MANAGING PRODUCT LIABILITY IN THE AUTOMOTIVE AND MANUFACTURING SECTORS
CD: What are some of the key trends in product liability that have affected the automotive and manufacturing sectors over the last 12-18 months?
Dickerson: In 2014, there were a record number of automotive recalls – 64 million, more than double the previous record. Most of the recalls were initiated by the manufacturers. One reason for the record number of recalls is likely the potential for hefty fines, as last year both the NHTSA and the Justice Department were aggressive in levying fines on auto manufacturers for issues related to recalls. In 2014, the NHTSA issued over $126m in civil penalties, setting a record high. The Department of Justice also stepped into the fray, imposing the largest penalty ever imposed on an automotive company. The threat of fines, coupled with the multitude of class-action lawsuits against manufacturers, has created an environment marked by heightened litigation exposure and regulatory concerns. Understandably, manufacturers are taking the initiative to remediate issues seriously.
Kessel: Certainly in the automotive industry, the numbers of recalls are increasing all the time. In addition, there are a number of silent recalls or field actions that take place but which the consumer and mostly the press do not become aware of. This development is due to the pressure of the market, but is ultimately, therefore, self-inflicted, to develop and sell ever more new or different vehicle models and model permutations at even shorter time intervals. This results simultaneously in continuously less time available for the development and testing of both such vehicle models and their relevant serial production parts. Notably, even test programs agreed with car manufacturers are shortened or skipped entirely from time to time. In addition, the more electronics and software based parts are in the car, the greater the danger of faults.
Apr-Jun 2015 issue
Alston & Bird LLP
Bird & Bird LLP
Harley-Davidson Motor Company