Presenting a live 90 ‐ minute webinar with interactive Q&A Product Liability Recalls on the Rise: Product Liability Recalls on the Rise: Legal Strategies Preparing for Recalls, Defending Litigation and Leveraging Case Developments TUES DAY, S EPTEMBER 13, 2011 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific T d Today’s faculty features: ’ f l f Kelly S avage Day, Sedgwick , S an Francisco . O’ Brian, Partner, Thompson Hine , Washington, D.C. Fern P Larry D. Grayson, Partner, Hartline Dacus Barger Dreyer , Dallas The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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Pr Product Lia oduct Liability R ility Recalls on the ecalls on the Rise: Le Rise: Legal Str Rise: Le Rise: Legal Str l Strate l Strate tegies tegies gies gies Preparing for Recalls, Defending Litigation and Leveraging Case Litigation and Leveraging Case Developments K ll Kelly Savage Day, Sedgwick LLP S D S d i k LLP Larry D. Grayson, Hartline Dacus Barger Dreyer LLP Fern O’Brian, Thompson Hine LLP , p Strafford Publications S September 13, 2011 t b 13 2011 5
Preparing for Product Recalls K ll Kelly Savage Day S D Sedgwick LLP 333 Bush Street, 30th Floor , San Francisco, CA 94101-2834 (415) 627-1406 kelly savageday@sedgwicklaw com kelly.savageday@sedgwicklaw.com 6
Views expressed in this presentation Views expressed in this presentation are for educational purposes only and d do not constitute legal advice or t tit t l l d i necessarily represent the views of the presenters' employers. 7
“Nothing concentrates the Nothing concentrates the mind like the prospect of being p p g hanged in a fortnight.” Samuel Johnson 8
Preparing for Recalls Not a Question of If But When . . . Not a Question of If But When . . . 9
Questions to Consider How can we protect against a product recall? Do we know how to judge whether a product has a defect that “presents an unreasonable risk of injury” requiring a recall? i k f i j ” i i ll? Do we understand federal, state, and international regulations regarding product recalls? Do we have processes and procedures in place to manage a product recall? Do we have a trained product recall team? Do employees know what to do? How quickly can we respond to media shareholders, employees, and regulators in the event of a product recall? event of a product recall? How will business continuity plans be put into action if a product is recalled? Have we made adequate allowances for a negative impact to supply chain if a product is recalled? Do we have the necessary technology tools to manage a product recall? Have we identified the necessary tools to help mitigate the financial impact of the recall? Have we identified the necessary tools to help mitigate the financial impact of the recall? Are we prepared to handle any product recall-related litigation? 10
Recall Preparedness Is Extremely Important Consumer/patient safety p y Brand damage Customer loyalty y y Financial exposure Legal exposure g p 11
Recall Preparedness What Does It Require? Developing and implementing processes and procedures to identify potentially and procedures to identify potentially defective products before they reach consumers consumers Preparing and implementing recall SOPs and a preparedness plan Conducting mock recalls Conducting mock recalls Taking proactive steps to mitigate financial risks with contracts and insurance risks with contracts and insurance 12
Recall Prevention: Building in Procedures to Locate Potential Risks Before Potentially Defective Products Reach Consumers Defective Products Reach Consumers Product Traceability • “As the recent cases involving some Toyota car models-with As the recent cases involving some Toyota car models with accelerator faults—and Rolls Royce—with the A380 Airbus engine—have graphically illustrated, traceability is at the heart of any efficient recall process.” f ffi i t ll ” Product and customer databases Product usage information database Product usage information database Investigative Procedures of CPSC, FDA and USDA 13
Recall Preparedness: Developing and Implementing a Written Recall Strategy Designation of a Recall Coordinator/Committee g Development of product recall SOPs Recall execution strategy Internal and external Communications Recall termination procedures 14
Recall Preparedness: Mock Recalls Choose a batch number for a real group of products Run reports using supplier, manufacturing, R t i li f t i distribution and transportation systems Account for what was made, shipped and received Do a Post-Mortem • Review recall and determine what worked and what needs to be improved • Include the review requirement in recall preparedness plan preparedness plan 15
Recall Preparedness: Mitigating Financial Exposure from Recalls Contracts Insurance Insurance 16
Recall Preparedness: Special Issues Social media Global and third-party suppliers 17
18 Final Thoughts
Product Liability Recalls on the Rise All About the Timing: Whether and When to Recall Fern P. O’Brian Partner Thompson Hine LLP p Strafford Webinar September 13, 2011 1:00 p.m. 19 ATLANTA | CINCINNATI | CLEVELAND | COLUMBUS | DAYTON | NEW YORK | WASHINGTON, D.C. 19
Introduction The Legal Landscape Whether and When to Recall Regulatory Framework FDA, CPSC, NHTSA * Regulatory Reports and Recalls * Regulatory Databases Question of Timing Q g Litigation and Considerations Additional Considerations What Companies can do to Prepare Fern’s Top Ten List Questions 20 ATLANTA | CINCINNATI | CLEVELAND | COLUMBUS | DAYTON | NEW YORK | WASHINGTON, D.C. 20
The Legal Landscape Generally no duty to institute a post-sale recall unless Generally, no duty to institute a post-sale recall unless government requirement Restatement (Third) Torts: Products Liability, §11: “O “One engaged in the business of selling or otherwise distributing products is d i th b i f lli th i di t ib ti d t i subject to liability for harm to persons or property caused by the seller's failure to recall a product after the time of sale or distribution if: (a)(1) a governmental directive issued pursuant to a statute or administrative regulation specifically requires the seller or distributor to recall the product; or (2) the seller or distributor, in the absence of a recall requirement under Subsection (a)(1), undertakes to recall the product; and (b) the seller or distributor fails to act as a reasonable person in recalling the (b) the seller or distributor fails to act as a reasonable person in recalling the product.” Typically, recalls are “voluntary” 21 ATLANTA | CINCINNATI | CLEVELAND | COLUMBUS | DAYTON | NEW YORK | WASHINGTON, D.C. 21
The Legal Landscape Post sale duty to warn may apply depending on jurisdiction Post-sale duty to warn may apply depending on jurisdiction Duty to warn may impact recall decision as warning may give rise to Duty to warn may impact recall decision, as warning may give rise to consumer reports and/or claims Duty to warn and regulatory obligations may dramatically affect decision to recall 22 ATLANTA | CINCINNATI | CLEVELAND | COLUMBUS | DAYTON | NEW YORK | WASHINGTON, D.C. 22
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