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Guard against lawsuits

Guard against lawsuits

Product liability law is undergoing dramatic change--hopefully for the better.

The American Law Institute (ALI) recently issued Restatement (Third) of Torts: Products Liability. This 400-page analysis of current and future law moves product liability failure-to-warn law away from "strict liability" towards a negligence-based system. (A failure-to-warn lawsuit claims that a manufacturer failed either to provide proper warnings about potential hazards or appropriate instructions for the safe use of a product.) As a result of this change, juries will be asked to consider not if there could have been a "better" warning--an easy decision to make in hindsight--but if the warning given was "reasonable."

Although court adoption of ALI recommendations should foster more sensible product liability decisions, it is still imperative that manufacturers assume a defensive posture against failure-to-warn claims.

Plan ahead. The "learned intermediary" or "sophisticated purchaser" doctrine somewhat protects manufacturers from failure-to-warn liability. Under this doctrine, a manufacturer isn't required to warn end users about potential hazards of its products--if it gives adequate warning to an intermediary that can reasonably be expected to use the product responsibly or communicate the necessary warnings.

Nevertheless, prudent companies must take all possible steps to help prevent failure-to-warn claims. These precautionary actions also lay the groundwork for a strong defense if a suit is filed. Manufacturers must understand the hazards associated with their products and create efficient, effective warning systems.

Companies should first establish a solid information base. They should evaluate their products to determine potential hazards, review the medical and scientific literature on any chemicals or substances in the products, and keep accurate product-related records, including those on raw materials and packaging.

Companies then should ensure that relevant safe use and handling information is communicated to their customers. They should develop complete, easily understood warnings and implement a well-documented system of disseminating safe use and handling information along with the product. Taking such steps can't prevent the filing of such a lawsuit, but should provide its legal counsel with materials to support its defense.

Plan a defense. Should someone file a failure-to-warn suit, manufacturers can help protect themselves by acting immediately to support their defense counsel. Companies should notify key company personnel promptly when a lawsuit is filed, and explain to all involved employees that a successful defense is as important to the company's bottom line as manufacturing and selling operations. Companies should also assign an internal liaison team with authority to expedite counsel's requests for assistance and information.

The actual defense occurs over three phases: investigation, discovery, and trial. Each phase requires collaboration between the company and counsel.

The effort is worth it. An ill-advised settlement, involving substantial dollars, encourages others to sue. However, the manufacturer who fights and wins will protect its products and establish a strong deterrent to similar claims.

Legal Questions

Q How can a company best support its counsel during the investigation phase of a product liability lawsuit brought against it? Company personnel need to understand clearly what information is needed and the period of time to be investigated. In many cases, the alleged injury many not be predicated on a one-time incident, but rather from long-term exposure. The suit may not even be filed until several years after the claimed exposure period.

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The company team must establish a procedure to categorize the numerous, sometimes thousands, of documents and identify their sources. Most important, the team must understand that the investigation must be thorough.

Q What happens during the next stage, discovery? Here, the plaintiff and defendant each can obtain facts, documents, and the identity of witnesses from the other. For the company team, the discovery process may include producing company documents for inspection, providing written answers to formal questions (interrogatories), and giving sworn testimony in depositions taken by the plaintiff's attorney. The company's defense counsel, of course, will lead the company's efforts to respond to document requests and interrogatories.

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Q Is the company as actively involved during the trial as well?Employee involvement will be over after the investigation and discovery phases of the case, except for individuals who are assisting counsel or who will be witnesses. Witnesses must expect to be flexible, as scheduled dates and times change frequently. During this phase, detailed preparation is essential.

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