Manufacturers owe consumers an obligation to be on the lookout for potential defects in a product line. Many defects only become evident after a certain number of products have been sold. Sometimes, the danger of a product is revealed because of an injury-causing accident. For example, the full range of side effects of some medications sometimes does not become clear until consumers use the product. Similarly, some vehicles only reveal their flaws in certain situations. It may be necessary for a manufacturer to retrieve a product in order to repair or replace it.
Recalls allow manufacturers to remove a product with a known manufacturing or design defect from the market and offer a remedy to consumers injured or inconvenienced by the problem. The government mandates some product recalls. Under the terminology of certain government agencies, the retrieval of a product may be a market withdrawal or a stock recovery, rather than a recall.
There are six agencies in the United States that can require recalls, including the Consumer Product Safety Commission, the Food and Drug Administration, the Food Safety and Inspection Services, the National Highway Traffic Safety Administration, the Coast Guard, and the Environmental Protection Agency. Each of these agencies has its own rules regarding product recalls. Often, however, manufacturers recall products in order to avoid the risk of multiple lawsuits or class action lawsuits, or to maintain good public relations.
Major recalls demand significant attention from a manufacturer. The manufacturer may need to contact regulators, notify their insurers, and retain a securities attorney to evaluate the company's financial position. In many major recalls, the manufacturer has a plan in place to offer a certain amount of money in settlements to those who have been injured by a defective product before issuing the recall. Manufacturers thinking of issuing a recall must carefully craft a message that allows them to say enough to adequately warn consumers, while still shielding themselves from unchecked liability.
Product Recalls and Class Action Lawsuits
Although in many cases manufacturers issue recalls to avoid liability for personal injuries, simply issuing a recall can result in adverse publicity and class action lawsuits. If a government agency required the recall, it may require notices to consumers to state the reason for the recall and an identification of the hazard involved. It is not good enough to simply recall the product without offering specific information. A plaintiff may try to use any admissions of fault, liability, or defects in the notice as evidence.
Often, manufacturers work out a strategy to exclude a recall announcement before issuing the recall. For example, it may craft a notice that can be construed as a subsequent remedial measure rather than an admission. In many jurisdictions, evidence of subsequent remedial measures by a manufacturer are inadmissible to show its negligence or that a defect exists. However, it can be difficult to predict whether a court will exclude the recall notice. If the recall is compelled by a government agency, it is difficult to argue it was a subsequent remedial measure. Moreover, the rules of evidence and case law in some states permit the introduction of a recall notice.
Ordinarily a plaintiff suing on the basis of strict liability proves this element by presenting expert testimony, which is expensive. However, if a defect is established, the plaintiff will only have to prove that the defect caused his or her injury in order to recover compensation.
In cases involving personal injuries, manufacturers face significant liability if they do not issue a recall. However, many plaintiffs who bring class action lawsuits after a product recall are suing only for economic injuries, not personal injuries.
When a plaintiff is injured after a recall notice has been issued, it may be possible for a manufacturer to argue "assumption of the risk." Assumption of the risk is an affirmative defense against a product liability lawsuit. The manufacturer may also be able to argue comparative negligence or contributory negligence when a consumer ignores a recall notice sent directly to him or her.