Part Submission Warrant (PSW) dispute

[Wes Bucey]

In Reply to Parent Post by gp7000

Wes,

Do you think we should consult a product liability lawyer specialized in automotive industry?

We want to clearly understand our liability so that we can improve our process dealing with suppliers and prevent big dispute in the future.

Sorry, I missed this one -
Make sure you have all your facts straight before you involve an attorney. Most good attorneys will tell you to do that before they will proceed on the case - the difference is that their meters will be running at the same time, adding to your cost.

I have seen several cases where plaintiffs pulled the trigger before they had their facts straight and ended up a lot poorer with egg dripping off their chin when defendants successfully countersued and won. I have seen a lot more cases where plaintiffs have sued and settled the case during the discovery process when deposing expert witnesses, having learned the plaintiff's position was not rock solid.

Litigation is the last resort, not the first, for smart organizations.

[Wes Bucey]

In Reply to Parent Post by Wes Bucey

Sorry, I missed this one -
Make sure you have all your facts straight before you involve an attorney. Most good attorneys will tell you to do that before they will proceed on the case - the difference is that their meters will be running at the same time, adding to your cost.

I have seen several cases where plaintiffs pulled the trigger before they had their facts straight and ended up a lot poorer with egg dripping off their chin when defendants successfully countersued and won. I have seen a lot more cases where plaintiffs have sued and settled the case during the discovery process when deposing expert witnesses, having learned the plaintiff's position was not rock solid.

Litigation is the last resort, not the first, for smart organizations.

Having written this first post, I now recognize you may have been asking about referring to a product liability attorney on general principles, not just allied with this plating issue. The more encompassing answer is there are risk assessment firms, some free services by product liability insurance companies and some not-for-profit trade associations who can provide plenty of information about risk proofing your organization, its products, and services from liability,

I would first start with my insurance carrier and keep asking for referrals.

Think of lawyers as kids with hammers - everything looks like a nail! To a lawyer, a primary paycheck comes from litigation and correction, not investigation and prevention.

[gp7000]

Thanks for the advice again. Yes, we're trying to learn lessons from this case and understand the general principles.

Of course, right now the supplier is willing to bear half of the loss but our upper management doesn't agree. It wants the supplier to absorb all the loss because the failure is for sure due to supplier's nonconformance to the spec.

I agree with you that we should treat the supplier as an ally and jointly look for the root cause of the failure. However our upper management wants to enforce the general principles to the supplier so that they will learn a hard lesson as well. The supplier is offshore and quality control isn't as strictly enforced as in U.S. even it is certified by TUV and audited by our QA team.
If they continue to think their nonconformance to spec doesn't expose them any liability, they wouldn't take the lesson very seriously. As I mentioned earlier, if the loss is very big, our company will sue the supplier for sure.
Therefore if our supplier understands that by signing PSW it is liable for any nonconformance to spec, they would be very careful. Many people in our organization strongly believe that the supplier would lose the case had we taken it to the court. I believe too. Do you?

[Wes Bucey]

In Reply to Parent Post by gp7000

Thanks for the advice again. Yes, we're trying to learn lessons from this case and understand the general principles.

Of course, right now the supplier is willing to bear half of the loss but our upper management doesn't agree. It wants the supplier to absorb all the loss because the failure is for sure due to supplier's nonconformance to the spec.

I agree with you that we should treat the supplier as an ally and jointly look for the root cause of the failure. However our upper management wants to enforce the general principles to the supplier so that they will learn a hard lesson as well. The supplier is offshore and quality control isn't as strictly enforced as in U.S. even it is certified by TUV and audited by our QA team.
If they continue to think their nonconformance to spec doesn't expose them any liability, they wouldn't take the lesson very seriously. As I mentioned earlier, if the loss is very big, our company will sue the supplier for sure.
Therefore if our supplier understands that by signing PSW it is liable for any nonconformance to spec, they would be very careful. Many people in our organization strongly believe that the supplier would lose the case had we taken it to the court. I believe too. Do you?

I guess it would depend on which venue the case is brought. If the supplier is offshore, are you going to be able to enforce any judgment?

I think your managers are being too myopic here. If they dealt with an off-shore supplier to save money, they sure didn't do much to protect themselves did they? If I were a stockholder, I'd be more interested in getting good product to sell rather than be distracted by a relatively minor issue like this. The only lesson a lawsuit will bring is for the supplier to dump you as a customer. Life is too short to deal with a litigious customer. Some surgeons subscribe to blacklists of known litigious patients and refuse to take them as new patients. Is that the kind of reputation your bosses want with off-shore suppliers?

Plainly, bluster and loud voices don't win trials. Saying a thing is true doesn't make it true. If it were my call, I would gladly accept the 50% offer, since both customer and supplier have blame. Why pay for a costly lawsuit to decide how much? The rule in civil cases is that if a judge or jury finds partial liability for each party, the judgment is split that way. Hence if a guy jaywalking across the street gets hit by a driver who was distracted because he was talking on a cell phone, a judge or jury might reasonably say each was liable to the same degree and require each party to pay half the cost.

We are starting to stray into the area where companies pay me big bucks for helping determine strategy and I will have to limit my answers from here on. I have been as forthcoming as I could under the circumstances.

[Jim Wynne]

In Reply to Parent Post by gp7000

Therefore if our supplier understands that by signing PSW it is liable for any nonconformance to spec, they would be very careful. Many people in our organization strongly believe that the supplier would lose the case had we taken it to the court. I believe too. Do you?

This seems to be open and shut insofar as the value of the parts themselves is concerned. You clearly specified plating that wasn't done. The supplier warranted that it was done. You accepted the supplier's warrant in good faith. No contest.

Now: liability for damage done that you might claim was due to the plating (or lack thereof) is another issue. As Wes suggested, you would need to be able to show that the supplier's failure to properly plate the parts was the cause, to the exclusion of other possible causes, which would be an expensive proposition. I will also agree with Wes when he tells you that litigation should be your last resort. Unless there is lots of money involved, it rarely does anything except leave everyone wishing they hadn't done it. Everyone except the lawyers.

[gp7000]

After over 10 posts I'm still very confused.

Let's forget about litigation and let's forget about the difficulty of taking litigation against offshore supplier. We understand this very well. No brain there.

However, the tricky part is the conclusion of this case. Given the situation, I just want a clear statement of your position. I believe that the conclusion from this case would be helpful to many subscribers of this forum.

JSW05 in the very beginning told me that "the supplier should be responsible for the nonconforming parts".

Now the new message of "... No contest" confused me. Did you change your position now? Do you still think it's the supplier to blame?

As for Wes' replies, I can't understand exactly his position. From his last message, he seems to suggest both sides should be blamed. Why should we get blamed? Is it because we didn't request the plating certificate?

I think the clear-cut positions are one of the following:
1. supplier to blame;
2. customer to blame;
3. both to blame.

I take 1. What about you? Let's make it short and simple.

[Wes Bucey]

In Reply to Parent Post by gp7000

After over 10 posts I'm still very confused.

Let's forget about litigation and let's forget about the difficulty of taking litigation against offshore supplier. We understand this very well. No brain there.

However, the tricky part is the conclusion of this case. Given the situation, I just want a clear statement of your position. I believe that the conclusion from this case would be helpful to many subscribers of this forum.

JSW05 in the very beginning told me that "the supplier should be responsible for the nonconforming parts".

Now the new message of "... No contest" confused me. Did you change your position now? Do you still think it's the supplier to blame?

As for Wes' replies, I can't understand exactly his position. From his last message, he seems to suggest both sides should be blamed. Why should we get blamed? Is it because we didn't request the plating certificate?

I think the clear-cut positions are one of the following:
1. supplier to blame;
2. customer to blame;
3. both to blame.

I take 1. What about you? Let's make it short and simple.

As I wrote - we are getting into the area where folks pay me big bucks to help them determine strategy.

Look at the situation from the supplier's point of view - he took it on faith from HIS supplier (as you did) that the plating was according to spec. He is shocked and dismayed to learn months after delivery that a problem has cropped up. There is no proof yet that the plating is to blame (lots of smoke - no proof for court, yet), but if it is, your supplier has been done dirty by the plating supplier. You are dealing in a foreign country. Problems in translation could occur anywhere along the line. As the customer, you should have anticipated such problems and put in failsafe measures to protect yourself against such errors. If you go to trial, the supplier may be able to successfully shift blame to plater who probably does not have deep pockets to defend at trial, let alone pay a judgment. Depending on what country the suppliers are in, they might just as easily close up shop under one name and reopen under a new name five minutes later, leaving plaintiff sucking gas.

I'm telling you the pragmatic approach. If some big exec in your company has his ego on the line for OKAYing the off shore outsource, he's really the guy who should be taking the heat for not for the customer in this deal in advance.

I'm giving you as straight and pragmatic advice as I would give for my normal fee. You may not be high enough on the totem pole to know all the egos on the line here, but I assure you the ostensible purpose of teaching the supplier a "lesson" is smoke blowing up someone's nether regions. The harshest lesson would be to take the sop of half the money and drop the supplier from the approved list. Anything else has no further benefit to the customer.

[Jim Wynne]

In Reply to Parent Post by gp7000

JSW05 in the very beginning told me that "the supplier should be responsible for the nonconforming parts".

I'm still saying that.

Now the new message of "... No contest" confused me. Did you change your position now? Do you still think it's the supplier to blame?

Who are you asking? I never said anything about "blame." Forget about blame. Blame is for losers.

As for Wes' replies, I can't understand exactly his position. From his last message, he seems to suggest both sides should be blamed. Why should we get blamed? Is it because we didn't request the plating certificate?

Wes has already responded, but I'll add that it appears that there is indeed some responsibility on both sides, and I'm not contradicting myself in saying that. Part of the risk involved in this sort of offshore purchase is inherent in the distances involved. The supplier knows exactly how far away he is, believe me. And he also knows that your company came to his in the beginning for one reason: price. And he also knows that people who are concerned primarily with price are often ignorant (or daring) when it comes to cost. He has you over a barrel at this point, I'm afraid, but someone should have seen it coming.

I think the clear-cut positions are one of the following:
1. supplier to blame;
2. customer to blame;
3. both to blame.

I take 1. What about you? Let's make it short and simple.

OK--short and simple.
1) The supplier is responsible for not making the parts to print, regardless of sub-tier screwups. This is unequivocal and undeniable, and I don't charge anyone big bucks for common knowledge.
2) Good luck collecting.