When is a Product Sold? We Now Have the Answer!

Many months ago, we here at Abnormal Use discussed the critical question, “When does a bucket truck become a bucket truck?” At that time, we were discussing Campbell v. Altec Indus., Inc., 605 F.3d 839 (11th Cir. 2010) [PDF], which involved a plaintiff allegedly injured when a cylinder on a bucket truck owned by Georgia Power failed. The plaintiff sued not only the manufacturer of the truck but that of the lift cylinder, as well. The problem for the plaintiff, however, was the statute of repose, which limited the action to “ten years from the date of the first sale or use or consumption of the personal property causing or otherwise bringing about the injury.” If that seems unclear to you, well, the Eleventh Circuit wasn’t so sure about what it all meant, either. So, they certified the following question to the Georgia Supreme Court: Does the ten-year statute of repose begin to run when:

(1) a component part causing an injury is assembled or tested, (2) a finished product, which includes an injuring component part, is assembled, or, (3) a finished product, which includes an injuring component part is delivered to its initial purchaser?

Well, we finally have our answer. The Georgia Supreme Court recently issued its decision in Campbell v. Altec Indus., Inc., —S.E.2d—, 2011 WL 356110 (Ga. Feb. 7, 2011) [PDF]. The Court held that the statute of repose began to run on the action when the truck was delivered as new to its intended consumer (choice number 3 in the excerpt above, in case you are keeping track).
In coming to its decision, the Court relied heavily on statutory interpretation of OCGA section 51-1-11(b)(1), which imposes liability on a manufacturer “of any personal property sold as new property directly or through a dealer or any other person” when a person is injured because the manufacturer’s product “when sold by the manufacturer was not merchantable and reasonably suited to the use intended, and its condition when sold is the proximate cause of the injury sustained.” The Court reasoned that:
In crafting OCGA § 51-1-11(b), the General Assembly did not choose to begin the period of repose “on the date of the ‘first sale’ of a product by its manufacturer. [Rather, OCGA § 51-1-11(b)(2) ] provides that the period of repose commences on the date of the ‘first sale for use or consumption.’ The General Assembly could have chosen to begin the period of repose on the date that the product was last in the hands of the manufacturer, but it did not. The choice of “the date of the first sale for use or consumption” to trigger the running of the statute of repose is in keeping with OCGA § 51-1-11(b)(1)’s imposition of liability on a manufacturer who sells its product “directly or through a dealer or any other person” as new; regardless of any chain of middlemen, the end sale of the product as new is what brings the manufacturer within the ambit of OCGA § 51-1-11(b)(1), if the other conditions for imposing liability exist.

In so holding, the Court specifically overruled the prior decision of Johnson v. Ford Motor Co., 281 Ga. App. 166, 637 S.E.2d 202 (2006), which the Court called “wrongly decided.” The Court of Appeals had held in that case that the statute of repose began to run when a defective switch, the cause of the plaintiff’s injuries in that case, was installed in the Ford automobile (choice number 2 from the certified question above). Instead, the Campbell Court adopted the reasoning of Pafford v. Biomet, 264 Ga. 540, 448 S.E.2d 347 (1994), which drew the distinction between the sale of a product to “the individual who initially purchased a manufactured product for mere static retention in his inventory” and the individual who purchases the product and intends to actually use it. It is only when the purchase is made to the user that the statute of repose begins to run, because, in the words of the Pafford Court “it is that individual who is the intended beneficiary of the liability imposed” through the statute.

This ruling means that a manufacturer of a defective component part will not be able to avoid liability to an injured plaintiff when the end-product simply sits on the retailer’s shelf for a long time before being sold to the user, effectively shortening the statute of repose. The decision does not undermine a plaintiff’s burden to prove that the product is actually defective, or that the allegedly defective product proximately caused his or her injuries; it simply closes the procedural loophole that Johnson created.

When Is a Product Sold?

I am honored to have the Cinco de Mayo post, and, in honor of this holiday, please ponder with me the age-old question, when does a bucket truck become a bucket truck? In Campbell v. Altec Industries, Inc., No. 09-13472, 2010 WL 1740691 (11th Cir. May 3, 2010) [PDF], the Eleventh Circuit certified a question to the Georgia Supreme Court to decide an statute of repose issue. Campbell worked for Georgia Power Company and was injured when a cylinder on a bucket truck, owned by Georgia Power, failed. Campbell sued the manufacturer of the truck (“Altec”) and the manufacturer of the defective lift cylinder (“THI”). The statute of repose limits the timing of a products liability action to “ten years from the date of the first sale for use or consumption of the personal property causing or otherwise bringing about the injury.” The certified question asks whether the statute of repose begins to run when

(1) a component part causing an injury is assembled or tested, (2) a finished product, which includes an injuring component part, is assembled, or, (3) a finished product, which includes an injuring component part, is delivered to its initial purchaser?

Id. The district court ruled that the statute of repose began to run on January 14, 1998, when Altec placed the completed lift assembly on a test chassis and operated it. “The final assembly of the lift cylinder and placement onto the bucket truck, however, did not occur until sometime in March 1998. The initial delivery to the ultimate purchaser, Georgia Power Company, then occurred in April 1998.” Id. The district court’s order granting the defendants’ motion for partial summary judgment shed’s more light on the facts, noting that Georgia Power initially ordered the bucket truck in March 1997 from Altec, and Altec purchased the lower lift boom cylinder in October 1997. The district court essentially reasoned that Altec purchased the cylinder for production of the truck ordered by Georgia Power, and the completion of the lift assembly on January 14, 1998, which could operate independently of the truck itself, was the moment triggering the statute of repose.

Thus, the relevant inquiry is not when the bucket truck ultimately entered the stream of commerce or whether it was operating as it was intended but rather the movement and function of the lift.

Order, Campbell v. Altec Indus., Inc., No. 08-CV-0810 (N.D. Ga. Feb. 19, 2009) [DE #56]. As shown above, the dates matter, because if the statute of repose was triggered by the assembly of the final bucket truck or its delivery, then Campbell’s suit is timely.

It will be interesting to see what Georgia does with this case. The case will impact vehicles that do something in addition to being vehicles (fire trucks with ladders) in addition to finished products made from components that can function independently of the finished product. I like the defendant-friendly ruling, but I don’t know if it will hold up in a different factual scenario, e.g., firefighter deaths from a defective ladder assembly.