Tag Archives: product liability lawsuit

Graco And Simplicity In The News Again

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How does the Graco and Simplicity product name survive and apparently continue to thrive, when it seems it has a major product recall about every other month?

Over the last ten years Graco and Simplicity has distinguished itself as one of the most embattled and recalled company’s in the history of the United States, yet it seems to be able to continue to live up to it’s business model of delivering inexpensive baby and children’s products.  During this time, products such as cribs (suffocation), strollers (finger amputations), high chairs (falls), car seats (choking), toddler beds, swings, walkers, baby carriers, bassinets and toys have been recalled by the millions.  The cost alone to handle all the recalls and product liability lawsuits has to have reached into the hundreds of millions of dollars over the past ten years.  I guess the Civil Penalty imposed by the CPSC of $4M for not reporting known product defects in a timely manner must have seemed like a small slap on the wrist.

I have to believe somewhere some college professor is teaching a class based on the business model of Graco.  You have to give Graco their props.  Despite it’s name being negatively being associated with baby and children’s injuries and deaths and spending hundreds of millions in fines, product recalls and product liability lawsuits they appear to not only survive, but to thrive and remain profitable.

State To State Variability – Statute of Repose

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A common theme in many of my blogs is the impact individual state laws or statutes can have on the outcome of a product liability lawsuit.  It is, in my opinion, possible to take the exact set of circumstances of a product liability lawsuit and have different outcomes in different states.  Product liability laws or statutes are created by state legislators and can be very different from state to state.  While there have been attempts to create federal preemption for medical products, all too often state laws continue to prevail over the federal preemptive defense.

One of the state laws that can have a major impact on the outcome of a product liability lawsuit is the Statute of Repose.  The Statute of Repose prevents product liability lawsuits against the manufactures, importers, designers and distributors of products based on the age of the product.  However, only 19 of the 50 states have Statute of Repose laws to protect businesses from product liability lawsuits.  Most of the states that have Statute of Repose laws limit product liability lawsuits somewhere between 5 to 12 years after the sale of a product.  Two states, Arizona and Rhode Island, have found Statutes of Repose laws for products unconstitutional.

One of the industries that is very familiar with Statute of Repose laws and the impact they can have on a product liability lawsuit is the Tree Stand industry.  For example, if a kid where to die or become a quadriplegic in a state with a 10 year Statute of Repose law and the age of the tree stand was 11 years from the date of sale, the manufacture, designer and sellers of the tree stand could be protected from a product liability lawsuit because of the 10 year deadline was exceeded.  However, in another state that did not have a Statute of Repose law, the manufacture, designer and sellers of the tree stand could find themselves named as defendants in a product liability lawsuit and, at the very least, incur discovery and settlement costs and, at the worst, large monetary judgments by a sympathetic jury.

State To State Variability – Joint & Several Liability

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If you are a business selling products in the U.S., nothing exemplifies better how state laws can impact your business more than Joint and Several Liability.   

We know from my previous blog, “Why Naming Multiple Defendants In A Lawsuit Is Common Practice”, that it is typical for the plaintiff’s attorney to name as many defendants as possible, when there is a product liability lawsuit.   However, what may surprise you is that even if you have only marginal ties to the product that is responsible for the product liability lawsuit you could potentially be responsible for paying the lions share of the damages or even paying all of it. 

How can this be? This is not fare! What kind of law would allow this to happen?

Joint and Several Liability was created to make sure the injured party or plaintiff was able to be made whole, even if one or more of the defendants are unable pay their share of the product liability monetary damages.  Many of the critics of Joint and Several Liability refer to this approach as the “deep pocket” rule because of the potential of a product liability lawsuit becoming a search for the “deepest pockets”.

Over time tort reform efforts have led to many states limiting the applicability of pure joint and several liability.  Currently states are using one of the following three approaches when distributing financial liability of defendants:

  1. Pure Joint/Several Liability – Each defendant in a product liability lawsuit is responsible for the entire amount of the damages, regardless of amount responsibility or liability each defendant had.  Currently, 16% of states use Pure Joint and Several Liability, including my fine state, South Carolina.
  2. Pure Several Liability – Each defandent is only liable for their assigned portion of the damages, based on their percentage of responsibility or liability.  For example, manufacture and designer of a faulty product would have a higher percentage of responsibility or liability than the retail distributor of the product.  Currently, 28% of the states use Pure Several Liability.
  3. Modified Joint/Several Liability – This is somewhere between Pure Joint/Several Liability and Pure Several Liability and can vary greatly state to state.  Currently, 56% of the states use Modified Joint and Several Liability.

Overall, the point of this blog is that life is not fare and if you are a business that distributes products in all or most of the 50 states, the amount of monetary damages your business may be responsible for paying could largely depend on the state in which the product liability case is being tried. 

If you want to know which states use Pure Joint and Several Liability, Pure Several Liability or the Modified Joint and Several Liability, simply click on this chart.

The Electronic Discovery Trap

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In a recent blog, “Why Naming Multiple Defendents In A Lawsuit Is Common Practice”, I talked about the liberal discovery rules in the U.S. and cost to comply when named as a defendent in a product liability lawsuit.

I wanted to expand on this because so many of the businesses that contact us have never been through a lawsuit and do not have any concept of how extremely expensive it is to comply with discovery in today’s electronic and technological world.

Often overlooked in today’s modern world is the fact that plaintiff attornies have spent the last 20 years perfecting the art of electronic discovery and how to use it against the defendents as a way of making them spend money. 

Did you know that defendents are required to preserve every email? If the emails are in an old system, defendents are required to search out and discover emails in old systems that are no longer supported and make this information available to the plaintiffs in whatever format they want to read it.  Not only is it expensive to ferret out the emails, but what if the emails contain sensitive materials that are protected by HIPPA privacy laws?  The cost to comply goes up.

I think you get the picture.  Even if you have no liability in the lawsuit, our liberal discovery rules in the U.S. allow the plaintiff’s attorney to force you to spend a great deal of money to comply with discovery.  The higher the costs to you the greater the asking price by the plaintiff’s attorney to reach a settlement.

Why Naming Multiple Defendants In A Lawsuit Is Common Practice

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When a product liability client is sued, they are usually amazed at how many parties are named in the product liability lawsuit and how many of the named parties have little or no connection to the product that allegedly caused the injury.  

The 3 reasons below will provide a little insight into why there are multiple defendants named when there is a product liability lawsuit.

The first reason there are so many parties named in a product liability lawsuit is  “Alternative Liability Theory”.  This theory allows the plaintiff to shift the burden of proving which of the two or more defendants was responsible for their injury to those defendants in which the plaintiff cannot identify.  Under this theory the plaintiff still has to prove the product caused the injury; however, it relieves the plaintiff of the burden of identifying the source of the product and requires the defendants to prove they were not the source of the injury.  This theory also is a means to get the defendants to identify the guilty parties responsible for the injury in order to avoid being subject to liability themselves.

Of course since product liability law is subject to individual state laws, “Alternative Liability Theory” may not apply in your state.

A second reason so many defendants are often named on product liability lawsuits is because the plaintiff’s attorney could be sued for malpractice, if the attorney fails to name a responsible party to the lawsuit and as a result, the plaintiff misses out on receiving compensation for the injury.  Since legally the plaintiff’s attorney cannot bring the same lawsuit twice, it is the responsibility of the attorney to name all parties that could even remotely have any responsibility for the injury.

The third reason is what makes people so cynical about the legal system.  In the U.S. our Discovery rules are so liberal that attorneys have perfected the art of covering up potential defendants with discovery paperwork.  The costs to comply is so expensive that it is more often in the financial best interest of the defendant’s insurance carrier to provide a settle payment to get release from the lawsuit than to go to the expense of trying to comply with discovery. 

Simply put, by naming as many defendants as possible, the plaintiff’s attorney can increase the amount of money they can collect.  For example, the cost of complying with discovery could potentially cost $10,000; however, by settling for $7,000 the insurance carrier ultimately saves $3,000.  So the next time your insurance carrier decides to settle rather than fight or defend a frivolous product liability lawsuit you will understand that the settlement is based on pure economics.  If you are adamant about defending what you see as a frivolous lawsuit, your insurance carrier may agree to pay you the settlement amount and allow you to hire your own attorney to defend the claim.