As many pet owners and pet friends know by now, a class action lawsuit against Diamond Pet Foods has recently been settled.  The pet owners involved in that lawsuit will receive up to $3.1 million in damages to reimburse them for injuries and deaths of their dogs and for costs of the recalled product.   Diamond Pet Foods denied that it did anything illegal, despite a significant pet food recall linked to the company's failure to properly test the food for safety.  The pet food had apparently been contaminated by a naturally occurring mold called aflatoxin, which can cause liver damage when ingested.  Consumers can find more information about the terms of the settlement at the Diamond Pet Food Settlement Website.  (Note: This case is not related to the pet food recalls of several pet food brands in 2006.)

 From pet food, to spinach, to toys with lead paint.... big recalls usually get a lot of press.   Yet, while many high-profile product recall cases result in class action litigation, not all recalls end up that way.  First of all, products are recalled after something bad happens - people get sick, pets get hurt, kids get injured, or the worst happens and a child dies.  The FDA investigates reports made by consumers and recommends (or demands) a recall based on what it discovers.  Companies can, and often do, issue voluntary recalls of their own products as well.  Often it is a PR nightmare....the media is all over the story and panic strikes in the hearts and minds of folks across the country.

A "class action" lawsuit is a way for the legal rights and remedies of a very large group of people afflicted with the same legal problem to be decided all at once rather than individually.  Enough people have to be affected by the same problem in order for the claim to qualify as a class action, let alone for a lawyer to take on the case (class actions can be very expensive to litigate).

Aside from when and why a  product recall may turn into a class action lawsuit, the issue of what happens as a result of a class action is also important.  Companies are increasingly taking out product liability insurance policies to cover the costs of lost profits from a recall or the monetary damages awarded in litigation.  However, companies may not necessarily simply absorb these costs and deal with a lesser profit margin.  Rather, the costs of a class action, or a product recall, or the insurance premiums covering those events are usually "passed on" at some point to the consumer in the form of higher prices on the product.

Ultimately, product safety, injuries, recalls and class action lawsuits may just all be part of one big circle.  Consumers obviously pay the listed price for a product.  Consumers also "pay" in terms of injuries or sickness they suffer as a result of products that turn out to be unsafe.  But they even pay for the financial consequences of an unsafe product!!  Isn't the real "price tag" for a product, then, the price of the product whether it is safe or not?  Only if we keep buying it...

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