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A defective or dangerous product is a business's worst nightmare. The damaged reputation and possible civil suits are bad enough to contemplate, but do small business owners need to be worried about jail time as well?
When companies contemplate a product recall, it's often a consideration of the potential harm and potential civil liability. But there are scenarios in which failing to recall a product could result in criminal charges, as well.
Some businesses, like auto manufacturers, are required by law to issue recalls for products that fail to meet minimum performance or safety standards set out in state or federal statutes. If a company waits too long, or fails to implement a recall entirely, it could be in violation of the statutes, some of which carry criminal penalties.
Under the TREAD Act, a person could face up to 15 years in prison for intentionally misleading government officials regarding dangerous or deadly defects. And while auto recalls are obviously more serious than those for many other products, some states like California have specific statutes regulating product recalls.
They always say the cover-up is worse than the crime. And that's true for product recalls, too.
Federal authorities charged executives from the Peanut Corporation of America (PCA) with fraud and conspiracy for their roles in a massive salmonella outbreak in 2009. The PCA was aware of possible contamination due to numerous health code violations, yet it took no action to recall tainted peanut butter, and even shipped potentially contaminated peanut butter while test results were still pending.
While the PCA case may have been a rare application of criminal law to a product defect, it nonetheless shows that when business owners are aware of a dangerous product and either do nothing or attempt to hide the defect, they could face criminal prosecution. Also, if the FDA tells you to recall your product, you should probably comply.
Making sure your business is protected from product liability claims can be complicated, especially when it comes to product recall decisions. An experienced business liability attorney may be able to help.
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