DENVER -- Vases made so thin they break when picked up, recliners that flip over backwards or even baby cribs painted in lead have all been part of recent liability actions taken against retailers caught selling those products, according to speakers at a recent CSP forum on reducing risk.
Many of today’s headlines involve recalls, litigation and data breaches and inevitably become of great concern to retailers, as both consumers and government officials seek to identify parties responsible for defective or harmful products brought to market, according to Steve Burkhart, vice president and general counsel, BIC Corp., Shelton, Conn.
Speaking before about 50 convenience-store retailers and suppliers at CSP’s Leadership and Crisis Prevention Forum, Burkhart said that as commerce becomes global, “more and more, people are looking to the retailer as the domestic entity.”
For c-stores, he said, product-liability issues often arise with no-name, private-label products; newly emerging products like e-cigarettes; and any item manufactured overseas. If an issue arises with a foreign-manufactured product, “you’ll have to pay,” Burkhart said. “The court is not going to wait for your [foreign] manufacturer to show up.”
Forty-two percent of recently recalled products have come from China, he said. This may involve cultural challenges that encourage manufacturers to circumvent U.S. standards by manufacturing overseas.
To guard against potential lawsuits and damage to a company’s reputation, Burkhart suggested several steps:
- Develop a recall strategy.
- Investigate any claims.
- Contact the manufacturer.
- Let federal commissioners know about the concern, especially if the manufacturer fails to do so. (But also verify the product is faulty so as not to sour the relationship with that provider.)
- Control purchasing.
- Obtain indemnification status within contracts and sufficient insurance coverage.
- Require foreign companies to have domestic insurance.
- Request necessary certificates and proof of compliance to accepted standards.
- Work with reputable manufacturers.
Doing such due diligence may not absolve a company but could limit the cost to the realm of general damages vs. punitive. More and more cases are arising where lawsuits from both the general public and government agencies are seeking to imprison or fine a corporation’s individual officers, he said.
Giving an example of an entrepreneur who sold stress-relieving magnet balls (which a federal agency found to be a hazard if small children swallowed them), Burkhart said government officials were “potentially overzealous” and, with limited resources, were questionable in their choice to go after that entrepreneur.
“Yes this product may be a hazard to small children, but so are dimes and pennies.”
Other topics discussed during the three-day forum included cyber security, the state of insurance rates and foodservice liability issues. Read more from the forum in the July issue of CSP magazine.
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