Wednesday, February 9, 2011

ERM-BC-COOP: Manufacturer's responsibility


I HAVE BEEN PREACHING for some time that "manufacturers have a duty to perform QA/QC on vendor products" and lacking that, the manufacturer can be held liable for damages.

This also applies to retailers who "brand" a manufacturer's product - such as many Sears' products. (There is nothing wrong with the branding practice.)

Apparently a state appeals court agrees.

It recently ruled that a retailer of imported high-end bicycles was liable following an accident caused when the bike's carbon-fiber fork broke, causing the rider to be thrown face down onto the sidewalk. The rider suffered a head injury, a broken jaw, the loss of four teeth, many cuts, and severe abrasions.

The retailer argued that the frame's manufacturer, not the retailer, should be held liable. The appeals court disagreed because, under the state products-liability law, the retailer was responsible because it had branded the bicycle as its own.

As with most things that end up in court, the defendant - in this case, the retailer - loses, even if the defendant prevails.

How much of a loss is the question and it must be balanced against what it would have cost to do QA/QC on the product, be it a screw or a jet engine.

Total costs must be considered.

Direct cost to defend:


    Expert witnesses

    Lost time and productivity

Indirect cost to defend:

    Damage to reputation and parallel advancement of competitor's product

    And then any damages if the plaintiff prevails.

Given the cost of the product - in this instance, bicycles selling between $130 for a kiddie version to $1,150 - it would seem reasonable to do some sampling or, more accurately, have some sampling performed by a third party (due to the materials and the expense of sampling equipment and skilled personnel to operate it).

Apparently, the defense was unable to show that the retailer performed due diligence; while that might not have absolved the retailer under the state's law, it might affect any award.

No comments: