REVIEW OF
1998
SECOND CIRCUIT PRODUCTS LIABILITY
CASES
By Eric D. Daniels*
I. INTRODUCTION
In 1998, the U.S. Court of Appeals for the Second Circuit decided
five cases from the district courts involving issues of products
liability-Liriano v. Hobart Corp.,' Castro v. QVC Network, Inc.,2
3
Rotolo v. Digital Equipment Corp., Stuart v. American Cyanamid Co.,4
and Jazini v. Nissan Motor Co.5 Of these decisions, Liriano v. Hobart
Corp. is, by far, the most significant decision from the standpoint of the
substantive law of products liability because of its expansion of the
failure to warn doctrine.
In Liriano, the issue presented was whether a manufacturer can be
liable under a failure to warn theory in a case in which the "substantial
modification" defense would preclude liability under a design defect
theory. The Second Circuit certified that question to the New York
Court of Appeals, which, in turn, answered the question in the
affirmative.
While the other 1998 decisions by the Second Circuit in the
products liability area do not change products liability law in any
material way, they do provide useful discussion regarding issues that
arise with some frequency in products liability cases-jury instructions
(Castro), the admissibility of evidence (Rotolo), the application of
statutes of limitations and repose (Stuart) and the exercise of personal
jurisdiction (Jazini).
* Partner, Robinson & Cole. The writer is gratefully indebted to his colleagues,
Matt Baldini, Dina Fisher, Brien Horan, Shawn Landau and Nate Olin, members of the
Products Liability Group at Robinson & Cole, whose valuable assistance made this
article possible.
1. 132 F.3d 124 (2d Cir. 1998).
2.
139 F.3d 114 (2d Cir. 1998).
3.
150 F.3d 223 (2d Cir. 1998).
4.
158 F.3d 622 (2d Cir. 1998).
5. 148 F.3d 181 (2d Cir. 1998).
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LiRIANO V. HOBART CORP.
A. Introduction
In 1998, the United States Court of Appeals for the Second Circuit
significantly expanded the failure to warn doctrine in products liability
cases. The Second Circuit's holding was based on a question it certified
to the New York Court of Appeals-New York's highest court. The
question was whether a manufacturer can be liable under a failure to
warn theory in a case in which the "substantial modification" defense
would preclude liability under a design defect theory. The New York
Court of Appeals answered the question in the affirmative.
The substantial modification defense was first pronounced by the
New York Court of Appeals almost twenty years ago in Robinson v.
Reed-Prentice Division of Package Machinery Co. 6 In Robinson, the
Court of Appeals held that manufacturers cannot be held liable for
defective design when injuries result from substantial alterations or
modifications that render their products unsafe.
In Liriano v. Hobart Corp.,7 the Second Circuit certified to the
New York Court of Appeals a question of whether the substantial
modification defense also precludes liability of products manufacturers
for failure to warn buyers against making a dangerous modification.
The Second Circuit found that
The law appears to be unclear on whether a manufacturer may be liable for
failure to warn of dangers associated with foreseeable and/or known misuses
of a product, where the product has been substantially modified by a third
party's removal of the product's safety devices (i.e., in situations in which no
liability for design defect would exist).
New York's highest court, citing policy distinctions between
defective design and failure to warn theories in connection with postsale modifications, held that plaintiffs failure to warn claim is not
barred.
6.
7.
403 N.E.2d 440 (N.Y. 1980).
132 F.3d 124 (2d Cir. 1998).
8.
Id. at 128.
1999]
PRODUCTS LIABILITY
B. The Facts in Liriano
In Liriano, the plaintiff was injured while working in the meat
department of a grocery store in September 1993 when he was feeding
meat into a commercial meat grinder whose safety guard had been
removed. His hand was caught in the "worm" that grinds the meat and,
as a result, his right hand and lower forearm were amputated.
The meat grinder was manufactured and sold in 1961 by Hobart
Corporation ("Hobart"). At the time of the sale, it had a safety guard
that prevented the user's hand from coming into contact with the
grinding worm. No warnings were placed on the machine or were
otherwise given to indicate that it was dangerous to operate the machine
without the safety guard in place. Subsequently, Hobart became aware
that many purchasers of its meat grinders had removed the safety guards
and, in 1962, it began issuing warnings concerning the removal of them.
Liriano sued Hobart in the Supreme Court, Bronx County, New
York under theories of negligence and strict products liability for,
among other things, defective product design and failure to warn.
Hobart removed the case to the United States District Court for the
Southern District of New York. It also impleaded Super Associated
grocery store, plaintiff's employer.
Following trial, the jury concluded that Hobart's failure to warn
was the proximate cause of Liriano's injuries. On appeal to the Second
Circuit, Hobart, relying on Robinson and on appellate division rulings in
the second, third and fourth departments in New York, argued that the
substantial modification of the meat grinder entitled Hobart to judgment
in its favor as a matter of law.
C. The Second Circuit'sJanuary 1998 Decision
In attempting to answer the issues before it, the Second Circuit
analyzed New York law and, in particular, the substantial modification
doctrine espoused in Robinson. The Second Circuit stated:
The New York Court of Appeals held that a manufacturer of a product may
not be held liable "either on a strict products liability or negligence cause of
action, where, after the product leaves the possession and control of the
manufacturer, there is a subsequent modification which substantially alters the
product and is the proximate cause of plaintiff's injuries." "Material
alterations at the hands of a third party which work a substantial change in the
condition in which the product was sold by destroying the functional utility of
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[VOL. 18:913
a key safety feature, however foreseeable that modification may have been,
are not within the ambit of a manufacturer's responsibility." 9
It continued, however, "Robinson, though never overruled, has not
been left undisturbed."' For instance, the Second Circuit noted that in
Cover v. Cohen," the New York Court of Appeals held that the duty of a
manufacturer to warn can continue even after the original sale.' 2
The Second Circuit also pointed to the Court of Appeals's decision
in Lopez v. Precision Papers, Inc.," in which the court held "that a
disablement [of a safety device] does not necessarily foreclose liability
where such removal
where safeguards can be easily removed and
14
thereby increases the efficacy of the product."'
The Second Circuit also reviewed several lower court decisions in
New York. However, after a thorough analysis of these decisions, the
Second Circuit nonetheless found at least four possible views of New
York law on the subject. It succinctly summarized these possibilities as
follows:
Whenever a substantial modification has occurred, Robinson: (1) bars claims
both for design defect and failure to warn, regardless of whether negligence
and/or strict products liability is alleged; (2) bars all actions for design defect,
whether based on strict liability or negligence, but does not foreclose suits for
failure to warn, whether based on strict liability or negligence; (3) bars all
actions for design defect, and also bars strict liability actions for failure to
warn, but does not preclude claims based on negligent failure to warn; (4) bars
only strict liability claims (whether for design defect or failure to warn) and
forecloses neither category of suit when negligence is alleged and proved.
.... '5
There is a logic to each of these possibilities under Robinson
Thus, the Second Circuit "welcome[d] enlightenment on which of
these, or other possibilities, is the law in New York today,' ' 6 and
certified the following question to the New York Court of Appeals:
9. Id. at 126 (quoting Robinson v. Reed-Prentice, 403 N.E.2d 440, 441, 444
(N.Y. 1980)) (internal citations omitted).
10. Id.
11. 461 N.E.2d 864 (N.Y. 1984).
12. See Liriano, 132 F.3d at 126.
13. 492 N.E.2d 1214 (N.Y. 1986).
14. Liriano, 132 F.3d at 127.
15. Id. at 131.
16. Id. at 132.
1999]
PRODUCTS LIABILITY
Can manufacturer liability exist under a failure to warn theory in cases in
which the substantial modification defense would preclude liability under a
design defect theory, and if so, is such manufacturer liability barred as a
matter of law7 on the facts of this case, viewed in the light most favorable to
the plaintiff?.1
D. The New York Court ofAppeals's Decision
The Court of Appeals ("Liriano I") answered the first question in
the affirmative and declined to answer the second question.' 8 It held that
Robinson was limited to defective design claims and that the issue was
more closely related to the case of Lugo v. LJN Toys, Ltd.' 9 In Lugo, the
court held that a manufacturer may be liable for failing to warn against
the dangers of foreseeable misuse of its product. Seizing on that
holding, the Court of Appeals in Liriano II held that "[n]o material
distinction between foreseeable misuse and foreseeable alteration of a
product is evident in this context."2 °
The court also cited several decisions, including Cover v. Cohen,
which hold that manufacturers have, in certain instances, a duty to warn
of dangers associated with the use of their product post-sale.2 ' The court
explained that
The justification for the post-sale duty to warn arises from a
manufacturer's unique (and superior) position to follow the use and adaptation
of its product by consumers. Compared to purchasers and users of a product,
a manufacturer is best placed to learn about post-sale defects or dangers
22
discovered in use.
While conceding that a manufacturer's duty "does not extend to
designing a product that is impossible to abuse or one whose safety
features may not be circumvented,, 23 the court found that the burden of
placing a warning on a product is less costly than designing a perfectly
tamper-resistant product and is neither infeasible nor onerous.24
17.
Id.
18.
19.
See Liriano v. Hobart Corp., 700 N.E.2d 303, 304 (N.Y. 1998).
552 N.E.2d 162 (N.Y. 1990).
20.
Liriano, 700 N.E.2d at 307.
21.
22.
23.
See id.
Id. (citation omitted).
Id. at 306 (quoting Robinson v. Reed-Prentice, 403 N.E.2d 440, 444 (N.Y.
1980)).
24.
See Liriano, 700 N.E.2d at 306-07.
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Thus, the court concluded that "manufacturer liability can exist
under a failure-to-warn theory in cases in which the substantial
in Robinson might otherwise
modification defense as articulated
25
preclude a design defect claim.,
E. The Second Circuit'sMarch 1999 Decision
After its argument that the substantial modification defense
precluded a finding of liability against it was rejected, Hobart sought to
overturn the verdict on two other grounds: (1) that the danger in using
the meat grinder was so obvious that, as a matter of law, no additional
warning was required; and (2) that Liriano failed to prove that
Hobart's
26
injury.
his
caused
machine
the
on
warning
a
place
failure to
1. Obviousness of the Danger
The Second Circuit sidestepped the issue of deciding "the difficult
question of whether New York would consider the risk posed by meat
grinders to be obvious as a matter of law."27 Instead, the Court focused
on the functions of warnings, stating that
[A] warning can convey at least two types of messages. One states that a
particular place, object, or activity is dangerous. Another explains that people
need not risk the danger posed by such a place, object, or activity
in order to
28
achieve the purpose for which they might have taken that risk.
The Court continued:
One who grinds meat.., can benefit not only from being told that his
activity is dangerous but from being told of a safer way. As we have said, one
can argue about whether the risk involved in grinding meat is sufficiently
obvious that a responsible person would fail to warn of that risk, believing
reasonably that it would convey no helpful information. But if it is also the
case-as it is-that the risk posed by meat grinders can feasibly be reduced by
attaching a safety guard, we have a different question. Given that attaching
guards is feasible, does reasonable care require that meat workers be informed
that they need not accept the risks of using unguarded grinders? Even if most
ordinary users may-as a matter of law-know of the risk of using a guardless
meat grinder, it does not follow that a sufficient number of them will-as a
25.
26.
27.
28.
Id. at 308.
See Liriano v. Hobart Corp., 170 F.3d 264 (2d Cir. 1999).
Id. at 271.
Id. at 270.
PRODUCTS LIABILITY
1999]
matter of law-also know that protective guards are available, that using them
is a realistic possibility, and that they may ask that such guards be used. It is
precisely these last pieces of information that a reasonable manufacturer may
have a duty to convey even if the danger of using a grinder were itself deemed
29
obvious.
The Court could not say, as a matter of law, that Hobart had no
duty to warn Liriano, and, therefore, it held that the issue was properly
submitted to the jury.
2. Causation
Hobart also argued that Liriano failed to present any evidence that
Hobart's failure to place a warning on the meat grinder was causally
related to his injury. It claimed that Liriano may well have operated the
grinder as he did and sustained his injuries whether or not there had
been a warning on the grinder.
The Court rejected Hobart's contention, holding simply that its
argument rested on a false premise, namely, that the burden was on
Liriano to introduce additional evidence showing that the failure to warn
was a but-for cause of his injury. Rather, the Court held:
But Liriano does not bear that burden. When a defendant's negligent act is
deemed wrongful precisely because it has a strong propensity to cause the type
of injury that ensued, that very causal tendency is evidence enough to
establish a prima facie case of cause-in-fact. The burden then shifts to the
defendant to come forward with evidence that its negligence was not such a
but-for cause.
... Accordingly, in a case like this, it is up to the defendant to bring in
evidence tending to rebut the strong inference, arising from the accident, that
the defendant's negligence was in fact a but-for cause of the plaintiff's
injury.
F. Conclusion
The Second Circuit's decision (as well as the New York Court of
Appeals's decision) in Liriano have eroded the substantial modification
defense upon which product manufacturers often relied. These holdings
appear to provide ammunition for plaintiffs' attorneys to argue that,
29.
30.
31.
Id. at 270-71.
See Liriano, 170 F.3d. at 271.
Id.
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[VOL. 18:913
even in the event of a substantial modification, a manufacturer is under
a duty to warn of not only the risks of injury associated with modifying
their products, but also of the availability of alternatives, including
safety devices.
2
III. CASTRO V. QVC NETWORK, INC.1
The ever-scholarly Judge Calabresi returned to the area of New
York product liability law in 1998. Having authored the 1997 dissent in
McCarthy v. Olin Corp.,33 Judge Calabresi penned a unanimous panel
opinion in Castro v. QVC Network, Inc.3 Although relatively straightforward, Castroultimately succeeds as a research tool for analyzing the
interconnectedness of strict products liability and breach of warranty
35
claims and how at least one court has applied Denny v. FordMotor Co.
The facts of Castro are not complex. In early November 1993,
defendant QVC Network, Inc. ("QVC"), a home-shopping channel,
advertised the "T-Fal Jumbo Resistal Roaster," manufactured by
defendant U.S.A. T-Fal Corp. ("T-Fal"), as part of a Thanksgiving
turkey-roasting promotion. 36 The roaster was provided by T-Fal's
parent company in France and was originally designed without handles
and for purposes other than roasting a turkey. For the QVC promotion,
two small handles were added to the pan so that it could be used to roast
a turkey.37 At trial, the jury saw a videotape of a QVC representative
demonstrating that the pan, in addition to serving as a suitable roaster
for a twenty-five pound turkey, could also be used to cook low volume
foods such as casseroles, cutlets and cookies.38
On Thanksgiving Day 1993, plaintiff, Loyda Castro, suffered
second and third degree bums as she was attempting to remove from her
oven a T-Fal roaster, which she had purchased from QVC. The pan
contained a twenty-five pound turkey. Using insulated mittens, Mrs.
Castro had gripped the pan's small handles with the first two fingers on
each hand and pulled the roaster out of the oven. As the turkey tipped
32. 139 F.3d 114 (2d Cir. 1998).
33. 119 F.3d 148 (2d Cir. 1997).
34. 139 F.3d 114 (2d Cir. 1998).
35. 662 N.E.2d 730 (N.Y. 1995).
36. During the promotion, the roaster was described as suitable for, among other
things, cooking a 25-pound turkey. See Castro, 139 F.3d at 115.
37. See id. n.1.
38. See id. at 119.
1999]
PRODUCTS LIABILITY
toward her, she lost control of the pan, spilling hot drippings and fat on
her foot and ankle.39
The plaintiffs pled their case under two separate theories, strict
products liability and breach of warranty. Nonetheless, the district court
allowed only a strict products liability jury charge, stating that "you
can't collect twice for the same thing" and that the warranty charge was
unnecessary and "duplicative., 40 After the jury returned a defendants'
verdict, the plaintiffs, unable to obtain from the district court a new
trial,4 ' appealed to the Second Circuit.42 A three-judge panel in an
opinion written by Judge Calabresi ruled that separate charges should
have been given on both strict products liability and breach of warranty
and, therefore, reversed the order of the district court denying the
motion for a new trial and remanded the case for further proceedings.
How did the Castro panel reach its conclusion? First, Judge
Calabresi outlined the bedeviling search in products liability law for an
appropriate definition of "defective" product design. In this regard, he
succinctly articulated the two predominant approaches: (1) the riskutility theory, "which focuses on whether the benefits of a product
outweigh the dangers of its design";" and (2) the consumer expectations
approach, "which focuses on what a buyer/user of a product would
properly expect that the product would be suited for., 45 He then
described how various jurisdictions-e.g., Alaska, Arizona, California,
Colorado, Connecticut, Florida, Hawaii, Idaho, Illinois, New
Hampshire, Ohio, Rhode Island, Washington and Wisconsin - applied
one or both of these two approaches.46
39. See id. at 115-16.
40. Castro, 139 F.3d at 116.
41. In denying the plaintiffs' motion for a new trial, the district court reasoned that
the strict products liability and breach of warranty claims were "virtually the same." Id.
42. See id.
43. See id. at 119-20.
44. See Castro, 139 F.3d at 116.
45. Id. at 116.
46. See id. at 116-17 (citing Caterpillar Tractor Co. v. Beck, 593 P.2d 871, 884
(Alaska 1979); Dart v. Wiebe Mfg., Inc., 709 P.2d 876, 879-80 (Ariz. 1985); Barker v.
Lull Eng'g. Co., 573 P.2d 443 (Cal. 1978); Armentrout v. FMC Corp., 842 P.2d 175,
183 (Colo. 1992); Potter v. Chicago Pneumatic Tool Co., 241 Conn. 199, 220-21, 694
A.2d 1319, 1333 (1997); Radiation Tech., Inc. v. Ware Constr. Co., 445 So. 2d 329, 331
(Fla. 1983); Ontai v. Straub Clinic & Hosp., Inc., 659 P.2d 734, 739-40 (Haw. 1983);
Rojas v. Lindsay Mfg. Co., 701 P.2d 210, 212 (Idaho 1985); Lamkin v. Towner, 563
N.E.2d 449, 457 (I11.1990); Thibault v. Sears, Roebuck & Co., 395 A.2d 843, 846 (N.H.
1978); Knitz v. Minster Mach. Co., 432 N.E.2d 814, 818 (Ohio 1982); Ritter v.
Narragansett Elec. Co., 283 A.2d 255, 263 (R.I. 1971); Seattle-First Nat'l Bank v.
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[VOL. 18:913
Second, Judge Calabresi noted that it was not until 1995 that New
York, in Denny v. Ford Motor Co., clarified that a cause of action for
strict liability is not identical to a claim for breach of warranty, although
the two theories are often used interchangeably. 7 In New York, the
imposition of strict liability for an alleged design "defect" is determined
by a risk-utility standard, 8 whereas the notion of "defect" in a U.C.C.based breach of warranty claim focuses, instead, on consumer
49
expectations.
Judge Calabresi then moved to the practicalities of trial, asking
"when should a jury be charged on both strict liability and warranty
causes of action?" His answer, found in Denny, has to do with what is
called the "dual purpose" requirement. Put briefly:
[T]he fact that a product's overall benefits might outweigh its overall risks
does not preclude the possibility that consumers may have been misled into
using the product in a context in which it was dangerously unsafe. And this,
the New York court emphasized, could be so even though the benefits in other
uses might make the product sufficiently reasonable so that it passed the
risk/utility test.50
In Denny, the Ford Bronco II had a dual purpose; it was designed
as an off-road vehicle but was marketed as being suitable for
commuting and for suburban and city driving. Accordingly, the New
York Court of Appeals explained that it was reasonable to conclude that
the vehicle's utility as an off-road automobile outweighed the risk of
injury resulting from roll-over accidents, but at the same time that the
vehicle was not suitable for the "ordinary purpose" of daily driving for
which it was marketed and sold. Thus, the Bronco in Denny could both
pass the risk-utility test, yet flunk the consumer expectations test.5'
According to Castro, the Denny "dual-purpose" scenario "is
precisely the situation before us.''12 The roasting pan was originally
manufactured and sold as an all-purpose cooking dish without handles,
but was also advertised as suitable for cooking a twenty-five pound
Tabert, 542 P.2d 774, 779 (Wash. 1975); Vincer v. Esther Williams All-Aluminum
Swimming Pool Co., 230 N.W.2d 794, 798 (Wis. 1975)).
47. See id. at 117-18.
48. See Castro, 139 F.3d at 118 (citing Voss v. Black & Decker Mfg. Co., 450
N.E.2d 204 (1983)).
49. See id. (citing Denny v. Ford Motor Co., 662 N.E.2d 730, 736 (N.Y. 1995)).
50. Id. (citations omitted).
51. See id. at 118-19.
52. Castro, 139 F.3d at 119.
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PRODUCTS LIABILITY
turkey, the use in which the pan allegedly failed. Therefore, the panel
held, the jury could have found that the pan passed the risk-utility test
(e.g., its overall utility for cooking low-volume foods outweighed the
risk of injury when cooking heavier foods), but that it failed the
consumer expectations test (e.g., it was unsafe for the purpose for which
it was marketed and sold-roasting a twenty-five pound turkey), and, as
a result, the district court should have offered a separate breach of
warranty charge. 3
In a final procedural footnote, the panel rejected (some might say
prematurely) the harmless error doctrine-i.e., that it was harmless error
for the district court to offer only a strict products liability charge since
the jury could reasonably have concluded that the roaster had only a
single purpose, a vessel for cooking. 4 At bottom, the panel was
convinced that, in light of evidence of the "multi-purpose nature of the
product," it was reversible error for the district court to fail to charge the
jury on breach of warranty.55
IV. ROTOLO V. DIGITAL EQUIPMENTCORP.56
In Rotolo v. Digital Equipment Corp., the Second Circuit vacated a
product liability judgment for plaintiff because of concern that the
judgment may have been substantially swayed by improperly admitted
evidence.
The history of the case can be sketched briefly. Plaintiff brought
suit in the Eastern District of New York, claiming injuries from her use
of a computer keyboard while working as an accounts receivable clerk
at a hospital in 1992 and 1993. She described her injuries as CTDs
(Cumulative Trauma Disorders) or RSIs (Repetitive Stress Injuries).
Defendant Digital manufactured the keyboard. Plaintiff alleged that
Rotolo's injuries were caused by a design defect in the keyboard and by
Digital's failure to warn of the risk of RSI.
At trial, plaintiff's attorneys successfully introduced, over
defendant's objections, a videotape created by Apple Computer
Corporation, a competitor of defendant. The videotape was marked
"Apple internal use only,"57 and there was no evidence in the record
53.
54.
55.
56.
57.
See id.
Seeid. atll9n.11.
Id. at 119-20.
150 F.3d 223 (2d Cir. 1998).
Id. at 224.
[VOL. 18:913
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indicating how plaintiffs attorneys had obtained it. On the tape, three
Apple consultants, two identified as medical doctors and one as an
engineer, claimed that there was a possible causal link between
keyboard use and the onset of RSI and then discussed Apple's plans to
address the problem.
Plaintiffs counsel repeatedly emphasized the videotape during the
trial, especially in closing argument, when counsel played it a second
time and even informed the jury that the videotape was available for a
third playing.
The jury found in plaintiff s favor, and a judgment in the amount of
$293,000 was entered. The jury presumably based its verdict on the
claim of failure to warn, because it also specifically found that the
keyboard contained no design defect. Digital appealed.
The Second Circuit decided that the videotape was inadmissible
hearsay which contained opinions by "absent and unsworn witnesses,
whose qualifications were not expounded upon or subject to review by
cross-examination.""0 In addition, the panel rejected plaintiffs claim
that the videotape might be admissible as "state of the art" proof of what
was known in the industry. Citing its decision in George v. Celotex
Corp.,59 the Court explained that there was no proof at trial that Digital
had ever seen the videotape or was at least inferentially put on notice by
it.
The panel then considered whether the inadmissible hearsay
"adversely affected Digital's substantial rights '
60
and thus constituted
reversible error. Emphasizing plaintiff's great reliance on the videotape
at trial and the fact that the content of the tape was directly connected to
the issue of whether a failure to warn caused the injuries, the Court held
that it "cannot say with fair assurance that the judgment in Rotolo's61
favor was not substantially swayed by improperly admitted evidence"
that affected Digital's substantial rights. It therefore vacated the
judgment and remanded the matter for retrial.
58.
59.
60.
61.
Id.
914 F.2d 26 (2d Cir. 1990).
Rotolo, 150 F.3d at 225.
Id. at 225-26.
PRODUCTS LIABILITY
1999]
V.
STUART V. AMERICAN CYANAMID
CO.
62
The Second Circuit also decided Stuart v. American Cyanamid
CO.
in 1998, a case involving a choice of law determination concerning
foreign statutes of repose and limitations periods. This case also gave
the Second Circuit an opportunity to address an attempt to recast a
products liability claim into a claim for redhibition, a somewhat arcane
Roman Law doctrine in Louisiana law concerning avoidance of sales.
Stuart is a putative class action suit involving two claims, each
involving personal injury arising out of administration of Orimune, a
polio virus vaccine manufactured and sold by the defendant American
Cyanamid. The United States District Court for the Southern District of
New York had granted summary judgment for the defendant based on
the statutes of limitation and repose, finding various affirmative
defenses to be ineffective due to the expiration of applicable time
periods for bringing suit. The Second Circuit affirmed summary
judgment, holding that, under New York's "borrowing statute," the
applicable limitations periods in the jurisdictions in which the two
claims arose barred the respective claims.
The outcome of the case thus turned on the New York's
"borrowing statute," Civil Practice Law and Rules, section 202 of the
New York Code. Generally, as noted by the Second Circuit, in a
diversity case brought in New York, the New York statute of limitations
63
would apply.
However, section 202 provides an exception when a
nonresident brings a claim in New York for a cause of action that
accrued outside of New York. 64 In such cases, in order to avoid forumshopping, New York courts must apply the shorter limitations period of
(1) the state where the cause of action arose, and (2) New York.65 This
rule defeated the claims of both sets of plaintiffs in this case.
This case involved two claims: the Stuart/Craven claim arising
from administration of polio vaccine to a plaintiff infant in Nebraska in
1979 and the Kairdolf claim involving administration of polio vaccine
to an infant in Louisiana in 1983. The court held that the Stuart/Craven
claim, brought in 1995, was time-barred under Nebraska's ten-year
statute of repose as of March 1989. (The court did not address whether
62.
63.
158 F.3d 622 (2d Cir. 1998).
Id.
64.
65.
See N.Y. C.P.L.R. § 202 (McKinney 1990).
See id.
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New York's "borrowing statute" would apply to a foreign statute of
repose, because neither plaintiff in this case raised the question.)
The court also held that the Stuart/Craven plaintiffs' claim of
fraudulent concealment was not sufficient to avoid summary judgment.
Plaintiff had argued that it did not have notice that the polio vaccine in
question failed to meet federal regulatory requirements, and that
American Cyanamid's concealment of this fact amounted to fraudulent
concealment sufficient to toll the statute of limitations. The court held
that plaintiff still had sufficient information to be put on notice of a
claim as early as 1979, when her son was diagnosed with a vaccinerelated polio infection, and therefore her fraudulent concealment
argument must fail.
The court also held that plaintiff could not prevail by pressing her
claim under the Uniform Commercial Code, which still had limitations
provisions that barred her cause of action. Plaintiff argued that her
claims also arose under section 2-725 of the U.C.C., as a breach of
express warranty.66
However, that statute also provides a four-year
limitations period for claims, which time limit had expired by 1995
when plaintiff filed this suit. 67 Additionally, the court found Nebraska's
product liability statute to be broadly defined, and held that it
encompasses all suits for personal injury resulting from a product.
Consequently, the plaintiff could not avoid the product liability statute
of repose by attempting to recast what was essentially a product liability
suit into a UCC claim.
As to the Kairdolf claim, the court also applied New York's
"borrowing statute" to determine that the suit was time-barred. Under
the Louisiana prescriptive period for product liability suits, the
Kairdolfs' claim was barred as of one year from the date on which the
Kairdolf infant was diagnosed with vaccine-related paralysis. As of this
date, the plaintiffs had "actual or constructive" notice of the causal
connection between the medical treatment received and the subsequent
condition, which under Louisiana law is the triggering event.
The Kairdolfs unsuccessfully sought to avoid summary judgment
by relying on the Louisiana doctrine of redhibition. In a claim for
redhibition, one can avoid a sale, and be awarded damages for loss
caused thereby, where a thing is sold that is so defective that no
reasonable person would buy it, but where such defect is hidden at the
time of sale and where the seller has the opportunity to repair the defect.
66.
67.
See Stuart, 158 F.3d at 629.
See id.
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The court held that this doctrine offered the Kairdolfs no relief because,
under Louisiana law, the administration of a vaccine cannot be
considered a "sale," and therefore the doctrine does not apply.
Moreover, even if the doctrine did apply, it still carried a four-year
limitations period so that the Kairdolfs' claim would nonetheless remain
time-barred.
In affirming the grant of summary judgment in each of these
claims, the Second Circuit did not venture into any new waters or offer
new insights into product liability law. It did suggest that there is a
question as to whether New York's "borrowing" statute should in fact
apply to foreign statutes of repose, but offered no hint as to how it
would decide that issue if raised.
68
VI. JAziNI V. NISSAN MOTOR CO.
Also decided by the Second Circuit this year was Jazini v. Nissan
69
Co.
While the underlying action in Jazini was based upon a
pure product liability claim, the Second Circuit did not consider or
discuss any such claims because the issue before the court was whether
personal jurisdiction could be asserted over a Japanese automobile
manufacturing corporation. 70 This section will briefly summarize the
Second Circuit's holding.
The plaintiffs/appellants (the "Jazinis") brought a products liability
action in the United States District Court for the Southern District of
New York ("District Court") against Nissan Motor Co., Ltd. ("Nissan
Japan")." The Jazinis maintained that, while in Iran, they were injured
when a Nissan Patrol automobile lost its rear wheel assembly and
crashed as a result of a defective part of the assembly.72 Nissan Japan
moved to dismiss the lawsuit for lack of personal jurisdiction. 73 The
District Court granted Nissan Japan's motion to dismiss and the Jazinis
appealed.74 The Second Circuit affirmed the District Court's decision.75
The Jazinis argued that the District Court had personal jurisdiction
over Nissan Japan because, inter alia, (1) Nissan Japan maintained a
Motor
68.
69.
148 F.3d 181 (2d Cir. 1998).
Id.
70.
71.
72.
73.
74.
75.
See id. at 183.
See id.
See Jazini, 148 F.3d at 183.
See id.
See id.
See id.
QLR
[VOL. 18:913
presence in New York through the actions and presence of its whollyowned subsidiary, Nissan Motor Corporation in USA ("Nissan USA");
(2) Nissan USA was controlled by, and dependent upon Nissan Japan
acted as Nissan
for its business plan and financing; and (3) Nissan 7USA
6
Japan would, were it directly present in New York.
After concluding that New York state law applied, the Second
Circuit recognized that, because Nissan Japan's motion to dismiss was
brought prior to the exchange of discovery, the Jazinis could defeat
Nissan Japan's motion to dismiss by making a prima facie showing of
jurisdiction." To make a prima facie showing of personal jurisdiction,
the Jazinis needed to establish that Nissan USA was either an "agent" or
a "mere department" of Nissan Japan.78
To prove that an agency relationship existed, the Jazinis were
required to demonstrate that Nissan USA conducted the same business
Nissan Japan would have, were it present in New York. 79 The Second
Circuit held that the Jazinis failed to show that Nissan USA was an
"agent" for Nissan Japan because the Jazinis had merely made
conclusory allegations regarding an alleged agency relationship and had
failed to support those allegations with any facts.8°
In analyzing whether Nissan USA was a "mere department" of
Nissan Japan, the Second Circuit considered the factors set forth in
Volkswagenwerk Aktiengesellschaft v. Beech Aircraft Corp.,8 namely
(1) whether there was common ownership; (2) the financial dependency
of Nissan USA on Nissan Japan; (3) the degree to which Nissan Japan
interfered in the selection and assignment of Nissan USA's executive
personnel and the failure of Nissan Japan to observe corporate
formalities; and (4) the control on the part of Nissan Japan over the
82
The Second
marketing and operational policies of Nissan USA.
Circuit concluded that the Jazinis' allegations that Nissan USA was a
"mere department" of Nissan Japan lacked the "factual specificity
76. See Jazini, 148 F.3d at 183.
77. See id. at 184 (citing Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d
194, 197 (2d Cir.), cert denied, 498 U.S. 854 (1990); Hoffritz for Cutlery, Inc. v.
Amajac Ltd., 763 F.2d 55, 57 (2d Cir. 1985); FED.R. Civ. P. 12 (b)(2)).
78. See id. (citing Koehler v. Bank of Bermuda Ltd., 101 F.3d 863, 865 (2d Cir.
1996)).
79. See id. (citing Frummer v. Hilton Hotels Int'l, Inc., 227 N.E.2d 851 (N.Y.),
remittitur amended, 229 N.E.2d 696 (N.Y.), and cert. denied 389 U.S. 923 (1967)).
80. See Jazini, 148 F.3d at 184.
81. 751 F.2d 117 (2d Cir. 1996).
82. See id. at 184-85 (citing Volkswagenwerk Aktiengesellschaft v. Beech Aircraft
Corp., 751 F.2d at 120-22 (2d Cir. 1996)).
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necessary to confer jurisdiction, ' 83 and, therefore, affirmed the judgment
of the District Court dismissing the complaint for lack of personal
jurisdiction.84
VII. CONCLUSION
Of the cases decided by the Second Circuit in 1998 in the products
liability area, Liriano is certainly the most significant in that it sharply
limits what had been viewed as a legal safe harbor for product
manufacturers whose products had been altered after sale. After
Liriano,those manufacturers are likely to be confronted with and forced
to defend failure to warn claims.
83.
84.
Jazini, 148 F.3d at 185.
Id. at 185-86.