Business Law and Manufacturer Responsibility From a Case Study

Excerpt from Case Study :

Business Law and Manufacturer Responsibility

From a business law perspective, the case involving a woman and her unattended food causing a house fire in her New Jersey home is an open and shut case. As the consumer involved in the case, Brenda Herff, claims that the Kellogg Company, makers of the popular breakfast food Pop-Tarts, failed to either warn her or adequately test their product for flammability, the evidence surrounding the case and the precautions taken by the Kellogg Company quite clearly point to operator negligence. Besides Kellogg, the couple also sued the Black and Decker Corp. For making a faulty product (ABC News, 2010). The lawyer for the couple claimed that the toaster failed to eject the pastry before it caught fire. There was no substantial evidence to support this claim, but certainly the couple was willing to stop at nothing to offload blame for this incident.

Another important consideration in this case is the fact that since two major corporations are named in the lawsuit, capitulating to the demands of the New Jersey couple would represent a significant president in such cases in the future, should any arise (LeMance, 2009). This is to say that a large payout for this accident, which was clearly the fault of the homeowners, could result in more people filing frivolous and otherwise unnecessary suits against them and other large companies in the future. This coupled with the fact that as more legislation to help re-tool and redefine tort suits in the United States enters the books, there is all the more reason to believe that lawsuits of this nature will continue to emerge. The idea that tort reform and cases such as the Herff's help balance each other out, within the legal realm, is quite relevant . Were it not for cases such as this, the legal system and tort reform legislation could very well lean in the opposite direction, creating a legal playing field that is tilted in favor of food manufacturers (Buzby and Frenzen, 1999). The Herff case helps highlight the absurdity within the tort system itself while, at the same time, reminding the nation that these laws and the consumer's right to sue exist for a reason, and that as long as companies are respectful of their responsibilities, a healthy balance between the manufacturer and the consumer can be struck.

Defining Tort and Tort Reform

In 2008 the Bush Administration, with support from the FDA worked to enact a new set of rules that defines the consumers' ability to sue a company or corporation based upon tort laws (Institute for Legal Reform, 2008). This action was in effect, an effort to reduce the number of frivolous lawsuits and claims made against manufacturers of not only food but other products, namely prescription drugs. Consumers have been keen to sue manufacturers for uses and grievances experienced during consumption of many goods, and the sheer number of lawsuits and their cost to companies and had begun to really pile up. Of the 51 proposed regulations, 41 of them would cover FDA actions relative to tort (Institute for Legal Reform, 2008). This sort of tort reform, while necessary in the eyes of the administration as well as many companies and drug manufacturers made it much harder for individuals to sue for faulty or unsafe products. Tort reform typically comes from two specific sources. One of these sources is legislation, like the Bush Administration proposed in 2008. The other source, which is much more germane to the New Jersey Pop Tart case, comes from legal precedent. The argument for tort reform often comes out of cases such as the one in New Jersey.

The lawsuit in question and many others of similar nature often involve each side bringing in legal experts on the matter. In previous cases, the Kellogg's Company has used engineers familiar with the chemical makeup of their cereals and products to help dispel the idea that the company creates a faulty or dangerous product (ABC News, 2010). In these cases, as with the New Jersey couple's case, there is more to be said about common sense than anything an engineer is willing to say during testimony. Tort reform remains elusive, at least as far as understanding what manufacturers are legally required to warn consumers about before a tort occurs. The Bush Administration legislation also puts limits on the amount of money an individual can receive for a wrongdoing such as Herff's. Certainly the family's demands for $100,000 in home damages is nothing compared to other cases where individuals feel the need to sue corporations for millions, but again, the idea that necessary tort reform and legal precedent follow specific court cases need not be overlooked (Institute for Legal Reform, 2008). The Herff case was an opportunity to set a new precedent, for better or for worse, relative to tort and tort claims in the United States.

Warning Labels

According to federal law, product manufacturers are responsible to give a reasonable warning when the product they manufacture poses a foreseeable risk of injury or harm. Courts use the these factors to consider a manufacturer's duty to warn: "the magnitude or severity of the likely harm, the ease or difficulty of providing an appropriate warning, and the likely effectiveness of a warning" (Mallor, etal. 377) in addition to the manufacturer's ability to reasonably foresee the risk. In the case of the Pop Tarts catching fire, a spokesperson for the Kellogg Company stated that since the pastries have been for sale to the public since the mid-1960's, that the possibility that the general public lacks enough familiarity with them as to create a product hazard is extremely low (CITE ORIG).

A risk vs. utility analysis is often used in court to help determine whether the risks associated with certain inherently unsafe products are reasonable. Pop Tarts, by their very nature, and because they provide a specific warning label telling consumers not to leave their products unattended, are not to be considered unsafe. This warning label, in the case of the Herff lawsuit, reads, "Do not leave the toaster appliance unattended due to possible risk of fire." (ABC News, 2010) This would seem a rather obvious warning against the very same behavior exhibited by Herff on the morning her house was damaged.

However, in many other cases where products have not yet been deemed safe or unsafe, courts weigh the availability of safer alternatives and hope to establish whether the risks of using the specific product outweigh that product's utility. Pop Tarts are not a utility product, and therefore do not have to conform to specific types of product testing involving safety of use, but they certainly have to conform to FDA and other federal standards relative to safety in consumption. In the United States, the majority of all failure-to-warn cases are settled out of court (Mallor, etal. 377).

Settlements and Trials

If, after the discovery phase, the case is not settled out of court, it moves on to trial. After the discovery phase, the only company employees who remain involved are those who will be testifying as witnesses during the trial. Sometimes months or even years lapse before a trial actually begins, which makes thorough preparedness for trial absolutely necessary for success. This also means that any claims against a company or a product may not yield any payouts or results for quite some time, leaving the New Jersey couple to fend for themselves and take care of their $100,000 in purported damages on their own.

Since the New Jersey couple involved in the Pop-Tarts case admitted to leaving their house while the Pop-Tart was heating up, despite the warning label on the box advising against leaving food unattended in the toaster, they are solely responsible for the damages due to negligence that ensued after the toaster pastry was left unattended. Not heeding a product's warning labels, as they are litigiously assigned to the box or packaging, can revoke the users' rights to trial in the case of a product failure or accident (LaMance, 2009). While this is not something that is set in stone, it is readily demonstrated that a manufacturer rarely loses a case in the U.S. In court where a warning label is clearly affixed to a product and is not heeded.

This does not mean, however, that a case will not be settled out of court, since many manufacturers are keen to avoid any negative publicity. These cases can last several years if they go to trial and be financially devastating to a company. Companies that are committed to standing on principle and that are bent on defending themselves throughout a trial, send a very clear message to other potential plaintiffs in similar cases. Since both the Kellogg Company and the Black and Decker Corporation were involved in the aforementioned suit, there remains little room for them to bend to the will of the New Jersey couple, since this would set a president in the event that a future case…

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