Jonathan Cooper’s Blog

Many small business owners that I’ve encountered are surprised to learn that under New York law, anyone in a product’s chain of distribution can be held liable for injury that results from the foreseeable use of the product. This law includes a retailer, who may have just put that product on his shelf without ever opening the box, and a distributor, who merely transported the product from one destination to the other. Under this scenario, neither the retailer nor the distributor was actively at fault for the product’s defect or the plaintiff’s accident – and they can still be held liable. Does that sound scary from the retailer or distributor’s perspective? It sure is.The Plaintiff’s Burden of Proof in a Products Liability ActionIn very basic terms, in order to prevail in a products liability action, a plaintiff needs to prove two things: first, that the product is defective, i.e., the product is so likely to be harmful to persons or property that a reasonable person who had actual knowledge of its potential for producing injury would conclude that it should not have been marketed in that condition, and, second, that the defect was a substantial factor in causing plaintiff’s injuries.  The plaintiff can meet this burden of proof by demonstrating one of the following: (1) this specific product was defectively manufactured; (2) the product was defectively designed; or, (3) the safety warnings accompanying the product were inadequate. At first blush, this law seems particularly tough on middlemen like the retailer and distributor, which presumably have little to no input in either the manufacture or design of the product, or the warnings that are placed on the product. However, it bears mention that these entities reap the financial rewards from selling the product. Consequently, the courts have opined that in the interests of assuring that a plaintiff with a legitimate defective products claim has a viable and readily available party from whom he or she can be compensated (as opposed to a foreign manufacturer with no connection to the plaintiff or place of occurrence), it is fair to hold the middlemen liable for the product’s failures. This law does not leave retailers or distributors without recourse; to the contrary, they are still entitled to seek indemnity and/or contribution from the responsible party (generally, the manufacturer).  On the other hand, clearing the technical and procedural hurdles necessary to get indemnity from the manufacturer is often far from simple, particularly where the manufacturer is foreign.Assumption #1: The manufacturer has the requisite minimum contacts with the forum of the claim. In order to obtain personal jurisdiction over the foreign manufacturer, you must demonstrate that the manufacturer either transacts business or has some other tangible nexus with the forum state (see, e.g., New York Civil Practice Law and Rules §302).  Assumption #2: The manufacturer’s host country is a signatory to the Hague Convention’s Service of Process Rules. If Assumption #1 can be satisfied (which is uncertain at best), you will still need to assure that your legal papers are personally served on the manufacturer. This in turn requires that the manufacturer is not only readily located, but can be served under the Hague Convention’s rules.Assumption #3: The manufacturer is a viable entity with collectible assets. It goes without saying that a paper judgment against a defunct corporation is utterly worthless.So how can a domestic retailer or distributor protect itself against products liability claims?  Here are a few suggestions:3         Easy Steps to Protect Your Retail Business Against Defective Products Claims Step #1: Make sure that those entities above you in the chain of distribution carry adequate products liability insurance from a domestic, well-reputed and established insurer that specifically names your company as an additional insured on the policy. Do not rely on the manufacturer’s claim that you are named on the policy; get confirmation directly from the insurer (I have seen instances where the declaration sheet provided by the other party to the agreement was a complete fabrication).Step #2: Make sure that you have an agreement that indemnifies you against any claim of a product defect that is not of your own doing.  Stated otherwise, if you are a retailer or distributor, you should be indemnified against any claims of manufacturing or design defect and/or inadequate warnings.Step #3: Try to assure that those companies directly above you in the chain of distribution have a domestic presence, such as an office or agent for service of process.

While following these rules may cost some time and money in the short run, these safeguards are indispensable, for they may ultimately save your company from needless exposure to financial ruin.

 1)                  Failing to Get Appropriate and Timely Clinical Testing that Confirms Food Poisoning 

Simply put, even if you exhibit all of the classic symptoms of food poisoning, without objective scientific data to support your claim (such as a stool sample), your experts will be hard-pressed to affirmatively prove that you sustained food poisoning, as opposed to a viral infection or other idiosyncratic reaction.

 2)                  Failing to Get Appropriate and Timely Testing that Confirms the Presence of Tainted Food 

On the chance that you actually retained any remnant of the food you suspect caused your illness, KEEP IT AND HAVE IT TESTED! Not only will this help confirm the particular villain you are confronting (and, therefore, help in your obtaining proper treatment), it will help defeat the food purveyors’ defense that your illness was caused by some other tainted food product.

 3)                  Failing to Confirm the Symptoms of Others Who Shared the Same Food 

A common defense to food poisoning claims is that “No one else got sick from this food, so it must have been fine.”  If you think you got food poisoning, don’t be shy; ask those who shared your meal if they also felt ill within 2-10 hours after the meal; if they experienced fever, diarrhea, chills, vomiting and the like.  And don’t forget to ask them if they followed steps 1) or 2) listed above: it may save you a lot of time, effort and aggravation later on.

Bicycles, Toys, Clothes, Cribs, Power Tools, Household and Other Products 

            In response to deaths, injuries and property damage from consumer product incidents that cost the nation more than $700 billion annually, in 1972, the Congress established the Consumer Products Safety Commission (“CPSC”) in order to protect consumers and families from products that pose a fire, electrical, chemical, or mechanical hazard or can injure children. The CPSC’s work to ensure the safety of consumer products - such as toys, cribs, power tools, cigarette lighters, and household chemicals.

             Under the Consumer Products Safety Act, when the CPSC finds an unreasonable risk of injury associated with a consumer product, it can develop a standard to reduce or eliminate the risk. The CPSA also provides the CPSC the authority to ban a product if there is no feasible standard, and gives the CPSC authority to pursue recalls for products that present a substantial product hazard. 

            The CPSC’s website (www.cpsc.gov) is a particularly valuable resource, because it has searchable databases to research reports about specific products, and also has tools to find product safety standards, and to determine which products have been recalled. Equally important, the CPSC has electronic forms that can be completed on-line to report injuries arising out of the use or exposure to various products.

            The information from these complaints is used to determine if a safety-related defect trend exists.

             A prime example of the usefulness of the CPSC is their help in enforcing the Poison Prevention Packaging Act of 2005, which was enacted to protect children from serious  personal injury or serious illness resulting from handling, using or ingesting hazardous household substances. See, e.g., 15 U.S.C. §1472(a)(1). Importantly, under the statute, the CPSC is empowered to prohibit packaging that is “unnecessarily attractive” to children [15 U.S.C. §1472(d)]. The Federal Regulations pertaining to this Act also establish the following requirements for packaging: ·        Specific criteria for child-resistance and ease of proper use by adults·        Packaging must function effectively for life of product·        Substance packaged must not interfere with the proper functioning of the package 

16 CFR Part 1700. pppa03 outline summary.pdf