What the term “strictly construed” actually means when used to describe how a release will be viewed by the court.Posted: July 9, 2018
The decision involves several legal issues, the one that concerns us is the issue of a release for a product. In Kansas, releases are strictly construed. In this case that meant that the language of the release did not meet the requirements of state law for a release. However, the court stretched incredibly far to come to that conclusion.
State: Kansas, United States District Court for the District of Kansas
Plaintiff: Patricia Fee
Defendant: Steve Snyder Enterprises, Inc.; Russell Young; SSE, Incorporated; Greene County Sport Parachute Center of Wellsville, Kansas, Inc.; and John Doe Corporation
Plaintiff Claims: Wrongful death and survival claims based on negligence, product liability and breach of warranty
Defendant Defenses: Statute of Limitations ran,
Holding: for the plaintiff
The lawsuit was brought over the failure of an automatic opener, which did not during a sky dive. The widow sued the manufacture of the device and the sky-diving center who sold the device to the deceased. The deceased signed a release and indemnity agreement, two separate documents when purchasing the automatic opener.
In Kansas, releases are allowed but strictly construed. Here strict construction is used, improperly, to interpret the release in an extremely narrow way to allow the lawsuit to proceed.
The deceased died when he was sky diving, and his automatic opening device failed to open. The automatic opening device was manufactured by the defendant.
The plaintiff spent eight years attempting to serve the defendant, starting in 1977 and finally serving the defendant in 1985. This lead to a discussion about when the lawsuit actually started, which takes the first half of the decision. Because the defendant had avoided service of process, because he knew about it and made attempts not to get sued, the date of the lawsuit started was the date he was served. However, due to the defendant’s actions, the statute of limitations did not run.
The widow purchased the automatic opener for the deceased, although the dates in the decision must be incorrect. The decision states the device was purchased a year after the deceased died. The device failed the first time it was used by the decedent.
The deceased signed a release for the parachute center. The defendant manufacturer raised the release as a defense to the claims of the plaintiff against the manufacture as well as those claims against the dive center.
The release was on one side of the paper and on the reverse was an assumption of risk language. The deceased also signed a separate indemnify agreement. The decedent signed both agreements.
This decision is that of the Federal District Court in Kansas.
Analysis: making sense of the law based on these facts.
The court first looked at release law in Kansas. If not against public policy, then Kansas recognizes exculpatory agreements, releases. However, like many state’s releases, the courts in Kansas use the language that releases “are not favored by the law and are strictly construed against the party relying on them.” Strictly construed does not require the specific term negligence but must clearly appear to express the intent to release from liability the defendant.
It is not necessary; however, that the agreement contained specific or express language covering in so many words the party’s negligence, if the intention to exculpate the party from liability clearly ap-pears from the contract, the surrounding circumstances and the purposes and objects of the parties.
The court in reading the release found it did not stop the plaintiff’s claims.
The court first in looking at the language found the language covered use of the product but did not cover liability for “sale” of the product.
First, a review of the agreement itself shows that, although it specifically releases the Parachute Center from liability for injuries or death arising out of the “ownership, operation, use, maintenance or control” of many devices,” the agreement fails to mention any release of liability revolving around the sale of any product to the parachuter.
The court admitted the deceased understood that parachuting was dangerous, that was not enough. By making the determination that the product was defective when sold, the court found the release would not stand because you cannot release liability for selling a defective product.
Strictly construing the agreement; however, we do not believe that this should be interpreted to exempt the Parachute Center from a failure to use due care in furnishing safe equipment, or should allow it to sell a product in a defective condition unreasonably dangerous to the parachuter. To do so would impermissibly extend the terms of the agreement to situations not plainly within its language.
The court then determined the release would also not work to stop the plaintiff’s claims for breach of either express or implied warranty. The court found attempting to release the defendant parachute center from liability was unconscionable. Under Kansas law, a release could be used to stop warranty claims, unless that was found to be unconscionable.
We, therefore, hold that plaintiff’s action is not barred by the release, covenant not to sue and indemnity clause signed by the plaintiff’s decedent. Summary judgment in favor of the defendants Parachute Center and Russell Young is therefore, inappropriate.
The indemnification agreement seemed to be ignored in reaching this determination by the court.
So Now What?
Strict construction is a term that gives leeway to a court to review the language of the release to make sure it conforms to the language required under state law. However, that term was created and applied to release’s decades ago and rarely used now except in rare situations like this. When the judge wants the defendant to pay.
Probably the term was created when courts were first asked to apply releases to a plaintiff’s claims and wanted a way to soften the blow. Now days, in most states it is quoted in the decision at the beginning and never heard of again. Eventually if the courts review enough releases, the term is not even quoted.
Few states allow a release to be used to stop product liability claims. However, several states do and several states allow assumption of risk to stop product liability claims. A well-written release that incorporates assumption of risk language is still effective in many product liability cases.
Here, however, the court reached as far as it could to find that the release was barred from stopping the claims. Part of that desire to allow the suit to proceed was probably because of the actions of the manufacturer who spend eight years avoiding service of the lawsuit.
The rest, however, was simply a stretch to allow the lawsuit to proceed.
Copyright 2018 Recreation Law (720) 334 8529
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Patricia Fee, Plaintiff, v. Steve Snyder Enterprises, Inc.; Russell Young; SSE, Incorporated; Greene County Sport Parachute Center of Wellsville, Kansas, Inc.; and John Doe Corporation, Defendants
CIVIL ACTION No. 84-2323
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS
1986 U.S. Dist. LEXIS 28158
March 14, 1986
CORE TERMS: parachute, sport, summary judgment, decedent, personally, covenant, implied warranties, statute of limitations, service of process, mail service, notice, mail, parachuting, personal injury, personal service, parachuter, consumer, assigns, wrongful death, strict liability, territorial limits, unconscionable, consequential, predecessor, disclaimer, diversity, automatic, warranty, opening, saving
COUNSEL: [*1] John E. McKay, LAW OFFICES OF BENSON & McKAY, 911 Main Street, Suite 1430, Kansas City, Missouri 64105, (816) 842-7604; Mark R. Singer/Micheline Z. Burger ROMAIN, BURGER & SINGER, CHTD., The College View Building, 4500 College Blvd., Suite 103, Overland Park, Kansas 66221, (913)649-5224; Paul v. Herbers, James E. Cooling, Cooling, Herbers & Sears, P.C., P.O. Box 26770, Kansas City, MO 64196, (816) 474-0770; Russell C. Leffel, 7315 Frontage Road, Suite 111, Shawnee Mission, KS 66204, 913-362-9727, Neal E. Millert, Larry J. Tyrl, James, Millert, Houdek, Tyrl & Sommers, 804 Bryant Building, 1102 Grand, Kansas City, Missouri 64106, Randolph G. Austin, Speer, Austin, Holliday, & Ruddick, 261 N. Cherry, P.O. Box 1000, Olathe, Kansas 66061.
OPINION BY: O’CONNOR
MEMORANDUM AND ORDER
EARL E. O’CONNOR, CHIEF JUDGE.
This matter is before the court on defendants’ motions for summary judgment and plaintiff’s motion for costs. This is a diversity action for wrongful death and survivorship based on claims of negligence, strict liability and breach of express and implied warranties.
I. Motion for Summary Judgment by Defendant SSE, Incorporated.
Defendant SSE, Incorporated, moves for [*2] summary judgment on the ground that plaintiff’s action is barred by the two-year statute of limitations found at K.S.A. 60-513(a). For the following reasons, defendant’s motion must be denied.
[HN1] Summary judgment is appropriate when the matters considered by the court disclose that “there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Federal Rule of Civil Procedure 56(c). The court must look at the record in the light most favorable to the party opposing the motion. Prochaska v. Marcoux, 632 F.2d 848, 850 (10th Cir. 1980), cert. denied, 451 U.S. 984 (1981). Before summary judgment may be granted, the moving party must establish that it is entitled to summary judgment beyond a reasonable doubt. Ellis v. El Paso Natural Gas Co., 754 F.2d 884, 885 (10th Cir. 1985).
The uncontroverted facts relevant to this motion are as follows:
1. The plaintiff’s decedent died while skydiving on December 11, 1982, when his parachute failed to open. Decedent’s parachute was equipped with an automatic opening device, which was manufactured by the defendant SSE, Incorporated.
2. Plaintiff filed this lawsuit on August 13, [*3] 1984, consisting of wrongful death and survival claims based on negligence, product liability and breach of warranty. Plaintiff named Steve Snyder Enterprises, Inc., as a defendant, claiming that it was a Pennsylvania corporation that designed, manufactured and sold the defective device.
3. On August 14, 1984, the complaint was mailed to Steve Snyder Enterprises, Inc., at a New Jersey address.
4. Steve Snyder Enterprises, Inc., had changed its name to “SSE, Incorporated,” in November of 1977. Its corporate headquarters, however, remained at the same location.
5. SSE, Incorporated, received the complaint at the New Jersey address.
6. ln a telephone conversation with plaintiff’s counsel, the attorney for SSE, Incorporated, advised plaintiff’s counsel that neither SSE nor its predecessor corporation, Steve Snyder Enterprises, Inc., would accept service by mail.
7. On November 1, 1984, counsel for SSE, Incorporated, rated, wrote to plaintiff’s counsel, again informing him that SSE intended not to acknowledge the mail service.
8. On November 14, 1984, the complaint was again mailed to Steve Snyder Enterprises, Inc. SEE, Incorporated, received the complaint, but refused to sign or [*4] return an acknowledgement.
9. On December 7, 1984, plaintiff filed her first amended complaint, adding SSE, Incorporated, as a defendant.
10. From January 1985 to August 28, 1985, plaintiff’s process servers made thirty-three attempts to personally serve SSE, Incorporated.
11. On August 29, 1985, plaintiff successfully served Steve Snyder, the registered agent and president of SSE, Incorporated.
Defendant SSE, Incorporated, argues that summary judgment is appropriate on all of plaintiff’s claims because they are barred by the two-year statute of limitations for wrongful death actions set forth at K.S.A. 60-513(a)(5). The court notes, however, that not all of plaintiff’s claims are for wrongful death — Counts VI through VIII are survival actions based on negligence, strict liability and breach of express and implied warranties. Nevertheless, a similar two-year statute of limitations (see K.S.A. 60-13(a)(4)) applies to the negligence, strict liability and breach of warranty claims. See Grey v. Bradford-White Corp., 581 F.Supp. 725 (D. Kan. 1984). The court will therefore treat defendant’s motion as seeking summary judgment on all of plaintiff’s claims and not merely plaintiff’s [*5] wrongful death claims.
To decide whether plaintiff’s claims are barred by the two-year statute of limitations, we must first determine when plaintiff’s suit was commenced. [HN2] In a diversity action, the court must apply the state law prescribing when an action commences for statute of limitations purposes rather than Rule 3 of the Federal Rules of Civil Procedure. Walker v. Armco Steel Corp., 446 U.S. 740 (1980); Ragan v. Merchants Transfer & Warehouse Company, 337 U.S. 530 (1949). [HN3] Kansas law provides that an action is commenced at the time a petition is filed if service of process is obtained within ninety days. See K.S.A. 60-203(a)(1). If service is not obtained during the 90-day period, then the action is commenced at the time of service. Id.
Defendant argues that plaintiff’s action did not com- mence until August 29, 1985, when plaintiff personally served the agent of SSE, Incorporated, Steve Snyder. Accordingly, since plaintiff’s cause of action arose on December 11, 1982, her claims are barred by the two-year statute of limitations. We are not persuaded by defendant’s argument.
We conclude that plaintiff’s action was timely commenced under the saving provisions [*6] of K.S.A. 60-203(b). That section provides:
[HN4] If service of process or first publication purports to have been made within the time specified by subsection (a)(1) but is later adjudicated to have been invalid due to any irregularity in form or procedure or any defect in making service, the action shall nevertheless be deemed to have been commenced by the original filing of the petition if valid service is obtained or first publication is made within 90 days after that adjudication, except that the court may extend that time an additional 30 days upon a showing of good cause by the plaintiff.
Applying this statute to the facts in this case, we find that plaintiff purported to serve process by mail on August 14, 1984, only one day after the suit was filed. Service by mail is proper under a recent amendment to the Kansas Code of Civil Procedure. 1
See K.S.A. 60-314 (Supp. 1985). We find, however, that plaintiff’s service was invalid due to the defendant’s failure to complete and return the enclosed notice. Under the saving provision of section 60-203(b), we may nevertheless deem plaintiff’s action to have been commenced on the date plaintiff’s complaint was filed, [*7] so long as plaintiff makes personal service on the defendant within ninety days of this order.
1 We must look to the Kansas law prescribing the method of service. This is a diversity action in which plaintiff asserts jurisdiction over the defendant pursuant to the Kansas long-arm statute, K.S.A. 60-308. Fed. R. Civ. P. 4(f) provides that “process other than a subpoena may be served anywhere within the territorial limits of the state in which the district court is held, and when authorized by a statute of the United States or by these rules, beyond the territorial limits of that state.” There is no applicable federal statute that would allow service of process outside the state in this case. Thus, in order to obtain service beyond the territorial limits of the court, there must be authorization in “these rules.” Rule 4(e) provides for service of process on defendants who are not inhabitants of or found within the state. In pertinent part it states:
Whenever a statute or rule of court of the state in which the district is held provides (1) for service of a summons, or of a notice, or of an order in lieu of summons upon a party not an inhabitant of or found within the state, . . . service may . . . be made under the circumstances and in the manner prescribed in the [state] statute or rule.
Clearly, service by mail is a “manner” of service provided by the Kansas statute in this situation. See K.S.A. 60-314 (Supp. 1985).
[*8] Defendant also argues that because plaintiff’s mail service was directed to Steve Snyder Enterprises, Inc., rather than to SSE, Incorporated, it was totally ineffective. We find defendant’s argument meritless for two reasons. First, under the saving provision discussed above, plaintiff’s mistake in naming defendant’s predecessor corporation qualifies as a defect in the service that may be remedied by plaintiff reserving the defendant under its proper name within ninety days of this order. Second, [HN5] both the federal rules (Rule 15(c)) and Kansas law (K.S.A. 60-215(c)) allow for relation back of an amendment changing a party. Under these provisions, [HN6] a change in party relates back so long as the claim asserted arose out of the events set forth in the original complaint and
within the period provided by law for commencing the action against him, the party to be brought in by amendment (1) has received such notice of the institution of the action that he will not be prejudiced in maintaining his defense on the merits, and (2) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against him.
Federal Rule [*9] of Civil Procedure 15(c); K.S.A. 60-215(c).
In this case, an amendment changing defendant’s name from Steve Snyder Enterprises, Inc., to SSE, Incorporated, would clearly relate back. First, the claims asserted would be identical to those originally filed. Second, SSE, Incorporated, admits it had notice of this action within the statutory period. Counsel for SSE, Incorporated, informed plaintiff’s counsel in August and November of 1984 that SSE had received the mail service but chose not to acknowledge it. Third, SSE, Incorporated, knew that but for plaintiff’s confusion over the name of its predecessor corporation, the action would have been brought against it.
We therefore hold that plaintiff shall have ninety (90) days from the date of this order to personally serve the defendant SSE, Incorporated. Upon such service, plaintiff’s action will be deemed to have commenced on August 13, 1984, when the case was filed. Plaintiff’s claims will therefore be timely. If, however, plaintiff fails to serve SSE, Incorporated, within the 90-day time period, plaintiff’s action against this defendant will be deemed time-barred. Defendant’s motion for summary judgment will therefore be held in abeyance [*10] for ninety days from the date of this order to allow plaintiff to properly serve the defendant.
II. Plaintiff’s Motion for Costs.
Plaintiff moves for payment of the costs incurred in plaintiff’s previous attempts to personally serve defendant. [HN7] Costs are available pursuant to both Federal Rule of Civil Procedure 4(c)(2)(D) and K.S.A. 60-314:
Unless good cause is shown for not doing so the court shall order the payment of the costs of personal service by the person served if such person does not complete and return within 20 days after mailing, the notice and acknowledgment of receipt of summons.
Defendant in this case has shown no reason why costs should not be assessed against it. Defendant deliberately refused to acknowledge mail service and even went so far as to inform plaintiff that it was electing to assert its “right to service of process in the customary manner and not by mail.” Defendant’s Exhibit 4. Not only did defendant refuse mail service, but it also made every attempt to thwart personal service. Plaintiff was thus forced to attempt service at least thirty-three times against defendant. We therefore hold that plaintiff is entitled to recover costs in [*11] the amount of $1,628.47 as requested in her motion. Furthermore, plaintiff will be entitled to recover costs incurred in serving the defendant again, as discussed in part I above, upon plaintiff’s submission of proof of expenses.
III. Motion for Summary Judgment by Defendants Russell Young and Greene County Sport Parachute Center.
Defendant Russell Young moves for summary judgment on the ground that plaintiff’s decedent signed a release and covenant not to sue in favor of Greene County Sport Parachute Center of Wellsville, Kansas, Inc. (hereinafter the Parachute Center), and its employees and agents. The Parachute Center joins in said motion.
The material uncontroverted facts are as follows:
1. On May 8, 1982, plaintiff’s decedent signed a “Release and Covenant Not To Sue,” which read in pertinent part:
[I] do hereby fully and forever release and discharge the said Greene County Sport Parachute Center of Wellsville, Kansas, Inc. and their employees, servants, stockholders, agents, successors, assigns, and all other persons whomsoever directly or indirectly liable, from any and all other claims and demands, actions and cause of action, damages, costs, loss of services, [*12] expenses and any and all other claims of damages whatsoever, resulting from PERSONAL INJURIES, DEATH OR PROPERTY DAMAGES SUSTAINED BY ME, arising out of AIRCRAFT FLIGHTS, PARACHUTE JUMPS, or any other means of lift, ascent or descent from an aircraft of any nature, or arising out of the ownership, operation, use, maintenance or control of any vehicle, whether motor vehicle, aircraft, or otherwise, or any device, or mooring, while on the ground or in flight, and meaning and intending to include herein all such PERSONAL INJURIES, DEATH OR PROPERTY DAMAGE resulting from or in any way connected with or arising out of instructions, training, and ground or air operations incidental thereto.
This release and covenant not to sue is made and entered in consideration of the permission extended to me by Greene County Sport Parachute Center of Wellsville, Kansas, Inc. to participate in a course of parachuting instructions, parachuting training flying activities, ground or air operations incidental to parachuting and flying.
I further acknowledge that I will not rely on any oral or written representation of Greene County Sports Parachute Center of Wellsville, Kansas, Inc. or any agent thereof. [*13] I fully understand that there are dangerous risks in the sport of parachute jumping, and I assume said risks. . . .
I HAVE READ AND FULLY UNDERSTAND that Release and Covenant Not to Sue and sign the same as my own free act.
2. Plaintiff’s decedent also signed an “Indemnity Clause,” which read:
I acknowledge that Greene County Sport Parachute Center of Wellsville, Ks., Inc., is not an insurer of me. I do, for myself, my heirs, executors, administrators and assigns, hereby expressly stipulate, covenant and agree to indemnify and hold forever harmless the said Greene County Sport Parachute Center of Wellsville, Ks., Inc., and its employees, servants, stockholders, agents, successors, and assigns, and all other persons whomsoever against and from any and all actions, causes of action, claims and demands for damages, judgments, executions, costs, loss of services, expenses, compensation, including reimbursement of all legal costs and reasonable counsel fees incurred or paid by the said indemnified parties or any of them, for the investigation, prosecution or defense of any such action, cause of action or claim or demand for damages, and any and all other claims for damages, whatsoever, [*14] which may hereafter arise, or be instituted or recovered against said Greene County Sport Parachute Center of Wellsville, Ks., Inc., and its servants, employees, stockholders, agents, successors, assigns or any other person or persons whomsoever, by me or by any other person whomsoever, whether for the purpose of making or enforcing a claim for damages, on account of PERSONAL INJURIES, DEATH, OR PROPERTY DAMAGE sustained by me, or whether for the purpose of enforcing a claim for damages of any nature by any person whomsoever, on account of, or in any way resulting therefrom.
3. The decedent signed both the clause and release and certified that he had read them. His signature was witnessed by defendant Russell Young, President of the Parachute Center.
4. On the reverse side of the release, the decedent also signed and certified the following statements:
(9) I understand there are potential dangers and risks involved in this sport and acknowledge that the training I have received is intended to minimize such but is no guarantee or representation that there are none.
(10) I understand that parachuting is a potentially dangerous sport and that the proper functions of these parachutes [*15] or any parachute cannot be and is not guaranteed.
5. The decedent ordered and promised to pay for an automatic parachute opening device from the defendants Parachute Center and Russell Young. Young delivered the device to the decedent in December 1982.
6. The decedent used the device for the first time while skydiving on December 11, 1982. His parachute failed to open, he fell to the ground and was fatally injured.
7. The decedent’s widow paid the Parachute Center $254.60 for the device on January 27, 1983.
[HN8] Kansas courts have long recognized the validity of exculpatory agreements relieving a party from liability unless it would be against the settled public policy to do so. See, e.g., Belger Cartage Service, Inc. v. Holland Construction Co., 224 Kan. 320, 329, 582 P.2d 1111, 1118 (1978); Hunter v. American Rentals, 189 Kan. 615, 617, 371 P.2d 131, 133 (1962). Exculpatory contracts, however, “are not favored by the law and are strictly construed against the party relying on them.” Cason v. Geis Irrigation Co., 211 Kan. 406, 411, 507 P.2d 295, 299 (1973). Accord. Belger, 224 Kan. at 329, 582 P.2d at 1119. The terms of the agreement are not to be extended to [*16] situations not plainly within the language employed. Baker v. City of Topeka, 231 Kan. 328, 334, 644 P.2d 441, 446 (1982); Missouri Pacific Railroad Co. v. City of Topeka, 213 Kan. 658, 664, 518 P.2d 372, 377 (1973). It is not necessary, however, that the agreement contain specific or express language covering in so many words the party’s negligence, if the intention to exculpate the party from liability clearly appears from the contract, the surrounding circumstances and the purposes and objects of the parties. Bartlett v. Davis Corp., 219 Kan. 148, 159, 547 P.2d 800, 806 (1976).
After reviewing the language of the contract and the totality of the circumstances to determine the intent of these parties, we conclude that the release and indemnity clause do not preclude plaintiff’s action. First, a review of the agreement itself shows that, although it specifically releases the Parachute Center from liability for injuries or death arising out of the “ownership, operation, use, maintenance or control” of many device,” the agreement fails to mention any release of liability revolving around the sale of any product to the parachuter. Granted, there is a paragraph in [*17] which the parachuter states that he understands that parachuting is a potentially dangerous sport and that the proper function of the parachute cannot be guaranteed. Strictly construing the agreement, however, we do not believe that this should be interpreted to exempt the Parachute Center from a failure to use due care in furnishing safe equipment, or should allow it to sell a product in a defective condition unreasonably dangerous to the parachuter. To do so would impermissibly extend the terms of the agreement to situations not plainly within its language.
Other courts have held that similar releases exempt parachute centers and trainers only from injuries that ordinarily occur without any fault of the defendant. See Diedrich v. Wright, 550 F.Supp. 805 (N.D. Ill. 1982); Gross v. Sweet, 49 N.Y.2d 102, 424 N.Y.S.2d 65, 400 N.E.2d 306 (Ct.App. 1979). We agree with these courts that the language alerting the parachuter to the dangers in parachute jumping is used to drive home to the individual that he must enter into this sport with an apprehension of the risks inherent in the nature of the sport. See 550 F.Supp. at 808; 49 N.Y.2d at
, 424 N.Y.S.2d at 369, 400 [*18] N.E.2d at It does not, however, follow that he must accept enhanced exposure to injury or death based on the carelessness of the defendants in selling him a defective product or failing to warn him about its use.
Furthermore, we hold that the release was ineffective under Kansas law to limit liability for a breach of either an express or implied warranty. [HN9] With respect to disclaimer of express warranties, K.S.A. 84-2-719(3) provides:
Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not.
In this case, the automatic opening device qualifies as a consumer good under K.S.A. 84-9-109. Under section 84-2-719(3), the defendants’ attempt to exclude consequential damages for personal injury was unconscionable and therefore unenforceable.
Furthermore, with respect to disclaimer of implied warranties of merchantability, [HN10] the Kansas Consumer Protection Act flatly prohibits in consumer cases the use of any limitation on remedies or liability for implied [*19] warranties, and declares that any such disclaimers are void. K.S.A. 50-639(a) and (e). See also id. at 84-2-719 (Kansas Comment).
We therefore hold that plaintiff’s action is not barred by the release, covenant not to sue and indemnity clause signed by plaintiff’s decedent. Summary judgment in favor of the defendants Parachute Center and Russell Young is therefore inappropriate.
IT IS THEREFORE ORDERED that defendants’ motion for summary judgment by Russell Young and Greene County Sport Parachute Center of Wellsville, Kansas, Inc., is denied.
IT IS FURTHER ORDERED that defendant’s motion for summary judgment by SSE, Incorporated, shall be held in abeyance until plaintiff obtains personal service upon SSE, Incorporated. Plaintiff shall have ninety (90) days from the date of this order to personally serve SSE, Incorporated. If plaintiff fails to so serve the defendant, defendant’s motion for summary judgment will be granted.
IT IS FURTHER ORDERED that plaintiff’s motion for costs to personally serve the defendant SSE, Incorporated, in the amount of $1,628.47, is granted.
Dated this 14th May of March, 1986, at Kansas City, Kansas.
A recall leads to lawsuits because injuries are connected to the product being recalled thus a lawsuit. Plaintiff’s hope the three can be connectedPosted: October 13, 2014
Plaintiff crashed her bike suffering head injuries. Plaintiff was wearing a bicycle helmet that was subject to a recall, earlier. Plaintiff hoped her injury could be paid by the helmet manufacturer using the recall as the influence with the jury.
Plaintiff: Tracy Ann Jenish
Defendant: Monarch Velo Llc dba Catlike USA, a Texas Corporation, The Kreb Cycle, a New York Corporation, and Catlike Sport Components SL
Plaintiff Claims: negligence, gross negligence, and breach of warranty
Holding: for the defendant
This is why recalls are such a problem. The recalls themselves are a nightmare for the outdoor recreation industry because the problems don’t fit in the Consumer Product Safety Council (CPSC) mold. The cost goes through the roof trying to comply with the requirements of the recall and deal with the resulting bad publicity.
The biggest problem is recalls immediately show up on plaintiff attorney’s websites with the line have you been hurt using/wearing this product “call us.”
In this case, the plaintiff purchased a bicycle helmet from the defendant retailer. The bicycle helmet was subject to a recall prior to the plaintiff’s crash. The plaintiff exchanged the helmet for a newer one due to the recall, prior to her crash. The plaintiff fell while riding her bike suffering head and other injuries and sued.
The first defendant was a retailer in New York. The retailer purchased the helmet from a distributor in Texas. The distributor imported the helmet from the manufacturer, a Spanish corporation. All three, the manufacturer, distributor and retailer were defendants to the litigation. All three were in the chain of sale from the manufacturer to the consumer.
The theory behind allowing suits against everyone involved in the litigation is anyone in the chain could have spotted the defect and prevented the consumer from purchasing a defective product. That was a great theory when wagon wheels were being sold. Everyone understood wagon wheels and could see a flaw or defect in a wagon wheel before the consumer purchased the wheel.
That general theory does not work any longer in software, computers or in this case a bike helmet. If you could understand the physics and engineering behind the creation of the helmet, you could not see the defects in many cases because the defects are covered by plastic.
The suit was filed in Michigan the home state of the plaintiff in the United States District Court for the Eastern District of Michigan, Southern Division. Federal courts are the courts in place to deal with litigation between parties from different states or of the US and another country. The federal courts are not subject to the issue of “hometowning” or deciding a case solely on the issue of where the parties live the courts’ hometown.
The three defendants filed a motion for summary judgment, which was granted.
Federal District Court decisions are reported. Very few states report trial court decisions. However, this is different in the federal system, and we have an interesting case.
Analysis: making sense of the law based on these facts.
The plaintiff dismissed its negligence and gross negligence claims and proceeded on its breach of warranty claims prior to this motion. The plaintiff stated there was no express warranty claim, only a breach of implied warranty. Implied warranties are warranties that attach to any sale. They are not written down on in the manual, they occur whenever there is a sale. Implied warranty of merchantability and implied warranty of fitness for a particular purpose are warranties that go with every sale and are the two main claims in lawsuits.
These warranties are not in writing and unless disclaimed, they go with any sale. The first, warranty of merchantability means the product meets the requirements of the industry where they are sold. The implied warranty of fitness for a particular purpose is a warranty that the promises made by the sellers will be met by the product. For more information on these warranties see The legal relationship created between manufactures and US consumers.
No specific warranty was mentioned in the decision other than the warranty of fitness and merchantability. There were also allegations that there was a breach of warranty under Michigan’s law, which may be the same or different from the warranties explained above.
The plaintiff’s case was based on the recall. The CPSC required recall “poster” which was entered into evidence as proof of the recall and the defect. The plaintiff also had an expert who opined that plaintiff’s head injury “directly related to the inadequacies of the Catlike Kompact bike helmet.”
No other evidence was introduced. The expert’s opinion was not specific, and did not provide any cause for the injury or the failure of the helmet. The court held that because there was no analysis of the crash, speed, location of impact or details of the accident that the expert’s opinion was of no value.
As discussed at oral argument, plaintiff has not brought forth any evidence of the reason the Catlike Kompact helmet failed impact testing. All that has been presented is a one-page press release from the CPSC, set forth above, including a statement that “[t]he helmets fail impact testing required un-der CPSC’s safety standard for bicycle helmets, violating the Consumer Product Safety Act.” Without additional information from the CPSC or any other source, or the results of any independent testing, it is the opinion of the court that Dr. Kress’ statement that “[t]he severity of the head injury sustained by Ms. Jenish is a direct result of the inability of the Catlike Kompact to comply to the CPSC’s safety standards” can be nothing but inadmissible speculation.
Although warranty claims require very little evidence to prove, in this case, no evidence was presented that the court could rely upon to uphold the claims of the plaintiff. The court granted the three defendants motion and dismissed the case.
So Now What?
This case has little value in teaching about helmet crashes, and the liability issues involved in manufacturing helmets. What it does teach is the unintended consequence of dealing with a recall and the CPSC.
It is impossible, probably, now days to create a product that will never have a recall. However, that does not mean you should try. As important, if you are looking at a recall, make sure you fully understand the consequences and work with counsel to lessen the impacts of the recall on your company and the effects it may have.
You also must disclaim all warranties other than the warranties you want for your product. If the proper disclaimer had been part of the information going with the sale of the helmet than this case would not have gone this far.
It is common for many products in the outdoor recreation industry to be brought into the US without the proper warranties and disclaimers. Additionally, many times when translated a product manual the word warranty will be translated into the word guaranty in English, which creates even greater liability issues.
What do you think? Leave a comment.
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Jenish v. Monarch Velo Llc dba Catlike USA, 2007 U.S. Dist. LEXIS 34120; CCH Prod. Liab. Rep. P17,754 (E.D. Mich. S.D. 2007)Posted: October 7, 2014
Tracy Ann Jenish, Plaintiff, vs. Monarch Velo Llc dba Catlike USA, a Texas Corporation, The Kreb Cycle, a New York Corporation, and Catlike Sport Components SL, a Spanish Corporation, Defendants.
Case No. 05-CV-73648
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN, SOUTHERN DIVISION
2007 U.S. Dist. LEXIS 34120; CCH Prod. Liab. Rep. P17,754
May 9, 2007, Decided
May 9, 2007, Filed
CORE TERMS: helmet, catlike, bicycle, safety standard, summary judgment, head injuries, consumer, warranty, material fact, brain, acceleration, testing, seller, bike, Bicycle Helmets Final Rule, entitled to judgment, traumatic, hematoma, usa, Consumer Product Safety Act, matter of law, genuine issue, implied warranty, proximate cause, manufactured, manufacturer, distributor, attenuation, deposition, violating
COUNSEL: [*1] For Tracy Ann Jenish, Plaintiff: Lawrence S. Katkowsky, LEAD ATTORNEY, Lawrence S. Katkowsky Assoc., Bingham Farms, MI.
For Kreb Cycle, Defendant: Matthew A. Brauer, LEAD ATTORNEY, Rutledge, Manion, (Detroit), Detroit, MI.
JUDGES: GEORGE CARAM STEEH, UNITED STATES DISTRICT JUDGE.
OPINION BY: GEORGE CARAM STEEH
OPINION AND ORDER GRANTING DEFENDANT THE KREB CYCLE’S MOTION FOR SUMMARY JUDGMENT (DOCUMENT # 38)
Before the court in this product liability lawsuit is a motion for summary judgment brought by defendant The Kreb Cycle, a New York seller of bicycle equipment, in which it asserts it is entitled to judgment on all counts in the complaint. 1 Because the court agrees that plaintiff has not raised a question of material fact as to causation of her injuries by an allegedly defective bicycle helmet, defendant’s motion is granted as set forth below.
1 The other defendants to this action have not filed answers to the complaint.
Plaintiff Tracy Jenish was riding with a bicycling [*2] club on Wing Lake Road in the area of Bloomfield Hills, Michigan on September 26, 2002, when she fell off her bike and suffered serious bodily injuries, including injuries to her head. She was wearing a helmet called a “Catlike Kompact,” manufactured by defendant Catlike Sport Components SL, a Spanish corporation, distributed by defendant Monarch Velo LLC, a Texas corporation 2, and sold to the plaintiff by movant-defendant Kreb Cycle, a New York corporation.
2 Answers to the complaint by the remaining defendants have not been filed, and defendant Kreb Cycle states in its motion that the other defendants are in default. The docket reflects that a clerk’s entry of default was filed as to defendant Monarch Velo, L.L.C. on June 2, 2006.
The Kreb Cycle (hereinafter “defendant”) started carrying these helmets after its owner attended a trade show in Las Vegas, where a model of the Catlike Kompact helmet was on display. Defendant ordered the helmets from Monarch Velo LLC, d/b/a “Catlike USA,” a Texas distributor. [*3] The helmets came with the manufacturer’s label stating they complied with U.S. Consumer Product Safety Commission (“CPSC”) standards. Although there are no records of the sale, defendant does not dispute that it sold the helmet to plaintiff. Plaintiff’s recollection, according to her deposition, is that she called in with a credit card or ordered it online, at some point during the year preceding the accident.
In 2003, some months after plaintiff’s accident, the Catlike Kompact helmet was the subject of a voluntary manufacturer recall. Defendant has produced a copy of the CPSC’s announcement of this recall, which is reproduced below in its entirety, with the exception of the generic CPSC headings and contact numbers:
CPSC, Monarch Velo, LLC doing business as Catlike USA Announce Recall of Bike Helmets
Washington, D.C. — The U.S. Consumer Product Safety Commission announces the following recall in voluntary cooperation with the firm below. Consumers should stop using recalled products immediately unless otherwise instructed.
Name of product: Catlike Kompact TM Bike Helmets
Distributor: Monarch Velo, LLC, doing business [*4] as Catlike USA, of Houston, Texas
Hazard: The helmets fail impact testing required under CPSC’s safety standard for bicycle helmets, violating the Consumer Product Safety Act.
Incidents/Injuries: None reported.
Description: This recall involves Catlike Kompact TM adult bicycle helmets. The helmets were sold in two sizes (small/medium and large/extra large) and various colors. The sizing label inside the helmets reads “Kompact” and “SM/MD” or “LG/XL.”
Sold at: Bicycle shops nationwide sold the helmets from March 2002 through February 2003 for about $ 130.
Manufactured in: Spain
Remedy: Contact Monarch Velo for information on receiving a free replacement helmet.
Consumer Contact: Contact Monarch Velo toll-free at (877) 228-5646 between 9 a.m. and 5 p.m. CT Monday through Friday or visit the firm’s web site at http://www.catlike-usa.com
Media Contact: Chris Watson at (877) 228-5646.
Exhibit D to Defendant’s Motion. Plaintiff obtained a replacement Catlike helmet after announcement of the recall.
This action was filed in federal court on the basis of diversity of citizenship in September 2005. [*5] Plaintiff’s First Amended Complaint, filed September 29, 2005, makes a common claim against all three defendants, asserting negligence, gross negligence, and breach of warranty in the design, manufacture, and distribution of an unmerchantable, “untested” bicycle helmet that failed to protect against injury to the head.
STANDARD FOR SUMMARY JUDGMENT
Federal Rule of Civil Procedure 56(c) empowers the court to render summary judgment “forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” See Redding v. St. Eward, 241 F.3d 530, 532 (6th Cir. 2001). The Supreme Court has affirmed the court’s use of summary judgment as an integral part of the fair and efficient administration of justice. The procedure is not a disfavored procedural shortcut. Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986); see also Cox v. Kentucky Dept. of Transp., 53 F.3d 146, 149 (6th Cir. 1995).
The [*6] standard for determining whether summary judgment is appropriate is “‘whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'” Amway Distributors Benefits Ass’n v. Northfield Ins. Co., 323 F.3d 386, 390 (6th Cir. 2003) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986)). The evidence and all reasonable inferences therefrom must be construed in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986); Redding, 241 F.3d at 532 (6th Cir. 2001). “[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986) (emphasis in original); see also National Satellite Sports, Inc. v. Eliadis, Inc., 253 F.3d 900, 907 (6th Cir. 2001). [*7]
If the movant establishes by use of the material specified in Rule 56(c) that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law, the opposing party must come forward with “specific facts showing that there is a genuine issue for trial.” First Nat’l Bank v. Cities Serv. Co., 391 U.S. 253, 270, 88 S. Ct. 1575, 20 L. Ed. 2d 569 (1968); see also McLean v. 988011 Ontario, Ltd., 224 F.3d 797, 800 (6th Cir. 2000). Mere allegations or denials in the non-movant’s pleadings will not meet this burden, nor will a mere scintilla of evidence supporting the non-moving party. Anderson, 477 U.S. at 248, 252. Rather, there must be evidence on which a jury could reasonably find for the non-movant. McLean, 224 F.3d at 800 (citing Anderson, 477 U.S. at 252).
Kreb Cycle asserts in its motion that it is entitled to judgment as to all three of plaintiff’s claims: negligence, gross negligence, and breach of warranty. In response, plaintiff asserts it is “only relying on the implied warranty of fitness and merchantability as to this Defendant and will not, therefore, respond to [*8] Defendant’s arguments as to negligence and gross negligence.” Accordingly, judgment is hereby granted for Kreb Cycle as to plaintiff’s negligence and gross negligence claims.
The sole claim remaining as to this defendant is plaintiff’s breach of warranty claim. Plaintiff concedes defendant made no express warranty regarding this helmet. Accordingly, proceeding on a cause of action for breach of an implied warranty, plaintiff asserts that she has established a prima facie case of breach of implied warranty under Michigan law, 3 citing to this court’s case of Konstantinov v. Findlay Ford Lincoln Mercury, 2006 U.S. Dist. LEXIS 85836, 2006 WL 3299487. As set forth in that case, under the Michigan Tort Reform Act, effective in 1996,
(6) In a product liability action, a seller other than a manufacturer is not liable for harm allegedly caused by the product unless either of the following is true:
(a) The seller failed to exercise reasonable care, including breach of any implied warranty, with respect to the product and that failure was a proximate cause of the person’s injuries.
(b) The seller made an express warranty as to the product, the product failed to conform to the warranty, and the [*9] failure to conform to the warranty was a proximate cause of the person’s harm.
Mich. Comp. Laws Ann. § 600.2947(6).
3 Although the retailer was a New York seller, neither party asserts applicable law other than that of Michigan.
Defendant’s argument for summary judgment on this claim is that plaintiff has not come forward with any evidence of a specific defect in the helmet, and has not drawn any kind of causal connection between the alleged defect and her head injuries. It cites to Mascarenas v. Union Carbide, 196 Mich. App. 240, 249, 492 N.W.2d 512 (1992) for the elements of a product liability case under Michigan law: proof that the defendant supplied a defective product, and that the defect proximately caused the plaintiff’s injury. Defendant argues that plaintiff relies only on the helmet’s later recall, disclosed in a 5/22/03 CPSC press release (stating that the recall was occurring “in voluntary cooperation with” the U.S. distributor) and conclusory statements [*10] by an expert, neither of which establish a question of material fact as to proximate cause. 4
4 Defendant also addresses plaintiff’s weak assertion, in answers to interrogatories, that defendant “had a duty to determine whether the model helmet in question did in fact meet CPSC standards.” As defendant argues, there is no such duty required by Mich. Comp. Laws Ann. § 600.2947(6), set forth above.
The court agrees with the defendant. Although precedent such as Mills v. Curioni, Inc., 238 F. Supp. 2d 876, 886 (E.D. Mich. 2002) and the very recent decision in Coleman v. Maxwell Shoe Co., 475 F. Supp. 2d 685, 2007 U.S. Dist. LEXIS 11513, 2007 WL 551608 (E.D. Mich. 2007) lend support to defendant’s argument concerning non-manufacturing sellers and the need for a showing of negligence in failing to detect a product’s defect, this case must be dismissed whether or not such evidence is required.
Plaintiff’s expert’s initial report, created by Tyler A. Kress, Ph.D. in Knoxville, Tennessee, dated [*11] October 6, 2006, summarily lists plaintiff’s injuries following the accident. It then lists all of the expert’s qualifications, his fees, and the records he reviewed. These are a 9/26/2002 CT scan of plaintiff’s head; the hospital’s discharge summary; a letter of April 3, 2003 by a Jon Wardner, M.D. stating plaintiff’s disability; the CPSC announcement of the helmet recall; and the plaintiff’s deposition. Dr. Kress also states that he met with the plaintiff. The remainder (and the entire substance) of his letter/report stated only a conclusion that a “defect” of the helmet was “directly related to the inadequacies of the Catlike Kompact bike helmet.”
Defendant then brought a motion, granted by the magistrate, for sanctions and to require a supplemental report by November 15, 2006, containing a “complete statement of all opinions to be expressed and the basis and reasons therefor…” A supplemental report was subsequently created by Dr. Kress. That report, dated November 15, 2006, is set forth below in its entirety:
Dear Mr. Katkowsky:
This is to supplement my report of October 6, 2006, regarding the above-styled cause.
1) Use: It is my opinion that it is foreseeable [*12] that some consumers will sustain a preventable head injury due to the impact performance (or lack thereof) of the helmet while using it in an appropriate manner as it is intended to be used.
Protective head gear and bicycle helmets have the ability to eliminate or greatly reduce traumatic head and brain injury when properly designed an manufactured. To ensure that bicycle helmets available in the consumer market adequately serve these goals, the Consumer Product Safety Commission has created safety standards for a range of criterion, including impact attenuation (CPSC’s Safety Standard for Bicycle Helmets Final Rule: 16 CFR Part 1203).
Bicycle helmets that have adequate impact attenuation performance, as set forth by the CPSC’s safety standards, and are used in an appropriate, reasonable, and correct manner are highly successful in preventing or greatly reducing traumatic head and brain injury. As found in a 1989 study by Thompson et al and explicitly cited in the CPSC’s Safety Standard for Bicycle Helmets Final Rule (16 CFR Part 1203, pg. 11713), riders with helmets had an 85% reduction in head injury risk, and 88% reduction in brain injury risk.
2) Reason for Injury: [*13] Ms. Jenish’s head injury is directly related to the inadequacies of the Catlike Kompact bike helmet.
The CPSC’s Safety Standard for Bicycle Helmets Final Rule (16 CFR Part 1203) explicitly establishes a performance test to “ensure that helmets will adequately protect the head in a collision” (pg. 11714). As a component of this performance test, helmets are required to not exceed a peak headform acceleration of 300 g for any impact. This pass/fail criterion of 300g or below is consistent with other standards such as the ANSI, Snell, and ASTM (CPSC’s Safety Standard for Bicycle Helmets Final Rule (16 CFR Part 1203, pg. 11714; Halstead 2001). The Catlike Kompact bike helmet is inadequate due to the fact that it failed impact standards that pertain to the design and performance of the helmet in a foreseeable use that may result in an impact to the head.
In the accident on September 26, 2002, Ms. Jenish hit a curb while riding her bicycle, was ejected, and impacted her head. She reported a loss of consciousness at the scene, and her relevant injuries include, but are not limited to, a traumatic brain injury and a subdural hematoma. Ms. Jenish sustained a direct impact to the back [*14] of the head (occipital region) which corresponds to a right occipatal scalp hematoma and the area of impact and failure seen in the helmet. Contact head impacts, such as this, result in predominantly linear acceleration of the head and brain, with small components of angular acceleration. Linear acceleration can product focal brain injuries, such as subdural hematomas, as well as concussions; as seen in Ms. Jenish.
The severity of the head injury sustained by Ms. Jenish is a direct result of the inability of the Catlike Kompact to comply to the CPSC’s safety standards. Subdural hematomas, similar to the one sustained by Ms. Jenish, are commonly caused by an impact to the occipital region (Kleiven 2003, Zhou et al 1995). The acceleration of the head in an occipital impact exceeded the values of what a reasonably designed and protective headgear would have given the wearer. Due to the failure of the Catlike Kompact bicycle helmet to comply to the CPSC’s impact safety standards Ms. Jenish’s head experienced higher acceleration values resulting in a more serious traumatic brain injury than would have been experienced if the helmet was compliant with the impact standards of the CPSC. [*15]
3) Design Defect: The helmet is inherently dangerous and defective by design in that it fails to comply with impact testing standards required under CPSC’s safety standard for bicycle helmets, violating the Consumer Product Safety Act.
The impact attenuation standards of the CPSC’s Safety Standard for Bicycle Helmets Final Rule (16 CFR Part 1203) was created in order to “ensure that helmets will adequately protect the head in a collision” (p. 11714). Failure to meet this standard endangers consumers by failing to prevent or reduce injury.
If you have any questions or need anything further please do not hesitate to contact me.
Tyler Kress, Ph.D., CIE
Exhibit I to Defendant’s Motion and Exhibit 2 to Plaintiff’s Response.
Defendant contends that all this report arguably establishes is that the helmet failed to “meet standards;” and that plaintiff has failed to connect that alleged, undefined defect to her injuries. As defendant asserts, there is no evaluation of items such as plaintiff’s speed at the time of the crash, location of impact, descriptive information concerning the object struck or other details of the accident. Defendant [*16] points to the serious injuries sustained by the plaintiff in the crash, including fractured vertebrae, a crushed rib cage, fractured collarbone, bulging spinal discs, and a collapsed lung, and asserts that helmets don’t rule out any and all head injuries, in any crash or at any speed, but serve to help protect against head injuries. Plaintiff has not identified the manufacturing or design elements of the helmet that led to voluntary recall nor has accident reconstruction tied these elements to the plaintiff’s injuries.
As discussed at oral argument, plaintiff has not brought forth any evidence of the reason the Catlike Kompact helmet failed impact testing. 5 All that has been presented is a one page press release from the CPSC, set forth above, including a statement that “[t]he helmets fail impact testing required under CPSC’s safety standard for bicycle helmets, violating the Consumer Product Safety Act.” Without additional information from the CPSC or any other source, or the results of any independent testing, it is the opinion of the court that Dr. Kress’ statement that “[t]he severity of the head injury sustained by Ms. Jenish is a direct result of the inability [*17] of the Catlike Kompact to comply to the CPSC’s safety standards” can be nothing but inadmissible speculation. Accordingly, it is the court’s determination that plaintiff has not produced evidence to raise a question of material fact regarding causation. Defendant’s motion will be granted.
5 Plaintiff has failed to identify any specific claimed defect, such as deficiencies in the suspension or cushioning system, hardness or thickness of the plastic, ventilation engineering, overall shape, the strapping mechanism, or any other particular aspects of the helmets in general, much less the helmet worn by plaintiff. Without knowing the defect that motivated a voluntary recall, and without testing of the helmet worn by plaintiff, it is impossible to conclude that a defect caused her injury.
Because plaintiff has failed to raise a question of material fact as to the proximate causation of her head injuries by an alleged defect in her bicycle helmet, summary judgment will enter as to all claims brought [*18] by the plaintiff against this defendant.
IT IS SO ORDERED.
Dated: May 9, 2007
S/ George Caram Steeh
UNITED STATES DISTRICT JUDGE
An Overview of the legal relationship created between manufactures and US consumers.
This is a quick memo to simply outline the legal issues encountered by foreign corporations selling in the US Market. This memo will touch on the following issues:
- Warranty Disclaimers and Issues
- State Consumer Protection Laws
- European Union certifications & the US
- Jurisdiction and Venue
An agent legally represents the manufacture. From a legal standpoint the agent stands in the shoes of the manufacture. An agent speaks and acts for the principal, the manufacture. As such the manufacture is liable for anything the agent says or does while representing the manufacture until the agency is terminated and that termination is communicated to interested third party consumers.
An agency relationship exists when a principal (in this case the manufacture or distributor) creates a legal relationship with a third party for the third party to represent the principal. In this case the third party is a retailer of products or an independent contractor sales representative. This relationship can be by contract (oral or written) or by actions on the part of either party (I’ll pay you if you do that).
An agency can be created without a legal relationship. Agency by Estoppel is created when third parties or consumers believe that one party has vested rights or an agency in another based on the actions of the principal. If a sales rep says he works for a manufacture and the manufacture does nothing to terminate the relationship or refine the relationship in the minds of the consumer or the shop then the agency does in fact exist. The parameters of the relationship are as defined by the consumer as reasonably interpreted from the actions of the agent. Failure to stop or disclaim the agency confirms the agency.
This places a tremendous burden on manufactures to create a relationship with agents that is within the parameters and/or restrictions the manufacture wants and then to insist the agent work within those parameters. However, if the manufacture does nothing to enforce the parameters or knows the agent is working outside of the parameters the manufacture will be held liable for the acts of the agent.
A good contract outlining the relationship is necessary for most independent contractor’s representative and required by seventeen (17) states.
Agency by law is another type of agency that is created. These are actions that the courts have interpreted over time to be agency relationships. A specific example in this case is again the manufacture and the distributor or the manufacture and the rep. Courts have determined that for the distributor or rep to do their jobs there is an agency relationship for the agent to act for the manufacture. Agency by law then is interpreted to mean the agent has the basic responsibility to act on behalf of the manufacture.
This places a burden on manufactures to do two things. (1) Hire agents who will understand and respect the agency relationship as defined by the manufacture. That then requires a well written contract that gives the agent freedom to do their job and at the same time reserves the rights and powers that the manufacture wishes to retain. (2) To act quickly when the manufacture sees someone acting outside of the defined relationship or a third party who is acting like an agent.
These place tremendous burdens on the manufacture. However the burdens were created to prevent the consumer, who has little or no way of checking on the relationship from getting ripped off.
Specifically a sales rep is the same as a bike shop, both are selling for the manufacture and the public can rely on both in the same way.
A warranty is created every time there is a sale. Most warranties in the US are defined in the Uniform Commercial Code (UCC) and in a few cases state and federal laws. Specific Federal laws may affect the sale of certain items such as the Magnuson-Moss Warranty Act which covers warranties on automobiles.
In every sale the UCC states that there is a Warranty of Fitness and a Warranty for a Particular Purpose (UCC – ARTICLE 2 -§2-314 & 315).
§ 2-314. Implied Warranty: Merchantability; Usage of Trade.
(1) Unless excluded or modified (Section 2-316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale.
(2) Goods to be merchantable must be at least such as
(a) pass without objection in the trade under the contract description; and
(b) in the case of fungible goods, are of fair average quality within the description; and
(c) are fit for the ordinary purposes for which such goods are used; and
(d) run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; and
(e) are adequately contained, packaged, and labeled as the agreement may require; and
(f) conform to the promise or affirmations of fact made on the container or label if any.
§ 2-315. Implied Warranty: Fitness for Particular Purpose.
Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose.
As innocent as these warranties appear, they are the basis for product liability lawsuits and can be used to void more limiting warranties. However both of these warranties can be voided.
An example of the problem would be a camming device. The salesman states the camming device will work “no matter what.” The user drags the device through the mud so it is just caked and won’t work properly. The consumer uses the device, it fails because of the mud and the consumer is injured. The consumer could sue for their injuries under a breach of warranty theory because the device did not live up to the reason why it was purchased. This is a breach of the fitness for a particular purpose warranty.
Another example of the problem would be selling a bicycle. The salesman states the bicycle will be easy to ride. The new owner has never used a derailleur shifted gears on a bicycle and constantly has trouble shifting the gears. During one attempt to change gears the consumer hits a sewer grate suffering serious injuries. The consumer could sue for their injuries under a breach of warranty theory because the device did not live up to the reason why it was purchased. This is a breach of the fitness for a particular purpose warranty.
There is an out in the law that allows a manufacture to argue that the statements were salesman’s “puffing.” That means the statements that a salesman makes to sell a product that may be over the top. However because the warranty was not properly disclaimed the salesman’s puffing is not a valid defense. This may be in addition to any claim for basic product liability issues.
State Consumer Protection Laws
Each state has enacted a serious of Consumer Protection Laws. These laws are designed to “level the playing field” between consumers and large manufactures. Although the specifics may vary for each state in general the laws lower the threshold needed to prove a case against the manufacture and increase the damages for the consumer. In some cases damages are trebled, with interest costs and attorney fees being added to the damages.
Another disadvantage for manufactures is the manufacture can be forced to defend the action in the consumer’s state if products are sold in that state.
Colorado’s Consumer Protection Act, C.R.S. §§ 6-1-105 et seq has the following sections that would be of interest.
(1) A person engages in a deceptive trade practice when, in the course of such person’s business, vocation, or occupation, such person:
(d) Uses deceptive representations or designations of geographic origin in connection with goods or services;
(r) Advertises or otherwise represents that goods or services are guaranteed without clearly and conspicuously disclosing the nature and extent of the guarantee, any material conditions or limitations in the guarantee which are imposed by the guarantor, the manner in which the guarantor will perform, and the identity of such guarantor. Any representation that goods or services are “guaranteed for life” or have a “lifetime guarantee” shall contain, in addition to the other requirements of this paragraph (r), a conspicuous disclosure of the meaning of “life” or “lifetime” as used in such representation (whether that of the purchaser, the goods or services, or otherwise). Guarantees shall not be used which under normal conditions could not be practically fulfilled or which are for such a period of time or are otherwise of such a nature as to have the capacity and tendency of misleading purchasers or prospective purchasers into believing that the goods or services so guaranteed have a greater degree of serviceability, durability, or performance capability in actual use than is true in fact. The provisions of this paragraph (r) apply not only to guarantees but also to warranties, to disclaimer of warranties, to purported guarantees and warranties, and to any promise or representation in the nature of a guarantee or warranty; however, such provisions do not apply to any reference to a guarantee in a slogan or advertisement so long as there is no guarantee or warranty of specific merchandise or other property.
(3) The deceptive trade practices listed in this section are in addition to and do not limit the types of unfair trade practices actionable at common law or under other statutes of this state.
Colorado’s statute allows the judge to award treble damages, interest and attorney fees if the consumer is successful in the suit. C.R.S. 6-1-113. §§ Damages
Here again the warranties come into play. If the consumer can prove the warranties are not disclaimed and the claim falls within the deceptive trade practices act or a common claim for deceptive trade practices, the damages for the warranty claim are increased.
European Union certifications & the US
Many manufactures from Europe or Asia believe that meeting standards for manufacturing products in Europe is all that is needed to sell in the US. That is correct. However those standards provide no defense in a US Court against product liability claims.
Product liability lawsuits are lawsuits against the manufacture and all entities in the chain of the sale. A product liability action can be brought against the bicycle shop, the distributor and the manufacture of a product. There are three basic product liability claims.
- Defective manufacture
- Defective Design
- Failure to warn
Defective manufacture claims are usually brought when only one product fails because there was a flaw in the manufacturing process for that product. The flaw caused an injury to the consumer using the product.
Defective design is usually the claim made when all of a type of product fails causing injury. A defective design claim can be brought at any time during the useful life of a product. This claim is brought when all of the products of a design fail for the same reason. The design flaw can either be based on the product breaking causing injury or the design preventing the product from working as advertised or as used by consumers.
The most difficult claim to defend is a failure to warn. This claim has two parts. Failure to warn at the time of the purchase and failure to warn of new issues the manufacture learns about. Failure to warn claims are the basics for information and warning labels that are not written in a manner to adequately inform the consumer of the risks of using the product.
Failure to warn claims that arise after time are usually a result of several Defective manufacture claims. Once a manufacture knows of problems in the way a product is being used OR that a product is being used incorrectly, the manufacture MUST warn all users of the problem. This type of claim in practice is similar to a product recall. However a product recall is done before an injury occurs. A failure to warn claim is the lawsuit brought after a recall.
The running of a warranty period does not end product liability claims.
Jurisdiction and Venue
Foreign manufacture believe that by setting up a US distributor, any lawsuit can only be brought against the US distributor and not the parent company in Europe. That is not true. US law allows a lawsuit against the end manufacture, wherever that manufacture is located if the manufacture entered the product in the stream of commerce in the state where the injury occurred or where the consumer lives. Proof of entering into the stream of commerce is a combination of factors: employees or agents living or working in the state; advertising in the state; contracting with retailers to sell the product in the state; advertising at events in the state are a few examples used to prove the manufacture entered the stream of commerce in a particular state.
In some cases, a manufacture can limit suits to just a few states with proper venue and jurisdiction clauses in their information to the consumer; however this is not always successful and will not work in all states. Either way, a foreign manufacture will be brought into the US to defend a product liability claim.
What do you think? Leave a comment.
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© 2010 James H. Moss
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