When a manufacturer goes to trial in a product-liability case, the character of the company is at stake. The plaintiff will likely allege that the company was negligent, reckless or careless in the design, manufacture or distribution of the product in question. The plaintiff may say the product was unreasonably dangerous, had design or manufacturing defects or lacked essential information. They will try to prove that the company demonstrated a lack of effort and concern.
The manufacturer, on the other hand, will try to prove to the court that they made every reasonable effort to assure a safe and reliable product. The defense must be in a position to prove that point to the court. The manufacturer will inevitably present elements of their own quality program.
The comprehensive quality system
Manufacturers recognize what quality systems they need to implement to assure a high-quality, reliable product. Prosecuting attorneys may not be well-versed in W. Edwards Deming's philosophies or the Malcolm Baldrige National Quality Award or ISO 9000, but they do have knowledge of the basic types of programs a manufacturer should have in place. An intelligent prosecuting attorney investigating a product-liability case won't hesitate to bring to the court's attention the defendant's deficient quality processes.
Prosecutors consider a comprehensive quality program a necessity for manufacturers. Popular aspects of total quality management such as employee-involvement teams, empowerment and customer service don't count. Prosecutors will scrutinize technical product quality systems and procedures, which requires documented systems to ensure safety, reliability and consistency.
Manufacturers need to ensure that the following areas receive proper treatment as part of their quality system to help prevent the chances of product liability:
Quality administrator. A documented
system of procedures. Verification
that employees follow the procedures. Qualified
employees. Training. Advertising. Warranty. Customer needs. Review of
customer purchase order contractual agreements. Product design. New product
introduction. Design review. Review of
needed warnings and instructions. Drawing and
specification approval. Control of
design changes. First-piece
approval systems. Selection
and qualification of suppliers and subcontractors. Communication. Receiving
inspection. Purchase orders. Terms of subrogation
and indemnification. Documented
process instructions. Control of
changes to documented proc-esses. Verification
that documented processes were followed. Product identification
and traceability programs. Documentation
of in-process as well as final inspection and testing. Identification
and control of nonconforming product. Equipment
calibration programs. Packaging
development.<
Receiving
and documenting customer complaints. Summary and
review of complaints. Procedure
for recalling products. Statistical
analysis programs and efforts. Records retention
guidelines.This outline of procedures won't logically be all of what a company recognizes it needs to have in place. Numerous other procedures deal with unique aspects of the company's product lines and operation that will also be necessary. But from a liability-prevention perspective, companies should ensure that they cover these outlined topics in some respect.
In recent years, product quality seems to have become secondary to service and office systems quality as corporations begin to feel that their product quality really isn't an issue. They need to have equal concerns in these areas, and even though the product's quality level may not be an issue with the external customer, retaining adequate product quality documentation could instantly become the issue.
As shown in the outline, the first step is to ensure these documented programs and procedures are in place. The second step is to ensure that they're being followed. The only thing worse than not having the necessary procedures in place is to have it found that they're not being followed. It's essential to demonstrate at all times that the operation complied with established procedures, or if it didn't at some specific time, how the company handled and controlled that deviation.
Key factors in development
The most effective and economical place to catch and address potential reliability and liability concerns is during the product's initial design review. What many companies think are design reviews don't even come close. In most cases, the right parties are not present to perform a real critique of a product design. Technical critiques of a product are not a strong point of production scheduling and purchasing departments. So if the technical disciplines aren't present, then who's doing the critiquing?
Typically, engineers hate design reviews. Engineers often are very sensitive and possessive of their work and normally don't willingly accept a critique of it. Like anyone else, engineers have egos. Egos can present problems. If an engineer does a good job of designing a product, no one has any problems. If an engineer does a poor job, everyone has problems. If engineers try to do everything alone, they create the potential for problems.
Many managers argue that they have no time in which to hold the necessary review. Companies view the challenge of competing in the global marketplace as meaning that the product has to go from concept to reality in a fraction of the original time normally allotted. If it used to take three years to introduce a new product, then we need to streamline that down to 1.5 years. If it took 12 months, we need to be able to do it in six.
But even though it is important to shorten lead times, it is more important to ensure safety and reliability. The same competitive world that demands shorter lead times also awards continuously higher financial product-liability settlements. In the same manner that a management team figures out how to streamline the impossible, so, too, is there a logical way to ensure that a design review takes place without shortchanging its credibility or effectiveness.
The highest-level quality manager should take on the role of in-house product-liability expert. From a product-liability perspective, the quality manager needs to evaluate the new product with the following questions in mind:
Is it a reasonably
safe product for the end user? What could
possibly go wrong with this product? What might
the end user do with this product? Are the dangers
obvious or concealed? Are needed
safety devices absent from the design? How could
this product possibly lend itself to personal injury or property damage? What kind
of warning labels or instructions should be included with this product?
What would
attorneys call "reasonable foreseeable use"? How does it
relate to "state of the art" in the industry? What legal
complications might arise by introducing this to the marketplace? Are there
any codes or regulations that this may be expected to comply with? What are some
extreme climatic or environmental applications for this product that should
be tested? What other
types of unique tests should be done to ensure that the product or its materials
will prove to be reliable? What similarities
does this product have with others that may have historically led to problems
in the field?This is a new perspective of analysis for quality. Although some of the areas of concern may have been asked or considered by departments to a degree, it would not have been with the focus and intensity that it is now being addressed. Nor would it have been from the same level of awareness and eventual expertise as that gained by the in-house expert.
In a study conducted by one major national insurance company in March 1993 of 27 random cases with settlements of more than $100,000, the largest cause of manufacturers' negligence centered around inadequate or nonexistent warnings.
Control of blueprints
Another key program in the quality system is blueprint and revision control. The system must ensure that everyone works off the most current print. Without the proper distribution and control system, departments and even suppliers tend to use old drawings. Sometimes, and especially in situations where the specification wouldn't be immediately obvious (such as a type of material specification), the results could be disastrous.
Second, the organization needs to have a system by which changes to the product are approved by a select group, not just one person. In a typical organization, the engineering change should be approved by product engineering, sales (customer), quality/product reliability (liability), manufacturing engineering, manufacturing and purchasing. Based on the company's size and organization, this list could change. In general, each function has a specific responsibility in approving a proposed change, and they should never be cut out of the loop.
In addition, the organization needs to ensure that the change is well-documented, addressing these areas of concern: the nature and reason for the change, parts or drawings affected by the change, the date the change will actually go into effect and the disposition of existing inventory.
In a product-liability case, the history of the specific product will be thoroughly reviewed by attorneys for the plaintiff during the discovery process. This is one of the first stages that they use to look for obvious signs that the product had a problem and that the manufacturer knew about the problem. Common questions include: How was the product engineered and manufactured at the time of the incident? What engineering changes took place prior to and since the incident? Why were the changes made?
Investigations into this area can prove to be a gold mine for the prosecution and a nightmare for the defense. At the time individuals propose engineering changes, they normally don't think about the possibility that they might one day enter into a product-liability action, so they could be quite careless in stating their reasons for the change. Or, on the other hand, they could be extremely concerned about potential liability and inadvertently still create what is known as a dangerous document.
Another problem that the in-house product-liability expert can face when subjected to a liability lawsuit is that the organization is normally focused on the here and now. This means that the organization is good about controlling changes to the blueprint specifications and updating the prints, but they don't see any significance in keeping the obsolete versions of blueprints or any other form or instruction sheet controlled by specification.
This becomes a real problem when you recognize that a product-liability case will likely be created involving a product that was actually manufactured three to five years ago. The product may have been manufactured in compliance with blueprint revision A, and now revision M is in use. And although a file of the engineering change request forms was maintained, a file of the previous blueprints was not. The company is now at a loss to furnish counsel for the plaintiff an actual blueprint of the product manufactured five years ago. This could be a real problem because the product could have changed substantially since then. The probability of this scenario becomes even greater now with the advent of computer-assisted drawing techniques and retention systems.
Reliability testing
The importance of a company's various manufacturing efforts as they relate to product-liability prevention should be ranked: quality system, design reviews and reliability-testing programs. "What efforts did the company undertake to ensure the safety and reliability of the product prior to its introduction to the marketplace?" would be a very common question asked by the courts.
Although companies may perform various everyday inspection tests on the products they make, many of which may take place right on the assembly lines by production personnel, these aren't necessarily reliability tests. Reliability tests are typically controlled lab tests, pushing the product to its extreme in many different areas. They might entail extreme temperature tests, high- and low-end voltage tests, dynamics tests, drop tests and other types of controlled tests to ensure that the product will withstand what it may be subjected to.
Many leading manufacturers and quality assurance departments create their own reliability testing labs and furnish them with the necessary equipment to ensure a reliable product. In some instances, the manufacturer even has the lab certified by Underwriters Laboratories, allowing them to perform the same tests needed to attain UL approval.
Reliability tests as well as routine inspection tests all play an important part in ensuring product quality. The types of testing that will take place are normally decided by the quality, reliability, engineering and possibly manufacturing engineering departments. The testing should prove that the products or components comply with the standards set. These may be company, industry or regulatory standards.
Just like any other critical area of product evaluation, the manufacturer and liability expert must watch the types of reports generated by this function. The results generated by the various reliability tests are needed to evaluate potential risks, but the actual reports followed by the company's actions can be as detrimental as they are beneficial. If the company identifies a potential problem with a product design and then elects to do nothing about it, this report can also end up in the courtroom as evidence.
Required documents
As part of the quality system, the manufacturer needs to recognize all the internal documents that have a significant relationship to the product manufactured and establish a record-retention program that identifies who maintains the records, where and for how long.
In a product-liability action and especially during litigation and the request-for-documents stage, the manufacturer will be required to produce numerous documents related to the product's design, manufacture and sale. The in-house liability expert must be able to produce these documents in a short time span, so the manufacturer must be organized. An initial list would normally include:
Engineering
drawings and product specifications. Sales and/or
purchase orders for the specific product. Contractual
agreements between the buyer and seller (including liability). Correspondence
pertaining to sale of specific product. Product brochures
and advertising materials. Product warranties. Owners manuals,
guides or instructions that accompanied the product. Copies of
any warnings that were attached to or accompanied the product. Test reports.A typical problem that occurs when trying to locate such documents from three to five years ago is that no one knows for sure where the records are. Sales and purchase orders may have been boxed away in basements, attics or off-site locations. Drawings, brochures, instructions and warnings may have been substantially revised since this product was produced. Not being able to locate such documents can hurt the defense because they will be unable to prove what was stated or provided.
The next area of concern the manufacturer faces during the discovery "request for documents" stage is the potential of having dangerous documents in retention. As manufacturing managers get caught up in the day-to-day problems of production schedules, lead times, efficiencies, politics and numerous other pressures, they can easily have the tendency to fire off memos or other types of documents that end up in someone's file and later surface during this discovery stage, which the organization will definitely regret. These documents can blame another department for poor product design or manufacture, or express concerns for potential field problems without anyone reacting. The best way to judge if a document could be dangerous is to ask, "If this product ever went to court, would I mind if someone read this memo there?" Nothing in anyone's files is protected from discovery, confidential or not.
The potential for someone to write a dangerous document exists everywhere within the organization. It can be contained in engineering change forms, letters to customers or other parties, meeting minutes, test reports and several other places. It is common for individuals to voice their feelings or concerns on paper. Many product-liability cases have been lost because these memos and reports were found by counsel for the plaintiff. They may even be presented by disgruntled employees who eventually became ex-employees.
Discarding files during a lawsuit can easily lead to criminal prosecution if detected. The liability expert needs to train the organization about the dangers of creating such documents and demonstrate the proper way of dealing with an issue. One of the best ways to address a product problem that could conceivably result as a liability is to meet and discuss the concern verbally and develop a verbal action plan.
Handling customer complaints
Any time a customer-service or sales-department employee becomes aware of a quality problem with a product in the field, they should be required to document and communicate that problem so that other departments can react. If there is a problem with a product in the field, the company should investigate and react as quickly as possible. Customer-service departments normally receive a high volume of calls involving everything from orders, questions, product inquiries to product complaints. Often, customer-service representatives receive a call about a defective product and coordinate a replacement shipment without telling anyone else. The problem doesn't become known to the rest of the organization unless it becomes noticeably repetitive.
Problems with products need to be immediately communicated once they are known so that the rest of the company can investigate the severity and cause. This can be accomplished by requiring that customer-service employees complete customer product-complaint forms. In this manner, the quality department can investigate the cause and hopefully identify and correct any problem beginning to develop.
If procedurized and handled properly, this can also provide the company with a documented history of what problems surfaced with various products and what actions they took to correct them. It also demonstrates to the court that your company is a concerned and caring organization and that you immediately react to any known problems. This can also benefit the defense. For instance, if a product that the company has produced tens of thousands of is involved in a liability action and counsel for the plaintiff alleges that it is defective by design, the documents will support the defense by showing that no other complaints were ever made about the product. Of course, the company must act in a responsible manner to the complaints filed, or this can just end up being more ammunition for the plaintiff.
Another major area of concern is when employees improperly handle liability incidents when they first make themselves known. A good question to ask is: If any sales or customer-service personnel received a call informing them that a party was injured by one of your products, would they know how to handle the call? Would they know who to report it to? Would they know what questions to ask? More importantly, would they know what not to say?
The first call coming into a company regarding an incident could be a very important one. It could be a witness or representative of an outside company who wanted to make the organization aware of an incident that just transpired and who may not be so willing to talk about it later once an action begins to develop. It could be an attorney representing a new client. The person receiving a potential liability call should pull out a specially devised report form and begin to document all known facts regarding the incident itself. This individual does not divulge information to the caller but only records information. Once the information known is attained, the representative informs the caller that someone will get back with them. The representative then forwards the form to the product-liability manager, who takes appropriate action.
These are just some concerns a company needs to focus on when entering into this new field of study. Product-liability actions won't go away. Current legislation may be effective in helping to curtail some of the impact, but it won't make a major difference in how devastating it can continue to be for manufacturers. Keep in mind that there are more than 750,000 attorneys out there, many of whom make good incomes off product-liability cases. Many are even in the Senate and Congress. They're not likely to cut off the hand that feeds them.
The study of product liability is a new frontier for quality.
(This article contains excerpts from Randall Goodden's new book, Preventing and Handling Product Liability, Marcel Dekker Publishers, New York, 1995.)
About the author
Randall Goodden is the vice president of quality and product reliability for Everbrite Inc. in Greenfield, Wisconsin. He has been in the quality profession for 20 years and has published numerous articles on quality, product reliability and liability that have appeared in leading quality publications. In addition, he has written a legal reference book for attorneys on product liability.
