South Carolina Product Liability Series – Innocent Seller Defense

Many of our clients are not familiar with the law of product liability in South Carolina. Often, clients are named in a lawsuit simply because they were the “seller” of a defective product. Under the current state of the law, it is arguably acceptable for the Plaintiff to do so. To be liable under a strict liability or warranty theory in South Carolina, a defendant must only have been a “seller” of a product that was defective and unreasonably dangerous, and which caused the plaintiff’s alleged injuries.

In some states, the fact that a seller is merely a “pass through” seller or a “broker” may absolve the seller of liability under a product liability theory. Some states refer to this as an “innocent seller” defense, which is supported by evidence that the defendant never handled, manipulated, inspected or otherwise had any direct involvement with the product beyond merely facilitating the sale. However, South Carolina does not explicitly afford such protections yet, and the plaintiff can choose to sue the seller of an allegedly defective product even if the seller merely acted as a middle man in the transaction. Lawing v. Univar, USA, Inc., 2015 S.C. LEXIS 398, *2-3 (S.C. Dec. 2, 2015); Rife v. Hitachi Constr. Mach. Co., 363 S.C. 209, 216, 609 S.E.2d 565, 569, 2005 S.C. App. LEXIS 19, *9 (S.C. Ct. App. 2005) (a plaintiff “can recover all damages that were proximately caused by the defendant’s placing an unreasonably dangerous product into the stream of commerce.”) (emphasis added); Bragg v. Hi-Ranger, Inc., 319 S.C. 531, 540, 462 S.E.2d 321, 326, 1995 S.C. App. LEXIS 125, *14, CCH Prod. Liab. Rep. P14,387 (S.C. Ct. App. 1995) (In product liability cases in South Carolina, the focus “is on the condition of the product, without regard to the action of the seller or manufacturer.”) (emphasis added); Scott v. Fruehauf Corp., 302 S.C. 364, 371, 396 S.E.2d 354, 358, 1990 S.C. LEXIS 162, *9, CCH Prod. Liab. Rep. P12, 635 (S.C. 1990) (“Here, [distributor] and [lessee of the allegedly defective equipment] shared a common liability to the ultimate consumer, Scott, under our strict liability law.”).

In fact, a defendant can be liable as a seller “even though no sale has occurred in the literal sense.” Henderson v. Gould, Inc., 288 S.C. 261, 268, 341 S.E.2d 806, 810, 1986 S.C. App. LEXIS 301, *11 (S.C. Ct. App. 1986). A defendant that “simply brokered the transaction and never affirmatively passed ownership” of the product was potentially liable as a seller under a strict liability theory because the defendant “assisted in passing the gasoline can through the stream of commerce and received a monetary benefit for doing so.” Funchess v. Blitz U.S.A., Inc., 2010 U.S. Dist. LEXIS 121924, *9, 2010 WL 4780357 (D.S.C. Nov. 16, 2010).

On the other hand, there is support for the argument that the Court should take into consideration the degree of control the defendant exercised over the product when deciding whether the defendant can be liable as a seller under a strict liability theory. The South Carolina Supreme Court has held that because a pharmacy was “providing a service, rather than selling a product, it may not be held strictly liable for properly filling a prescription in accordance with a physician’s orders.” Madison v. Am. Home Prods. Corp., 358 S.C. 449, 456, 595 S.E.2d 493, 496, 2004 S.C. LEXIS 92, *11, CCH Prod. Liab. Rep. P16,980 (S.C. 2004). In reaching its decision, the Court considered that the South Carolina Pharmacy Practice Act “specifically states that ‘the practice of pharmacy shall center around the provision of pharmacy care services’” and that the statute defines “health care provider” to include pharmacists who provides health care services.  Id.

Defendants in subsequent cases have argued, based on Madison, that they were not liable as the seller of a product due to their limited involvement in the relevant transaction, and the results have been positive.  A defendant that was “compensated to install,  maintain and recalibrate the [a] machine. . . . [and was] compensated for training the [customer’s] employees” was not liable as the seller of the machine at issue, because it was merely an “after-purchase service provider having nothing to do with the actual sale of any product.” Martin v. A. Celli Nonwovens Spa, 2014 U.S. Dist. LEXIS 153557, *5-6 (D.S.C. Oct. 28, 2014).

We would argue that South Carolina’s appellate courts would adopt an innocent seller defense given the opportunity, and we hope that this opportunity will come sooner rather than later.

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