Increasing Trend of Class Action Lawsuits for Product Liability Claims in the U.S., Nikkan Kogyo Shimbun (Daily industries newspaper)

Article reprinted with permission from Nikkan Kogyo Shimbun. This article has been translated into English by Jones Day.  The use of this article on other web sites without permission is strictly prohibited.

Yellow warning signals are flashing for product safety and security due to consecutive accidents involving water heaters, shredders, etc. Theodore Grossman, traveled to Japan to give advice to companies that are worried about the possibility of product liability litigation in Japan. We asked about the status of PL litigation in the U.S., and what Japanese companies that sell products in the U.S. should be concerned about.

Nikkan Kogyo Shimbun: What is the status of product liability litigation in the U.S.?
Grossman: 25 years ago 10% of cases went to juries, but now that has declined to 2%. Instead, pressure is applied through class action lawsuits to settle out of court in most cases. For example, right now in the tobacco package label litigation that we are working on, a group of 15 million plaintiffs is requesting $800 billion in damages. The trend to request huge amounts for damages has prompted the U.S. Federal court to establish upper limits on those amounts. This is another reason why the plaintiff tries to settle out of court for the purpose of increasing the amount of damages.

NKS: What are the differences between product liability laws in Japan and the U.S.?
TG: Juries make legal interpretations in product liability in the U.S. In the U.S., even when companies comply with government regulations, there is ample possibility that juries will find they did not adequately do so. Manufacturers must give warnings about everything. That is why the level of regulation becomes higher. The use of juries is guaranteed by the constitution.”

NKS: What should Japanese companies that sell products in the U.S. be concerned about, and what should they do in the event they are subject to product liability lawsuits?
TG: You also have to understand the product risks faced by your competitors. Then you can’t just give warnings, the warnings must be clear and not subject to doubts. If a product liability lawsuit were to arise, the objective of the plaintiffs is to take it to settlement so you cannot show weakness in the early stage. If you show weakness the number of plaintiffs joining the suit will increase. It is also better to introduce document management rules, and not to destroy documents that pertain to risk. If you destroy documents it is as if you are admitting that you are in the wrong. Responses to the media and to the regulating authorities are also important. Honda and Sony are being sued in America.