Pitfall No. 1: The Case of the Quick-Filed Suit on the Cheap and the Failure to Preserve Evidence

Attorney Jones received a call involving a fatality that reportedly involved a tire failure and resulted in a death. Although Jones did not ordinarily handle many product liability cases, this case excited him and he quickly signed up the client. He had his investigator secure the tire which reportedly caused the accident. Within a few weeks of signing up the client he filed suit. Several more weeks went by while he secured service of process on the tire manufacturer defendant. The defendant then filed an answer and discovery requests. Jones also received a call from the defense attorney asking to inspect the vehicle. “Well, you can look at the tire any time you like, it’s in my office.”

“No,” replied the defense lawyer, “I want to see the entire vehicle. Our initial experts suggest that this case was caused by other mechanical problems, not the tire. Furthermore, we also have reason to suspect that there might have been a seat belt failure in this case, and so we also need to inspect the vehicle for that issue as well.” Jones, who decided not to spend the extra money buying the vehicle and preserving it in a warehouse, was at a loss as to what to tell the defense lawyer after he learned from his client’s property insurer that the vehicle had recently been sold for salvage and crushed.

This hypothetical illustrates one of the biggest pitfalls the unwary can step in when handling product liability cases: failure to preserve the product for evidentiary purposes. Most personal injury firms have well honed case intake procedures. These procedures typically include attorneys and staff members who are well trained in collecting, labeling, logging and storing evidence for use in cases. If the evidence you are dealing with is a document, a toaster or a helmet, it is probably well covered by the systems you have in place. If, however, the evidence you need to preserve is a back hoe, a boat or an SUV, the costs of preservation are greatly increased, along with the risk of costly mistakes.

Jones’ decision not to preserve the vehicle in this hypothetical could mean the difference between winning and losing this case. The defense strategy will be to fully exploit the lack of vehicle evidence, whether it be to claim that defects in the vehicle were the cause of injury, or that the unavailability of the vehicle limits the tire manufacturer’s ability to prepare a defense. There is a significant risk that the manufacturer will convince the jury the real culprit is not the vehicle manufacturer, or even worse, convince the court that the case should be dismissed as a sanction for Plaintiff’s failure to preserve evidence important to the manufacturer’s defense. Courts are becoming more familiar and comfortable with the claim of spoilation of evidence, both as a separate cause of action, or as in this hypothetical, as a sanction against a party.

It may be that cases involving limited damages do not, in fact, justify the expense of preserving large and expensive items of evidence. This information should be factored into the equation when deciding whether to accept or decline the representation. However, once you have taken on the representation, the limited amount of likely damages does not excuse a failure to adequately preserve evidence that may be important to the case. Such a failure may expose you to potential liability and significantly increases the risk that you will not be able to recover the expenses you do incur in preparing the case.

Pitfall No. 2: The Case of the Secret Statute of Limitations (Better Known as the Statute of Repose)

Attorney Smith received a call about a potential rollover accident involving several catastrophic injuries. His radar up, Smith pulls out all the stops and hires the best investigator he can find. He takes months tracking down every witness statement. He hires three experts to go over the scene, the vehicle and the facts. He meets with experts and witnesses and hones his theory. After 6 months he files suit.

Instead of an Answer to the complaint, the Defendant manufacturer files a Motion to Dismiss based on Florida’s Statute of Repose. The defense argued in the Motion that one week prior to Smith having filed the complaint, the statute of repose ran, thereby extinguishing Smith’s clients’ causes of action. But wait, Smith asked himself; isn’t the statute of repose tolled when the accident occurred? And aren’t I O.K. as long as I file death cases within two years of the accident and injury cases within four years?

After some quick research on Westlaw, Smith learned that Florida’s current statute of repose was adopted in 1999 and is codified at Fla. Stat. § 95.031(2). This statute provides, in pertinent part:

Under no circumstances may a claimant commence an action for products liability, including a wrongful death action or any other claim arising from personal injury or property damage caused by a product, to recover for harm allegedly caused by a product with an expected useful life of 10 years or less, if the harm was caused by exposure to or use of the product more than 12 years after delivery of the product to its first purchaser or lessee who was not engaged in the business of selling or leasing the product or of using the product as a component in the manufacture of another product.

Thus, the critical date in terms of the statute of repose is when the product first entered the stream of commerce. As Smith learned with a cold heavy feeling in his gut, choosing the wrong date for purposes of calendaring the statute of repose deadline is a second pitfall for the unwary.

The critical factor in determining the correct deadline for filing a product liability case which might be limited by the Statute of Repose, also known as the “Secret” Statute of Limitations, is the date the product was delivered to its first purchaser or lessee. In vehicle cases, many vehicles are available for purchase during the late summer or fall of the year preceding the stated model year.

In the above hypothetical, Smith may well have missed the statute of repose deadline by waiting six months to file, even though he filed well within the statute of limitations. For personal injury law firms, in terms of incorporating the statute of repose into an internal calendaring system, the only way to be completely safe when you do not know the actual date a vehicle entered commerce is to choose the first day of the calendar year preceding the stated model year of the vehicle as the trigger date for the running of the twelve year statute.

One important caveat regarding the date on which the twelve year period begins to run is that vehicles that are initially leased are not considered to have entered commerce during the time they are owned by an entity in the business of leasing vehicles. Therefore, it is a mistake to automatically assume actions involving a vehicle more than twelve years beyond its stated model year is barred by the statute of repose without first checking to make sure the vehicle was not first owned by a leasing company. As an example, if a vehicle is owned by a rental car company for three years and then sold as a used vehicle, the repose period should, arguably, begin twelve years after “delivery of the product to its first purchaser or lessee who was not engaged in the business of selling or leasing” which would be fifteen years about after the stated model year.

Pitfall No. 3: No Good Deed Goes Unpunished – The Problem of Entering into a Partial Settlement with an In-State Defendant

Attorney Brown signs up a family whose teenage son was riding a motorcycle when a senior citizen pulled out in front of him. Their son struck the car, went over the car, and landed on the road. Although the son hit the car at only 15 miles per hour, when he struck the pavement his helmet shattered rendering him seriously brain injured. Brown recognized this as a potentially defective helmet case and decided to refer the case to another firm. In the meantime however, the senior citizen had a $10,000 B.I. policy and the B.I. carrier was begging to pay the $10,000 and secure a release for their insured senior. The son was in desperate need of the money, so after consulting with the family Brown accepted the $10,000 for their son. As a courtesy to his clients, Brown negotiated the liens, made sure the release didn’t include the potential helmet case, and without taking a penny for a fee, Brown forked over the $10,000 to the family. Nice job. Good gesture. HUGE mistake.

It’s no secret that state courts are generally friendlier environments for plaintiffs. Hearings are more readily available for discovery problems. Schedules are more flexible. And, sometimes of critical importance in a products case, the rules regarding admissibility of expert opinions are dramatically different. In Federal court one must comply with Daubert standards while in Florida, Frye is still the law of the land. To illustrate the point, if a defendant manufacturer ever has the option of being in federal or state court – they will almost always run away from the latter and beg, borrow and steal to claw their way into the former. For many practical reasons (including costs) it generally benefits a plaintiff to stay in state court.

Most product liability cases – such as Brown’s helmet case above – involve two or more potential defendants. In Brown’s case as in most auto cases there are two defendants: the manufacturer and the “active” tortfeasor. Usually the plaintiff and the “active” tortfeasor are both Florida residents. With a Florida plaintiff and at least one Florida defendant, the case must be filed in state court as the federal court has no “diversity” jurisdiction because the plaintiff and the defendant are not “diverse” in terms of their states of residence.

While Brown thought he was acting in the best interests of his client by getting them some quick and much needed financial relief in the short term, he actually hurt his client’s in the long run. By releasing the Florida-resident tortfeasor, assuming the only other defendant was the out of state manufacturer of the broken helmet, Brown’s client’s case is now subject to removal by the defendant as there is now complete diversity of citizenship between the plaintiff and the defendants. Once in federal court the case will now be subject to all of the additional hurdles described above, but there will be no “empty chair.” For many reasons it is often helpful to have the tortfeasor sitting in the courtroom, especially when the plaintiff proves that, but-for the product’s failure, there would have been little or no injury. Jury research has shown that under the right set of facts – such as with Brown’s case above – the senior citizen might be viewed as a second victim of the defective product, who would not have had to experience the guilt and remorse that naturally result from having contributed to a catastrophic injury.

Unfortunately, actions that may benefit your client in the short term, when he is in his time of greatest need, may compromise his interests in the long run. Under these circumstances, it is important to maintain perspective and, if it is in your client’s long term best interests, resist settling with a state court defendant.