INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
It’s plausible that product liability applies
Norfolk & Dedham Mutual Fire Insurance Company (Norfolk) happened to provide commercial property coverage to 10 poultry farms damaged during heavy snowfall that occurred in Pine Bluff, Arkansas. The farms all suffered roof collapses from the weight of accumulated snow. Norfolk ended up paying their policyholders nearly $5 million for the loss. After making the payments, the insurer decided to recoup its payouts via subrogation.
During the 1990s, all of the poultry farms became affiliates to produce food products for Tyson Foods, Inc. (Tyson). As part of that process, each of the farms was required to build chicken houses to Tyson’s specifications. One requirement was to have roofs that could withstand weights of 23 pounds per square foot. The weight that collapsed the various roofs was less than the load required by Tyson.
Based on that information, Norfolk sought reimbursement from Rogers Manufacturing Corporation (Rogers), the company that made and supplied the roof trusses (internal structural supports) to all the affected farms. Norfolk’s lawsuit argued that Rogers was liable for the losses via product liability, negligence and breach of warranty. Norfolk appealed after a district court ruled in favor of Rogers, dismissing the legal action.
The lower court ruling was based on its reading of an Arkansas statute that was raised as a defense by Rogers, a statute of repose. A statute of repose is a limitation where product liability actions against companies (in this case, manufacturers) are barred after a stated passage of time. It is intended to prevent pursuit of old (a.k.a. stale) product liability claims. In Arkansas, the limitation that applies to manufacturers (including designers) is five years.
In its argument, Rogers argued that, as the trusses supplied were intended to meet Tyson’s requirements, they acted as designers of customized products. Therefore, per a reading of the statute, they qualify for the statutory limitation against any product liability.
The higher court addressed both the argument and the lower court decision that the statute of repose was applicable. In that court’s opinion, the lower court reached its decision according to a plausible interpretation. However, the court also reasoned that other interpretations are also plausible. Specifically, it found that, rather than a situation that involved custom-designed trusses, the trusses were merely available as standardized goods.
Further, Rogers had no involvement in installing the trusses that were meant as a structural improvement to the barns. Therefore, it is just as plausible that Rogers merely supplied trusses that were used but eventually failed to meet a load-bearing requirement. The higher court advised that the statute of repose did not apply.
The lower court decision in favor of Rogers was reversed and remanded for rehearing.
Norfolk & Dedham Mutual Fire Insurance Co. v. Rogers Manufacturing Corporation—United States Court of Appeals for the 8th Circuit—No. 23-3035—November 27, 2024.
