Promaulayko v. Johns-Manville Sales Corp.
562 A.2d 202, 58 U.S.L.W. 2129, 116 N.J. 505 (1989)
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Rule of Law:
A downstream distributor in a strict products liability case, who is liable to an injured party without independent fault, is entitled to common-law indemnification from an upstream distributor in the same chain of distribution.
Facts:
- John Promaulayko worked for Ruberoid Corporation from 1934 to 1978 and contracted asbestosis from exposure to asbestos fibers.
- Ruberoid Corporation purchased asbestos from Leonard J. Buck, Inc. (Buck), a broker of mineral products.
- All of the asbestos that Buck sold to Ruberoid, which caused Promaulayko's illness, was Soviet asbestos that Buck had purchased from Amtorg Trading Corporation (Amtorg).
- Amtorg was a corporation that served as a direct agent for Soviet business interests and channeled the majority of Soviet trade to the United States.
- The asbestos was packaged in 100-pound bags that did not contain any warning of the dangers of asbestosis.
- Neither Amtorg nor Buck ever took physical possession of the asbestos bags, which were shipped directly from the Soviet Union to Ruberoid.
Procedural Posture:
- Marie Promaulayko, on behalf of her deceased husband's estate, sued Amtorg and Buck, among others, in the New Jersey Law Division (trial court).
- A jury found for the plaintiff and awarded damages, answering special interrogatories that Amtorg supplied 100% of the asbestos from Buck that caused the injury, but allocated 25% fault to Buck and 10% to Amtorg.
- Based on the finding that Amtorg was the upstream supplier, the trial court granted Buck's motion for common-law indemnification from Amtorg.
- Amtorg, as appellant, appealed to the New Jersey Appellate Division (intermediate appellate court).
- The Appellate Division reversed the trial court's grant of indemnification, holding that one blameless distributor could not indemnify another.
- The Supreme Court of New Jersey granted certification to hear the appeal by Buck.
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Issue:
Does a distributor in a strict products liability action have a right to common-law indemnification from a distributor higher up in the same distribution chain?
Opinions:
Majority - Pollock, J.
Yes. A distributor is entitled to common-law indemnification from a distributor positioned higher in the chain of distribution. This principle aligns with the core policies of strict liability, which are to allocate the risk of loss to the party best able to control the risk and to distribute the resulting costs. The distributor closer to the manufacturer, Amtorg in this case, is in a better position to pressure the producer to make the product safe and is better able to shift the cost of loss to the producer. Therefore, requiring the party closest to the producer to indemnify parties farther down the chain shifts the risk to the most efficient accident avoider. The jury's comparative fault allocation between the distributors is irrelevant because indemnification, not contribution, is the appropriate vehicle for allocating responsibility between two parties in a distribution chain who are both liable without personal fault.
Analysis:
This decision establishes a clear default rule for liability allocation among distributors in strict products liability cases in New Jersey. It solidifies the principle that liability should flow 'upstream' towards the manufacturer, placing the ultimate financial burden on the parties with the most control over product safety. By prioritizing indemnification over contribution between 'innocent' distributors, the court simplifies litigation and reinforces the economic theories underlying strict liability. This precedent makes it easier for downstream sellers, like retailers, to shift liability to wholesalers or importers, encouraging those upstream entities to exert pressure on manufacturers for safer products.
