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The Effect of Product Liability Litigation on the Duty to Report Safety Issues to the Government

1510_F4_coverProduct liability litigation and product safety regulatory activities often become intertwined. Product liability claims and lawsuits can generate reports to the government and recalls in the U.S. and around the world. And, on the flip side, recalls can generate product liability and other lawsuits and contribute to findings of liability.

Despite that, the people defending litigation (in-house attorneys, corporate risk management personnel, insurance company personnel and defense counsel) are usually different than the people who are responsible for regulatory compliance. In fact, in many companies, those responsible for dealing with the U.S. Consumer Product Safety Commission (CPSC), Health Canada, and other safety agencies are not lawyers and have no knowledge of litigation.

The effect of this division of responsibility can be a lack of coordination, resulting in a manufacturer sometimes failing to learn about a safety issue raised in litigation that could create a reportable matter to a government agency. Such a report could ultimately require a manufacturer to take post-sale safety actions at the request of the government, which could in turn adversely affect current litigation or result in additional litigation.

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Reporting a safety issue to the government and undertaking a recall can certainly make defending a product liability case much harder. And, while it doesn’t amount to absolute liability, reporting and recalling a product certainly increases the interest of plaintiff’s attorneys and can serve as the basis for a plaintiff’s verdict and possible award of punitive damages.

The increased risk of being sued for product liability and the growing need to report to U.S. and foreign government agencies has made product safety regulatory compliance a very complex and risky global endeavor. Therefore, companies that sell regulated products are well advised to coordinate litigation management and regulatory compliance, either by using the same lawyers or at least by having the responsible personnel communicate closely over strategy in both areas.

CPSC Regulations Regarding Litigation

The Consumer Product Safety Act (CPSA), section 15(b), requires manufacturers, importers, distributors, and retailers to notify the CPSC immediately if they obtain information that reasonably supports the conclusion that a product distributed in commerce: 1) fails to comply with a consumer product safety standard or rule; 2) fails to comply with any other rule, regulation, standard, or ban enforced by the Commission; 3) contains a defect that could create a substantial product hazard to consumers; or 4) creates an unreasonable risk of serious injury or death.

The most important basis for reporting to the CPSC is section 15(b)(3), which requires reporting if there exist both a defect and the possibility of a substantial product hazard. Under section 15(b)(3), a product without a defect is not necessarily subject to the reporting requirements, even if injuries occur.

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The CPSC regulations say that the term “defect” used in this section is not necessarily the same as the term “defect” in product liability law. But, CPSC regulations do require product liability in general to be considered in connection with a determination of whether a product is defective.

The regulations also require that a company consider the following issues in determining whether there is a substantial product hazard:

  1. Information about engineering, quality control, or production data;
  2. Information about safety-related production or design changes;
  3. Product liability suits and/or claims for personal injury or damage;
  4. Information from an independent testing laboratory; and
  5. Complaints from a consumer or consumer group.

Another basis for reporting is whether the product presents an unreasonable risk of serious injury or death (section 15(b)(4)). This regulation does not require that a product be defective before a reporting responsibility arises. For such reports, the regulations require companies to consider “reports from experts, test reports, product liability lawsuits or claims, consumer or customer complaints, quality control data, scientific or epidemiological studies, reports of injury, information from other firms or governmental entities…”

The regulations then go on to say that, while such information shall not trigger a per se reporting requirement, in its evaluation of whether a subject company is required to file a report under the provisions of section 15 of the CPSA, the Commission shall attach considerable significance if the company learns that a court or jury has determined that one of its products has caused a serious injury or death and a reasonable person could conclude based on the lawsuit and other information obtained by the company that the product creates an unreasonable risk of serious injury or death.

The regulations also make clear that the reporting company may deny that its product is defective when it reports. However, despite such a denial, the fact that a report was made might be admissible in a trial to support an expert’s opinion. And, at a minimum, the manufacturer would have to explain why it reported and recalled the product if it wasn’t defective or had a substantial risk of injury. That may be hard to do.

The last section of the CPSA dealing with litigation is section 37. This section requires manufacturers of consumer products to report information about settled or adjudicated lawsuits if:

  • A particular model of the product is the subject of at least three civil actions filed in federal or state court;
  • Each suit alleges the involvement of that particular model in death or grievous bodily injury, which is defined as mutilation or disfigurement, dismemberment or amputation, the loss of important bodily functions or debilitating internal disorder, injuries likely to require extended hospitalization, severe burns, severe electric shock, or other injuries of similar severity; and
  • During a two-year period specified in the law, each of the three actions results in either a final settlement involving the manufacturer or in a court judgment in favor of the plaintiff

And, the CPSC makes clear that a manufacturer does not need to wait for adjudication by a jury that its product is defective before it is required to report.

Lastly, the regulations state that product use, experience, performance, design, or manufacture outside the U.S. that is relevant to products sold or distributed in the U.S. must also be considered. Therefore, incidents occurring outside the U.S. must be considered and could create a reporting responsibility to the CPSC, even if no incidents occurred in the U.S.

International Reporting Requirements

Reporting requirements enacted by the European Union (EU), Canada, and Australia do not contain requirements similar to those promulgated by the CPSC. Canada and Australia’s requirements are based, in part, on the occurrence of an incident anywhere in the world involving serious injury or death after a use or foreseeable misuse of the product. Therefore, a duty to report to these agencies could be triggered well before litigation in that country or in the U.S. commences.

However, if litigation occurs outside the U.S., the manufacturer would have to consider the facts of the occurrence and any judge’s or expert’s opinions (there are generally no jury trials outside the U.S.) concerning the reason for the incident in determining whether there is a duty to report to the CPSC.

What Does This Mean?

These CPSC regulations can create substantial confusion as they relate to the effect of litigation on the duty to report. Let’s say that there are incidents and the company investigates and determines that there is no defect in the product and really has no reason to conclude that the incident was caused by the product. In such a case, there should be no duty to report.

Then, a lawsuit is filed and an allegation is made that the product is defective and caused the injury. Does that create a duty to report? I don’t think so. Next, a plaintiff’s expert issues an opinion saying that the product is defective and that this defect caused the incident. Now is there a duty to report? If the manufacturer hires a defense expert who reviews the report, sees the product, and then issues an opinion disagreeing with the plaintiff’s expert, I would say no. Many things are going on during discovery; there are going to be several opinions and a dispute over whether the product is defective and caused harm. I still think there is a good argument that there is no duty to report.

But the CPSC may disagree with this conclusion. They might believe that a report is triggered merely by the issuance of the plaintiff’s expert report opining that the product caused the incident. This seems inappropriate, especially if a defense expert reviews the report and concludes that there was no substantive basis for the plaintiff’s expert’s conclusions and that it was merely unsupported speculation.

Now let’s say that a manufacturer goes to trial and the result is a plaintiff’s verdict. Is this per se reportable? The regulations say no and I agree, especially if this is the first case of its kind and there is no indication that an incident of this type would ever happen again. However, what if the jury renders a verdict specifically saying that the product was defective, was unreasonably dangerous, and caused the accident? Again, there are many reasons why a jury rules in a certain way and the verdict should be evaluated by the manufacturer, but I don’t think it should always result in a report.

Certainly, after any verdict by a jury or a judge finding liability, the manufacturer should document the file as to why it believes the jury verdict does not create a reportable matter. But, if in doubt, the manufacturer could report, deny a defect, explain why they disagree with the court’s ruling or jury’s finding and argue that no recall is necessary.

What about a manufacturer that tries similar incidents to a jury verdict and gets inconsistent verdicts? Does the manufacturer have a duty to report? The manufacturer could report and argue that the product is not defective and similarly that a recall or other corrective action is unnecessary. The problem is that the CPSC may disagree, and argue that even though there is no defect, there is an unreasonable risk of serious injury or death, and require a recall.

What if the manufacturer loses the first case and then chooses to settle other similar cases so they don’t get any further adverse results. Is that some proof that the product is defective? Does that make it reportable under section 15 or section 37?

While the CPSC makes it clear that information developed during litigation must be considered, there is no guidance on how to analyze the evidence and the results, especially when there are a series of cases that have inconsistent results. The manufacturer must consider all of the evidence available as required by the regulations, make a decision that is supported by technical analysis and the law, and make sure that the basis of the decision is adequately documented.

The manufacturer must manage its litigation and any response to litigation (i.e., safety improvements in new products) in a way that will help them identify when a duty to report might arise or whether the CPSC or foreign government agency might consider a report to be appropriate. And, the manufacturer must also manage its dealings with the CPSC and other agencies with an eye towards how these dealings will be perceived if admitted into evidence in any current or future product liability cases.

Evidence of CPSC Actions or Inaction in Litigation

If there has been a report to the CPSC and a subsequent corrective action, or if the CPSC has taken some regulatory action concerning the product in litigation, the plaintiff will try to discover all of this information and use it during litigation. Certainly, if possible late reporting to the CPSC is an issue, evidence of any civil penalty investigation and an award of civil penalties will be sought by the plaintiff. And the plaintiff will be very happy if the CPSC has sent

a letter to the manufacturer, stating that they have made a preliminary determination that the product is defective and contains a substantial product hazard.

On the other hand, if a manufacturer reports to the CPSC and the CPSC agrees that no recall is necessary, the manufacturer could try to use that evidence to support the position that the product is not defective, does not create a substantial product hazard, and is not unreasonably dangerous. And, if a corrective action was undertaken, the manufacturer could try to use the CPSC’s approval of its efforts as evidence supporting the position that it was not negligent in performing the recall. It is possible that some or all evidence of this type will not be admissible or will not be persuasive or determinative to a jury. However, it might be helpful as the plaintiff’s attorney is evaluating the case for settlement or trial.

Clearly, all correspondence in the manufacturer’s files between the CPSC and the manufacturer concerning section 15 and section 37 reports and any subsequent corrective actions are discoverable. This is true even if much of the information in the CPSC’s file cannot be disclosed by the CPSC under the Freedom of Information Act because it contains business confidential information. Depending on the court, the information that is produced in litigation could be admissible in a trial or at least be used by the plaintiff’s expert to opine about defect and causation and other aspects of the plaintiff’s case.

Employees of the CPSC are not permitted by the CPSC to testify in litigation about anything done or not done by them in connection with a report and any subsequent corrective action. However, former CPSC employees are free to testify. And, plaintiffs and their experts can try to use the CPSC’s actions to support their case, just as manufacturers can try to use the CPSC’s inaction to support their contention that their product did not violate the CPSC’s rules or regulations.


The interrelationship between litigation and regulatory activities is very complex and important. In all post-sale activities, to minimize the risk, it is a good idea to seek assistance from lawyers who have expertise in both product liability and regulatory compliance.

If insurance companies are handling a manufacturer’s insured litigation, company personnel need to be involved to the extent that they can be made aware of information that may arguably trigger a reportable matter. And, they need to have some input in the resolution or trial of the matter so that it is consistent with the position the company is taking or would take in connection with a possible report to the CPSC.

Of course, a manufacturer cannot let litigation cloud its judgment in deciding what is best to do concerning future safety. So, a company may decide to report to the government and implement a recall, even though the product can be successfully defended in product liability litigation.

author_ross-kennethKenneth Ross is a former partner and now Of Counsel in the Minneapolis, Minnesota office of Bowman and Brooke LLP, where he provides legal and practical advice to manufacturers and other product sellers in all areas of product safety, regulatory compliance and product liability prevention, including safety management, recalls and dealing with the CPSC. He can be reached at kenrossesq @

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