ARIZONA STATE SENATE
Fifty-Fifth Legislature, Second Regular Session
AMENDED
product liability; civil action; limitation
Purpose
Specifies reasons for which a product liability action may be commenced or maintained against a product seller that is not also the manufacturer of the product at issue.
Background
Current statute requires a product manufacturer who refuses to accept a tender of defense from a product seller to indemnify the seller for any judgement against the seller and reimburse any attorney's fees and costs, unless: 1) the seller had knowledge of the product defect; or 2) an alteration, modification or installation performed by the seller was a substantial cause of the incident giving rise to the action, and the alteration, modification or installation was not authorized by the manufacturer and not performed in compliance with manufacturer specifications.
If a judgement is rendered in favor of a plaintiff and the seller has been indemnified against a manufacturer, the plaintiff is required to attempt to satisfy the judgement by levying execution on the manufacturer and by making demand on any liability insurance carrier before attempting to collect judgement from the seller.
If a seller provided plans for the manufacture of a product, the product was manufactured according to the plans and the plans were a substantial cause of the product's alleged defect, the manufacturer of the product shall be indemnified by the seller. In this case a plaintiff that is rendered a favorable judgement is required to attempt to satisfy the judgement by levying execution on the seller rather than the manufacturer (A.R.S. 12-684).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Specifies that indemnification and reimbursement requirements for manufacturers apply in any product liability action that is commenced or maintained against a seller that is not also a manufacturer of the product at issue unless certain exceptions apply.
2. Allows a product liability action to be commenced or maintained against a seller that is not also a manufacturer of the product at issue if the seller:
a) provided the plans or specifications for the manufacture or preparation of the product, the product was manufactured in compliance with the seller's plans and the plans were a substantial cause of the product's alleged defect;
b) resold the product after first sale for use and the product was not in substantially the same condition as it was when it left the manufacturer's possession, the seller had actual knowledge of the change and the change was a substantial cause of the incident giving rise to the action;
c) failed to exercise reasonable care in assembling, maintaining or repairing the product at issue, or in conveying to the consumer the labels, warnings or instructions that were intended to be placed on or distributed with the product at issue that the seller actually received before selling the product, and the failure was a substantial cause of the incident giving rise to the action; or
d) made an express warranty regarding the product independent of any express warranty made by a manufacturer, the product failed to conform to the seller's independent express warranty and the failure was a substantial cause of the incident giving rise to the action.
3. Removes the requirement that a manufacturer indemnify the seller for any judgement rendered against the seller in a product liability action where the manufacturer refuses to accept a tender of defense from the seller.
4. Specifies that a product liability action may be commenced or maintained against a seller that is not also a manufacturer if the seller had actual knowledge of the defect in the product.
5. Makes technical and conforming changes.
6. Becomes effective on the general effective date.
Amendments Adopted by Committee of the Whole
1. Specifies that the seller of a product must have had actual knowledge of a change in the product's condition from when the product left the manufacturer's possession in order to be held liable in a product liability action.
2. Specifies that, in order for the seller of a product to be held liable in a product liability action, the seller must have failed to convey labels, warnings or instructions to the consumer that were intended to be placed on or distributed with the product at issue that the seller actually received before selling the product.
Senate Action
JUD 1/10/22 DP 5-2-1
Prepared by Senate Research
February 2, 2022
ZD/sr