In the last five years, at least 8,000 defective nail guns have been pulled from the shelves of retailers like Home Depot and Lowe’s. Consumers have been instructed to return the faulty products to their manufacturers, and promised full repair or replacement.

The power tool industry closely guards any information that would suggest the damage caused by its mistakes. How many have been injured at the hands of improperly designed, or inappropriately manufactured, nailers? We just don’t know. After recalling its popular NV83A2 coil nailer, Hitachi reported at least 15 serious injuries. But most of the harm is hidden behind the screen of “confidential settlements.” Victims agree to settle for a quick cash payout, in exchange for their silence. It’s perfectly legal and standard protocol in most large industries.

No matter how many have been hurt, some of these nail gun injuries will inevitably lead to lawsuit. But cases involving defective products are very different from other personal injury claims. In fact, they involve a separate set of “product liability” laws and legal theories.

How Does Product Liability Work?hands injured and wounded

Simply put, the producers of consumer and industrial goods have certain duties. In order to do business in the market, they implicitly agree to protect consumers from undue harm. To design, manufacture and market their products in a responsible way. If they fail, and place purchasers in danger, they can be held accountable in a lawsuit.

Defining Defects

To win a product liability lawsuit, you’ll have to prove that the particular product you bought was defective in some way. Further, you’ll have to demonstrate that the fault made your product unreasonably dangerous. In the case of nail guns, this may be more difficult, because people agree that nailers imply a certain amount of risk, even if they are manufactured and used perfectly.

Design defects involve faults that were present from the start. Something about the way the product was designed made it unsafe.

Defects in manufacturing involve products that may have been designed appropriately, but something went wrong at the factory. Because most consumer goods are assembled from parts that come from numerous production plants, and this supply chain may span the globe, liability is often difficult to nail down.

Marketing defects involve problems in the way a product was advertised. Safety warnings that fail to mention common risks are a good example.

Legal Theories

Product liability cases can be effectively argued by using a number of accepted legal theories.

Strict liability

Most personal injury claims are argued on the basis of a legal theory called “negligence.” In order to prove that a defendant acted negligently, a plaintiff’s attorney has to demonstrate that their actions fell below a reasonable standard of care. In part, they’ll have to define this “reasonable standard,” usually in reference to what others expect of us.

For example, we should be able to expect other drivers to follow driving laws. Accordance with the law is one of the main ways in which drivers reduce the risk of accidents. It’s a “standard of care,” following the law. If a driver violated a law, and crashed into you, they fell below that standard, and may have acted negligently.

But defining a reasonable standard of care within industries can be difficult. If every company within an industry adopts a relatively “low” standard, a defendant could argue that while their actions seemed negligent to the average consumer, they were actually reasonable by the industry’s standards.

Strict liability gets around this problem. Instead of focusing on a company’s actions, it simply looks at the defective product. Under this theory, manufacturers are liable for the faults in their products, whether or not those faults were the result of negligence.

Negligence

Negligence looks at the behavior of defendants, and asks whether or not that behavior fell below a reasonable standard of care.

Breach of warranty

There are two kinds of warranties: implied and express.

Express warranties, like those you buy in addition to a product, make certain legal claims about a product. These claims can be stated in writing or speech, and generally express the fact that a product will meet a certain standard of quality. If the product does not meet that standard, and you get hurt, you may be able to argue that the defendant should be liable for your injuries due to a breach of warranty.

Implied warranties are never directly stated by a manufacturer or salesperson, but are protected by law in most states.

An implied warranty of merchantibility says that goods must be reasonably suitable to the use for which they are sold. A blender that won’t blend doesn’t make the cut. Merchantibility only applies to sellers who usually deal in a certain type of merchandise. If you purchased that ineffective blender from a shoe salesman, it’s probably not covered by the warranty of merchantibility.

A warranty of fitness applies to all sellers, regardless of whether or not they generally deal in a certain type of product. If the shoe salesman knew that you were purchasing a blender to blend, they must implicitly guarantee that the blender is fit for that particular use.

Some implied warranties can be circumvented by acknowledging potential faults before purchase. Sellers commonly use phrases like “sold as is” to limit their exposure to liability.

Consumer protection

All the theories we’ve discussed so far are considered “common law,” because they’re supported by common sense and legal precedent. But they’re not laws; they’ve never been written into statute. Many states have passed consumer protection statutes, which attempt to regulate industries and protect the public from undue harm.

These laws generally cover situations in which defendants “willfully engaged in

[fraudulent] trade practice[s] knowing [them] to be deceptive.” Inaccurate marketing, which leads consumers to believe that a product is fit for a use that it is not, would fit the bill. In many cases, this law only covers “economic losses” – when a product is made useless by a defect, rather than personal injury. “Lemon laws,” which allow consumers compensation for cars that fail to meet quality standards, are a common example.

Links In The Chain: Spreading Liability

Exposure” is a legal and financial term used to describe the assumption of risk. If you can be held liable for a consumer’s damages, and are at risk of facing a lawsuit, you are “exposed” to that risk. In normal personal injury cases, exposure is fairly straightforward. There’s usually one plaintiff and one defendant, and only that defendant is exposed to liability. You sue them, and no one else.

Product liability is trickier. Anyone in a product’s “distribution chain,” including designers, manufacturers, distributors and retailers may be held liable for the damages caused by a defective product. In many cases, exposure is spread around among these parties, rather than remaining the sole responsibility of a single individual.

Can Companies Buy Product Liability Insurance?

Sure they can.

In the world of business, this form of coverage is usually referred to as “Products-Completed Operations Insurance,” and it generally covers medical expenses, legal costs and any damages that are awarded to injured plaintiffs in court.

Some policies will even cover the expenses incurred during a recall, which can include the cost of repairing defective products, replacing ones that can’t be repaired and destroying those that have been deemed unsafe.