07272017Headline:

Scottsdale, Arizona

HomeArizonaScottsdale

Email Geoff Trachtenberg Geoff Trachtenberg on LinkedIn Geoff Trachtenberg on Twitter Geoff Trachtenberg on Facebook
Geoff Trachtenberg
Geoff Trachtenberg
Contributor •

Supreme Scrooge: Arizona's Supreme Court Delivers a Serious Blow to Products Liability

Comments Off

Worried about lead in your toys this Christmas? You now have something else to worry about – if those toys harm or kill your children, your rights and remedies in the state of Arizona are under serious attack.

This week, in State Farm Ins. Co. v. Premier Mfg. Sys. Inc., the Arizona Supreme Court held that, despite centuries-old common law “strict liability” in product liability cases, Arizona’s Legislature eliminated such protections (in 1984) when they enacted the Arizona Uniform Contribution Among Tortfeasors Act, commonly referred to as UCATA.

Historically, courts have afforded protection to the public in extraordinary situations by imposing “strict liability” on parties engaged in certain activities. Although strict liability has always been the exception in civil cases rather than the rule, it has long been the rule in certain types of cases, such as products liability or “ultra-hazardous” activities. This is due to the balance of harms to the public and the fact that, in the products liability context, manufacturers and distributors were typically in much better positions to take steps to prevent harm if they were all held strictly liable.

In Premier, the Supreme Court concluded that UCATA’s adoption, more than 20 years ago, changed this landscape. The Court held that, under UCATA, manufacturers, distributors and all others involved in putting dangerous and defective products into the stream of commerce, are to be held responsible under traditional comparative fault laws.

What does this mean to you? Assume Hasbro imports a toy from China with lead paint, and better yet, assume Hasbro absolutely knows that the toys have lead paint. Assume there is a memorandum to the Board of Directors saying, “Dear Board, we have found that we can make an additional profit of .10 per toy if we use Lead Masters Production Company in Hong Kong because Lead Masters coats all their toys in lead that will probably cause permanent brain damage to the children that play with the toys.”

What used to happen before Premier? Hasbro and Lead Masters Production Company were strictly liable for damages caused by the product, so a Board of Directors receiving such a memo would have an incentive to avoid such situations (and fire the morons who came up with such a scheme) because they would be just as liable as the Chinese company for any harm that resulted from their product.

What happens now, after Premier? Hasbro has little or no exposure. In a lawsuit over who is responsible for little Jimmy’s permanent brain damage due to the hypothetical Hasbro toy above, the jury will be asked to apportion fault to the various parties bringing the toy to market. That means everyone from Lead Masters Production Company in Hong Kong, to the importing company, the shipping company, any middle-man merchants, Hasbro and the store, such as Wal-Mart, who sold the product that injured little Jimmy.

What will happen? Most of the time there will not be a memo, such as the one described above, but even if there was one, the party that actually produced the harmful product will be the one with all or most of the fault. And in those situations where the toy companies, such as Hasbro above, claim ignorance of the fact that lead was used and claim that they had no reason to know lead would be used in the product, what then? If the jury believes them, they will get away free of any responsibility.

Maybe you think, “well, that’s not the end of the world.” But imagine that Lead Masters Production Company in Hong Kong is no longer in business, has no insurance, is bankrupt or is nothing more than a couple of part-time rickshaw drivers who make toys on the weekend. Yes, it will be found responsible, but that won’t matter to little Jimmy or his parents because they will have nothing more than a worthless pyrrhic victory and no way to pay for the special care that little Jimmy will need for the rest of his life.

This decision is devastating to those people harmed by products and must be addressed by the Legislature. And frankly, one cannot fault the courts for reaching the conclusion. The simple fact is that the courts must interpret the law and, due to the poor drafting of UCATA in 1984, the result handed down by the Supreme Court was, while dramatic and disappointing, probably inevitable.

One last point bears mentioning, UCATA needs to be amended to avoid the result in Premier in the products liability arena, but it also needs to be amended to apply only to negligence matters. UCATA is as inapplicable to intentional torts as it is to products liability, yet it is applied to intentional torts all the time. UCATA is a fine idea, but it should be limited to negligence cases so that, in those case, only parties who are at fault have to pay for the damages they cause in proportion to their fault.

For more information on this subject, please refer to the section on Defective and Dangerous Products.