Posted in Business Litigation
By Tony Liu, Founder and Principal Business Trial Attorney
In Summary:
Product liability litigation isn’t just a risk for manufacturers. If your business touches a product, even through marketing, packaging, distribution, or resale, you could be pulled into a lawsuit. California law holds multiple parties responsible when a defective product causes harm. Learn how these claims work, who’s liable, and what proactive steps you can take to protect your business before it’s too late.
What Is Product Liability Litigation for Businesses?
Product liability litigation involves holding one or more parties legally responsible for injuries or damages caused by defective or dangerous products. These lawsuits don’t just target the original manufacturer. They can also name:
- Wholesalers
- Retailers
- Distributors
- Marketing firms
- Packaging designers
- Importers
In short: If your business touches the product in the supply chain, you’re a potential target.
Why Your Business Could Be Liable—Even If You Didn’t Make the Product
In California, product liability claims fall under strict liability laws (Cal. Civ. Code § 1714.45). This means the injured party doesn’t need to prove your business was negligent. They only need to show:
- The product was defective.
- The defect existed when it left your control.
- The defect caused harm when used as intended.
That’s it.
Even if you had nothing to do with designing or manufacturing the product, your business could be held accountable if:
- You sold the product.
- Your brand is on the packaging.
- You imported it into the U.S.
- You marketed or promoted the product.
This creates a ripple effect where entire supply chains get sued.
3 Real-World Scenarios Where Innocent Businesses Got Pulled Into Product Liability Lawsuits
1. The Boutique Retailer with the Faulty Candle
A small Southern California home décor shop sold artisanal candles made by a third-party vendor. One candle exploded due to poor wick placement, causing a fire. The customer sued the shop, not the vendor, because the vendor was overseas and unreachable.
2. The Amazon Seller Who Dropshipped Electronics
A seller fulfilled customer orders using a Chinese manufacturer. When a charger caused electrical burns, the seller faced a lawsuit, even though they never touched the product, because their name was on the online listing.
3. The Wellness Brand with Custom Labeled Supplements
A company selling white-labeled supplements was named in a suit after a consumer had a severe allergic reaction. The manufacturer was FDA-compliant, but because the label bore the wellness brand’s name, the plaintiff sued the brand directly.
Common Types of Product Defects That Trigger Litigation
Product liability claims usually fall into one of these categories:
1. Design Defects
The product was inherently dangerous due to poor design (e.g., unstable furniture that tips easily).
2. Manufacturing Defects
A mistake occurred during production (e.g., contaminated food batches or faulty wiring in electronics).
3. Marketing Defects (Failure to Warn)
The product lacked adequate safety warnings or instructions (e.g., missing “choking hazard” labels on toys).
Pro Tip: Plaintiffs don’t need to prove which defect occurred, only that the product was defective and caused harm.
How to Protect Your Business From Getting Sued
Require Indemnity Agreements
If you resell or distribute products, make sure your contracts include indemnification clauses so the manufacturer covers your legal costs if something goes wrong.
Get Proper Insurance
Standard general liability insurance isn’t always enough. You may need product liability coverage or an umbrella policy.
Vet Every Vendor Thoroughly
Make sure your suppliers, manufacturers, and vendors have clean safety records and are responsive to quality concerns.
Keep Records of Product Movement
Document when and where you received or sold a product. This helps prove your level of involvement if you’re ever sued.
Label & Market With Care
Ensure all marketing and packaging materials are accurate and include necessary safety warnings.
Frequently Asked Questions: Product Liability Litigation for Businesses
1. What is product liability litigation?
Product liability litigation refers to lawsuits filed when someone is injured by a defective product. Businesses across the supply chain—not just the manufacturer—can be held responsible under California law.
2. Can a business be sued for selling someone else’s product?
Yes. California’s strict liability doctrine means you can be sued even if you didn’t make the product. If your business sells, distributes, or promotes it, you’re potentially on the hook.
3. How can I reduce my business’s risk of being sued?
Use indemnity agreements, get tailored insurance, vet your suppliers, and include adequate product warnings. Proactive legal protections go a long way.
4. Is product liability insurance necessary?
If your business deals with physical products in any way, then yes. General liability often doesn’t cover product claims, so specific product liability insurance is essential.
5. What should I do if I get a product liability claim?
Don’t wait. Contact a business litigation attorney immediately. Avoid communicating directly with the plaintiff, their attorney, or their insurance provider.
Don’t Wait for a Lawsuit to Find Out You’re Liable
Most business owners don’t realize how vulnerable they are to product liability litigation until it’s too late. You could lose everything not because of something you did wrong, but because of a product someone else made. And California’s strict liability laws don’t offer much room for excuses.
If your business touches any product, from labeling supplements to reselling imported tools, you need to take legal precautions now. Otherwise, one customer injury could turn into a lawsuit that drains your profits and wrecks your reputation.
At Focus Law, we help Southern California business owners bulletproof their operations against costly litigation. Schedule a consultation today and get ahead of the problem.
