Finerty v. Abex Corp.
| Decision Date | 03 May 2016 |
| Docket Number | No. 1.,1. |
| Parties | Mary FINERTY, Individually and as Executor of Raymond Finerty, Deceased, Respondents, v. ABEX CORPORATION, Formerly Known as American Brake Shoe Company, et al., Defendants, and Ford Motor Company, Appellant. (And Another Action.). |
| Court | New York Court of Appeals Court of Appeals |
O'Melveny & Myers LLP, New York City (Anton Metlitsky of counsel), O'Melveny & Myers LLP, Washington, D.C. (Jonathan D. Hacker and Brittney Lane of counsel), and Aaronson Rappaport Feinstein & Deutsch, LLP, New York City (Elliott J. Zucker of counsel), for appellant.
Levy Konigsberg, LLP, New York City (James M. Kramer, Robert I. Komitor and Brendan J. Tully of counsel), for respondents.
Orrick, Herrington & Sutcliffe LLP, New York City (E. Joshua Rosenkranz and Matthew L. Bush of counsel), and U.S. Chamber Litigation Center, Inc., Washington, D.C., for Chamber of Commerce of the United States of America, amicus curiae.
PIGOTT
, J.
Plaintiff claims that he was exposed to asbestos during the 1970s and 1980s while replacing asbestos-containing brakes, clutches and engine parts on Ford tractors and passenger vehicles in Ireland. In 1985, plaintiff emigrated to Queens, New York, and, years later, was diagnosed with peritoneal mesothelioma
.
In 2010, plaintiff and his wife commenced this action against, among others, Ford Motor Company (Ford USA), Ford Motor Company, Ltd. (Ford UK) and Henry Ford & Son, Ltd. (Ford Ireland)1 alleging strict products liability under the theories of defective design and failure to warn. After discovery, Ford USA moved for summary judgment seeking to dismiss the complaint on the ground that Ford USA did not manufacture, produce, distribute or sell the parts in question, pointing out that they were manufactured, produced, distributed and sold by its wholly-owned subsidiary, Ford UK. Ford USA further moved to dismiss the complaint pursuant to CPLR 3211(a)(7)
arguing that the complaint should be dismissed for failure to state a cause of action because it was devoid of any allegations supporting a claim that the court should “pierce the corporate veil” such that Ford USA could be held derivatively liable for the acts of Ford UK.
Plaintiff countered that Ford USA was “actively involved” in the design, specification, production and sale of Ford products throughout the world, including the United Kingdom, such that it could be held liable for the role it “independently played” in placing the products into the stream of commerce and in failing to warn plaintiff.
Supreme Court, while holding that there was no basis upon which to pierce the corporate veil, nonetheless determined that because plaintiff produced evidence showing that Ford USA “exercised significant control over Ford [UK] and Ford Ireland and had a direct role in placing the asbestos-containing products to which [plaintiff] was exposed into the stream of commerce,” there was a question of fact concerning Ford USA's “direct responsibility for plaintiff['s] injuries.”
The Appellate Division affirmed the order of Supreme Court denying Ford USA's motion for summary judgment (125 A.D.3d 564, 5 N.Y.S.3d 40 [1st Dept.2015]
).2 It agreed with Supreme Court that there was “no basis for piercing the corporate veil” but held that “the record demonstrate[d] that Ford USA acted as the global guardian of the Ford brand, having a substantial role in the design, development, and use of the auto parts distributed by Ford UK, with the apparent goal of the complete standardization of all products worldwide that carried the signature Ford logo” (id. at 565, 5 N.Y.S.3d 40 ). As such, the Appellate Division held that there were factual issues concerning whether Ford USA could be found “directly liable as a result of its role in facilitating the distribution of the asbestos-containing auto parts on the ground that it was ‘in the best position to exert pressure for the improved safety of products' or to warn the end users of these auto parts of the hazards they presented” (id., quoting Godoy v. Abamaster of Miami, 302 A.D.2d 57, 60–61, 754 N.Y.S.2d 301 [2d Dept.2003], lv. dismissed 100 N.Y.2d 614, 767 N.Y.S.2d 396, 799 N.E.2d 619 [2003] ).
The Appellate Division granted Ford USA leave to appeal to this Court pursuant to CPLR 5713
(
2015 N.Y. Slip Op. 75895[U] [1st Dept.2015]
), and certified the question of whether that portion of the order that affirmed the order of Supreme Court was properly made. We hold that it was not, and answer the certified question in the negative.
It is well settled that a manufacturer of defective products who places them into the stream of commerce may be held strictly liable for injuries caused by its products, regardless of privity, foreseeability or due care (see Sukljian v. Ross & Son Co., 69 N.Y.2d 89, 94, 511 N.Y.S.2d 821, 503 N.E.2d 1358 [1986]
; Codling v. Paglia, 32 N.Y.2d 330, 342, 345 N.Y.S.2d 461, 298 N.E.2d 622 [1973] ; see also
Amatulli v. Delhi Constr. Corp., 77 N.Y.2d 525, 532, 569 N.Y.S.2d 337, 571 N.E.2d 645 [1991] ). It is the manufacturer, and the manufacturer alone, “who can fairly be said to know and to understand when an article is suitably designed and safely made for its intended purpose” and who “has the practical opportunity, as well as a considerable incentive, to turn out useful, attractive, but safe products” (Codling, 32 N.Y.2d at 340–341, 345 N.Y.S.2d 461, 298 N.E.2d 622 ).
Strict liability may also be imposed on retailers and distributors of allegedly defective products because such sellers, due to their continuing relationship with the manufacturers, are usually “in a position to exert pressure for the improved safety of products and can recover increased costs within their commercial dealings, or through contribution or indemnification in litigation” (Sukljian, 69 N.Y.2d at 95, 511 N.Y.S.2d 821, 503 N.E.2d 1358
). Sellers who engage in product sales in the ordinary course of their business are subject to strict liability because they “may be said to have assumed a special responsibility to the public, which has come to expect them to stand behind their goods” (id.; see Restatement [Second] of Torts § 402A, Comment c ).
Plaintiff asserts that he raised a question of fact concerning Ford USA's role in the “chain of distribution” by submitting evidence establishing that Ford USA played a “direct role” in the design, distribution and marketing of asbestos-containing parts by “imposing” its decisions in those areas on Ford UK. The record evidence demonstrates, however, that it was Ford UK, not Ford USA, that manufactured and distributed the tractor and vehicle parts.
Ford USA was not a party within the distribution chain, nor can it be said that it actually placed the parts into the stream of commerce. Although plaintiff submitted evidence tending to show that Ford USA provided guidance to Ford UK in the design of certain tractor components, absent any evidence that Ford USA was in fact a manufacturer or seller of those components, Ford USA may not be held liable under a strict products liability theory (cf. Sage v. Fairchild–Swearingen Corp., 70 N.Y.2d 579, 586–587, 523 N.Y.S.2d 418, 517 N.E.2d 1304 [1987]
[] ). Moreover, absent any indication that Ford USA was in the distribution chain, it is of no moment that Ford USA exercised control over its trademark (see
Laurin Mar. AB v. Imperial Chem. Indus., 301 A.D.2d 367, 367–368, 752 N.Y.S.2d 855 [1st Dept.2003], lv. denied 100 N.Y.2d 501, 760 N.Y.S.2d 764, 790 N.E.2d 1193 [2003] ; Porter v. LSB Indus., 192 A.D.2d 205, 211, 600 N.Y.S.2d 867 [4th Dept.1993] ). In any event, the record indicates that Ford USA's “world-wide” trademark program described how the trademark was to be used on packaging of Ford products, and did not contain directives as to what warnings, if any, were required to be placed on the packaging itself.
The Appellate Division did not determine that there was a factual question as to whether Ford USA was the manufacturer, retailer or...
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