Recalling defective products can be expensive and it may be tempting for manufacturers to ignore flaws. But that can be more costly in the long run, both in financial and human terms.
Federal law requires manufacturers to notify the government of defective products that present a substantial hazard to the public.
A manufacturer of lawn and garden products incurred significant costs under this law. U.S. Home and Garden, Inc. agreed to pay an $885,000 fine in 2002 for failing to notify the federal government of problems with its Weed Wizard trimmer.
The San Francisco company denied the charges but announced that it entered into a settlement "to avoid the distraction and expense of litigation."
According to the suit, U.S. Home and Garden, Inc. purchased Weed Wizard, Inc. in 1998 and became aware of an internal company report indicating that a metal chain link on the head of a weed trimmer could fly off and cut through skin and bone. The report noted at least twenty incidents, including the death of a three-year-old Alabama girl whose skull was penetrated by a flying link.
The Consumer Product Safety Commission claimed that despite the report, U.S. Home and Garden didn't notify the agency of the problem and continued to market the trimmer for two more years.
The manufacturer argued that it did not have an obligation to inform the government in this case. The weed trimmers were eventually recalled and the Weed Wizard unit went out of business.
Incurring a sizable fine is only one of the dangers that await businesses failing to report product flaws as required by law. It can also make a company more culpable in lawsuits brought by injured plaintiffs.
Keep in mind that negligent or reckless behavior by a manufacturer can greatly increase the level of damages awarded at a trial. Legal experts warn that you shouldn't underestimate the negative effect that negligence can have on a jury or judge.
Certainly, a recall of a defective product can be expensive, but failing to notify the government of dangerous product defects can be financially catastrophic and ruin a company's reputation.
Under the Consumer Product Safety Act,manufacturers, distributors and retailers must immediately report to the U.S. Consumer Product Safety Commission products with a defect that could create a substantial risk of injury to the public or that present an unreasonable risk of serious injury or death. Click here for more information.
Another Case
A producer of mountain bikes was ordered to pay a large fine for failing to report a serious defect on a timely basis as required by the Consumer Product Safety Commission (CPSC).
Certain bikes produced by Dynacraft, a Massachusetts corporation, were found to have defective welds in their front suspension forks causing the bikes to break apart during normal use. Other models lost their wheels. Dynacraft received reports of accidents caused by these defects, including concussions, fractures, lacerations, lost and broken teeth and in one case, death. The company did not report the defects to CPSC and produced other bikes with similar defects.
When charged with violations by CPSC, Dynacraft denied fault, but agreed in 2004 to settle for $1.4 million in civil penalties to avoid additional legal costs, and agreed to recall the defective bicycles.(CPSC Docket No. 05-C0003)
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