Products Liability Pointers - Volume III, No. 7

By: Michael J. Williams
[email protected]

Last month, we wrote of the newly enacted Adult Survivors Act (S.66A/A.648A) and the restorative justice it would provide to any adult victim of sexual abuse in New York’s history. Plaintiffs were granted six months to prepare their cases before a one-year window of opportunity opened to file without regard to statutes of limitations. Since businesses have surely begun preparing themselves for this litigation (and if you forgot, please consider this your reminder), today’s case concerns a slightly different issue: potential exposure resulting from your business absorbing the assets of another against whom liability would have been proper.
 

Dutton v. Young Men’s Christian Association of Buffalo Niagara, --- N.Y.3d ---, 2022 WL 2382155, 2022 N.Y. Slip Op. 04238 (4th Dept. July 1, 2022)

In Dutton, the plaintiff alleged sexual abuse against an employee of YMCA Niagara Falls which had allegedly merged with defendant YMCA Buffalo. YMCA Niagara Falls underwent judicial dissolution under Not-For-Profit Corporation Law sec. 1404(d) with its assets falling to the National Council of YMCAs. The National Council in turn transferred those assets to YMCA Buffalo. Supreme Court held that the intermediary entity precluded plaintiffs from relying on the de facto merger doctrine as a matter of law based on YMCA Niagara Falls never directly transacting with YMCA Buffalo.

The Fourth Department, however, reversed. Plaintiff alleged YMCA Buffalo had absorbed YMCA Niagara Falls’ facilities and branches, with continuity of management, personnel, physical location, assets, and general business operations. Additionally, YMCA Niagara’s judicial dissolution was expressly premised on the National Council transitioning its assets to YMCA Buffalo to continue providing services to the region. Holding that de facto merger is a common law, equitable doctrine, the Fourth Department found it meritorious under these facts despite limitations in the Not-For-Profit Corporation Law.

Dutton recognizes the ongoing refinement of law governing successor liability in the Child Victims Act context. As the Adult Survivors Act will create even greater fact-intensive complexities as to successor liability in the business, educational, religious and charitable environments, current management would be well served to identify and preserve those records necessary for their defense regardless of how long ago a merger, acquisition or other absorption of another entity may have occurred.

Manufacturing Defects
By: Jesse L. Siegel
jls@hurwitzfine.com

This month’s case is from the Fourth Department and deals with a claim of a manufacturing/design defect involving a Reebok shoe. When I think of Reebok, the two most influential athletes in terms of sponsorship that come to mind are Shaquille O’Neal and Allen Iverson. Did you know that Allen Iverson has a trust fund with Reebok in the amount of $32 million, but he cannot access said trust fund until 2030? Don’t feel so bad for the Answer; his lifetime deal with Reebok still pays him $800,000 annually.

Turning to this early July decision, the Court upheld the denial of summary judgment by the lower court, sending a case to a jury when a battle of the experts ensues from a sneaker marketed as purposefully unstable.
 

07/08/2022 Mancuso v. Reebok Intl., Ltd
Appellate Division, Fourth Department
Summary judgment denied to shoe company as plaintiff’s expert raised triable issues of fact as to whether shoe was unstable and feasibility of making shoe safer.

Plaintiff fell while walking down stairs in her home. At the time of her fall, plaintiff was wearing "Reebok EasyTone" shoes designed, manufactured, assembled or distributed by defendants. Plaintiff asserted causes of action for negligence, strict products liability predicated on defects in design and manufacture, and breach of express and implied warranties. Defendants moved for summary judgment dismissing the complaint, and the Supreme Court denied the motion. Reebok appealed.

The Appellate Division, Fourth Department found that defendants met their burden with respect to strict products liability. The burden then shifted to plaintiff to raise an issue of fact by submitting evidence of a specific flaw in the product, or circumstantial evidence that the product did not perform as intended excluding all causes for the product's failure not attributable to defendant.

Plaintiff could not prove the latter, so the only issue on appeal was whether plaintiff submitted sufficient evidence to raise a triable question of fact regarding a specific flaw in the shoe. Plaintiff's expert opined that the shoe was dangerous, described why it was dangerous, explained how it could be made safer, and concluded that it was feasible to do so. As a result, the Appellate Division, Fourth Department upheld the lower court’s decision, indicating that “it is usually for the jury to make the required risk-utility analysis".

An interesting aside, Reebok acknowledged that it intentionally designed the shoe to be unstable in an attempt to provide toning benefits to users. The fact that the shoe was designed to be unstable is evidence, albeit not conclusive, that the shoe is actually unstable. The Federal Trade Commission later determined Reebok engaged in false advertising by claiming that the shoe had toning benefits, though that did not in and of itself establish that the shoe was actually stable. Reebok paid $25 million to consumers in a 2011 settlement due to the strengthening and toning claims that ultimately had no substance.

Failure to Warn
By: Stephen Sorrels 
[email protected]

I am writing this article from my hotel room in Chicago, Illinois, as I am attending a Defense Counsel Panel Seminar presented by a prominent insurance company. After a fantastic first day of programming, the day ended with a spectacular cruise around the Windy City.

I have always enjoyed my many visits to Chicago. Chicago is the third largest city in the United States with a population of nearly three million people. In my last, pre-Covid visit to Chicago, I was finally able to check off my bucket list of seeing a Cubs game at Wrigley Field. In the early days of Cable TV, WGN was a staple to our station package. From Bozo the Clown and the Chicago Cubs, the City of Chicago has been with me from an early age.

One of my first trips with my wife was a weekend in Chicago. I have great memories of our welcoming cocktail at The Signature Lounge on the 96th Floor at the former John Hancock Building. We also discovered the greatness of the Steppenwolf Theater.

The first of two product liability cases addressed this month pertains to air travel and the manufacturing of airplanes and cabin air qualities. The second case involves a different type of air quality through the manufacturing of a ventilator. The common feature in both of the cases involve the sufficiency of allegations contained within the complaint to state a product liability of cause of action.
 

Vuksanovich v. Airbus Americas, Inc.
United States District Court, Southern District of New York (June 23, 2022) 

The plaintiffs in this consolidated action are former JetBlue flight attendants who brought product liability actions against the airplane manufacturers (asserting strict products liability, negligence and breach of warranty) for injuries purportedly sustained as a result of prolonged exposure to toxic fumes in the passenger cabins. According to the plaintiffs, the alleged defect concerning the airplanes bleed air system that consists of a network of ducts, valves, and regulators that draws compressed air from an aircraft's engine and pumps it directly into the passenger cabin. Plaintiffs contend that contaminants (such as carbon monoxide and carbon dioxide, jet engine oil, hydraulic fluid, and deicing fluids) would infiltrate the cabin. In lieu of answering, the defendant manufacturers sought dismissal under Federal Rule of Civil Procedure 12(b)(6), arguing that plaintiffs' claims are time-barred and inadequately pleaded.

With regard to the timeliness of the actions, both of these actions were commenced in October, 2020, and subject to the three-year statute of limitations. In determining this this issue, the manner in which the allegations of injuries were alleged within their Complaints resulted in whether the Court determined the actions were timely commenced within the applicable statute of limitations.

Plaintiff Salvatore asserts that she "began experiencing serious illness," including "pain, difficulty, breathing, and worsening eyesight" in January, 2017. The Court notes that nowhere in her pleadings does she allege that the symptoms she experienced in January 2017 subsided and, instead, indicated her illness "progressively worsened throughout 2017." In contrast, plaintiff Vuksanovich does not allege that the symptoms she suffered prior to October 2017 "progressively worsened" over time. Instead, she asserts that her early symptoms abated and that she only discovered the permanent neurological condition for which she now sues within the limitations period. As a result, the Court dismissed the Salvatore action for failing to timely file and deemed the Vuksanovich action as timely with the indication that this dismissal motion may be renewed by defendants following discovery of the onset of the alleged condition.

Defendants also sought to dismiss the Vuksanovich action for state a product liability cause of action. To survive a [Rule 12(b)(6)] motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. A claim is facially plausible when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.

Plaintiff Vuksanovich brings failure-to-warn claims on the basis that defendants failed to adequately warn users of their aircraft about the potential hazards associated with the bleed air system. In order to recover under a failure to warn theory, a claimant must show: [i] that a manufacturer has a duty to warn; [ii] against dangers resulting from foreseeable uses about which it knew or should have known; and [iii] that the failure to do so was the proximate cause of harm. The Court determined that this plaintiff adequately plead failure to warn claims against the defendant manufacturers.

Another claim asserted by plaintiff Vuksanovich included a design defect. To establish a design defect, a plaintiff must allege [i] that the product, as designed, posed a substantial likelihood of harm; [ii] that it was feasible for the manufacturer to design the product in a safer manner; and [iii] that the defective design was a substantial factor in causing plaintiff's injury. The Court determined that this plaintiff adequately plead design defect claims against the defendant manufacturers.
 

Warren v. Resmed Corp.
United States District Court, Southern District of New York (June 28, 2022) 

Mr. Warren suffered from neurological condition prescribed a ventilator by his physician to provide non-invasive positive pressure ventilation, oxygen, and carbon dioxide removal. The ventilator used by Mr. Warren was manufactured by Resmed Corp. and designed and manufactured to activate an audible and visual alarm to alert the user or caretaker to a condition that requires immediate attention. Mr. Warren’s wife found him unresponsive and observed a gap or opening between the face mask of the ventilator and his face. This gap is also alleged to have impaired the functioning of the alarm on the ventilator. Mr. Warren died shortly after he was discovered by his wife.

In response to the complaint and lieu of providing an answer, the defendants move to dismiss the plaintiff's claims for failure to warn and breach of express warranty pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted.

In alleging a failure to warn, plaintiffs alleged "upon information and belief” that the physician who prescribed the ventilator received and reviewed warnings and instructions from the defendants regarding the ventilator. The Court held that this allegation was insufficient to state a cause of action for failure to warn as it does not identify a single fact that supports the plaintiff's "belief" that the prescribing physician received the documents in question resulting in such allegation to be deemed by the Court as "wholly conclusory”.

Furthermore and with regard to plaintiff’s claim for breach of express warranty, the Court held that plaintiff’s allegations "upon information and belief" that Mr. Warren and his treating physician "received, read, and reviewed" the documents produced by the defendants. Plaintiff also alleges, "upon information and belief[,]" that the treating relied on the "express warranties stated [in the documents] prior to prescribing" the ventilator to Mr. Warren. As a result and in dismissing this claim, the Court held that the complaint is bereft of any facts "that would permit the inference that [the] Plaintiff actually read these [documents] and directly relied upon them when making the decision to utilize [the Defendants'] product."

As alternative relief in the event the Court was inclined to dismiss these claims, plaintiff sought permission to amend the complaint. While the Court did not grant this alternative relief outright, the Judge permitted plaintiff’s counsel to make a further, separate application within 30 days to amend the complaint requiring plaintiff to include (1) a proposed second amended complaint and (2) a memorandum of law of no more than fifteen pages explaining how the second amended complaint would survive a comparable motion to dismiss brought by the defendants.

NEWSLETTER EDITORS

V. Christopher Potenza
[email protected]
Brian F. Mark
[email protected]

ASSISTANT EDITORS

Kara M. Eyre 
Mark S. Nemeth
[email protected] 
Jesse L. Siegel
[email protected]
Stephen M. Sorrels
sms@hurwitzfine.com
Michael J. Williams
[email protected]