Arizona Supreme Court to Review Product Liability Case

The Arizona Supreme Court announced it will be reviewing a product liability case in which a lower court decided that all parties in a distribution chain could not be sued equally.

At issue in the case, State Farm Insurance v. Premier Manufactured Systems, is whether the Arizona Legislature’s principles of comparative fault are applicable to participants in the chain of distribution of an allegedly defective product.

Previously, the Arizona Division 1 Court of Appeals ruled that they are.

In the case, the plaintiff, who was insured by State Farm Insurance Companies, returned home from vacation and discovered that an under-sink reverse osmosis water filtration system had leaked, damaging his home and property. The insured had purchased the system one to two years before the leak, and had properly installed and maintained the system. The system was packaged and sold by Premier Manufactured Systems Inc. Worldwide Distributing Ltd. had manufactured the canisters holding a series of filters and sold them to Premier.

State Farm paid its insured approximately $19,000 for the losses caused by the leak, then filed a strict products liability case against Premier and Worldwide to recover the amount it had paid. The court entered a default judgment against Worldwide because by then the company was defunct. Premier denied liability, alleging the “trier of fact would be required to determine the ‘relative degree of fault of all parties and other persons.'”

Thus, State Farm moved for summary judgment on issue of comparative fault, asserting all entities in a distribution chain are joint and severally liable for the injuries caused by the product.

The state superior court denied State Farm’s motion, holding that the entities involved in the manufacture, production and sale of a defective product to consumers are severally at fault, and noted the comparative fault principles. Based on that ruling, Worldwide was determined 75 percent at fault, and Premier 25 percent at fault and liable to State Farm.

State Farm appealed, arguing that all parties in the chain of distribution of a defective product should be jointly and severally liable, otherwise an injured consumer will be left with little or no remedy if, as in this case, most of the fault is apportioned to an insolvent member of the distribution chain,” according to court documents.

The Supreme Court is expected to make a ruling in mid-summer.

Source: Arizona Courts