Risk management: Product risks and recall - steps that should be taken when considering a recall

United Kingdom
Risk management - Product risks and recall

Mark Tyler considers the steps that should be taken when considering a recall

Crisis management focusing on the recall issue has tended to be seen as a discrete topic. However, deciding on recalls often requires an extensive knowledge of design and manufacturing criteria and risks normally associated with the products in question; it always requires a full appreciation of all the regulatory, contractual and liability issues.

The legal framework

This inevitably varies between organisations. In highly regulated industries the expectations and powers of the regulators will be well understood. For less regulated products the requirements for dealing with risks identified in products are more opaque, with the substantive safety requirements written in only very general terms - little more than 'goal-setting'.

Identify regulatory codes

Key issues to be addressed at the outset:


  • is one dealing with a consumer product, a product for use at work, or both? The relevant inspectors and their enforcement powers will vary. A product subject to consumer protection legislation (particularly the General Product Safety Regulations 1994) will be enforced by local authority trading standards officers whilst the product safety provisions of the Health and Safety at Work Act 1974 are the jurisdiction of the Health and Safety Executive;

  • what product specific statutes and regulations (eg for testing, labelling and any 'bespoke' substantive safety requirements) apply? Increasingly important are the New Approach Directives, requiring conformity assessment procedures, technical files, third party certification (in some cases) and the application of CE marks - all the documentation will require review.

Identify the product liability risks

Most important is strict liability for defective products under the Consumer Protection Act 1987. Common law negligence principles - and most significantly the somewhat ill-defined duty to warn customers to whom products have been supplied - will also require consideration. Finally, the express and implied terms of the contracts with suppliers and customers will need to be examined.

Assessing the options

In any product crisis there is likely to be a range of decisions available. The main options can be summed up as:


  • do nothing
  • tell distributors
  • tell regulators
  • tell future users: amend product information
  • tell current users: issue or revise warnings
  • tell media
  • restrict product availability
  • discontinue sales
  • provide retrofit or rectification in the field
  • recall

At an early stage, before assessing risks, it is helpful to elaborate on these options and eliminate those which are irrelevant, not feasible or unacceptable.

In the UK there is no explicit legal recall power available to the authorities. However, the threat of compulsory publication of warnings to customers, either through an HSE Improvement Notice or the Secretary of State's power to issue a Notice to Warn may effectively mean that a recall is unavoidable.

Certification bodies, especially Notified Bodies under New Approach Directives may need to be viewed as quasi-regulators for these purposes. It can be necessary to examine all the documentation associated with such certifications, including the terms and conditions of the supply of services and any protocols which are made a condition of certification. Certification bodies - as well as having their own reputations to preserve - are subject to their own quality systems and approvals and may insist on being informed and consulted about potential recall or other action.

Risk assessments

Attempts to simplify product crises by assessing simply the proportion of defects and estimating whether this might be acceptable will rarely, if ever, be successful. Case law suggests a more sophisticated approach.

In the Australian case of Thompson -v- Johnson & Johnson ([1992] 3 Med. LR 148) it was said by the trial judge that "as a general proposition it appears to me to be obvious that where the possible consequences of the contraction of a condition include death, even though the risk of any contraction may be very small, a potential purchaser is, at least, entitled to know of the existence of that risk and to be able to choose whether or not it will be accepted". Cases in other areas of law have demonstrated the duty to warn for various significant injuries, eg a 1:14,000 risk of blindness (Rogers -v- Whitaker ([1993] 4 Med. LR).

It is therefore necessary to assess carefully the magnitude of the risk of injury, both in terms of incidence and severity. Material considerations will be the quality of evidence implicating the product as a cause of danger, data on past usage, and the attitude of the regulatory authorities. The Thompson case showed that regulatory authorities support of the plan of action adopted by the company and the timing of warnings was regarded by the Court as significant in demonstrating compliance with the duty of care. A basic set of risk assessment guidelines is shown opposite.

An effective way to review the risk assessment outcome and the proposed decision about recall, warnings, retrofit or some other option is, as Mr Justice Ian Kennedy put it at the recent Law Society Commerce & Industry Group Product Liability and Crisis Management conference, "to walk around the desk and look at the matter from the customer's perspective".

The two cases of Walton -v- British Leyland and Caroll - v- Fearon are instructive about how decisions which are not in the customer's interests can result in heavy criticism.


  • In Walton -v- British Leyland (1978, Product Liability Casebook) the company was found wholly liable for giving limited information to only certain dealers and for not recalling Allegro's with faulty wheel bearings. In the judge's view their duty was to "make a clean breast of the problem ... they knew the full facts; they saw to it no-one else did".

  • In Caroll -v- Fearon (Court of Appeal, 20.01.98) the Court of Appeal took a dim view of a tyre manufacturer's reluctance to publicise failures which had subsequently prompted significant design changes, holding that there was in this case a duty of full disclosure to the Department of Transport so that they could exercise an independent judgment on recall.

Conclusions

Effective handling of product crises requires a full understanding of the regulatory, contractual and liability consequences of defects.
On a practical level recall plans - including means of tracing products through the supply chain, devising notifications and effectiveness checks - are vital, but are only one part of an adequate strategy. Risk assessment techniques are of prime importance in making decisions affecting liability.
Legal obligations for safety impinge on every stage of a product's life from design to disposal. Recall planning belongs in a wider framework of effective risk management.