Schmidt v. Boardman Co.
608 Pa. 327, 11 A.3d 924 (2011)
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Rule of Law:
Under Pennsylvania's product-line exception, a successor corporation that acquires all or substantially all of a predecessor's manufacturing assets and continues the same manufacturing operation may be held strictly liable for the predecessor's defective products. Whether a bystander plaintiff may recover damages for emotional distress in a strict liability action without contemporaneous physical impact remains unsettled, as the Court was equally divided, thereby affirming the lower court's decision by operation of law.
Facts:
- In 1994, the Coraopolis Volunteer Fire Department (CVFD) purchased a custom-built fire engine from the Boardman Company, a division of TBC Fabrication, Inc. (TBC).
- The fire engine was designed with cross-lay compartments for fire hoses but lacked a retaining device to secure them.
- In 1995, TBC liquidated due to insolvency. Sinor Manufacturing, Inc. (Sinor) purchased the Boardman name for use with emergency vehicles, engineering drawings, and some inventory from TBC.
- In 1998, Sinor was restructured and renamed Freightliner Specialty Vehicles, Inc. (Appellant). Sinor's advertising portrayed it as a continuation of Boardman's 65-year manufacturing history.
- In 2004, while the CVFD's Boardman fire engine was en route to an emergency, a 200-foot fire hose fell from a cross-lay compartment.
- The hose snagged on a parked car and then whipped free with great force, striking two ten-year-old children, Erin Schmidt and Joeylynne Jeffress.
- Erin Schmidt died from her injuries, and Joeylynne Jeffress was severely injured.
- The accident was witnessed by Erin's mother (Joyce Schmidt), Erin's sister (Lindsay Schmidt), and Joeylynne's sister (Lauren Jeffress), all of whom suffered emotional distress.
Procedural Posture:
- The Schmidt and Jeffress families (Appellees) filed civil actions in the Court of Common Pleas of Allegheny County against multiple defendants, including Freightliner Specialty Vehicles, Inc. (Appellant).
- The cases were consolidated, and Appellees proceeded against Appellant solely on a theory of strict liability.
- Appellant's pre-trial motion to preclude recovery for emotional distress damages was denied by the trial court.
- Following a trial, the jury returned a verdict in favor of Appellees, finding Appellant and the Coraopolis Volunteer Fire Department each fifty percent liable.
- Appellant's post-trial motion for judgment notwithstanding the verdict (JNOV), arguing that the product-line exception was not established and that emotional distress damages were improper, was denied.
- Appellant appealed to the Superior Court of Pennsylvania.
- A divided three-judge panel of the Superior Court affirmed the trial court's judgment.
- The Supreme Court of Pennsylvania granted Appellant's petition for allowance of appeal.
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Issue:
Under Pennsylvania strict products liability law, 1) is a successor corporation that acquires the name and some assets of a liquidated manufacturer liable for the predecessor's defective products under the product-line exception, and 2) may bystander witnesses recover for emotional distress without suffering a contemporaneous physical impact?
Opinions:
Majority - Justice Saylor
On issue 1: Yes, a successor corporation can be held liable under the product-line exception. The court affirms the finding of liability by clarifying that the flexible standard from Dawejko, which adopts the Ramirez test as its core, is the correct legal framework, rather than a rigid application of the three Ray factors. The appellant waived its right to challenge the existence of the exception itself by not raising the issue in lower courts. The court then clarified existing precedent, holding that the trial court's jury instruction based on the Dawejko standard was correct. On issue 2: Undecided (affirmed by operation of law). The Court is equally divided on whether a plaintiff may recover for emotional distress without physical impact in a strict liability action. Justice Saylor's opinion in support of reversal argues that allowing such recovery would improperly import negligence concepts like foreseeability into strict liability law, contrary to established Pennsylvania jurisprudence. Therefore, this opinion would hold that recovery for emotional distress in strict liability claims requires a contemporaneous physical impact.
Concurring - Justice Baer
On issue 1: Concurs with the majority's holding that the challenge to the product-line exception was waived and with its clarification of the doctrine's contours. On issue 2: No, a plaintiff does not need to prove physical impact, but must prove physical harm, which can be a physical manifestation of emotional distress. Section 402A of the Restatement requires 'physical harm,' a term distinct from 'physical impact.' Physical manifestations of emotional trauma, such as the symptoms of post-traumatic stress disorder, satisfy this requirement. However, because the jury was improperly instructed to award damages for general emotional distress rather than being limited to its physical manifestations, the verdict on this issue should be vacated and the case remanded for a new trial on damages.
Concurring - Justice Todd
On issue 1: Concurs with the majority's finding of waiver but would not have proceeded to analyze the contours of the product-line exception, as the core issue was not preserved for appeal. On issue 2: Agrees with Justice Baer's opinion. Joins the reasoning that physical manifestations of emotional distress are sufficient to satisfy the 'physical harm' requirement for recovery under a strict products liability theory.
Analysis:
This decision clarifies the legal standard for the product-line exception to successor liability in Pennsylvania, resolving a conflict in lower court precedent by reaffirming a flexible, justice-oriented approach over a rigid, multi-factor test. However, the Court's 3-3 split on the emotional distress issue leaves a critical question of strict liability law unanswered. While the lower court's decision allowing bystander recovery for emotional distress stands, the lack of a binding Supreme Court precedent creates significant uncertainty for future litigants and courts, highlighting the ongoing tension in Pennsylvania law over the strict separation of negligence and strict liability doctrines.
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