Wholesale & Distribution International - Spring 2017 - 53
Manufacturers' representatives often are sued by consumers. Some claims are related to advertising, while
others may allege that a product itself is defective or
unsafe. In the vast majority of these lawsuits, the manufacturer - not the representative - is the true target.
Being sued may be inevitable depending upon the
industry, but there are certain precautions manufacturers' representatives can take to avoid or mitigate
the impact of any lawsuit. In my practice defending
manufacturers' representatives, I have identified four
common mistakes that can paint a target on the back
of any unknowing manufacturer's representative.
To illustrate these mistakes, let's take for
example my client Wally. Wally is a new
manufacturer's representative responsible for growing the business. When
he started his new job, he found an old
brochure lying on his desk and decided
to create a new one. He used his personal email account to contact a friend at a
small advertising company who owed
him a favor. In the email, he told his friend
that the old brochure was a piece of "(expletive)," among other things, and he
needed something new. His friend came
up with a new electronic brochure using
the same data from the old brochure.
Wally wanted to send out the new brochure to potential customers as quickly
as possible, so he faxed it to 500 potential
clients. Wally was sued. How did he paint
a target on his back?
1. A TALE OF TWO EMAILS
Using one personal email address for
everything may not be a problem unless
you are brought into a lawsuit. Wally was
forced to turn over his personal email account. Any witness in a business case may
be required by the court to turn over an
email account if it was used for business
purposes, even if it also contains personal email messages. While there are ways
to electronically sort email, the process
can be costly, and sorting email manually
can be very time consuming.
Manufacturers' representatives may
choose to use their personal email addresses because they represent more
than one manufacturer, for confidentiality purposes, or just to maintain their
independence. Public email servers like
Yahoo and Gmail are free or inexpensive to use. If you choose to use a public
email server for both business and personal email, set up two different email
accounts and keep them separate. Compared to turning over your personal email
in a lawsuit, keeping two accounts is a minor inconvenience.
2. KEEP EMAIL CLEAN
Never say in an email anything that you
do not want to become a trial exhibit.
Wally's email disparaged the company
brochure. He was called to testify because
he made an off-color joke and a negative
comment that could be taken out of context. Remember, too, that sometimes it's
better to have a face-to-face conversation
or pick up the telephone.
3. USE APPROVED LITERATURE
Creating product literature carries certain risks. The old data in Wally's new
brochure claimed the product was 99.9
percent effective. Unbeknown to him,
the manufacturer's latest unreleased
data suggested the product was only 60
percent effective. Had he checked, the
company would have told him not to use
the old brochure or the data itself. Wally
was sued for false advertising.
Some industries prohibit representatives creating brochures, so check with the
manufacturer before creating any literature. If you must create marketing materials, make sure the manufacturer signs off
on it before you distribute it. Otherwise,
the best and safest practice is to stick with
the manufacturer's current brochures, instructions for use or other literature.
4. AVOID UNSOLICITED FAXES
Unsolicited faxes should never be used
as a substitute for cold calling or mass
mailing. Under the Telephone Consumer
Protection Act, sending an unsolicited fax
for advertising to anyone is a violation of
federal law. A business can pay as much as
$500 in damages for each unsolicited fax.
Wally's 500 faxes could potentially cost
him $250,000. It takes only one unhappy
fax recipient to report a violation, as the
law encourages whistleblowers. Although
there are exceptions to the law, faxing unsolicited advertising just isn't worth the
risk when alternatives like cold calling,
mailing or email can be used to reach potential clients.
Wally is a fictitious client, but his experiences are based upon real client
experiences. While a manufacturer's
representative may not always be able
to avoid litigation, following these tips
can mitigate potential liability. If you are
sued, involve legal counsel immediately.
Manufacturers may provide counsel to
their representatives when they are also a
party to the lawsuit, but there is no guarantee. To minimize the risk of being sued,
don't paint a target on your back! q
Sanford E. Watson, a partner with Tucker
Ellis LLP, is a trial lawyer practicing in the
areas of medical products liability, real estate
and commercial litigation, ethics and public
law. He spends a substantial portion of his
time defending distributors, manufacturers'
representatives and sales representatives in
products liability cases. He can be reached at
Spring 2017 www.wdimagazine.com