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Combination of a Products Liability statute, an Expert Witness Report that was just not direct enough and odd facts holds a retailer liable as manufacture for product defect.

Recreational Equipment Incorporated, REI, the big nationwide outdoor co-op held liable for injuries of a bicycle branded as its own.

Johnson v. Recreational Equipment, Inc., 2011 Wash. App. LEXIS 351

Disclaimer. I’m a member of REI for more than 40 years. (I signed up when I was 4!).

This case received a lot of press because the plaintiff died in an avalanche less than a week before the Washington Appellate Court handed down this decision. See Backcountry enthusiast who died last week wins REI suit over 2007 cycle accident. As usual, the reports left me confused so I went searching for the decision.

I think this decision is the first products liability case where the plaintiff won on a motion for summary judgment I’ve ever read. Summary judgment is a motion granted by the court based on written motions or in some cases limited oral argument. Normally, the issues in a product liability case are too complex for this type of resolution. REI, lost before it had a chance to argue its case, to some extent.

The case stems from a front fork on a Novara bike allegedly failing. Novara is the trade name for bikes sold by REI. In this case, the bike was manufactured by Aprebic Industry Company, Ltd. Aprebic was not brought into the case. Under Washington Product Liability ACT (WPLA), the retailer is liable for product liability claims if the product is sold under the retailer’s name. Because Novara was the trade mark name of REI, then REI was liable for the defects.

The WPLA differentiates between the liability of a manufacture and that of a retailer.

The WPLA distinguishes between and imposes different standards of liability on manufacturers and product sellers for harm caused by defective products. See RCW 7.72.030, .040. As a general rule, manufacturers of defective products are held to a higher standard of liability, including strict liability where an injury is caused by a manufacturing defect or a breach of warranty. RCW 7.72.030(2). 2 In contrast, product sellers are ordinarily liable only for negligence, breach of express warranty, or intentional misrepresentation.

This difference is major. If REI was not the retailer the plaintiff would have had to prove that REI was negligent. A manufacture can be held liable for a strict liability claim which limits the defenses available to the defendant. This difference made it easier to win the lawsuit against REI.

REI also argued that the actual manufacture, Aprebic, should be held equally or vicariously liable for the defects and the damages. However, the court held that for this aspect of the case, whether or not Aprebic was liable did not matter. REI was liable and that was all that mattered to the court and subsequently to the plaintiff. REI and Aprebic could sue each other later to determine who owes who money.

The motion for summary judgment was based the strict liability claim. Remember in this case, although REI is only a retailer, by branding the product with its name, it is now held to the liability of a manufacture.

Washington by statute defines the liability of a manufacture if found liable for strict liability as:

A product manufacturer is subject to strict liability to a claimant if the claimant’s harm was proximately caused by the fact that the product was not reasonably safe in construction or not reasonably safe because it did not conform to the manufacturer’s [*9] express warranty or to the implied warranties under Title 62A RCW.

(a) A product is not reasonably safe in construction if, when the product left the control of the manufacturer, the product deviated in some material way from the design specifications or performance standards of the manufacturer, or deviated in some material way from otherwise identical units of the same product line.

The standard of manufacturing in this case was simple proof that the product was not reasonable safe. That is a very low standard to be proved by the plaintiff.

The plaintiff and defendant hired expert witnesses. The plaintiff’s expert witness opined that the front fork was not manufactured correctly. The plaintiff’s expert stated several specific issues with the fork that he found were the cause of the failure which caused the accident.

REI’s expert was not as specific in his findings from the way the Washington Appellate Court quoted him. The court quoted him using the following terms and phrases: “there is presently insufficient information to rule,” “the nature of the fracture was not determined” and “that additional laboratory testing should be conducted.” This hesitancy or non-specific language in the defendant’s expert witness report was grasped by the court as proof the expert witness of the plaintiff was correct.

So?
 
If you are a retailer you should understand the strict liability laws of your state to see how you are defined for products you brand with your name. In any case, you need to make sure that all products that come into your store are manufactured correctly and are not defective. In many cases, you may not be able to do that, such as the case a carbon fiber front fork.

If you are using third parties to manufacture products for your store you may want to have an agreement outlining the liability of the parties. You should also receive indemnification for product liability claims when you have no part of the manufacturing process. This means receiving more than a certificate of insurance. Most certificates of insurance simply prove the person providing the certificate has insurance. Not that the insurance policy is going to be available to use to pay claims.

What do you think? Leave a comment.

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