In 2009, there was concern over what happened to personal injury victims, who filed auto products liability lawsuits against General Motors and Chrysler pending the auto makers' bankruptcies.
According to the U.S. Consumer Product Safety Commission, defective products cost lives, contribute to serious injuries, and require consumers to incur monetary losses to replace or repair products. Examples of product liability cases:
• Medical devices
• Hazardous toys
• Dangerous household appliances
• Makeup and lotion that cause dangerous side effects
• Poorly designed vehicles
• Unsafe power tools
In bankruptcy, a lawsuit against the debtor freezes, but the debtor may have counterclaims against the plaintiff. These claims are considered assets in the debtor's estate. Someone considering a products liability lawsuit should consider having to pay a judgment on a counterclaim and not being able to recover on the original claim.
Product liability claims are based on three (3) theories of law: negligence, strict liability, breach of warranty.
In negligence, the plaintiff proves four elements:
• the defendant such as a manufacturer owed a duty to the consumer
• the manufacturer breached its duty
• the plaintiff was injured
• the manufacturer's breach caused the plaintiff's injury
Manufacturers owe a duty to product users and bystanders, and must guard against injuries that are likely to result from reasonable, foreseeable misuse of a product. In some cases, the merchant or distributor who sold the defective product may also be liable.
Strict liability holds the manufacturer of a product responsible to anyone injured by the use of an unreasonable and dangerous product. A plaintiff must show that the product was defective and unreasonably dangerous, and was defective when it left the manufacturer. The defect must have caused the injury to the plaintiff.
Every product comes with an implied warranty that the product is safe for its intended user. Under breach of warranty, a defective product that causes injury is not safe for its intended user and constitutes a breach of warranty.
When a bankruptcy acts as an automatic stay of all civil proceedings in every court or administrative agency, the plaintiff may (a) file a motion in the bankruptcy court requesting relief from the automatic stay in order to continue prosecuting a lawsuit, (b) file a notice of removal in the bankruptcy court to transfer the case there, or (c) wait for the bankruptcy case to terminate and, if a claim hasn't been discharged, continue the case in the original court.
Engage an experienced bankruptcy attorney for advice on options to take when dealing with lawsuits against a defendant that files bankruptcy.
