What we have learned... at least in product liability situations, ignorance may not be bliss but it can be profitable, particularly for the lawyers. New Report Justifies Judicial Need to Continue to
Reallocate Fault in Product Liability Litigation

This week, the U.S. Consumer Product Safety Commission (CPSC) issued a notice saying that years after products are recalled or safety warnings are issued, those same products continue to kill and injure. Many consumer products deemed hazardous and included on the CPSC list have previously received substantial attention because they were recalled or addressed under government safety standards. These include such items as drawstrings around the neck on children's jackets and sweatshirts, old cribs with slats positioned too far apart, disposable and novelty lighters that are not childproof and window blind cords.

Only a consumer living in a cave with undoubtedly little need or desire for such products can claim ignorance to the reports of such products' hazards. "But they continue to be used each year, leading to deaths, injuries, and property damage," said CPSC Chairman Hal Stratton.

One harm the CSPC notice fails to account for is the rise in product liability lawsuits by ignorant or irresponsible consumers who continue to use, misuse and abuse these "hazardous products," despite a marked increase in the number of recalls and warnings issued each year.

Product recall means notification of a defect combined with an offer of repair, replacement or refund. If the manufacturer recalls its product, the producer not only informs the consumer of the defect, but it also absorbs the cost of refunding the price or repairing or replacing the hazard. One step down from the product recall is the issuance of a post-sale warning, with the appropriate remedy being the inclusion of an adequate caution statement rather than offer to repair, replace or refund.

Federal law empowers several agencies to order a recall or seek a court-ordered recall, and some federal laws require manufacturers to recall products whenever they find safety-related defects. In fact, manufacturers undertake most recalls voluntarily, either on their own initiative or at the urging of a federal agency with recall authority. What may be most surprising is the frequency with which companies agree to recalls without litigation, considering the fact that recalls can be expensive, requiring refunds or replacements for products that have already been produced and marketed.

The CPSC issues approximately six recall notices or warnings each week. Yet, despite the fact that each year manufacturers recall millions of consumer products -- ranging from toys and household appliances to drugs and automobiles -- under an array of federal health and safety statutes, consumers can and sometimes do render warnings and recalls totally ineffective by failing to respond. Even well-publicized recalls aren't always successful. In many instances, the manufacturer may have no way to identify or locate product users. Because the original purchaser may resell the product, issuing post-sale warnings or recalls can be difficult and expensive.

Unfortunately, only occasionally do news organizations devote major attention to consumer product recalls. What generally does get the attention of the media and the public, however, are the exponentially increasing number of product liability lawsuits, many in the form of class actions, that are filed against the companies by plaintiffs' lawyers whose clients failed to stop using these sometimes deadly products despite the manufacturers' best efforts to warn the buyers. During the past decade, the federal courts have been inundated with an unprecedented number of these lawsuits, many of which seek to hold the manufacturer liable under some form of strict liability.

Companies cannot insure against product liability claims by recalling defective products -- to the contrary, recalls can stimulate additional lawsuits and bring adverse publicity that stigmatizes not only the recalled product but also the company's entire business and product line. With the cost and delay of defending lawsuits exceptionally high, most companies faced with the uncertainty of litigation and the opportunity to negotiate the terms of a voluntary recall opt for the latter approach.

Further, the threat of product liability lawsuits prompts many producers to avoid formal agency findings of "substantial product hazard" that may be admissible as evidence against the companies in such suits. Quite simply, to avoid litigation, consumer product manufacturers often agree to recalls even though they do not believe their products create substantial hazards for the end users.

In most litigation involving injury from a defective product, an attempt to allocate fault represents the judicious weighing of factors that allows the trier of fact -- usually a jury -- to assess blame for the real cause of an injury and impose liability for damages. The availability of defenses relating to the consumer's conduct varies widely among states. In most jurisdictions, continued use of the product after becoming fully aware of the defect traditionally qualifies as voluntary assumption of risk or as comparative negligence. Originally, the former constituted a complete bar to recovery while the latter resulted in a reduction of the award commensurate with the degree of fault on the part of the plaintiff. The prevailing trend is to collapse the two categories into one of comparative negligence and to reduce, or possibly even deny, recovery according to the magnitude of the defendant's fault.

Evidence of product recalls is often an issue in cases where punitive damages are sought. Manufacturers frequently assert that because they have initiated recall campaigns, any award of punitive damages would be inappropriate. This is a valid argument, but a manufacturer that declares a product recall in order to avoid punitive damages must make sure that its recall efforts are effective, or at least are reasonably calculated to be effective.

Yet, even in the current information age, the end-use consumer bears no responsibility for familiarizing himself with the lists of dangerous products or heeding the advice of the manufacturer. Worse yet, in some instances, such as those involving many medical devices, the manufacturer is required to track the device, but because of physician-patient confidentiality concerns, only the doctors are notified of a recall or safety alert by the manufacturer, thereby transferring responsibility of notification to the physician without necessarily transferring liability in the event of failure to notify.

What we have learned from all of this is that, at least in product liability situations, ignorance may not be bliss but it can be profitable, particularly for the lawyers.

May 1, 2003
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