Injured individuals or groups of individuals frequently file lawsuits and/or class actions against manufacturers, suppliers, distributors and retailers due to personal injuries caused by allegedly defective and dangerous products. Resolving product liability claims through litigation is costly and time consuming.
Personal injuries are frequently caused by defective products or materials, such as asbestos, aircraft and aircraft components, vehicles and tires, industrial machines, medical devices, pharmaceuticals and dietary supplements.
When product liability injury claims arise, manufacturers, suppliers, distributors and retailers are oftentimes interested in resolving those claims promptly and without undue publicity. Preventing litigation is one of their top priorities because defective/dangerous products can cause significant injuries to users of those products and the resulting lawsuits oftentimes result in negative publicity, which can harm a defendant’s business and threaten entire product lines. Manufacturers, suppliers, distributors and retailers in most major industries generally prefer to avoid product liability claims but, if not possible, to resolve those product liability claims in a timely and cost-effective manner with minimum adverse effects to their businesses.
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To achieve those goals, companies responsible for allegedly defective/dangerous products oftentimes choose alternative dispute resolution (“ADR”) procedures, instead of going to trial to resolve product liability claims.
Mediation has numerous advantages over traditional litigation. The desire to informally resolve an individual’s product liability injury claim and with confidentiality (as provided in mediation) are two of the characteristics of mediation that enable injured individuals and product liability defendants to resolve product liability claims in a mutually beneficial manner. On the other hand, going through a traditional trial means engaging in an expensive, time-consuming and oftentimes inefficient process, which frequently results in an unfair result and adverse publicity to the product liability defendant(s). That is why manufacturers, suppliers, distributors and retailers try to avoid lengthy litigation and a trial before a lay jury. Public disclosure of product liability issues can sometimes help bring attention to the defective product and reflect poorly on the responsible companies. At the end of the day, injured individuals oftentimes care most about the amount of money they receive as compensation for the personal injuries and damages they have suffered. For these reasons, mediation can be beneficial to both parties in a product liability claim.
In traditional litigation, at trial the jury acts as the finder of fact while the judge “referees” the procedural and evidentiary aspects of the trial. Unlike a court trial, there is no jury in mediation. The mediator (usually a retired judge or an experienced attorney) works with the injured party/ies and the company/ies responsible (for the allegedly defective dangerous product) in an attempt to resolve the product liability claim(s). The parties generally agree on the mediator who will assist the parties in an attempt to reach a settlement agreement.
After a joint meeting with all of the mediation participants present, the mediator discusses the relevant issues with each party privately through a series of meetings that are referred to as caucuses. The discussions (caucuses) focus on the product and/or the care of the product liability defendant(s) that allegedly led to the claimant’s personal injury. The claimant usually alleges that his/her injury occurred due to the negligence of the party/ies responsible for the allegedly dangerous product and/or manufacturing defect(s), design defect(s), breach(es) of (express or implied) warranties or failure(s) to warn the injured end user of the product resulting in the allegedly dangerous aspect(s) of that product. Through these private caucuses, the mediator attempts to assist the parties in reaching a settlement of the product liability claim. The effectiveness of the mediator oftentimes depends on his or her ability to assist the parties in weighing realistic options, understanding the litigation expenses involved in going to trial and recognizing the entire range of outcomes that are possible in traditional litigation and a jury trial.
Facilitated by the mediator, the negotiations between the parties oftentimes lead to a settlement between the product liability defendant(s) and the injured individual(s). If an agreement is reached between the parties, the parties sign the agreement – which is enforceable by the courts as a binding contract.
To properly prepare for mediation, it is crucial that the parties are familiar with all of the facts of the case and recognize the strength and weaknesses of their evidence as well as the strength and weaknesses of the opposing party/ies’s evidence. The attorneys for the injured party/ies and the product liability defendant(s) should be well prepared to explain their party/ies’s position to the other party/ies in a calm and confident manner. Recognizing the positions and interests of the other party/ies will improve the negotiations and increase the likelihood of the parties reaching a mutually beneficial settlement agreement.
Arbitration, as an alternative dispute resolution (“ADR”) procedure, can be either (i) non-binding, or (ii) binding. In non-binding arbitration, the parties can reject the arbitrator(s)’s decision/award and, instead, file a motion for a trial de novo and resolve their dispute through a traditional court trial. In binding arbitration, the arbitrator(s)’s decision/award is generally final and enforceable by the court in the same way as a jury verdict and final judgment entered by the court.
In arbitration hearings, the parties make opening statements, present documents and witness testimonies, including expert witness opinions, and make closing arguments.
The rules of evidence, however, are generally more flexible in arbitration, compared to traditional trial proceedings. Resolving product liability claims generally involves the product liability defendant(s)’s accepting their potential liability for their negligence and/or the defective product and assessing the “value” of the injured party/ies’ injuries and resulting damages. In both traditional court litigation and ADR procedures, the injured party/ies’s claim(s) are generally based on negligence for lack of reasonable care on the part of the product liability defendant(s), strict liability and/or breach of warranty. The focus in negligence claims is the care (or lack of care) used by the alleged at-fault product liability defendant in designing, manufacturing or marketing the product(s) alleged to be dangerous and the cause of the injuries claimed. The focus in strict liability claims is on the product and whether it (i) failed to contain an element necessary to make it safe, or (ii) contained an element which made it unsafe, to include the presence or absence of an appropriate warning. The focus in breach of warranty claims is the express or implied warranties regarding the allegedly defective/dangerous product.
In arbitration, there is no jury. The arbitrator(s) – usually a single arbitrator or a three- person arbitration panel – decide(s) the product liability claims. The arbitrator(s) is/are often retired judges, and/or experienced attorneys with specialized knowledge or experience with the product and/or in the product industry. The legal basis for arbitration is an arbitration agreement, which may be voluntarily agreed to between the parties, or ordered by the judge in the court where the product liability lawsuit is filed.
The cost of arbitration is much lower than the cost of litigation. Additionally, it takes far less time for the parties’ attorneys to prepare for arbitration and, oftentimes, the testimony of witnesses is summarized and presented by the parties’ attorneys – thus greatly reducing the cost of presenting testimony, particularly expert witness opinion testimony, to the arbitrator(s).
Like mediation, the arbitration procedure is generally not open to the public, which is one of the reasons manufacturers may choose arbitration over going to a jury trial, due to the risk of adverse publicity regarding their product and/or design/manufacturing process and their concerns regarding the viability of their product line(s), in the event the product is found to be defective by a jury in a traditional trial.
Mediation and arbitration are invaluable ADR procedures for resolving product liability claims from the perspectives of both the product liability defendant(s) and the injured party/ies.
Product liability defendants, to include, manufacturers, suppliers, distributors and retailers, benefit from these alternative dispute resolution (“ADR”) procedures due to confidentiality, lower costs and time-effectiveness . . . and the ability of the product liability defendant(s) to resolve product liability claims on a face-to-face basis with the injured party/ies outside the bright spotlight that can occur in a traditional public trial.
On the other hand, consumers can present their claims and demands more easily due to the informal face-to-face confidential negotiations in mediation and/or through the more flexible and less expensive proceedings in arbitration.