibration of measuring equipment. 7. Sample inspection:  Lots numbered? Samples taken? Organization? 8. Non-conforming items:  RJ Reynolds.
    20. 20. 11 Functions of a Quality Control (QC) Department 9. Error /analysis & corrective action. 10. Preservation, packaging, shipping. 11. Records.
    21. 21. 7. Packaging & Shipping (P&S) Special P&S considerations needed?  Timely.  Economical.  Free from damage.  Complete in its contents. Last line of defense:  Proper training & quality personnel.
    22. 22. 8. Labeling & InstructionsLabeling:  Adequacy of information.  Clear & succinct.  Appropriate warnings? (GHS, instructions on container)  Compliance with government regulations.Instructions:  Provided with the product.  Proper instructions for use.  Highlights potential for misuse.  Compliance with government regulations.
    23. 23. 9. Sales & Advertising Primary contact:  Owner & manufacturer. Presents accurate picture of user expectation. Product performance statements accurate:  Reviewed by legal personnel & engineering staff. Over performance statements:  “Fireproof”.  “Bulletproof” - - really? Bullet resistant.  Non-toxic. Are there hazards misrepresented/concealed? Illustrations of safety features Warranties/Guarantees made – Are they accurate?
    24. 24. 10. Recordkeeping Document: Start to Finish … Why? . . “If it is not on paper, it is vapor!” Support potential claims defense. Retention (duplicates, samples?). What records should be kept?
    25. 25. 11. Complaint Analysis & HandlingIndicators of performance:  Under different environmental/ use conditions.  Errors & abuses that occur.  Potential for loss.  Which components fail first? Fail frequently?Make the process easy! Encourage customers, dealers, manuf reps, service techs to report issues:  Accidents.  Malfunctions.  Misuse.  Abuse.  Compatibility with components manuf by other companies.
    26. 26. 12. Claim Handling We have developed a safe product … something went “sideways”. Now we have a claim! What do we do?  Report to Claims Department.  Obtain Product – Examine – Document.  Cooperation with no admission.  Apologize (studies show ….)  Utilize expert witnesses.  Is it a valid defect? – Recall/Retrofit/Replace.
    27. 27. 13. Development of Expert Witnesses Manufacturers can be a source:  There is also an extensive marketplace in this area. Opposing counsel WILL provide. Can be in-house or external. Verify credentials & technical knowledge. Credibility. Have they done this before?
    28. 28. 14. Auditing Results Coordinate / disseminate to all company departments. Match to design standards & acceptable criteria. Management system auditors can verify the internal processes. Adopt a philosophy of continuous improvement.
    29. 29. Products liability – LC survey guideAre the following elements of the Product Liability program formal, informal or in place:1. Corporate Policy Statement YES NO NONE2. Products Loss Control Committee YES NO NONE3. Products Liability Coordinator YES NO NONE4. Product Design Review YES NO NONE5. Manuals & Procedures YES NO NONE6. Quality Control YES NO NONE7. Packaging & Shipping YES NO NONE8. Labeling & Instructions YES NO NONE9. Sales & Advertising YES NO NONE10. Record Keeping Procedures YES NO NONE11. Complaint Analysis & Handling YES NO NONE12. Claim Analysis & Handling YES NO NONE13. Development Expert Witnesses YES NO NONE14. Auditing Results YES NO NONE
    30. 30. Products liability – LC survey guide 19 General Questions in this 7 page survey guide along with supplements:• 13 questions - PRODUCT SAFETY PROGRAM / QUALITY CONTROL• 2 questions - COMPLAINT & INCIDENT PROCEDURES• 2 questions - WRITTEN MATERIALS Class-specific product liability considerations (5 sections)• 7 questions - FOOD PRODUCTS• 4 questions - CLOTHING MANUFACTURERS• 5 questions - MACHINE SHOPS / METAL GOODS MANUFACTURERS• 5 questions - FURNITURE MANUFACTURERS• 3 questions - ELECTRONICS / ELECTRICAL COMPONENT MANUFACTURERS
    31. 31. Conclusion PL is a “beast with many heads”… …but it can be tamed with education & experience. We need to collaborate to be effective with this line of business.