Alabama Supreme Court Rejects “Good Samaritan” Liability in Gray Market Case
Last month, I wrote about the “Good Samaritan” rule, codified in Restatement (Second) of Torts, section 324A, “Liability to Third Persons for Performance of Undertaking.” In that post, I discussed how plaintiffs have tried to impose liability on manufacturers and distributors of products based on a company’s post-sale efforts to recall, retrofit or warn about a hazard. In special situations, plaintiffs have even tried to invoke section 324A against parties who were not involved in the product’s chain of distribution. Recently in one such case, the Alabama Supreme Court, applying section 324A, rejected the plaintiff’s argument that our client, Yanmar America Corporation (YAC), was negligent in its post-sale efforts to warn the public about the safety hazards of gray market Yanmar® brand tractors. Yanmar America Corporation v. Randy Nichols,1130214 (Ala. 2014) Supreme Court of Alabama, Sep.. 30, 2014.
“Gray market” defines a product intended for sale and use in one market that is imported into some other market, contrary to the manufacturer’s intent, through unauthorized distribution channels. Gray market products can also include used products.
The tractor in question was built by YAC’s parent corporation, Yanmar Co., Ltd., in 1979 for sale in Japan for the tilling of flat-terrain rice paddies. Due to the age of the tractor and the fact that it was intended for only specific uses in Japan, it did not come equipped with all of the safety features that a more modern tractor intended for use in the United States would have had. In this case, the most important difference was that the tractor did not come equipped with a rollbar and seatbelt, which protect the operator in the event of a rollover. After the tractor had been used in Japan for 26 years, it was imported into the United States in 2005 through unauthorized gray market channels and sold to the plaintiff’s brother in Alabama. The gray market importer and a subsequent dealer had installed implements to facilitate mowing and other uses not originally intended. The plaintiff borrowed his brother’s tractor to mow on a slope and sustained various serious injuries when it rolled over.
YAC, based in the United States, had no role in the chain of distribution of the subject tractor, so under the law, YAC could have stood idly by and taken no action whatsoever. Instead, YAC posted warning notices on its website and in trade publications, and took various other measures to counter the import into and sale of gray market Yanmar tractors in the United States.
The plaintiff in Nichols argued that YAC had thereby voluntarily undertaken to warn him under section 324A and that YAC’s safety notices were not sufficiently comprehensive. He further argued that YAC’s efforts to disseminate the warnings were inadequate because the importing dealer testified that if he had seen YAC’s warning, he would have conducted himself differently. The plaintiff relied exclusively on the “increased risk” prong of section 324A(a).
There was un-contradicted testimony that the unauthorized importing dealer, the original purchaser of the tractor (the plaintiff’s brother) and the plaintiff never saw YAC’s warnings. We argued, therefore, that under section 324A(a), any alleged deficiencies in the content of YAC’s warnings or how they were disseminated could not have “increased the risk” to Mr. Nichols, as compared with YAC taking no action at all. The Alabama Supreme Court agreed and held that the trial court erred in denying YAC’s motion for judgment as a matter of law at the close of the evidence. The judgment against YAC was reversed and remanded, with instructions to dismiss the action against YAC.
We are interested in hearing our readers’ questions or comments on the issue of post-sale warnings, retrofit or recall.