Corporations are far from perfect. The majority seek to do good and provide their customers with high-quality products that work as they are intended to do so. However, even despite their best intentions, corporations make mistakes; some large and some small.

Many of these mistakes have led companies to release faulty products into the market. Whether it be automobiles with problematic issues, healthcare companies releasing products with broken packaging, or a slew of other issues that put the customer in harm's way.

When a company releases a problematic product it is detrimental to its business. Not only does it hurt sales, which threatens the existence of the company, but it also hurts a company's brand image, which can be hard to repair and sometimes impossible. If a consumer loses trust in a company they will spend their money on a competitor.

It is for this reason that a company must manage any problems efficiently and correctly. This can result in recalling the product, reimbursing customers, or any other decision that will make the company look good in a time of crisis.

Yet, despite any corrective measures, companies can still be sued and have to deal with product liability claims that end up costing the company dearly. Here is a sampling of some of the biggest product liability suits that U.S. corporations have faced.

Key Takeaways

  • Companies often release faulty products that cause damage to their customers, which results in liability claims.
  • Most companies that release faulty products seek to repair the damage quickly, by fixing the issue, recalling the product, and reimbursing customers.
  • Companies are at the risk of damaging their brand identity and losing customers and, therefore, sales, due to bad products.
  • Despite their best efforts to resolve the problem, companies lose millions of dollars in lawsuits to customers that have suffered due to the problematic products.
  • Some of the largest U.S. corporate liability claims include Philip Morris, General Motors, Dow Corning, and Owens Corning.

1. Philip Morris: Tobacco Products

Philip Morris: Tobacco Products

In 2002, Philip Morris, now known as Altria Group Inc. (MO), faced charges in a suit filed by a woman who had lung cancer and claimed that smoking cigarettes had caused her sickness and that her tobacco addiction was caused by the tobacco company's failure to warn her of the risks of smoking. The company was ordered to pay punitive damages of a whopping $28 billion and $850,000 in compensatory damages. Philip Morris appealed the case and nine years later the amount was reduced to $28 million.

2. General Motors Co.: Automobile Parts

General Motors Co.: Automobile Parts

In March 2008, GM faced a product liability suit that claimed a damaging chemical was used in its Dex-Cool coolant, which caused leaks and engine damage. A class-action suit was filed on behalf of about 35 million GM customers for approximately $150 million. The customers who filed the suit ended up receiving individual payments in the range of $50 to $800.

3. Dow Corning: Silicone Breast Implants

Dow Corning: Silicone Breast Implants

In 1998, Dow Corning, a joint venture of The Dow Chemical Co. (DOW) and Corning Inc. (GLW), reached a settlement in which it agreed to pay $3.2 billion as part of a class-action suit filed by customers who claimed that their silicone breast implants were rupturing, causing injury, bodily damage, and scleroderma. Each individual woman would receive between $12,000 to $60,000. The company would also pay $5,000 to women wishing to remove their implants and $25,000 to women whose implants had ruptured.

4. General Motors Co.: Automobile Parts

General Motors Co.: Automobile Parts

In August 1999, General Motors faced a personal injury and product liability lawsuit claiming a faulty gas tank on its 1979 Chevrolet Malibu that caused gas tank explosions that severely burned six individuals when their cars were hit from the rear. The plaintiffs sued for $4.9 billion in punitive damages. The victims were able to present evidence that showed GM knew of the problem but did nothing to fix it because of the associated costs.

5. Owens Corning: Asbestos Building Materials

Owens Corning: Asbestos Building Materials

In December 1998, Owens Corning Corp. (OC) agreed to pay $1.2 billion to settle asbestos-related product liability lawsuits claiming that its asbestos building materials caused mesothelioma cancer and death. There were 176,000 individuals involved in this product liability case. This lawsuit eventually grew to include 237,000 claims and Owens stated it could not afford the debt and filed for bankruptcy.