Does The “I’m Just A Retailer” Defense Pass Muster?

Many product liability practitioners operate with the presumption that a seller of a product – while it may be named as a party defendant – ultimately will obtain a dismissal from the case so long as a financially solvent product manufacturer is identified and the seller did not sell a known defective product or otherwise take any action affecting the condition of the product. In other words, a product seller generally cannot be held vicariously liable.  However, the District of New Jersey decision, DeGennaro v. Rally Mfg., 2011 U.S. Dist. LEXIS 126568 (D.N.J Nov. 2, 2011), calls into question the scope of protection afforded to sellers under the New Jersey Products Liability Act (N.J.S.A. 2A:58C-1, et seq. (“PLA”)) and raises significant concerns for New Jersey retailers.

Pursuant to N.J.S.A 2A:58C-9, a defendant named by virtue of having sold the subject product is relieved of liability under the PLA if it files an Affidavit identifying the manufacturer of the product, unless, essentially, the manufacturer is financially insolvent or has no presence in the Untied States.   However, there are exceptions to this defense, and a seller is liable if:

(1) The product seller has exercised some significant control over the design, manufacture, packaging or labeling of the product relative to the alleged defect in the product which caused the injury, death or damage; or

(2) The product seller knew or should have known of the defect in the product which caused the injury, death or damage or the plaintiff can affirmatively demonstrate that the product seller was in possession of facts from which a reasonable person would conclude that the product seller had or should have had knowledge of the alleged defect in the product which caused the injury, death or damage; or

(3) The product seller created the defect in the product which caused the injury, death or damage.


Notably, the seller bears the burden of demonstrating that none of these exceptions apply.

In DeGennaro, a lead-acid battery pack manufactured by defendant Rally Manufacturing Inc. (“Rally”) and sold by defendant Pep Boys exploded in the plaintiff’s hands after he left the Pep Boys store.  Plaintiff claimed that the heat-sealed packaging design of the battery pack was defective because it allowed for combustible gases to collect and potentially explode.  Pep Boys moved for summary judgment based on the defense provided by N.J.S.A 2A:58C-9.

Significantly, it was undisputed that Rally had been properly identified as the product manufacturer and that Pep Boys had no role in the design, testing, manufacturing, packaging or labeling of the battery pack.  Accordingly, only the second of the three exceptions provided by N.J.S.A 2A:58C-9 – whether Pep Boys knew or should have known of the alleged defect at the time of sale – was at issue. 

In that regard, plaintiff argued that: (1) the labeling and separate instructions should have alerted Pep Boys that “the air-tight packaging was problematic”; (2) ventilation concerns with lead-acid batteries was “common knowledge amongst car mechanics”; and (3) a visual inspection of the plastic packaging would “reveal that pressure was building and thus reveal the defect.” DeGennaro, at *23.  Plaintiff also asserted that a post-accident Pep Boys email could be interpreted at evidencing that Pep Boys was aware of other relevant pre-accident complaints regarding the product.  Without further elaborating on plaintiff’s arguments, District Court Judge Peter G. Sheridan concluded that, “[t]aken together, this evidence could support a finding that Pep Boys should have known that the [battery pack] had a packaging defect.” Id. at *24.

The DeGennaro opinion will likely encourage creativity from the plaintiffs’ bar in effort to keep claims alive against product sellers and thereby increase the number of parties potentially contributing to a recovery in product liability actions.  From the defense perspective, it can be argued that the import of DeGennaro is limited, given that it is an unpublished opinion involving a peculiar set of facts unlikely to be present in the vast majority of product liability cases.  Clearly however, retailers inNew Jersey should be aware of potential liabilities arising from claims that they “should have known” of defects in products that they sell.

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