The California Court of Appeals recently issued an opinion in favor of plaintiffs pursuing damages following a motor vehicle crash. The choice of law issue in this case centered on whether a California tour bus dealership was subject to Indiana law, the location of the tour bus manufacturer, or California law. Noting that product liability law is more “plaintiff-friendly” in California, the court applied the governmental interest test and ultimately held that California law should apply.
Following a catastrophic California tour bus accident, the surviving victims and family members of the deceased victims filed a lawsuit for damages against the tour bus distributor, as well as the manufacturer and driver. The plaintiffs, 10 Chinese nationals visiting the United States on holiday, alleged strict liability, negligence, wrongful death, loss of consortium, and negligent infliction of emotional distress. The accident took place on a trip from Las Vegas to the Grand Canyon.
Legally, there was no dispute about causation, since the driver had taken a turn at a high speed, lost control of the bus, and rolled it twice. Since the driver and tour guide had been wearing seat belts, they were virtually unharmed in the crash. None of the passengers had seat belts, some were ejected from the bus, and all suffered serious injuries. Two were fatally wounded.
The plaintiffs argued that passenger seat belts would have prevented the deaths and lessened the injuries. Even the defense expert agreed that this was the main factor in reducing the risk of being ejected in a rollover car accident. The driver of the bus and the tour company settled outside court for a payment of five million dollars, in exchange for the plaintiffs releasing claims against them.
In this lawsuit, the bus had been manufactured in Indiana, and the bus dealership was in California. The dealer ordered the buses from the Indiana manufacturer without lap belts. The bus manufacturer and the dealership argued that Indiana law should apply to the ongoing claims, since Indiana had an interest in the application of its law. They also argued that the plaintiff-friendly laws of California were not relevant here because the plaintiffs were not California residents. In opposition, the plaintiffs argued that the California car dealership placed the bus in the stream of commerce, and California law should therefore apply.
The trial court found that Indiana law was more protective of the defendants, and in this case, Indiana had an interest in protecting the rights of its resident manufacturer. The manufacturer eventually settled with the plaintiffs for over three million dollars. The plaintiffs again argued that now, Indiana had no interest in the application of its law, since the remaining defendant (the dealership/seller) was located in California.
The tour bus seller argued that the initial determination that Indiana law applied had been correct. The trial court held that Indiana had an interest, since the plaintiffs alleged there was a design and manufacturing issue, and the bus was manufactured in Indiana. The jury found that the bus was not in a “defective condition” at the time of the rollover accident. The plaintiffs appealed.
On appeal, the court stated that California conflicts law required the application of the governmental interest test. This looks at whether the laws from different jurisdictions differ and, if there is a difference, each jurisdiction’s interest in applying its own law. Finally, if there is a conflict, the nature and strength of each jurisdiction’s interest must be considered.
First, the appellate court held that when the Indiana defendant, the manufacturer, was no longer a party to the case, the court was required to reconsider its choice of law assessment. Next, the court stated that the main difference between California and Indiana law lay in strict product liability. The laws between the two states differ because Indiana allows a plaintiff in a defective design lawsuit to recover compensation only when they show the seller failed to exercise reasonable care in the design of the product. By contrast, California law allows for recovery for defectively designed products, even if the defendant used reasonable care.
The court stated that the dealership does not in fact do business in Indiana. In fact, the product is purchased in Indiana and distributed in California. The court stated there was not an interest in extending laws Indiana adopted for local sellers to a foreign buyer that sells in their home jurisdiction. The court stated that since the dealership does not conduct business in Indiana but buys a product that is made there and distributes it, there is not an interest in that state protecting its manufacturers, since they are not a party to the case.
The error by the trial court in determining that Indiana law applied was prejudicial. This case, according to the appeals court, presented a “classic” jury question regarding design defects under a risk-benefit analysis. Seat belts would have been an inexpensive and simple safety feature that would have likely prevented the fatalities and other serious injuries. The court stated that there is evidence on both sides, but a California jury would likely have thought the bus was defective.
The appellate court reversed the judgment and remanded for a new trial to be governed by California product liability law.
The Los Angeles car accident attorneys at Sharifi Firm are dedicated to helping motor vehicle collision victims and their families pursue compensation from an at-fault party. We provide guidance and can help you understand your legal rights. Call our office today for a free consultation at 866-422-7222 or complete our online form.
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California Court Upholds Grant of New Trial When Plaintiffs Were Misled About Trial Strategy and Prejudiced by Surprise, Southern California Injury Lawyer Blog, August 8, 2016
Appellate Court Holds Sham Pleading Did Not Apply in California Car Accident Case When Plaintiffs Were Unclear on Factual Basis for Liability, Southern California Injury Lawyer Blog, July 22, 2016