A Washington Court Precludes Branding Seller from Allocating Fault to Manufacturer of Defective Product
Product Liability Advisory
The Washington Product Liability Act ("WPLA," RCW Chapter 7.72) provides that sellers assume the liability of manufacturers where products are "marketed under a trade name or brand name of the product seller." RCW 7.72.040(2). The Washington Court of Appeals, Division One, recently held that WPLA does not allow the branding seller to allocate fault to the manufacturer of the defective product. Johnson v. Recreational Equipment, Inc., (REI), 159 Wash.App. 939, 247 P.3d 18 (2011).
In Johnson, the plaintiff was seriously injured when the carbon fiber fork of her bicycle failed, causing the front wheel of the bicycle to detach from the frame of the bicycle. The fork was manufactured by Aprebic Industry Company, Ltd., ("Aprebic") but sold and marketed under REI's brand name, Novara. The bicycle was manufactured by REI and manufactured under the Novara name. The plaintiff filed suit against REI alone, not the manufacturer of the carbon fork. The Johnson court affirmed the trial court's decision to preclude REI from allocating fault to Aprebic, noting that "[s]uch a result would contravene our legislature's clear intent that a product seller that brands a product as its own assumes the liability of the manufacturer." The court reasoned that, in a case arising from a manufacturing defect, the manufacturer necessarily caused the defect (as opposed to the seller). Therefore, an allocation would result in the manufacturer assuming liability for 100 percent of the fault, and the branding seller could avoid liability completely.
The decision illustrates the importance of risk allocation in branding sellers' contracts with product manufacturers. Indeed, the Johnson court stated that WPLA presupposes that sophisticated commercial parties will contractually allocate risk between themselves. Bargaining parties should be cognizant of the impact of WPLA before entering into a contract.
The Washington Supreme Court denied REI's petition for review in September 2011.