Business Ethics for the 21st Century: Chapter 8 (pp. 411 - 418): "Consumer Safety and Product Liability" [rough draft]

Examples of products and services that have harmed consumers:

What is the usual way consumers can deal with defective or dangerous products or services? Is litigation the best way to make sure that consumers are not harmed by products and services? Are there other avenues?

Since producers generally operate on the basis of a cost/benefit analysis, does litigation tip the scales in the direction of safety and reliability? What do you think?

The ethical question is this: How much responsibility should the producer or service provider have? How liable should they be? On the other hand, how much responsibility does the consumer bear to learn how to use products properly and safely? When does the consumer become guilty by virtue of negligence or carelessness? Consider the case of the hot coffee at McDonalds. Was the coffee too hot, or was the consumer too careless? How hot is coffee expected to be?

The issue of punitive damages or penalties imposed by a court over and above trial expenses and medical expenses is a big one. Are punitive damages a way "to teach the seller a lesson?" Or are they unfair? The case of Connie Daniell, who locked herself in a trunk of a car and sued the auto company for not having latches inside of the trunk.

CONSUMER PROTECTION LAWS

The Consumer Product Safety Act of 1972 allows victims to sue to get compensation for their injury. In fact, companies may be criminally prosecuted for marketing dangerous products. Usually, however, such cases are settled in civil rather than criminal cases.

Look at the online sources page for this course. Some of the sites pertain to automobile recalls and defects.

These sites deal with many sorts of recalls and consumer warnings:

One interesting category is that of holiday lights. Many of those light strings from China are quite unsafe. They are poorly insulated and can cause shocks or fire hazards. The issue of recalls is an interesting one. Manufacturers are generally eager to pull defective products from the market before consumers are harmed. The following sites are geared mostly to child safety. By and large, they get much of their information from the Consumer Product Safety Commission. The most common offenses among toys are choking hazards, electrical hazards, toxins such as lead and phthalates. For example, high levels of lead were found in some types of sidewalk chalk.

Finally, we have the U.S. Department of Agriculture and the Food and Drug Administration, which are supposed to protect us from Hepatitis A in scallions and strawberries -- or salmonella in cantaloupes. Incidentally, they haven't done very well. However, much of the blame goes to Free Trade with Mexico, where many of our winter fruits and vegetables come from. Apparently, in the case of the scallions, a number of Mexican food-packing plants were using polluted water (that nobody would want to drink) for washing and ice cubes. When you go to Mexico, don't drink the water. But, also, don't use ice cubes from the water to ship scallions.

I gave you the guidelines for a legitimate case of product liability. Whatever one might discuss about the rights and wrongs of it, the lawyers know what is likely to work. See the handout.

In general, there are three categories of product liability:

There is an additional category -- that of warranties -- expressed or implied. An implied warranty presumes that a product will do what is supposed to do for a reasonable length of time. Think of the toy that breaks the day after Christmas. Is this consumer negligence or product unreliability? So we have liability and unreliability.

Incidentally, was Coca-Cola responsible for the exploding coke bottle?

STRICT PRODUCT LIABILITY

In general, the courts have moved in the direction of strict product liability. This doesn't mean that the customer is always right, but it does mean that the burden for defective or dangerous products lies mostly with the producer or seller.

See some of the interesting cases on Page 414. It is sometimes very hard to draw the line between liability for the producer and responsibility of the consumer. See the Guidelines (for determining whether products are defective) at the bottom of Page 414 (Business Ethics for the 21st Century, p. 414):

One thinks of the "reasonable person" standard in cases of deceptive advertising. [Now all we have to do is find a reasonable person.]

There are many inherently unsafe products which have usefulness and are desired by consumers. What should we do about them?

When it comes to warning labels, which -- the producer or the consumer -- is most likely to have the better knowledge? The one who understands the product best is the one who is most liable to post the warning (so the courts say).

JUSTICE AND STRICT PRODUCT LIABILITY

The author is really asking that we rethink this issue of strict product liability. Is strict product liability a good idea? On a scale that goes from putting all the blame on the consumer to the other extreme of putting all the blame on the producer, what is really the "golden Aristotelian mean" (couldn't resist)?

From the consumer's standpoint, being able to sue and get punitive damages results in a kind of "insurance" for consumers who are injured and in a kind of deterrent for producers who are trying too hard to pinch pennies. If producers operate on the basis of cost/benefit, then why not make them really pay when they make a bad product? That will insure they will be more careful.

On the other hand, is it fair to producers to make litigation a kind of "socialized" health care program? Producers argue that strict liability costs too much, and the cost is passed on to the consumer. Furthermore, if they know they can sue at the drop of a hat, consumers might be less careful. In some instances, they might even be eager to get hurt, in order to profit from the mishap. Losing an arm or a leg is nothing, so long as one is "set for life."

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