7 Things to Know About Defective Products & Product Liability Cases

Searcy Denney Scarola Barnhart & Shipley

If you have questions about a product defect or product liability in general, below are seven things to know about defective products and product liability law.

  1. What is Product Liability Law?

Product liability law addresses how injured parties may recover for damages they sustained from a defective product. Typically, the responsible party in a product liability case is anyone in the product’s chain of distribution, including but not limited to:

  • The product manufacturer
  • The manufacturer of parts of the product
  • The party that assembles the product or installs it
  • The distributor of the product
  • The retail store selling the product directly to the consumer

Product liability law is based on state law and is often brought under the following causes of action:

2. How Can a Product Be Defective?

There are various ways a product can be defective, including:

  • Manufacturing Defects: These types of defects typically occur while the product is in the manufacturer’s care.
  • Marketing Defects: These types of defects involve problems with how a product is marketed, which may include issues with the labeling of the product, a lack of warnings or instructions, etc.
  • Design Defects: These defects are caused by a flaw in the design of the product itself, such that the product is defective from the start.

3. What Are Examples of Defective Products?

There are thousands of different products that are defective, causing millions of injuries each year. That said, it would be impossible to name every type of defective product. However, below are some examples of products that have had serious defects that may be surprising:

  • Essential oils. This is a product commonly used by consumers that you would not expect to be harmful. However, in recent news, this product has been recalled in some instances after the Centers for Disease Control and Prevention determined that certain bottles of room spray contained rare and dangerous bacteria that causes melioidosis – a potentially fatal condition.
  • Off-road motorcycles. Off-road motorcycles are supposed to be fun for riders to use during their outdoor adventures. However, if the bike is defective, this activity could be dangerous. Recently, the U.S. Consumer Product Safety Commission (CPSC) recalled some of these motorcycles because the retaining clips on the front brake caliper pin were falling out. This could cause the front brakes to fail, posing a crash hazard to the bike’s rider.
  • Defective battery. Sometimes the lithium battery inside many commonly-used products such as phones, video cameras, or even remote-controlled cars can be faulty, causing severe injuries.
  • LED Projectors. When you think of a defective product, rarely would an LED projector come to mind. However, the CPSC has recently recalled some LED projectors because they can malfunction and overheat, posing a fire hazard.
  • Jogging Strollers. Your baby’s safety is a top priority. Most parents would not expect their child’s life to be in danger when taking their baby for a stroll. However, on October 7, 2021, the CPSC recalled some jogging strollers due to a product defect. The stroller’s front wheel bearing could fail or detach in some situations, posing a fall and injury hazard.
  • Wood Stools. When sitting on a stool in your kitchen, you typically would not expect to be in danger. However, some wood stools have been recalled recently due to the stool breaking during use, posing fall and injury hazards. The CPSC recalled some stools in October 2021, recommending that consumers immediately stop using the recalled items and return them to the store where they were purchased for a full refund.
  • Youth ATVs. Recently, the CPSC recalled some youth ATVs because the vehicles failed to comply with federal mandatory ATV safety standards, posing a risk of severe injury or death to children.
  • Oversized Outdoor Reclining Chairs. When you are relaxing outside in your reclining chair on a warm summer day, the last thing you expect is the chair to suddenly collapse, causing you injuries. However, the CPSC has recently recalled several reclining outdoor chairs because they could break or collapse when weight is applied, posing a fall hazard. Reports of injured parties were sent to the retailer of the chair. The CPSC recommended that consumers immediately stop using the recalled chairs and return them to the nearest retail store for a full refund.
  • Oil and Vinegar Cruets. When you are sitting down with your family enjoying a nice Italian dinner, and you go to grab the oil and vinegar cruet to add a nice flavor to your salad, you typically would not expect to be lacerated by the cruet (which is a small container). However, in September 2021, the CPSC recalled about 26,150 cruets because the glass portion can break during use, posing laceration hazards.
  • Defective power or chain saw. Be careful to inspect your power or chainsaw before use, and do your research. In December 2020, the CPSC recalled 10-inch corded chain saws with extension poles because the chainsaw can start unexpectedly without the operation of the switch when the extension cord adapter is connected upside down. This could pose serious laceration hazards. The CPSC recommended that consumers stop using the recalled chainsaw immediately and contact the manufacturer for a free repair kit.

4. How to Conduct a Product Recall

When a product is defective, and a party in the product’s distribution chain, such as the manufacturer, distributor, or retailer, among other responsible parties, learns that the product is faulty, the responsible party may need to conduct a product recall. The CPSC provides guidelines on how to conduct a recall.

The CPSC recommends that one of the best ways to ensure that a product recall effectively reduces the amount of injuries or damages sustained to consumers is for a company to have a product recall plan already in place prior to an issue arising and execute it as quickly as possible.

Generally, a recall plan should begin with a company following the applicable laws and reporting the product to the CPSC. Responsible parties have a legal obligation to immediately report the following information about their products to the CPSC:

  • A defective product that could cause an unreasonable risk, injuries, or death to consumers
  • A product that fails to comply with applicable consumer product safety rules or any other rule, regulation, standard, or ban under the Consumer Product Safety Act, or any other statute enforced by the CPSC
  • An incident in which a child (regardless of age) chokes on a marble, small ball, latex balloon, or other small part contained in a toy or game and that, as a result of the incident, the child dies, suffers a severe injury, ceases breathing for any length of time, or is treated by a medical professional
  • Certain types of lawsuits applicable to manufacturers and importers and subject to the time periods detailed in Sec. 37 of the CPSA

Failure of a responsible party to properly report this information to the CPSC may lead to civil and/or criminal penalties. According to the CPSC, a responsible party should follow the following advice: “When in doubt, report.”

Sometimes defective products are reported by the consumers themselves or other sources. Once the CPSC decides that a recall may be necessary, it will expect a responsible party to respond quickly to its request for information and work closely with the CPSC’s Office of Compliance to ensure a proper recall.

5. How Do I Report an Unsafe Product or Search for Them?

If you are a consumer and would like to report an unsafe product to the CPSC, or you would like to protect your family and search the CPSC’s product recall database to see if a product you are considering is unsafe, consult the CPSC’s web page located at saferproducts.gov.

6. What Should You Do After Being Injured by a Defective Product?

If a defective product injures you, first, you should take care of your injury and seek medical attention. Your health and safety are most important. After you have addressed your medical needs, you should consider the following to help prepare your product liability case:

  • Be sure to keep the product that causes your injuries. Keep the product as-is without attempting to fix or modify it. Do not throw it away.
  • Be sure to collect your medical records documenting your injuries and take photos of the injuries caused by the defective product.
  • Be sure to follow your doctor’s advice and follow the prescribed treatment plan to ensure your injuries are treated properly.
  • Do not talk about your situation on social media. This could harm your case.
  • Seek guidance or advice on your legal rights as soon as possible after sustaining your injuries.

7. How Do I Know If I Have a Viable Product Liability Case?

If you or a loved one were injured or died because of a defective product, you may have a product liability claim. The key to winning your case is to prove that the product’s defect was the manufacturer’s fault (or another responsible party such as the seller or distributor of the product). Consumers expect, and the law requires, products to be safe and not dangerous to those using them.

Even if a product was safe when it left the manufacturer, you might still have a claim against another party if its packaging hurt you, the product was damaged at some point after leaving the manufacturer and being purchased by you, or the product did not have sufficient warnings or instructions.

Industry Standard and Sole Negligence Defenses Can’t Fix a Defect

Lian Skaf | The Subrogation Strategist

Strict products liability cases have been the subject of much fluctuation in the Pennsylvania courts over the last few years. Utilizing hope created by the courts in recent strict liability cases, defendants have tried to revive defenses based on meeting industry standards and the plaintiff’s contributory negligence. Recently, the Superior Court of Pennsylvania tempered that hope with limitations of how far strict liability defenses can extend.

In Sullivan v. Werner Co., No. 3086 EDA 2019, 2021 Pa. Super. LEXIS 210, an appellate panel of the Superior Court reviewed the lower court’s decision to exclude evidence of industry standards and of the plaintiff’s negligence in a trial that resulted in a $2.5 million verdict for the plaintiff. Upholding the decision of the lower court, the court found that the proffered evidence was within the discretion of the court to exclude.

In Sullivan, Michael Sullivan (Sullivan) was working as a union carpenter at a renovation project for a local school. He and his apprentice were installing exterior sheathing to the outdoor walls. In order to install the sheathing, Sullivan had to use a scaffold. He put together a new SRS-72 scaffold manufactured by Werner Company (Werner) that his foreman bought at Lowe’s Companies, Inc. (Lowe’s) and used the scaffold during the course of his work. While on the scaffold, Sullivan fell through and crashed to the ground. He suffered permanent injuries as a result of the incident.

Sullivan and his wife, Melissa Sullivan, brought a strict products liability action against Werner and Lowe’s (herein after referred to collectively as Manufacturer). Determining that a design defect caused the accident, the jury awarded Sullivan $2.5 million in damages. Manufacturer appealed, alleging, among other things, that the lower court improperly disallowed evidence that it met industry standards in its design and that Sullivan’s negligent actions could constitute the sole cause of the loss.

In support of its industry standard argument, Manufacturer claimed that it should be allowed to have its expert testify that the “inverted L-shaped design of the deck pins” was the most common design in the industry. The court did not find Manufacturer’s argument persuasive, holding that the much discussed Tincher decision (see Tincher vs. Omega Flex, Inc., 104 A.3d 328 (Pa. 2014)), a case that loosened some restrictions in product liability cases, did not overturn the prohibition against industry and government standards being introduced as evidence in strict liability cases. Thus, the exclusion of such evidence by the trial judge was not improper.

The court also did not find persuasive Manufacturer’s argument that evidence of Sullivan’s potential negligence should have been allowed. Although the court conceded that there are “limited exceptions” addressing when a plaintiff’s conduct may be allowed as evidence of the plaintiff’s sole negligence, including voluntary assumption of the risk, product misuse and highly reckless conduct, Sullivan’s actions in this case did not fall into those exceptions. Here, Manufacturer claimed that Sullivan improperly assembled the product at issue. However, since such evidence is not allowed when the alleged negligence involves the product itself, the trial court properly excluded it.

Both rulings in this case are important because they help calm the choppy waters of strict liability for plaintiffs in Pennsylvania. As the court notes, “a product could be defective yet still widespread in an industry.” Thus, allowing a jury to consider evidence of industry standards as a defense to a design defect would be counterintuitive to the essence of strict products liability. Likewise, although a plaintiff’s sole negligence can still be used as a defense, because such evidence is not admissible when it involves the product itself, manufacturers cannot avoid the ramifications of a defective design simply because the plaintiff misused it. Considering these two defense prohibitions is important when evaluating the strength of a strict liability case in Pennsylvania and the potential defenses that can be raised in litigation.

Economic Loss Rule Bars Claims Against Manufacturer

David Adelstein | Florida Construction Legal Updates

The economic loss rule lives to bar a claim against a product manufacturer in a real estate transaction.  In a products liability action, there needs to be personal injury or property damage, other than to the property itself, in order to recover economic damages.  Otherwise, the economic loss rule will bar the recovery of such economic losses when the economic losses deal to the product itself.  This is important to keep in mind in any product liability action against a manufacturer.

In a recent case, 2711 Hollywood Beach Condominium Ass’n, Inc., v. TRG Holiday, Ltd., 45 Fla. L. Weekly D2179a (Fla. 3d DCA 2020), a condominium association purchased the condominium from the developer.  Subsequently, it noticed leaks with the fire suppression system in the condominium and sued multiple parties for damages for repairs due to the leaks and the replacement of the fire suppression system.  One of the parties sued in negligence and strict liability was a manufacturer of pipe fittings used in the fire suppression system.  The manufacturer moved for summary judgment based on the economic loss rule and relying on the 1993 Florida Supreme Court opinion in Casa Clara Condominium Ass’n v. Charley Toppino & Sons, Inc., 620 So.2d 1244 (Fla. 1993), holding “the economic loss rule limited a defendant’s tort liability for allegedly defective products to injuries caused to persons or damage caused to property other than the defective product itself.”  2711 Hollywood Beach Conominium Ass’n, supra.  The trial court agreed with the manufacturer and granted summary judgment.  On appeal, the Third District affirmed based on the economic loss rule:

The Association bargained for, purchased and received a building; [the manufactuer’s] fittings were only a component of the FSS [fire suppression system], incorporated into the building. Applying the rule set forth in Casa Clara, the Association purchased a completed building from the developer. [The manufactuer’s] fittings were “an integral part of the finished product and, thus, did not injure ‘other’ property.”  Injury to the building itself is not injury to “other” property because the product purchased by the Association was the buildingSee Casa Clara, 620 So. 2d at 1247. The economic loss rule therefore bars the Association’s recovery as to [the manufacturer] to the extent that it sought damages to replace the FSS [fire suppression system] and repair damage to the building.

2711 Hollywood Beach Conominium Ass’n, supra (internal citations omitted).

Notably, in Casa Clara, homeowners sued a concrete supplier for supplying defective concrete that caused the reinforcing steel in the concrete in their homes to rust.  The concrete supplier, in an action that went up to the Florida Supreme Court, prevailed based on the economic loss rule because there was no personal injury or damage to property other than the property itself, which was the completed building.  As the Florida Supreme Court held:

The homeowners also argue that [the supplier’s] concrete damaged “other” property because the individual components and items of building material, not the homes themselves, are the products they purchased. We disagree. The character of a loss determines the appropriate remedies, and, to determine the character of a loss, one must look to the product purchased by the plaintiff, not the product sold by the defendant.  Generally, house buyers have little or no interest in how or where the individual components of a house are obtained. They are content to let the builder produce the finished product, i.e., a house. These homeowners bought finished products—dwellings—not the individual components of those dwellings. They bargained for the finished products, not their various components. The concrete became an integral part of the finished product and, thus, did not injure “other” property.

We also disagree with the homeowners that the mere possibility that the exploding concrete will cause physical injury is sufficient reason to abrogate the economic loss rule. This argument goes completely against the principle that injury must occur before a negligence action exists. Because an injury has not occurred, its extent and the identity of injured persons is completely speculative. Thus, the degree of risk is indeterminate, with no guarantee that damages will be reasonably related to the risk of injury, and with no possibility for the producer of a product to structure its business behavior to cover that risk. Agreeing with the homeowners’ argument would make it difficult “to maintain a realistic limitation on damages.”

Casa Clara, supra, at 1247 (internal citations omitted)

Attorneys Await Answers on Key Products Liability Questions

Ben Seal | The Legal Intelligencer | February 12, 2016

When Tincher v. Omega Flex landed on products liability attorneys’ desks 15 months ago, its 137 pages left them looking for more. The state Supreme Court’s fervently awaited decision raised a series of questions, the most pressing of which was when the other foot might drop.

By leveling the playing field, as the opinion’s author, former Chief Justice Ronald D. Castille, said, and clearing a path for the incremental development of decisional law to fill out the practice area, the court left attorneys uncertain about a variety of practical issues. Those issues—ranging from how a judge should instruct and charge a jury to the admissibility of certain evidence and defenses—have yet to be resolved, attorneys said, and the law won’t stabilize until they are addressed.

Building the necessary body of case law to settle the turbulence attorneys are experiencing will likely take several years, they said. The Supreme Court recently agreed to hear its first post-Tincher case, on whether a jury should decide if a product is “unreasonably dangerous”—just one of the numerous questions attorneys said they want courts to answer.

The fact-specific nature of products liability cases makes the task facing Pennsylvania’s courts particularly daunting, according to Jeremy Mishkin of Montgomery McCracken Walker & Rhoads. It might have taken just one decision to unsettle the practice area, but it will likely take many more to restore order, attorneys said.

“When you’re eating a dinosaur, you can only eat it one bite at a time,” Mishkin said.

Speak with 10 products liability lawyers in Pennsylvania and you’re likely to hear 10 different priorities for the issue the courts most need to resolve.

Among its four specific holdings, Tincher ruled that a plaintiff can pursue one of two theories to prove a product’s defectiveness: the consumer-expectations test (“the danger is unknowable and unacceptable to the average or ordinary consumer”) or the risk-utility test (“a reasonable person would conclude that the probability and seriousness of harm caused by the product outweigh the burden or costs of taking precautions”).

Turning theory into practice is a critical next step, said Alan Feldman of Feldman Shepherd Wohlgelernter Tanner Weinstock & Dodig. He recently filed two cases against a furniture retailer over dressers that allegedly fall over too easily and have injured small children. Without further guidance from the courts, he said, he doesn’t know if those cases should proceed under the consumer-expectations or risk-utility test, or both, let alone what type of expert testimony he should present.

Thomas Finarelli of Lavin O’Neil Cedrone & DiSipio said attorneys don’t yet know whether a jury will be charged with reaching a finding on one of the tests or both. As a result, he doesn’t know how to present his defense.

“We would pick the theory that we think best fits our defense and push for that one,” he said. “But until the trial court makes a decision, you don’t know.”

The issue is one of many on which plaintiffs and defense attorneys are deeply divided. Finarelli said the tests propose separate theories, and a jury can’t be asked to decide one issue by answering two questions.

Plaintiffs attorney Larry Bendesky of Saltz Mongeluzzi Barrett & Bendesky said he has a different view.

“I believe I should be allowed to present evidence on both theories, and if I win one or the other, I win the case,” Bendesky said. “I don’t know whether the Supreme Court is going to agree with me on that.”

The appellate courts will likely be asked to weigh in on burden of proof, according to plaintiffs attorney Larry Coben of Anapol Weiss. Defendants could start pushing the notion that plaintiffs should have to prove a product could have been made with a safer alternative design in order to show causation, he said.

Causation is a “granular” issue, according to Mishkin, a defense attorney, but one that could play a key role in future development of the law. Other states place a higher burden on plaintiffs to prove causation than Pennsylvania does, he said.

In the uncertain post-Tincher landscape, jury instructions are a prime example of just how much is up in the air, Feldman said.

“Defendants and plaintiffs are submitting completely different instructions based upon completely different readings of Tincher,” he said.

Plaintiffs attorney John Gismondi of Gismondi & Associates said Tincher’s length and style contributed directly to the widespread confusion among products liability lawyers on how to move forward.

“If lawyers can’t understand it, how do we expect laypeople to understand it?” Gismondi said. “And if lawyers can’t understand it, how does a judge fashion a fair and accurate instruction to the jury?”

There are ample evidentiary issues judges now need to consider, many of which are “open for reargument,” Coben said.

Should a product’s adherence to industry standards and government regulations factor into a jury’s decision on its defectiveness? Should it matter whether the product is “state-of-the-art”?

Defense attorney James M. Beck of Reed Smith said if plaintiffs have their way on the admissibility of such evidence—convincing judges that it’s not relevant—they’re likely to be “pretty successful in the near term.”

Should it matter whether a plaintiff could be found comparatively at fault for the actions that brought about his or her injury?

Many plaintiffs attorneys hold firmly to the notion that an individual’s negligence in using a product should have no bearing on the defendant’s liability. Until further rulings, though, the availability of comparative fault as a defense is still up in the air.

And what role might experts be allowed to play in all of this?

Defense attorney Jonathan Dryer of Wilson Elser said Tincher has left him wondering whether judges will accept expert testimony on the definition of phrases like “acceptable risk,” “knowable risk” and “reasonable consumer.”

Finding answers to the many open questions facing products liability practitioners won’t be an easy process. As Finarelli noted, the trend away from trial means there are fewer opportunities for judges to make decisions that resolve some of the tension.

Even when a case does present significant legal issues that could climb the appellate ladder and help calm the confusion, the conditions are not always ideal.

In a recent trial before Philadelphia Court of Common Pleas Judge Marlene Lachman, in Kovacevich v. Crown Equipment, the jury instruction touched on a number of the pressing concerns attorneys highlighted.

Lachman employed the risk-utility test and told the jury to consider whether the product at issue—a forklift with an allegedly defective electric jack—complied with government regulations or industry standards. She also told the jury to consider “whether Mr. Kovacevich himself was negligent and whether his own negligence was a factual cause in bringing about his injuries.”

The jury returned…

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Is it the Dawning of the Age of Strict Products Liability for Contractors in California?

Garret Murai | California Construction Law Blog | February 9, 2016

It was the Age of Aquarius.

And everything was changing. Politically, socially . . . andlegally.

Through the 19th Century the doctrine of caveat emptor, literally “let the buyer beware,” was the rule of law. Under the doctrine a buyer was expected to protect him or herself against both obvious and hidden defects in a product.

It wasn’t until the late 1800s that U.S. courts began to impose implied warranties – for merchantability and fitness for a particular purpose – to protect consumers. But implied warranties were premised on their being a contract between the manufacturer and the user of a defective product, and by the mid 20th Century it was increasingly uncommon for consumers to purchase products directly from a manufacturer.

Then, in 1963, the California Supreme Court decided Greenman v. Yuba Power Products, Inc. (1963) 59 Cal.2d 57, and California became one of the first states to recognize strict products liability, based not on contract but imposed by law. Under the strict products liability doctrine a manufacturer could be held “strictly” (i.e., without fault) liable for defects in its products even though the manufacturer didn’t sell the product directly to the injured consumer.

Less than a year later, in Vandermark v. Ford Motor Company (1964) 61 Cal.2d 256, the California Supreme Court extended the strict liability doctrine to other parties involved in the distribution of products such as wholesalers and retailers – who, while not involved in the design or manufacture of products, were found liable for public policy reasons because they “playe[ed] a substantial part in insuring that the product was [safe] or . . . [were] in a position to exert pressure on the manufacturer to that end” and were “able to bear the cost of compensating for injuries” – and the current “stream-of-commerce” approach to strict products liability was born.

By 1969 strict products liability was applied to food manufacturers, car manufacturers, and manufacturers of other consumer items such as soap, hair dye and clothing, but it had yet to be applied to construction. But in then, in Kriegler v. Eichler Homes, Inc. (1969) 269 Cal.App.2d 224, the California Court of Appeals for the First District applied the strict products liability doctrine for the first time to sellers of mass-produced homes, finding no “meaningful distinctions between . . . [the] mass production and sale of homes and the production and sale of automobiles.”

In the forty plus years since then, while strict products liability has been applied to developers of mass produced homes and manufacturers of construction components such as windows and doors, it has yet to be applied to be applied to contractors generally. That is until now.

Enter Hernandezcueva v. E.F. Brady Company, Inc.

In Hernandezcueva v. E.F. Brady Company, Inc., California Court of Appeals for the Second District, Case No. B251933 (December 22, 2015), the Court of Appeals has held for the first time that a contractor who installed drywall using a joint compound – both of which contained asbestos – which the contractor was not aware of – could be found liable for strict products liability.

In the early 1970s, Fluor Corporation (“Fluor”) began construction of a complex of buildings in Irvine, California to house the engineering facilities of its southern California division. C.L. Peck was hired as the general contractor, and it in turn subcontracted with E.F. Brady Company, Inc. (“E.F. Brady”) to serve as the drywall subcontractor.

E.F. Brady’s bid, like most bids, included both labor and material. E.F. Brady’s profit arose primarily from the labor portion of its bid, although E.F. Brady included a “one to two percent” change for “escalation of cost[s] of the material[s].”

E.F. Brady’s contract provided that E.F. Brady would select the drywall and materials in accordance with the general contractor’s plans and specifications. The specifications called for asbestos-free fireproofing and insulation, but contained no analogous requirement for drywall material and taping mud.

The drywall installed by E.F. Brady was manufactured by Kaiser Gypsum Company (“Kaiser”). E.F. Brady also used a joint compound (also known as “taping mud”) manufactured by Kaiser, but when the joint compound proved to be ineffective, E.F. Brady substituted a joint compound made by Hamilton Drywall Products (“Hamilton”). Unknown to E.F. Brady, however, both the drywall manufactured by Kaiser and the taping mud manufactured by Hamilton contained asbestos.

Joel Hernandezcueva worked at the Fluor complex from 1992 or 1993 to 1995. He worked as a janitor. During that time, certain areas of the complex were remodeled, and certain walls within the complex were continuously under repair. Hernandezcueva’s duties included cleaning up drywall debris. While performing those duties he inhaled dust. In or about 2011, he was diagnosed with mesothelioma which his medical experts attributed to his exposure to asbestos-containing products installed by E.F. Brady.

At trial, following Hernandezcueva’s case-in-chief, E.F. Brady successfully moved for nonsuit on Hernandezcueva’s cause of action for strict products liability, and the jury later found that while Hernandezcueva had been exposed to asbestos from products installed by E.F. Brady that E.F. Brady was not negligent regarding that exposure.

Hernandezcueva appealed.

The Court of Appeals Decision

On appeal, the California Court of Appeals explained that under the “stream-of-commerce” theory of strict products liability the imposition of strict liability hinges on the extent to which a party was “responsible for placing products in the stream of commerce.”  And, it is there, that there are two distinctions between: (1) parties whose primary objective or essence of the transaction is the sale of a product, as in the case of retailers, in which case strict products liability applies; and (2) parties whose primary objective or essence of the transaction is a service in which the “service aspect predominates and any product sale is merely incidental to the provision of the service,” in which case strict products liability does not apply.

Here, E.F. Brady’s bid on the Fluor project – as was the case with all of its bids – involved both the furnishing of labor and materials. According to E.F. Brady’s operations manager at the time, generally seventy-five percent (75%) of the amount of E.F Brady’s bids was allocated to labor and twenty-five percent (25%) was allocated to materials. Thus, a large portion of E.F. Brady’s work included the furnishing of materials in the ‘stream-of-commerce” even if it’s profits were not derived from the furnishing of those materials. For those same reasons, E.F. Brady was capable of bearing the costs of compensating for injuries due to the products they installed, and because of their sizable purchase of defective products, was in a position to exert pressure on the manufacturer, which it did by calling Kaiser to the project when Kaiser’s joint compound failed to work.

In response to E.F. Brady’s argument that it was an “end user” – not a “seller” of the products – because it paid sales tax on the products – the Court of Appeals explained that strict products liability turns on a party’s “participatory connection” to the stream of commerce not a party’s “precise legal relationship” to members of that stream. Thus, explained the Court, other courts have held that a party that buys a defective product and leases it to others, or offers its use for payment, may be subject to strict liability.

The Court of Appeals also rejected E.F. Brady’s argument that contractors should not be subject to strict liability when they provide products complying with an architect’s specifications. Rather, the Court held, strict products liability dictates a “fact-sensitive inquiry into [a] party’s activities relating to the defective product, with due attention to the policies underlying the doctrine of strict liability.”

And, finally, the Court of Appeals rejected E.F. Brady’s argument that Hernandezcueva had an alternative source of compensation through the asbestos bankruptcy trust system established by manufacturers of asbestos-containing products, which under the collateral source rule, bars a defendant from shielding itself from liability for injuries by identifying a source of compensation that is wholly independent of the defendant.

Conclusion

The Hernandezcueva decision marks a new age for both subcontractors and generals alike. Not only is the decision…

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