Product Liability Claims: Lessons learned the hard way

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No matter how big, no company is immune to product liability risks.  In February 2014, General Motors was sued because several of its car models were manufactured with faulty ignition switches that may shut off the engine during driving, disabling power steering and brakes, and preventing airbags from inflating. These faulty switches have been linked to at least 31 car accidents and 13 deaths. As a result, GM has recalled over 26 million vehicles for various malfunctions and established a $400 million fund to compensate for deaths and injuries caused by its vehicles. However, the chain reaction does not end until here. Several lawsuits against GM are still pending in the courts; one seeking $10 billion in compensation. The result for GM has been another bankruptcy, and catastrophic damage to their brand.

It’s not the first time GM has faced a product liability suit. As early as 2003 GM began receiving notices of suit for damage caused by the Dex-Cool antifreeze used in all their vehicles. The fiasco culminated in a class-action suit of about 35 million customers for a total of $20 billion against GM.

Even products carrying hazard warning labels are not immune.  In 1998, Owens Corning Corp. spend $1.2 billion to settle the asbestos-related product liability lawsuit; and in 2002, Philip Morris faced charges in a suit filed by women who had lung cancer and claimed tobacco company’s failure to adequately warn her of the risks of smoking.  Even after a successful appeal, they still ended up paying $28 million in compensation and punitive damages.

All in all, any fruits of manufacturing such as tires, drugs, aviation parts, and anything else carry product liability risk that can lead to financial hardship, or even bankruptcy, for a company.  Product liability laws can vary greatly from state to state, and navigating those oten-murky legal waters can be intimidating.  Thus, an experienced product liability expert is essential to help a business minimize their risks and protect their bottom line.

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