Randall L. Goodden - Preventing and handling product liability

Cover

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Randall L. Goodden

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Library of Congress Cataloging-in-Publication Data

Goodden, Randall L.
Preventing and handling product liability / Randall L. Goodden.
p. cm.
Includes index
ISBN: 0-8247-9681-0 (alk. paper)
1. Products liabilityUnited States. 2. Product safetyUnited
States. 3. Risk managementUnited States. 4. Quality control.
I. Title
KF1296.Z9G66 1995
346.73038dc20
[346.73038] 95-33240
CIP

This publication was designed to provide helpful recommendations and assistance with regard to the subjects covered. It was not meant to supply direction on how to handle legal cases or issues, nor is it intended to take the place of legal advice or other expert assistance that a company may be required to seek.

The publisher offers discounts on this book when ordered in bulk quantities. For more information, write to Special Sales/Professional Marketing at the address below.

This book is printed on acid-free paper.

Copyright 1996 by Marcel Dekker, Inc. All Rights Reserved.

Neither this book nor any part may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, microfilming, and recording, or by any information storage and retrieval system, without permission in writing from the publisher.

Marcel Dekker, Inc.
270 Madison Avenue, New York, New York 10016

Current printing (last digit):
10 9 8 7 6 5 4 3 2 1

PRINTED IN THE UNITED STATES OF AMERICA

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To my wife, Peggy, for her love and support,
and my pride in life, Wendy and Becky.

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The entire preoccupation with product liability in the last two decades, along with the time and money spent in litigation, are out of control in this country. The number of lawsuits related to product liability filed in federal courts increased 983% from 1974 to 1988, placing a heavy financial burden on corporations of all sizes. Many corporations have been required to pay substantial risk insurance premiums or defense costs, and what might have been healthy organizations have been forced into bankruptcy. Expenditures for product liability insurance premiums and other defense costs and settlements impact the bottom line and drain funds that would have otherwise gone into profits, and yet they are often viewed as a necessary evil unlike other Quality Costs. The impact of this has in many cases reduced the amount

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of funds available for research and development, preventing many new products from making it to the marketplace and adding significant cost to many other products.

As the number of attorneys in the United States grows, with over 40,000 entering the field every year and approximately 740,000 in total, and with record-setting awards to plaintiffs being publicized routinely, it is no wonder that such actions are almost instantaneous. America is the most litigious nation in the world, and, as of 1995, there is little relief in sight. Even with liability reform, it is doubtful whether such actions will ever be truly curtailed, because attorneys for plaintiffs will likely find new angles to pursue.

The insurance industry maintains that it spends as much on defending corporate policyholders against product liability actions as on paying claims. As this trend continues, insurance companies are focusing their efforts on controlling the costs of legal defense, and may often pursue an early settlement even if a case lacks credibility. Corporations and their insurance carriers must therefore join forces in a concerted effort to reduce risk and mitigate potential suits to turn this situation around.

The problem most manufacturing corporations have had up to this point is that they feel they really dont have the background or knowledge necessary to get involved in product liability. Many of those in Quality and Engineering management may have maintained concern and interest in the subject, but felt that a legal degree is necessary to get involved in this area. But this isnt true; the basic knowledge can be obtained without attending law school: one must only possess the desire to learn.

Many people acquire a substantial knowledge of medicine and the medical field without attending medical school, by reading and studying and/or through personal involvement. They do it because they want to take good care of themselves and their families, and they want to understand what they should and shouldnt be doing to maintain their good health. Although theyre not experts, they can become well-versed.

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The elements of product law can be learned the same way. Although the corporate representative designated to study this field will probably never become a lawyer, he or she will be able to improve and maintain the health of the organization. The first requirements are ambition, willingness, and recognition that one needs to learn, and then, with study and experience, the knowledge will grow.

This book demonstrates why corporations must abandon the conventional practice of leaving the handling of potential product liability incidents to the insurance companies, because it is obvious that the insurance companies (even with any experts they enlist) will never have the technical product knowledge that the corporation possesses. It is time for corporations to realize the inefficiency and risk in leaving their fate in the hands of others who lack the technical knowledge to challenge the credibility of the basic premise of a case, and get actively involved in their own defense.

This book will show any company how to develop the procedures and programs necessary to help reduce the potential of a product liability incident. It describes the Quality, reliability, and testing procedures and efforts that need to be put into place. It will show corporations how their own nonlegal staff can take a lead role in fightingand winningproduct liability actions. It describes the fundamentals and leading methods of investigating a field incident that might result in a product liability lawsuit, and stop it in its tracks. This book removes the mystique surrounding the legal process, and explains the procedures in terms anyone can understand.