(Illustration by Greg Mably)
Most of us who have boarded a plane in the last few months have heard the announcement: “Anyone with a Samsung Galaxy Note 7 smartphone, please power down your phone and see the flight attendant immediately.” In September 2016, Samsung Electronics announced a recall of its popular Note 7 amid reports of lithium ion batteries in the devices catching on fire and, in some cases, exploding. Replacement smartphones were issued, but stories of similar problems continued to roll in. An expanded recall soon followed, and Samsung announced in October 2016 that it was discontinuing production and sales of the troubled Note 7.
In mid-October, consumers initiated Waudby v. Samsung, the first class action suit concerning the Note 7 in New Jersey federal court. The complaint alleges, among other issues, that the company’s recall and delay in replacing its flagship smartphone with a comparable device unfairly caused consumers to pay monthly carrier fees for inoperable phones. The lawsuit also includes counts arising out of breach of express warranty, common law fraud, and breach of the duty of good faith and fair dealing. In addition to unspecified monetary damages, plaintiffs seek a court order requiring Samsung to repair, recall and/or replace the phones, and to extend applicable warranties for a reasonable period of time or provide plaintiffs with curative notice of the existence and cause of Note 7′s design defect. Although Samsung offered discounts to Note 7 owners on the purchase of their next smartphone, plaintiffs’ counsel argues that the credit is not sufficient to make consumers whole. Plaintiffs’ counsel chose New Jersey as the venue because the electronic maker’s U.S. unit—Samsung Electronics America Inc.—is based in Ridgefield Park, though counsel seeks to represent a nationwide class of Note 7 buyers.
Within a month, a similar class action relating to Note 7 was filed against the tech giant in Canada. The Canadian suit generally alleges that Samsung was negligent because the company either knew or should have known that the troubled device could harm consumers. The Canadian plaintiffs complain that they had to destroy their smartphones because Note 7s were banned from airline flights, that during the destruction the devices sparked and caught fire, and that plaintiffs were not compensated for their loss. The Canadian plaintiffs therefore seek monetary damages and a declaration that Samsung’s actions were wrong and misleading.
These types of cases, as well as the litigation that is sure to follow, will likely prompt a deeper analysis of a manufacturer’s post-sale duty to warn. As noted above, the tech company’s U.S. headquarters is located in New Jersey; therefore, it is likely that many impending lawsuits will implicate New Jersey product liability law, and involve an area of such law that is ripe for clarification—the post-sale duty to warn.
It is well settled in strict product liability law that a manufacturer has a duty to take reasonable steps to warn consumers about product defects at point-of-sale if the company knew or reasonably should have known about the problem. However, the responsibilities of a manufacturer or seller are not as clear cut when a latent defect comes to light as consumers put the product to use. A post-sale duty to warn takes into account what steps a reasonable manufacturer or seller should take to notify consumers about a latent defect and therefore is a negligence-based standard.
In response to state court trends, in 1998, the American Law Institute included in the Restatement (Third) of Torts a section entitled “Liability of Commercial Product Seller or Distributor for Harm Caused by Post-Sale Failure to Warn.” This Section 10 requires that those who engage in selling and distributing products “provide a warning after the time of sale or distribution of a product if a reasonable person in the seller’s position would provide such a warning.” The comments to Section 10 indicate that courts should carefully consider the circumstances in which a post-sale duty to warn is imposed so as not to create an unacceptable burden for product sellers. Plaintiffs may seek recovery from manufacturers and sellers based on a time-of-sale defect and a post-sale failure to warn because “even when a product is defective at the time of sale, a seller may have an independent obligation to issue a post-sale warning based on the rule stated in this Section.” See Comment (j) to Section 10 of Restatement (Third) of Torts. Only a handful of states have adopted Section 10, and practices relating to post-sale duty to warn vary greatly from state to state.
Although New Jersey has not adopted Section 10 of the Restatement (Third) of Torts, it is one of the few states to have codified by statute a post-sale duty to warn. Pursuant to the New Jersey Products Liability Act (PLA), “in the case of dangers a manufacturer or seller discovers or reasonably should discover after the product leaves its control, if the manufacturer or seller provides an adequate warning or instruction” concerning such dangers, the companies will not be liable for harm caused by the product to a consumer. N.J. Stat. Ann. §2A:58C-4.
The PLA also provides that “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 ….” Court interpretations of this statute have not been plentiful to date, but those that address the issue indicate that manufacturers and sellers have a continuing duty to warn that applies even after point-of-sale. See Lewis v. American Cyanamic Co., 155 N.J. 544, 564 (1998); see alsoLally v. Printing Mach. Sales & Serv. Co., 240 N.J. Super. 181, 184-185 (App. Div. 1990).
New Jersey jurisprudence indicates that courts will liberally impose a post-sale duty to warn on manufacturers and sellers, even for second-hand consumers. For instance, in Dixon v. Jacobsen Mfg. Co., an injured plaintiff sought recovery from the manufacturer of a snowthrower because the manufacturer failed to warn plaintiff about risks associated with clearing snow from the snowthrower’s clogged discharge chute. 270 N.J. Super 569, 583 (App. Div.), cert. denied, 136 N.J. 295 (1994). The Dixon court indicated the manufacturer may have had a responsibility to issue such a warning even though plaintiff’s father had purchased the snowthrower at a garage sale and the manufacturer arguably lacked knowledge of the new owner. Reasoning that the plaintiff’s father had requested an owner’s and parts manual from the manufacturer after he acquired the used snowthrower, the Dixon court stated that the manufacturer was on notice of the new owner and held that a jury should determine whether the manufacturer provided appropriate post-sale warnings under those circumstances.
Manufacturers should be aware of this developing area of law, as practices concerning post-sale duty to warn vary from state to state, and litigation in this area is on the rise. Certainly the options available to manufacturers in their efforts to notify consumers of a safety recall are expanding as technology increases. Samsung, for example, is using the Note 7 itself to provide warnings and to urge consumers to turn in the recalled smartphones, via pop-up alerts and other reminders that appear whenever the smartphone is charged or rebooted. Manufacturers can also avail themselves of a wide variety of social media platforms to get the message out to the masses by announcing the recall on the company’s Facebook, Twitter, Instagram and the like. Other methods, such as news releases and mailed recall notices, are more traditional, but still effective. Manufacturers should be wary of reliance on widespread media coverage to get the word out about a product warning, as third-party reporting does not insulate the company from its duty to warn.
We recommend the following additional best practices for consideration in determining how to warn consumers about a defective product:
Maintain searchable recall information on company website(s);
Publish television, radio and Internet-based announcements;
Direct notice to all consumers who request replacement parts and/or product information, such as an owner’s manual, as such consumers may differ from initial product purchasers;
Provide updated as well as original product information upon consumer request;
Place notifications in trade publications and other written sources that might be reviewed by consumers; and
Work in conjunction with safety organizations such as the Consumer Product Safety Commission or the National Highway Traffic Safety Administration to determine appropriate actions in severe cases.
It remains to be seen whether the high profile media attention given to the Note 7 product recall will prompt any changes or enhancements to a manufacturer’s duty to provide post-sale warnings to its consumers in New Jersey and across the country. Regardless of the method a manufacturer uses to advise its consumers of potentially serious safety defects, companies are well advised to have a plan of action in place well before it is actually needed.•