Nutting v. Ford Motor Co.
584 N.Y.S.2d 653, 180 A.D.2d 122, 1992 N.Y. App. Div. LEXIS 7560 (1992)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A company that regularly purchases a substantial quantity of new vehicles for employee use and then disposes of them through routine sales to the public after approximately one year is considered to be in the regular business of selling used cars for the purposes of imposing strict products liability.
Facts:
- Hewlett-Packard Company (HP) purchased a 1984 Mercury Marquis from Ford Motor Company in August 1983 as part of a fleet purchase of approximately 3,290 vehicles for employee use.
- HP had an "Elite Fleet" program designed to regularly dispose of vehicles after about one year of use, while they still had substantial value.
- In January 1985, after the vehicle had been driven nearly 33,000 miles, HP's agent sold it at an auction to Hi-Way Motors, a used car business owned by defendant Catherine A. Nutting's father.
- Title was subsequently transferred to Catherine A. Nutting and her husband.
- The Nuttings first experienced a dangerous engine stalling problem in April 1985, three months after acquiring the vehicle.
- Over the next eight months, the Nuttings experienced numerous stalling incidents under various conditions, including at highway speeds, but did not have the vehicle repaired.
- In December 1985, while Catherine A. Nutting was driving, the car allegedly stalled, causing her to drift into oncoming traffic and resulting in a collision.
- The accident resulted in the death of one child passenger and serious injuries to another.
Procedural Posture:
- Plaintiffs, representing the two children involved in the accident, filed a lawsuit in the New York Supreme Court (a trial-level court) against Ford Motor Company, Catherine A. Nutting, and Hewlett-Packard Company (HP).
- HP filed a third-party claim against Lazare Lincoln-Mercury Inc., which had serviced the vehicle.
- Plaintiffs reached settlements with defendants Ford and Nutting.
- HP, Lazare, and Ford filed motions in the trial court for dismissal of the various claims, cross-claims, and a counterclaim asserted against or by HP.
- The Supreme Court (trial court) issued an order ruling on these motions.
- HP, Lazare, and Ford, as appellants, appealed the trial court's order to the Appellate Division of the Supreme Court of New York, Third Department (an intermediate appellate court).
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a company that regularly purchases thousands of new vehicles for its employee fleet and then sells them after about a year of use, as part of an established business program, qualify as a seller in the regular business of selling used cars for the purpose of imposing strict products liability?
Opinions:
Majority - Casey, J.
Yes. A company that regularly purchases thousands of new vehicles for its employee fleet and then sells them after about a year of use, as part of an established business program, qualifies as a seller in the regular business of selling used cars for the purpose of imposing strict products liability. The court determined that HP's sales program was not a series of 'casual or occasional' sales of surplus equipment, but a large-scale, regular, business-related program that placed HP in the chain of distribution from the manufacturer to the consumer. Imposing strict liability on HP furthers public policy because HP's large purchasing volume gives it leverage to pressure manufacturers for improved safety, and the public can reasonably expect a company engaged in such regular sales to stand behind its products. However, while HP can be held strictly liable for a manufacturing or design defect, the court dismissed the claims for failure to warn, breach of warranty, and fraud. The Nuttings' continued use of the vehicle for eight months with full knowledge of the stalling defect severed the causal connection between HP's failure to disclose the defect and the accident.
Analysis:
This decision significantly expands the definition of a 'seller' for strict products liability, extending it beyond traditional retailers to entities whose primary business is unrelated to selling the product in question. The ruling establishes that the analysis hinges on the regularity, scale, and business purpose of the sales activities, not the company's principal industry. It clarifies that a company cannot avoid liability by claiming such sales are merely 'incidental' if they are conducted as a structured, ongoing program. The case also provides a nuanced analysis of proximate cause, distinguishing between how a user's intervening conduct affects defect-based claims versus warning-based claims.
Unlock the full brief for Nutting v. Ford Motor Co.