Product Liability in the United States

Consumer product recalls-including tainted pet foods and faulty baby cribs- dominated the news in 2007. The global economy, which has led to increased overseas manufacturing and international competition, contributed to the wave of recalls and impacted the issues that product liability practitioners faced. The same trends have affected the practice of insurance recovery specialists representing product liability defendants.

From the perspective of a defendant’s insurance recovery for a product liability problem, globalization has been positive and a negative. It’s been a positive because, increasingly, we’re finding some foreign parent companies-especially European-based parents of major U.S. subsidiaries-have broader insurance coverage that may apply to the U.S. subsidiaries. This is also true for a few countries in Asia, particularly Japan. The downside of recovering for those alleged injuries in a global economy is that business insurance markets in much of Asia, particularly in China where some recent product liability issues have originated, are not as highly developed as those in Europe and the United States.

To some extent this recall trend illustrates the need for any company bringing a product into the United States to have a vigorous quality-assurance program. If you’re an international corporation, it’s incredibly difficult to maintain quality on a global level.

Where the U.S. government doesn’t have the ability to regulate a foreign manufacturer, it may still try to regulate the downstream members of the supply chain that are based in the U.S.

Foreign lawyers often express surprise at the incentives, such as contingency fees, that exist within the American justice system with respect to class action litigation. The Japanese delegation was surprised to learn that plaintiffs attorneys get paid out of whatever they recover, and that they use those recoveries to fund future litigation. In Japan, class actions can only currently be brought by consumer groups, which have limited public funding. Until this lack of incentives changes, there will still likely be foreign consumers coming to the U.S. to take advantage of the U.S. judicial system.

Class Action Fairness Act and California’s Proposition 64

Because parties only need one diverse party and $5 million at stake to have federal jurisdiction under Class Action Fairness Act (CAFA), virtually all class action cases are from 2007 handled in federal court, either by removal or because more plaintiffs are filing their cases there.

CAFA has had the effect that was intended by the legislation in that it has curbed the filing of nationwide class actions in state courts in somewhat obscure locations as a means of getting a substantial settlement. It’s also eliminated another problem when dealing with-where multiple, overlapping cases were filed in different states, and plaintiffs lawyers raced to trial in those various jurisdictions. The plaintifs still have the possibility of a multidistrict litigation (MDL) proceeding, but it’s not been used much.

Maybe CAFA has unnecessarily taken class cases away from state judges. Lawyers found a little more difficult to settle cases in federal court. Settlements seem to take longer and they’re harder to get approved.

CAFA requires greater scrutiny of coupon settlements. Structuring these settlements will impact coverage. The increased scrutiny of coupon settlements in state court has been another general benefit to insureds because of the types of relief which tend to be agreed upon during the settlement-cash benefits and a specific component for plaintiffs attorneys fees and costs tend to fit more snugly into insured rather than uninsured buckets. So part of the impact of the increased scrutiny of coupon settlements as a result of CAFA and Proposition 64 has been to enhance insurance recoveries for product liability settlements.

Even prior to Prop 64, in case of an Unfair Competition Law (UCL) claim, the case was always based on someone who had suffered some form of harm. In fact, some plaintiffs firms did not object all that strongly to Prop 64 because it was expressly limited to standing. Some even agreed, despite the unique nature of the UCL, that it was not inappropriate to require that a plaintiff have suffered harm in order to sue.

Prop 64 defied the conventional wisdom that there’s no coverage for 17200 cases. The California Supreme Court has said that a claim solely for purely restitutionary relief is not insurable, but plaintiffs lawyers have been clever at including additional claims that are insurable, particularly under the California Legal Remedies Act (CLRA), as well as claims based on advertising, which have been a frequent trigger under errors and omissions insurance policies. In California, as in many other jurisdictions, because even one potentially covered allegation means the insurer must pay defense for the entire case, the inclusion of additional legal claims has led to some interesting results for people vis-a-vis their insurers.

Tort and Product Liability: Main Elements

The coverage of Tort and Product Liability includes the following main elements:

Elements of a Tort

Find out an overview of this topic, in relation to Tort and Product Liability, in the legal Ecyclopedia.

Unintentional Torts (Negligence)

There is information on this basic subject in the legal Ecyclopedia.

Special and Limited Duties

Find out an overview of this issue following this link (topic).

Joint and Several Liability

There is information on this basic subject matter in this legal reference.

Defenses

Find out an overview of this topic in the legal Ecyclopedia.

Punitive Damages

There is information on this basic subject in this reference work.

Contingency Fee System

For information on this issue, please click here (subject).

Product Liability

Read more in relation to this subject matter here (topic).

Mass Torts

There is information on this basic subject matter in this legal reference.

References

See Also

• Tort
• Product Liability

Product Liability

Leading Case Law

Among the main judicial decisions on this topic:

Escola v. Coca Cola Bottling Co. of Fresno

Information about this important court opinion is available in this American legal Encyclopedia.

Greenman v. Yuba Power Products, Inc.

Information about this important court opinion is available in this American legal Encyclopedia.

References

See Also

• Tort
• Product Liability

Resources

See Also

• Legal Topics.
• Automobiles
• Unsafe
• Consumer Product Safety Commission
• Consumer Protection
• Merchantable
• Proximate Cause
• Sales Law
• Tort Law
• Liability.

Further Reading (Books)

“APSA Supports Liability Reform Legislation.” Refrigerated Transporter. 1 July 2001.

Greenberg, Lisa. “Federal Punitive Damages.” Automotive Body Repair News. August 2001.

Hart, Christine, and Mark Kinzie. Product Liability for the Professional. Thomson Leaning, 2002.

Miller, Roger LeRoy, and Gaylord A. Jentz. Fundamentals of Business Law. Thomson South-Western, 2005.

Hillstrom, Northern Lights

updated by Magee, ECDI

Further Reading (Articles)

Lankan exporters urged to secure from product liabilities, The Daily Mirror (Colombo, Sri Lanka); August 30, 2010

Product Liability: Retention and Risk Management Solutions: Records Managers Should Take the Lead in Developing a Cross-Functional Team to Prepare for Possible Product Liability Litigation Issues, Information Management Journal; January 1, 2006; Haider, Mary W.

Product liability and perioperative nurses.(OR Nursing Law), AORN Journal; February 1, 2004; Murphy, Ellen K.

Does Product Liability Make Us Safer? Adverse Consequences Arise from Problems with the Judicial System and Jurors’ Judgment Biases, Regulation; March 22, 2012; Viscusi, W. Kip

Product Liability Law in Italy, Mondaq Business Briefing; November 30, 2012

Product Liability Frequently Asked Questions on United States.(product liability claims), Mondaq Business Briefing; March 22, 2006

Reducing product liability uncertainty in bankruptcy cases, American Bankruptcy Institute Journal; July 1, 2001; Cavanaugh, John C Stamm, Earl

PRODUCT LIABILITY: EUROPEAN PARLIAMENT UNCONVINCED BY DIRECTIVE REVIEW., Europe Environment; April 4, 2000

Product Liability Law in Spain, Mondaq Business Briefing; December 4, 2012

Product Liability And Class Actions: Pharma And Medical Devices In The Litigation League Table., Mondaq Business Briefing; December 11, 2008; Kellam, Jocelyn

The Product Liability of Pharmaceutical Companies., Mondaq Business Briefing; September 27, 2010

Product Liability And Class Actions: The Litigation Leagues Table., Mondaq Business Briefing; November 3, 2008

Product Liability Reform: New Strategies Needed., Risk & Insurance; October 15, 2000; LA FIANDRA, KENNETH J.

Product Liability Protection For Reps – By The Numbers, Agency Sales; April 1, 2005; Anonymous

Product Liability: Key Considerations for Ukrainian Market, Mondaq Business Briefing; August 10, 2012

Sweden Product Liability., Mondaq Business Briefing; July 11, 2003

Product liability ‘overkill’ threatens consumers lives as well as their wallets.(Originated from Knight-Ridder/Tribune News Service), Knight Ridder/Tribune News Service; March 24, 1997

PRODUCT LIABILITY: EUROPEAN PARLIAMENT UNCONVINCED BY DIRECTIVE REVIEW.(Government Activity)(International Pages)(Brief Article), European Report; April 5, 2000

Developments In US Product Liability Law And The Issues Relevant To Foreign Manufacturers., Mondaq Business Briefing; November 26, 2009

Product liability in comparative perspective.(Brief Article)(Book Review), Reference & Research Book News; February 1, 2006

Product Liability in State Statute Topics

Introduction to Product Liability (State statute topic)

The purpose of Product Liability is to provide a broad appreciation of the Product Liability legal topic. Select from the list of U.S. legal topics for information (other than Product Liability).

Tort and Product Liability: Main Elements

The coverage of Tort and Product Liability includes the following main elements:

Elements of a Tort

Find out an overview of this topic, in relation to Tort and Product Liability, in the legal Ecyclopedia.

Unintentional Torts (Negligence)

There is information on this basic subject in the legal Ecyclopedia.

Special and Limited Duties

Find out an overview of this issue following this link (topic).

Joint and Several Liability

There is information on this basic subject matter in this legal reference.

Defenses

Find out an overview of this topic in the legal Ecyclopedia.

Punitive Damages

There is information on this basic subject in this reference work.

Contingency Fee System

For information on this issue, please click here (subject).

Product Liability

Read more in relation to this subject matter here (topic).

Mass Torts

There is information on this basic subject matter in this legal reference.

References

See Also

• Tort
• Product Liability

Product Liability

Leading Case Law

Among the main judicial decisions on this topic:

Escola v. Coca Cola Bottling Co. of Fresno

Information about this important court opinion is available in this American legal Encyclopedia.

Greenman v. Yuba Power Products, Inc.

Information about this important court opinion is available in this American legal Encyclopedia.

References

See Also

• Tort
• Product Liability

Resources

Further Reading

• Information about Product Liability in the Gale Encyclopedia of American Law.

Product Liability in the International Business Landscape

Definition of Product Liability in the context of U.S. international business and public trade policy: A firm’s or person’s legal responsibility for harm stemming from the use of a product that it made, sold, managed, or used.