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Randall Goodden

FDA Compliance

Handling Product Recalls and Product Liability Lawsuits

A major field of opportunity for the head of quality

Published: Monday, February 24, 2020 - 13:03

The manufacturing industry, stock market, and new product development have really taken off in the past four years, and there’s a lot of focus now on moving offshore manufacturing back into the United States. With all of this growth, it is also apparent that many manufacturing corporations are primarily focused on marketing their new products, increasing sales, and hopefully, ensuring their products are safe and will live up to expectation.

But with all the records being set in the stock market and employment, record numbers of product recalls and product liability lawsuits are also happening. What further compounds that problem are executive management teams making assumptions that their employees know how to prevent product recalls and product liability lawsuits, that it’s basically “common sense.” This false perception has led to an ever-growing trend in product recalls, record-breaking numbers of product-liability lawsuits, and manufacturing corporations going bankrupt.

Whether your company nets $20 million or $20 billion, whether you manufacture consumer products, automotive, medical, industrial, or commercial, or whether you have a legal department or don't, many corporations continue to make the same mistakes at all management levels. They will do so until companies become educated in this specific area, from the top down.

Quality professionals can help

Learning all the areas in manufacturing that can lead to financially devastating recalls, and especially product liability lawsuits, can be valuable knowledge for the head of quality.

Figure 1: Recall trends across several sectors (click images to enlarge)

There are more than 270,000 product liability lawsuits in the U.S. courts and another 80,000 being added every year, especially as we create higher-tech products. Many of the new technological innovations and products based on artificial intelligence (AI) have no history, so what can ultimately happen to them in many cases is unknown. This also leads to the potential for larger, more complex, and more expensive product recalls than ever before.

In more than a decade of studying product recalls as they are being announced, I find that the largest cause of recalls is due to defects in design. It is also the top cause of lawsuits, along with lack of adequate warnings. I reported this during a TV interview with Reuters back in 2007. Products were defective right from the start, and manufacturers didn’t catch them, probably because there really was no design or product-safety review before the products were launched.

At the start of my seminars, I ask attendees if their companies hold design reviews and product-safety reviews before launching new products. Most of them respond “yes.” But when I get into the detail of how such reviews should be handled, the majority of those who initially said they hold them, then say they don’t do all of what I state needs to be done. In essence, they really aren’t holding reviews; they just thought they were.

The common practice with most manufacturers is that a product engineer is assigned to design and engineer a new product and possibly do (what they think is) a product-safety review at the same time. This might only be a failure mode and effects analysis (FMEA), which is not a product safety review. Once the engineer completes the drawings and specifications, and reviews them with those who will have to build the product, they consider that to be a design review. It’s not. It is nothing more than an after-the-fact engineering review: “I’ve already designed the product; this is what you’re going to have to do to build it.” If the product fails once it’s out in the marketplace, it’s the engineer’s fault.

Quality’s typical role is to become familiar with the new design and specifications, and ensure all the products are built to those specifications. That isn’t enough. I gave presentations at every annual ASQ International Conference from 1997 until about 2007 and would say to the quality audience, “When you just accept the drawings and design without question or review and make sure all the products are built in compliance, you’re just assuring customers that if the design has a defect, we’ll make sure you get one.”

Quality needs to start doing more than that. It needs to make sure there is a design review as well as a product-safety review, that the right parties are part of the teams, and that the proposed product is thoroughly reviewed and approved by all the parties, and tested, before the drawings are released for production. This design review should be a fully documented set of meeting minutes, and the product-safety review should be documented as well. Without this documentation there will be no discussions or decisions to reference at a later date, and nothing to prove that such review meetings ever took place, thereby setting the stage for negligence if the issue ever goes to court.

There are a lot of companies that focus only on making sure a new product is in compliance with all regulatory requirements, thinking once this has been accomplished they’ve done everything they’re expected to do. Wrong! Being in compliance with regulatory requirements is viewed in the legal arena as a minimum requirement. There could be numerous unique aspects of a product design that could result in accidents or injuries which aren’t covered by regulatory or industry standards that the company can be held accountable for, regardless of whether they complied with regulatory requirements. Regulatory requirements commonly deal with some aspect of product design that is common to all the products, not unique, specific design features.

Organizational structures that can affect quality’s role

In my decades in international manufacturing with multiple plants around the world, I rose to the executive level and was a vice president of a number of departments and functions. I am well aware of what I would consider good organizational structures as well as bad ones. The heads of departments like quality, product safety, and product-reliability testing need to report to the president and be independent of scheduling and production pressures. Many times they’re not. The top executive merely finds a convenient home for them.

When I see these departments reporting to the vice president of engineering, or even the vice president of operations, I am concerned because I know that in many cases those heads are graded on schedules and output, and the concerns of these key functions can be ignored when the focus is on hitting the company’s weekly or monthly production or shipping goals. These functions must remain independent of such pressures and assume the role of the “conscience of the company” in ensuring the company is going to build a safe and reliable product that’s going to live up to customer expectation.

The head of quality should be able to sit in the president’s office and present her concerns regarding a product design with the head of engineering, head of operations, or even the head of sales, and the president can decide as to how they should proceed.

The opportunity for quality

I have mentioned a number of trends and problems that plague and bankrupt product manufacturers, but there are quite a number of other areas, such as problems in marketing, warnings and instructions, dangerous documents, contracts and agreements, as well as how to begin investigating a claim or product liability lawsuit. I discuss all of these issues in my seminars and books. There is a lot for quality professionals to learn. But not only is it necessary for them to do so, it can also be extremely rewarding.

In all probability less than one percent of manufacturers in the United States have legal departments, and they don’t get into much more than contracts, agreements, acquisitions... and finding defense attorneys to handle their liability cases. So who is going to spearhead all of these preventive aspects and protect the company from such disasters that are substantially growing in number? The quality department should. After all, quality professionals are ones who have, or should have, the best grasp of existing or potential problems.

Back in the early days as a corporate director of quality for a large multiplant company, we were hit with our first product-liability case that involved a fire. The question quickly arose as to who was going to handle this, and my response was if our product could really cause such a disaster, that would be the ultimate product-quality failure, so as the director of quality, I should handle it. I did from that point on.

Unfortunately, at the time it was very difficult to learn what to do and what to expect from a legal perspective. There was no internet and no articles on the topic. And to my surprise, no interest among quality professionals. Even as I began to understand product liability and write articles about the legal side of quality and product reliability for quality publications, I got an instant “Whhhoooaaa, that’s legal stuff. We don’t deal with that.” That attitude eventually turned around, but it took time to convince quality professionals that, yes, you do need to learn about and deal with legal stuff.

Developing and implementing such a program is a major opportunity for the right quality person. First, you have to learn all of what needs to be in place, how it needs to be written, how it needs to work, and then work on the implementation within your corporation. This information wasn’t available to me in my early years, but it is available to manufacturers and quality professionals now. I have watched numerous heads of quality receive the training and implement the program, and even have their titles change to include this area, and then even be hired by larger companies that need the same expertise.

This is the only way we’re ever going to turn all of these upward product liability trends around, and substantially improve corporate profitability.


About The Author

Randall Goodden’s picture

Randall Goodden

Randall Goodden, educator, advisor, and author has been teaching product safety, and  recall and product liability prevention worldwide for more than 20 years. He is the author of Lawsuit! Reducing the Risk of Product Liability for Manufacturers (Wiley, 2009), Product Liability Prevention: A Strategic Guide (ASQ Quality Press, 2000), and  Preventing and Handling Product Liability (CRC Press, 1995). Goodden has served for decades in manufacturing as an interim president and corporate vice president of quality and reliability, litigation management, and new product development. Currently he is president of Randall Goodden International and Goodden Enterprises LLC.