*[co-author: Tom Hubbard]
The number of cases involving so-called “nuclear verdicts” — that is, verdicts with awards of $10 million or more — have risen sharply, and many of those cases concern product liability claims. For large corporations, such verdicts can be damaging, both from a financial and reputational standpoint, but rarely do they significantly impact operations beyond the quarter or year in which they are booked. For middle-market and smaller corporations, however, product liability litigation can be enterprise-threatening; therefore, it is vital for smaller corporations — especially those with limited in-house legal resources — to understand the claims most often brought in product liability litigation, how to triage inbound lawsuits, and when to call on outside legal advice to resolve disputes.
What is a Product Defect?
Product defects are generally categorized into three types: design defects, manufacturing defects, and warnings defects (also known as marketing defects).
- Design Defects: These occur when a product is inherently dangerous due to its design, even if manufactured correctly. For example, a car model that is prone to flipping over during normal driving conditions may have a design defect.
- Manufacturing Defects: These defects occur during the production process and result in a product that deviates from its intended design. An example would be a batch of contaminated medication that poses health risks.
- Warning Defects: These involve inadequate instructions or warnings about the product’s proper use. For instance, if a manufacturing company fails to warn consumers about potential health hazards associated with its product, it might be liable for a warnings defect.
In a product liability lawsuit, the claims will center around one or more of these defects. These lawsuits typically allege causes of action like negligence and strict liability but will sometimes include other claims, such as warranty claims. It is important to remember that the buyer of a product is not the only person allowed to file a lawsuit. For example, if a buyer’s family member is injured by the product, that family member may have a legal claim.
Who Can be Liable in Product Liability Litigation?
Corporations that sell products in the “stream of commerce” are normally liable for defective products. This includes multiple participants involved in the product’s lifecycle:
- Manufacturers: Businesses responsible for designing and producing the product.
- Component Suppliers: Businesses that provide parts or materials used in the final product.
- Distributors: Businesses that transport and store the product before it reaches retailers.
- Retailers: Businesses that sell the product to consumers.
Each of these businesses could be held accountable if its actions, inactions, or negligence contributed to the defect. Common defenses to the claims mentioned above include product misuse or alteration, assumption of the risk, lack of causation, and regulatory compliance—among others.
Jurisdictional Analysis
According to a May 2024 report from the U.S. Chamber of Commerce Institute for Legal Reform, nuclear verdicts in state court far exceed their counterparts in federal court. This is at least partly because personal injury lawyers “have long preferred to try cases in state courts — which they often perceive as having more plaintiff-friendly judges, jurors, and court rules.” With large verdicts increasing, some states are taking measures to make it harder to recover large dollar figures, while others have taken measures that could lead to even higher verdicts. As these measures take effect, state courts look to become even more contentious battlegrounds. But federal courts hear their fair share of cases as well; in 2022 alone, over 5,800 product liability cases were litigated in federal court. This number does not even include multi-district litigation cases.
Recent Trends
Data from 2013 to 2023 indicate the number of product liability cases litigated year over year is increasing. One reason for this increase is the growing popularity of litigation funding. An investment group might pay certain fees and costs for the Plaintiff, in return for a percentage of any winnings the Plaintiff receives. Notably, product liability cases accounted for 37% of the nuclear and thermonuclear ($100 million-plus) verdicts in 2023. Additionally, shifts in jury pool demographics are likely contributing to these large verdicts, as Millennial jurors tend to be more pro-plaintiff than prior generations.
Conclusion By proactively identifying and addressing potential risks related to product liability, corporations can safeguard their reputation, financial stability, and customer trust. Investing in robust design, manufacturing, marketing, and compliance processes, as well as fostering strong supplier relationships and preparing for potential incidents, will help corporations mitigate the risk posed by product liability; however, when it occurs, product liability litigation is complex, multifaceted, and high-risk. All corporations can benefit from consulting with experienced outside counsel when lawsuits or compliance challenges emerge; when smaller corporations are faced with such risk, the benefits of outside counsel are even greater, as they can quickly access the specialized knowledge and experience needed to navigate these formidable challenges.
*Written with the assistance of Tom Hubbard, a summer associate in Husch Blackwell’s Springfield, MO office.
