The public policy exception allows the release to be void when the recalled product was not pulled from the rental fleet.
This is a Utah ski rental case. The plaintiff rented skis from the defendant. While skiing, the plaintiff fell injuring her neck. She claimed she fell because the bindings prematurely released. The bindings were manufactured by K2 a subsidiary of the Jarden Corporation.
Prior to the plaintiff’s injury, K2 had notified the Consumer Product Safety Commission and issued a recall for the bindings the plaintiff was using. The recall was based due to a tendency for the bindings to unexpectedly release. The recall was issued by the CPSC and K2 had sent notice of the recall to retail and rental shops.
The plaintiff filed this suit in federal court against the defendant rental shop and the binding manufacture K2. The defendant rental shop filed this motion to dismiss because the plaintiff had signed a release when she rented the recalled skis and bindings.
Summary of the case
The defendant rental shop filed a motion for summary judgment because the plaintiff had signed a release upon renting the skis and bindings. The court first looked at releases and Utah’s law and found Utah allows people to “contract away their rights to recover in tort for damages caused by the ordinary negligence of others.” Under Utah’s law, there are three exceptions that can void a release when:
(1) the release offends public policy,
(2) the release is for activities that fit within the public interest exception, or
(3) the release is unclear or ambiguous.
The court found that the second and third exceptions were not at issue here. The first issue, that releases must be compatible with public policy under Utah’s law. The court looked at the public policy exception to the rule slightly different in Utah than in most other states that allow a release to be voided due to public policy issues.
The court looked at the federal law that created the Consumer Products Safety Commission and created the requirement that products be recalled.
Under 15 U.S.C. § 2064(b), manufacturers, distributors, and retailers are required to notify the United States Consumer Product Safety Commission when they become aware a product (1) fails to comply with applicable safety standards, (2) fails to comply with other rules, regulations, standards, or bans under any acts enforced by the Commission, (3) “contains a defect which could create a substantial product hazard,” or (4) “creates unreasonable risk of serious injury or death.”
The court then stated: “The law requires distributors and retailers to heed recall alerts issued by the Commission and ensure defective products are either fixed or not sold.” Finding this requirement puts an extreme burden on shops, retail or rental when dealing with recalled products.
The rental shop argued that the federal law cannot preempt state law, and state law allows releases. The court agreed, however, the court stated the law did not conflict or preempt the Utah law.
The court went on to say.
The rental of the ski bindings at issue in this case became unlawful once the recall notice became effective. Public policy should not favor allowing a party to insulate itself from harms caused to others arising from unlawful acts.
The said that if a release relieved the retailer of the duty to recall products, then the effect of the law would be nullified and would violate the value of the law. Public policy issues should encourage compliance with laws designed to make products safer not void them.
The court held the rental companies arguments were not valid and denied the motion for summary judgment.
So Now What?
If you get a recall notice, and you are in a retail store, rental shop, or distributor, remove the product from the shelves and/or the rental fleet. Period. The judge in his final sentence stated: “GGT’s preinjury release is unenforceable and invalid as a matter of public policy.” There is no leeway in that statement.
This may create disaster in a small rental shop. Most times the shop has one binding on all of its skis. It makes setting the bindings easier and makes training the employees on setting the bindings much easier also.
It can be a scary situation when you open an email and find you have no rental fleet. You should contact the company immediately and tell them that you are out of business effectively unless they respond and assist you in correcting the entire recalled product or replacing it.
This may be an issue you want to discuss with someone when you are negotiating bindings for your rental fleet.
Product recalls are not minor matter. Any product you have in your store that is subject to a recall is no longer available for sale until after the product has been fixed according to the manufacture’s requirements.
What do you think? Leave a comment.
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