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New product warning standards.

A LTHOUGH THE HEADLINES OF BOTH the national and industry press point out the alarming increase in "failure to warn" cases, this increase should come as no surprise. At a trial lawyers' convention in 1983, well-known plaintiff's lawyer Harry M. Philo told the audience that in the near future 80 percent of plaintiff's recoveries would hinge on the adequacy of the manufacturers' warnings. True to that prediction, today's courts are seeing failure to warn claims in an increasing number of products liability suits, and this trend is likely to continue. At present, failure to warn determinations are involved in at least 70 percent of all products liability claims. And manufacturers that do not label their products or do so incorrectly - may find that the courts regard inadequate labeling as the product "defect" that gives rise to liability.

Products liability lawsuits have always plagued U.S. manufacturers, especially since the landmark Greenman vs. Yuba Power Products case in 1963. This California Supreme Court case, concerning a person who was injured by a power tool, introduced the concept of "strict liability," which holds a manufacturer responsible for injuries arising out of a defective product - even if the manufacturer was not guilty of negligence. As a result of Greenman, both the number of products liability lawsuits and the size of their awards have skyrocketed, even though experts believed that strict liability would serve as an impetus for businesses to produce safer products.

Obviously, manufacturers are expected to produce products that are free from defects. However, consider a scenario where a manufacturer creates a product that, although without defects, is deemed "unreasonably dangerous" by the courts. If the manufacturer fails to warn consumers of the product's dangers, or does not provide proper restructions as to its use, strict liability may be applied in any resultant lawsuits. This concept of failure to warn has left many companies vulnerable to costly litigation.

In response to these exposures, many corporations developed and implemented formal safety programs for their products. Although the precise elements of a product safety program vary depending on the nature of the product, the typical safety program is designed to pinpoint a product's hazards and eliminate them or warn consumers of their dangers. A good program will also identify and eliminate sources of preventable claims before, during and after a product's production. History has shown that broad, comprehensive product safety programs do in fact reduce liability claims - first because they actually decrease the number of accidents, and second because courts will regard their implementation as a "good faith" measure in any cases that do arise. As a result, corporate risk managers have found that the preventive element of a good product safety program is an excellent way to reduce products liability claims.

For the most part, the components used in product safety programs have not changed over the years. However, there has been a significant change in the area of product safety warnings; because of these changes, risk managers need to become aware of this new warning system and encourage their companies to implement it by including it in their product safety programs.

Communicating Warnings

RECENT STUDIES INDICATE that properly labeling a product is the most important step a manufacturer can take to mitigate liability claims. Labeling must also comply with relevant government and private regulations, standards and codes. The original standards for labeling a product were developed by the American National Standards Institute (ANSI) in 1972.

In the past, the primary method of communicating warnings was through written words (see Figure 1). Research determined, however, that written communications had serious limitations. Chief among these shortcomings is the fact that words can have different meanings to different people. AdditiOnally, the high U.S. illiteracy rate, coupled with a work force comprising many persons whose native tongue is not English, can lead to misunderstandings of written warnings.

Because of these problems with written communications, ANSI, through its Accredited Standards Committee Z535 on Safety Signs and Colors, spent the last 12 years developing a new labeling system. Although not required by federal legislation, the new standards, which were approved by ANSI's Board of Standards in June 1991, will radically change how manufacturers design their warning labels. The committee found that pictorial or symbolic language, combined with written words, resulted in the clearest communication of product warnings. The new standards contain a graphic design system that uses pictorials as the primary means of communication (see Figure 2).

The standards, which are now considered by experts to be state-of-the-art, are contained in various ANSI codes such as the American National Standard Safety Color Code, which designates the colors used for messages (i.e., red for danger and yellow for caution); the American National Standard for Environmental & Facility Safety Signs, which standardizes sign symbols for particular uses (i.e., the universal no smoking and handicapped signs); the Criteria for Safety Symbols; and the American National Standard for Product Safety Signs and Labels.

Implementing Changes

SINCE THE NEW STANDARDS require warning labels that are significantly different from past requirements, risk managers will need to develop programs that fully comply with all aspects of the Z535 standards. Before doing so, however, the risk manager should conduct a thorough analysis of the company's products to determine if they in fact represent a hazard to users; this analysis should consider the nature of any existing hazard, its level of seriousness, the injuries it could cause to users and the information needed to prevent the hazard from occurring.

Next, the risk manager can work with the engineering department to determine what information needs to be communicated to users. This message can then be translated into design elements, such as signal words, color codes, hazard pictorials and instruction messages, that make up a safety or warning label.

Products liability claims involving goods manufactured after June 1991 state whether or not the defendant manufacturer complied with the new standards. Accordingly, manufacturers who have not yet done so must immediately work to create warning designs for use on their products.

Standards for the Future IN THE PAST, companies strove to create and implement warning labels that protected their products' users from injury. However, the new ANSI standards have completely transformed product labeling procedures. Consequently, it is extremely important that risk managers incorporate the ANSI standards into their safety programs. Besides the compliance issue, the new standards can have the added benefit of actually reducing accidents since safety warnings will now be much easier to understand.

If properly handled, the new standards can provide manufacturers and their risk managers with an effective risk control mechanism. However, if the standards are ignored - or if they are implemented improperly - they then represent another area that plaintiffs' counsel can exploit. Manufacturers that fail to comply with these standards not only leave themselves vulnerable to litigation, but they also weaken the credibility of any other safety efforts they may have undertaken.

Michael J. Moody is president of Moody Business Associates in Naperville, IL, and J. Terrence Grisim is president of Safety Management Consultants in Elmhurst, IL.
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Title Annotation:Limelight on Labels
Author:Moody, Michael J.; Grisim, J. Terrence
Publication:Risk Management
Date:Jul 1, 1992
Previous Article:The case for products liability reform.
Next Article:Tort reform takes a turn.

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