PRODUCT LIABILITY
Liability of Non-Manufacturers for Defective Products
Robert F. Parker
Under Indiana law, as in most states, a person who sells, leases or “otherwise puts into the stream of commerce,” a product that is defective and unreasonably dangerous, can be liable for physical harm caused by the product to a user or consumer (or to the user or consumer’s property). I.C. §34-20-2-1. Product “defects” can include defects in design, manufacture, instructions, or warnings. While claims based on allegedly defective design, instruction or warning cannot succeed without proof that the manufacturer or seller failed to exercise reasonable care, I.C. §34-20-2-2, liability for defective manufacture of a product is “strict,” i.e., without the necessity of proving fault. I.C. §34-20-2-2(1).
A “seller” is any person engaged in the business of selling or leasing a product for resale, use, or consumption. I.C. §34-6-2-136. Manufacturers are those who design, assemble, fabricate, produce, construct, or otherwise prepare a product (or the part of a product alleged to be defective) before the sale of the product to a user or consumer. I.C. §34-6-2-77. In the world of commerce today, many people and companies are in the business of regularly selling, marketing, or distributing products that are manufactured by others. Where do such non-manufacturers stand with respect to product liability lawsuits arising out of injuries or damage allegedly caused by defects in these products?
The general rule is that a product liability action in which the theory of liability is “strict,” i.e., where the injured party does not have to prove that the defendant was guilty of fault in the manufacture, design, labeling, etc., of the product, can only be brought against a seller who is also the manufacturer of the product, or the part of the product alleged to be defective. I.C. §34-20-2-3. That general rule, however, is subject to a number of exceptions.
First, if the court is unable to obtain jurisdiction over the manufacturer, then the manufacturer’s “principal distributor or seller” over whom the court may hold jurisdiction is considered to be the manufacturer. I.C. §34-20-2-4. This most frequently happens in the case of distributors of products manufactured overseas, or by entities who are now insolvent or defunct.
Secondly, a “manufacturer” includes a non-manufacturing seller under certain circumstances. These circumstances include a seller who furnishes specifications to the manufacturer or who otherwise exerts significant control over a portion of the manufacturing process, or who alters the product in any significant manner before selling it, or who owns or is owned by the manufacturer. I.C. §34-6-2-77(a).
Lastly, a seller who places a private label on a product that he did not manufacture can be liable for defects in the product, but can avoid that liability if he discloses the name of the actual manufacturer somewhere in the product information provided to the user or consumer. I.C. §34-6-2-77(b).
Product liability in Indiana is a creature of statute, and the statute has numerous exceptions, limitations, restrictions, and available defenses. Product liability actions, therefore, call for counsel who are both knowledgeable and experienced in the workings of Indiana’s Product Liability Act.
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