Electronic cigarette manufacturer considerations – product liability and product recall

We learned last week of the death of a man in the USA as a result of a vaping device exploding. Whilst it is unclear why the device exploded it would appear that it could have been as a result of an overheating lithium-ion battery and it was also reported that the device had been modified by the user. The lithium-ion batteries used to power the devices can fail. Battery failures, manifested as small explosions and fires, have occurred. Failure rates are low, however, this incident brings to the fore the importance of understanding the risks with the vaping sector and specifically the issue of product liability. Product Liability insurance will typically cover a manufacturer's liability to pay damages for death, personal injury or property damage, plus defence costs.  Without such cover, the manufacturer will have to meet any claims and the costs of dealing with them. Product liability insurance would typically address the following risks faced by an e-cigarette manufacturer:

• Consumer claims for death or injury caused by an e-cigarette product;
• Consumer or customer claims for property damage e.g. that an e-cigarette caused a fire in a home, workplace or in a warehouse or shop.

A manufacturer might face claims either direct from consumers in negligence or under the Consumer Protection Act 1987.  In addition, a manufacturer may receive claims, whether in contract or under the Civil Liability (Contribution) Act 1978, from its B2B customers (retailers or distributors) if they have in turn received consumer claims. Such claims could involve either death/personal injury or property damage. Personal injuries are far more high profile than damage to property as illustrated by the death of the man in the USA. The single biggest reason for a battery explosion is user error but this is often difficult to be precise about from a legal liability point of view. Social media illustrates numerous examples of very serious incidents but few of the reported explosions bear clear signs of user error. Manufacturers may be confident of their own design and quality processes. However, if any of the materials, components or ingredients are sourced from elsewhere, default by a supplier could increase the risk of property damage or injury, for which the manufacturer of the finished product would be liable in contract or under the Consumer Protection Act, regardless of personal "fault". Most manufactured de­vices have built-in timeout features that prevent overheat­ing, and many have locking features to prevent the switch from being activated in a pocket or purse. There is no specific regulation, code or law that applies to the safety of the electronics or batteries in e-cigarettes. If we accept that user error is a factor in safety then there is an imperative need for user education. Most e-cigarette manufacturers already mention the impor­tance of proper charging practices in their literature. Stronger warnings in the literature and user manuals that are mandatory may be a way forward. Sometimes purchased alongside Products cover is Product Recall insurance. If an e-cigarette product is believed to show a defect, which would make it unsafe (includes risk of property damage as well as risk of death/injury), the manufacturer may be obliged to take corrective action, which may include initiating a recall.  Product recall insurance in principle may cover certain costs of initiating a recall, including advertising costs, testing costs and uplifting affected product.  It's important to bear in mind that, assuming the client is UK based, the burden and therefore cost of dealing with a recall will fall on them. Steve Green Director Anthony Jones (UK) Ltd