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Protecting O&P Companies from Product Liability—Part 2
By Sylvia A. Ezenwa, JD 
The law of product liability allows a person who has been injured by a defective product (i.e., a plaintiff) to recover monetary compensation or "damages" for his injury by suing any company or individual (i.e., the defendant) involved in the product's manufacture, distribution, or sale.
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Product liability lawsuits usually are decided in two stages: First, a court will determine whether the defendant was responsible or "liable" for the plaintiff's injury; and second, if liability is found, the court will assess the kind and amount of damages to award to the plaintiff.
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Part 1 of this article
, published in the August, 2006, issue of
The O&P EDGE
, showed how liability is determined: specifically, the assertions or "claims" commonly raised by plaintiffs in product liability lawsuits. Part 2 will reveal some defenses commonly used by defendants to refute plaintiffs' claims; the kinds of damages that may be awarded to plaintiffs when those defenses fail; and how O&P companies can minimize the risk of product liability.
Common Defenses
Plaintiffs usually assert one or more of the following claims in product liability lawsuits: (1) strict product liability (i.e., a product defect caused the plaintiff's injury); (2) negligence (i.e., the defendant's failure to use reasonable care in manufacturing the product, or to provide warnings about potential dangers of the product, caused the plaintiff's injury); and (3) breach of warranty (i.e., the nonconformity of a feature of the product to the seller's promises or warranties caused the plaintiff's injury).
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Two defenses commonly used by defendants to refute plaintiffs' claims are contributory negligence and assumption of risk.
(1) Contributory Negligence
Using the defense of "contributory negligence," the defendant can argue that the plaintiff should be barred from recovering any damages, because the plaintiff's own negligent or careless conduct while using the defective product contributed (along with the defendant's negligence) in causing his injury. However, in many states, the defense of contributory negligence has been replaced with "comparative negligence," which means that the plaintiff's own negligence cannot totally bar him from recovering damages, but the damages he does receive will be reduced in proportion to his own negligence.
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For example, a court might determine that: (i) a prosthetic device manufacturer was 70 percent liable for a patient's injury because it failed to warn the patient of a potential hazard of the device; and (ii) the patient was 30 percent liable for his own injury because he misused the device. As a result, when assessing damages, the court will reduce the amount of damages awarded to the plaintiff by 30 percent, which means that if the plaintiff is entitled to receive $100,000 in compensation for his medical costs, he will only receive $70,000.
(2) Assumption of Risk
Using the defense of "assumption of risk," the defendant can argue that the plaintiff should be barred from recovering any damages because the plaintiff: (i) knew that a product was dangerous; (ii) appreciated the nature or extent of the danger; and (iii) voluntarily exposed himself to the danger.
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For example, a patient may be barred from recovering any damages for an injury caused by an experimental prosthetic device if he was warned of all the potential dangers of the new device, but chose to use it anyway.
How Damages Are Assessed
If a defendant is found liable for a plaintiff's injuries, the court may choose to award damages to the plaintiff. In product liability lawsuits, there are two kinds of damages that may be assessed against defendants: actual and punitive damages; and the defendant also may incur other defense or litigation-related costs.
(1) Actual Damages
"Actual damages" consist of the money awarded to a plaintiff to compensate him for the actual or real expenditures he made, or pecuniary losses he suffered, during the course of his injury.
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For example, a patient injured by a defective prosthetic device may be awarded actual damages that include "medical costs (past, present, and projected, after insurance), lost productivity (e.g., actual salary losses and projected lost future earnings), other dollar losses (e.g., burial expenses, travel costs to obtain medical care), and general losses that are difficult to monetize (e.g., pain and suffering, loss of consortium (i.e., a spouse's help and affection), disability, psychological and emotional distress)."
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(2) Punitive Damages
In addition to actual damages, a plaintiff also may be awarded "punitive damages" if the court finds that the defendant either: (i) intentionally caused the product defect; or (ii) inadvertently caused the defect by being grossly negligent or reckless during the manufacturing, distribution, or retail process.
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Because punitive damages are intended to punish a defendant's reprehensible behavior and deter similar wrongdoers, they are not based on the actual damages suffered by the plaintiff, but on the defendant's ability to pay.
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(3) Other Defense Costs
In addition to actual and punitive damages, a defendant also may incur other monetary losses that may adversely affect its business interests, including: "direct and indirect costs of a product recall (including lost product and replacement of product), lost profits, lost sales (i.e., affected products and other product in the same product line or similar product category), loss of customers, reduced market share, loss of business reputation, and legal expenses."
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Moreover, the intentional violation of any state or federal product safety, labeling, or other applicable laws may subject the defendant to additional civil or criminal penalties, such as statutorily mandated fines and/or terms of imprisonment.
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How to Minimize the Risk of Product Liability
Product liability usually is imposed when a product is sold in a defective condition, making it unreasonably dangerous to the user or consumer. A product may be considered "unreasonably dangerous" if it has a defect in design, manufacturing, or marketing.
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Therefore, to minimize the risk of product liability, O&P companies must reduce the likelihood of such defects occurring during product design, manufacturing, or marketing, and that task requires the development and implementation of quality assurance standards.
Checklist for Quality Assurance Standards
Any set of standards developed by a company to assure the quality of its products should cover the following areas:
- Product design (including compliance with industry and government specifications);
- Product performance (including post-production testing);
- Product safety (including post-production inspections; tracking procedures, such as serial or lot numbers, to help identify and locate products after distribution and sale; and recall procedures to recover defective products already in the hands of distributors, retailers, or consumers);
- Product marketing (including review of product literature, such as advertisements and labels, to ensure adequate and proper instructions for product use, and warnings of potential dangers);
- Express warranties (including verification of truthfulness of statements made by salespersons, on labels, and in advertisements, concerning product quality, character, safety, and performance);
- Monitoring of customer complaints (including the specific product involved, the alleged defect, and the eventual resolution--either refund, repair, or replacement);
- Monitoring of compliance with product safety, labeling, and other applicable laws; and
- Documentation and record keeping (including maintenance of paper and electronic records of all design specifications, results of performance testing and safety inspections, copies of all product literature, and correspondence with government regulatory agencies).
Remember, the goal of quality assurance standards is, first, to prevent defects from ever occurring; and second, if they do occur, to detect and correct them before they can cause injury to a consumer. To achieve those goals, it is best that such standards be: (i) written; (ii) comprehensive; (iii) user-friendly and readily accessible to all company employees (e.g., by compilation in a handbook or manual); and (iv) administered by an individual (i.e., a quality assurance administrator) who is fully capable of monitoring and ensuring the company's compliance with internal quality standards, as well as state and federal laws.
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References
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Early, Ludwick & Sweeney, Defenses in Products Liability Lawsuits, available at
www.els-esqs.com/ProductsLiabilityNewsletter.jsp
(last accessed Feb. 21, 2006).
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Jean C. Buzby et al., Food and Rural Economics Division, Economic Research Service, U.S. Department of Agriculture, Agricultural Economic Report No. 799, Product Liability and Microbial Foodborne Illness, app. at 39 (April 2001), available at
www.ers.usda.gov/publications/aer799/
(last accessed Feb. 22, 2006).
- See generally Buzby et al., supra note 2, app. at 36-39.
- See Black's Law Dictionary 1033, 282 (6th ed. 1990).
- See Black's Law Dictionary 123 (6th ed. 1990).
- See Black's Law Dictionary 390 (6th ed. 1990).
- Buzby et al., supra note 2, app. at 40.
- See Buzby et al., supra note 2, app. at 40.
- See Black's Law Dictionary 390 (6th ed. 1990); Buzby et al., supra note 2, app. at 40.
- Buzby et al., supra note 2, app. at 40.
- See Buzby et al., supra note 2, app. at 40.
- Caterpillar, Inc. v. Shears, 911 S.W.2d 379, 381-382 (Tex. 1995).
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See generally Early, Ludwick & Sweeney, Quality Control,
www.els-esqs.com/ProductsLiabilityNewsletter.jsp
(last accessed Feb. 21, 2006).
Sylvia A. Ezenwa is a lawyer, author, and freelance writer based in Superior, Colorado. She is licensed to practice law in the State of Texas. She writes legal articles for trade and consumer publications.
DISCLAIMER: The information in this article is not intended to constitute legal advice. Please consult an attorney regarding your specific situation.
Copyright 2006 Sylvia Ezenwa. Reproduction of any portion of this article in any form is prohibited without the expressed, written consent of the author. 
Table Of Contents - September 2006
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