Re: Ever Last product Line
Introduction
For the past two years, Ever Last Ovenware has recorded decreased sales due to a downturn in the economy. The production manager has missed to meet his target of earning a 25% return on assets from the sales of the Ever Last Ovenware (Rock Cookware Inc, n.d. P.1). All costs attributed to the product line are relevant costs and profitability of the product line is not possible by reallocating the costs to other cost centers. This informed the production manager to commission the redesigning of the product. Redesigning the product led to a reduction in 35% of the product variable costs, and increased the product longevity by 10% (Rock Cookware Inc., n.d., p.1). The production manager reduced the selling price by 10% and embarked on an aggressive marketing campaign that secured sales of 1,500,000 units to be delivered in the first quarter (Rock Cookware Inc., n.d., p.1).
During a regular quality test, the employees discovered a flaw in the ovenware product, the ovenware would explode when placed in a refrigerator or set on a cold trivet if it had been cooking at extremely high temperatures (450-500 degrees), (Rock Cookware Inc., n.d., p.1). On becoming aware of the flaw, the production manager carried out more tests and found out that the problem only occurred in 0.25% of the cases (Rock Cookware Inc., n.d., p.1).
The production manager was faced with two decisions. One, delay shipment by a month, recycle the flawed ovenware, and produce the ovenware using the old methods and cost structure. However, they would sell the ovenware at 10% discount. The production manger estimated the business would lose a third of the annual sales. Two, they could ship the flawed ovenware and alter the testing reports to indicate that the ovenware might only crack not explode. (Rock Cookware Inc., n.d., p.2)
The management chose the second option and shipped the flawed products hoping that there would be no serious claims on the company. Unfortunately, in the third month, Mrs. Farzam suffered bodily harm when the Ever Last ovenware she had used to prepare a chicken and rice dish in the oven at temperatures of 475 degrees before placing it in the refrigerator exploded (Rock Cookware Inc., n.d., p.2). Mrs. Farzam sustained second and third degree burns on her neck, face, and arms. In addition, several similar explosions followed the incident.
The product was defective; Mrs. Farzam must prove that the ovenware was unreasonably defective in the marketing, design, or manufacturing (Sustein, 2002, p.13).
Causation; Mrs. Farzam must prove to the court that the unreasonably dangerous condition of the ovenware caused her injury (Sustein, 2002, p.13).
The product was defective in manufacturing, marketing, and design. Under the green law, a product is said to have a manufacturing defect when the manufactured product quality or specifications are significantly different from the expected output (Rock Cookware Inc., n.d., p.5). In the case of Ever Last ovenware, the product was expected to be similar in looks and functionality to the original product. However, the manufactured product had a serious flaw of exploding when moved from high temperatures (450-500 degrees) to low temperatures such as when it is placed in a refrigerator (Rock Cookware Inc., n.d., p.1).
Marketing defect makes the defendant liable if they failed to provide adequate warnings of the potential hazards in the product (Rock Cookware Inc., n.d., p.5). Rock Cookware, downplayed the risks of the ovenware by indicating to the consumer that the ovenware may crack when in fact the ovenware would explode.
Design defect makes the defendant liable if at the time of design it was possible for them to alter the design without incurring significant costs or altering the functionality of the product (Rock Cookware Inc., n.d., p.6). At the time of design, Rock Cookware Engineers felt that they could correct the flaw in six months (Rock Cookware Inc., n.d., p.1-2). Rock Cookware could have corrected the defect without a significant increase in costs or an alteration in the features of the ovenware making them liable for design defect.
Damages
The court will award compensatory damages to compensate Mrs. Farzam for her exact losses (Sunstein, 2002). The amount of compensatory damages will include medical bills, lost income due to the injuries, and pain-and-suffering damages (Sunstein, 2002). The court can only award punitive damages only in exceptional and egregious circumstances. The court is likely to award Mrs. Farzam punitive damages if she proves to the court that Rock Cookware actions were negligent, malicious, or in reckless disregard of Mrs. Farzam rights (Sunstein, 2002). Punitive damages are not meant to compensate the plaintiff but are instead meant to deter or punish the defendant and deter repeated offence (Sustein, 2002, p.15).
Rock Cookware Inc., acted negligently by putting their profit motives a head of the interest of their customers. Despite being aware of the harm their ovenware would cause consumers, Rock Cookware did not take any measures to mitigate the risks their products posed to their customers. In a bid to meet their profit targets and secure sales, they went ahead and shipped a flawed product. There is no standard amount for punitive damages however, punitive damages should be sufficient to deter the defendant from repeat offence and must not show sympathy, bias or prejudice to any party (Sustein, 2002, p.15).
Works cited
Rock Cookware Inc.: Case. (n.d.). Print.
Sunstein, Cass R. Punitive Damages: How Juries Decide. Chicago: U of Chicago, 2002. Print.
