James B. Carlson recently defended a Japanese tractor manufacturer and its U.S. distributor in a significant case that will have direct implications for foreign manufacturers and distributors of foreign-made products. The plaintiff’s arm was amputated when the tractor he was using rolled over. The tractor was made in the 1970s for use in rice paddies in Japan and imported through the gray market without involvement or approval of the manufacturer or U.S. distributor. The plaintiff claimed that by posting warnings on its website and in trade journals regarding the dangers of using the gray market tractors in the U.S. that were designed for use in Japan, the U.S. distributor undertook and breached a duty to the plaintiff to warn of all dangers associated with using the gray market tractor.
The plaintiff reached a substantial settlement with the local Alabama dealer that sold this used gray market tractor. However, the jury returned a verdict against the manufacturer’s distributor, and a judgment was entered against the distributor for the difference between the verdict and the settlement made by the local dealership. Deborah Alley Smith handled the appeal from this verdict, and the Alabama Supreme Court reversed the judgment, resulting in a defense judgment for the manufacturer. The Court held that by posting warnings the distributor did not increase the risk to plaintiff over the risk that existed without any warnings, so it could not be liable.