Nasir and Matt talk about the legal fallout from the Ray Rice suspension by the NFL and answer "I'd like to know about the legalities and liabilities from a safety standpoint – whose responsibility is it to check that items conform to safety laws, what can be done to ensure that CE Certification, Kitemarks, RF certification and so on are genuine? If a product breaks, who is liable? If a product causes harm to the end user, who is liable? What about textile or similar products requiring fireproofing treatment? Is liability insurance something the end seller should have or the manufacturer?It seems lots of people on here are eager to start importing things, but I'm deadly scared of ending up with something illegal or unsafe on my hands." See info for products liability for importers.
Full Podcast Transcript
NASIR: All right. Welcome to our business podcast where we cover business in the news and add our legal twist and also answer some of your business legal questions that you, the listener, can send in to firstname.lastname@example.org. This is Nasir Pasha.
MATT: And this is Matt Staub.
NASIR: And here we are on another episode. Today, we’re talking about football, right?
MATT: Yeah, we’re going to talk about football and this story has been pretty overblown. I mean, even by the time we’re recording this, this story’s oversaturated.
NASIR: Played out so to speak?
MATT: Yeah, we’re going to do it a little bit different; talk about kind of the legal aspects of this Ray Rice issue of the NFL. So, if you are not familiar with this, basically, Ray Rice is a football player for the NFL. Originally, he got suspended for two games for what was assumed to be some sort of domestic violence. New video came out last week by the time people listening into this that showed that it was much worse than the first video. Basically, he punched his now wife, at the time fiancé, knocked her out cold. Somehow, the NFL claim that they never saw the video up until this past week so I won’t get into that because that seems questionable right off the bat. As a result, what happened was the NFL suspended him indefinitely and the team he played for, the Baltimore Ravens, cut him altogether. So, we are going to talk some of the legal aspects of it. There’s a few things that come to mind in terms of what his options are or what kind of legal fallout could be. But, I guess, first things first, before I get into it is keep in mind, whether he should even get involved in this in the first place but I don’t know if we will discuss that or not, but that’s just the consideration. So, you can petition a court for an injunction that would say he would be available as a free agent following the second week because the original suspension was two games; now, it’s indefinitely so the argument there is kind of a double jeopardy argument – can’t get penalized twice for the same violation. Can file civil loss against the NFL for monetary damages and then can file a grievance with a collective bargaining agreement and go that route as well but, like I said, I don’t know if any of this is even worth it honestly for him and it’s definitely not worth it for the NFL because – I kind of alluded to this at the beginning that – the commissioner’s definitely in some hot water, boiling hot water, after this and, if they get into the court process and the NFL does not settle this out or do whatever, they’re going to depose the commissioner and all the people. So, at that point, he can’t lie anymore; I guess he could but there’s a much more severe penalty than lying to a media in person.
NASIR: Yeah, and I think what’s interesting is that the NFL has created rules almost… I don’t want to say ambiguous but kind of generalized on purpose because I don’t believe that the league itself has specific rules that dictate any kind of mandatory suspensions on physical abuse of their players, et cetera. There is some discretion involved with the commissioner and so forth. And so, when Rice went to bring NFL to court, the court is going to kind of give a little bit of deference to how the NFL interpret its own rules. And so, they would have to show that somehow the commissioner went way off as to what his legal bounds were. But I’m just thinking here, you know, there are a lot of craziness with the NFL on how they’ve been handling this, but it does seem strange that they are kind of loosey goosey on how they have been implementing these rules that, only until there was this kind of social uproar of what’s going on in the NFL with Rice and other past instances and with the release the video does the extension of the two days suspension turn into an indefinite suspension, there is something strange about that and I think that in itself may give rise to the questions of whether or not they received the video before this last week as they say they did but did they admit that they did receive it now beforehand?
MATT: Oh, I mean, right now, at least…
NASIR: As of today?
MATT: As of recording this podcast, they are still denying that they saw it up until TMZ posted it which seems unbelievable considering how much NFL’s worth.
NASIR: And I believe the police themselves sent the disclosed the tape back in April, right? And that seems pretty believable to me but, nonetheless, that kind of going back and forth seems disingenuine in the first place in the sense that now does the rule change because public opinion changes? And maybe some people will argue and say, “Yeah, it does, and now we understand that’s the ramifications of this and so forth.” But, I think, if you are going to rely upon these rules and so forth, maybe you will make a little more concrete but I think they made it loose on purpose to give pretty wide discretion to the commissioner.
MATT: Yeah, and you are right they have the… I forget exactly what they call it but it’s a very vague…
NASIR: It’s like a morals clause, right?
MATT: Personal Conduct Policy.
NASIR: Yeah, okay.
MATT: But it took this instance for them to add some sort of domestic violence suspension language in there which seems outrageous since this is definitely not the first instance of an NFL player doing this. But, yeah, I mean, I think what it comes down to is this, it’s Ray Rice and obviously this is where he makes his money, I think it would be a smart move to just not even get involved in this and just kind of let it be. I think it’s only going to get worse for him and it’s only going to bring more tension to, I mean, supposedly his wife doesn’t approve of all this and thinks it’s bad that they keep talking about it and it’s in the media. So, if that’s what they really want to do, you would definitely be smart to not even get involved and I don’t think it’s going to go well for him. Nothing good is going to come from this for him and the NFL, too.
NASIR: Yeah, it shows you, domestic violence is just not good for business.
NASIR: I think that’s the NFL stance, you know, that’s how they are looking at it.
MATT: Yeah, it’s a pretty outrageous situation.
NASIR: But let me take this to, obviously, this is NFL. I mean, none of us are owning such organizations. But let’s just take this from a small, medium-sized business perspective. When you contract with other vendors or other businesses and so forth and different business relationships, a lot of times, the contracts almost definitely don’t detail every single term and process and so forth because, a lot of times, if it’s a small deal and so forth and, even in the bigger deals, it just becomes too cumbersome, right? And there are some generalities that are made. For example, how payment is made. You know, sometimes, it would say within thirty days. Sometimes, it says, “Okay. On the 30th day by check, send in to this address,” right? And, depending upon how broad you make the terms depends upon how well the two parties trust each other to act in good faith. That’s kind of a principle that I just want to demonstrate here. Okay. You are giving a lot of trust to the commission that they are going to cooperate in good faith and the best interest of the NFL, et cetera. In the same way, when you’re contracting, you kind of have to look it that way – that, the less you trust or the bigger the consequence of your relationship with that particular party that you are dealing with, the more important it’s going to be to outline in details somebody’s issues. That’s why you see, for example, in a contract with a customer or someone that owes you a debt where the payment is a little more suspect, where it’s outlined that, okay, the payment must be made by cashier’s check and delivered by this date and at this address whereas a very casual business relationship where someone’s purchasing goods from you and selling it or whatever, it’s not as strict.
MATT: I don’t know. I agree? I don’t know.
NASIR: Sorry for that tangent there but I just wanted to kind of bring it home to small businesses.
MATT: I wasn’t expecting you to take it that route.
NASIR: I know. I like to throw people off, that’s what I do.
MATT: I just wanted to talk about football, really.
NASIR: Well, we didn’t even get to talk about football. I mean, the Chargers lost last Monday.
MATT: Yeah, tough one for you.
NASIR: Yeah. Believe it or not, I actually fell asleep by the third quarter, but don’t tell anyone.
MATT: So, you saw the good part?
NASIR: Yeah, exactly.
MATT: That after this. So, it’s really your fault.
NASIR: Yeah, my bad.
I feel like we should end our episode but we still have a question of the day.
MATT: Yeah. It’s a long one, too.
Question of the day. “I would like to know about the legalities and the liabilities from a safety standpoint? Whose responsibility is it to check the items conform to safety laws? What can be done to ensure that CE certification, kitemarks, RF certification and so on are genuine? If a product breaks, who is liable? If a product causes harm to the end user, who is liable? What about textile or similar products requiring fire-proofing treatment? Is liability insurance something the end seller should have or the manufacturer? It seems like lots of people on here are eager to start importing things but I’m deadly scared of ending up with something illegal or unsafe on my hands.”
NASIR: Okay. I think this question is taken out of context.
MATT: You think?
NASIR: Yeah, this question was submitted to us via Reddit. We did an AMA this week. Thanks for all those that are listeners and helped us with that. But the person was talking about importing from China, basically. By the way, when you guys do submit questions, one question is sufficient instead of a series of five or six questions but that’s okay. But I think the most important thing in any kind of product business – let alone, importing from China or anywhere else – is that there is a concept of strict liability where every single party down the line – from the manufacturer to the distributor to the retailer – is strictly liable for the harm that a defect may cause. And a strict liability means that it doesn’t matter if there is intent – meaning, whether you are negligent or not, you could be held liable for that. And so, that’s why it’s important to have the proper product liability insurance for that and that usually is kind of a must when you’re dealing with any kind of products that could potentially cause harm and also dealing with recalls and things like that.
MATT: Yeah, that’s definitely the consideration. I guess I would say, you know, in these situations, if there is an issue, liability comes into question, I would think that everyone down the whole line is just going to get sued. So, it’s going to be difficult. I would think most times it might be difficult to show where exactly the issue was and, even if you got, you know, you’re third in the process line and it came to you and you didn’t notice the flaw with it, you know, is there a liability there? I guess I would say liability insurance, no matter what, is definitely going to be your friend in this situation.
NASIR: And, especially if you are importing from China, because what if you’re the second or last in line and the people in China are harder to reach for the consumer, right? They are not going to serve these papers to this company in China because how are they going to enforce a judgement against them? You’re a bigger target so it kind of goes to your genuine issue too, right? How do you determine what… You’re also going to have some assumption of risk that you are going to have to determine how genuine these certifications are on your own part and do your research and having indemnification clauses and making sure that you’re reimbursed by the Chinese company for any kind of mistakes like that is one thing but, again, you have the same problem. Are you are willing to go to china to enforce these judgements?
MATT: Yeah, that’s true as well. There’s too many questions here for me to keep track. I answered one so I think that’s sufficient.
MATT: Well, I guess they are all kind of relating to the same sort of idea so I think we…
NASIR: Yeah, I think, conceptually, yeah, you know, this person is saying that there are a lot of people are really getting into importing products from China and other places which I think that happens all the time because a lot of times all you need to do is find the right supplier and, of course, the demand and then just kind of broker the deal and make it happen. It’s actually a pretty lucrative and easy business to get into but, of course, like this person kind alludes to, there are some risks involved and the unwary can really fall into a trap.
MATT: Yeah. Okay. Do we have anything else?
NASIR: I think that’s our football episode. We didn’t fumble any questions or stories, did we?
MATT: Oh, football pun!
NASIR: Oh, t was unintended, actually.
MATT: Ah, I doubt that.
NASIR: You intercepted that, did you? Or you received that? Anyway…
MATT: Okay, all right, all right.
NASIR: I’ll give you an extra point later.
MATT: Oh, that one was good. I’ll give you that. That was pretty funny.
NASIR: Okay. Well, let’s just push this to past half time and…
MATT: You should have stopped while you were ahead..
NASIR: And get to safety and time out this episode. Okay.
MATT: You picked such great football terms, too.
NASIR: I know. I’m horrible at that stuff. But, anyway, thanks for joining us everyone.
MATT: Yeah, keep it sound and keep it smart.