Oklahoma passes new products liability statute protecting vigilant manufacturers and innocent sellers
Product safety is a crucial priority in modern society. The federal government subjects many products designed, manufactured and sold within the United States to intense scrutiny. Manufacturers and sellers alike work hard to comply with a web of regulations. Unfortunately, this hard work does not count for much when a plaintiff files a lawsuit. In recent years, both the U.S. Supreme Court and the Supreme Court of Oklahoma have issued decisions holding that compliance with federal regulations does not shield a manufacturer or seller from product liability lawsuits.
Over a dozen states have passed laws to reverse this trend. On May 2, 2014, Oklahoma joined those states when Governor Mary Fallin signed HB 3365 into law. The new law, which goes into effect November 1, 2014, creates special protections for both manufacturers and sellers in products liability suits.
What does the new law do?
In any case involving an alleged defect in the formulation, labeling or design of a product, manufacturers and sellers can now invoke a presumption that they are not liable by showing compliance with federal safety standards or premarket licensing requirements. A plaintiff can only rebut the presumption by showing that the regulations were inadequate to protect the public, or that the manufacturer committed some kind of fraud during the regulatory process. The law does not extend to manufacturing flaws or defects, and it does not apply when there has been a voluntary recall or federal action to remove the product from the market. Still, this law rewards manufacturers and sellers for complying with federal regulations and should decrease defense costs by discouraging some types of lawsuits.
For sellers, the protections are even stronger. By default, a seller can no longer be sued in a product liability action. There are broad exceptions to the rule where the seller has control over the design, testing, manufacture, packaging or labeling of the product, or otherwise modified it. There are also exceptions in certain warranty cases, in cases where the manufacturer cannot otherwise be held liable for the defective product, or under certain negligence theories. However, the default rule is extremely favorable to sellers and retailers. The statute even goes so far as to limit preliminary discovery in these cases, which should help keep defense costs down.
The Bottom Line
In many circumstances, manufacturers have already defended the safety of their products to the federal government. Sellers and retailers have long been on the hook for product issues even when they had nothing to do with the alleged defect. Under this new law, Oklahoma now recognizes that manufacturers are working hard to make safe products, and that innocent sellers should not have to shoulder litigation costs just for selling things.