Silicon Valley electronics manufacturers may soon join the ranks of companies facing mass product liability claims for what have come to be known as repetitive stress injuries (RSI) purportedly caused by routine workplace use of their products. Recently, lawyers representing workers in what are being called the "vanguard of related mass litigation" obtained a court order to consolidate all cases filed against electronics manufacturers in New York federal district court. These lawyers claim that hundreds more lawsuits are about to be filed. And, with some 46 million computer users as potential plaintiffs, if they are right, Silicon Valley manufacturers face a new litigation threat that may alter how they make their products, run their businesses and what insurance coverage they can get.
Product Liability Takes On A New Twist
While product liability litigation in the 1980s -- such as DES, asbestos, Agent Orange, and the Dalkon Shield -- started slowly and built into mass consolidations, electronics product liability claims in the 1990s are being consolidated right from the start. At risk in consolidating RSI cases are claims against products manufactured in the past, as well as for new products now under development. Because high-tech companies depend heavily on new product innovation for growth and global competitiveness, executives will need to carefully consider both the manufacturing risks -- as well as the product revenue rewards -- before bringing a product to market.
For Silicon Valley manufacturers, this means that today's litigation strategies developed for single plaintiff cases may no longer be viable. Companies that are sued in consolidated cases may be forced to make quick decisions about their position on legal and scientific questions that could decide the fate of their company long before they are ready to address -- or understand -- these issues. The decisions are also likely to affect potential punitive damage liability.
For example, much of the legal debate in the RSI cases centers on whether workplace conditions or the product itself is the cause of the problem. Lawyers representing the injured workers claim that manufacturers knew about the RSI risk with their products, yet failed to provide any warnings. Current scientific research does not appear to have resolved the question. And, even if workplace conditions are more important, as some recent research indicates, what duty did the technology manufacturer have to warn employers and users about the correct workplace environment for their products? Even if a warning was required, how could the manufacturer make certain that the ultimate user reads and understands the warning -- especially years after the product was sold and resold. These issues, which are fundamental to future high-tech manufacturer liability cases, still remain unresolved.
Class Action v. Single Plaintiff: What It Means To Silicon Valley
There are viable arguments on both sides of the class action versus single plaintiff approach to handling product liability cases. Federal District Court Judge Jack Weinstein, a veteran jurist who is credited with solving DES, Agent Orange and asbestos litigation logjams in New York, frankly admits that "Congress, state legislatures and the courts have yet to develop a satisfactory set of rules for fair and efficient processing of mass litigation." Judge Weinstein, however, believes that he has found a solution, at least for the repetitive stress injury cases.
This consolidation comes despite manufacturer's objections that the cases are not similar. Technology product use and design varies widely. One keyboard manufacturer, for instance, could have as many as ten different keyboard designs, all with different ergonomic specifications. In ordering consolidation, Judge Weinstein hopes to minimize the transactional cost of litigation by encouraging full development of the scientific and legal evidence at an early stage in the process. He believes that minimizing the cost of litigation is as "important to American industry as it is to injured plaintiffs and the general public."
From a business and industry innovation standpoint, consolidating the cases may end up impeding technology product development efforts. Companies named in consolidated cases will face the burden of searching through every scrap of information that relates to the claim very early on in a product's life cycle. As a result, senior management may end up devoting a significant amount of time to addressing product liability issues that do not directly pertain to their products, instead of concentrating on innovating and managing the business.
From a legal perspective, however, the courts have found that RSI case consolidation -- rather than a single plaintiff case approach -- is preferable. While consolidating the cases can help minimize transaction costs, the costs will still be significant. Most observers of RSI litigation recognize that individual damage awards are likely to be smaller than other mass product liability cases, such as asbestos, because the injuries are not as life threatening. However, the number of potential tech product liability cases is much higher. The most recent National Institute for Occupational Safety and Health study estimates that between 50 and 70 million Americans already suffer from some form of RSI in a wide variety of occupations. Data-intensive occupations -- from journalists to data entry clerks -- and factory line occupations that rely on repetitive tasks have reported the highest incidence of RSI.
New Territories To Cover For Insurance Coverage
In addition to considering the impact of potential RSI litigation on product manufacturing and design, Silicon Valley executives also need to examine how the issue may impact their product liability coverage. Carefully examining company and product coverage insurance should be a top priority for any technology manufacturer. And, for those who do not have such coverage, they will need to develop strategies to help resolve their participation in the litigation as early as possible.
Whether product liability cases are consolidated or individual suits, and regardless of the availability of insurance, the fact is that high-technology manufacturers may be held more accountable for on-the-job injuries. Undoubtedly, this growing legal concern will have Silicon Valley manufacturers closely assessing their product design and ergonomic tests, and taking a second look at their liability coverage.