Liability Without Harm: Is There a New Source of Catastrophic Liability Lurking Within Your State's Consumer Protection Statute?

Part Two of a Two-Part Series

Part One of this article discussed how lost benefit suits are a significant departure from traditional tort principles. The conclusion describes the threat that these suits pose to all types of manufacturers and makes suggestions as to how to reduce that threat.

A Threat to Product Manufacturers

Lost benefit suits are especially threatening to product manufacturers because these claims are particularly susceptible to class aggregation. Rule 23 of the Federal Rules of Civil Procedure permits plaintiffs to assemble into classes when, among other things, they share 'questions of law or fact' and those common questions 'predominate over any questions affecting only individual members.' Fed. R. Civ. P. 23. Ordinarily, injury and causation are sources of diversity between plaintiffs and, by extrapolation, impediments to class treatment. Plaintiffs who claim injury from tobacco, for example, frequently claim different injuries and different causal mechanisms and, therefore, typically may not assemble into classes. See, e.g., Aspinall, 442 Mass. at 392-93, 813 N.E.2d at 485-86. By dispensing with the injury and causation requirements, lost benefit suits destroy a source of diversity between plaintiffs and promote class treatment.

Lost benefit suits threaten more than just the tobacco industry; such suits have been brought against a wide array of product manufacturers. The pharmaceutical industry is a frequent target. In Williams v. Purdue Pharma Co., 297 F. Supp. 2d 171 (D.D.C. 2003), for example, plaintiffs claimed to have overpaid for the pain reliever OxyContin' because of its purported addiction risk. The plaintiffs did not claim addiction, but instead alleged that a drug that incorporates an addiction risk has a lower value than one that does not, and they sought to recover that difference in market value. The district court dismissed the suit on the grounds that '[t]he invasion of a purely legal right without harm to the consumer' is not recoverable under the District of Columbia consumer protection law. Id. at 178. Elsewhere, however, lost benefit suits against pharmaceutical manufacturers have progressed further.

In DeSiano v. Warner-Lambert, 326 F.3d 339 (2d Cir. 2003), for example, the Court of Appeals for the Second Circuit reversed a district court's grant of summary judgment in favor of a drug manufacturer facing a lost benefit claim. The manufacturer had been sued by a group of health insurers who claimed to have paid more for the drug than they would have, had they known that the drug was alleged to cause liver failure. None of the insurers' subscribers had such a liver failure, and the insurers even conceded that most of the subscribers derived a health benefit from the drug. Nevertheless, the court allowed their claim to proceed, holding that 'the insurers were directly harmed by the deception practiced on them.' Id. at 349 n.9. On remand, the district court dismissed the insurers' claims, holding in part that the insurers were not 'consumers' for whom protection was intended by the New Jersey Consumer Fraud Act under which they sued. In re Rezulin Prods. Liab. Litig., 390 F. Supp. 2d 319, 340 (S.D.N.Y. 2005).

The automotive industry has faced lost benefit suits as well. In Briehl v. General Motors, 172 F.3d 623 (8th Cir. 1999), a class of plaintiffs sued a car manufacturer over allegedly defective antilock brakes. No plaintiff claimed to have had an accident on account of the claimed defect, and indeed the plaintiffs' purported class expressly excluded anyone who had. Nonetheless, they claimed to have been injured because their cars were worth less on account of the defect. Similarly, in Wallis v. Ford Motor Co., 2005 Ark. LEXIS 301 at *1-2 (May 12, 2005), a class of Ford Explorer owners sued over their vehicles' alleged propensity for rolling over; they claimed that they paid more for their cars than they would have had they known of that characteristic. Both cases were dismissed on the ground that the plaintiffs had failed to plead legally cognizable damages. Briehl, 172 F.3d at 630; Wallis, 2005 Ark. LEXIS 301 at *22-25. The Wallis court noted, however, that its result relied on specific statutory language, and it acknowledged that a different result had been reached in other states where the language of the consumer protection statute was different. 2005 Ark. LEXIS 301 at *24-25.

The electronics industry faced similar claims in Shaw v. Toshiba American Information Systems, 91 F. Supp. 2d 926 (E.D. Tex. 1999). In Shaw, the defendant had manufactured a computer with a faulty floppy disk controller that created the potential for data loss during exchanges between the computer's hard and floppy drives. A class of plaintiffs sued, not under a state consumer protection statute but rather under the federal Computer Fraud and Abuse Act, 18 U.S.C. '1030. No member of the plaintiff class had experienced any data loss, and the class even included plaintiffs who had not bought the faulty laptop. The district court nevertheless denied summary judgment to the defendants, holding that the plaintiffs' complaint sufficiently pleaded the elements of the statute.

After this denial, the defendants settled for $2 billion. The spectacular result is perhaps partially explained by the case's unique statutory setting; the Computer Fraud and Abuse Act contains criminal as well as civil penalties. Still, the case demonstrates that any industry can face a catastrophic exposure whenever its product is susceptible to the claim that it incorporates a defect, even when that defect does not harm anyone's person or property.

The retail industry faced a lost benefit lawsuit in Kelly v. Sears Roebuck & Co., 308 Ill. App. 3d 633, 720 N.E.2d 683 (1999). In Kelly, a class of plaintiffs sued an automotive parts retailer over its alleged practice of mixing used and 'demonstrator' car batteries in with its new stock. None of the plaintiffs claimed to have actually received a used battery; instead, they claimed that they would have paid less for their new batteries if they knew that their purchase carried a risk that they would get a used one. The trial court dismissed the plaintiffs' claims, and the Illinois Appellate Court affirmed, holding in part that because the retailer demonstrated its willingness to warrant all of its batteries, the plaintiff 'received exactly what he bargained for in the transaction.'

While most of these cases have been dismissed, they nevertheless demonstrate that lost benefit suits are not unique to the tobacco industry. Indeed, one Illinois tobacco case suggests that manufacturers of other products might be at a greater risk than tobacco manufacturers. In December 2005 the Illinois Supreme Court reversed a $10.1 billion verdict on the basis of an exemption in the Illinois Consumer Fraud Statute for conduct specifically authorized by a state or regulatory body. Without reaching Philip Morris' federal pre-emption defense, the court held that the Federal Trade Commission's consent orders involving a different manufacturer specifically authorized the Philip Morris' conduct at issue, and, therefore, concluded that conduct was exempt from liability under the state statute. Price v. Philip Morris, Inc., No. 96236, slip op. at 67-68 (Ill. Dec. 15, 2005). This holding may encourage the plaintiffs' bar to seek targets in other, less heavily regulated industries.

Recommendations for Manufacturers and Defense Counsel

Product manufacturers and defense counsel may take a number of steps to prevent lost benefit suits from occurring and to defend them successfully when they do arise. Manufacturers may, for example, attempt to prevent these suits in the first instance by supporting legislative reforms. The Wallis and Aspinall opinions suggest that differences in statutory language may have important impacts. So too does the California experience. Prior to its amendment in 2004, California's Unfair Competition Law permitted 'any person acting for the interests of … the general public' to bring an action, regardless of whether that person suffered any injury from the allegedly unfair practice. Cal. Bus. and Prof. Code '17204 (repealed 2004). In one widely publicized case, a plaintiff sued the sporting goods manufacturer Nike for its public statements about its labor practices in Asia, without pleading or proving how he was harmed by such statements. Kasky v. Nike, Inc., 27 Cal. 4th 939, 45 P.3d 243 (2002).

In 2004, however, a California ballot initiative amended the Unfair Competition Law to permit actions only by plaintiffs who had suffered an 'injury in fact.' Cal. Bus. and Prof. Code '17204 (as amended 2004). California courts are in the process of determining whether the amendment applies retroactively. In one case, the California Court of Appeal reversed an $800 million judgment in favor of a class of plaintiffs whose leader conceded that he was unharmed by the defendant's conduct ' and indeed had never even done business with the defendant. Schwartz v. Visa Int'l Serv. Ass'n, 132 Cal. App. 4th 1452 (2005). The California experience suggests that differences in statutory language may have important effects.

The American Legislative Economic Council ('ALEC') has proposed a model statute that would curb some of the worst excesses of lost benefit suits. The proposed statute would confer a private right of action only on a plaintiff who 'reasonably relies upon an act or practice declared unlawful' by the state's unfair trade practice law. Am. Legis. Econ. Council, Model Act on Private Enforcement of Consumer Protection Statutes, '1(a). Additionally, the statute would require the plaintiff to 'suffer [ ] an ascertainable loss of money or property.' Id. These two provisions would restore the injury and causation requirements and place lost benefit suits on a more traditional tort footing. The statute would also permit punitive damages only upon a finding, 'by clear and convincing evidence,' that the defendant engaged in its unfair practice willfully and 'with the purpose of deceiving the public.' Id. at '1(c). Moreover, the statute permits the court to award attorneys' fees to the defendant when the plaintiff's action is found to be 'groundless in fact or law or brought in bad faith, or for the purpose of harassment.' Id. at '2(b). Needless to say, product manufacturers should support the ALEC Model Act or similar initiatives.

Product manufacturers' counsel may also help prevent or reduce the risk presented by lost benefit suits by involving themselves in their companies' customer communication processes. Counsel can review advertising materials before they are communicated to the public and alert marketers to instances in which a communication could be attacked on the grounds that it promises more than the product delivers.

Manufacturers also may take steps to defend lost benefit suits when they do arise. Manufacturers' counsel should, for example, acquaint themselves with the different ways in which the lost benefit damage model is vulnerable to attack. Proponents of lost benefit theory often claim that their damage model is nothing new. In Price, for example, a dissenting justice of the Illinois Supreme Court argued that lost benefit damages were the traditional measure of damages for 'fraudulent misrepresentation made by a defendant,' citing a fraudulent land sale case from 1871. Price, No. 96236, slip op. at 112 (Freeman, J., dissenting). Upon closer examination, however, the lost benefit damage model is vulnerable on two fronts.

One avenue of attack has already been alluded to ' lost benefit plaintiffs often attempt to measure their damages with reference to a product that does not exist. As noted in Part One of this series, the plaintiffs in Price attempted such a measurement using an Internet survey. While the trial court accepted their methodology, it received criticism in the majority Illinois Supreme Court opinion, and particularly harsh criticism in a concurrence by Justice Lloyd A. Karmeier. 'Putting aside any questions regarding the scientific validity of the survey … there is a fundamental flaw with [the plaintiffs'] approach.' Id. at 79 (Karmeier, J., concurring). The purpose of the time-honored benefit-of-the-bargain 'rule' is to 'compensate the plaintiff for the pecuniary loss occasioned by the defendant's fraud' ' that is, 'the amount which the plaintiff is actually out of pocket by reason of the transaction.' Id. at 79-80 (internal quotation marks omitted). Such pecuniary losses can only be 'determined by the choices and values actually available to a consumer in the marketplace.' Id. at 80 (quoting Restatement (Second) of Torts '549, cmt. c).

Lost benefit claims may also be attacked on the grounds that they are adequately redressed by existing warranty and product liability regimes. As noted above, in Kelly v. Sears Roe-buck & Co., the Appellate Court of Illinois rejected a plaintiff's attack on an automobile parts retailer's practice of mixing used and 'demonstrator' batteries in with its new stock, in part on the grounds that the plaintiff's injury was redressed when the retailer exchanged the battery under its warranty. Since 'the warranty provisions were fulfilled and plaintiff's battery was replaced … plaintiff received exactly what he bargained for in the transaction.' Kelly, 308 Ill. App. 3d at 645, 720 N.E.2d at 693.

Although no court has addressed the argument, some academic commentators argue analogously that product liability law obviates the need for lost benefit recovery. When a manufacturer markets a product in an environment that imposes strict liability for product defects, it implicitly promises its customers that it will pay for any harm the product causes. Lost benefit plaintiffs claim that 'even though the product … has not injured them, the discovery of a potential for injury reveals an actionable form of misrepresentation.' Moin A. Yahya, Can I Sue Without Being Injured? Why the Benefit of the Bargain Theory for Product Liability is Bad Law and Bad Economics, 3 Geo. J. L. & Pub. Pol'y 83 (2005). Yet if this potential for injury carries with it an implicit promise that the injury will be compensated, the plaintiffs' claims are already addressed by the existing regime.

Conclusion

Manufacturers of all types should expect lost benefit suits to be part of their legal landscape for years to come. The theory relieves the plaintiff of the need to satisfy traditional tort principles, and consequently it is and will continue to be attractive to the plaintiffs' bar. Manufacturers should not assume that it 'can't happen to them,' but should instead confront the situation head-on and develop strategies to prevent and manage the risks that these suits present.

James H. Rotondo is the chair of the Trial Section at Day, Berry & Howard LLP, and focuses his practice on product liability and insurance litigation. Thomas O. Farrish is an associate in the Insurance and Torts Litigation Department at the firm.

Part Two of a Two-Part Series

Part One of this article discussed how lost benefit suits are a significant departure from traditional tort principles. The conclusion describes the threat that these suits pose to all types of manufacturers and makes suggestions as to how to reduce that threat.

A Threat to Product Manufacturers

Lost benefit suits are especially threatening to product manufacturers because these claims are particularly susceptible to class aggregation. Rule 23 of the Federal Rules of Civil Procedure permits plaintiffs to assemble into classes when, among other things, they share 'questions of law or fact' and those common questions 'predominate over any questions affecting only individual members.' Fed. R. Civ. P. 23. Ordinarily, injury and causation are sources of diversity between plaintiffs and, by extrapolation, impediments to class treatment. Plaintiffs who claim injury from tobacco, for example, frequently claim different injuries and different causal mechanisms and, therefore, typically may not assemble into classes. See, e.g., Aspinall, 442 Mass. at 392-93, 813 N.E.2d at 485-86. By dispensing with the injury and causation requirements, lost benefit suits destroy a source of diversity between plaintiffs and promote class treatment.

Lost benefit suits threaten more than just the tobacco industry; such suits have been brought against a wide array of product manufacturers. The pharmaceutical industry is a frequent target. In Williams v. Purdue Pharma Co. , 297 F. Supp. 2d 171 (D.D.C. 2003), for example, plaintiffs claimed to have overpaid for the pain reliever OxyContin' because of its purported addiction risk. The plaintiffs did not claim addiction, but instead alleged that a drug that incorporates an addiction risk has a lower value than one that does not, and they sought to recover that difference in market value. The district court dismissed the suit on the grounds that '[t]he invasion of a purely legal right without harm to the consumer' is not recoverable under the District of Columbia consumer protection law. Id. at 178. Elsewhere, however, lost benefit suits against pharmaceutical manufacturers have progressed further.

In DeSiano v. Warner-Lambert , 326 F.3d 339 (2d Cir. 2003), for example, the Court of Appeals for the Second Circuit reversed a district court's grant of summary judgment in favor of a drug manufacturer facing a lost benefit claim. The manufacturer had been sued by a group of health insurers who claimed to have paid more for the drug than they would have, had they known that the drug was alleged to cause liver failure. None of the insurers' subscribers had such a liver failure, and the insurers even conceded that most of the subscribers derived a health benefit from the drug. Nevertheless, the court allowed their claim to proceed, holding that 'the insurers were directly harmed by the deception practiced on them.' Id. at 349 n.9. On remand, the district court dismissed the insurers' claims, holding in part that the insurers were not 'consumers' for whom protection was intended by the New Jersey Consumer Fraud Act under which they sued. In re Rezulin Prods. Liab. Litig., 390 F. Supp. 2d 319, 340 (S.D.N.Y. 2005).

The automotive industry has faced lost benefit suits as well. In Briehl v. General Motors , 172 F.3d 623 (8th Cir. 1999) , a class of plaintiffs sued a car manufacturer over allegedly defective antilock brakes. No plaintiff claimed to have had an accident on account of the claimed defect, and indeed the plaintiffs' purported class expressly excluded anyone who had. Nonetheless, they claimed to have been injured because their cars were worth less on account of the defect. Similarly, in Wallis v. Ford Motor Co., 2005 Ark. LEXIS 301 at *1-2 (May 12, 2005), a class of Ford Explorer owners sued over their vehicles' alleged propensity for rolling over; they claimed that they paid more for their cars than they would have had they known of that characteristic. Both cases were dismissed on the ground that the plaintiffs had failed to plead legally cognizable damages. Briehl, 172 F.3d at 630; Wallis, 2005 Ark. LEXIS 301 at *22-25. The Wallis court noted, however, that its result relied on specific statutory language, and it acknowledged that a different result had been reached in other states where the language of the consumer protection statute was different. 2005 Ark. LEXIS 301 at *24-25.

The electronics industry faced similar claims in Shaw v. Toshiba American Information Systems , 91 F. Supp. 2d 926 (E.D. Tex. 1999). In Shaw, the defendant had manufactured a computer with a faulty floppy disk controller that created the potential for data loss during exchanges between the computer's hard and floppy drives. A class of plaintiffs sued, not under a state consumer protection statute but rather under the federal Computer Fraud and Abuse Act, 18 U.S.C. '1030. No member of the plaintiff class had experienced any data loss, and the class even included plaintiffs who had not bought the faulty laptop. The district court nevertheless denied summary judgment to the defendants, holding that the plaintiffs' complaint sufficiently pleaded the elements of the statute.

After this denial, the defendants settled for $2 billion. The spectacular result is perhaps partially explained by the case's unique statutory setting; the Computer Fraud and Abuse Act contains criminal as well as civil penalties. Still, the case demonstrates that any industry can face a catastrophic exposure whenever its product is susceptible to the claim that it incorporates a defect, even when that defect does not harm anyone's person or property.

The retail industry faced a lost benefit lawsuit in Kelly v. Sears Roebuck & Co. , 308 Ill. App. 3d 633, 720 N.E.2d 683 (1999). In Kelly, a class of plaintiffs sued an automotive parts retailer over its alleged practice of mixing used and 'demonstrator' car batteries in with its new stock. None of the plaintiffs claimed to have actually received a used battery; instead, they claimed that they would have paid less for their new batteries if they knew that their purchase carried a risk that they would get a used one. The trial court dismissed the plaintiffs' claims, and the Illinois Appellate Court affirmed, holding in part that because the retailer demonstrated its willingness to warrant all of its batteries, the plaintiff 'received exactly what he bargained for in the transaction.'

While most of these cases have been dismissed, they nevertheless demonstrate that lost benefit suits are not unique to the tobacco industry. Indeed, one Illinois tobacco case suggests that manufacturers of other products might be at a greater risk than tobacco manufacturers. In December 2005 the Illinois Supreme Court reversed a $10.1 billion verdict on the basis of an exemption in the Illinois Consumer Fraud Statute for conduct specifically authorized by a state or regulatory body. Without reaching Philip Morris' federal pre-emption defense, the court held that the Federal Trade Commission's consent orders involving a different manufacturer specifically authorized the Philip Morris' conduct at issue, and, therefore, concluded that conduct was exempt from liability under the state statute. Price v. Philip Morris, Inc., No. 96236, slip op. at 67-68 (Ill. Dec. 15, 2005). This holding may encourage the plaintiffs' bar to seek targets in other, less heavily regulated industries.

Recommendations for Manufacturers and Defense Counsel

Product manufacturers and defense counsel may take a number of steps to prevent lost benefit suits from occurring and to defend them successfully when they do arise. Manufacturers may, for example, attempt to prevent these suits in the first instance by supporting legislative reforms. The Wallis and Aspinall opinions suggest that differences in statutory language may have important impacts. So too does the California experience. Prior to its amendment in 2004, California's Unfair Competition Law permitted 'any person acting for the interests of … the general public' to bring an action, regardless of whether that person suffered any injury from the allegedly unfair practice. Cal. Bus. and Prof. Code '17204 (repealed 2004). In one widely publicized case, a plaintiff sued the sporting goods manufacturer Nike for its public statements about its labor practices in Asia, without pleading or proving how he was harmed by such statements. Kasky v. Nike, Inc. , 27 Cal. 4th 939, 45 P.3d 243 (2002).

In 2004, however, a California ballot initiative amended the Unfair Competition Law to permit actions only by plaintiffs who had suffered an 'injury in fact.' Cal. Bus. and Prof. Code '17204 (as amended 2004). California courts are in the process of determining whether the amendment applies retroactively. In one case, the California Court of Appeal reversed an $800 million judgment in favor of a class of plaintiffs whose leader conceded that he was unharmed by the defendant's conduct ' and indeed had never even done business with the defendant. Schwartz v. Visa Int'l Serv. Ass'n , 132 Cal. App. 4th 1452 (2005). The California experience suggests that differences in statutory language may have important effects.

The American Legislative Economic Council ('ALEC') has proposed a model statute that would curb some of the worst excesses of lost benefit suits. The proposed statute would confer a private right of action only on a plaintiff who 'reasonably relies upon an act or practice declared unlawful' by the state's unfair trade practice law. Am. Legis. Econ. Council, Model Act on Private Enforcement of Consumer Protection Statutes, '1(a). Additionally, the statute would require the plaintiff to 'suffer [ ] an ascertainable loss of money or property.' Id. These two provisions would restore the injury and causation requirements and place lost benefit suits on a more traditional tort footing. The statute would also permit punitive damages only upon a finding, 'by clear and convincing evidence,' that the defendant engaged in its unfair practice willfully and 'with the purpose of deceiving the public.' Id. at '1(c). Moreover, the statute permits the court to award attorneys' fees to the defendant when the plaintiff's action is found to be 'groundless in fact or law or brought in bad faith, or for the purpose of harassment.' Id. at '2(b). Needless to say, product manufacturers should support the ALEC Model Act or similar initiatives.

Product manufacturers' counsel may also help prevent or reduce the risk presented by lost benefit suits by involving themselves in their companies' customer communication processes. Counsel can review advertising materials before they are communicated to the public and alert marketers to instances in which a communication could be attacked on the grounds that it promises more than the product delivers.

Manufacturers also may take steps to defend lost benefit suits when they do arise. Manufacturers' counsel should, for example, acquaint themselves with the different ways in which the lost benefit damage model is vulnerable to attack. Proponents of lost benefit theory often claim that their damage model is nothing new. In Price, for example, a dissenting justice of the Illinois Supreme Court argued that lost benefit damages were the traditional measure of damages for 'fraudulent misrepresentation made by a defendant,' citing a fraudulent land sale case from 1871. Price, No. 96236, slip op. at 112 (Freeman, J., dissenting). Upon closer examination, however, the lost benefit damage model is vulnerable on two fronts.

One avenue of attack has already been alluded to ' lost benefit plaintiffs often attempt to measure their damages with reference to a product that does not exist. As noted in Part One of this series, the plaintiffs in Price attempted such a measurement using an Internet survey. While the trial court accepted their methodology, it received criticism in the majority Illinois Supreme Court opinion, and particularly harsh criticism in a concurrence by Justice Lloyd A. Karmeier. 'Putting aside any questions regarding the scientific validity of the survey … there is a fundamental flaw with [the plaintiffs'] approach.' Id. at 79 (Karmeier, J., concurring). The purpose of the time-honored benefit-of-the-bargain 'rule' is to 'compensate the plaintiff for the pecuniary loss occasioned by the defendant's fraud' ' that is, 'the amount which the plaintiff is actually out of pocket by reason of the transaction.' Id. at 79-80 (internal quotation marks omitted). Such pecuniary losses can only be 'determined by the choices and values actually available to a consumer in the marketplace.' Id. at 80 (quoting Restatement (Second) of Torts '549, cmt. c).

Lost benefit claims may also be attacked on the grounds that they are adequately redressed by existing warranty and product liability regimes. As noted above, in Kelly v. Sears Roe-buck & Co., the Appellate Court of Illinois rejected a plaintiff's attack on an automobile parts retailer's practice of mixing used and 'demonstrator' batteries in with its new stock, in part on the grounds that the plaintiff's injury was redressed when the retailer exchanged the battery under its warranty. Since 'the warranty provisions were fulfilled and plaintiff's battery was replaced … plaintiff received exactly what he bargained for in the transaction.' Kelly, 308 Ill. App. 3d at 645, 720 N.E.2d at 693.

Although no court has addressed the argument, some academic commentators argue analogously that product liability law obviates the need for lost benefit recovery. When a manufacturer markets a product in an environment that imposes strict liability for product defects, it implicitly promises its customers that it will pay for any harm the product causes. Lost benefit plaintiffs claim that 'even though the product … has not injured them, the discovery of a potential for injury reveals an actionable form of misrepresentation.' Moin A. Yahya, Can I Sue Without Being Injured? Why the Benefit of the Bargain Theory for Product Liability is Bad Law and Bad Economics, 3 Geo. J. L. & Pub. Pol'y 83 (2005). Yet if this potential for injury carries with it an implicit promise that the injury will be compensated, the plaintiffs' claims are already addressed by the existing regime.

Conclusion

Manufacturers of all types should expect lost benefit suits to be part of their legal landscape for years to come. The theory relieves the plaintiff of the need to satisfy traditional tort principles, and consequently it is and will continue to be attractive to the plaintiffs' bar. Manufacturers should not assume that it 'can't happen to them,' but should instead confront the situation head-on and develop strategies to prevent and manage the risks that these suits present.

James H. Rotondo is the chair of the Trial Section at Day, Berry & Howard LLP, and focuses his practice on product liability and insurance litigation. Thomas O. Farrish is an associate in the Insurance and Torts Litigation Department at the firm.