Product Recalls

“Adequate and Reasonable” Product Recalls

by Kenneth Ross

Most manufacturers, at some point, will have to undertake a post-sale remedial program in connection with one of its products. The program could include a consumer warning, recall, retrofit, or safety upgrade. Such a program may be instituted as a result of a series of accidents or consumer complaints, lawsuits, an adverse jury verdict, a safety improvement, a change in standards, or a request or order of a governmental entity in the United States or abroad.

© 2003 DRI. All rights reserved. Any manufacturer selling in the United conduct was reasonable. And, even if the or regulations. (For a comprehensive dis- States needs to assume it has at minimum manufacturer is held liable under strict li- cussion of the common law in all 50 states a post-sale duty to warn, since significantly ability or negligence for selling a defective and of U.S. and foreign regulatory law on more than half of the states have adopted product, its actions and due diligence should this subject, see Post-Sale Duty to Warn, a some version of this duty, either through be helpful in defending against a claim of monograph published in September 2003 the courts or the legislatures. On the regu- punitive damages. by the American Bar Association’s Section latory side, U.S. governmental agencies have This article will describe various guide- of Litigation.) revised their regulations to require reporting lines, regulations, and best practices for imple- Section 10 establishes four criteria to con- of more safety issues. Governments in the menting a post-sale remedial program and sider when deciding whether a manufacturer European Union will be required next year will discuss how to defend the adequacy of has a post-sale duty to warn. Failure to issue to issue new regulations increasing a man- a post-sale program. This article will not such a warning would be unreasonable and ufacturer’s responsibility to withdraw its discuss when a manufacturer should or is a basis for liability. The criteria are similar products from the marketplace. In addition, legally required to report a post-sale prob- to the Learned Hand formula—the higher the U.S. Consumer Product Safety Com- lem to the government or how to set up a the risk, the more responsibility to warn, mission has recently sponsored meetings product safety management program, in- unless the burden is too high. This section and studies on recall effectiveness to try to cluding a post-sale planning protocol. I have provides nothing more than a reasonable- help manufacturers develop better ways to already discussed these issues in “Estab- ness test for determining if the duty has recall their products. lishing an Effective Product Safety Manage- been met. And the trier of fact, of course, If the manufacturer’s product was defec- ment Program,” in the January 2003 issue of decides this issue. tive at the time of sale, the common law pro- For The Defense, and “The Increased Duty Section 11 of the Restatement states that vides generally that a highly effective recall to Take Post-Sale Remedial Action,” in the there is no common law duty to recall a prod- will not cut off liability for the manufacturer. April 2002 issue. uct. However, it also says that if there is a man- A post-sale duty to warn is a separate cause datory or voluntary recall and a manufacturer of action, based on negligence. So, while a Common Law and the Restatement fails to act reasonably, it can be held liable. manufacturer may successfully defend this The common law basis for post-sale duty to Again, there are no further criteria to pro- cause of action, the existence of the recall or warn is negligence. So, using Judge Learned vide guidance on what is reasonable. Also, other remedial program may be considered Hand’s formula for negligence, the basis for the Reporter’s Notes to comment d of this sec- an admission that the product is defective. determining whether this duty has been met tion says that there is “a paucity of authority And, as long as the product injured some- is the reasonableness of the manufacturer’s discussing the legal effect of the efforts of a one, the manufacturer could still be held li- conduct after balancing the risk of harm manufacturer to recall its products when able for selling a defective product. against the burden on the manufacturer to such efforts are not successful in avoiding in- All of this makes it important for manu- reduce the harm. The higher the risk, the jury due to the fact that either dealers or pur- facturers to be prepared to institute a post- more the manufacturer needs to do to mini- chasers do not take advantage of the recall.” sale remedial program quickly, and that the mize the risk to consumers and other prod- However, the few cases cited in Section 11 program be as effective as it can under the uct users. and other relevant cases basically show that circumstances. This effectiveness will re- However, as with all questions of reason- the plaintiff can always argue that the manu- duce the number of products in the field ableness under negligence, the common law facturer should have done more. The recall that could harm people, and will hopefully provides no further basis for a manufac- letter or other notice could have been sent allow the jury and any affected government turer to understand how effective its reme- out earlier and could have contained more agency to conclude that the manufacturer’s dial program must be in order for it to be explicit language. Or, it could have been sent considered non-negligent. certified mail or sent out more than once. The 1997 Restatement (Third) of Torts: Or, the advertisement could have been on Products Liability has three sections that are page 2 instead of page 40 of the magazine. pertinent to this examination. They discuss The ability of the plaintiff to argue that the post-sale duty to warn, the duty to recall more could have been done will be bound- a product, and the effect of compliance or less. And, plaintiffs may not even need an ex- non-compliance with product safety statutes pert to support this theory. In such cases, the defendant will need to prove that the conduct by the manufacturer was “state of the art,” complied with all applicable govern- Kenneth Ross is Of Counsel to Bowman and Brooke LLP in Minneapolis. mental statutes and regulations, and was as For 27 years, he has helped manufacturers and product sellers set up comprehensive as necessary considering the safety and liability prevention programs and recall their products. level of risk.

October 2003 19 That leads to the third relevant section of distribution chain and from the pos- ful techniques for recalls, a literature search the Restatement. Section 4 clearly says that session of consumers; and and evaluation of consumers’ behavior as it compliance with applicable governmental •to communicate accurate and under- relates to recalls, and an evaluation of the regulations or statutes is a minimum re- standable information in a timely man- CPSC recall database to assess the effective- quirement. The Reporter’s Notes to Section 4 ner to the public about the product defect, ness of previous recalls. This was prompted cite Section 288C of the Second Restatement, the hazard, and the corrective action. in part by the urging of consumer advo- which says, “Compliance with a legislative A large part of the handbook discusses cates and some in Congress. enactment or an administrative regulation the many ways in which the manufacturer Several meetings discussing recall effective- does not prevent a finding of negligence or other entities in the chain of production ness have taken place. The first meeting took where a reasonable man would take addi- or distribution can communicate with con- place on May 15, 2003; the subject was “Moti- tional precautions.” sumers. However, it leaves it up to the party vating Consumers to Respond to Recalls.” (See Based on this law, it is apparent that a http://www.cpsc.gov/businfo/rem_sum1.pdf for manufacturer may not be able to successfully If there is a mandatory a summary of this meeting). Eighteen social defend itself by claiming that a government marketing and public relations experts dis- agency “approved” its post-sale program. or voluntary recall and cussed the following four questions: How can However, while this “approval” by a govern- we motivate consumers to act? Which cam- ment agency may not get into evidence di- a manufacturer fails to paigns/programs have motivated consumers rectly, it should be able to be used by an to act? Which specific ideas from these pro- expert witness who can cite it as one of the act reasonably, it can grams could increase consumers’ response to bases for opining that the manufacturer’s product safety recalls? How do we measure conduct was reasonable and the post-sale be held liable. whether we have motivated consumers? program adequate. The experts at the May 15 meeting iden- Given the paucity of judicial authority de- doing the recall to determine what is appro- tified creative techniques that are not part scribing an adequate post-sale remedial propriate. The CPSC says that in determining of the standard recall procedures that have gram, it is necessary to consider United States what forms of notice to use, the paramount been used for years. While most of these and foreign regulatory law, guidelines and consideration should be the level of hazard techniques would not be considered “state regulations as well as suggestions provided that the recalled product presents. of the art” today, they may in the future. by those in the recall industry to help estab- The CPSC will classify the hazard as A, Therefore, manufacturers should consider lish an outline of an “adequate” program. B, or C. Class A is defined as a risk of death such suggestions and test some of them in or grievous injury or illness that is likely or a future remedial program. Consumer Product very likely, or serious injury or illness is very A second meeting took place on July 25, Safety Commission likely. This hazard requires the recalling en- 2003. It focused on “tools” that manufacturers, Many U.S. regulatory agencies provide help- tity to “take immediate, comprehensive, and retailers, and others who distribute safety in- ful guidelines to manufacturers on how to imaginative corrective action measures to formation use to notify consumers of recalls. undertake a recall and how to make it more identify and notify consumers, retailers and Panelists included retailers, manufacturers, effective. One of the most useful documents distributors…” credit card companies, and various public is the CPSC Recall Handbook. See http:// The CPSC also provides a recall checklist interest entities. A third meeting took place www.cpsc.gov/businfo/8002.html. that is helpful for manufacturers and retail- on September 9; the attendees discussed The CPSC handbook states that the core ers in implementing a consumer product new methods to be considered to provide a element of a recall is as follows: recall. This checklist can be found at http:// more complete account of recalled products. A company that undertakes a recall should www.cpsc.gov/businfo/recallcheck.pdf. In another significant effort in this area, develop a comprehensive plan that reaches Nowhere does the CPSC say how effec- on August 5 the CPSC released a new study throughout the entire distribution chain tive the recall must be to be considered suc- that organized and summarized the litera- to consumers who have the product. The cessful. Recalls or retrofit programs with an ture found on recall effectiveness and ef- company must design each communica- effective rate of less than 10 percent have fective safety communications, including tion to motivate people to respond to the been deemed acceptable by the CPSC. And, warnings. For a copy of the full report, go to recall and take the action requested by the CPSC has said that the average response http://www.cpsc.gov/LIBRARY/FOIA/FOIA03/os/ the company. rate for most recalls is between four percent RecallEffectiveness.pdf. The handbook goes on to say that the ob- and 18 percent. In addition, the authors reviewed empiri- jective of any recall is: Because of concern that effectiveness rates cal data developed by the CPSC and others • to locate all defective products as quickly are too low and can be improved, the CPSC on recall effectiveness. This report also con- as possible; has instituted a recall effectiveness project that tains information on the effectiveness of • to remove defective products from the includes public meetings to discuss success- NHTSA and FDA recalls. It should be re-

20 For The Defense viewed by manufacturers of any product vices. The FDA, like the CPSC, will classify other significant factors such as type or since it identifies studies that have analyzed the level of hazard when it receives a report; use of the product, distribution pattern, how to motivate consumers on safety mat- the hazard levels are I, II, and III. Class I recalls market availability, etc. The need for pub- ters. The report concluded by saying: are the highest level and are for dangerous licity, the depth of the recall, the level of The research collected and reviewed for or defective products that predictably could effectiveness and audit checks, and other this project details the large number of cause serious health problems or death. recall implementing factors will be a part steps required for a recall message to After classifying the hazard, the FDA, of the recall strategy. The strategy is sepa- achieve an active response from an af- unlike the CPSC, develops a strategy for each rate from, and not tied to, the class of re- fected product user. Users must receive individual recall that sets forth how exten- call selected. the message, internalize and comprehend sively it will check on a company’s perfor- The procedures manual also describes the its instructions, determine that a response mance in recalling the product in question. FDA’s approach to analyzing effectiveness: is necessary, and be willing to perform For a Class I recall, for example, FDA would It is FDA policy that after a firm decides that response even if there are costs asso- check to make sure that 100 percent of the to recall its products and so notifies the ciated with doing so. In the case of prod- defective products have been recalled or re- agency and recipients of the products, the uct recalls, they must follow through on conditioned. Effectiveness rates for Class II recalling firm has the responsibility to de- that willingness to check if they have an or III would be much less. termine whether the recall is progressing affected product, then take additional ac- The regulations describing recall strat- satisfactorily. Because effectiveness checks tions to eliminate or reduce the hazard. egy and recall communications are set forth aid in verifying that all known, affected … in 21 C.F.R. Subpart C, §7.42 et seq. These consignees have received notification We believe that the materials identi- regulations make clear that the recalling en- about a recall and have taken appropriate fied and reviewed for this report provide tity must conduct the recall in accordance action, it is the obligation of all recalling a more than adequate foundation for an with an approved strategy. The strategy will firms to conduct effectiveness checks as assessment of ways in which recall pro- need to address the depth of the recall (to part of their recall strategy. Only in this grams—and particularly recall com- whom the communications are directed), way can the firm fulfill its responsibility munications—might be modified to whether the public as well as health care pro- to FDA and consumers. improve potential response rates. fessionals are alerted, and which effective- The manual contains a number of helpful The August 5 report and research sum- ness checks will be used. The regulations sample recall documents and guidances in marized therein will also be useful to cite in identify five effectiveness levels—Levels A various areas. For example, there is a guid- defending the adequacy of a recall since it thru E, with A requiring 100 percent effec- ance on how to evaluate hazards in order to confirms how difficult it is to motivate con- tiveness and B through E much less. make the initial decision on whether a re- sumers to respond to what would clearly be The regulations describe the types of recall is necessary, and then how to create an an adequate notice. call communications that should be consid- acceptable recall strategy. The factors to con- The report also pointed out that the CPSC ered by the recalling entity. 21 C.F.R. Subpart sider are the usual ones that any manufac- last evaluated recall effectiveness rates from C, §7.49. These communication techniques turer uses to evaluate future risk—what is its database in the early 1980s. The CPSC are similar to those described in the CPSC the hazard, when does it occur, what type of staff said in February of this year that it would Recall Handbook. They also provide that a people will be exposed to it, what is the prob- be undertaking such an evaluation of recent recall will be terminated when the FDA “de- ability of the hazard occurring, and what are effectiveness data, including indications of termines that all reasonable efforts have been the consequences if it occurs. which techniques have worked in the past made to remove or correct the product in to increase effectiveness. accordance with the recall strategy…” 21 U.S.D.A. and N.H.T.S.A. The result of all of this activity is that the C.F.R. Subpart C, §7.55. The United States Department of Agricul- CPSC will most likely eventually come out with The FDA’s recall procedures are set forth in ture’s Food Safety and Inspection Service is updated and improved regulations and guide- Chapter 7 of its Regulatory Procedures Man- responsible for meat and poultry that is in lines on how to undertake a recall. Hopefully, ual (http://www.fda.gov/ora/compliance_ref/ interstate commerce. Intrastate food safety these new requirements and suggestions will rpm_new2/ch7.html). This manual describes is the responsibility of state and local food help improve recall effectiveness rates and, if the recall strategy that FDA develops with inspectors. Like the FDA, the FSIS classifies they comply, will help manufacturers present each manufacturer as follows: hazards as Class I, II, and III, with I being evidence that they were reasonable and did Each circumstance necessitating a recall the most hazardous. the best they could under the circumstances. is unique and requires its own recall strat- The FSIS’s primary role is to closely moni- egy. FDA will review and/or recommend tor the effectiveness of the firm’s recall proce- Food and Drug Administration the firm’s recall strategy, and will develop dures and to provide scientific and technical The FDA has jurisdiction over most foods a strategy for its own audit program based advice. FSIS has a standing Recall Committee and all cosmetics, drugs, and medical de- on the agency’s hazard evaluation and that works with the company to coordinate

October 2003 21 the recall. It is chaired by the Recall Man- products and vehicle emission control sys- cooperating in actions taken by manufactur- agement Division and consists of scientists, tem) and the Department of Housing and Ur- ers and governmental agencies to avoid the technical experts, field inspection managers, ban Development (manufactured housing). risks. Both manufacturers and distributors enforcement personnel, and communica- will have a duty to immediately notify agen- tions specialists. More guidance is provided European Union cies when they know or ought to know that on FSIS procedures at http://www.fsis.usda. The EU has recently increased the respon- a product they have placed on the market gov/OA/background/bkrecalls.htm. sibilities of manufacturers to report safety poses risks to the consumer that are incom- The National Highway Traffic Safety Ad- problems to a governmental agency and the patible with the general safety requirement ministration provides a comprehensive com- responsibility of agencies to be more proac- of the GPSD. pendium of information concerning recalls, tive in dealing with post-sale problems. See The GPSD applies only to consumer prod- dated June 2001, on its Web site. See http://www. Ross, “The Increased Duty to Take Post- ucts. However, the EU is proposing that the nhtsa.gov/cars/rules/standards/recompendium. Sale Remedial Action,” April 2002 For The law be changed so that the market surveil- pdf. It summarizes all of the regulations and Defense 37. lance and product withdrawal responsibilities procedures for undertaking a recall. The revisions to the EU’s General Prod- also apply to industrial products and other NHTSA recalls are a bit different than uct Safety Directive will become effective in products governed by the New Approach consumer product recalls and many FDA January 2004. Then, each EU member state Directives (such as machinery, toys, low volt- recalls. Since on-road motor vehicles must must enact legislation incorporating the re- age equipment, medical devices, etc.). be registered with some governmental en- quirements of the new GPSD. It could be In some recent reports, the EU has fo- tity, it is generally easier to find the current expected at that time that governments in cused on providing guidance to member owner and communicate with him or her. the EU will provide more guidance on how states about how to improve and make con- However, certain important motor vehicle manufacturers should undertake a recall. sistent throughout the EU market surveil- equipment, such as baby car seats, are not The 2004 GPSD substantially expands lance techniques used to identify unsafe registered, and owners can change a num- manufacturers’ and government’s post-sale products that need to be withdrawn from ber of times over the seat’s lifetime. responsibilities. It attempts to strengthen the marketplace. See, “Guide to the Imple- The kinds of information to be provided each member state’s powers to monitor and to mentation of Directives based on the New Ap- to the purchaser are described in this com- improve collaboration on market surveillance proach and the Global Approach” (September pendium. It is similar to the information and enforcement. The mechanism for this ef- 1999), http://europa.eu.int/comm/enterprise/ that the FDA and CPSC require to be pro- fort will be a Product Safety Network that will newapproach/legislation/guide/legislation.htm, vided. Other content of the compendium develop Rapid Alert System (RAPEX) pro- and “Enhancing the Implementation of the includes press releases to the public, notice cedures. RAPEX requires member states to New Approach Directives COM (2003) to the dealers, forms for reporting to the inform the European Commission of seri- 240” (July 5, 2003), http://europa.eu.int/comm/ NHTSA, sample letters to consumers and ous risks so that it can alert other members. enterprise/newapproach/index.htm. dealers, and the possible need to renotify all The objective of the new Product Safety For example, the July 2003 report describes of the affected parties if NHTSA deems the Network will be to facilitate the exchange of market surveillance techniques in the EU as recall not totally effective. The recalling en- information on risk assessment, dangerous follows: tity must report quarterly to NHTSA on the products, test methods and results, and re- Some Member States have a “proactive” progress of the recall. cent scientific developments. In addition, approach to market surveillance, while The compendium does not discuss recall joint surveillance and testing projects, the others adopt a “reactive” strategy. A reac- effectiveness or the criteria used by NHTSA exchange of expertise and best practices, tive strategy covers activities such as re- to determine if a recall has been successful. and cooperation in training activities will sponse to complaints, safeguard clause Again, because motor vehicles are registered be established and executed. Presumably, notifications of other Member States and and the products expensive, it would be ex- there will be close cooperation within the basic customs checks. A proactive ap- pected that response rates on recalls would European Union and also with foreign agen- proach suggests targeted campaigns, use be high where the risk is perceived to be cies responsible for product safety, in the of risk assessment tools, co-operation significant by the consumer. tracing, withdrawal, and recall of danger- with other authorities. ous products. The report also says “Member States need Other Governmental Agencies The 2004 GPSD also increases responsi- to ensure effective communication and co- A few other agencies require certain manu- bilities for manufacturers and distributors. ordination at national level between their facturers to report and to undertake recalls. Distributors will have to monitor the safety market surveillance authorities and their These include Bureau of Alcohol, Tobacco of products placed on the market, especially other authorities which work in the field of and Firearms (alcoholic beverages), Coast by passing on information on product risks, product safety such as occupational health Guard (recreational boats and equipment), keeping and providing documentation nec- and safety authorities and customs.” Environmental Protection Agency (pesticide essary for tracing the origin of products, and On the issue of encouraging companies to

22 For The Defense report and voluntarily withdraw their product in Europe after recalling the product in hensive mailing lists, a high expenditure of ucts from the market, the July 2003 report the United States. Plaintiffs will most likely money on published notices, and a high level states “Deterrent measures like strong sanc- inquire into whether the manufacturer un- of free publicity. The low levels of recall effec- tions against persons or companies repeat- dertook any post-sale remedial program in tiveness were attributable to the age of the edly misusing the freedoms offered by the any country outside the U.S., and try to get product (they’ll continue using a product New Approach system, product recall ac- that fact into evidence. that has been used safely for years), the low tions or information campaigns are appro- cost of the product (they’ll just throw the priate actions to help reduce the number of Other Nations product away), and a low perceived risk deficient products on the Internal Market.” One of the most useful guides on recalls is an (they’ll just continue using the product). The EU also envisions much greater co- excellent pamphlet published in 1999 by the And, unfortunately, it will be difficult to con- operation between member states in trans- United Kingdom’s Department of Trade and sider products that are just discarded or not mitting information about unsafe products. used anymore as a result of the recall notice The July 2003 report states: “Information about Given the variables of in tracking response rates. non-complying products, especially those The Consumer Safety Unit of the Austra- that are subject to frequent complaints, need determining the adequacy lian Treasury published a recall guide in to be passed from one national authority to all July 2002. It can be found at http://www. other national market surveillance authori- and effectiveness of a recalls.gov.au/recalls_guide1.cfm. Its content is ties faster than the products can be moved similar to the U.K. and CPSC manuals de- from one national market to the other.” recall program, it is scribed above. However, a manufacturer re- However, one organization avers that there calling any consumer product in Australia is no way for market surveillance bodies to difficult to come up with should consult this guide for any require- exchange information among themselves ments that are particular to Australia, espe- within a short space of time, thereby mak- definite strategies for cially those involving reporting the recall to ing it possible for an unsafe product taken the Australian government. off the market in one country to be on sale defending the recall. In Canada, the Consumer Products Di- for a long time in another country. The so- vision of the Health Ministry has powers to lution, according to the Information and Industry. Consumer Product Recall: A Good enforce the Hazardous Products Act, but Communication System for Market Surveil- Practice Guide (see http://www.dti.gov.uk/CACP/ does not have recall powers. In addition, lance (http://www.icsms.org), is an Internet- ca/advice/productrecall/pdf/consumer.pdf). It manufacturers and importers do not have a based system made up of manufacturers, provides excellent guidance on communi- specific duty to recall their products. How- trade associations, and governments that cating to product users about safety issues ever, their products can be seized if they will then be able to more quickly transmit involving consumer products; it also lists violate the Act. As a practical matter, the safety information concerning market sur- other guides in the U.K. on recalling cars, Ministry does not have a public list of recall veillance and product safety issues. food, medicine, aerosol products, and ap- procedures. Instead, it works with each manu- Despite all of this new legislation and pliances. This guide also includes: planning facturer or importer to develop a recall strat- guidance, few manufacturers selling in the for a recall, deciding whether to recall, what egy for the specific product. The Canadians EU know how to withdraw products from the recall message needs to say, how to de- probably rely on procedures and guidelines the marketplace and how effective the recall liver the recall message, and innovative ways similar to those of the CPSC and other safety must be. The focus seems to be much more on to improve your recall. The guide also pro- agencies. governments mandating recalls and product vides case studies of actual recalls and the The Canadian Motor Vehicle Safety Act withdrawals and then placing public notices lessons learned from the recall. does give Transport Canada the right to or- in various locations concerning the recall. In addition, the U.K.’s DTI has issued a use- der recalls, although there do not appear to However, a failure to take your European ful report called Product Recall Research (http:// be any recall guidelines for manufacturers. responsibilities seriously because of the lack www.consumer.gov.uk/homesafetynetwork/ Basic instructions on how to implement a of product liability litigation in Europe can gh_recal.htm), which surveyed recalls in the recall and how to report the recall’s progress be a big mistake. In addition to causing legal U.K. from 1990 to 1996 and, in part, iden- are in the Act, but there is no mention of re- problems in the EU, the failure to take ap- tified the key reasons and factors as to why quired recall effectiveness. propriate remedial actions in the EU might certain recalls were particularly successful The Canadian Health Products and Food even creep into your U.S. litigation. In two or not successful. The response rates aver- Branch Inspectorate of Health Canada has cases where the author was retained as an aged 37 percent with the largest number of published product recall procedures for food, expert witness, one involved an allegedly recalls coming in at less than 10 percent. drugs, cosmetics, medical devices, and ra- inadequate recall in Europe and the other The highest levels of response were at- diation emitting devices. These procedures involved, in part, a failure to recall a prod- tributable to a high-perceived risk, compre- continued on page 55

October 2003 23 Product Recalls, from page 23 One of the principal authors of the CPSC to affirmatively place the recall in evidence as can be found at http://www.hc-sc.gc.ca/hpfb/in- recall effectiveness study is Ed Heiden, the proof of the manufacturer’s commitment to spectorate/recall_procedure_entire_e.html. They former chief statistician for the CPSC. He has safety and the well being of its consumers. are similar to the recall procedures issued by written extensively on how to perform a re- Having the recall in evidence would be nec- the United States FDA. HPFB helps compa- call, how to measure recall effectiveness, and essary to use some of the other possible de- nies develop a recall strategy, communication how to defend the adequacy of recalls. Several fenses. The best one is that the recalled product effort, and effectiveness checks. And the gov- years ago, Ed analyzed the potential to increase or part of the recalled product that was defec- ernment classifies hazards with the designa- recall response rates by increasing the receipt tive did not cause the injury or damage. Of tion Class I, II and III and with similar recall of product registration cards. He thinks that course, the existence of the recall, if it gets effectiveness checks. the chances of increasing the receipt of such into evidence, will muddy the facts and may cards will not be significantly improved with result in liability even without causation. How to Perform an Effective Recall more effort and that the value of the cards di- The next good defense would be that the The first question is: what is an effective recall? minishes with time. People move frequently consumer saw the message or received the Since this is dependent on so many variables (16 percent per year) and products are sold or letter and ignored the recall. While it may be and there are no set numbers or even ranges of discarded. Instead, Heiden believes that using hard to prove an assumption of the risk, this numbers that would allow one to conclude that modern communication media such as the argument should at least help establish some a recall has been reasonable and effective, there Internet might increase effectiveness. contributory fault on the injured party. When is no good answer. It is very specific to the Many observers have written over the years using this defense, it is imperative to be able to types of products, cost of the product, risks in on the subject of how to perform a recall. Typi- prove that the “warning” in the letter or notice using the product, perceived risks by the con- cally, they focus on pre-recall planning, man- was adequate, using general warning prin- sumer, distribution techniques, difficulty in re- agement techniques to establish for obtaining ciples. That is why some type of comprehen- ducing or eliminating risk, and other factors. and analyzing post-sale information and per- sion testing of recall letters may be helpful Another question to ask is how effective forming the recall, logistics and communication before they are sent out. However, these kinds does the recall have to be? This goes to the planning, post-recall tracking, and follow-up. of surveys can also be performed during the question of the level of risk that exists if people Most of their suggestions are similar to those defense of the case to support the adequacy of continue to use the product. In many recalls, contained in the various government docu- the notice. the goal is at least to get the message out about ments. If the recall is to be performed by an inter- a hazard and not necessarily to get the product An entire coterie of consultants has emerged mediary such as a dealer or retailer, and they back. The consumer could destroy the product, to help with recalls—crisis management ex- did not do it adequately, the manufacturer not use it, or change his or her behavior when perts, legal experts in recalls, financial and lo- might be able to pass along some or all of the using it. In these types of remedial programs, gistics experts, and experts in what is called liability to that entity. For example, in one case, it is impossible to track a “response” since the “reverse marketing.” A manufacturer should a propane gas dealer was held liable and the consumer doesn’t have to respond to the pub- at least consider these resources in determin- manufacturer was absolved because the dealer lic notice or recall letter or safety bulletin. Also, ing how best to perform a remedial program. did not send out the manufacturer’s recall let- many products may have been already taken ters to their customers after promising to do so. out of service or are not being used anymore. Defending the Adequacy of the Recall His failure to send out the letters constituted So, tracking the number of products sold ver- Given the variables of determining the ad- a superseding, intervening cause. Similarly, a sus the number of products recalled or fixed equacy and effectiveness of a recall program, retailer’s failure to remove recalled products is not an accurate measure of the effective- it is difficult to come up with definite strate- from the shelves and warehouse, or failure to ness of the recall. gies for defending the recall. As stated earlier, place the recall notice in a conspicuous place, The guides published by the various gov- the best recall most likely will not automati- may also constitute some contributory fault ernmental agencies should, of course, be re- cally cut off liability for the manufacturer for or intervening cause. viewed. However, except for medical devices selling a defective product. And, given the fact If you can’t break the causal link, then you recalled in the United States, there are no effec- that most recall letters admit that the product must defend the adequacy of the specific re- tiveness levels established in the regulations. So is defective, defense counsel needs to look else- call or post-sale program. Since the recall was the manufacturer has flexibility to develop a where for a good defense. presumably not effective to the injured party, rationale to convince the agency and possibly Of course, the best approach would be to the plaintiff will argue that the manufacturer a jury that the effectiveness rate was adequate. keep the recall from being introduced into could have and should have done more. The Some of the conclusions from the CPSC re- evidence. You can argue that the recall is a manufacturer will have to evaluate the tech- call effectiveness study issued in August 2003 subsequent remedial measure and should not niques it employed, the effectiveness rates as confirm ways in which a recall can be more ef- be allowed into evidence. See Carter, “Defend- compared to others for similar products, try fective. Consumers are less likely to comply ing Against Product Recall Evidence at Trial,” to explain the effectiveness rate in the context where compliance is inconvenient, takes time, April 2002 For The Defense 43. However, often of limitations to increasing the rate, and dis- or costs money. For example, where consum- a good plaintiff’s attorney can somehow get the cuss why doing more would not have neces- ers must return the recalled product before recall into evidence or find an expert to argue sarily increased the rate. they receive a replacement, response rates have that the product should have been recalled. In An analysis of past punitive damages awards been low. fact, it may be beneficial to the manufacturer clearly shows that the basis for most such awards

October 2003 55 is that the jury believed that the manufacturer arises, it is too late to develop a plan. Prepar- doing and what government agencies are re- failed to undertake adequate post-sale remedial ing for a recall before it occurs can signifi- quiring. This vigilance will pay large dividends. measures. At a minimum, hopefully the manu- cantly increase its effectiveness and lessen the Manufacturers should not assume that their facturer can minimize or prevent the chance that costs and disruption. Of course, the manufac- effectiveness rates are static and can’t be im- punitive damages will be imposed by establish- turer also needs to employ pro-active pre-sale proved. Technology is available today that could ing lack of causation, intervening cause, or other product liability prevention techniques so that increase their ability to quickly communicate contributory fault, or defend the effectiveness of a recall is not necessary in the first place. with the distribution chain and even consum- the response and limitations on improving it. It is clear that governments around the ers about the recall. They should continually world will focus more on identifying product look for ways to significantly improve the suc- Conclusion safety problems and forcing or encouraging cess of their recalls and other post-sale remedial Manufacturers need to be prepared to recall manufacturers to do something about them. programs. Hopefully, this will minimize risks their products even if they have never had to Keeping up with the state of the art will require and the potential for accidents and provide some do so in the past. Once a product safety issue paying attention to what other companies are type of defense if an accident happens.

56 For The Defense