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American and European product manufacturers face many challenges operating in the international marketplace.  Foremost is the product liability lawsuit, which can challenge a manufacturer’s every decision, from the design and development stage, through sale of the product, and even for an undefined period thereafter.  A manufacturer’s potential liability for legacy equipment, i.e., older or prior models of machines, discontinued lines, and so on, represents among the most difficult of challenges.  The design and engineering processes, as well as warnings on the product or in the product literature, may become subject to review at a later time, affording jurors or courts the opportunity to criticize the manufacturer with updated technology and knowledge.

Product liability lawsuits in the United States generally claim a design or manufacturing defect, or a failure to warn of dangers inherent in the product under theories of (1) strict product liability, (2) negligence or (3) breach of warranty.  With respect to so-called legacy equipment, the manufacturer may be faced with expert opinions claiming that the manufacturer had a duty to re-design, retrofit, issue a post-sale warning or recall the product.  In some instances, the manufacturer’s knowledge of post-sale use by consumers or operators, as well as re-developments of the product, will supply the basis of expert opinions against the manufacturer.  Further, the manufacturer’s compliance with foreign laws may also demonstrate an alternative design that was required in a foreign country but not utilized in the United States.

Manufacturers operating in an international market must be prepared to defend their products in any venue.  The American manufacturer must be cognizant of the changes in the Restatement (Third) of Torts:  Product Liability regarding issues of post-sale duty to warn and recall of products.

DISCUSSION

Manufacturers in today’s global marketplace are often confronted with issues related to older machines still operating in the field, the so-called “legacy equipment.”  Among the questions presented are defining the manufacturer’s duty when:

  • It learns of advancements in safety that may apply to old equipment still functioning in the field.
  • It performs maintenance on its legacy equipment at customer locations.
  • It discovers a defect in a design in a current line where equipment has already been shipped.
  • It purchases a product line from another manufacturer.
    • The other manufacturer is defunct.
    • The other manufacturer remains a going concern.

Some manufacturers voluntarily assume a duty, irrespective of the governing law of the state where the product was manufactured, sold, or is in use, to issue warnings or instructions post-sale.  This is often done in the spirit of protecting the customer and the end-user of the product in cases where the manufacturer discovers a flaw in design or instructions after the product is sold, or where the manufacturer develops an advancement in safety or design in a later model of the product.  There are a variety of sound reasons for undertaking such a duty, even where arguably not required by law, including:

  • Avoiding injuries and property damage
  • Reducing liability exposure
  • Protecting company brand and image

Confounding the issue is the disparity in state common law on the issue of a manufacturer’s duty, if any, with respect to legacy equipment.  The issue comes down to whether or not a manufacturer has a post-sale duty to warn or retrofit older equipment still operating in the field.  As is apparent, below, there is no uniform answer to this question.

In Pennsylvania, manufacturers do not have a duty to alert owners of older equipment to safety advancements in the equipment, but do have a continuing duty to warn of defects that were present in their products when they were sold. DeSantis v. Frick Co., 745 A.2d 624 (Pa. Superior 2000).  Similarly, under Texas law, manufacturers generally have no post-sale duty to warn unless the manufacturer gains some significant control of the product, the product is deemed defective during that period of control, and the consumer is later injured as a result of the defect.  See, Bell Helicopter Co. v. Bradshaw, 594 S.W. 2d 519 (Texas Civ.App. – Corpus Christi 1979).  In Washington, neither a manufacturer nor seller can be liable for harm under the Washington Products Liability Act (WPLA), if the harm has occurred after the product’s “useful safe life” has expired.  Wash. Rev. Code §7.72.060(1).  The actual duration for a product’s “useful safe life” is defined by statute, but is generally presumed to be 12 years.  Wash. Rev. Code §7.72.060 (1) and (2).  Georgia affirmatively imposes a post-sale duty to warn against dangers discovered after a product is sold under negligence theory at common law.  DeLoach v. Rovema Corp., 241 Ga.App. 802, 527 S.E.2d 882 (2000).   Other states that apply some version of a post-sale duty to warn include: Michigan, Colorado, Minnesota, North Carolina, Kansas, New Jersey, North Dakota, Maryland, New York, Iowa, Massachusetts, New Mexico and Maine.

Even for those states that affirmatively decline to impose a post-sale duty to warn on manufacturers or sellers, the rule is not absolute.  For example, Illinois does not impose a common law post-sale duty to warn against a manufacturer; however such a duty may be imposed either by statute or when the manufacturer voluntarily warns customers of a defect in a product outside of the manufacturer’s control.  Modelski v. Navistar Intl. Transp. Corp., 302 Ill.App. 3d 879, 889 (1st Dist. 1999).  However, in a case typifying this issue, Jablonski v. Ford Motor Co.,398 Ill.App.3d 222, 923 N.E.2d 347 (5th Dist. 2010) reversed, 955 N.E.2d 1138, 2011 Ill.LEXIS 1136, 353 Ill.Dec. 327 (2011), the Illinois Appellate Court reversed course, and determined to impose a post-sale duty to warn on Ford Motor Co., resulting in a multi-million dollar verdict against it.  While the Illinois Supreme Court ultimately overturned the verdict, it left the door open to imposition of a post-sale duty.

These decisions and others signal a possible shift to greater imposition of a post-sale duty on manufacturers.  The shift is likely prompted by the Restatement, (Third) of Torts: Product Liability. The Restatement provides that 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 warning.  (emphasis supplied).  Who is this “reasonable person?”  According to the Restatement, a reasonable person in the seller’s position would provide a warning after the time of sale if:  (1) the seller knows or reasonably should know that the product poses a substantial risk of harm to persons or property; (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; (3) a warning can be effectively communicated to and acted on by those to whom a warning might be provided; (4) the risk of harm is sufficiently great to justify the burden of providing a warning.  While the Restatement (Third) of Torts directly addresses only sellers and distributors, the comments to the Restatement (Third) of Torts apply the guidelines to manufacturers as well.  Restatement (Third) of Torts:  Product Liability.

Finally, it is common in the United States that the manufacturer that fails to conduct an adequate retrofit or recall campaign may be liable for negligence, apart from the issue of design defect.  Although a seller may be under no statutory or regulatory obligation to recall the product that causes harm, if it volunteers to recall it, it will be subject to liability if it fails to do so adequately.  See e.g., Bell Helicopter Co. v. Bradshaw, 594 S.W. 2d 519, 532 (Texas Civ.App. 1979).

Clearly, no manufacturer should consider itself completely insulated from a claim of post-sale duty to warn or the like relative to its legacy equipment, regardless of where the manufacturer is located or where its product was manufactured.  This is particularly true in a global marketplace, where a manufacturer can see its product placed anywhere on the globe.  The prudent manufacturer will have some measures in place to maintain contact and communication with known customers and to convey safety and related information to them through the mails, electronically, via its web site or otherwise.  That manufacturer will also have some repository of documents and the like related to its legacy equipment in order to allow it to adequately defend lawsuits related to same.

From a common sense perspective, the practical benefits to the manufacturer of outreach to its customer base and those possessing its “legacy equipment” are several, and may include:

  • Avoidance of injuries and property damage
  • Reduction of liability exposure
  • Satisfaction of legal obligations and duties to end users
  • Protection of the company’s assets, reputation and brand image

Ultimately, the manufacturer prepared to address claims that it has a duty with respect to its legacy equipment, and to show it has satisfied such a duty will find itself better positioned to respond to lawsuits related to that equipment or product.