The ABCs of product liability

YOU'RE a manufacturer of trailer equipment and will build to customer specifications if custom equipment is requested. You have built a trailer with retractable platform installed on the rear.

There is an accident. An automobile collides with that trailer. The platform latch releases, allowing the platform to pierce the front windshield of the driver's car, striking a passenger and causing severe brain damage and ultimately death.

You find out you are being sued by the deceased's family. Now what?

Michael Meehan, an attorney specializing in product liability, used this fictional case to walk the audience through the process in the NATM's product liability workshop.

He said you may learn of the claim through: the grapevine; calls from the plaintiff or his attorney (who may not identify themselves); or a “letter of representation” advising you that a claim is being made against your company.

He recommended not calling the lawyer because you are more likely to surrender critical information than obtain it. If the lawyer calls, do not discuss the matter with him; tell him you have retained counsel, which will be in contact with him. Report the claim to your insurer, then copy all of the materials and send to the broker or carrier, certified mail, return receipt requested. Request that the insurer confirm receipt of the materials, assign counsel, and identify the claim handler and attorney as soon as possible.

Meehan recommended starting a file and organizing it based on the source of the material: plaintiff, your insurance company, your lawyer, the court, and materials you have gathered from your file and produced to your lawyer or your insurer.

If you have any notes that you made at the time the trailer was sold, serviced, or modified, take them from the normal filing system, label them, and place them in the litigation file. Include: sales documents, sales orders, purchase order, invoice; design documents for the trailer, or product involved; warranty card or description, owners, service, and operator's manuals; notes from the original sale, and any service or warranty work; preserve the trailer or any parts of it that have been sent to you (if you repair the trailer, you may be spoiling evidence you can use in your defense at trial); take photographs of the equipment if it comes into your possession before doing any repairs, changes, or even moving it.

Meehan said the litigation commences with some sort of notice to accompany the service of the complaint. It will be called “complaint,” “summons,” “writ,” “service,” “You have been sued in court,” or “Forward this to your attorney.” Write down how and when you received it, copy it, then forward it immediately to your insurance representative or lawyer.

In the fictional case, the allegations in the complaint maintain that “the presence of the platform system on the rear of the trailer was dangerous and defective in that in the event of a rear impact, the platform latch released, enhancing the injuries to the occupant of the vehicle striking the trailer”; “the platform system, as designed and installed by the defendant, was insufficient to withstand the force caused by the rear impact”; “the rear of the trailer was improperly equipped in that it lacked reflective striping”; “the rear of the trailer was improperly designed in that the platform in the down position concealed the reflective brake lights and/or striping”; and “the equipment lacked proper warnings about operation and storage with the platform in the stored position.”

Meehan said the lawyer is appointed and paid by the insurance company, and represents you and/or your company. The attorney's allegiance is to you and your company, and not the insurer.

In the fictional case, the trailer manufacturer advised his lawyer that the trailer was not intended to operate or be stored with the platform down; the manufacturer affixed reflective tape on the rear of the trailer; many of the company's customers modify the trailers according to their needs; as originally designed, the brake lights were not obscured with the platform down.

Answering the complaint

Meehan said an answer needs to be filed with the court, usually within 30 days. Drafted by the lawyer, it will contain mostly denials for “legal” reasons.

He said that early in the litigation, you should address the need to join additional defendants in the case, which is necessary to ensure that the proper parties bear responsibility for the damages. In most cases, the attorney will automatically file “crossclaims” against the other defendants. Meehan cautioned, though, that by suing suppliers and customers, you may win the battle (the litigation) and lose the war (your important customers).

Discovery process

He said the discovery process is the most lengthy, and perhaps most important, aspect of product liability litigation. It allows the parties to engage in fact-finding on issues related to the litigation, through four forms:

  • Interrogatories (written).

    This is a series of questions that must be answered. You must provide your lawyer all of the information requested. The questions seek information that is in possession of the entire corporation, including all employees and records. Examples: When was the product designed? When did you first sell the product? Who sold it? What year were you incorporated, and in which state?

  • Request for documents (written).

    These are the same as interrogatories but request production of objects or files. Meehan said that before you produce any records, you should request that the parties sign a “Confidentiality Agreement”. He said that is because the plaintiff's attorneys would otherwise share your design documents with other attorneys who may have a case against you later.

  • Deposition (oral).

    This is the sworn question-and-answer session in which you personally answer questions in the presence of attorneys and parties. Meehan said this is perhaps the most important aspect of your involvement in the litigation.

    He said it is critical that you are prepared. Meet with your lawyer before the deposition and be prepared to answer difficult questions.

    He said it also is critical that you tell the truth: Lying under oath is called perjury and is illegal.

    “You don't want to bend the truth,” he said. “Lawyers can deal with bad facts. Insurance companies can deal with bad facts. Maybe there wasn't an issue with regard to, ‘You didn't put reflective tape on.’ But if you lie, it doesn't matter. Your insurance company is going to hate you. Just tell the truth. It's the most important part of the litigation.”

    Meehan said you should answer only the question that is asked. This is not the time to present your defenses. He also said you should not guess, speculate, or provide your opinion. If you don't know the answer to a question, the only accurate answer you can give is, “I don't know,” or “I don't remember.”

  • Request for inspection/expert testing (expert).

    This involves an inspection of the product, trailer, gate, or whatever is involved in the litigation. You should be involved in the testing or inspection, as you will have more expertise on the product than your lawyer, and probably even the outside expert hired by your counsel.

He said that although you likely won't have much control over settlement negotiations, you should monitor them to ensure that your uninsured risk is minimized. The major concern is the potential that the amount awarded to the plaintiff might exceed the amount of your insurance coverage.

In describing the aspects of the trial, Meehan referred to old Woody Allen saying: “90% of life is just showing up.” He said you need to make sure you attend the entire trial.

“Juries don't like empty seats,” he said. “If you don't defend your product, the jury won't.”

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