A key pretrial ruling by Fulton County State Court Judge Diane Bessen on a novel question of Georgia product liability law may have paved the way for a settlement following a $29 million compensatory damages verdict in a recent wrongful death case. Efrain Hilario and Gabina Martinez Flores v. Newell Recycling of Atlanta, Inc. (12EV015400).
The case arose out of the death of Erik Hilario, a worker at the Newell Recycling plant in East Point, GA, who was burned to death when the front-end loader he was driving in the plant yard caught fire. According to plaintiffs’ theory of the case, the fire occurred when sparks caused by pushing the loader over asphalt ignited standing gasoline. Hilario’s parents brought suit against Newell Recycling alleging both premises and product liability.
Plaintiffs’ product liability theory was based on the allegedly negligent design of a “puncher,” a device used by Newell to drain the fuel from the gas tanks of junked cars before they were shredded and recycled. The puncher was a metal spike mounted on steel beams over a catch basin. A Newell employee would use a crane to lift and maneuver the cars over the spike. The employee would then drop the car onto the spike, puncturing the gas tank and allowing the gas to drain into the basin. Plaintiffs contended that the design of the puncher was defective and that the punching process caused gasoline to spill and accumulate where Hilario was working.
The defense filed a motion to dismiss, claiming that the puncher, which was designed and built by Newell and never left the Newell plant, was never “sold” and that, absent a sale, plaintiff’s product liability claim could not stand. The defense pointed to the language of the Georgia product liability statute, O.C.G.A. § 51-1-11(b)(1), which states: “The manufacturer of any personal property sold as new property …shall be liable in tort, irrespective of privity, to any natural person who may use, consume, or reasonably be affected by the property and who suffers injury to his person or property because the property when sold by the manufacturer was not merchantable and reasonably suited to the use intended…”
Although plaintiffs alleged both strict liability and negligence claims against Newell, the defense contended that, in either case, the word “sold” in the statutory language was dispositive. Because O.C.G.A. § 51-1-11 is in derogation of common law, the statutory language must be strictly construed, and a prior sale is a prerequisite to liability under the statute. The defense pointed to Robert F. Bullock, Inc. v. Thorpe, 256 Ga. 744 (1987), for the proposition that, while actual passage of title is not a prerequisite for a product to be “sold” under the statute, the product must at least be “placed in the stream of commerce.”
Further, the defense argued that the later case of Monroe v. Savannah Electric & Power Company, 267 Ga. 26 (1996) added the additional requirement that, before a product is “sold” under O.C.G.A. § 51-1-11, “the manufacturer [must have] relinquished exclusive control over the product and that the product was in a useable or marketable condition.” Since Newell Recycling never relinquished control over the puncher and it never entered the stream of commerce, then, according to the defense, it was never “sold” as required for O.C.G.A. § 51-1-11 to apply.
The defense also contended that the requirement that the product be sold applies to common law negligence claims as well, citing Campbell v. Altec Industries, Inc., 288 Ga. 535 (2011). In that case, the Eleventh Circuit Court of Appeals asked the Georgia Supreme Court when the ten-year statute of repose under O.C.G.A. § 51-1-11 begins to run “in a strict liability or negligence action.” The Georgia Supreme Court responded that the statute of repose begins to run “when a finished product is sold as new to the intended consumer who is to receive the product.”
In its response, plaintiffs acknowledged that the sale requirement is a prerequisite for a strict liability claim and dismissed their strict liability claim for that reason. However, they disputed whether a sale was a requirement to bring a common law negligent design claim, noting that Monroe and other cases cited by the defense were all brought and decided under strict liability theories. In particular, in Monroe, the Supreme Court upheld the Court of Appeals’ grant of partial summary judgment on strict liability, while allowing the case to proceed under negligent design and other negligence theories.
Similarly, plaintiffs argued that, while O.C.G.A. § 51-1-11 (c) created a separate statute of repose for claims alleging manufacturer negligence, the statute does not list any statutory prerequisites for a manufacturer negligence claim. Plaintiffs also noted that the purpose of the statute of repose was to bar claims arising ten years after a product was “sold.” If the puncher had been over ten years old, plaintiffs suggested that the defense would surely argue that the statute of repose barred plaintiffs’ claims.
Plaintiffs also noted that the defense cited no cases holding that a product must be sold before a negligent design claim will lie and pointed to other Georgia cases, such as Ford Motor Co. v. Carter, 239 Ga. 657 (1977), in which the Supreme Court noted the difference between strict liability and negligence claims, saying: “Strict liability imposed under [the predecessor to O.C.G.A. § 51-1-11] is not based on negligence. While negligence on the part of the manufacturer may happen to be involved as a matter of fact, in a given situation, it is not necessarily so, and the statute imposes liability irrespective of negligence.”
In her written opinion, Judge Bessen agreed with plaintiffs and denied the motion to dismiss. She noted that, while many of the elements of strict liability and negligence are the same, such as the existence of a defect and the requirement of proximate cause, “despite their general similarity, it does not appear that [negligent design] cases have the sale of the product as an essential element.”
The judge continued, “The problem that this Court faces is that no one in Georgia appears to have directly addressed the issue in the context of a negligence claim, and this Court is left with nothing more than dicta and speculation, which is hardly a basis for dismissal under any set of facts. Furthermore, all of the cases cited by Defendant relate to strict liability claims, which are governed by a statute that expressly mentions a sale and which are strictly construed. None of these are actually on point with the issue at bar. Based above cited case law, this Court finds that the law is uncertain and there is no way for this Court to determine, at this time, that Plaintiffs could not recover under their allegations as a matter of law.”
Judge Bessen’s ruling had a considerable practical effect, especially after the jury returned a verdict in favor of the plaintiffs on both their premises liability (for which the defense conceded liability prior to trial) and their product liability claims and returned a verdict of over $29 million in compensatory damages. Plaintiffs had also asked for punitive damages, and under O.C.G.A. § 51-12-5.1, the $250,000 statutory cap on punitive damages does not apply to cases arising under product liability. Faced with the prospect of a potentially large punitive damage verdict, the defense agreed to a confidential settlement with plaintiffs before testimony could be heard on the issue of punitive damages.
CVN subscribers can see gavel-to-gavel coverage of this groundbreaking case here. Earlier articles on the case can be found here and here. Contact Steve Silver at ssilver@cvn.com.
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