The COVID-19 pandemic has placed a greater importance on using best practices in adjusting, investigating, and defending product liability claims. Delay, travel obstacles, and lack of face-to-face interaction make early claims investigation more daunting. However, if an early and comprehensive investigation can be completed, pre-suit or early suit mediations are available options.
COVID-19 has heightened parties’ interest as to whether mediations at an early stage can be constructive in leading to claims and case resolution. While each jurisdiction is different, trials across the board are less common than they were prior to the pandemic. The expectation is that most jurisdictions will not return to typical trial dockets for some time. Thus, the parties and their counsel generally have more incentive to resolve claims early.
From an adjustment point of view—and with respect to the potential for a product liability subrogation claim—the priority is to ascertain cause and origin as soon as possible. This includes advising the first contact and associated parties to preserve and maintain the loss site to the extent possible. One best practice is to partner with insurance companies that can provide pre-loss authority for expert retention and expense. Valuable time can be lost sending emails, reports, or phone calls to obtain this authority if it is not pre-approved. Time is of the essence if the first notice of loss indicates the potential for liability.
Typically, investigations begin with engagement of a pre-approved panel of experts that includes fire investigators, electric engineers, and mechanical engineers. Once this initial investigation is done, we request investigators contact us directly after the site investigation, allowing the insurance carrier to promptly consider all possible third-party liability and/or subrogation avenues. Picking up the phone and making direct calls can make a significant difference in making sure that the investigation runs as quickly and smoothly as possible.
In the event an initial investigation shows potential for either third-party liability or subrogation, consider supplemental retention of experts to assess the presence of specific product defects. For example, in a setting where a fire investigator identifies the source of the fire as directly behind a refrigerator where electrical arcing has occurred, it is recommended that the carrier engage an electrical engineer to assist in the investigation to determine whether the refrigerator was the point of failure, and, if so, any contributing factors that could be attributed to the equipment or manufacturer.
The defense of products claims against manufacturers mirrors the development of a subrogation claim. In order to maintain a product liability action, a party must establish that a defect existed that made the product unreasonably dangerous. Additionally, the defect is required to have existed at the time the product left the manufacturer’s control. Lastly, it must be established that the identified defect caused the injury or damage. Lack of causation is fatal to a claim of product liability. It is imperative to not only evaluate all potential affirmative defenses to a product liability claim, but also to evaluate all other potential causes to the incident, independent of the claimed defect.
Time Is of the Essence
The length of time between an incident and notice of a claim or lawsuit can limit the ability of a manufacturer to fully investigate the incident. Evidence, witnesses, the accident scene, and the product itself can be lost during the intervening period.
Additionally, the age of the product can create difficulties, even though alteration of a product is a viable defense. Prompt, extensive efforts must be made to identify manufacturers, components, and retailers so they can be placed on notice. These entities need to be present for product inspections and deconstructive testing.
Maintaining and preserving the product, evidence, and securing the incident/accident scene is critical to forming the best claim outcome or defense. Proactively interviewing witnesses and gathering information prior to a lawsuit or a formal request provides for the opportunity to develop theories and evaluations before an adversary can define the playing field. Regular contact with, and updates to, clients and carriers allows clients to engage in informed and efficient decision making on how to manage the claim or litigation.
If a party can navigate these tasks and challenges in the early life of a claim and achieve resolution quickly, there are several benefits: Attorneys’ fees, court costs, and expert fees will be reduced, which could potentially generate lower settlement amounts.
It is unknown how COVID-19 may shape jury decisions. With that said, consider that, despite the new landscape, difficulties have always been present in early mediations. The claims and defenses of the parties are likely not fully formed, which can lead to unreasonable expectations or unsustainable positions. In personal injury cases, a plaintiff may still be treating. Causation or prognosis evidence can be limited. In more complex claims, expert opinions may be lacking. Accordingly, what may appear to be a reasonable settlement figure could, in reality, be a resolution at a premium for either side.
Successful early mediations are predicated upon a comprehensive investigation and evaluation outside of the normal discovery process. Opposing counsel must be cooperative in sharing information and damages calculations. Flexibility will be critical in dealing with valuation of case unknowns. Parties may also use an early mediation as a tool to obtain the information needed to resolve a claim at a subsequent time. Overall, being nimble and proactive in the early stages of the investigation can enhance the likelihood for early resolution.