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ARIZONA STATE SENATE
Fifty-Fourth Legislature, Second Regular Session
product liability; civil action; limitation
Purpose
Limits the circumstances in which a product liability lawsuit may be brought against the seller of a product that is not also the manufacturer of that product.
Background
A product liability action is a civil action brought against a manufacturer or seller of a product for damages for bodily injury, death or property damage. The claim may be based on the: 1) manufacture, construction, design, formula, installation, preparation, assembly, testing, packaging, labeling, sale, use or consumption of the product; 2) failure to warn or protect against a danger or hazard in the use or misuse of the product; or 3) failure to provide proper instructions for the use or consumption of a product (A.R.S. § 12-681). A manufacture is a person or entity that designs, assembles, fabricates, produces, constructs or otherwise prepares a product or component part of a product before its sale to a user or consumer, including a seller owned in whole or significant part by the manufacturer or a seller owning the manufacturer in whole or significant part. A seller is a person or entity, including a wholesaler, distributor, retailer or lessor, that is engaged in the business of leasing any product or selling any product for resale, use or consumption (A.R.S. § 12-681).
In a product liability action where the manufacturer refuses to accept a tender of defense from the seller, the manufacturer must indemnify the seller for any judgement against the seller. The manufacturer must also reimburse the seller for reasonable attorney fees and costs in defending the action. Indemnity and reimbursement are not required if either: 1) the seller had knowledge of the defect in the product; or 2) the seller altered, modified or installed the product and the alteration, modification or installation was: a) a substantial cause of the incident giving rise to the action; b) not authorized or requested by the manufacturer; and c) not performed in compliance with the directions or specifications of the manufacturer (A.R.S. § 12-684).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Allows a product liability action to be commenced or maintained against a seller that is not also the manufacturer of the product at issue, only if the seller:
a) had knowledge of the defect in the product;
b) altered, modified or installed the product and the alteration, modification or installation was:
i. a substantial cause of the incident giving rise to the action;
ii. not authorized or requested by the manufacturer; and
iii. not performed in compliance with the directions or specifications of the manufacturer;
c) provided the plans or specifications for the manufacture or preparation of the product, the plans or specifications were a substantial cause of the product's alleged defect and the product was manufactured in compliance with and according to the seller's plans or specifications;
d) resold the product after the product's first sale for use or consumption, the product was not in substantially the same condition as it was at the time the product left the manufacturer's possession and the change in the product's condition was a substantial cause of the incident giving rise to the action;
e) failed to exercise reasonable care in assembling, maintaining or repairing the product at issue or in conveying to the product user or consumer the manufacturer's labels, warnings or instructions and the failure was a substantial cause of the incident giving rise to the action; or
f) made an express warranty regarding the product independent of any express warranty made by a manufacturer regarding the product, the product failed to conform to the seller's independent express warranty and the failure of the product to conform to the seller's independent express warranty was a substantial cause of the incident giving rise to the action.
2. Requires a manufacturer to indemnify and reimburse a seller for reasonable attorney fees and costs incurred by the seller for any judgment rendered against the seller in a product liability action, where the manufacturer refuses to accept a tender of defense, unless the action was the result of one of the theories of liability that allow for the action to be commenced or maintained against the seller.
3. Makes technical and conforming changes.
4. Becomes effective on the general effective date.
Prepared by Senate Research
February 4, 2020
JA/kja