Randy Barnhart

Colorado Products Liability - The Innocent Seller Defense, Part 4

To support the construction of the "innocent seller" statute in Colorado regarding causation, specifically that the causation element of a plaintiff’s claim is a failure to execute recall services with reasonable care, and is not founded on the defect in a product, the reasoning and findings of the Blossman court are helpful:

we find that the record contains evidence authorizing a finding that [plaintiffs’] injuries were a foreseeable consequence of appellant's failure to complete its voluntarily assumed duties with regard to the ... recall program. The jury could have found that appellant offered to distribute the recall information, and then could have concluded either that appellant received the shipment of recall notices ... but never mailed them to its customers, or that appellant did not receive the requested notices, but having assumed the duty to notify its customers a reasonably prudent dealer would have contacted [the manufacturer] when the notices failed to appear. 
Additionally, the jury was authorized to infer that had the notices been mailed to [defendant’s] customers, "this would have produced a chain of events resulting in [replacement of the defective thermostat] at the time [the water heater] was sold...."

The evidence further authorized the jury to find that the explicit language in the recall notices regarding the risk of explosion from leaking gas would have led a gas dealer of ordinary prudence to foresee that users of appliances equipped with the defective Emerson thermostat could be injured in explosions if they were not notified of the danger, and that [defendant’s] negligence in executing its obligation to so notify its customers, . . . was a direct and proximate cause of [plaintiffs’] injuries.

Blossman, 375 S.E.2d at 120-21 (defendant’s “negligent failure to complete its voluntarily assumed duty to distribute the recall notices was the proximate cause of [plaintiffs’] injuries”).

Further, although research indicates that no Colorado appellate court has expressly adopted Restatement (Third) of Torts: Products Liability § 11 (1998), the principles articulated therein are instructive and authoritative:

One engaged in the business of selling or otherwise distributing products is subject to liability for harm to persons or property caused by the seller's failure to recall a product after the time of sale or distribution if:

(a)(1) a governmental directive issued pursuant to a statute or administrative regulation specifically requires the seller or distributor to recall the product; or

(a)(2) the seller or distributor, in the absence of a recall requirement under Subsection (a)(1), undertakes to recall the product; and

(b) the seller or distributor fails to act as a reasonable person in recalling the product.
(Underscoring added).

This shows that the evolution of law recognizes that culpable conduct can be the failure to recall with reasonable care, completely apart from any liability for the defective product itself. Consider requesting a jury instruction reflecting the foregoing principles.

See Colorado Products Liability - The Innocent Seller Defense, Part 1 here, Part 2 here, and Part 3 here.

Surf to this page for more information on Colorado products liability law.

 

Colorado Products Liability - The Innocent Seller Defense, Part 3

Again, nothing in the Colorado Products Liability Act precludes an action against an entity, otherwise also a seller of products, who is not innocent, but allegedly culpable, in some other manner or capacity.

Subsection (1) of the Act, as already construed by the Colorado court of appeals, confirms this construction:

No product liability action shall be commenced or maintained against any seller of a product unless said seller is also the manufacturer of said product or the manufacturer of the part thereof giving rise to the product liability action. Nothing in this part 4 shall be construed to limit any other action from being brought against any seller of a product.

In Brighton Ford, the court found the foregoing “last sentence of the statute providing that the statutory provisions should not be ‘construed to limit any other action from being brought against the seller’ would become meaningless if we were to read section 13-21-402(1) to bar any product liability action.”

In other words, not all actions, including actions which may fall under the rubric of products liability actions, against an entity, otherwise also a seller of products, are barred by the Act.

Duty

When the cause of the damages is alleged to be a failure to use ordinary care in a recall campaign, courts have distinguished between the causation of that failure and the more typical allegation of causation by a defective product in a products liability action.

In Blossman Gas Co. v. Williams, for example, the court held:the evidence authorized a verdict for [plaintiffs] on the issue of [defendant’s] negligent performance of the voluntarily assumed duty to notify its customers of the recall. 375 S.E.2d 117, 119-20 (Ga. App. 1988). The court stated: “It is ancient learning that one who assumes to act, even though gratuitously, may thereby become subject to the duty of acting carefully, if he acts at all.” Id. (citing section 324A of the Restatement (Second) of  120 Torts). 

Colorado courts have recognized this ancient learning and have adopted section 324A of the Restatement (Second) of  120 Torts. The court in W. Innovations, Inc. v. Sonitrol Corp., quoted Section 324A: One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third person or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking, if

(a) his failure to exercise reasonable care increases the risk of such harm, or
(b) he has undertaken to perform a duty owed by the other to the third person, or
(c) the harm is suffered because of reliance of the other or the third person upon the undertaking.
187 P.3d 1155, 1161 (Colo. App. 2008).

It cannot be disputed that recall services are calculated to prevent the precise harm which befell plaintiff. May Dept. Stores Co. v. Univ. Hills, Inc., 789 P.2d 434, 441 (Colo. Ct. App. 1989)(“for a service provider to be rendered liable under either Restatement § 323 or § 324A, the service rendered must be ‘reasonably calculated to prevent the type of harm’ that actually befalls the plaintiff”).

See Colorado Products Liability - The Innocent Seller Defense, Part 1 here and Part 2 here.

Surf to this page for more information on Colorado products liability law.

Colorado Products Liability - The Innocent Seller Defense, Part 2

Defendants will likey assert, erroneously, that as a matter of law, a seller cannot be subject to a product liability action unless it can be deemed a “manufacturer” under the Act. Let's take a closer look at the Act, with an emphasis on the clauses actually relevant to the claim of a culpable service provider:

“Product liability action” means any action brought against a manufacturer or seller of a product, regardless of the substantive legal theory or theories upon which the action is brought, for or on account of personal injury, death, or property damage caused by or resulting from the manufacture, construction, design, formula, installation, preparation, assembly, testing, packaging, labeling, or sale of any product, or the failure to warn or protect against a danger or hazard in the use, misuse, or unintended use of any product, or the failure to provide proper instructions for the use of any product.

C.R.S. § 13-21-401(2). Thus, the Act comprehends those product liability actions, and only those product liability actions, wherein the claim is predicated on damage, whether personal injury or death, caused by, or resulting from, a product. See Carter v. Brighton Ford, Inc., 2010 WL 4361379 (Colo. App. 2010)(“product liability actions are those tort actions which seek damages for injuries and collateral damage caused by defective products”) (underscoring added).

The clauses in the Act which delimit the scope of the Act cannot be ignored. Petron Dev. Co. v. Washington County Bd. of Equalization, 91 P.3d 408, 410 (Colo. App. 2003) (“when interpreting a constitutional, statutory, or regulatory provision, we look to the ordinary and common meaning of its language, giving effect to every word and term whenever possible”). When the words and terms on causation in the Act are given effect, the correct conclusion is that not every action, whether denominated as a products liability action or otherwise, is precluded by the Act.

Thus, when the causal allegation or element on the claims against a supposed innocent seller are not based on any allegation of a defective product as the cause of plaintiff’s damages, but on the failure, for example, to execute, effect, or implement a recall of a defective product in a reasonable manner or with ordinary care, as the cause, then the Act should not apply.

The firm is committed to ensuring that trial judges are apprised of this correct application of the law.

Part 1 here.

Colorado Products Liability - The Innocent Seller Defense, Part 1

Defendants who are "sellers" of defective products, that is, who sell products with design defects, manufacturing defects, or which fail to provide adequate warnings or instructions on use to minimize the risk of injury or property damage, will typically invoke the Colorado statute, 13-21-401 et seq.

The statute provides that an action cannot be maintained against a "seller" of an allegedly defective product unless:

(1) the seller also manufactured the product,
(2) the manufacturer of the product is not subject to the Court’s jurisdiction, or
(3) the seller had actual knowledge of the defect at the time of sale.

Apart from those three exceptions, however, an action against a defendant may not be on account of the defendant's status as a  "seller." Yet, defendants who are also "sellers" will argue that they can only be sued as a "seller" if in fact they sold the defective product which allegedly caused personal injury or damage. With that strategy, defendants will then loudly proclaim themselves as "innocent sellers" in order to invoke the immunity to liability provided by the statute.

Not so fast. Nothing in the statute precludes a suit against a defendant, otherwise also the "seller" of the defective product in question, who is allegedly negligent in some other capacity, for example, on account of their status as a service provider with regard  to the defective product in question. 

Let's say the innocent seller is also an allegedly culpable "recaller," that is, the seller is a link in the chain of a product recall initiated by the manufacturer or ordered by a regulatory entity (for example, the National Highway Traffic Safety Administration), because of a defect in the product. What then?

Come back soon for the answer.