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Brief Summary: The new statutory language adopted in Tennessee for product liability actions found in the Tennessee tort reform bill of 2011 changed the circumstances where a seller can be found liable for selling a defective product. This statute made it more difficult for a plaintiff to recover damages against a seller of a defective product in a product liability action.
Analysis: The Tennessee tort reform bill of 2011 completely replaced the old T.C.A. § 29-28-106 with new statutory language that is more favorable to sellers in product liability actions. This statute governs when a product liability action can be maintained against a seller, other than the manufacturer, in Tennessee. The new T.C.A. § 29-28-106 provides as follows:
No product liability action, as defined in § 29-28-102, shall be commenced or maintained against any seller, other than the manufacturer, unless:
(1) The seller exercised substantial control over that aspect of the design, testing, manufacture, packaging or labeling of the product that caused the alleged harm for which recovery of damages is sought;
(2) Altered or modified the product, and the alteration or modification was a substantial factor in causing the harm for which recovery of damages is sought;
(3) The seller gave an express warranty as defined by title 47, chapter 2;
(4) The manufacturer or distributor of the product or part in question is not subject to service of process in this state and the long-arm statutes of Tennessee do not serve as the basis for obtaining service of process; or
(5) The manufacturer has been judicially declared insolvent.
It went into effect in Tennessee with the adoption of Public Chapter No. 510 and it applies to all actions that accrue on or after October 1, 2011. This statute changed the circumstances when a seller can be found liable for selling a defective product. This new statutory language provides:
1. This statute strengthened the protections for a seller that does not modify, alter or inspect the product. Previously, the statute had a “closed container” defense which basically provided protection as long as the seller did not have a reasonable opportunity to inspect the product. As a result, this opened the door to factual disputes as to what constituted a “reasonable opportunity” to inspect the product. This new statute eliminates this prior nonspecific language and instead provides that for the seller to be responsible, it must exercise “substantial control” over “that aspect of the design, testing, manufacture, packaging or labeling of the product that caused the alleged harm for which recovery of damages is sought.”
2. The new statutory language also eliminates the ability to bring a cause of action against a seller for an “implied warranty” as was found in the original statute. The plaintiff must now rely on an “express warranty” under this statute as defined in Title 47, Chapter 2.
3. The Tennessee tort reform bill also added T.C.A. 29-39-104(c) which provides the circumstances when punitive damages can be assessed against a seller in a products liability action. A seller can only be liable for punitive damages when (1) the seller exercised substantial control “over that aspect of the design, testing, manufacture, packaging or labeling of the product that caused the harm for which recovery of damages is sought” or (2) the seller altered or modified the product and that alteration or modification was a “substantial factor” in causing the harm in question or (3) the seller “had actual knowledge of the defective condition of the product” at the time is was sold.
4. Under the new statute, the seller of the product can still be found liable when the manufacturer or distributor “is not subject to service of process” in Tennessee. Additionally, the seller can be found liable when the manufacturer has been “judicially declared insolvent”.
This statute provides significant strengthening of T.C.A. § 29-28-106 for sellers of products in Tennessee. It makes it much more difficult to bring a products liability cause of action against a seller of a product in Tennessee. This is certainly a positive development for companies that sell products in Tennessee.
When handling cases involving the defense of a seller of an allegedly defective product, it could certainly be important to know the actual changes made in the statute. For that reason, below is the language of the old version of T.C.A. § 29-28-106 for comparison purposes:
(a) No product liability action, as defined in § 29-28-102(6), shall be commenced or maintained against any seller when the product is acquired and sold by the seller in a sealed container and/or when the product is acquired and sold by the seller under circumstances in which the seller is afforded no reasonable opportunity to inspect the product in such a manner which would or should, in the exercise of reasonable care, reveal the existence of the defective condition. The provisions of the first sentence of this subsection shall not apply to:
(1) Actions based upon a breach of warranty, express or implied, as defined by title 47, chapter 2; or
(2) Actions where the manufacturer of the product or part in question shall not be subject to service of process in the state of Tennessee and where service cannot be secured by the long-arm statutes of Tennessee; or
(3) Actions where the manufacturer has been judicially declared insolvent.
(b) No product liability action, as defined in § 29-28-102(6), when based on the doctrine of strict liability in tort, shall be commenced or maintained against any seller of a product which is alleged to contain or possess a defective condition unreasonably dangerous to the buyer, user or consumer unless the seller is also the manufacturer of the product or the manufacturer of the part thereof claimed to be defective, or unless the manufacturer of the product or part in question shall not be subject to service of process in the state of Tennessee or service cannot be secured by the long-arm statutes of Tennessee or unless such manufacturer has been judicially declared insolvent.
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