N.Z. firms advised on liability law

Press, 13 April 1988, Page 33

N.Z. firms advised on liability law

By

NEVIN TOPP

Il i I : i I The television programme, “L.A. Law,” had given New Zealanders some idea about product liability in the United States, said a former U.S. ( lawyer, Mr Robert Auerbdch, yesterday. I i i I I ': 1 ' ' V ! : •

Mr was in Christchurch yesterday to talk to members of the Export Institute about the product liability crisis in the United States, and what New Zealand companies should be doing about it when exporting to the U.S. Product liability was starving industry in the United States, stifling innovation, and making firms averse to introducing new produce. |U.S. firms were also concerned aboi t modifying Old producs in case there were liability claims by people who wanted to know why sucii changes had not been made before. Mr Auerbach) used the example of Benedictin, a drug made by Merrell Dow in the | U.S., for women who suffered from severe nausea,‘(more than ' just “morning sickness” when pregnant. I : Benedictin was (considered an “orphan” drug, one that was not a profitable "block buster” on the market, but which the company continued to make to alleviate 1 suffering. | j However, the company withdrew the | drug because the claims from product liability suits that Benedictin caiised birth defects exceeded the company’s total revenue. ' The potential of (product liability also added to costs. A case was the DTP vaccine, a “wonder drug” made by Lederle Labs for children. “I took my son to the dbctori for the vaccine, and the total cost of the visit was SUSI2S. (Of that $5O was in consultation and the $75 ;was for administering th i j vaccine. Fifty dollars o' that was to, cover the pdteritial for liability.” I (Although New Zealand firms were thousands ofmiles from the United States markets they should not assume that product liability 'did not involve them, Mr Auerbach said. _! :

i For example, both the > Bank of! New Zealand and » Westpac Banking Corpora- ! tion had offices in the i United I States which 1 meant that product liability claimants could use > these offices (to freeze a > New Zealand! company’s bank assets in New Zea- ; land. : “It means that product liability is not an Ameri- ■ can problem but one that affects any company that sells goods ' within the i United States.” Five product liability i : lawsuits involving three ; New Zealand companies i were already being ; handled by Mr Auerbach in the United States, but 1 he said that potential exi porters should not be put off as long as they carried out a “risk management” programme for their products. I. I The first thing that a New Zealand company should do is prepare a , safety audit of a i product type if it was going to the U.S. This included contacting U.S. Federal ; sources fori standards, | > plus gaining opinion of those making the product and the customers to i whom the | product is 1 being exported. j If a product is edible then it should be tamper evident in its packaging, one area where New Zea-|I land was several years behind the U.S., he said. A safety engineer should be involved in the design, not allowing pack- ■ aging or cost considerations to influence safety decisions. Lawyers should be included; as well to take minutes!on meetings about the product arid ensure documents and instructions meet consumer requirements.! II I New! Zealand ((companies should consider transferring product liability to their customers. If they are dealing! with only two or; three,; then they can offer concessions such (as exclusive selling or extended payment times, in return for the customer taking such lia-

bility. Il' ■ I j Some (companies I offer; limited liability warrant ties to limit potential suits! Film (companies, offer free film if! a buyer finds that the! original film is j defective. However, this | does not always ■ work] particularly if a famous photographer was (photo! graphing a famous sub; : ject, but found the film defective. The j photo] ! grapher, would want more than free film. I , ( “Obviously, if an air-; I craft crashes into the side I of a mountain because of ! a defective altimeter, the I firm making the altimeter ! cannot (offer the aircraft company another gauge." j Product i liability was not completely injescapa--ble, arid if it occurred then crisis management was needed. | > Johnson ’ and Johnson 1 , i lithe American health care( firm, bounced back from | the crisis over the! tylenol; j tampering problem by; ( going out of its (way to! placate a fearful corrimunity. Although costly, it , proved worthwhile because the public gave the firm top marks i for its j efforts,! Mr Auerbach said. 1 “Community loyalty is hard to keep and, easy to lose.” I - Mr (Auerbach Iran his own law firm in (Manhaj-I tan, New York, specialis-j ing in, trade association law, iricluding acting for 14 trade organisations such as the Bicycle Inst’i] ; tute of America. (.- , | Married to (a New Zealander, he decided to emigrate to New: Zealand in 1986 in spite" of a successful law (practice; seeking a quality of life that New York could not give him and his family;!j Mr Auerbach has set up his own firm, Robert Auf, erbacli, in Auckland, providing! legal assistance for companies wanting to ex] | port to the U.S, He also . advised on joint, ventures | with U.S. partners, tech- ( nology sharing agree-! ments], manufacturing! licences, and distribution ( and agency relationships, j