Business Success in the US: Managing the Risk of Product Liability in the U.S.

- Patrick B. Fazzone, Partner Butzel Long Tighe Patton, PLLC

The attractiveness of the U.S. market for consumer products is often offset by the challenges, especially the confusing puzzle of product liability laws. Since it is the product manufacturer that is in the best position to ensure that its products are not injurious to consumers in their intended use, this is an issue that first and foremost must be addressed by that party. Appointment of U.S.-based distributors does not remove a manufacturer’s duty to exercise care in the design, manufacture, presentation and marketing of its products. 

The proper course for a manufacturer who wishes to minimize the incidence of product liability claims is first and foremost to understand the laws in this area. There is no single uniform product liability law in the United States. Rather the “law” is a patchwork of fifty jurisdictions plus the federal government, each of which may approach issues of product liability differently.

It is not unusual for a single U.S. product liability claim to be stated or brought in multiple counts or theories. Normally, product liability causes of action will claim negligence, breach of warranty and strict liability in tort. Statutory claims may also be brought under circumstances in the manufacturer or distributor breached a statutory obligation to the class of persons of which the plaintiff was a party.

Risks of suit may be substantially reduced through an aggressive and comprehensive program which seeks to eliminate possible hazards in product design, or product manufacture as well as by improving warnings and instructions on the products to be manufactured for distribution in the American market. Some of the potential cost from a claim can be shifted through product liability insurance. However, insurance coverage cannot and does not remove the underlying potential exposure for injury due to use or misuse of a product.

Creating an effective program is not an impossible task. Rather it simply requires the attention and commitment of a company’s senior management acting with advice from counsel on the risks and how best to address them.

Patrick B. Fazzone, Partner Butzel Long Tighe Patton, PLLCPatrick specializes in sophisticated commercial transactions, corporate law, technology transfers and international trade law. Patrick has advised Australian companies on companies on the protection of their intellectual property, establishment and structuring of U.S. start-up companies, joint ventures and other commercial arrangements, managing the risk of product liability, contracting with the United States Government, and the drafting of sales and technology agreements. Patrick is also Chairman of the Trade and Government Committee of the American Chamber of Commerce in Australia. He focuses on providing practical and effective advice and solutions to his clients.