January, 2006 No. 6

In This Issue What Every Product Manufacturer Needs To Know When Defending A Lawsuit In Alabama Chris Berdy is a partner with Sirote & Permutt, P.C. in

Birmingham, Alabama, By Chris Berdy where he specializes in litigation, emphasizing Hey Stan, you're in Ala-*#!-Bama. products liability, personal You come from New York…There is injury, and business no way this is not going to trial. litigation. He is a member of IADC. Vinny Gambini (Joe Pesci), My Cousin Vinny (1992)

I. ALABAMA: IS THE HEART OF DIXIE A “JUDICIAL HELLHOLE” ?

In the 1980’s and 1990’s, the State of Alabama won the nickname of “ hell” for its “headline-grabbing” verdicts.1 In 2002, Alabama earned a spot on the American 2 Association’s (“ATRA”) “Dishonorable Mention” list. After hosting back-to-back jury verdicts that ranked as the nation’s highest, The IADC with an $11.9 billion verdict in 2003 and $1.6 billion and $1.3 billion verdicts in 2004, Alabama returned to the ATRA’s list of “Judicial

The IADC dedicates itself to Hellholes,” although relegated to the “Watch List.”3 For product enhancing the development manufacturers and distributors defending suit in the Heart of Dixie, of skills, professionalism what follows is an overview of Alabama’s product liability law. and camaraderie in the practice of law in order to II. THE ALABAMA EXTENDED MANUFACTURERS serve and benefit the civil LIABILITY DOCTRINE justice system, the legal profession, society and our A. Introduction members. 4 In two 1976 companion cases, the Alabama Supreme Court adopted the Alabama Extended Manufacturers Liability Doctrine (“AEMLD”), a hybrid version of “strict liability” law. Declining to

International Association of Defense Counsel One North Franklin, Chicago, IL 60606 Phone: (312) 368-1494 Fax: (312) 368-1854 Email:[email protected] www.iadclaw.org

Product Liability Committee Newsletter

embrace the concept of strict liability under proof that the defect caused the injury and that the 11 Section 402A of the Restatement (Second) of defect is traceable to the defendant. Therefore, , the Court instead retained a fault-based essential to an AEMLD claim is proof that the concept of liability. product’s performance failure is causally related

in fact to the product’s defective condition at the 12 To establish liability under the AEMLD, time of its sale. a plaintiff must prove (1) he/she suffered injury or to the plaintiff’s property by one A product manufacturer is not required to who sold a produce in a defective condition produce the safest possible product, but only to unreasonably dangerous to her as the ultimate produce one that is reasonably safe when put to 13 user or consumer, if (a) the seller was engaged in its intended use. The failure of a product does the business of selling such a product, and (b) it not presuppose the existence of a defect.14 The was expected to, and did, reach the user or fact that someone was injured while using a

consumer without substantial change in the product does not establish that it was 5 condition in which it was sold. The plaintiff unreasonably dangerous when put to its intended 6 must affirmatively show a defect in the product. use.15 A “defect” is that which renders a product

“unreasonably dangerous,” i.e., not fit for its D. Defenses 7 intended purpose. A claim under the AEMLD is subject to a B. Types of Claims two-year of limitations.16 Alabama has no statute of repose.17

Under the AEMLD, a plaintiff can pursue claims for (1) defective manufacture, (2) Because the AEMLD is a fault-based tort, defective design, and (3) failure to warn. A a plaintiff’s contributory negligence18 and defective manufacture claim requires that the assumption of the risk19 are complete defenses to

plaintiff establish the above-listed elements. In a an AEMLD claim. Likewise, product misuse, defective design claim, the plaintiff must prove defined as use of the product in some manner that a safer, practical alternative design was different than that intended by the manufacturer, available to the manufacturer at the time it is an affirmative defense to AEMLD claims.20 manufactured the product, in addition to the The open-and-obvious defense is an affirmative 8 21 above-listed elements. In a failure to warn defense in failure to warn claims. claim, the plaintiff must demonstrate that the proposed warning would have been read and Finally, the “no causal relation” defense is heeded and that it would have prevented the available exclusively to distributors and sellers,

resulting accident, as Alabama has no “heeding but not to manufacturers.22 Under this affirmative 9 presumption.” A manufacturer is under a duty defense, a distributor may establish that there is to warn users of the dangerous propensities of a no causal connection in fact between the product only when such product is dangerous distributor’s handling the product and its alleged when put to its intended use.10 defective condition.23

C. The Plaintiff’s Burden of Proof Additionally, a manufacturer selling an industrial product to a “sophisticated user,” one Under the AEMLD, the plaintiff must who has significant experience operating and

prove by substantial evidence that the product using a particular product, has no duty to warn the was substantially unaltered when used by him employees of that purchaser where the purchaser and must also prove causation in fact, including has an obligation to inform them of the hazards

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Product Liability Committee Newsletter

24 associated with the product. Moreover, a limitations for a wrongful death claim is two 33 plaintiff cannot recover for injuries that result years. from allergic or idiosyncratic reactions to otherwise harmless substances.25 Despite the limitation to recovering punitive damages, one must beware of the III. CO-EMPLOYEE LIABILITY “Aquaslide” scenario in which a plaintiff may be entitled to recover compensatory damages, such As an exception to the Alabama as medical expenses, if sustained by the decedent

Workers’ Compensation Act’s exclusivity before his death, in addition to punitive damages 34 provision, an injured employee can sue a co- recoverable for wrongful death. Alabama’s employee when personal injury or death results Wrongful Death Act does not allow from a co-employee’s “willful conduct.”26 In the apportionment of damages among joint tort- context of products liability actions, “willful 35 feasors. conduct” is defined as the willful or intentional removal, or failure to install, from a machine of Liability insurers are obligated to cover a safety guard or safety device provided by the punitive damages in the wrongful death context.36 manufacturer of the machine with the knowledge A standard liability policy that excludes coverage

that injury or death would likely or probably for punitive damages in a wrongful death case 27 37 result from the removal. contravenes Alabama law.

IV. BREACH OF WARRANTY CLAIMS B. Expert Witnesses

Under Alabama’s version of the Uniform Ordinarily, expert testimony is required to 38 Commercial Code, implied warranties are support an AEMLD claim. Rule 702 of the applicable only to sellers and have no Alabama Rules of Evidence governs the application to product manufacturers.28 As to admission of expert testimony. Likewise,

express warranties, breach of warranty claims Alabama has yet to abandon the outdated Frye are unavailable if the essence of the claim is that “general acceptance” test for novel expert 29 39 the product was “unreasonably dangerous.” testimony in civil cases. Both general Alabama has a four year limitations period for acceptance in the scientific community and a breach of warranty claims, and in the case of reliable basis in the knowledge and experience of “equipment,” the breach occurs upon delivery, a discipline are required under Alabama’s 40 while for “consumer goods,” the cause of action application of Frye. accrues when the injury occurs.30 C. Admissibility Of Other Similar

V. OTHER ISSUES RELATING TO Incidents PRODUCT LIABILITY CLAIMS Where the plaintiff attempts to introduce the defendant-manufacturer’s internal reports of A. Wrongful Death Claims other incidents, the reports must be substantially

similar to the incident in question.41When the The Wrongful Death Act is the sole reports of other incidents are not substantially 42 remedy for the tortious infliction of death in similar, the reports should not be admitted. Alabama, and the only available remedy is punitive damages.31 To recover for wrongful D. Spoliation Of Evidence death in Alabama, all that is required is the mere

commission of a tort resulting in death, although In connection with defending a product no heightened standard of proof is required to liability or warranty claim, a defendant is entitled 32 recover punitive damages. The statute of to examine the product to determine the cause of 3

Product Liability Committee Newsletter

43 the alleged problems. Strict sanctions may be plaintiff cannot recover under a or imposed for a party’s failure to preserve crucial other tort theory of liability, including the evidence.44 In fact, Alabama now recognizes an AEMLD, where a product only causes damage to independent cause of action for negligent itself.53 However, warranty claims will provide 45 spoliation of evidence. an avenue of recovery for damage to the product.

E. Personal Jurisdiction B. Collateral Source Rule

When considering a motion to dismiss for lack Where the plaintiff claims, as damages,

of personal jurisdiction, courts must consider the medical expenses that have been reimbursed, the allegations contained in the Plaintiff’s complaint defendant can introduce evidence that those 54 as true, unless those allegations are controverted expenses have been paid by a third party. by the defendant’s affidavits.46 Alabama’s long- C. Contribution And Indemnity arm statute has long been recognized as expanding the scope of Alabama courts’ jurisdiction to the full extent allowed by the due In general, no contribution is permitted process constraints.47 Although a physical among joint tortfeasors, except when a written presence in Alabama is not a prerequisite, there indemnity agreement between the parties exists.55

must be such contacts with this state such that Thus, all responsible defendants are jointly and 56 the defendant should reasonably anticipate being severally liable for any damages. haled into court in Alabama.48 VII. INFORMATION ABOUT ALABAMA AND ITS JUDICIAL SYSTEM The Alabama Supreme Court has adopted the “purposeful availment” test to determine whether a defendant has sufficient Alabama’s sixty-seven counties and three minimum contacts with this state.49 For either federal districts vary greatly in demographics and general or specific jurisdiction, the nexus judicial temperament. A wealth of information

between the defendant and Alabama must arise about the State of Alabama, its judicial system, out of an action by the defendant that was and its demographics can be found on the purposefully directed toward Alabama.50 Internet.

The State of Alabama’s official website is VI. DAMAGES www.alabama.gov. For demographic and Census A. Compensatory and Punitive information, visit Damages http://quickfacts.census.gov/qfd/. For facts and information about Alabama’s State Bar and its

In addition to compensatory damages, a plaintiff Unified Judicial System, visit www.alabar.org may recover punitive damages by proof of clear and www.alacourt.gov. Information relating to and convincing evidence that the defendant Alabama’s United States District Courts can be consciously or deliberately engaged in found at www.alnd.uscourts.gov (Northern District), www.almd.uscourts.gov (Middle oppression, fraud, wantonness, or malice with 51 regard to the plaintiff. A variety of limitations District), and www.als.uscourts.gov (Southern exist restricting punitive damages awards in District). certain circumstances.52 Endnotes

B. The Economic Loss Doctrine 1. P. Rawls, “Alabama in spotlight for Under the Economic Loss Doctrine, a record lawsuits,” Anniston Star, Dec. 4

Product Liability Committee Newsletter

20, 2005. 21. Abney v. Crossman Corp., 2005 WL 2. Id. 1189587, *5-6 (Ala. May 20, 2005); Ford Motor Co. v. Rodgers, 337 So. 3. Id. 2d 736, 739 (Ala. 1976).

4. See Atkins v. American Motors Corp., 22. See Foremost Ins. Co. v. Indies House, 335 So. 2d 134 (Ala. 1976); Casrell Inc., 602 So. 2d 380, 382 (Ala. 1992); v. Altec Indus., 335 So. 2d 128 (Ala. Atkins, 335 So. 2d at 143. 1976). 23. Consolidated Pipe & Supp. Co. v. 5. Atkins, 335 So. 2d at 141 Stockham Valves & Fittings, Inc., 365 6. Verchot v. General Motors Corp., So. 2d 968, 970 (Ala. 1978). 812 So. 2d 296, 301 (Ala. 2001). 24. Vines v. Beloit Corp., 631 So. 2d 7. Hawkins v. Montgomery Indus. Int’l, 1003, 1004-6 (Ala. 1994). Inc., 536 So. 2d 922, 926 (Ala. 1988). 25. Griggs v. Combe, Inc., 456 So. 2d 8. Beech v. Outboard Motor Corp., 584 790, 792-93 (Ala. 1984). So. 2d 447, 450 (Ala. 1991). 26. Ala. Code § 25-5-11(b) and (c). 9. Deere & Co. v. Grose, 586 So. 2d 27. See Ala. Code § 25-5-11(c)(2); Moore 196, 198 (Ala. 1991); Gurley v. v. Reeves, 589 So. 2d 173, 178 (Ala. American Honda Motor Co., 505 So. 1991). 2d 358, 361 (Ala. 1987). 28. Ex parte General Motors Corp., 769 10. Hawkins, 536 So. 2d at 927. So. 2d 903, 910 (Ala. 2000). 11. Ala. Code § 12-21-12(d); Verchot, 29. See Ex parte General Motors Corp., 812 So. 2d at 301. 769 So. 2d at 913; Yarbrough v. Sears, 12. Verchot, 812 So. 2d at 301. Roebuck and Co., 628 So. 2d 478, 483 (Ala. 1993). 13. Graham, 657 So. 2d at 870. 30. Simmons v. Clemco Indus., 368 So. 2d 14. Verchot, 812 So. 2d at 301. 509, 512 (Ala. 1979); Wright v. 15. Id. Cutler-Hammer, Inc., 358 So. 2d 444,

445-46 (Ala. 1978); Ala. Code § 7-2- 16. See Etheridge v. Genie Indus., Inc., 725(1) & (2). 632 So. 2d 1324, 1327 (Ala. 1994);

Ala. Code § 6-2-38(l). 31. King v. National Spa and Pool Inst., 607 So. 2d 1241, 1246 (Ala. 1992); 17. See Ala. Code § 6-5-502(c); Lankford Ala. Code § 6-5-391, -410. v. Sullivan, Long, & Hagerty, 416 So. 2d 996, 1004 (Ala. 1982). 32. See Ala. Code § 6-5-410; Cherokee Elec. Co-op. v. Cochran, 706 So. 2d 18. General Motors Corp. v. Saint, 646 1188, 1193-94, n. 5 (Ala. 1997). So. 2d 564, 565-66 (Ala. 1994); Atkins, 335 So. 2d at 143. 33. See Ala. Code § 6-5-410.

19. Rivers v. Stihl, Inc., 434 So. 2d 766, 34. See Benefield v. Aquaslide ‘N’ Dive 773 (Ala. 1983); Atkins, 335 So. 2d at Corp., 406 So. 2d 873, 876 (Ala. 143. 1981); King, 607 So. 2d at 1248.

20. Sears, Roebuck and Co. v. Harris, 35. Lemond Constr. Co. v. Wheeler, 669 630 So. 2d 1018, 1028 (Ala. 1993). So. 2d 855, 863-64 (Ala. 1995).

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Product Liability Committee Newsletter

36. See American Fid. & Cas. Co. v. McInnis, 820 So. 2d at 802. Werfel, 162 So. 103, 106 (Ala. 1935); 48. See Sieber v. Campbell, 810 So. 2d “Insurance Against Liability for 641, 644 (Ala. 2001). Punitive Damages Imposed in Civil

Cases Is Not Violative of Public 49. See Ex parte McInnis, 820 So. 2d at Policy in Ala.,” Opinion of Ala. Att’y 803-4; Ex parte Kamilewicz, 700 So. Gen’l (Feb. 1, 1978); see also Ross 2d 340, 342-44 (Ala. 1997).

Neely Sys., Inc. v. Occidental Fire & 50. See Elliott v. Van Kleef, 830 So. 2d Cas. Co. of N. Carolina, 196 F. 3d th 726, 731 (Ala. 2002). 1347, 1350 n. 2 (11 Cir. 1999); Montgomery Health Care Facil. v. 51. Ala. Code § 6-11-20. Ballard, 565 So. 2d 221, 226 (Ala. 52. See Ala. Code § 6-11-21. 1990); Hill v. Campbell, 804 So. 2d

1107, 1109-11 (Ala. Civ. App. 2001). 53. See Ford Motor Co. v. Rice, 726 So. 2d 626, 631 (Ala. 1998); Dairyland 37. Hill, 804 So. 2d at 1109. Ins. Co. v. General Motors Corp., 549 38. See Verchot, 812 So. 2d at 303. So. 2d 44, 46 (Ala. 1989).

39. See Courtalds Fibers, Inc. v. Long, 54. See Mobile Infirmary Med. Ctr. v. 779 So. 2d 198, 202 (Ala. 2000). Hodgen, 884 So. 2d 801, 815-16 (Ala. 2004); Marsh v. Green, 782 So. 2d 40. See Slay v. Keller Indus. Inc., 823 So. 223, 230 (Ala. 2000); Ala. Code § 6-5- 2d 623, 626 (Ala. 2001). 1 522-524, -545; Ala. Code § 12-21-45. 41. See Verchot, 812 So. 2d at 304-5; 55. See Crigler v. Salac, 438 So. 2d 1375, General Motors Corp. v. Johnston, 1385-86 (Ala. 1983); Consolidated 592 So. 2d 1054, 1058-59 (Ala. Pipe & Supp. Co., 365 So. 2d at 970. 1992). 56. See Nelson Bros., Inc. v. Busby, 513

42. See Verchot, 812 So. 2d at 304-5; So. 2d 1015, 1017 (Ala. 1987); Taylor v. General Motors Corp., 707 Sherman Concrete Pipe Mach., Inc. v. So. 2d 198, 203 (Ala. 1997). Gadsden Concrete & Metal Pipe Co., 43. See Iverson v. Xpert Tune, Inc., 553 335 So. 2d 125, 127 (Ala. 1976).

So. 2d 82, 84 (Ala. 1989); Capitol Chevrolet, Inc. v. Smedley, 614 So. 2d 439, 441-42 (Ala. 1993).

44. See Alfa Mut. Ins. Co. v. Ray’s Refrigeration, 682 So. 2d 452 (Ala. 1996); Smedley, 614 So. 2d at 442-

43; Cincinnati Ins. Co. v. Synergy Gas, Inc., 585 So. 2d 822, 826-27 (Ala. 1991); Iverson, 553 So. 2d at 88-89.

45. See Smith v. Atkinson, 771 So. 2d 429, 432 (Ala. 2000).

46. See Ex parte McInnis, 820 So. 2d 795, 798 (Ala. 2001). 47. See Ala. R. Civ. P. 4.2(a)(2); Ex parte 6