Recalls Can Create a Multitude of Legal Problems

Feature Article

Minimizing These Problems Can Be Difficult

hen a recall is implemented, it hopefully solves the safety issue. But that doesn’t always happen. First, you rarely are 100% successful in retrieving the product or repairing it. And, of course, the occurrence of an accident involving a recalled product can be very difficult to defend. Even worse, an accident involving a product that was unsuccessfully repaired by the manufacturer can be even harder to defend.

The number of lawsuits involving recalled products and products that haven’t been recalled has been proliferating recently. And the verdicts and settlements have been significant.

This article will describe the difficulty of defending the adequacy of a recall, the types of remedies that are offered, and a recent trend of class action lawsuits being filed alleging that the remedy instituted by the manufacturer is inadequate and resulted in economic loss to the consumer or owner of the product.

Defending the Adequacy of the Recall

Injuries or deaths resulting from unsuccessful recalls or repair programs can result in litigation and huge verdicts. It can be difficult to argue that a 10% response rate was adequate and could not be improved by the manufacturer doing more. In that case, the jury could believe that the manufacturer negligently performed the recall.

In addition, if a repair is performed and an accident still occurs, that can also cause a jury to get mad and believe that the manufacturer was grossly negligent. In August 2024, a jury rendered a huge award against Harley-Davidson for allegedly failing to adequately repair faulty software on one of its recalled motorcycles. Unfortunately, there was an accident on the repaired motorcycle that resulted in catastrophic injuries and one death. The jury awarded $240 million in punitive damages and $47 million for pain and suffering, medical expenses, and loss of consortium.

Of course, Harley believes that the accident had nothing to do with the original repair and they plan to appeal. The message here is that if you repair or replace the product instead of refunding the purchase price, you had better be confident that the fix or replacement is adequate and that you have good evidence that it is safe.

Given the variables for determining the adequacy and effectiveness of a recall program, it is difficult to come up with definite strategies for defending the recall. The best recall most likely will not cut off liability for the manufacturer for selling a defective product. And, given the fact that most recall notices admit that the product is defective, defense counsel needs to look elsewhere for a good defense.

Of course, the best approach would be to keep the recall from being introduced into evidence. While you can argue that the recall is a “subsequent remedial measure” and should not be allowed into evidence to prove that the product was defective, a good plaintiff’s attorney can somehow get the recall into evidence or find an expert to argue that the product should have been recalled. In fact, it may be beneficial to the manufacturer to affirmatively place the recall into evidence as proof of the manufacturer’s commitment to safety and the well-being of its consumers.

Having the recall in evidence would be necessary to use some of the other possible defenses. The best one is that the recalled product or part of the recalled product that was defective did not cause the injury or damage. Of course, the existence of the recall, if it gets into evidence, will muddy the facts, and may result in liability even without causation.

The next good defense would be that the consumer saw the message or received the notice and ignored the recall. While it may be hard to prove that the injured party assumed the risk, this argument should at least help establish some contributory fault on the part of the injured party. When using this defense, it is imperative to be able to prove that the “warning” in the letter or notice was adequate, using general warning principles.

If the recall is to be performed by an intermediary such as a dealer or retailer, and they did not do it adequately, the manufacturer might be able to pass along some or all the liability to that entity. For example, in one case that I worked on, a propane gas dealer was held liable, and the manufacturer was absolved because the dealer did not send out the manufacturer’s recall letters to their customers after promising to do so.

The dealer’s failure to send out the letters constituted a superseding, intervening cause. Similarly, a retailer’s failure to remove recalled products from the shelves and warehouse, or failure to place the recall notice in a conspicuous place may also constitute some contributory fault or intervening cause, thus reducing or eliminating liability for the manufacturer of the defective product.

If you cannot break the causal link, then you must defend the adequacy of the specific recall or post-sale program. Since the recall was presumably not effective for the injured party, the plaintiff will argue that the manufacturer could have and should have done more. The manufacturer will have to evaluate the techniques it employed, the effectiveness rates as compared to others for comparable products, explain the effectiveness rate in the context of limitations to increasing the rate, and discuss why doing more would not have necessarily increased the rate or guaranteed that the recall notice would have been received and heeded.

An analysis of past punitive damage awards clearly shows that the basis for most such awards is that the jury believed that the manufacturer failed to undertake adequate post-sale remedial measures such as a recall. Hopefully, at a minimum, the manufacturer can develop and implement a reasonably effective recall which will minimize or prevent the possibility that punitive damages will be awarded.

U.S. PIRG Report on Recall Remedies

On January 11, 2024, U.S. Public Interest Research Group (PIRG), a public interest advocate, issued a report¹ describing how difficult some companies make it to get a refund or repair on a recalled product. The report starts off by saying that in 2023, there were 323 consumer product recalls done in cooperation with the U.S. Consumer Product Safety Commission (CPSC).

PIRG claims that more than half of these recalls required consumers to undertake what they deem unnecessary actions to get a refund. These actions include returning the product to the store or shipping it back to the manufacturer. They also include registering the product on the company’s website, sending a photo and maybe proof of purchase to confirm that the product is among those being recalled, and then disabling the product in some fashion so it can’t be used in the future and sending the company a photo of the disabled product. And then the consumer may only get a partial refund or a credit or voucher towards the purchase of another product from the manufacturer. These actions need to be approved by the CPSC and imposed on the consumer to ensure that they have disabled or discarded the unsafe product.

Of the 323 recalls studied by PIRG, half offered just a refund and half offered a replacement or repair. Also, manufacturers offered any of the three remedies in only around 10% of these recalls. PIRG found that of these 323 recalls, only about 6-10% of the recalled products were returned or discarded. They attribute this partly to the difficult requirements imposed by the manufacturer.

PRIG gave an example of this difficulty as follows:

Burdensome recall processes have been a problem for many years. The outrage accelerated in 2019 after Fisher-Price recalled 4.7 million Rock ‘n Play Sleepers after 30 infant deaths were connected to the inclined sleeper. Fisher-Price ordered refunds only to customers who’d purchased the product within the last six months if they sent pieces of the sleeper and proof of purchase. Families with products older than six months were given vouchers to use toward buying another Fisher‑Price product. The sleepers cost $40 to $149. Consumers, advocates, and policymakers found the vouchers offensive and insensitive, considering the sleepers were linked to infant deaths.

For a variety of reasons, the number of sleepers returned was astonishingly low. The belief was that at least some consumers didn’t want the hassle of returning the sleepers, only to get a voucher for another product. Because of the low return numbers, the recall was reannounced in January 2023. By that time, an additional 70 infant deaths were connected to the Fisher-Price sleepers, for a total of about 100. That included at least eight deaths that happened after the April 2019 recall.

PIRG goes on to analyze in detail the remedies offered by companies and concludes with recommendations for manufacturers, retailers, the CPSC, and Congress to make the remedies easier to obtain in a timely fashion.

As we’ve already discussed, one of the defenses to these cases is that the consumer received the recall notice but did not follow through with the proposed remedy. The more difficult the company makes it for the consumer to obtain the remedy, the less viable this defense might be in front of a jury.

No-Injury Class Actions

Another series of lawsuits that have been filed because of recalls involve class actions alleging that the recall remedies are inadequate and do not make them whole, and therefore the consumer has suffered some economic loss. These lawsuits can be filed even though there have been no incidents resulting in injury or damage. Most of the class-action lawsuits filed for an “inadequate remedy” have been against automobile manufacturers who have recalled their products. However, there have been a number of cases filed against consumer product manufacturers and the number seems to be growing in the U.S. and also in Canada.²

In August 2024, a class action was filed in New York against Samsung Electronics America. Samsung had announced a recall six days before this lawsuit was filed. The recall concerned the front-mounted heat control knobs of recalled ranges that can be activated by accidental contact by humans or pets, posing a fire hazard. The remedy provided by Samsung was as follows:

Consumers should contact Samsung to receive a free set of knob locks or covers compatible with their model of electric slide-in range to install. Consumers using the recalled ranges without knob locks or covers are cautioned to keep children and pets away from the knobs, to check the range knobs to ensure they are off before leaving the home or going to bed, and to not leave objects on the range when the range is not in use.

The plaintiffs allege that the ranges are still dangerous and seem to be asking for a full refund for the range instead of just receiving new covers.

Another case filed in 2023 was brought against a bicycle parts manufacturer. The complaint states:

Even though Shimano has finally acknowledged the widespread issue, it is working hard to limit the cost of fixing the issue at the expense of consumers. Rather than offering to issue refunds or replacements for all of the Defective Cranksets, Shimano has taken the unconscionable position that only “(c)onsumers whose cranksets show signs of bonding separation or delamination during (an) inspection will be provided a free replacement crankset . . . that the dealer will professionally install.”

The plaintiffs go on to allege:

This proposed remedy is a nightmare for riders and bike shops. Owners are left without usable bicycles while they get in line with hundreds of thousands of other impacted cyclists to schedule and await an inspection. When the inspection finally happens, a local bicycle mechanic is tasked with making a complex engineering judgment to determine whether the crankset shows sufficient deterioration to merit replacement.

The plaintiffs conclude by alleging that:

Plaintiffs and the other Class members were deprived of having a safe, defect-free crankset installed on their bicycles, and Defendants unjustly benefited from the sale of these products and from the unconscionable limitations on the recall remedy now offered.

Plaintiffs are asking for reimbursement of all their expenses because of this recall, which would include a refund for the purchase price of the defective crankshaft. Of course, the bigger part of any settlement or verdict will be for attorney’s fees.

There was a recent settlement of class action lawsuits filed against Fisher-Price for its recall of Rock ‘n Play Sleepers in 2019. There had been sixteen class actions filed in thirteen states all alleging, in part, that the recall was deficient because a full refund was not offered to all consumers. For some consumers, Fisher‑Price offered vouchers for other Fisher-Price products. The settlement established a fund of $19 million to reimburse consumers who are being asked to disable their product and file a claim to receive a cash refund of some of the purchase price.

Most recently, in a recall by Fisher-Price announced on October 10, 2024, CPSC Commissioner Trumka issued a statement criticizing the details of the recall. Fisher-Price is asking consumers to remove parts of the product and if they do, they can receive a $25 cash payment. Commissioner Trumka says that this offer is not adequate because the product is still unsafe, and that Fisher-Price should be offering a full refund of $160 and ask the consumer to destroy the entire product.

Not surprisingly, on October 17, 2024, a class action lawsuit was filed in New York, alleging in part that:

Despite the recall involving companies with billions of dollars in revenue each year (Mattel and Fisher-Price) and an incredibly dangerous safety hazard (suffocation/death), the recall provides only $25 in potential relief to consumers, and that is only if consumers “remove and destroy the headrest and body support insert.”

It goes on to say:

This recall was immediately panned by consumer safety experts. CPSC Commissioner Richard Trumka stated that “the flawed recall that Fisher-Price is announcing today is doomed to fail and will keep many babies in harm’s way…,” noting that Fisher-Price was continuing to urge consumers to use the swing so long as infants are not sleeping in it and the headrest and body support inserts are removed. Commissioner Trumka wrote that he had “no doubt that if these products remain in homes, many consumers will still use these products for sleep because they have received conflicting instructions over time,” citing a Fisher-Price YouTube video from 2015 stating that the Products were safe for naps.

He ended his letter thusly: “Fisher-Price can do more to save babies’ lives—I think it needs to. And I firmly believe that consumers should demand more from this company.”

There are other significant class actions described in a blog posting by a law firm that specializes in filing class actions for recalled products.³ The blog posting is titled The Relationship Between Recalls and Class Action Lawsuits and it describes in detail a class action that involves a $758 million settlement in 2020 concerning engine fires in Hyundai and Kia vehicles and claims that the recall was too narrow and the remedy not adequate.

And food sellers are also seeing class actions filed after most food recalls are undertaken.⁴ These lawsuits typically seek reimbursement of the purchase price of the product, various penalties available to consumers who have allegedly been defrauded, and exorbitant attorneys’ fees.

What Should You Do?

Obviously, you need to do whatever is necessary to not have a recall. However, once a recall or other post-sale program is being developed, the manufacturer must make a serious assessment of what can be done to minimize the risk of future incidents and what program will be most effective and defensible. This is difficult in that a full refund program can be very expensive and many times, not necessary. However, it may make sense to consider offering a refund as one option to head off any criticism of the recall by a plaintiff’s attorney, a CPSC commissioner or a consumer publication like Consumer Reports.⁵

Conclusion

Manufacturers need to be prepared to recall their products even if they have never had to do so in the past. Once a product safety issue arises, it is too late to develop a plan. Preparing for a recall before it occurs can significantly increase its effectiveness and lessen the costs and disruption. Of course, the manufacturer also needs to employ proactive pre‑sale product liability prevention techniques so that a recall is not necessary in the first place.

It is clear that governments around the world will focus more on identifying product safety problems and forcing or encouraging manufacturers to do something about them. Keeping up with the state of the art will require paying attention to what other companies are doing and what government agencies are requiring.

This vigilance will pay large dividends. Manufacturers should not assume that their effectiveness rates are static and can’t be improved. Technology is available today that could increase their ability to quickly communicate with the distribution chain and even consumers about the recall. They should continually look for ways to significantly improve the success of their recalls and other post-sale remedial programs. Hopefully, this will minimize risks and the potential for accidents and provide some type of defense if an accident happens.

Endnotes

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Kenneth Ross is a Senior Contributor to In Compliance Magazine and a former partner and now Of Counsel to Bowman and Brooke LLP. 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 risk assessment, design, warnings and instructions, safety management, litigation management, post-sale duties, recalls, dealing with the CPSC, contracts, and document management. Ross can be reached at 952-210-2212 or at kenrossesq@gmail.com. Ken’s other articles can be accessed at https://incompliancemag.com/author/kennethross.

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