Product liability in Charlotte, North Carolina

Its safe to say that every single person within the United States has purchased or used a defective product. Product liability theory is a tremendously broad category and covers everything from a defective product due to the negligent design of a product, the defective manufacturing of a product, and the failure to adequately warn the end user.

If you have been injured under any of these product liability theories it is imperative that you preserve the defective product for later use at trial. Product Injuries require legal counsel to engage in a type of litigation that is much more in depth than the customary negligence lawsuit.

At the Law Offices of David P. Sheehan, we understand what it takes to adequately represent you and bring a Products Liability case to trial in North Carolina.

North Carolina has never recognized strict liability in tort for products, so a claim must prove fault or a broken warranty

There is no strict liability in tort in a product liability action in North Carolina. G.S. 99B-1.1 says so in a single sentence, but that sentence did not take a right away from injured people — it recorded a position the courts had already settled. In Smith v. Fiber Controls Corp., 300 N.C. 669 (1980), the Supreme Court declined to adopt strict products liability, holding that a manufacturer's duty to those who use its product is measured by the law of negligence and that any move to a strict standard was a matter of public policy for the legislature. The Court of Appeals said much the same of Chapter 99B in Driver v. Burlington Aviation, Inc., 110 N.C. App. 519 (1993). The practical consequence has never changed: showing that a product was defective and that the defect caused harm is not enough on its own.

Two routes remain. The first is negligence, where the question is whether the maker or the seller behaved unreasonably against what it knew or ought reasonably to have known. The second is warranty — an express warranty under G.S. 25-2-313, or the implied warranty of merchantability under G.S. 25-2-314. Privity is not always needed, but the exception is narrower than it is usually described. G.S. 99B-2(b) allows a claimant who is a buyer of the product as the Uniform Commercial Code defines buyer, a member or a guest of a member of the buyer's family, a guest of the buyer, or an employee of the buyer, to bring a product liability action directly against the manufacturer of the product for breach of implied warranty, and provides that lack of privity is not a ground for dismissing that action. It is confined to those categories, to implied warranty, and to the manufacturer; it does not carry an express warranty claim against a remote manufacturer, and it does not reach a bystander who falls outside the list.

What counts as a product liability action is defined broadly. G.S. 99B-1(3) covers any action brought for or on account of personal injury, death or property damage caused by or resulting from the manufacture, design, formulation, testing, warning, instructing, marketing, packaging or labeling of a product, so the Chapter's defenses follow the claim whatever the complaint calls it.

Design, warning and manufacturing claims each carry a different statutory test

In North Carolina the theory pleaded decides what must be proved, and Chapter 99B sets a statutory threshold for two of the three. A manufacturing defect — a unit that departed from the maker's own specification — has no dedicated section, and is proved as ordinary negligence or as a breach of the implied warranty of merchantability.

• Design or formulation, under G.S. 99B-6(a): no manufacturer is liable for inadequate design or formulation unless the claimant proves that at the time of manufacture the manufacturer acted unreasonably in designing or formulating the product, that this conduct was a proximate cause of the harm, and, in addition to both of those, either that the manufacturer unreasonably failed to adopt a safer, practical, feasible alternative design that would have prevented or substantially reduced the risk without substantially impairing the product's usefulness, or that the design was so unreasonable that a reasonable, prudent person aware of the relevant facts would not use the product. G.S. 99B-6(b) lists the factors weighed in deciding whether the manufacturer acted unreasonably, and G.S. 99B-6(c) defeats the claim to the extent it rests on an inherent characteristic that cannot be eliminated without substantially compromising the product's usefulness or desirability and that the ordinary person recognizes.
• Warning or instruction, under G.S. 99B-5(a): no manufacturer or seller is liable on an inadequate warning or instruction claim unless the claimant proves that it acted unreasonably in failing to provide the warning or instruction, that the failure was a proximate cause of the harm, and, in addition, either that at the time the product left its control the product without an adequate warning created an unreasonably dangerous condition that it knew or in the exercise of ordinary care should have known posed a substantial risk of harm to a reasonably foreseeable claimant, or that after the product left its control it became aware, or in the exercise of ordinary care should have become aware, of such a risk and failed to take reasonable steps to give adequate warning or instruction or to take other reasonable action. G.S. 99B-5(b) bars liability for failing to warn about an open and obvious risk or a risk that is a matter of common knowledge.

Contributory negligence reaches product claims through G.S. 99B-4

North Carolina is one of a small number of states in which a claimant whose own want of care contributed to the injury may recover nothing. In product cases the principle is written into the statute, and the wording of it decides cases. Under G.S. 99B-4 no manufacturer or seller is liable where the use of the product was contrary to express and adequate instructions or warnings delivered with, appearing on, or attached to the product or its original container or wrapping, and the user knew or with the exercise of reasonable and diligent care should have known of them; where the user knew of or discovered a defect or dangerous condition of the product that was inconsistent with the safe use of the product and then unreasonably and voluntarily exposed himself or herself to the danger and was injured by or caused injury with that product; or where the claimant failed to exercise reasonable care under the circumstances in using the product and that failure was a proximate cause of the occurrence that caused the injury or damage complained of.

The qualifiers are not decoration. Noticing a fault and carrying on using the product does not by itself engage the second bar: the condition has to be one inconsistent with safe use, the exposure has to have been unreasonable as well as voluntary, and the injury has to have come from that product. Nor does a general instruction sheet engage the first bar; the instructions or warnings must be express, adequate, and supplied with or on the product or its original container or wrapping.

Warranty does not sidestep those defenses. G.S. 99B-1.2 preserves a product liability action for breach of warranty that otherwise exists against a manufacturer or seller, but applies the Chapter's defenses to warranty claims unless the Chapter expressly excludes them. G.S. 99B-3(a) is a separate bar again: no manufacturer or seller is liable where a proximate cause of the injury, death or property damage was an alteration or modification of the product by a party other than the manufacturer or seller, occurring after the product left the control of that manufacturer or seller, unless the alteration or modification was made in accordance with the maker's or seller's instructions or specifications or with its express consent. Under G.S. 99B-3(b), alteration or modification includes changes in the design, formula, function or use of the product and the failure to observe routine care and maintenance, but not ordinary wear and tear.

Last clear chance remains a recognized exception to common-law contributory negligence, and the claimant carries the burden of proving it. Whether it answers a bar under G.S. 99B-4 is unsettled: no North Carolina appellate decision has applied the doctrine to escape that section, and the point should not be relied on without advice on the particular facts. Whether any of the three statutory bars is engaged is a question of fact that usually turns on the instructions actually supplied with the product and on what the user was told.

The 12-year period in G.S. 1-46.1 runs from purchase, not from injury

No action for the recovery of damages for personal injury, death, or damage to property based upon or arising out of any alleged defect or any failure in relation to a product shall be brought more than 12 years after the date of initial purchase for use or consumption. That is G.S. 1-46.1(1). Because it runs from purchase whatever the date of injury, it can end a claim before anyone is hurt. It replaced the six-year period formerly at G.S. 1-50(a)(6), which Session Law 2009-420 repealed effective 1 October 2009 and applicable to causes of action accruing on or after that date, so a cause of action that accrued earlier is still measured against the old six years.

A three-year limitation runs alongside the repose period, under G.S. 1-52(5). G.S. 1-52(16) fixes when the clock starts: the cause of action does not accrue until bodily harm to the claimant becomes apparent or ought reasonably to have become apparent, subject to a proviso that no cause of action accrues more than 10 years from the defendant's last act or omission. Where the product caused a death the action is brought under G.S. 28A-18-2 within two years of the date of death, under G.S. 1-53(4) — and G.S. 1-53(4) adds that no wrongful death action lies if the decedent would already have been barred under G.S. 1-15(c) or G.S. 1-52(16) had he lived. A warranty claim under the Uniform Commercial Code has its own four years under G.S. 25-2-725, running from tender of delivery unless the warranty explicitly extends to future performance. The periods can expire in any order, so all of them are checked at the outset.

Minority does not obviously rescue a claim from the repose period, and the point is often stated on injury websites more confidently than the authority supports. In Bryant v. Adams, 116 N.C. App. 448 (1994), the Court of Appeals held that the disability provision in G.S. 1-17 tolled the six-year repose then found in former G.S. 1-50(6), and it reached that result because the Products Liability Act carried express language that it was not to be construed to amend or repeal G.S. 1-17. Session Law 2009-420 repealed that six-year period and enacted G.S. 1-46.1 without carrying the savings language forward, and no North Carolina appellate decision has extended Bryant to the 12-year period. North Carolina courts have also been careful to distinguish a period of repose from a limitation period when asked to toll it; in Glens of Ironduff Property Owners Association, Inc. v. Daly, 224 N.C. App. 217 (2012), a six-year repose was held not to be tolled by G.S. 47F-3-111(c). A claim on behalf of a child should therefore not be treated as safe on the strength of Bryant, and the date of initial purchase should be established early rather than assumed.

Keeping the product itself decides many North Carolina product cases

In a North Carolina product case the product is usually the central evidence, and it is often discarded, repaired, returned to a supplier or scrapped by an insurer before anyone examines it. N.C.P.I.—Civil 101.39, the pattern instruction on spoliation by a party, allows a jury to infer that an item was damaging to a party where the evidence tends to show that the item was in that party's exclusive possession, that it has been lost, misplaced, suppressed, destroyed or corrupted, and that the party had notice of a potential claim or defense. The inference is permissive rather than compelled — Holloway v. Tyson Foods, Inc., 193 N.C. App. 542 (2008) — and the instruction withholds it where the item was equally accessible to both parties or where there is a fair, frank and satisfactory explanation for the failure to produce it. It applies to claimants as readily as to manufacturers, as the argument in Red Hill Hosiery Mill, Inc. v. MagneTek, Inc., 138 N.C. App. 70 (2000), illustrates. A written preservation request to the seller, the employer, the repairer and the insurer is therefore one of the first steps in a product file, and the product, its packaging, its manual and the purchase record are kept together.

Design and causation opinions come from engineers, metallurgists and treating physicians. Rule 702(a) of the North Carolina Rules of Evidence, as construed in State v. McGrady, 368 N.C. 880 (2016), applies the federal reliability standard, so the sufficiency of the facts or data, the reliability of the principles and methods, and their application to the facts of the case are all open to challenge before trial rather than left to cross-examination.

A product injury at work produces two claims, not one

In North Carolina an employee hurt by a machine, tool or chemical at work has a workers' compensation claim against the employer and a possible civil claim against whoever made or sold the product. G.S. 97-10.1 makes compensation the exclusive remedy against an employer that is subject to and has complied with the Act, excluding common law claims against that employer for the same injury. G.S. 97-10.2 preserves the third-party claim against the maker, the seller or anyone else outside that exclusivity.

G.S. 97-10.2 also decides who controls that claim and who is repaid out of it. Under subsection (b) the employee, or the personal representative if the employee has died, has the exclusive right to enforce the third party's liability if proceedings are instituted not later than 12 months after the date of injury or death. Under subsection (c), if no settlement is made and no summons is issued within that period and the employer has filed a written admission of liability with the Industrial Commission, either the employee or the employer may then proceed; and where, 60 days before the applicable limitation period expires, neither has settled with or instituted proceedings against the third party, all those rights revert to the employee or the personal representative. Recovery is distributed in the order set by subsection (f)(1): the costs of the action, then the attorney's fee, which the statute provides shall not exceed one third of the amount obtained or recovered from the third party, then reimbursement of the employer or carrier for benefits paid, and the balance to the employee.

The employer's lien is not always taken at face value, but the reduction has to be asked for. Under G.S. 97-10.2(j), where a judgment has been obtained by the employee against the third party or a settlement has been agreed between them, either party may apply to a resident superior court judge of the county in which the cause of action arose or where the employee resides, or to a presiding judge of either district. After notice to the employer and carrier and an opportunity for all interested parties to be heard, and with or without the employer's consent, the judge determines in his discretion the amount, if any, of the employer's lien, weighing the anticipated prospective compensation, the net recovery to the plaintiff, the likelihood of success at trial or on appeal, the need for finality and any other factors the court considers just and reasonable. Nothing about that reduction is automatic.

What a North Carolina product claim can cover, and what is deducted from it

Recoverable losses include medical treatment, future care, lost earnings and lost earning capacity, pain and suffering, permanent injury and scarring. Rule 414 of the North Carolina Rules of Evidence limits evidence offered to prove past medical expenses to the amounts actually paid to satisfy bills that have been satisfied, whatever the source of payment, and the amounts actually necessary to satisfy bills that have been incurred but not yet satisfied, so the figure a jury hears is often well below the sum billed. Interest on the portion of a money judgment the fact finder designates as compensatory damages runs from the date the action was commenced under G.S. 24-5(b); any other portion of the judgment, costs aside, bears interest only from entry of judgment.

Punitive damages fall under Chapter 1D and are never automatic. G.S. 1D-15(a) permits an award only where the claimant proves that the defendant is liable for compensatory damages and that fraud, malice, or wilful or wanton conduct was present and was related to the injury for which compensatory damages were awarded. Subsection (b) requires the aggravating factor to be proved by clear and convincing evidence, and subsection (c) forbids an award founded on vicarious liability alone, requiring in the case of a corporation that its officers, directors or managers participated in or condoned the conduct. G.S. 1D-25(b) then caps an award against a defendant at three times the compensatory damages or $250,000, whichever is greater, and directs the trial court to reduce a larger verdict to that maximum. Under G.S. 1D-25(c) the cap is not disclosed to the jury.

What is deducted matters as much as what is recovered. Providers within the categories listed in G.S. 44-49 — including physicians, dentists, nurses, hospitals and ambulance services, and suppliers of drugs and medical supplies — may claim a lien on sums recovered as damages for personal injury, but the lien is conditional: the section requires the claimant provider to furnish, without charge, an itemized statement and written notice of the claim, and a lien is not valid where those conditions are not met. G.S. 44-50 provides that the lien shall in no case, exclusive of attorneys' fees, exceed 50 per cent of the amount of damages recovered. Health plan reimbursement rights and any Medicare or Medicaid interest are handled separately and can move the net figure materially.

Where a Charlotte product case is filed and how it moves

Under G.S. 7A-243 the district court division is the proper division for the trial of a civil action where the amount in controversy is $25,000 or less, and the superior court division where it exceeds that, which covers most product injury actions. Venue lies under G.S. 1-82 in a county where a plaintiff or a defendant resides at the commencement of the action, so a claim by a Charlotte resident is ordinarily filed in Mecklenburg County Superior Court. Manufacturers are often based elsewhere, so removal to the United States District Court for the Western District of North Carolina, Charlotte Division, is common. Where a product is already the subject of federal multidistrict litigation, the Judicial Panel on Multidistrict Litigation may transfer the case under 28 U.S.C. 1407 for coordinated or consolidated pretrial proceedings, with remand to the transferor court for trial unless the case ends first.

A case that stays in state court can be recommended by the senior resident or presiding superior court judge to the Chief Justice for designation as exceptional under Rule 2.1 of the General Rules of Practice for the Superior and District Courts. The designation is the Chief Justice's to make, and where it is made the case is assigned to a single superior court judge for its duration.

Mediation is the usual next step, though it is not automatic in the way it is often described. Under G.S. 7A-38.1(e) the senior resident superior court judge of a participating district may order a mediated settlement conference in any superior court civil action pending in the district, and may by local rule order all cases not otherwise exempted by Supreme Court rule to such a conference. Where a conference has been ordered, G.S. 7A-38.1(f) requires the parties, their attorneys and other persons or entities with authority to settle the claims to attend unless excused by rules of the Supreme Court or by order of the senior resident superior court judge. The mediator makes no award and decides nothing.

Common questions

Written for North Carolina law and reviewed by David P. Sheehan, attorney, Charlotte. General information, not legal advice — see the disclaimer.