Ruling may limit liability lawsuits - East Valley Tribune: Business

Ruling may limit liability lawsuits

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Posted: Saturday, September 9, 2006 5:37 am | Updated: 2:46 pm, Fri Oct 7, 2011.

Consumers who buy products that prove defective may be short-changed when they sue.

In a unanimous decision, the Arizona Court of Appeals has concluded that manufacturers can escape paying the full amount of the damages their products cause if it can be shown that the defect can be traced, at least in part, to a faulty part supplied to them.

That means that consumers would have to sue not only the company that made the product but also any suppliers. More to the point, it means if the supplier has gone out of business — as happened in this case — the customer is out of luck.

“This is a really bad decision for consumers,’’ said attorney John Sittu. He represents State Farm Insurance, the company that provided coverage to the homeowner in question.

The case involves a homeowner who bought a water filtration system made by Premier Manufactured Systems. That system leaked while the homeowner was away, causing more than $19,200 in damages.

State Farm paid the claim and then turned around and sued Premier.

But the appellate judges said Premier is liable for just 25 percent of the damages. The balance, they concluded, is the fault of Worldwide Distributing Ltd., which had manufactured the canisters and sold them to Premier.

Only thing is, Worldwide had since gone out of business.

But Judge Patricia Norris, writing for the unanimous court, said that wasn’t the fault of Premier. And she said the fact that it was Premier — and not the homeowner — who had bought the canisters from Worldwide is legally irrelevant.

The bottom line, said Norris, is the Arizona Legislature changed the law in 1987 to spell out that defendants in virtually all civil cases are responsible only for the percentage of damage they caused. And that, the judge said, even covers product liability lawsuits.

Sittu had argued the requirement to apportion fault among all guilty parties should be applied only when multiple defendants each had a direct relationship with the injured party. In this case, he said, both Worldwide and Premier are in the “chain of distribution’’ and should be jointly liable.

“Although State Farm’s argument has some pragmatic appeal, we must reject it,’’ Norris wrote. She said the 1987 law “could not be any clearer.’’

Sittu also argued that there are special rules governing product liability cases. One of those is that consumers do not have to prove that the manufacturer was negligent but simply that the product was defective. And traditionally the law had concluded that liability for a defective product extends to all involved in its distribution.

Norris acknowledged the special practices in products liability cases, but she said the change in law in 1987, coupled with the requirement of courts to find degrees of fault, limits from whom State Farm can collect.

The appellate court rejected Sittu’s argument that the law violates the state constitution.

The specific provision says “the right of action to recover damages for injuries shall never be abrogated, and the amount recovered shall not be subject to any statutory limitation.’’ But Norris said allocating fault — and limiting Premier’s liability to 25 percent — did not deprive State Farm of its right to sue.

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