Overview

You've received a demand letter claiming your product caused injury. California product liability law, established in Greenman v. Yuba Power Products, allows injured consumers to recover from manufacturers, distributors, and retailers under multiple theories. This guide helps you understand your exposure and respond strategically.

Notify Your Insurer

Product liability insurance (often part of general liability or CGL policies) may cover this claim. Notify your carrier immediately.

Preserve Evidence

If possible, obtain and preserve the product, packaging, and any instructions or warnings. Issue a litigation hold on relevant documents.

Supply Chain Matters

Liability may flow up or down the distribution chain. Identify manufacturers, component suppliers, and distributors for potential indemnification.

Three Theories of Product Liability

  • Strict Liability - Product was defective and caused injury; no negligence required
  • Negligence - Defendant failed to use reasonable care in design, manufacture, or warnings
  • Breach of Warranty - Express or implied warranties were breached (Commercial Code 2314-2315)

Types of Product Defects

  • Manufacturing defect - Product deviated from intended design during production
  • Design defect - Entire product line has inherent dangerous characteristics
  • Warning defect - Inadequate warnings or instructions for safe use
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Product liability analysis, defense evaluation, and professional response to protect your business.

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Evaluate the Claim

Product liability claims require proving multiple elements. Analyze each to assess the strength of the claim against you.

Elements They Must Prove

Element Requirement Defense Focus
Defect Existed Product was defective when it left your control Challenge defect existence
Your Role You are in the chain of distribution Identify other responsible parties
Causation Defect caused the injury Alternative causes possible
Proper Use Product used as intended or foreseeable Misuse defense
Damages Actual harm and quantifiable losses Verify and challenge damages

Product Investigation

  • check Obtain and inspect the product
  • check Review design specifications
  • check Check manufacturing batch records
  • check Review warning labels and instructions

Claim History

  • check Prior complaints about this product
  • check Any recalls or safety bulletins
  • check Similar claims or lawsuits
  • check CPSC or FDA reports

Expert Analysis May Be Needed

Product liability cases often require expert testimony on product design, manufacturing processes, and causation. Consider engaging an expert early to evaluate the claim's technical merits before committing to a position.

Your Defenses

California law recognizes several defenses to product liability claims.

No Defect Existed

The product was not defective when it left your control. It met design specifications, manufacturing standards, and included appropriate warnings.

When to use: Product inspection shows no defect; quality control records confirm proper manufacturing; warnings were adequate.

Product Misuse / Alteration

The plaintiff used the product in a way that was not intended or reasonably foreseeable, or materially altered the product after purchase.

When to use: Product was modified, used for unintended purpose, used after expiration, or used contrary to warnings.

Comparative Fault

The plaintiff's own negligence contributed to their injuries. Under California's comparative fault system, damages are reduced by their percentage of fault.

When to use: Plaintiff ignored warnings, used product carelessly, or contributed to their own injury.

State of the Art

The product met the state of the art at the time of manufacture. Scientific knowledge at the time did not reveal the risk. (Limited applicability in California)

When to use: Risk was scientifically unknowable at time of manufacture; applies mainly to warning defect claims.

Component Part Defense

Component manufacturers may not be liable if they provided a component that was not defective and the injury resulted from the finished product's design.

When to use: You supplied a non-defective component; injury resulted from finished product design decisions.

Statute of Limitations

Personal injury claims must be filed within 2 years of discovery of the injury and its cause (CCP 335.1). Property damage has a 3-year limit.

When to use: More than 2 years have passed since injury and claimant knew or should have known about the claim.

Defenses That Are Limited

  • "We're just the retailer" - Retailers are in the chain of distribution and face strict liability
  • "We followed FDA/CPSC regulations" - Compliance is evidence but not a complete defense
  • "No one else was injured" - Doesn't prove product wasn't defective
  • "They assumed the risk" - Limited application in product liability cases

Response Options

Based on your evaluation, choose the appropriate response strategy.

Tender to Insurance

Notify your product liability or general liability insurer. They will investigate and handle defense and settlement.

  • Professional defense provided
  • Settlement within limits covered
  • Required by most policies

Seek Indemnification

If you're a retailer or distributor, the manufacturer may be obligated to indemnify you. Review supply agreements.

  • Shifts liability upstream
  • May require tender notice
  • Check contract terms

Dispute Liability

If you have strong defenses (no defect, misuse, alteration), respond formally disputing liability with supporting evidence.

  • Preserves defenses
  • May deter weak claims
  • Signals prepared defense

Negotiate Settlement

If liability seems likely, negotiate settlement to avoid costly litigation and adverse publicity.

  • Controls outcome
  • Avoids litigation costs
  • Confidentiality possible

Product Liability Exposure Analysis

Example: Moderate injury from consumer product

Medical expenses $25,000
Lost wages $10,000
Pain and suffering $50,000-$100,000
Expert witness fees $25,000-$75,000
Defense attorney fees $50,000-$150,000
TOTAL EXPOSURE RANGE $160,000-$360,000

Class Action and Mass Tort Risk

A single product liability claim may indicate broader exposure. Review your product complaint history, consider whether other consumers could bring similar claims, and evaluate potential recall obligations. Early resolution of individual claims can help manage broader risk.

Sample Responses

Copy and customize these response templates for your situation.

Insurance Referral & Investigation
We acknowledge receipt of your demand letter dated [DATE] regarding alleged injuries from our product. This claim has been forwarded to our liability insurance carrier, [INSURANCE COMPANY], Claim Number [CLAIM NUMBER]. The assigned adjuster is [ADJUSTER NAME] at [PHONE]. To properly investigate this claim, please provide the following: - The product in question (or allow inspection) - Purchase receipt or proof of purchase - Complete medical records related to the claimed injuries - Photos of the product and injuries We take product safety seriously and will conduct a thorough investigation.
Liability Denial - No Defect
We have reviewed your demand letter regarding our [PRODUCT NAME] and respectfully deny liability. Our investigation confirms that the product was manufactured according to design specifications, passed all quality control inspections, and included appropriate warnings and instructions for safe use. The product was not defective when it left our facility. [Describe any specific findings - e.g., "Our examination of the returned product shows no manufacturing defect," "The product functioned as designed," "All safety features were intact"]. We are confident that if this matter proceeds to litigation, we will demonstrate that no defect existed and that any injury was not caused by our product.
Misuse Defense
We dispute your product liability claim. The facts indicate that the [PRODUCT] was not used as intended or in accordance with the provided warnings and instructions. Specifically, [describe misuse - e.g., "the product was modified after purchase," "used for a purpose not intended," "used contrary to explicit warnings in the user manual," "continued to be used after the recommended replacement date"]. Product manufacturers are not liable for injuries resulting from unforeseeable product misuse or alteration. The injury described appears to result from improper use, not any defect in our product. We therefore deny liability for the claimed injuries.
Settlement Offer with Release
Without admitting liability or any defect in our product, and solely to avoid the expense and uncertainty of litigation, we offer [$AMOUNT] in full and final settlement of all claims. This offer is contingent upon: 1. Execution of a comprehensive release of all claims 2. Return of the product in question for our records 3. Confidentiality regarding the terms of this settlement This offer will remain open for [14] days. If not accepted by [DATE], the offer is withdrawn and we will defend any claims vigorously. This offer is made as a compromise and shall not be construed as an admission of liability or product defect.

Next Steps

Actions to take after receiving a product liability demand letter.

Step 1: Preserve Evidence

Obtain the product if possible. Preserve all design documents, manufacturing records, quality control reports, and complaint history.

Step 2: Notify Insurance

Report the claim to your product liability or general liability carrier. Many policies require prompt notice.

Step 3: Identify Chain of Distribution

Determine all parties in the distribution chain who may share liability or owe indemnification.

Step 4: Assess Recall Obligations

If the defect is real, evaluate whether a voluntary recall or CPSC/FDA report is required.

Regulatory Considerations

  • CPSC Reporting - Manufacturers must report products that create substantial product hazard within 24 hours
  • FDA Compliance - Medical devices, food, and drugs have specific reporting requirements
  • Voluntary Recall - May be advisable to limit ongoing liability exposure
  • Document Retention - Issue litigation hold to preserve all relevant records

Insurance Considerations

  • Policy limits - Know your product liability coverage limits
  • Defense costs - Most policies cover defense costs in addition to limits
  • Multiple claims - Consider aggregate limits if facing multiple claims
  • Umbrella coverage - Review excess coverage for catastrophic claims

Get Professional Help

Product liability claims can threaten your business. Get a professional response that protects your interests.

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California Resources

  • Greenman v. Yuba Power (1963): Landmark case establishing strict product liability
  • CACI 1200-1243: California jury instructions for product liability
  • Commercial Code 2314-2315: Implied warranties of merchantability and fitness