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A Third-Party’s Removal of a Safety Device Did Not Require Summary Judgment In Favor of the Manufacturer, Even though the Safety Device Would Have Prevented the Injury/There Was Evidence the Safety Device Itself Was Defective, Leading to Its Removal by the Third Party/Therefore, the “Substantial Modification” Defense Did Not Insulate the Manufacturer from Liability as a Matter of Law

In a full-fledged opinion by Judge Abdus-Salaam, over a dissent, the Court of Appeals determined the defendant manufacturer of a post-hole digger did not demonstrate entitlement to summary judgment dismissing the product liability suit because a plastic safety shield (which would have prevented the injury) had been removed by a third party after the sale (the “substantial modification” defense).  There was evidence that the plastic shield was defective in that it wore out prematurely:

If the defendant establishes prima facie entitlement to summary judgment based on substantial modification, the burden shifts to the plaintiff to come forward with evidentiary proof in admissible form demonstrating “the existence of material issues of fact which require a trial of the action” …. . The plaintiff may overcome a substantial modification defense by demonstrating that the post-sale modification did not render a “safe product defective” because the product incorporated a defectively designed safety feature at the time of sale … . In other words, the plaintiff must raise a triable issue of fact whether the safety feature “was not reasonably safe and that the defective design was a substantial factor in causing plaintiff’s injury” … . * * *

…[I]f a plaintiff establishes the existence of material issues of fact concerning the defective design of a safety feature, the defendant will not automatically prevail on summary judgment simply because that safety feature was modified post sale. The substantial modification defense is intended to insulate manufacturers and others in the distribution chain from liability for injuries that would never have arisen but for the post-sale modification of a safety feature on an otherwise safe product. [It] does not, however, mandate summary disposal of cases where the plaintiff raises a colorable claim that the product was dangerous because of a defectively designed safety feature and notwithstanding the modification by the third party. We agree with the Appellate Division that, on this record, plaintiff established the existence of material issues of fact sufficient to overcome defendants’ substantial modification defense. Hoover v New Holland N Am Inc, 2014 NY Slip Op 02215, CtApp 4-1-14

 

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Questions of Fact Raised About Whether Insufficient Warnings On Flammable Floor Refinishing Materials Constituted the Proximate Cause of the Injuries

In a full-fledged opinion by Justice Gische, the First Department determined a lawsuit based upon failure to warn survived summary judgment. While plaintiff’s decedent [Carino] was using highly flammable floor refinishing materials, the materials caught fire and plaintiff’s decedent was burned. There were warnings about fire on the containers and plaintiff’s decedent had worked with the materials before. But questions of fact were raised about exactly what dangers plaintiff’s decedent was aware of and, therefore, whether defendants were relieved (by the level of his knowledge) of the duty to warn of the dangers not addressed on the labels:

A product may be defective due to inadequate warnings of the risks and dangers involved in its foreseeable use … . The duty also extends to forseeable product misuse … . To be actionable, however, the absence of warnings must be a proximate cause of the claimed injuries … . Even if a duty to warn otherwise exists, recovery may be denied to a knowledgeable user, i.e. one who was fully aware of the specific hazard without receiving the warning … . While in a proper case the court can decide as a matter of law that there is no duty to warn …, in most cases whether a party is a knowledgeable user is a factual question … . Even if a user has some degree of knowledge of the potential hazards in the use of a product, summary judgment will not lie where reasonable minds might disagree as to the extent of the knowledge ….While there is evidence that Carino had some knowledge about general hazards associated with using floor refinishing products, it cannot be said, as a matter of law, that his knowledge base was sufficient to relieve defendants of any duty they may have had to provide adequate warnings. There is evidence that Carino had used floor refinishing products before and that he had been told by his employer that they were flammable and required certain safety precautions, such as shutting off the gas and electricity. There is no evidence, however, that he knew about the particular properties of each product he was using, including their flashpoints, the fact that one product was much more volatile than the other and the specifications for proper ventilation when using these products, or that he knew one product was prohibited for indoor use in the City of New York. Thus, it is for a jury to determine whether Carino had sufficient knowledge of the specific hazards attendant to the use of the floor finishing products to relieve defendants of any duty to warn of those hazards. Public Adm’r of Bronx County v 485 E 188th St Realty Corp, 2014 NY Slip Op 01142, 1st Dept 2-18-14

 

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“Crime-Fraud” Exception to Attorney-Client Privilege Re: Studies Funded by Defendant Casting Doubt on Relationship Between Asbestos and Cancer

In a full-fledged opinion by Justice Andrias, the First Department determined plaintiffs, as part of discovery in this asbestos litigation, were entitled to an in camera review of defendant’s internal communications and to the data underlying published research studies funded by the defendant. The studies purported to cast doubt on whether chrysotile asbestos caused cancer.  In the course of the opinion, the First Department explained the “crime-fraud” exception to the attorney-client privilege (the basis of the request for in camera review of defendant’s internal communications):

The motion court providently exercised its broad discretion …when it  …granted in camera review of the documents to determine whether the crime-fraud exception to the attorney-client privilege applied … .

The crime-fraud exception encompasses ” a fraudulent scheme, an alleged breach of fiduciary duty or an accusation of some other wrongful conduct'”…. “[A]dvice in furtherance of a fraudulent or unlawful goal cannot be considered sound.’ Rather advice in furtherance of such goals is socially perverse, and the client’s communications seeking such advice are not worthy of protection”….

A party seeking “to invoke the crime-fraud exception must demonstrate that there is a factual basis for a showing of probable cause to believe that a fraud or crime has been committed and that the communications in question were in furtherance of the fraud or crime” … .However, “[a] lesser evidentiary showing is needed to trigger in camera review than is required ultimately to overcome the privilege”… .

To permit in camera review of the documents to analyze whether the communications were used in furtherance of such wrongful activity, there need only be “a showing of a factual basis adequate to support a good faith belief by a reasonable person that in camera review of the materials may reveal evidence to establish the claim that the crime-fraud exception applies” …. “Once that showing is made, the decision whether to engage in in camera review of the evidence rests in the sound discretion of the [] court” …. Matter of New York City Asbestos Litig, 2013 NY Slip Op 04127, 1st Dept, 6-6-13

 

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Verdict for Negligent Design Upheld—1987 Car Did Not Have a Starter Interlock Device that Would Prevent Car from Starting When In Gear

The First Department determined a motion to set aside a verdict in a negligent design case was properly denied.  The jury found the car manufacture negligent in not installing a device (starter interlock device) such that the car (1987) car could not be started when it was in gear.  The First Department wrote:

The trial court properly instructed the jury that in determining the negligent design claim it first had to decide whether, from the evidence at trial, there was a general custom or practice by automobile manufacturers selling manual transmission vehicles in the United States in 1987. The proof adduced at trial was sufficient to permit a jury to conclude that the practice was fairly well defined in the car manufacturing industry. Plaintiffs were not required to prove universal application of the practice in order for the jury to consider this question … . The court further properly instructed the jury that if there was such a custom and practice, it could be considered along with all of the other facts and circumstances, in determining whether Volvo had exercised reasonable care … . From all of the evidence in the record, including the experts’ testimony, the jury reasonably concluded that defendants were negligent in failing to use a starter interlock device in its vehicle …. The trial court correctly denied defendants’ motion for a directed verdict because there was sufficient evidence supporting plaintiffs’ negligent design claim. Reis… v Volvo…, 2013 NY Slip Op 03024, 1st Dept, 4-30-13

 

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Grant of Motion to Dismiss Based on Forum Non Conveniens Upheld

Plaintiff, a British citizen, was injured in England when he was a passenger on an all-terrain vehicle manufactured by a New York company, RII.  The Fourth Department affirmed the grant of RII’s motion to dismiss pursuant to CPLR 327 (forum non conveniens) and to have the proceeding moved to England.  Plaintiffs’ objections that contingency-fee arrangements are not allowed in England and loss of consortium damages are not recognized in England did not warrant denial of the motion.  The Fourth Department wrote:

…[T]he court properly determined that “the action, although jurisdictionally sound, would be better adjudicated elsewhere” …. Plaintiffs are both British citizens residing in Scotland. The accident occurred in England, and other witnesses, including the driver of the ATV, are located there. As the trial court in the federal action between the same parties noted, “highly material evidence, such as the eyewitness testimony, accident investigation documents and witnesses, the scene of the accident, and the vehicle itself, which will not be readily within plaintiffs’ control in this court, would be more accessible to both sides in a British forum” ….  Moreover, RII is amenable to service of process in Scotland or England, and it does not take issue with the conditions imposed by the court concerning the waiver of defenses based on jurisdiction and the statute of limitations.  Emslie v Recreative Industries, Inc., CA 12-01246, 139, 4th Dept, 4-26-13

 

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Jurisdiction Was Gained Over Out-of State Manufacturer Under Two Provisions of CPLR 302

Plaintiff was injured when he fell from a tree stand made by an out-of-state manufacturer and distributed in New York through Dick’s Sporting Goods.  In denying defendant’s motion to dismiss for lack of jurisdiction, the Fourth Department outlined the statutory and due process requirements for good service upon a foreign corporation under CPLR 302.  The court wrote:

Here, defendant had an exclusive distributorship agreement with Dick’s, and maintained a website that provided information relating to its products, directed consumers to retail locations where they could purchase the products, and allowed for the direct purchase of the products through a credit card. Therefore, defendant was transacting business in New York through the use of its website, and the court properly concluded that there is long-arm jurisdiction under CPLR 302 (a) (1).

… [D]efendant is subject to long- arm jurisdiction pursuant to CPLR 302 (a) (3) (ii). Under that provision, courts “may exercise personal jurisdiction over any non-domiciliary . . . who . . . commits a tortious act without the state causing injury to person . . . within the state . . . if he .expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce.” “The conferral of jurisdiction under [that] provision rests on five elements: First, that defendant committed a tortious act outside the State; second, that the cause of action arises from that act; third, that the act caused injury to a person or property within the State; fourth, that defendant expected or should reasonably have expected the act to have consequences in the State; and fifth, that defendant derived substantial revenue from interstate or international commerce” ….  Halas v Dick’s Sporting Goods…Big Dog Treestands, Inc, CA 12-01868, 336, 4th Dept, 4-26-13

 

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Criteria for Holding Parent Company Liable for Torts of Subsidiary

In a products liability case, the Third Department determined a question of fact had been raised about whether the parent company could be liable for the torts of a subsidiary.  The relevant legal standard was described as follows:

Liability of a parent company for the torts of a subsidiary does not arise from the mere ownership of a controlling shareholder interest. “Rather ‘there must be direct intervention by the parent in the management of the subsidiary to such an extent that the subsidiary’s paraphernalia of incorporation, directors and officers are completely ignored'” … .   The  parent  company  must  “exercise[] complete  dominion  and  control over the subsidiary” ….  Goodspeed, et al, v Hudson Sharp Machine Company, 515490, 3rd Dept, 4-11-13

 

 

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Cause of Action Based on the Failure to Warn Mechanic About Remote Car Starter Survived Summary Judgment

The denial of summary judgment was affirmed by the Fourth Department.  The plaintiff, a mechanic, was injured when a remote car starter started the car he was working on, dragging and running over him.  The Court determined plaintiff had alleged sufficient facts to support the theory that the defendants (the owners/users of the car in question) had a duty to warn the plaintiff the car was equipped with a remote starter which could start the car when it was in gear and the clutch was not depressed:

Contrary to the contention of defendants, we conclude that Supreme Court properly denied their motion for summary judgment dismissing the complaint. “Under general tort rules, a person may be negligent because he or she fails to warn another of known dangers or, in some cases, of those dangers [of] which he [or she] had reason to know”… .  Chambers v Evans, et al. 291, CA 12-01517, 4th Dept. 3-22-13

 

 

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