Manufacturing and Design Defects

Kenneth Ross

Introduction

Manufacturing defects were the original defects envisioned when strict liability was first conceived in the early 1900s. Strict liability was developed in the context of lawsuits involving foreign matter and other contamination in food and beverages. The concern was that the injured party, the plaintiff, should not have the burden of proving who was negligent by allowing foreign matter to get into the food or drink container. All that such a person should have to prove is that the foreign matter was there at the time the food or drink was sealed by the manufacturer, making the product defective, and that its presence caused harm.

This was the original basis of products liability, and it was eventually applied to all kinds of products starting in the 1960s. As the law evolved throughout the 1960s and 1970s, strict liability was eventually applied in design defect cases, which is potentially problematic for manufacturers.

Manufacturing defects are fairly easy to define and to prove. Quite simply, with a manufacturing defect, the product did not turn out the way it was intended. With design defects, however, the product did turn out the way it was intended, but the design was inadequate. The process for determining whether a design defect exists is much more subjective than the process for manufacturing defects. In design defect cases, juries are basically allowed to “redesign” products (in theory) that they think should be safer. This article will discuss the general law concerning manufacturing and design defects and briefly mention some FDA documents which will help manufacturers minimize risk.

Manufacturing Defects

A manufacturing defect exists if the product “departs from its intended design even though all possible care was exercised in the preparation and marketing of the product.” In other words, even if the manufacturer’s quality control was the best in the world, the fact that the product departed from its intended design, meant that it had a manufacturing defect. The plaintiff need not prove that the manufacturer was negligent, just that the product was defective. The focus is on the product, not on the conduct of the manufacturer.

So, if the product was inadequately assembled or if the materials or components were not consistent with those specified, the product could be defective.

There are very few defenses to such a claim. The two main ones are that the defect did not cause the injury and that the defect was caused by someone else such as the hospital or health care professional.

Design Defect Law

Design defect is one of the main theories used by plaintiffs in product liability cases against manufacturers. This theory can also be difficult to defend against. This is because the basis for proving a design defect is subjective and open to interpretation by the judge or jury, as noted previously.

Of course, what underlies the design defect case is that it is difficult for manufacturers to determine the safest designs for their products. There are two kinds of design-defect cases: those involving “inadvertent design errors” and the other involving “conscious design choices.” Design errors are like manufacturing flaws and are treated easily by the courts. The design was wrong because someone made a mistake. The mistake created a hazard and someone was hurt. In that case, there is virtually no defense and the manufacturer usually settles the case.

The more important type of design defect case involves conscious design choices. In these cases, the design turned out as intended by the designer and manufacturer. It had the level of safety expected by the designer for the intended use. However, the product still hurt someone, the plaintiff, who claims that the product should have been made safer. The plaintiff argues that an alternative safer design should have been used, and the court or jury must decide whether this alternative was preferable.

Test for Design Defect

The development of the law with conscious design choices has caused confusion. Several tests were developed to help courts and juries decide whether there was a defective design.

When strict liability was first enunciated in 1962, its application was limited to manufacturing defects. However, soon after the adoption of strict liability, courts started to apply the concept to a product’s design.

The test for determining manufacturing defects under this new theory of law was called “consumer expectations.” Under this test, a product was defective if it was “…dangerous to an extent beyond that which would be contemplated by the ordinary consumer…” This test made some sense when applied to an objective determination like manufacturing flaws. However, this test made much less sense when applied to other theories, such as design defects.

This test has been criticized for being too subjective, vague, and unrealistic, since many consumers have no expectations about the safety of a product. We all hope that a product will not hurt us, but we usually do not dwell on how safe or unsafe it is.

Despite criticism, the consumer expectations test still exists in many states. However, some courts accepted created an alternative test called “risk-utility balancing.” This test balanced many factors but helped address the ultimate question of whether the product could and should have been made safer. This test really is just an expansion of the original test for negligence, which said that a manufacturer is negligent if the level of risk in the product outweighed the burden of reducing the risk.

To help determine whether a product was “reasonably safe,” juries are sometimes asked to consider seven factors:

    • Usefulness and desirability of the product.
    • Safety of the product – the likelihood that it will cause injury and the probable seriousness of the injury.
    • Availability of a substitute product that performed the same function and was safer.
    • Ability of the manufacturer to eliminate the unsafe characteristic of the product without lessening its usefulness or making it too expensive.
    • User’s ability to avoid harm by being careful when using the product.
    • User’s awareness of the risk, either because it is obvious or because of suitable warnings and instructions.
    • Feasibility by the manufacturer to spread the risk by way of price increases or purchasing insurance.

These factors provided a more comprehensive and understandable basis for a jury to make a decision. They also provided more guidance to the litigants to evaluate their case. Also, as importantly, they provide a basis by which a manufacturer could evaluate the safety of its product before sale and decide what is “reasonably safe.”

Today, some states use the “consumer-expectations” test, some use the “risk-utility balancing” test, and some use a variation or combination of the two different tests. Since manufacturers do not know where the accident will occur and because the seven factors of the balancing test are consistent with good design principles, manufacturers should consider these factors when designing their products.

The focus of most products liability cases using the risk-utility balancing test is a concept called “reasonable alternative design.” A jury can hold a manufacturer liable for a design defect if the omission of a reasonable alternative design renders the product not reasonably safe. In determining whether there is a reasonable alternative design, the jury is allowed to consider the seven factors mentioned above plus consider the effect of the alternative design on product longevity, maintenance, repair, cost and esthetics.

Below are other sub issues that need to be considered generally in connection with design defects.

Misuse, Abuse and Alteration

Liability for design defect can be created only if the risk of harm relates to foreseeable product use that could have been reduced by adoption of a reasonable alternative design. Therefore, risk of harm from unforeseeable product use should not create potential liability. Therefore, a manufacturer is not liable if the product was misused, abused, or altered after it left the manufacturer’s control if the misuse, abuse, or alteration caused the harm and was not foreseeable. Thus, a key question is: what is foreseeable use and misuse of a product?

It is clear in the law that a manufacturer must design a product so that it is reasonably safe for reasonably foreseeable use and misuse. It is not a defense to say that the product was misused if the misuse was reasonably foreseeable. For example, automobile manufacturers must consider safety in crashes even though crashes are not intended uses and really misuse of the product. However, thousands of crashes occur each year and therefore courts have deemed it “foreseeable misuse.”

Likewise, if a manufacturer provides a safety guard that makes it difficult to use the product, they may not have a defense if the user removes the guard or disengages it. It is foreseeable that the user will do so, and the manufacturer should have foreseen the difficulty and designed the guard better.

Unforeseeable misuse has been defined to be a “use or handling so unusual that the average consumer could not reasonably expect the product to be designed and manufactured to withstand it – a use which the seller, therefore, need not anticipate or provide for.”

So, when first developing the design specifications, you must determine foreseeable and intended uses and foreseeable misuses. One way to identify foreseeable misuses is to consider prior misuses, misuses by users of competitor’s products, and claims experience. Also, manufacturers should ask whether the product can be used in a different environment than anticipated, can it be used for another purpose than the intended one, and are there secondary uses of the product that could result in hazards.

The law also clearly says that not all foreseeable misuses constitute “reasonably foreseeable misuses.” We can probably foresee almost anything happening. Also, it is possible that a particular misuse has previously happened? Despite that, such misuses may not be “reasonably foreseeable” in the future.

There is an urban legend that someone used a lawnmower as a hedge trimmer. You may have have seen someone juggle a running chainsaw. Yet, are these uses reasonably foreseeable? Perhaps they are foreseeable but not necessarily “reasonably foreseeable” from a legal standpoint.

The best a manufacturer can do is seriously evaluate other uses and misuses, including alterations to the product, and then make a judgment as to the likelihood that they will occur. Obtain some competent legal advice to be sure that a court hasn’t already determined that certain conduct with respect to a particular product is “foreseeable.” Consider these uses, misuses, and alterations when doing design risk assessment. Then, document design decisions and the rationales behind them.

Compliance with Standards, Law and Regulations

Another complex area involves laws, standards, and regulations. As part of the initial analysis, a manufacturer must identify those laws, standards, and regulations that apply to its product. At times, that may be difficult to determine, or there may be numerous and different ones that must be reconciled for application.

Official laws and regulations that apply to the product’s design must be complied with by manufacturers. If the product does not comply and this noncompliance caused the injury, then the manufacturer most likely will be liable. Unfortunately, compliance with all applicable laws and regulations is not, for most products, an absolute defense in a products liability case. Therefore, a jury could come back and say a manufacturer should have exceeded laws and regulations pertaining to safety.

With medical devices, it is possible for products liability cases to be “preempted” if they received PMA approval.1 However, for 510(k) devices, there is generally not preemption. For purposes of these articles, we will assume that there is no preemption.

Industry standards and even certifications like UL are considered minimum requirements. They are also not official unless adopted by some government agency by reference. As a result, compliance with standards and certifications is not an absolute defense, although it is pretty good evidence that the product is reasonably safe. The standard creates the “state of the art” and establishes a reasonable alternative design.

So, where does this leave manufacturers? They should meet or exceed all applicable laws, regulations, and mandatory or voluntary consensus standards. If they don’t or can’t, then they should document the reason and make a reasonable judgment as to the basis for arguing that their product is still reasonably safe.

CE Marking

The European Union (EU) has developed a variety of directives that pertain to health and safety. There is one for Medical Devices. A manufacturer must meet the requirements of these directives and obtain a CE mark to sell their products in Europe.

These directives may become worldwide safety requirements and raise the “state of the art” beyond that required in the United States. At a minimum, it is dangerous to sell a “safer” product in Europe that complies with the EU Directives and sell a “less safe” product in the United States, even if it complies with U.S. medical device requirements. Obviously, the safer product is the reasonable alternative design. So, manufacturers need to be careful when they sell a safer product in Europe or elsewhere, and they should be prepared to justify why their less-safe product sold in the United States is still reasonably safe.

Optional Safety Devices

The focus of a products liability case is whether the product should have and could have been made safer. Was there a “reasonable alternative design” that was technologically and commercially feasible?

But when it comes to optional safety devices, it gets even more complex. Some courts have said that there is no such thing as an optional safety device. The reason is that the manufacturer has developed and has in existence the alternative design. So, assuming this design makes the product safer, how could it be optional? The courts also say that the manufacturer cannot delegate the obligation to install safety equipment to someone else, including the plaintiff’s employer.

The manufacturer must be careful in selling a product that is unassembled or lacks certain safety devices that are produced by the manufacturer or by another company. Manufacturers should create or obtain documentation that reflects a clear understanding by the customer that the customer will purchase and install appropriate safety devices to ensure the safe use of the product. If such documentation does not exist and the customer doesn’t install the safety devices and an employee is injured, the manufacturer may find it hard to defend itself. The employee engaged in “misuse” of the product, but it is likely that it would be considered “foreseeable” if practical experience shows that employers do not add the safety devices they need to.

Component Parts

The original manufacturer (OEM) buys components from a variety of sources. The law holds the OEM liable for defects in its components, raw materials, and the incorporation of all of these into a final product. The OEM is also responsible for the final selection of the components used in its product. The component part manufacturer may be fully or partially at fault for a product defect, but the OEM has the ultimate potential liability.

The kinds of safety analyses that are available, such as risk assessment, need to be applied to the parts manufactured by the OEM and by the component part supplier. But how far a safety analysis must go is not easily determined. Does the OEM have to visit the component part supplier’s location and do an analysis? How much does the OEM have to do to ensure that the component parts it buys and incorporates into its products are designed safely?

First of all, OEMs need to identify “safety-critical” parts. For these parts, the OEM needs to do more to ensure that they are safe than they would for parts that are not critical for safety. Also, the OEM must make an initial decision whether to make or buy such parts, and if they buy them, from whom to buy them.

Having safety-critical parts made offshore by a small foreign manufacturer who has no insurance and no legal presence in the United States is a bad idea unless the OEM’s personnel monitor the safety and quality of the component and there is 100 percent inspection of the incoming parts.

As a general matter, the OEM wants contractual terms and conditions that protect them in the event that there are problems with the component part. This includes an indemnification by the part manufacturer of the OEM and a requirement that the OEM is named as an additional insured under the part manufacturer’s insurance policy. An OEM wants to be sure that the insurance policy’s deductible is not too large, and the OEM should confirm the financial stability of the insurance company. Also, an OEM should examine any lawsuits and claims previously brought against the component supplier and determine whether the supplier has had any recalls or been the subject of a government enforcement action.

Due diligence is important in weeding out potential problem suppliers who create safety issues and cannot adequately protect OEMs. Even if they can protect OEMs financially, the OEM’s name is on the product and, therefore, any safety problem will impact the OEM’s name, goodwill, and reputation. So, the OEM needs to think seriously about how far to go to ensure that the components it utilizes are correct for the product and are designed and manufactured safely and with sufficient quality.

Creating a safety and quality checklist to qualify suppliers and creating a quality manual for suppliers is important. The field of supply chain quality management is fairly well developed and should be consulted when setting up a supplier program.

Designing to Specifications

Many component part suppliers and some OEMs design products to the specifications of their customers. Can these manufacturers be held liable if the specification is incorrect and the resultant design is defective?

Generally, if a manufacturer designs a product according to the customer’s specifications and there is no reason to know that the resultant product is unreasonably dangerous, the manufacturer is not liable. However, in many situations, the manufacturer will most likely have known, or it should have known, that the specifications were incorrect or unsafe. The manufacturer’s knowledge may become the subject of a factual dispute, and the jury will hold the manufacturer liable if the jury decides that the manufacturer knew that the customer was not an expert in the design of the component part or final product and the manufacturer should have questioned the adequacy of the specifications.

In other cases, the manufacturer has been asked to vary its standard design and a jury believes that the manufacturer should have known that the variance would make the product unsafe. Safety devices are sometimes the subject of this sort of case.

So, manufacturers should not sell products according to other’s specifications if they have any reason to believe that the specifications will make the product unsafe. This should be the rule even if the customer provides an indemnification and names the manufacturer as an additional insured. If the customer eventually goes out of business, these contractual protections will be useless and the jury will want to compensate the injured party by holding liable anyone who was involved in the manufacturing of the product.

Medical Devices

The law discussed above fully applies to medical devices. The difference between medical devices and other types of products is that the FDA provides lots of requirements and guidance to device manufacturers to assist them with meeting the obligation to provide reasonably safe products.

The ways in which a medical device manufacturer can prevent design defects are well known within the industry. For example, most device manufacturers are familiar with the FDA’s regulations on quality systems (QS)2 and the Medical Device Quality Systems Manual: A Small Entity Compliance Guide, which was issued by the FDA in December 1996.3 The coverage of this manual is as follows:

This manual covers requirements of the Quality System regulation that manufacturers of medical devices must consider when they design devices, or when they manufacture, contract manufacture, remanufacture, process, repack, or relabel finished medical devices intended to be commercially distributed. The manual contains articles that explain the various good manufacturing practices (GMP) requirements such as design controls, process validation, calibration, device master records, component control, etc., along with related topics such as labeling. It also contains examples of forms, procedures, decals, etc. Manufacturers may use this guidance when developing their quality system.

There are additional FDA documents that are very helpful to device manufacturers in these areas. Some of them are titled: Premarket Information - Device Design and Documentation Processes; FDA Medical Device Quality Systems Manual; Quality System Information for Certain Premarket Application Reviews; Guidance for Industry and FDA Staff, Medical Device Use-Safety; Incorporating Human Factors Engineering into Risk Management; Draft Guidance for Industry and Food and Drug Administration Staff Applying Human Factors and Usability Engineering to Optimize Medical Device Design; Do It By Design; and Design Control Guidance For Medical Device Manufacturers.

In addition, there are numerous technical standards applicable to medical devices in the United States. Many of these have been published by the Association for the Advancement of Medical Instrumentation (AAMI).

Conclusion

There is no one correct method for designing safe products. There are some factors that must always be considered – laws, standards, and regulations – and some processes, such as risk assessment, that should be performed. But it is up to the manufacturer to decide what is necessary to produce a reasonably safe product that minimizes hazards and is defensible if an accident occurs.

While it is impossible to predict what consumers will do with products and what a jury will do if it gets to assess the safety of a product, a manufacturer must make an educated judgment about the best way to design the product and then stand behind it.

 

1A state law or regulation is “preempted” when it is in direct conflict with a federal law. In such a case, federal law will apply.
221 CFR 820 and 21 CFR Parts 808, 812 and 820
3HHS Publication FDA 97-4179

 

Kenneth Ross

Kenneth Ross is Of Counsel to the Minneapolis office of Bowman and Brooke LLP where he practices in the areas of product safety and liability prevention and advises manufacturers, product sellers and insurers on ways to identify, evaluate and minimize the risk of products liability and contractual liability. These guides do not constitute legal advice and are very general. You should consult competent legal counsel or Medmarc Loss Control before acting on any of the information in these guides.

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