product liability recalls: preparing for a recall and...

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Product Liability Recalls: Preparing for a Recall and Mitigating Legal Risks Determining Factors for Issuing a Recall, Timing Considerations and Defense Strategies Today’s faculty features: 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10. WEDNESDAY, JUNE 20, 2012 Presenting a live 90-minute webinar with interactive Q&A Kelly Savage Day, Sedgwick, San Francisco Pryce G. Tucker, Partner, Hartline Dacus Barger Dreyer, Dallas Paul S. Rosenlund, Partner., Duane Morris, San Francisco

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Page 1: Product Liability Recalls: Preparing for a Recall and ...media.straffordpub.com/products/product-liability...2012/06/20  · 12 Recall Prevention: Building in Procedures to Locate

Product Liability Recalls: Preparing for a Recall and Mitigating Legal Risks Determining Factors for Issuing a Recall, Timing Considerations and Defense Strategies

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

The audio portion of the conference may be accessed via the telephone or by using your computer's

speakers. Please refer to the instructions emailed to registrants for additional information. If you

have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.

WEDNESDAY, JUNE 20, 2012

Presenting a live 90-minute webinar with interactive Q&A

Kelly Savage Day, Sedgwick, San Francisco

Pryce G. Tucker, Partner, Hartline Dacus Barger Dreyer, Dallas

Paul S. Rosenlund, Partner., Duane Morris, San Francisco

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Sound Quality

If you are listening via your computer speakers, please note that the quality of

your sound will vary depending on the speed and quality of your internet

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If the sound quality is not satisfactory and you are listening via your computer

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For CLE purposes, please let us know how many people are listening at your

location by completing each of the following steps:

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FOR LIVE EVENT ONLY

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If you have not printed the conference materials for this program, please

complete the following steps:

• Click on the + sign next to “Conference Materials” in the middle of the left-

hand column on your screen.

• Click on the tab labeled “Handouts” that appears, and there you will see a

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5

Preparing for Product Recalls

Kelly Savage Day

Sedgwick LLP

333 Bush Street, 30th Floor

San Francisco, CA 94101-2834

(415) 627-1406

[email protected]

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6

Views expressed in this presentation

are for educational purposes only and

do not constitute legal advice or

necessarily represent the views of the

presenters' employers.

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7

“Nothing concentrates the

mind like the prospect of being

hanged in a fortnight.”

Samuel Johnson

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Preparing for Recalls

Not a Question of If But When . . .

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Questions to Consider

How can we protect against a product recall?

Do we know how to judge whether a product has a defect that “presents an unreasonable

risk of injury” requiring a recall?

Do we understand federal, state, and international regulations regarding product recalls?

Do we have processes and procedures in place to manage a product recall?

Do we have a trained product recall team? Do employees know what to do?

How quickly can we respond to media, shareholders, employees, and regulators in the

event of a product recall?

How will business continuity plans be put into action if a product is recalled?

Have we made adequate allowances for a negative impact to supply chain if a product is

recalled?

Do we have the necessary technology tools to manage a product recall?

Have we identified the necessary tools to help mitigate the financial impact of the recall?

Are we prepared to handle any product recall-related litigation?

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Recall Preparedness Is Extremely Important

Consumer/patient safety

Brand damage

Customer loyalty

Financial exposure

Legal exposure

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Recall Preparedness What Does It Require?

Developing and implementing processes

and procedures to identify potentially

defective products before they reach

consumers

Preparing and implementing recall SOPs and

a preparedness plan

Conducting mock recalls

Taking proactive steps to mitigate financial

risks with contracts and insurance

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Recall Prevention: Building in Procedures to

Locate Potential Risks Before Potentially

Defective Products Reach Consumers

Product Traceability

• “As the recent cases involving some Toyota car models-with

accelerator faults—and Rolls Royce—with the A380 Airbus

engine—have graphically illustrated, traceability is at the heart

of any efficient recall process.”

Product and customer databases

Product usage information database

Investigative Procedures of CPSC, FDA and USDA

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Recall Preparedness: Developing and Implementing a Written Recall Strategy

Designation of a Recall Coordinator/Committee

Development of product recall SOPs

Recall execution strategy

Internal and external Communications

Recall termination procedures

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Recall Preparedness: Mock Recalls

Choose a batch number for a real group of products

Run reports using supplier, manufacturing,

distribution and transportation systems

Account for what was made, shipped and received

Do a Post-Mortem

• Review recall and determine what worked and what

needs to be improved

• Include the review requirement in recall

preparedness plan

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Recall Preparedness: Mitigating Financial Exposure from Recalls

Contracts

Insurance

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Recall Preparedness: Special Issues

Social media

Global and third-party suppliers

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Final Thoughts

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www.duanemorris.com

©2012 Duane Morris LLP. All Rights Reserved. Duane Morris is a registered service mark of Duane Morris LLP.

Duane Morris – Firm and Affiliate Offices | New York | London | Singapore | Los Angeles | Chicago | Houston | Hanoi | Philadelphia | San Diego | San Francisco | Baltimore | Boston | Washington, D.C.

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Product Liability Recalls: Preparing for a Recall

and Mitigating Legal Risks:

Strategic Assessment and Timing

Paul S. Rosenlund

Strafford Publications Webinar

June 20, 2012

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Overview: Scenario and Solutions

Scenario: You have received information suggesting that

post-sale corrective action may be needed.

Actions: What to do next?

– Assessing available information

– Conducting the investigation

– Strategies and decision making regarding:

Is a report to the regulators necessary?

When must regulators be notified?

Will a recall be necessary – is there an alternative?

Negotiating the terms of the recall

Who will bear the cost?

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“The most terrifying

words in the English

language are: I’m from

the government and I’m

here to help.”

Ronald Reagan

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More regulators than you care to count …

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And they all want to help you!

• Safety

• Control imports

• Fair and accurate labels

• Properly tested products

• Uniform safety standards

• Investigate causes and prevention of product-

related deaths, illnesses and injuries

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• Food, beverages, vitamins and supplements

• Drugs & medical devices

• Vaccines & biologics

• Cosmetics

• Animal & veterinary drugs and devices

• Radiation-emitting products & procedures

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National Highway Traffic Safety Administration

• Cars, trucks & buses

• Child seats

• Railroads (DOT-FRA)

• Travel trailers (caravans)

• Car and truck accessories, parts and

components

• Tires

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Additional Agencies

• US Department of

Agriculture (USDA): Meat

and poultry products

• Environmental Protection

Agency (EPA): Pesticides

and motor vehicle emission

systems

• Department of Housing

and Urban Development

(HUD): Manufactured

housing

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Coast Guard, FAA and BATF

• Pleasure boat safety

• Cruise ship safety

• Personal flotation devices (pfd)

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• Wine, beer and liquor ingredients,

purity, names, labels, appellation

designations (AOC)

• Tobacco warnings and additives

• Firearms and explosives

regulation and licensing

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CPSC

All consumer goods not otherwise regulated

– Household goods and appliances

– Fabrics, apparel, shoes

– Toys, baby supplies (cribs, strollers, etc.)

– Sporting goods, bicycles, ATVs

– School supplies, paint, art materials

– Consumer electronics

– Building materials (heaters, glass,

windows, fire suppression systems)

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All impose similar obligations on companies

• No unreasonable risk of harm to users

• Compliance with regulations

• Compliance with voluntary standards

• Quality control of materials and processes

• Traceability of materials and finished goods

• Proper marketing, labels and instructions

• Report promptly and recall voluntarily any

product that is hazardous or noncompliant

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The message for today …

• Know your product and the rules that apply

• Know who regulates your product

• Know who to notify when you have a problem

• Know when to notify them

• Know what you need to tell them

• Have a system in place to identify problems

and take immediate action

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Is there a legal duty to recall?

• Most recalls are voluntary.

• No common law duty to recall unless it’s a government

requirement.

• Restatement (Third) Torts: Products Liability, §11: – “One engaged in the business of selling or otherwise distributing products

is subject to liability for harm to persons or property caused by the seller's

failure to recall a product after the time of sale or distribution if:

(a)(1) a governmental directive issued pursuant to a statute or

administrative regulation specifically requires the seller or distributor

to recall the product; or

(2) the seller or distributor, in the absence of a recall requirement

under Subsection (a)(1), undertakes to recall the product; and

(b) the seller or distributor fails to act as a reasonable person in

recalling the product.”

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The cost of non-compliance

• Fines and civil penalties

• Mandatory recalls

• Reputational damage

• Increased oversight

• Debarment – the ultimate sanction

• Criminal prosecution and jail for company

executives

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Why rush to file a report?

• BMW: $3 million to NHTSA for late and incomplete

reporting under National Traffic and Motor Vehicle

Safety Act (MVSA) (Feb 2012)

• Hewlett-Packard: $425,000 to CPSC for late reporting

of overheating computer batteries (Jan 2012)

• Toy makers: $2.3 million, $2 million, $1.25 million,

$1.1 million, $1.3 million to CPSC for toys failing

safety standards (2009-2011)

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Voluntary reports – cornerstone of compliance

• CPSA section 15

• CPSA section 37

• Choking hazards for children’s products

• Flammable fabrics

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Section 15(b) substantial product hazards

1. Violation of CPSC product safety regulations or

voluntary standards adopted by CPSC

2. Violation of any other rule, regulation, standard or

ban enforced by CPSC

3. The product “creates an unreasonable risk of

injury or death”

4. Information is known “which reasonably supports

the conclusion” that the product contains a defect

which could create a “substantial product hazard”

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Section 37 reports

Obligation triggered by:

• 3 lawsuits involving death or “grievous injury”

• Involving the same “particular model”

• Settled or resulting in judgments during a two-

year period

No exemption for “nuisance” settlement of

payment made by insurance company.

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Who must report?

• Know your definitions in CPSA § 3

• Manufacturer =

– US manufacturer

– Foreign manufacturer

– US importer of foreign-made product

• Retailer

• Distributor

• Private labeler (brand owner / undisclosed mfgr)

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How does the company know what to report?

• Company knows everything in its records

• Company knows everything its employees

know

• Company knows all divisions of the company

• 5 days for safety information to move from

bottom to top

• CPSC subpoenas and investigations

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How do multinationals report?

• Major concerns over foreign data and early warnings

• NHTSA - Transportation Recall Enhancement,

Accountability and Documentation Act (TREAD)

• CPSC statement of policy patterned after TREAD

– “Reportable information can be obtained from any

source and any country.”

– Information about products manufactured or sold

outside of the USA must be evaluated and reported

under section 15(b) “if relevant to defects and hazards

associated with products that are distributed within the

United States”

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When to make the report?

• Duty to report arises immediately

• 10 business days to file report with CPSC

• Internal reports “could” support this conclusion

• No time or need to finish investigation

• No time or need to reach a conclusion

• No time or need to have a solution

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What to report

• 16 CFR Part 1115

• CPSC Recall Handbook

• Report Elements

– Preliminary Report

– Full Report

– Election to conduct Fast Track Recall

• Not all reports result in a recall

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CPSC Response to Reports

• Questions, site visit, tests, investigations …

• Thank you, nothing further need be done

• Penalty investigation

• Fast Track Recall

• Preliminary Determination and ordered recall

Or

• Absolutely nothing!!

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Design your remedies carefully

• CPSA § 15(c) and (d)

• Cease distribution

• Stop sale notice to retailers

• Notice campaign to consumers via web,

media, direct mail, etc. Foreign language?

• Any combination of repair, replace and/or

refund remedies as the CPSC determines to

be in the public interest

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FDA Recall Framework

FDA Recall Basics: Recalls are actions taken by a firm to remove a product from the market. Recalls may be conducted on a firm's own initiative, by FDA request, or by FDA order under statutory authority.

– Class I recall: a situation in which there is a reasonable probability that the

use of or exposure to a violative product will cause serious adverse health consequences or death.

– Class II recall: a situation in which use of or exposure to a violative product may cause temporary or medically reversible adverse health consequences or where the probability of serious adverse health consequences is remote.

– Class III recall: a situation in which use of or exposure to a violative product is not likely to cause adverse health consequences.

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FDA –actions short of recall

Other Actions (short of recall)

– Market withdrawal: occurs when a product has a minor violation that would

not be subject to FDA legal action. The firm removes the product from the

market or corrects the violation. For example, a product removed from the

market due to tampering, without evidence of manufacturing or distribution

problems, would be a market withdrawal.

– Medical device safety alert: issued in situations where a medical device may

present an unreasonable risk of substantial harm. In some case, these

situations also are considered recalls.

See http://www.fda.gov/Safety/Recalls/ucm165546.htm

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NHTSA Recalls

• NHTSA Recall Basics

– Can be voluntarily initiated, influenced by NHTSA investigations,

or ordered by NHTSA via the courts

– When is a recall necessary?

When a motor vehicle or item of motor vehicle equipment

(including tires) does not comply with a Federal Motor Vehicle

Safety Standard

When there is a safety-related defect in the vehicle or

equipment

• Other Actions (short of recall)

– Safety Complaints, NHTSA Defect Investigations, and Technical

Service Bulletins – listed on the NHTSA website

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Can a recall preempt tort liability?

• “Compliance with consumer product safety rules

or other rules or orders under this Act shall not

relieve any person from liability at common law or

under State statutory law to any other person.”

CPSA § 25(a)

• In re Mattel, Inc., Toy Lead Paint Products

Liability Litigation, 580 F.Supp. 1111 (C.D. Cal.

2008)

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But a well-designed recall can help

• Moot class action remedies. Harrington v. Daiso Japan,

2011 WL 2110764 (N.D. Cal. 2011)

• “when a defendant is already offering an effective remedy

for putative class members through out-of-court channels,

a class action threatens to consume substantial judicial

resources to no good end.” In the Matter of Aqua Dots

Prods. Liab. Litig., 270 F.R.D. 377, 382 (N.D. Ill. 2010),

aff’d at 654 F.3d 748 (7th Cir. 2011)

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More good reading on class actions

• Webb v. Carter’s Inc., 272 F.R.D. 489, 504 (C.D. Cal.

2011) (“a class action is not superior because Carter’s is

already offering the very relief that Plaintiffs seek”)

• In re ConAgra Peanut Butter Prods. Liab. Litig., 251 F.R.D.

689, 700–01 (N.D. Ga. 2008) (refund program for

contaminated peanut butter)

• In re Phenylpropanolamine (PPA) Prods. Liab. Litig., 214

F.R.D. 614, 622 (W.D. Wash. 2003).

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Other litigation considerations

• Recall can start the statute of limitations clock running

– Neal v. Stryker Corp., No. 1:11-cv-62 (AJT/TRJ), 2011 U.S. Dist. LEXIS 23037

(E.D. Va. Mar. 8, 2011) (granting motion to dismiss plaintiff’s warranty claims

where plaintiff failed to file within 2 years of injury, or 2 years of product recall)

– Owen v. GMC, 2006 U.S. Dist. LEXIS 70466 (W.D. Mo. Sept. 28, 2006) (failing to

notify the particular Plaintiffs of a recall does not toll the statute of limitations where

a party has made a positive effort to notify consumers).

• Lack of customer complaints may be admissible to show lack of

notice, defect, and/or risk of harm so long as the manufacturer has a

reliable system in place to track complaints.

– Walton v. Bridgestone/Firestone, Inc., No. CV-05-3027-PHX-ROS, 2009 U.S. Dist.

LEXIS 85014 (D. Ariz. Jan. 16, 2009);

– Schaefer v. Cedar Fair, LP, 348 N.J. Super 223 (App. Div. 2002)

– Hines v. Joy Mfg. Co., 850 F.2d 1146, 1152-53 (6th Cir. 1988)

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Compliance and Risk Management

– Product specifications

– Contracts with producers and distributors

– ID and special handling of children’s products

– Testing (third party?), QA and COC records

– Tracking of materials and finished product

– Post-sale warranty & product support

– Market surveillance and tracking of complaints, warranty, etc.

– Risk-shifting mechanisms

Insurance

Indemnity agreements

– Arbitration and dispute resolution

– Audit and confirm procedures and records

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Consumer Reporting Databases

• Adverse Event Reporting System (FDA)

– Database for reporting complaints regarding

approved drugs

• SaferCar.gov (NHTSA)

– Database for reporting complaints regarding

vehicles and child seats

• SaferProducts.gov (CPSC)

– Database for publicly available consumer product

safety information

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www.duanemorris.com

Responsibility in the Chain of Distribution

• Old Order: contracts, relationships and

understandings worked things out

• New Order:

– Low cost Asia production

– Traditional rights and obligations are sacrificed

– Same factory makes your competitor’s goods

– “We make exactly what you tell us to make …”

– Written agreements non-existent or unenforceable

– Unpredictable legal systems

– Limited access to records

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www.duanemorris.com

Be Prepared for the Worst

• Risk management mechanisms in place

– Internal

– Producers

– Distributors and retailers

• Dedicated product safety team

– Identify and consider all sources of information

– Recognize, evaluate and address problems promptly

– Recall plans in place and ready for action

53

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www.duanemorris.com 54

Paul S. Rosenlund

Duane Morris LLP

[email protected]

(415) 957-3178

QUESTIONS?

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www.duanemorris.com

INTERNATIONAL Hanoi

Ho Chi Minh City

London

Singapore

Mexico*

Atlanta

Baltimore

Boca Raton

Boston

Cherry Hill

Chicago

Houston

Lake Tahoe

Las Vegas

Los Angeles

Miami

Newark

New York

Philadelphia

Pittsburgh

Princeton

San Diego

San Francisco

Washington, D.C.

Wilmington

UNITED STATES

About Duane Morris A full-service law firm with over 700 attorneys in 24 offices in

the United States and internationally.

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Product Liability Recalls on the Rise:

Legal Strategies

Larry D. Grayson and Pryce G. Tucker

Hartline Dacus Barger Dreyer LLP

6688 N. Central Expressway, Suite 1000 | Dallas, Texas 75206

P: (214) 346-3719 | F: (214) 267-4219

[email protected] | www.hdbdlaw.com

Texas. . . and Beyond

Dallas Houston Corpus Christi

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• Difficult Balancing Act: A manufacturer needs to ensure that its products are safe

and maintain credibility with its customers. At the same time, it must defend

against claims and lawsuits

• Be prepared to fight back against meritless claims while simultaneously resolving

claims with merit.

• Establish a plan on how consumers will be notified about the recall. This process is

monitored by the governmental agency (NHTSA, CPSC, or FDA) and typically

includes:

– Press releases

– Point-of-sale posters

– Direct customer notices

– Website notices

• In negotiating notice requirements, companies must balance the necessity of

providing adequate notice, the requirements of the governmental agency, and

how the notice could affect subsequent products liability litigation.

Defense Strategies Before Recall

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Defense Strategies in the Public Forum

Modern media means

unrelenting publicity, unending questions and

uncertain outcomes.

Companies should:

– Investigate, learn, and understand before speaking.

– Involve legal, marketing, engineering, service, and parts departments.

– Educate and involve the distribution chain.

– Preserve relationship with the government. 58

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Defense Strategies in the Courtroom

• Consider whether the jurisdiction imposes a post-sale duty to warn

More than thirty states recognize some form

of a post-sale duty to warn. If the relevant jurisdiction

imposes such a duty, counsel should evaluate whether

it applies to the client’s facts.

• Discoverability of Recall Evidence

Despite broad discovery rules, companies should limit the discoverability of recall

evidence where possible. Limitations on discovery may be imposed where:

1. Production requests are overly broad or vague (“all recall documents” or “any

documentation relating in any way to the recall”

2. The recall’s target vehicle does not have the same component at issue in the

lawsuit.

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Defense Strategies in the Courtroom

• Discoverability of Recall Evidence

3. The product has a long history or was widely distributed and production

requests may constitute an undue burden.

• Uitts v. GMC., 58 F.R.D. 450, 453 (E.D. Pa. 1972)

(discovery allowed)

• Uitts v. GMC., 62 F.R.D. 560 (E.D. Pa. 1974)

(discovery denied)

• Swain v. GMC., 81 F.R.D. 698, 700 (W.D. Pa. 1979)

(discovery allowed)

• Bourque v. CNH America, 2011 WL 4904430 (W.D. La. 2011)

(discovery allowed)

Regardless, plaintiffs have other avenues of discovering recall campaigns.

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Defense Strategies in the Courtroom

• Decide whether admitting recall evidence would help the company’s case

– In certain situations, admitting evidence of a recall may be beneficial to a

company. If a plaintiff seeks punitive damages, the company may cite the recall

as evidence of efforts to improve the product and protect the public. Holmes v.

Wegman Oil Co., 492 N.W. 2d 107, 112-113 (S.D. 1992); Denton v.

DaimlerChrysler Corp., 2008 WL 5111222 *2 (N.D. Ga. 2008).

– In cases where pre-recall complaints come into evidence,

excluding recall evidence means that the manufacturer loses

the benefit of showing the measures it took to make the

product safer. And if the plaintiff ignored the recall

letter or refused remedial offers, recall evidence

could assist with a contributory

negligence defense.

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Defense Strategies in the Courtroom

• Evidentiary strategies to exclude or limit recall evidence where appropriate 1. Relevancy – Companies may successfully exclude recall evidence on relevancy

grounds:

a) If the recall involves different model vehicles than the one in question. Olson v. Ford

Motor Co., 410 F. Supp. 2d 869, 872-873 (D.N.D. 2006); Jenkins v. Chrysler Motors

Corp., 316 F. 3d 663, 665 (7th Cir. 2002); Nay v. GMC., 850 P.3d 1260, 1263 (Utah 1993);

Williams v. Ford Motor Company, 2003 WL 21010601 *1 (Tex. App. 2003).

b) If the recall involves only a manufacturing defect and the claim is one of design defect.

Olson v. Ford Motor Company, 410 F. Supp. 2d 869, 874 (D.N.D. 2006); Brethauer v.

GMC., 2009 WL 820120 *5 (Ariz. App. 2009).

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Defense Strategies in the Courtroom

• Evidentiary strategies to exclude or limit recall evidence where appropriate

c) If the plaintiff’s vehicle has the same defect as the recall vehicle, but differs in other

respects, Muniga v. GMC., 302 N.W.2d 565, 568 (Mich. Ct. App. 1980).

d) Where the plaintiff offers a recall letter regarding a defect that may cause problems

under certain conditions, but fails to show those conditions existed when the accident

occurred. Calhoun v. Honda Motor Co., 738 F.2d 126, 133 (6th Cir. 1984).

e) Where the manufacturer has admitted the defect. Muniga, 302 N.W.2d at 568.

2. Hearsay – Because the recall letter is an

out-of-court statement offered to prove

the matter asserted, companies should

anticipate the arguments a plaintiff may

use to try to circumvent hearsay objections

(e.g., recall letter may constitute admission

by party opponent. Higgins v. GMC.,

465 S.W.2d 898, 900 (Ark. 1971)).

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• Evidentiary strategies to exclude or limit recall evidence where appropriate

3. Subsequent Remedial Measure – Companies should argue that a recall is

evidence of a subsequent remedial measure excludable under Rule 407. Giglio

v. Saab-Scania of Amer., Inc., 1992 WL 329557 *4 (E.D. La. 1992); Chase v. GMC.,

856 F.2d 17, 21 (4th Cir. 1988); Cothren v. Baxter Health Care Corp., 798 F. Supp.

2d 779 (S.D. Miss. 2011); Hughes v. Stryker Corp., 423 Fed. Appx. 878 (11th Cir.

2011).

4. Impeachment – To whatever degree recall evidence is admissible, counsel

should argue that it be used only for impeachment (e.g., if defense controverts

feasibility). Buckman v. Bombardier Corp., 893 F. Supp. 547, 553-554 (E.D. N.C.

1995); Miller v. Four Winds Intern Corp., 827 F. Supp. 2d 1175 (D. Idaho 2011).

5. Unduly Prejudicial – Companies should argue that the recall evidence,

whatever probative value it may have, is unduly prejudicial and excludable

under Rule 403. Jordan v. GMC., 624 F. Supp. 72 (E.D. La. 1985); Great Northern

Ins. Co. v. Schwartz, 2011 WL 2304135 (N.J. Super. 2011).

Defense Strategies in the Courtroom

64

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• Limiting Jury Instruction

Consider requesting a jury instruction explaining that evidence of a recall campaign

may only be considered after the plaintiff, independent of the recall, establishes by a

preponderance of the evidence that a defect existed in the vehicle. Manieri v.

Volkswagenwerk, 376 A. 2d 1317 (N.J. Super. 1977); Allstate Ins. Co. v. Jaguar Cars,

915 F.2d 641, 649 (fn 16) (11th Cir. 1990).

Defense Strategies in the Courtroom

65

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Defense Strategies in the Courtroom

• Failure to Recall

– Distinction between a post-sale duty to warn

and a duty to recall or retrofit a product

after sale.

– More than 30 states now recognize some

form of post-sale duty to warn.

Restatement (Third) of Torts: Products Liability§10 (1998)

Liability of Commercial Product Seller or Distributor for Harm Caused by

Post-Sale Failure to Warn:

(a) One engaged in the business of selling or otherwise distributing products is

subject to liability for harm to persons or property caused by the seller’s

failure to provide a warning after the time of sale or distribution of a product

if a reasonable person in the seller’s position would provide such a warning.

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Defense Strategies in the Courtroom

Restatement (Third) of Torts: Products Liability§10 (1998)

(b) A reasonable person in the seller’s position would provide a warning after the

time of sale if:

(1) the seller knows or reasonably should know that the product poses a substantial risk of harm to persons or property; and

(2) those to whom a warning might be provided can be identified and can reasonably be assumed to be unaware of the risk of harm; and

(3) a warning can be effectively communicated to and acted on by those to whom a warning might be provided; and

(4) the risk of harm is sufficiently great to justify the burden of providing a warning.

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Defense Strategies in the Courtroom

• Failure to Recall

Restatement (Third) of Torts: Products Liability§11 (1998)

Liability of Commercial Product Seller or Distributor for Harm Caused by

Post-Sale Failure to Recall Product:

(a) One engaged in the business of selling or otherwise distributing products is subject

to liability for harm to persons or property caused by the seller’s failure to recall a

product after the time of sale or distribution if:

(1) a governmental directive issued pursuant to a statute or administrative

regulation specifically requires the seller or distributor to recall the product; or

(2) the seller or distributor, in the absence of a recall requirement under Subsection

(a)(1), undertakes to recall the product; and

(b) the seller or distributor fails to act as a reasonable person in recalling the product.

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Defense Strategies in the Courtroom

Restatement (Third) of Torts: Products Liability (1998) (cases)

– Dowdy v. Coleman Co. Inc., 2011 WL 6151432 (D. Utah 2011)

– Jablonski v. Ford Motor Co., 353 Ill. Dec. 327, 955 N.E. 2d 1138 (Ill. 2011)

– Bell Helicopter v. Bradshaw, 594 S.W.2d 519 (Tex. Civ. App.–Corpus Christi 1979, writ

ref’d n.r.e.)

– Salvage v. Scripto-Tokai Corp., 266 F. Supp. 2d 344, 351 (D. Conn. 2003).

– Tabieros v. Clark Equipment Co., 944 P. 2d 1279 (Haw. 1997).

– Patton v. Hutchinson Wil-Rich Mfg. Co., 861 P.2d 1299, 1315-16 (Kan. 1993).

– Gregory v. Cincinnati Inc., 450 Mich. 1, 538 N.W.2d 325 (1995).

– Syrie v. Knoll International, 748 F.2d 304 (5th Cir. 1984).

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Product Liability Recalls on the Rise:

Legal Strategies

Larry D. Grayson and Pryce G. Tucker

Hartline Dacus Barger Dreyer LLP

6688 N. Central Expressway, Suite 1000 | Dallas, Texas 75206

P: (214) 346-3719 | F: (214) 267-4219

[email protected] | www.hdbdlaw.com

Texas. . . and Beyond

Dallas Houston Corpus Christi