Use a Product Safety Team to Minimize Your Product Liability

We’re now ready to look at the last piece of product liability risk management, and that relates to operations, and specifically how you deal with contract liability and tort liability. We’ve already covered how you can deal with contract liability and that is by limiting your warranty exposure. You can limit that exposure, you might recall, by not giving express warranties and by disclaiming implied warranties. Now, if you’re operating a business, this probably means that you’re going to be in the middle of a tug-of-war between your legal advisor and your marketing people.

As a form of marketing, your marketing folks might recommend that you give express warranties, and they might be concerned if you try to deny implied warranties, try to disclaim implied warranties. So that’s going to be a decision that you’ll have to make when you’re getting pulled between the marketing people and the lawyers who will tell you, hey you can eliminate your warranty liability if you want to. On the tort side, your major opportunities for limiting liability relate to your safety concerns relating to a product. So let’s try a hypothetical. Let’s assume that you and I are on a new product safety team within a company.

Let’s say it’s a cross functional team that will bring in people from finance, marketing, engineers, lawyers, etc., to look at safety of new products. And we have a new product that we’re considering today. This product is a talking hair dryer. So, you wake up in the morning, you walk into the bathroom, and the hair dryer automatically activates and says good morning to you. And you can give the hair dryer instructions, verbally. So our team wants to evaluate the safety of this product. Where do we start in evaluating the safety? What’s the very first question we want to ask? Please hit pause and write down your answer.

This is a very tough question, I’ve discovered. When I pose this to company managers, to executives, because they want to focus on how products should work. Engineers, company leaders, managers, often have a tunnel vision. We’ve manufactured a product to perform in this way, and so our goal should be to make sure it safely performs what it’s intended to do. However, that’s the wrong question. The question is not, will the product perform as intended? The question is, how are our customers actually using the product? The magic word here is foreseeable. What kind of foreseeable uses are customers making of the product.

So what I’d like you to do now is, thinking of the hair dryer, what uses do customers make of hair dryers apart from drying their hair? See if you can think of three uses that customers make apart from drying their hair. Hit pause, write down those uses.

This is what my students come up with, just as an example. They say they use hair driers for drying clothes, for starting charcoal, for shrinking plastic, for drying glue and paint, for defrosting refrigerators, for thawing pipes, for drying pets when they’re not using their microwaves, just kidding, for drying polish, for dusting, and a number of other uses. So this is the very important starting point, how are people actually using our products? And then as you might guess, the next step is to ask yourself, are there any dangers associated with these uses? Now I’m not an engineer, I’m not sure where the dangers would lie.

But let’s assume that you decide that shrinking plastic, drying glue, drying polish, are all risky activities that might result in injury. So you’ve identified foreseeable uses, you’ve identified the risks associated with those uses, and now the question is, what is your next step as a member of this product safety review team? Please write down your answer, what is your next step? And then we’ll move on.

The next step, when I ask this question to executives and to product managers, is often stated as developing warnings so that people will not be injured by the product. This is the wrong answer. In other words, you can’t jump from the risk identification to giving warnings relating to the product. And the reason why is that courts will first require that you try to redesign the risks out of the product before moving on to warnings. Here’s an example of the court’s logic. We have a situation where somebody’s working with a tire and there’s a warning on the tire.

It’s very prominent in red and yellow highlights, and it includes a drawing that shows an exploding tire throwing a worker into the air. And the warning says, never mount a 16-inch size diameter tire on a 16.5-inch rim. Mounting a 16-inch tire on a 16.5-inch rim can cause severe death or injury. Now after seeing this picture, after reading the warning, somebody decided to try to mount a 16-inch tire on a 16.5-inch rim. The tire exploded and it resulted in severe brain injury. The person sued the manufacturer and the manufacturer said, well wait a minute, we had a warning on the tire, it was very clear, and the person even read the warning.

The court said, that’s not enough because there is evidence that the tire was defectively designed, and according to the Supreme Court of Texas, warnings are not a substitute for a reasonably safe design. So as a result the defendant Goodyear, here, had to write a check for $5.5 million.

So bottom line, instead of jumping from identifying the risks to the warnings, it’s important first of all to go through a redesign process first, and then develop warnings. So that pretty much covers our look at how you can control and manage product liability risk, and we have one last segment, and that is, is there any way in which you can use product liability strategically to create value for your company? We’ll look at that in our final module.