Mary Finerty v. Abex Corporation, Formerly Known as American Brake Shoe Company , 27 N.Y.3d 236 ( 2016 )

This opinion is uncorrected and subject to revision before
publication in the New York Reports.
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No. 1
Mary Finerty &c.,
Respondents,
v.
Abex Corporation, Formerly Known
as American Brake Shoe Company,
et al.,
Defendants,
Ford Motor Company,
Appellant.
(And Another Action.)
Anton Metlitsky, for appellant.
James M. Kramer, for respondents.
Chamber of Commerce of the United States of America,
amicus curiae.
PIGOTT, J.:
Plaintiff claims that he was exposed to asbestos during
the 1970s and 1980s while replacing asbestos-containing brakes,
clutches and engine parts on Ford tractors and passenger vehicles
in Ireland. In 1985, plaintiff emigrated to Queens, New York,
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and, years later, was diagnosed with peritoneal mesothelioma.
In 2010, plaintiff and his wife commenced this action
against, among others, Ford Motor Company ("Ford USA"), Ford
Motor Company, Ltd. ("Ford UK") and Henry Ford & Son, Ltd. ("Ford
Ireland")1 alleging strict products liability under the theories
of defective design and failure to warn. After discovery, Ford
USA moved for summary judgment seeking to dismiss the complaint
on the ground that Ford USA did not manufacture, produce,
distribute or sell the parts in question, pointing out that they
were manufactured, produced, distributed and sold by its
wholly-owned subsidiary, Ford UK. Ford USA further moved to
dismiss the complaint pursuant to CPLR 3211 (a) (7) arguing that
the complaint should be dismissed for failure to state a cause of
action because it was devoid of any allegations supporting a
claim that the court should "pierce the corporate veil" such that
Ford USA could be held derivatively liable for the acts of Ford
UK.
Plaintiff countered that Ford USA was "actively
involved" in the design, specification, production and sale of
Ford products throughout the world, including the United Kingdom,
such that it could be held liable for the role it "independently
played" in placing the products into the stream of commerce and
in failing to warn plaintiff.
1
In September 2014, plaintiff consented to the dismissal of
the complaint against Ford Ireland for lack of personal
jurisdiction.
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Supreme Court, while holding that there was no basis
upon which to pierce the corporate veil, nonetheless determined
that because plaintiff produced evidence showing that Ford USA
"exercised significant control over Ford [UK] and Ford Ireland
and had a direct role in placing the asbestos-containing products
to which [plaintiff] was exposed into the stream of commerce,"
there was a question of fact concerning Ford USA's "direct
responsibility for plaintiff's injuries . . ."
The Appellate Division affirmed the order of Supreme
Court denying Ford USA's motion for summary judgment (125 AD3d
564 [1st Dept 2015]).2 It agreed with Supreme Court that there
was "no basis for piercing the corporate veil" but held that "the
record demonstrate[d] that Ford USA acted as the global guardian
of the Ford brand, having a substantial role in the design,
development, and use of the auto parts distributed by Ford UK,
with the apparent goal of the complete standardization of all
products worldwide that carried the signature Ford logo" (id. at
565). As such, the Appellate Division held that there were
factual issues concerning whether Ford USA could be found
"directly liable as a result of its role in facilitating the
distribution of the asbestos-containing auto parts on the ground
2
The Appellate Division also reversed a separate order of
Supreme Court that had denied Ford UK's motion to dismiss the
complaint for lack of personal jurisdiction (125 AD3d 564, 565
[1st Dept 2015]). Plaintiff has not appealed from that portion
of the Appellate Division order.
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that it was 'in the best position to exert pressure for the
improved safety of products' or to warn end users of these auto
parts of the hazards they presented" (id., quoting Godoy v
Abamaster of Miami, 302 AD2d 57, 60-61 [2d Dept 2003], lv
dismissed 100 NY2d 614 [2003]).
The Appellate Division granted Ford USA leave to appeal
to this Court pursuant to CPLR 5713, and certified the question
of whether that portion of the order that affirmed the order of
Supreme Court was properly made. We hold that it was not, and
answer the certified question in the negative.
It is well settled that a manufacturer of defective
products who places them into the stream of commerce may be held
strictly liable for injuries caused by their products, regardless
of privity, foreseeability or due care (see Sukljian v Charles
Ross & Son Co., Inc., 69 NY2d 89, 94 [1986]; Codling v Paglia, 32
NY2d 330, 342 [1973]; see also Amatulli v Delhi Constr. Corp., 77
NY2d 525, 532 [1991]). It is the manufacturer, and the
manufacturer alone, "who can fairly be said to know and to
understand when an article is suitably designed and safely made
for its intended purpose" and who "has the practical opportunity,
as well as a considerable incentive, to turn out useful,
attractive, but safe products" (Codling, 32 NY2d at 340-341).
Strict liability may also be imposed on retailers and
distributors of allegedly defective products because such
sellers, due to their continuing relationship with the
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manufacturers, are usually "in a position to exert pressure for
the improved safety of products and can recover increased costs
within their commercial dealings, or through contribution or
indemnification in litigation . . ." (Sukljian, 69 NY2d at 95).
Sellers who engage in product sales in the ordinary course of
their business are subject to strict liability because they "may
be said to have assumed a special responsibility to the public,
which has come to expect them to stand behind their goods" (id.;
see Restatement [Second] of Torts §402A, Comment c).
Plaintiff asserts that he raised a question of fact
concerning Ford USA's role in the "chain of distribution" by
submitting evidence establishing that Ford USA played a "direct
role" in the design, distribution and marketing of
asbestos-containing parts by "imposing" its decisions in those
areas on Ford UK. The record evidence demonstrates, however,
that it was Ford UK, not Ford USA, that manufactured and
distributed the tractor and vehicle parts.
Ford USA was not a party within the distribution chain,
nor can it be said that it actually placed the parts into the
stream of commerce. Although plaintiff submitted evidence
tending to show that Ford USA provided guidance to Ford UK in the
design of certain tractor components, absent any evidence that
Ford USA was in fact a manufacturer or seller of those
components, Ford USA may not be held liable under a strict
products liability theory (cf. Sage v Fairchild-Swearingen Corp.,
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70 NY2d 579, 586-587 [1987] [designer of defective hanger was
also the manufacturer]). Moreover, absent any indication that
Ford USA was in the distribution chain, it is of no moment that
Ford USA exercised control over its trademark (see Laurin
Maritime AB v Imperial Chem. Indus. PLC, 301 AD2d 367, 367-368
[1st Dept 2003], lv denied 100 NY2d 501 [2003]; Porter v LSB
Indus., Inc., 192 AD2d 205, 211 [4th Dept 1993]). In any event,
the record indicates that Ford USA's "world-wide" trademark
program described how the trademark was to be used on packaging
of Ford products, and did not contain directives as to what
warnings, if any, were required to be placed on the packaging
itself.
The Appellate Division did not determine that there was
a factual question as to whether Ford USA was the manufacturer,
retailer or distributor of the asbestos-containing parts.
Rather, the Appellate Division hinged Ford USA's potential
liability on the premise that there was evidence that Ford USA
played "a substantial role in the design, development, and use of
the auto parts distributed by Ford UK," such that Ford USA's
"role in facilitating the distribution of the asbestos-containing
auto parts" could subject it to strict liability because it was
in the best position to exert pressure on Ford UK and to warn end
users of the hazards presented by the auto parts (125 AD3d at 565
[emphases supplied]). That was error.
Ford USA, as the parent corporation of Ford UK, may not
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be held derivatively liable to plaintiff under a theory of strict
products liability unless Ford USA disregarded the separate
identity of Ford UK and involved itself directly in that entity's
affairs such that the corporate veil could be pieced (see Billy v
Consolidated Mach. Tool Corp., 51 NY2d 152, 163 [1980]), a
conclusion that neither Supreme Court nor the Appellate Division
reached in this instance.3
It was also error for the Appellate Division to
conclude that Ford USA could be subject to strict liability
because it was in the "best position" to "exert pressure" on Ford
UK for improved product safety. Of course, as Ford UK's parent
company, Ford USA could "exert pressure" on Ford UK, but we have
never applied that concept to a parent company's presumed
authority over a wholly-owned subsidiary. We have, however,
routinely applied that concept to sellers of a manufacturer's
products, because it is the sellers who, through their ongoing
relationship with the manufacturers and through contribution and
indemnification in litigation, combined with their role in
placing the product in the consumer's hands, are in the best
position to pressure the manufacturers to create safer products
(see Sukljian, 69 NY2d at 95; see also Jaramillo v Weyerhaeuser
Co., 12 NY3d 181, 192 [2009] [refusing to hold seller of used
equipment liable for strict products liability because there was
3
Nor has plaintiff argued that Ford USA and Ford UK had a
principal/agent relationship.
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no reason to think that imposition of such liability "would
create any measurable 'pressure for the improved safety of
products' on . . . manufacturers"]; Godoy, 302 AD2d at 63
[holding that seller could obtain indemnification from
distributor that was higher in the distribution chain because the
distributor was "closer to the manufacturer" and was in a better
position to "exert pressure" on the manufacturer]; Nutting v Ford
Motor Co., 180 AD2d 122, 129 [3d Dept 1992] [seller of fleet of
vehicles was in position to use its leverage against manufacturer
that could be used to encourage the manufacturer to make safer
vehicles]).
Accordingly, the order of the Appellate Division
insofar as appealed from should be reversed, with costs, Ford
USA's motion for summary judgment dismissing the complaint
against it granted and the certified question answered in the
negative.
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Order insofar as appealed from reversed, with costs, defendant
Ford Motor Company's motion for summary judgment dismissing the
complaint against it granted and certified question answered in
the negative. Opinion by Judge Pigott. Chief Judge DiFiore and
Judges Abdus-Salaam, Stein, Fahey and Garcia concur. Judge
Rivera took no part.
Decided May 3, 2016
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