Minimizing FR litigation risks

Editor’s note
This article contains only general guidance. Views expressed in this article do not necessarily reflect the views of BedTimes or the International Sleep Products Association. Companies should consult their own attorneys for specific legal advice about these issues.

Even mattress manufacturers that have fully complied with federal flammability standards can be at risk of being named as defendants in lawsuits in the event of a mattress–related fire. However, there are steps manufacturers can take to best protect themselves against potentially negative judgments, says an attorney who regularly defends manufacturers in product liability litigation.

It’s a hard truth, but new regulations in any industry can start a cycle that attorney David Osterman describes as “regulation, awareness, claims and litigation.”

“The cycle can sometimes become a vortex. They all feed off of each other,” says Osterman, who specializes in handling fire–related litigation and regulatory matters and who is a senior partner in the firm of Goldberg Segalla, which has offices in New York, New Jersey and Pennsylvania. “The more claims you have, the more likely you are to have litigation. The more litigation you have, the more consumer awareness you will have and the more litigation you will have. The combination of claims, regulations and media attention almost always results in lawsuits.”

The elements of an effective risk–avoidance strategy for any company include quality, compliance, communication and contracts. Quality compliance means producing a quality product in an environment with quality controls at both the manufacturing and supply chain levels.

“This should be the first line of defense in terms of minimizing risk,” says Osterman, who recently spoke to a gathering of mattress industry executives on the subject of litigation risks. “Supply chain quality is just as, if not more, important as manufacturing quality. All you have to do is look at some of the troubles some major manufacturers have gotten themselves into over poorly managed supply chain issues to understand the importance of the issue.”

Regulatory compliance is an integral part of any quality program.

“More important than just making a good product, companies need to be perceived as making good products, if they truly want to minimize their risk,” Osterman says. “Too many companies put their brand name image and their financial well–being at risk by underestimating the importance of complying strictly with safety regulations. The regulations can be your best friend if you follow them and your worst enemy if you don’t.”

A manufacturer’s goal should be to produce defect–free products.

“Unfortunately, we live in a litigious society, and no matter how good or safe your product is, if you sell enough product, eventually someone will get hurt while using it and sue you,” Osterman says.

“The law of products liability provides that a product is defective if it is not reasonably fit, suitable and safe for its ordinary, intended and foreseeable use,” Osterman says, adding that everyone in the distribution chain—component supplier, mattress manufacturer, retailer—potentially can be held liable for the sale of a defective product.

Defects generally fall into three categories: manufacturing defect, design defect and warning defect, according to Osterman.

A manufacturing defect refers to a product that leaves the plant without meeting the manufacturer’s own quality standards. A design defect refers to the improper design of a product and a warning defect refers to a product that was made properly but doesn’t include warnings about proper use.

If a manufacturer or importer becomes aware of safety risks associated with its mattresses or bed sets, it has an obligation to report those to the U.S. Consumer Product Safety Commission. Those reporting obligations are in addition to the product testing, labeling and recordkeeping obligations set forth in the 16 CFR Part 1632 federal cigarette standard and the 16 CFR Part 1633 federal open–flame standard. The reporting requirements, set forth in Sections 15 and 37 of the Consumer Product Safety Act, also are triggered if a manufacturer or importer’s products become the subject of product liability lawsuits (specifically three judgments or settlements against a product in a two–year period).

Of course, full compliance with both the 1632 and 1633 standards is essential for mattress manufacturers.

“Compliance with the standard is the best strategy for minimizing litigation risk,” Osterman says. “Noncompliance will lead to the greatest risk and challenge. It creates risk not just in terms of litigation, but regulatory risk and, of course, ultimately risk to your reputation and brand.”

Manufacturers and importers already should be well–versed in the federal requirements, but detailed information about the federal mattress flammability standards can be found at the CPSC’s Web site at www.cpsc.gov/businfo/mattress.aspx or at the International Sleep Products Association’s Web site at www.sleepproducts.org/flammability.

Proper product warnings include initial information and instructions for mattress use that manufacturers should provide to consumers. If anything, the new federal mattress flammability standard increases the need for these types of warnings. Based on recent court decisions, the new mattress standard may make it more difficult for plaintiffs to win a product liability claim against a manufacturer whose mattress fully meets the product performance requirements of 1632 and 1633.

Neither of these standards, however, sets any requirements as to what information the mattress manufacturer should include in a proper product warning. As a result, attorneys for a plaintiff injured in a fire involving a mattress that meets both 1632 and 1633 may base much of his case on whether the manufacturer’s product warning properly alerted the consumer to fire risks associated with using the mattress.

Osterman recommends that as part of their risk management strategy, manufacturers provide to consumers the safety hangtag available from ISPA’s Sleep Products Safety Council. The recently revised tags, which provide important mattress safety and use information, were developed in consultation with human factors experts who reviewed the content and format of the tags and recommended changes to make them more easily understood by consumers, including those for whom English is not their first language.

The hangtags are available as a card hangtag that can be inserted with product–related literature or as a Tyvek label that can be sewn into the mattress. (The tags can be ordered at www.sleepproducts.org.)

Lastly, Osterman suggests that everyone pay careful attention to the contracts they have with their vendors and dealers to confirm whether they include indemnification provisions that allocate risks among the contracting parties and insurance providers as they parties intended. Exactly who is responsible for what and under which circumstances will be the subject of negotiations among the parties. But it is important to know for which risks you might be held responsible so that you can arrange adequate insurance coverage and price products accordingly.

If a plaintiff sues to recover damages and injuries experienced in a mattress–related fire, Osterman says components suppliers, manufacturers and retailers could be named as defendants, depending on which kinds of claims the plaintiff or other parties assert.

For example, an injured consumer might file a direct claim against the mattress manufacturer or possibly the retailer as the primary defendants. Or the manufacturer of a different product sued directly by the plaintiff (for instance, a lamp manufacturer whose product the plaintiff blames for starting the fire) might file a third–party claim against the mattress manufacturer (or others) on the grounds that the plaintiff was injured by the burning mattress, which should not have ignited. Or an insurance company could file a subrogation claim against a mattress manufacturer (or others) to reimburse if for property damage claims that the insurer has paid resulting from a house fire.

Osterman points to one particular scenario of which the mattress industry should be aware, especially given the long life expectancy of mattresses.

In the case of a mattress–related fire that involves a mattress made prior to July 1, 2007 (when the federal open–flame standard took effect), a plaintiff could claim that a pre–1633 mattress could have been made safer because the technology existed to do so. This argument could be made even if the manufacturer had completely met all applicable federal and state laws in effect on the date the mattress was assembled.

Based on several new court cases and statements by the CPSC itself, it is possible that a manufacturer’s full compliance with 1633 may strengthen this type of argument. But no court has yet agreed with this approach involving 1633–complaint mattresses

Another potential liability scenario for a mattress manufacturer could occur when a retailer sells a mattress with a foundation other than the one intended by the manufacturers and identified on the 1633 mattress label required by the CPSC. If a mattress–related fire were to occur, the element of foreseeability could come into play, Osterman says. That is, was it foreseeable to the manufacturer that the retailer might ignore the restriction on the 1633 label and sell a mattress with an incorrect foundation?

A manufacturer with absolutely no knowledge or control over the retailer’s practice of selling mismatched mattresses and foundations should have very little risk or legal exposure, he says.

“If, however, it is entirely foreseeable that the mattress and box spring are going to be sold separately and paired off with different foundations, then it is easier to say that the manufacturer does have exposure. A lawsuit could go forward,” Osterman says.

Despite these scenarios, Osterman says “in the long term, I believe that there will be safer products on the market as a result of the new CPSC standard and that will reduce the risk of claims in the future.”

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