Product Liability Verdicts Are on the Rise: What This Means for Consumers and Manufacturers

Product liability lawsuits are on the rise, and with them, the size of verdicts against manufacturers is also increasing. In 2024 alone, product liability cases accounted for an astonishing $13.7 billion in verdicts. This surge in product liability litigation has significant implications for both consumers and manufacturers, demanding a closer look at consumer rights, manufacturer responsibilities, and strategies for mitigating risk.

Understanding Product Liability

Product liability refers to the legal responsibility of manufacturers, distributors, and sellers for injuries caused by defective or dangerous products. These laws are designed to protect consumers from harm and ensure that those responsible for placing unsafe products on the market are held accountable. When a product is defective and causes injury or damage, the injured party has the right to pursue a product liability claim to seek compensation for their losses.

Types of Product Defects

Product liability cases typically involve one of three types of defects:

Design Defects: These occur when a product is inherently dangerous due to its design, even if it is manufactured correctly. For example, a car with a design flaw in its brakes might pose a risk to drivers.
Manufacturing Defects: These defects arise during the production process. A product might be designed safely but become dangerous due to errors or negligence in manufacturing. An example is a batch of medications where one bottle contains a harmful substance due to a mistake in the production line.
Marketing Defects (Failure to Warn): Also known as “failure to warn,” these occur when a product lacks proper instructions or warnings about its safe use. For instance, a household cleaner that doesn’t include adequate safety warnings about its potential hazards could lead to injuries.

The Rising Tide of Product Liability Verdicts

Recent data indicates a significant increase in both the number and size of product liability verdicts. Several factors contribute to this trend:

Increased Consumer Awareness: Consumers are becoming more aware of their rights and are more likely to take legal action when injured by a defective product.
The Rise of “Nuclear Verdicts”: Juries are increasingly awarding massive verdicts (>$10 million), often driven by emotional appeals and a desire to punish corporations for perceived wrongdoing. In 2022, the median nuclear verdict in product liability cases peaked at $36 million, a 50% rise over the prior ten years.
Litigation Funding: Third-party litigation funding, where investment firms finance lawsuits in exchange for a percentage of the winnings, is fueling more and increasingly costly lawsuits.
Social Media and Attorney Advertising: The rise of social media and aggressive attorney advertising has amplified awareness of product liability claims and encouraged more people to come forward.

What This Means for Consumers

The rise in product liability verdicts has several important implications for consumers:

Stronger Consumer Protection: The trend reinforces the importance of product liability laws in protecting consumers from harm caused by defective products.
Right to Compensation: Injured consumers have a greater chance of receiving fair compensation for their medical expenses, lost wages, pain and suffering, and other damages.
Increased Product Safety: The threat of large verdicts incentivizes manufacturers to prioritize product safety and invest in quality control measures.
Access to Justice: Product liability lawsuits provide a means for consumers to hold manufacturers accountable for their actions and seek justice for their injuries.

What This Means for Manufacturers

For manufacturers, the rise in product liability verdicts presents significant challenges and demands a proactive approach to risk management:

Increased Financial Risk: Large verdicts can have a devastating impact on a company’s bottom line, potentially leading to bankruptcy or significant financial losses.
Reputational Damage: Product liability lawsuits can damage a company’s reputation, leading to lost sales, decreased market share, and long-term harm to brand loyalty.
Higher Insurance Costs: As the risk of large verdicts increases, manufacturers can expect to see their product liability insurance premiums rise.
Regulatory Scrutiny: Product liability claims can trigger increased scrutiny from regulatory agencies like the Consumer Product Safety Commission (CPSC), leading to investigations, recalls, and potential penalties.

Strategies for Manufacturers to Mitigate Risk

To mitigate the risks associated with product liability, manufacturers should implement the following strategies:

Prioritize Product Safety: Invest in robust quality control processes, rigorous testing, and comprehensive risk assessments throughout the product lifecycle.
Design for Safety: Ensure that products are designed with safety in mind, incorporating safety features and minimizing potential hazards.
Provide Clear Warnings and Instructions: Offer clear, concise, and easy-to-understand warnings and instructions about the proper use of the product and potential risks.
Maintain Thorough Records: Keep detailed records of product design, manufacturing processes, testing results, and any customer complaints or incidents.
Implement a Recall Plan: Develop a comprehensive recall plan that outlines the steps to take in the event of a product defect or safety issue.
Obtain Adequate Product Liability Insurance: Secure sufficient product liability insurance coverage to protect against potential claims and lawsuits.
Monitor and Align with Changing Regulations: Keep abreast of industry standards and regulatory changes.
Check Vendor’s Contracts and Insurance Levels: As the cost of liability insurance has climbed, some suppliers may have reduced their policy limits, potentially leaving manufacturers on the hook for more of the damages.
Avoid “Bad Facts” and Incriminating Internal Communications: Be sensitive in emails, not calloused. Studies have found that juries tend to find against a defendant if it is shown that the culprit was involved in nefarious activity – even if all other circumstances are the same.

The Role of Expert Witnesses

Expert witnesses play a crucial role in product liability cases. These individuals have specialized knowledge in areas such as engineering, medicine, or manufacturing. Their testimony helps to explain technical issues and guide the jury toward understanding how a product defect might have led to an injury. Expert witnesses can:

Review case files
Examine the defective product
Conduct tests or simulations
Provide written reports summarizing their findings

Defenses in Product Liability Claims

Defendants in product liability cases have several potential defenses available to them. These include:

Product Misuse: Arguing that the plaintiff was misusing the product in a way that was not intended or foreseeable.
Assumption of Risk: Claiming that the plaintiff was aware of the risks associated with using the product and willingly assumed those risks.
Modification: Asserting that the product was altered or modified after it left the manufacturer’s control, and that the modification caused the injury.
State of the Art: Arguing that the product was designed and manufactured using the best available technology and knowledge at the time.

The Future of Product Liability

The product liability landscape is constantly evolving, driven by technological advancements, changing consumer expectations, and legal developments. Emerging trends that are likely to shape the future of product liability include:

AI and Autonomous Products: As AI becomes embedded in everyday products, from smart appliances to autonomous vehicles, novel liability theories are emerging.
E-commerce and Third-Party Sellers: The rise of e-commerce platforms and third-party sellers raises concerns about holding these sellers accountable for product defects or misrepresentations.
Sustainability and Environmental Concerns: Products that claim to be “green” or sustainable are under increasing scrutiny, and misleading eco-friendly claims can lead to liability issues.

Conclusion

The rise in product liability verdicts underscores the importance of product safety and the need for both consumers and manufacturers to be aware of their rights and responsibilities. Consumers must be vigilant in using products safely and reporting any defects or injuries. Manufacturers must prioritize product safety, implement robust risk management strategies, and stay informed about the evolving legal landscape. By working together, consumers and manufacturers can help create a safer marketplace for everyone.