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Presenting a live 90 minute webinar with interactive Q&A Product Liability Recalls on the Rise: Product Liability Recalls on the Rise: Legal Strategies Preparing for Recalls, Defending Litigation and Leveraging Case Developments TUES DAY,

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Presenting a live 90‐minute webinar with interactive Q&A

Product Liability Recalls on the Rise: Product Liability Recalls on the Rise: Legal Strategies

Preparing for Recalls, Defending Litigation and Leveraging Case Developments T d ’ f l f

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific TUES DAY, S EPTEMBER 13, 2011

Today’s faculty features: Kelly S avage Day, Sedgwick, S an Francisco Fern P . O’ Brian, Partner, Thompson Hine, Washington, D.C. Larry D. Grayson, Partner, Hartline Dacus Barger Dreyer, Dallas

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Pr Product Lia

duct Liability R

ility Recalls on the ecalls on the Rise: Le Rise: Legal Str l Strate tegies gies Rise: Le Rise: Legal Str l Strate tegies gies Preparing for Recalls, Defending Litigation and Leveraging Case Litigation and Leveraging Case Developments

K ll S D S d i k LLP Kelly Savage Day, Sedgwick LLP Larry D. Grayson, Hartline Dacus Barger Dreyer LLP Fern O’Brian, Thompson Hine LLP , p Strafford Publications S t b 13 2011

September 13, 2011

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Preparing for Product Recalls

K ll S D Kelly Savage Day Sedgwick LLP 333 Bush Street, 30th Floor , San Francisco, CA 94101-2834 (415) 627-1406 kelly savageday@sedgwicklaw com

kelly.savageday@sedgwicklaw.com

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Views expressed in this presentation Views expressed in this presentation are for educational purposes only and d t tit t l l d i do not constitute legal advice or necessarily represent the views of the presenters' employers.

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“Nothing concentrates the Nothing concentrates the mind like the prospect of being p p g hanged in a fortnight.” Samuel Johnson

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Preparing for Recalls Not a Question of If But When . . . Not a Question of If But When . . .

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Questions to Consider



How can we protect against a product recall?



Do we know how to judge whether a product has a defect that “presents an unreasonable i k f i j ” i i ll? risk of injury” requiring a recall?



Do we understand federal, state, and international regulations regarding product recalls?



Do we have processes and procedures in place to manage a product recall?



Do we have a trained product recall team? Do employees know what to do?



How quickly can we respond to media shareholders, employees, and regulators in the event of a product recall? event of a product recall?



How will business continuity plans be put into action if a product is recalled?



Have we made adequate allowances for a negative impact to supply chain if a product is recalled?



Do we have the necessary technology tools to manage a product recall?



Have we identified the necessary tools to help mitigate the financial impact of the recall?



Have we identified the necessary tools to help mitigate the financial impact of the recall?



Are we prepared to handle any product recall-related litigation?

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Recall Preparedness Is Extremely Important

 Consumer/patient safety

p y

 Brand damage  Customer loyalty

y y

 Financial exposure  Legal exposure

g p

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Recall Preparedness What Does It Require?

 Developing and implementing processes

and procedures to identify potentially and procedures to identify potentially defective products before they reach consumers consumers

 Preparing and implementing recall SOPs and

a preparedness plan

 Conducting mock recalls  Conducting mock recalls  Taking proactive steps to mitigate financial

risks with contracts and insurance

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Recall Prevention: Building in Procedures to Locate Potential Risks Before Potentially Defective Products Reach Consumers Defective Products Reach Consumers

 Product Traceability

“As the recent cases involving some Toyota car models-with

As the recent cases involving some Toyota car models with accelerator faults—and Rolls Royce—with the A380 Airbus engine—have graphically illustrated, traceability is at the heart f ffi i t ll ”

f any efficient recall process.”

 Product and customer databases  Product usage information database  Product usage information database  Investigative Procedures of CPSC, FDA and USDA

SLIDE 14

Recall Preparedness: Developing and Implementing a Written Recall Strategy

 Designation of a Recall Coordinator/Committee

 Development of product recall SOPs  Recall execution strategy  Internal and external Communications  Recall termination procedures

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Recall Preparedness: Mock Recalls

 Choose a batch number for a real group of products  R

t i li f t i

 Run reports using supplier, manufacturing,

distribution and transportation systems

 Account for what was made, shipped and received  Do a Post-Mortem

Review recall and determine what worked and what

needs to be improved

Include the review requirement in recall

preparedness plan

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Recall Preparedness: Mitigating Financial Exposure from Recalls

 Contracts  Insurance  Insurance

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Recall Preparedness: Special Issues

 Social media  Global and third-party suppliers

SLIDE 18

Final Thoughts

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Product Liability Recalls on the Rise All About the Timing: Whether and When to Recall

Fern P. O’Brian Partner Thompson Hine LLP p Strafford Webinar September 13, 2011 1:00 p.m.

SLIDE 20

Introduction

 The Legal Landscape  Whether and When to Recall  Regulatory Framework FDA, CPSC, NHTSA * Regulatory Reports and Recalls * Regulatory Databases  Question of Timing Q g  Litigation and Considerations  Additional Considerations  What Companies can do to Prepare  Fern’s Top Ten List

 Questions

SLIDE 21

The Legal Landscape

 Generally no duty to institute a post-sale recall unless  Generally, no duty to institute a post-sale recall unless government requirement  Restatement (Third) Torts: Products Liability, §11:

 “O d i th b i f lli th i di t ib ti d t i  “One engaged in the business of selling or otherwise distributing products is subject to liability for harm to persons or property caused by the seller's failure to recall a product after the time of sale or distribution if:

(a)(1) a governmental directive issued pursuant to a statute or administrative

regulation specifically requires the seller or distributor to recall the product; or (2) the seller or distributor, in the absence of a recall requirement under Subsection (a)(1), undertakes to recall the product; and

(b) the seller or distributor fails to act as a reasonable person in recalling the
(b) the seller or distributor fails to act as a reasonable person in recalling the

product.”

 Typically, recalls are “voluntary”

SLIDE 22

The Legal Landscape

 Post sale duty to warn may apply depending on jurisdiction  Post-sale duty to warn may apply depending on jurisdiction  Duty to warn may impact recall decision as warning may give rise to  Duty to warn may impact recall decision, as warning may give rise to consumer reports and/or claims  Duty to warn and regulatory obligations may dramatically affect decision to recall

SLIDE 23

Tough Choices: Whether and When to Recall

 Significant adverse publicity and reputational damage  Significant business expense and distraction of company personnel  Plaintiffs in subsequent litigation may attempt to use recalls as evidence of defect and causation in litigation or as company admissions of liability  Recalls may demonstrate reasonableness of company actions B tt Li Liti ti l t d i k i t t id ti i Bottom Line: Litigation-related risks are important considerations in decisions regarding whether and when to recall, the scope of the recall and implementation strategy.

SLIDE 24

Regulatory Framework

 FDA Recall Basics

 Recalls are actions taken by a firm to remove a product from the market. Recalls may be conducted on a firm's own initiative, by FDA request, or by FDA

rder under statutory authority.

 Class I recall: a situation in which there is a reasonable probability that the use of or exposure to a violative product will cause serious adverse health consequences or exposure to a violative product will cause serious adverse health consequences or death.  Class II recall: a situation in which use of or exposure to a violative product may cause temporary or medically reversible adverse health consequences or where the probability of serious adverse health consequences is remote.  Class III recall: a situation in which use of or exposure to a violative product is not likely to cause adverse health consequences.

SLIDE 25

Regulatory Framework

 Other Actions (short of recall)

 Market withdrawal: occurs when a product has a minor violation that would not be subject to FDA legal action. The firm removes the product from the market or corrects the violation. For example, a product removed from the market due to tampering, without evidence of manufacturing or distribution problems, would be a market withdrawal.  Medical device safety alert: issued in situations where a medical device may present an unreasonable risk of substantial harm. In some case, these situations also are considered recalls also are considered recalls. See http://www.fda.gov/Safety/Recalls/ucm165546.htm

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Regulatory Framework

 CPSC Recall Basics

 M d t R ll f I i t H d S b t ti l P d t H d S S ti 12  Mandatory Recalls for Imminent Hazards or Substantial Product Hazards. See Sections 12, 15(c), or 15(d) of the Consumer Product Safety Act  Cease distribution of the product.  Notify all persons that transport, store, distribute, or otherwise handle the product to cease immediately distribution of the product cease immediately distribution of the product.  Specific Notice Requirements for Mandatory Recalls. See 16 C.F.R. §§ 1115.23 – 1115.29.  Voluntary Recalls  Commonly negotiated on case-by-case basis to allow the individual notice to fit the circumstances of the individual recall  Regulations for mandatory recalls will likely serve as the guidelines for voluntary recalls

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Regulatory Recall

 NHTSA Recall Basics  NHTSA Recall Basics

 Can be voluntarily initiated, influenced by NHTSA investigations, or ordered by NHTSA via the courts

 When is a recall necessary?

 When a motor vehicle or item of motor vehicle equipment (including tires) does not comply with a Federal Motor Vehicle Safety Standard  When there is a safety-related defect in the vehicle or equipment

 Other Actions (short of recall)

 Safety Complaints NHTSA Defect Investigations and Technical Service  Safety Complaints, NHTSA Defect Investigations, and Technical Service Bulletins – listed on the NHTSA website

SLIDE 28

Regulatory Framework: Consumer Reporting Databases

 The Adverse Event Reporting System  The Adverse Event Reporting System

 Database for reporting complaints regarding approved drugs  Monitored by the Food and Drug Administration (“FDA”)

 SaferCar.gov

 Database for reporting complaints regarding vehicles and child seats  Monitored by the National Highway Traffic Safety Administration (“NHTSA”)

 SaferProducts.gov

 Database for publicly available consumer product safety information  Database for publicly available consumer product safety information  Monitored by the Consumer Product Safety Commission

SLIDE 29

The Question of Timing

 Reasonableness of company actions vs Likely fodder for litigation  Reasonableness of company actions vs. Likely fodder for litigation

 Rezulin recall resulted in significant litigation and plaintiffs’ counsel has argued that the recall should have occurred sooner (FDA-requested recall after a reported 391 deaths and nearly 500 cases of severe liver damage, most i i t fi th d ) (htt // li liti ti /) requiring surgery to fix the damage) (http://www.rezulinlitigation.com/)  Media claimed Toyota had fixed steering rods in other countries for over a decade before a highly publicized crash influenced massive recall (at least 153 steering rod repairs to 4Runners and compact and T-100 pickups were g p p p p conducted from 1993 to September 2005; at least two fatal crashes reported to NHTSA related to Toyota relay rod failures)  Manufacturer recalled an implantable spinal cord simulation system device upon reports of 8 patients reporting problems with the device These 8 patients reports of 8 patients reporting problems with the device. These 8 patients represented only 0.063% of the 12,700 patients who had received the device. The company issued a Field Safety Notice prior to the Notice of Recall. Maness

v. Boston Scientific, 2010 U.S. Dist. LEXIS 118748 (E.D. Tenn. Nov. 4, 2010).

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The Question of Timing

 Product Safety Issues: Investigate and understand the safety issues  Product Safety Issues: Investigate and understand the safety issues

 Adequacy of pre-market research, development and testing factors into recall decision  Prevention of safety impacts y p

 Assess the reasons for safety issue to understand the appropriate remedial action (scope of recall, etc.)  Regulatory notification may trigger agency action and regulatory response g y y gg g y g y p  Information contained in databases may provide basis for arguing that manufacturer had notice, though such information generally is inadmissible on the issue of causation. See McClain v. Metabolife Intern., Inc 401 F 3d 1233 (11th Cir 2005) Inc., 401 F.3d 1233 (11th Cir. 2005).  Implement reasonable repair, service and/or notice

SLIDE 31

Litigation Considerations

 Recalls may trigger lawsuits  Recalls may trigger lawsuits

 Class action complaint filed after Toyota recalled millions of vehicles for sudden unintended acceleration. Heilbrunn v. Toyota Motor Corp. (S.D. Fla.); Harding

v. Toyota Motor Corp. (M.D. Al.)
v. Toyota Motor Corp. (M.D. Al.)

 Federal class actions filed after makers of Similac issued a recall on infant

formula. Manufacturers accused of unfairly and deceptively promoting the

product as having safe ingredients for infant consumption when the ingredients may cause diarrhea and other health problems. O’Neil, Jr. v. Abbott Labs., Inc. (E.D. La); Jasper v. Abbott Labs., Inc. (N.D. Ill.)  Lawsuits filed after two Iowa farms recalled 550 million eggs linked to salmonella illnesses Dwyer v Quality Egg LLC (N D Ill ) salmonella illnesses. Dwyer v. Quality Egg LLC (N.D. Ill.)

 Statements contained in recall notices may be construed as admissions of liability

SLIDE 32

Litigation Considerations

 Consumer complaints are hearsay Olson v Ford Motor Co 410 F Supp  Consumer complaints are hearsay. Olson v. Ford Motor Co., 410 F. Supp. 2d 855 (D.N.D. 2006) (collecting cases).

 Reports to manufacturer and/or a government agency do not meet the business

r public records exception because both the person recording and the person
r public records exception because both the person recording and the person

reporting have to have a duty to report

 However, evidence of similar incidents may be relevant to prove notice.

 Notice of what?  Varies by jurisdiction  Notice of: (1) defects; (2) other complaints; (3) the magnitude of the  Notice of: (1) defects; (2) other complaints; (3) the magnitude of the danger; (4) the product’s lack of safety for intended uses; and/or (5) causation

SLIDE 33

Litigation Considerations When Issuing a Recall

 Recall can start the statute of limitations clock running  Recall can start the statute of limitations clock running

 Neal v. Stryker Corp., No. 1:11-cv-62 (AJT/TRJ), 2011 U.S. Dist. LEXIS 23037 (E.D. Va.

Mar. 8, 2011) (granting motion to dismiss plaintiff’s warranty claims where plaintiff failed to

file within 2 years of injury, or even 2 years of product recall)  Owen v. GMC, 2006 U.S. Dist. LEXIS 70466 (W.D. Mo. Sept. 28, 2006) (failing to notify the particular Plaintiffs of a recall does not toll the statute of limitations where a party has made a positive effort to notify consumers).

 In most jurisdictions, the lack of customer complaints is admissible to show lack of notice, defect, and/or risk of harm so long as the manufacturer has a reliable system in place to track complaints.

 Walton v. Bridgestone/Firestone, Inc., No. CV-05-3027-PHX-ROS, 2009 U.S. Dist. LEXIS 85014 (D Ariz Jan 16 2009); 85014 (D. Ariz. Jan. 16, 2009);  Schaefer v. Cedar Fair, LP, 348 N.J. Super 223 (App. Div. 2002)  Hines v. Joy Mfg. Co., 850 F.2d 1146, 1152-53 (6th Cir. 1988)

SLIDE 34

Additional Recall Considerations

 Market Response  Market Response

 Reduced sales  Reduced confidence in product or brand

 Issuing a recall may require an SEC disclosure

 The Securities and Exchange Commission (SEC) began a formal investigation relating to an FDA warning letter issued to Matrixx Initiative Inc after the relating to an FDA warning letter issued to Matrixx Initiative, Inc. after the company recalled its products, Zicam Cold Remedy Nasal Gel and Zicam Cold Remedy Gel Swabs, in June 2009.

 Recalls in Other Countries – Relevance; Need All the Facts ;

 Country-specific recalls (e.g., specific manufacturing plant issues) may be irrelevant at trial under Fed. R. Evid. 402, 403 (and their state equivalents)

SLIDE 35

What Companies Can Do to Prepare

 Work closely with legal department counsel and business functions  Work closely with legal department, counsel and business functions

 Avoid responses to consumer reports that may involve confidential and proprietary information

 Work With Agency As Much As Possible

 Seek Voluntary Recall as Appropriate  Avoid Using Language Suggesting or Admitting Causation  Avoid Using Language Suggesting or Admitting Causation  See, e.g., Hughes v. Stryker Sales Corp., 2010 U.S. Dist. LEXIS 47062 (S.D. Ala. May 13, 2010) (rejecting plaintiff’s “contention that the product recall was tantamount to an admission of a manufacturing defect, and point[ing] out specific language in the exhibits that refuted this ‘admission’ theory.”).

SLIDE 36

What Companies Can Do to Prepare

 Develop a plan for addressing consumer complaints Develop a plan for addressing consumer complaints  Establish and/or update recall plan, including response team  Designate someone to tracking production information and coordinate recalls  Manufacturers should always maintain:  Manufacturers should always maintain:

 Production records  Status of product manufacture  Distribution records  Quality control records  Past consumer complaints  Marketing information  Product instructions warnings labels and warranties included with the product  Product instructions, warnings, labels, and warranties included with the product  Establish effective communication channels with distributors and retailers  Consider insurance for recalls; follow notification procedures carefully

SLIDE 37

Fern’s Top Ten List

1 Investigate Quickly and Communicate the Facts to Recall 1. Investigate Quickly and Communicate the Facts to Recall Stakeholders 2. Involve Marketing and Communications Professionals Early On 3. Ensure All Company Statements Are Thoroughly Vetted 4. Avoid Creating Inappropriate Documents g pp p 5. Do Not Admit Causation in Public Statements

SLIDE 38

Fern’s Top Ten List

6 Protect Attorney Client and Work Product Materials 6. Protect Attorney – Client and Work Product Materials 7. With the Agency 8 Ensure Recall is as “Voluntary” as Possible 8. Ensure Recall is as “Voluntary” as Possible 9. Avoid Having the Agency Endorse Positions on Causation 10 N tif Y I C i

10. Notify Your Insurance Carrier

SLIDE 39

QUESTIONS

SLIDE 40

Fern O’Brian Partner Thompson Hine LLP Fern OBrian@ThompsonHine com Fern.OBrian@ThompsonHine.com (202) 263-4185

SLIDE 41

“Product Liability Recalls on h Ri L l S i ” the Rise: Legal Strategies”

Sept. 13, 2011

p ,

Larry D. Grayson | Hartline Dacus Barger Dreyer LLP 6688 N. Central Expressway, Suite 1000 | Dallas, TX 75206 (214) 346-3719 | (214) 267-4219 (direct fax)

lgrayson@hdbdlaw.com | www.hdbdlaw.com

SLIDE 42

Recall Defense Strategies Recall Defense Strategies

SLIDE 43

D f St t i B f R ll Defense Strategies Before Recall:

 Difficult Balancing Act:

A manufacturer needs to ensure that its products are safe and maintain credibility with its customers. At the same time, it must defend against claims and lawsuits against claims and lawsuits.

 Be prepared to fight back against meritless claims

while simultaneously resolving claims with merit while simultaneously resolving claims with merit.

SLIDE 44

Defense Strategies Before Recall: Defense Strategies Before Recall:

 Establish a plan on how consumers will be

notified about the recall. This process is monitored by the governmental agency (NHTSA CPSC or by the governmental agency (NHTSA, CPSC, or FDA) and typically includes 1) press releases, 2) point-of-sale posters, 3) direct customer notices, and point of sale posters, 3) direct customer notices, and 4) website notices.

 In negotiating the notice requirements, companies

g g q , p must balance the necessity of providing adequate notice, the requirements of the governmental agency,

and how the notice could affect subsequent products liability litigation.

SLIDE 45

Defense Strategies in the Public Defense Strategies in the Public Forum:

M d di l ti bli it

 Modern

media means unrelenting publicity, unending questions and uncertain

utcomes.

Companies should: Companies should: 1) Investigate, learn, and understand before speaking. 2) Involve legal, marketing, engineering, service, and parts departments. 3) Ed d i l h di ib i h i 3) Educate and involve the distribution chain. 4) Preserve relationship with the government.

SLIDE 46

Defense Strategies in the Public Defense Strategies in the Public Forum:

 Modern

media means unrelenting publicity, unending questions and uncertain

utcomes.

Companies should: Companies should: 5) Use modern media: Twitter, Facebook, etc. 6) D t t b fi i bl i kl 6) Demonstrate concern by fixing problems quickly. 7) Identify a spokesperson that is both media- friendly and technically knowledgeable enough to friendly and technically knowledgeable enough to clearly discuss issues while staying on message. The CEO is probably not the right choice.

The CEO is probably not the right choice.

SLIDE 47

D f S i i h C Defense Strategies in the Courtroom:

 Consider

whether the relevant jurisdiction imposes a post-sale duty to warn. M h hi i f f More than thirty states recognize some form of a post-sale duty to warn. If the relevant jurisdiction imposes such a duty counsel should evaluate imposes such a duty, counsel should evaluate whether it applies to the client’s facts.

SLIDE 48

D f S i i h C Defense Strategies in the Courtroom:

Di bili f ll id



Discoverability of recall evidence. Despite broad discovery rules, companies should limit the discoverability

f recall evidence where possible.

Limitations on discovery may be i d h ) d i l b d (“ ll imposed where a) production requests are overly broad or vague (“all recall documents” or “any documents relating in any way to the recall”), b) the recall’s target vehicle does not have the same component at issue in the lawsuit or c) the product has a long history or was widely distributed the lawsuit, or c) the product has a long history or was widely distributed and production requests may constitute an undue burden.



Uitts v. General Motors Corp., 58 F.R.D. 450, 453 (E.D. Pa. 1972) (discovery allowed)



Uitts v. General Motors Corp., 62 F.R.D. 560 (E.D. Pa. 1974) (discovery denied)



Swain v. General Motors Corp., 81 F.R.D. 698, 700 (W.D. Pa. 1979) (discovery allowed)



Regardless, Plaintiffs have other avenues of discovering recall campaigns.

SLIDE 49

D f S i i h C Defense Strategies in the Courtroom:



Decide hether admitting recall e idence

ld help



Decide whether admitting recall evidence would help the company’s case. In certain situations, admitting evidence of a recall may be b fi i l t If l i tiff k iti beneficial to a company. If plaintiffs seek punitive damages, companies may cite the recall as evidence of efforts to improve the product and protect the public. Holmes v Wegman Oil Co 492 N W 2d 107 112 113 Holmes v. Wegman Oil Co., 492 N.W. 2d 107, 112-113 (S.D. 1992); Denton v. DaimlerChrysler Corp., 2008 WL 5111222 *2 (N.D. Ga. 2008).

SLIDE 50

D f S i i h C Defense Strategies in the Courtroom:



Decide hether admitting recall e idence

ld help



Decide whether admitting recall evidence would help the company’s case. Second, in cases where pre-recall complaints come into id l di ll id th t th evidence, excluding recall evidence means that the manufacturer loses the benefit of showing the measures it took to make the product safer. Also, if the plaintiff ignored the recall letter or refused remedial offers recall ignored the recall letter or refused remedial offers, recall evidence could assist with a contributory negligence defense.

SLIDE 51

D f S i i h C Defense Strategies in the Courtroom:

E id ti t t i t l d li it ll

 Evidentiary strategies to exclude or limit recall

evidence where appropriate. 1) Relevancy Companies may successfully exclude 1) Relevancy – Companies may successfully exclude evidence on relevancy grounds:

a) If the recall involves different model vehicles than the a) If the recall involves different model vehicles than the

ne in question. Olson v. Ford Motor Co., 410 F. Supp.

2d 869, 872-873 (D.N.D. 2006); Jenkins v. Chrysler Motors Corp 316 F 3d 663 665 (7th Cir 2002); Nay v Motors Corp., 316 F. 3d 663, 665 (7th Cir. 2002); Nay v. General Motors Corp., 850 P.3d 1260, 1263 (Utah 1993); Williams v. Ford Motor Company, 2003 WL 21010601*1 (Tex App 2003)

(Tex. App. 2003).

SLIDE 52

D f S i i h C Defense Strategies in the Courtroom:

b) If the recall involves only a manufacturing defect and the claim is one of design defect Olson v Ford Motor the claim is one of design defect. Olson v. Ford Motor Company, 410 F. Supp. 2d 869, 874 (D.N.D. 2006); Brethauer v. General Motors Corp., 2009 WL 820120*5 (A i A 2009) (Ariz. App. 2009). c) If the plaintiff’s vehicle had the same defect as the ll hi l b diff d i h M recall vehicle, but differed in other respects, Muniga v. General Motors Corp., 302 N.W.2d 565, 568 (Mich. Ct.

App. 1980).

pp )

SLIDE 53

D f S i i h C Defense Strategies in the Courtroom:

d) Where the plaintiff offers the recall letter that reported that the problems caused by the defect occurred under p y certain conditions and plaintiff failed to show those conditions appeared in the accident. Calhoun v. Honda Motor Co 738 F 2d 126 133 (6th Cir 1984) Honda Motor Co., 738 F.2d 126, 133 (6th Cir. 1984). e) Where the manufacturer admitted the defect. Muniga v General Motors Corp 302 N W 2d 565 568

v. General Motors Corp., 302 N.W.2d 565, 568

(Mich. Ct. App. 1980).

SLIDE 54

D f S i i h C Defense Strategies in the Courtroom:

2) Hearsay – Because the recall letter is an out-of- court-statement

ffered

to prove the matter asserted companies should consider all the asserted, companies should consider all the relevant exceptions plaintiffs may use to admit the letter (i.e., admission by party opponent, the letter (i.e., admission by party opponent, Higgins v. General Motors Corp., 465 S.W.2d 898, 900 (Ark. 1971).

SLIDE 55

D f S i i h C Defense Strategies in the Courtroom:

3) Subsequent Remedial Measure – Companies should argue that recall evidence is a subsequent remedial measure excludable under Rule 407 Giglio v Saab-Scania of excludable under Rule 407. Giglio v. Saab Scania of Amer., Inc., 1992 WL 329557*4 (E. D. La. 1992); Chase

v. General

Motors Corp., 856 F.2d 17, 21 (4th Cir. 1988) 1988). 4) Impeachment – To whatever degree recall evidence is admissible, counsel should argue that it be used , g

nly for impeachment (e.g., if defense

controverts feasibility). Buckman v. Bombardier Corp., 893 F. Supp 547 553 554 (E D N C 1995)

Supp. 547, 553-554 (E.D. N.C.

1995).

SLIDE 56

D f S i i h C Defense Strategies in the Courtroom:

5) Unduly Prejudicial – Companies should argue that the recall evidence, whatever probative value it may have is unduly prejudicial and excludable may have, is unduly prejudicial and excludable under Rule 403. Jordan v. General Motors Corp., 624 F. Supp 72 (E.D. La 1985). 624 F. Supp 72 (E.D. La 1985).

SLIDE 57

D f S i i h C Defense Strategies in the Courtroom:

 Limiting jury instruction.

Counsel should consider requesting a jury instruction that explains that the evidence of a recall campaign can only be explains that the evidence of a recall campaign can only be considered after the plaintiff, independent of the recall, establishes by a preponderance of the evidence that a defect existed in the vehicle. Manieri v. Volkswagenwerk, 376 A. 2d 1317 (N.J. Super. 1977); Allstate Ins. Co. v. Jaguar Cars, 915 F.2d 641, 649 (fn 16) (11th Cir. 1990). , ( ) ( )

SLIDE 58

D f S i i h C Defense Strategies in the Courtroom:

F il t R ll

 Failure to Recall:



Distinction between a post-sale duty to warn and a duty to recall or retrofit a product after sale.



More than 30 states now recognize some form of post-sale duty to warn.



3RD Restatement, Product Liability, Section 10: , y, § 10. Liability of Commercial Product Seller or Distributor for Harm Caused by Post-Sale Failure to Warn (a) One engaged in the business of selling or otherwise distributing products is subject to liability for harm to persons or property caused by the seller’s failure to provide a warning after the time of sale or distribution of a product if a reasonable person in the seller’s position would provide such a warning. (b) A reasonable person in the seller’s position would provide a warning after the time of sale if: (1) h ll k bl h ld k h h d b i l (1) the seller knows or reasonably should know that the product poses a substantial risk of harm to persons or property; and (2) those to whom a warning might be provided can be identified and can reasonably be assumed to be unaware of the risk of harm; and (3) a warning can be effectively communicated to and acted on by those to whom a

(3) a warning can be effectively communicated to and acted on by those to whom a warning might be provided; and (4) the risk of harm is sufficiently great to justify the burden of providing a warning.

SLIDE 59

D f S i i h C Defense Strategies in the Courtroom:

F il t R ll

 Failure to Recall:



Compare that with 3RD Restatement, Product Liability, Section 11: § 11. Liability of Commercial Product Seller or Distributor for Harm Caused by Post-Sale Failure to Recall Product Failure to Recall Product One engaged in the business of selling or otherwise distributing products is subject to liability for harm to persons or property caused by the seller’s failure to recall a product after the time of sale or distribution if: (a)(1) a governmental directive issued pursuant to a statute or administrative regulation specifically requires the seller or distributor to recall the product; or (a)(2) the seller or distributor in the absence of a recall requirement under Subsection (a)(2) the seller or distributor, in the absence of a recall requirement under Subsection (a)(1), undertakes to recall the product; and (b) the seller or distributor fails to act as a reasonable person in recalling the product.

SLIDE 60

D f S i i h C Defense Strategies in the Courtroom:

F il t R ll

 Failure to Recall:



Bell Helicopter v. Bradshaw, 594 S.W.2d 519 (Tex. Civ. App. – Corpus Ch i ti 1979 it f’d ) Christi 1979, writ ref’d n.r.e.)



Salvage v. Scripto-Tokai Corp., 266 F. Supp. 2d 344, 351 (D. Conn. 2003).



Tabieros v. Clark Equipment Co., 944 P. 2d 1279 (Haw. 1997). q p , ( )



Patton v. Hutchinson Wil-Rich Mfg. Co., 861 P.2d 1299, 1315-16 (Kan. 1993).



Gregory v. Cincinnati Inc., 450 Mich. 1, 538 N.W.2d 325 (1995).

h 

Syrie v. Knoll International, 748 F.2d 304 (5th Cir. 1984).