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Due Diligence: A Legal Perspective
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  1. Due Diligence: A Legal Perspective Roy F. Viola, Jr., Esq. McGivney & Kluger, P.C.

  2. Rules of Effective Presentations • 1. Start with humor and stay current • 2. Never alienate your audience

  3. Staying current

  4. What is Product Liability • 1. Design Defect cases • 2. Manufacturing Defect cases • 3. Failure to Warn cases

  5. Why study New Jersey Law? • Henningsen v. Bloomfield Motors (1960) • Under modern marketing conditions, when a manufacturer puts a new automobile in the stream of trade and promotes its purchase by the public, an implied warranty that it is reasonably suitable for use as such accompanies it into the hands of the ultimate purchaser."

  6. Defective Product: N.J. Test • TWO PART TEST: • A. DID CONSUMER HAVE REASONABLE EXPECTATIONS CONCERNING A PRODUCTS DESIGN? • B. IF NOT, USE RISK-UTILITY FORMULA

  7. Whitehead v. St. Joe Lead Co. • Wade-Keeton Prudent-Manufacturer Test • “A product is not reasonably safe/duly safe if a defendant with constructive knowledge of its dangerous condition would be negligent in putting it on the market”

  8. Risk-Benefit Analysis • 1. Product’s usefulness; • 2. Safety aspects (likelihood it will cause injury and seriousness of injury); • 3. Availability of substitute product; • 4. Manufacturer’s ability to eliminate unsafe character without impairing its use or making it too expensive;

  9. Risk-Benefit (cont.) • 5. User’s ability to avoid danger by exercise of care in product use; • 6. User’s anticipated awareness of dangers in product and avoidability based upon: • a. General Public Knowledge, or • b. Warnings or Instructions;

  10. Risk-Benefit (cont.) • 7. Feasibility, on the part of the manufacturer, of spreading the loss by setting the price of the product or carrying liability insurance.

  11. EASY TO UNDERSTAND?

  12. Other Jurisdictions • PA - Riley v Warren Mfg., whether a product is unreasonably dangerous is a question of law. Therefore, in answering this question the court is making a “social policy” decision. In Buongiovanni v. GMC the court discusses the risk-utility analysis used in Pennsylvania. In determining whether a plaintiff has shown a product to be unreasonably dangerous, the court employs a risk-utility economic analysis in accordance with social policy. This risk-utility analysis involves weighing the utility of the product against the seriousness and likelihood of the injury and the availability of precautions that, though not foolproof, might prevent the injury.

  13. Other Jurisdictions • NY - Rainbow v Albert Elia Building Co. there is a 7 part analysis used to determine if the product in question is unreasonably dangerous.

  14. Other Jurisdictions • Woods v. General Motors Corp.  Under Connecticut law to be considered unreasonably dangerous the product must be dangerous to an extent beyond that which would be contemplated by the ordinary consumer who purchases it, with the ordinary knowledge common to the community as to its characteristics.  

  15. Other Jurisdictions • Haas v. United Technologies Corp. Delaware uses a 7 factor test to determine whether a product is unreasonably dangerous as well. The factors considered are similar to hose considered pursuant to NJ and NY case law.

  16. Conclusion • Thank You • Roy F. Viola, Jr. • McGivney & Kluger, P.C. • 23 Vreeland Road • Florham Park, NJ 07932 • (973) 805-6670 • rviola@mcgivneyandkluger.com

  17. Rules of Effective Presentations • 1. Start with humor and stay current • 2. Never alienate your audience

  18. Staying current

  19. What is Product Liability • 1. Design Defect cases • 2. Manufacturing Defect cases • 3. Failure to Warn cases

  20. Why study New Jersey Law? • Henningsen v. Bloomfield Motors (1960) • Under modern marketing conditions, when a manufacturer puts a new automobile in the stream of trade and promotes its purchase by the public, an implied warranty that it is reasonably suitable for use as such accompanies it into the hands of the ultimate purchaser."

  21. Defective Product: N.J. Test • TWO PART TEST: • A. DID CONSUMER HAVE REASONABLE EXPECTATIONS CONCERNING A PRODUCTS DESIGN? • B. IF NOT, USE RISK-UTILITY FORMULA

  22. Whitehead v. St. Joe Lead Co. • Wade-Keeton Prudent-Manufacturer Test • “A product is not reasonably safe/duly safe if a defendant with constructive knowledge of its dangerous condition would be negligent in putting it on the market”

  23. Risk-Benefit Analysis • 1. Product’s usefulness; • 2. Safety aspects (likelihood it will cause injury and seriousness of injury); • 3. Availability of substitute product; • 4. Manufacturer’s ability to eliminate unsafe character without impairing its use or making it too expensive;

  24. Risk-Benefit (cont.) • 5. User’s ability to avoid danger by exercise of care in product use; • 6. User’s anticipated awareness of dangers in product and avoidability based upon: • a. General Public Knowledge, or • b. Warnings or Instructions;

  25. Risk-Benefit (cont.) • 7. Feasibility, on the part of the manufacturer, of spreading the loss by setting the price of the product or carrying liability insurance.

  26. EASY TO UNDERSTAND?

  27. Other Jurisdictions • PA - Riley v Warren Mfg., whether a product is unreasonably dangerous is a question of law. Therefore, in answering this question the court is making a “social policy” decision. In Buongiovanni v. GMC the court discusses the risk-utility analysis used in Pennsylvania. In determining whether a plaintiff has shown a product to be unreasonably dangerous, the court employs a risk-utility economic analysis in accordance with social policy. This risk-utility analysis involves weighing the utility of the product against the seriousness and likelihood of the injury and the availability of precautions that, though not foolproof, might prevent the injury.

  28. Other Jurisdictions • NY - Rainbow v Albert Elia Building Co. there is a 7 part analysis used to determine if the product in question is unreasonably dangerous.

  29. Other Jurisdictions • Woods v. General Motors Corp.  Under Connecticut law to be considered unreasonably dangerous the product must be dangerous to an extent beyond that which would be contemplated by the ordinary consumer who purchases it, with the ordinary knowledge common to the community as to its characteristics.  

  30. Other Jurisdictions • Haas v. United Technologies Corp. Delaware uses a 7 factor test to determine whether a product is unreasonably dangerous as well. The factors considered are similar to hose considered pursuant to NJ and NY case law.

  31. Conclusion • Thank You • Roy F. Viola, Jr. • McGivney & Kluger, P.C. • 23 Vreeland Road • Florham Park, NJ 07932 • (973) 805-6670 • rviola@mcgivneyandkluger.com

  32. Due Diligence Defined And by whom?

  33. A Random Engineering Website definition An OSHA definition General Definition New Jersey’s Model Jury Charge Due Diligence Defined

  34. Model Jury Charge • Negligence may be defined as a failure to exercise in the given circumstances, that degree of care for the safety of others, which a person of ordinary prudence would exercise under similar circumstances.

  35. Model Jury Charge • A reasonably prudent person is not meant the most cautious person or one who was unusually bold but rather one of reasonable vigilance, caution and prudence.

  36. 2A:58C-4 .    No liability if warning provided • An adequate product warning or instruction is one that a reasonably prudent person in the same or similar circumstances would have provided with respect to the danger and that communicates adequate information on the dangers and safe use of the product, taking into account the characteristics of, and the ordinary knowledge common to, the persons by whom the product is intended to be used.

  37. How to address standards issue • Include every possible warning in the world • Recommend to the client that safety studies be performed well beyond the expected norm* • * start looking for new client when he gets the bill for the study • Set standards well above the industry norm to CYOA

  38. But I complied with OSHA and ANSI standards, why am I being sued?

  39. Standard in the Industry • The general custom of the industry, although evidential as to what is the reasonable standard in such industry, does not conclusively establish the care the defendant was required to exercise in the performance of its operations.

  40. Compliance with an industry standard is not necessarily conclusive as to the issue of negligence, and does not, of itself, absolve the defendant from liability. The defendant must still exercise reasonable care under all the circumstances.

  41. Unfortunately, the converse is not true. A jury may consider, as evidence of negligence, violation of any federal state or local regulation although it would not constitute negligence per se.

  42. My Lawnmower • Stop Mower • Disconnect sparkplug • Drain gasoline • Remove bag • Move 500 yards from mower and empty grass • Reinstall plug • Add gasoline • Mow lawn

  43. 2A:58C-4 .    No liability if warning provided • An adequate product warning or instruction is one that a reasonably prudent person in the same or similar circumstances would have provided with respect to the danger and that communicates adequate information on the dangers and safe use of the product, taking into account the characteristics of, and the ordinary knowledge common to, the persons by whom the product is intended to be used.