Do's and Don'ts When Handling a Product Liability Matter in Georgia
| Publication year | 2019 |
| Pages | 0016 |
Product liability cases often involve multiple causes of action against more than one defendant in the chain of distribution, with some claims sounding in tort and others sounding in contract. Carefully analyzing which parties are involved (designer, manufacturer, distributor or seller) and which causes of action have "teeth" in Georgia can help both sides narrow the issues for discovery and trial, as well as prepare the case for meaningful settlement discussions on the damages that might actually be awarded.
BY ARTHUR J. PARK
Product liability matters in Georgia present a unique array of factual and legal issues. Who qualifies as "the manufacturer" under O.C.G.A. section 51-1-11? What causes of action can a plaintiff bring? How does the plaintiff's theory of liability impact the evidence required at trial? Did this particular consumer actually read the warnings and manual? Having handled the defense of product liability cases as well as subrogation claims on behalf of insurers, I hope to provide the reader with a few tips that may be helpful in this tricky field.
What causes of action are available in a product liability case?
Georgia's Uniform Deceptive Trade Practices Act [1]
Georgia's Uniform Deceptive Trade Practices Act bans advertising in consumer transactions that is false or likely to cause confusion or misunderstanding, such as misrepresenting the origin or quality of a product, "bait-and-switch" tactics, or the like.[2] Although this cause of action sounds great and many states have fee-shifting statutes,[3] Georgia law is not very helpful to consumers here. Under Georgia law, injunctive relief is the "sole remedy" available to a party under Georgia's Uniform Deceptive Trade Practices Act (UDTPA).[4] Because the UDTPA provides for equitable relief only, all claims for monetary relief under the UDTPA are subject to being summarily dismissed.[5] To avoid dismissal, a plaintiff must raise a factual question about the "likelihood of some future wrong" to him.[6] Damages allegedly caused by an earlier deceptive act cannot be remedied through an injunction.[7] An injunction is only available to remedy future wrongs and ""˜does not afford a remedy for what is past.'"[8] As such, a claim under the UDTPA for a manufacturer's alleged misrepresentation of the quality and abilities of a product is not viable where the consumer's claim is based entirely on damages suffered for past wrongs.[9]
Do not bring a cause of action for violation of the UDTPA, unless you enjoy banging your head against a wall.
Breach of Warranty
When a plaintiff has purchased a defective product, he or she may bring a claim for breach of warranty—either an implied warranty or an express warranty—that sounds in contract.
Implied Warranty of Merchantability Under Georgia's version of the Uniform Commercial Code (UCC), "a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind."[10] Goods are merchantable if they (a) are fit for the ordinary purposes for which such goods are used; and (b) conform to the promises or affirmations of fact made on the container or label.[11] Under Georgia law, in order to prove a breach of implied warranty, a plaintiff must show four elements: (1) the goods were subject to the warranty; (2) the goods were defective at the time of sale; (3) the injury was caused by the defective goods; and (4) damages were incurred as a result.[12]
Do consider the UCC remedies if the product seller is the primary target.
Express Warranties
An express warranty is contractual in nature and arises from specific statements or representations, either verbal or written, made by a seller concerning the quality or
Under Georgia’s version of the Uniform Commercial Code, “a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind.”
character of goods.[13] Express warranties are usually made at the time of sale (oral statement) or provided in writing with the product.[14]
A seller's oral statement made at the time of sale must (a) refer to the character, quality or title to the goods, and (b) the seller must promise or ensure that certain facts are true.[15] For an oral express warranty to be enforceable, the statement or representation must be made contemporaneously with and as part of the sale of the product.[16] The buyer must allege that he relied upon the seller's statement or representation in order to establish a claim for breach of express warranty.[17] A plaintiff must show that a statement was made and intended to be an express warranty and that it was relied upon as such.[18]
For breach of a written warranty, Georgia law imposes two conditions: (1) notice of the defect, and (2) a reasonable opportunity to repair the defect.[19] The Courts have found:
A warranty is not breached simply because a vehicle is found on delivery or at some time thereafter within the warranty period to have a defective part or an operational deficiency. Assuming the purchaser has maintained his vehicle in the manner specified, it is the refusal to remedy within a reasonable time, or a lack of success in the attempts to remedy that would constitute a breach of warranty. And where the buyer makes the vehicle available for repair under the warranty, refusal to repair, unsuccessful repair, or repeated failures of the repair constitute a breach of the express warranty.[20]
If there is no repair remedy for a defect, then "there will be a breach of warranty, because the product is not merchantable with an unrepairable defect."[21] If there is a written warranty that includes repair or replacement of parts, then again, two conditions of the warranty must be satisfied before a breach of warranty can exist: first, notice of the defect, and second, a reasonable opportunity to repair the defect.[22]
Do read the provisions of any written warranty very closely, as they could make or break your entire case. A typical Limited Warranty might be restricted to the original purchaser of the product, have a warranty period of one year, only cover repair or replacement of the product and contain a disclaimer for consequential, indirect, special or punitive damages.
The Privity Requirement
A defendant cannot be held liable for any breach of warranty claim in the absence of privity.
Generally, before a recovery may be had for breach of warranty, this state has recognized the necessity of privity between the parties where a plaintiff-purchaser of an article has been injured because of its alleged defectiveness and brings an action based on warranty. That is, if a defendant is not the seller to the plaintiff-purchaser, the plaintiff as the ultimate purchaser cannot recover on the implied or express warranty, if any, arising out of the prior sale by the defendant to the original purchaser, such as distributor or retailer from whom plaintiff purchased the product.[23]
The privity requirement is consistent with the notion that claims for breach of warranty are governed by the Uniform Commercial Code and apply only to the "seller" of the good.[24] Under Georgia law, there is no viable breach of warranty claim where there is no privity of contract between the manufacturer and the plaintiff.[25]
For rent-to-own agreements on appliances, O.C.G.A. section 10-1-682(a)(11) provides that "if any part of a manufacturer's warranty continues to cover the leased property at the time the lessee assumes ownership of the property, if allowed by the terms of the warranty, it will be passed on to the lessee." Until the consumer makes all of the payments to the rent-to-own company, there is no privity with the product manufacturer. If ownership of the appliance never passes to the plaintiff, it logically follows that any written warranty never passes to the plaintiff, and he is never in direct privity with the product manufacturer. Because there is no privity, a breach of warranty claim must be dismissed as a matter of law.[26]
Do raise the privity defense early and often.
What are the damages for a breach of warranty?
The UCC controls the damages allowed for a breach of warranty claim.[27] Remedies for breach of warranty can be limited by the manufacturer in the purchase documents.[28] For example, the written warranty can limit "the buyer's remedies to return of the goods and repayment of the price or to repair and replacement of nonconforming goods or parts."[29]
Incidental damages are generally re-coverable.[30] Consequential damages are allowed for "[a]ny loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know."[31] However, consequential damages are often limited or excluded in the written warranty.[32]
Unjust Enrichment and Restitution
Unjust enrichment is an equitable doctrine which provides that a party conferring labor and things of value must act with the expectation that the other will be responsible for the cost.[33] "Unjust enrichment applies when as a matter of fact there is no legal contract, but when the party sought to be charged has been conferred a benefit by the party contending an unjust enrichment which the benefitted party equitably ought to return or compensate for."[34] An unjust enrichment claim requires the plaintiff to establish that (1) the plaintiff conferred a benefit on the defendant, and (2) equity requires the defendant to compensate the plaintiff for that benefit.[35] It appears that the measure of damages would simply be the purchase price of the product at issue.
Do not waste your time bringing a claim for unjust enrichment unless the purchase price was substantial.
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