RISK RETENTION INSURANCE SERVICES, INC.

February 2010 NEWSLETTER

What’s in a name?  In the classic Shakespearian classic play “Romeo and Juliet” the heroine, Juliette, notes:

“What’s in a name? That which we call a rose
By any other name would smell as sweet.”

Romeo and Juliet (II, ii, 1-2)

But in the case of product names, failure to properly name the model, and keep track of changes, does make a difference.  Unfortunately, some manufacturers neglect to properly name their models, and track changes.  This newsletter reminds us that, while to Juliet placed no import on a name, the play ends with her tragic death.

PRODUCT MODEL NUMBERS AND DESIGN CHANGES POSE LITIGATION CHALLENGES

Products change over time.  Sometimes, the changes in the design are substantial, with new components.  Sometimes, the changes are minor, with components staying the same, only with new vendors replacing previous suppliers due to price, delivery, or quality.

The ability to track each design and/or vendor change becomes paramount once a claim is made.

Typically, a claimant attorney will seek through discovery all claims involving all products, regardless what happened, and regardless of the product model or design.

However, most courts have held that in order to be admissible, a prior claim must involve an accident that occurred under substantially similar circumstances, on a substantially similar product and due to a substantially similar defect.

What is a substantially similar product?  We take the position that it is the same product, or if (in the case of ladders) the only difference is the height of the ladder, the same product line (same design).  We may need to broaden our response as a result of a court order, but if, for example, we can show that a product’s design changed  (in the case of a ladder) the spreader bar rivets, then obviously, the ladders with different rivets would be irrelevant.  We are often successful with these arguments, which are highly fact specific.

Although under the law the plaintiff is entitled to obtain information in discovery that may not be admissible, in point of fact, once they have the information on a whole line of products, or all products, the plaintiff has a stronger argument to get all such information before the jury.

The plaintiff knows that if he can show that there were “numerous” prior complaints, then he can paint the designer/manufacturer with a broad brush – “this manufacturer just does not care about its customers!”

With Proper Planning, All Is Not Lost!

If the manufacturer changes the model number/designation whenever there is a change in the design, even slightly, this provides an argument that the model is different and no claims should be reported.

Further, if the manufacturer keeps track of supplier/vendor changes, then when there is a manufacturing defect claim (for example, that a rivet is not strong enough), we can argue to limit production to the products with rivets from that manufacturer.

But Wait – It’s Even More Important!

In order to get testing of an exemplar into court, we need to be able to show that the product is “substantially similar.”  This does not just mean manufactured by the same manufacturer, but that the components at issue are “substantially similar.”  The easiest way to do this is to show that the components are manufactured by the same vendor, and that the design is the same.

If you keep track of the vendors for various time periods, then we can ensure that you go back and provide the “proper” exemplar with the proper “parts” for testing.  Failure to do this can result in expensive testing by experts that ends up being excluded at trial.  One way to do so could be to have an insignificant and irrelevant difference in the products so that different vendors can be readily identified.  For example a small indentation or bump could be added to the die for an aluminum extrusion or fiberglass pultrusion to differentiate the vendors.

Examples. One ladder manufacturer had an unusual process of changing model numbers when there were not changes to the design; but when there were design changes, the model number usually did not change.  Under those circumstances, it is almost impossible to argue that the claims that were made regarding a ladder were not on a substantially similar product.  We could not provide the court with an easy explanation that the ladder was different.  Once you start getting into engineering terms with a judge, the likelihood of withholding prior claims goes way down.

On the other hand, had we been able to show that the accident was on a Model 1000c, we likely would not have had to provide claims history on a Model 1000a, 1000b, or 1000d.  Judges understand that different model numbers designate changes (even if it may not actually relate to the facts of the case).

Similarly, we recently had a case where an extension ladder was involved in an accident.  The plaintiff was alleging that the ladder rails were too weak, and simply failed.  We retained an expert to perform testing on a ladder of the same model, same length and color.   The expert determined that the ladder was easily able to withstand the forces of reasonable use.

Then we learned that the ladder involved in the accident had fiberglass rails manufactured by one fiberglass manufacturer.  And the ladder that was tested had fiberglass rails manufactured by another manufacturer.  Being told that the new fiberglass manufacturer used the same specifications, we had the rails tested for strength.

We learned that the exemplar ladder was much stronger (in some respects).  Thus, what our expert showed was that a stronger ladder would have easily withstood the forces.  We could not now say without a lot of explaining that the ladder in question had substantially similar strength characteristics.

It is entirely possible that the ladder testing would have been excluded by the court.  What relevancy (says the plaintiff) is testing on a stronger ladder?  In fact, it would be misleading to a jury.

The problem was solved by locating a similar ladder from a customer and re-testing (and paying for retesting) of a substantially similar ladder manufactured with the same components.

Sometimes, a product of the same model and components cannot be found.  In that case, from the beginning, and before the testing, such a fact must be known to the expert.  He can then design a test to take into consideration the differences, so that he is comparing “apples to apples.”

Without the proper records and information, we can waste thousands of dollars on testing that is not ultimately admissible in court.

The Take Away.  Proper record keeping on design changes and modifications, including vendor changes, is essential.  Changing model numbers whenever there is a substantive change to a design, or to components, keeps the arguments clean.  By doing this, you have a much better chance to keep out irrelevant prior claims information, and a much better chance to have pretrial testing admitted to the jury.  In both cases, your chances of success at trial are substantially improved.

ACTIVITY REPORT

Over the past quarter RRS closed 34 claims including four lawsuits and 30 non-litigated claims.

One of the lawsuits resulted in a defense verdict.  One of the lawsuits settled with no payment to the plaintiff, but the insurer waived costs incurred.  The other two lawsuits were dismissed with no payment to plaintiffs.

Of the 30 claims that were closed, 18 were closed with no payment.  12 claims were settled.  One of the claims involved a potentially defective product and because the manufacturer stands strongly behind its product, a reasonable settlement was made and accepted to compensate the family of an injured child.  The average settlement, even including that claim, was $1,462.00 (excluding claims closed without payment).

414) 352-4542      sales@riskretentionservices.com (414) 352-4547 Fax