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NAW Asks Pennsylvania Supreme Court for new Product Liability Standard

Washington, DC (June 18, 2008) … The National Association of Wholesaler-Distributors (NAW) is one of 11 organizations which this week filed an amicus curiae (“friend of the court”) brief asking the Pennsylvania Supreme Court for a more reasonable product liability standard for non-manufacturer distributors in failure-to-warn cases.

Bugosh v. I.U. North America, Inc. revolves around plaintiff’s claim that he was exposed to asbestos-containing pipe that was supplied by I.U.N.A. I.U.N.A. did not manufacture the pipe, and asbestos products constituted only one percent of the products I.U.N.A. distributed. At trial, the defendant was barred from presenting evidence of what it knew or should have known about the dangers of the product at the time of sale. The Pennsylvania Superior Court upheld the trial court’s Order.

In the brief, amici trace the development of “strict liability” (i.e., liability based on the condition of the manufacturer’s product rather than the conduct of the defendant) constructed in Section 402(A) of the Restatement of Torts (Second) (1965) (“Sec. 402(A)”). Despite the focus of the Reporters of Sec. 402(A) on manufacturing defects, courts has since struggled to apply strict liability “to very different claims involving defective design and failure to warn,” the result of which “has been a confusing and contradictory body of products liability law …” Amici argue that Section 2 of the Restatement Third, Torts (1998) (“Third Restatement”) resolves the conflict by “setting forth distinct principles of manufacturing defect, design defect and failure to warn.” In its definition of “inadequate instructions or warnings,” the Third Restatement uses terms (e.g., “foreseeable” and “reasonable”) that are associated with the seller’s conduct and knowledge and thus clarifies “that a manufacturer or distributor of a product may only be liable for failing to warn of foreseeable risks” and not for scientifically or technologically unknowable “hindsight risks.”

Amici further contend that the path charted by the Reporters of the Third Restatement does not depart from the intent of Sec. 402(A) whose Reporters commented, “… failure to warn requires a fault-based inquiry whereby a manufacturer or distributor cannot be held liable for failing to warn about a risk that was not known and was not knowable at the time the product was sold … almost every court has declined to impose ‘liability by hindsight’ in failure-to-warn cases.” The brief proceeds to remind the high court that “the general concept that a duty to warn flows from what a manufacturer or seller knew or should have known continued to run through case law and statutes and remained uncontroversial in many states. This touchstone for failure-to-warn claims is now a well accepted principle …”

Finally, amici suggest that to uphold the lower courts in Bugosh would have the opposite affect; i.e., of holding distributors liable under a standard greater than that applied to manufacturers. “Under both the Restatement (Second) and the Third Restatement, as well as the overwhelming majority of cases that have considered the issue, ‘hindsight liability’ is not (emphasis added) imposed on manufacturers. As distributors are held to the same standard as manufacturers for claims of failure to warn, neither manufacturers nor distributors are, or should be subject to liability for hindsight failures to warn … Product sellers, including distributors … should not be subject to liability in a manner that is greater than a manufacturer would have under either the Restatement (Second) or the Third Restatement.

“This case is a legal embodiment of what NAW has tried for decades to achieve in federal product liability reform legislation; namely, to get a fair standard of product seller liability that appropriately lays responsibility for injury-causing product defects at the doorstep of the party that caused the defect and was in the best position to remedy it. Holding nonmanufacturer product sellers liable for unknowable risks, which the appeal to the Pennsylvania Supreme Court in Bugosh challenges, only serves to encourage plaintiff trial lawyers to unjustly haul innocent wholesaler-distributors into court in their unending search for deep pockets to sue,” said Jim Anderson, NAW Vice President-Government Relations.

“The Bugosh appeal is an extremely important case with a potential affect well beyond asbestos product liability litigation and well beyond the borders of Pennsylvania,” observed NAW General Counsel George Keeley, senior partner in the Chicago law firm Keeley, Kuenn & Reid. “This case involves a genuinely consequential issue that is being litigated before the highly-respected Supreme Court of a major industrial state. The decision the Pennsylvania Supreme Court renders in this case is of the kind that courts in other jurisdictions will look to in adjudicating relevant products cases going forward and will therefore have a significant impact on the product liability exposure of wholesaler-distributors for years, perhaps decades to come,” Keeley said.

Note: Click here to view a copy of the amicus brief.

The National Association of Wholesaler-Distributors is the national voice of the wholesale distribution industry.  Its membership encompasses more than 100 national and regional line-of-trade associations, and approximately 40,000 wholesale distribution companies.