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Showing posts with label chapter 93A. Show all posts
Showing posts with label chapter 93A. Show all posts

Thursday, January 27, 2022

Mass. high court affirms 'component parts doctrine' in HVAC spat, unless maker was culpable in defect

Historical interior of the William Bliss House, 25 Exeter, Back Bay in Boston,
constructed 1882-1884: today the private home of the Nemirovsky family.
Source: Historic New England. 
In a December decision, the Massachusetts Supreme Judicial Court (SJC) reaffirmed the defense-friendly "component parts doctrine" in product liability.

The case arose from a faulty HVAC system installed in plaintiff's 22,000-square-foot Boston home. Evaporator coils in the system repeatedly failed and required replacement, costing the plaintiff hundreds of thousands of dollars, and then substantially more to replace the system in its entirety.  The coils themselves were not defective, but a defect in the system's Styrofoam drain pan caused the coils to fail prematurely.  The statute of limitations precluded plaintiffs' claims based on sale of the HVAC system, but not claims based on the later sale of replacement coils.

Sensibly, the widely accepted "component parts doctrine" ordinarily relieves from liability the manufacturer of non-defective component parts.  However, the SJC explained, citing the Third Restatement, "a component manufacturer may be liable, even if the component itself is not defective, if the component manufacturer is 'substantially involved' in the integration of the component into the design of the integrated product, the integration of the component causes the integrated product to be defective, and the defect in the integrated product causes the harm."

The Superior Court erred, the SJC concluded, in not applying the general rule of the component parts doctrine.  The Superior Court had reasoned that the coil manufacturer could be liable because the coils were made specifically for integration into the defective HVAC system and had no standalone functionality.  In other words, the product failure was foreseeable to the coil manufacturer.  But there are no such exceptions to the component parts doctrine, the SJC held.  Intended integration is not the same as the "substantial involvement" contemplated by the Restatement rule.  And standalone functionality is not the test to shield a component maker from liability.

The component parts doctrine is widely accepted in the states.  There was some hand-wringing over the vitality of the doctrine in 2016 when the California Supreme Court held the doctrine inapplicable when "injury was allegedly caused directly by the [defendant's] materials themselves when used in a manner intended by the suppliers."  In that case, a metal foundry worker had developed lung disease, he alleged, as a result of fumes and dust generated by the foundry's use of the defendant's materials in manufacturing.  But it was the defendant's materials that caused the disease, even if they had been physically transformed by the foundry.  And the specific intentionality attached to the use of the materials closely resembled substantial involvement, tightening the lasso of foreseeability.  The decision hardly unsettled the component parts doctrine.

Law students should take care not to confuse the component parts doctrine with "the single integrated product rule."  That rule determines when damage to an integrated product can be said to satisfy the injury requirement of product liability.  Standalone functionality is relevant to the analysis, but not necessarily dispositive.  If a component part is intended for integration into a larger product, and a defect in the component causes damage to the larger product, but no damage beyond the larger product, then the buyer of the defective component cannot meet the injury requirement to sue in product liability.  The theory of the rule is that the buyer, anticipating the integration, should protect itself in contract and warranty, rather than depending on tort law.  The component parts doctrine rather precludes component manufacturer liability for a non-defective integrated component upon the theory that the component buyer, responsible for the integration, is in the better position to ensure the safety of the integrated product.

In the Massachusetts case, the SJC's decision vacated a $10.6m award.  The jury had awarded just under $3.4m in its verdict.  Massachusetts does not allow punitive damages at common law, but an expansive statute protecting consumers against misrepresentation, "chapter 93A," subsumes much of what would be separate product liability claims in other jurisdictions and can hit defendants with punishing awards of damage multipliers and attorney fees.  Under 93A, the trial court had awarded double damages and attorney fees against defendant Daikin North American for its "willful and knowing" misrepresentation.  Daikin NA might not be off the hook entirely, as the SJC ordered a reexamination of its culpability on remand, to disentangle product liability based on defect from product liability based on culpable misrepresentation.

The case is Nemirovsky v. Daikin North America, LLC, No. SJC-13108 (Dec. 16, 2021).  Justice Dalila Wendlandt wrote the unanimous opinion.

 Ahh, rich people problems....

Monday, June 7, 2021

Extortion claim survives anti-SLAPP motion because defendants could not show petitioning connection

Haverhill, Mass., on the Merrimack River, 2008
(photo by Fletcher6 CC BY-SA 3.0)
Defendants could not raise an anti-SLAPP law against allegations of extortion, the Massachusetts Appeals court ruled before the Memorial Day weekend, because extortion did not relate plausibly to the defendants' constitutionally protected petitioning.

Plaintiffs Stem Haverhill and owner Caroline Pineau were applicants for zoning ordinance changes to permit a marijuana dispensary, since opened, in the downtown riverfront district of Haverhill, Massachusetts, a city 35 miles north of Boston, on the New Hampshire border.  Defendants Brad Brooks and Lloyd Jennings leased nearby residential and restaurant space and opposed the zoning changes.

Brooks and Jennings had had a scrap over property boundary with the previous owner of the Stem lot and had paid $30,000 to resolve the matter.  According to the complaint, Brooks and Jennings, apparently bitter over the former matter, demanded more than $30,000 from Pineau as the price of their acquiescence to zoning changes, no matter what the proposed use.

Stem and Pineau sued under the broad Massachusetts tort-and-consumer-protection statute, chapter 93A, as well as state civil rights law and common law defamation.  As often occurs in anti-SLAPP suits, both parties claimed the exercise of constitutional rights.  The plaintiffs were petitioning the government for zoning changes.  The defendants invoked anti-SLAPP upon the theory that the plaintiffs' civil charges of extortion were calculated to interfere with defendants' petition of government in opposition to the zoning changes.  (Read more about anti-SLAPP on this blog.)

The Massachusetts anti-SLAPP statute facilitates dismissal in favor of the defense by special motion upon the theory that litigation is being weaponized to chill the defendant's (or counter-defendant's) free exercise of the right to petition.  As construed by the Supreme Judicial Court, and quoted in part in the instant case, "a defendant seeking dismissal must show, at the threshold, that the claims against it 'are based solely on [its] exercise of its [constitutional] right to petition.'"

The extortion allegations did not fit the anti-SLAPP pattern, the court concluded, affirming the trial court on de novo review.  "Here, some of the defendants' statements to the Pineaus cannot reasonably be viewed as relating to the defendants' petitioning activities. As discussed, the defendants' focus was to obtain money from Pineau that the defendants knew Pineau did not owe to them."  Litigation in the Land Court could not produce a financial award, the court observed, thus undermining the defendants' position.  The court further reasoned:

Here the defendants did not merely oppose Pineau's proposed business, nor did they merely seek to negotiate their price.  Rather, the complaint describes a concerted and extended effort to coerce Pineau to pay, "or else"—complete with thinly veiled threats such as that Pineau "doesn't know who she is dealing with." The complaint thus adequately describes extortion—coercion by improper means that is designed to reap an economic reward. Such actions, in the business context, can be actionable under c[hapter] 93A, and given the facts alleged here, the suit is not based solely on petitioning activity as required by the anti-SLAPP cases.

Though the "solely" limitation is not found in the anti-SLAPP statute, the rule appropriately narrows the doctrine to its roots in protecting the right to petition.  Had the case proceeded in the Massachusetts anti-SLAPP process, the plaintiff would have been afforded an opportunity in rebuttal, also, to articulate a purpose apart from chilling the right to petition.  As the Appeals Court observed, "The Supreme Judicial Court has construed the statute several times, and has provided a framework, which has evolved over time, for analyzing whether an anti-SLAPP motion to dismiss should be allowed."

The case is Haverhill Stem LLC v. Jennings, No. 20-P-537 (Mass. App. Ct. May 26, 2021).  Justice John Englander authored the opinion for a unanimous panel that also comprised Chief Justice Green and Justice Kinder.

Wednesday, March 24, 2021

Facebook shields records from Mass. AG inquiry

The Massachusetts Supreme Judicial Court today ruled on efforts by Facebook to resist disclosures arising from an internal investigation into application development.  The disclosures are sought by the commonwealth attorney general, which is investigating allegations of consumer data misuse.

AG Healey
(Zgreenblatt CC BY-SA 3.0)
The court's ruling is mixed, but, overall, Facebook gained ground.  The court allowed Facebook more latitude than it won in the lower court to resist disclosure on grounds of attorney work product.  On remand, the lower court will have to scrutinize the records to separate attorney opinion, which is protected, from mere facts, which are not.  The SJC agreed with the lower court that one set of records was within attorney-client privilege, and Facebook will have to produce a privilege log.

Facebook seems to be taking seriously the investigation by the office of Attorney General Maura Healey, and it should.  The company hired fixer-firm Gibson Dunn to handle its internal investigation and is represented by Wilmer Hale in the Massachusetts investigation.  Massachusetts data protection regulation is antiquated relative to the latest generation of regulations in Europe and California, but the law has been on the books for more than a decade.  The AG was represented in the SJC by attorney Sara Cable, whose appointment last year as the office's first chief of data privacy and security signaled an intent to ramp up data protection.  Massachusetts consumer protection law, "93A," the basis of the AG investigation here, is famously expansive, often displacing common law tort in private enforcement and affording generous damages.

Justice Scott Kafker wrote the lengthy opinion for the court in Attorney General v. Facebook, No. SJC-12946 (Mass. Mar. 24, 2021).  Justice Kafker is on a tear of late, having written the court's opinion in a sea change in tort law in late February and the court's unanimous ruling against Gordon College in a First Amendment religious freedom case on March 5.

Thursday, February 4, 2021

FDA reg doesn't preempt state medical device liability, but plaintiff must plead 'plausible' theory, Court says

PainDoctorUSA CC BY-SA 4.0
Medical-device liability claims in state courts are not preempted by federal law, the Massachusetts Supreme Judicial Court confirmed Friday, but the plaintiff before the Court failed to meet the pleading standard.

Seeking relief from the pain of osteoarthritis, Plaintiff Dunn received in her knees two injections of "Synvisc-One," a product of defendant Genzyme Corp. and an FDA-approved "Class III medical device," the Court retold.  Subsequently, she "experienced severe side effects, including 'pain and swelling in her knees, difficulty walking, hip bursitis and systemic pseudoseptic acute arthritis," resulting in falls and injuries, including a torn meniscus and broken neck.

The plaintiff sued Genzyme in negligence and product liability and under Massachusetts consumer protection law.  Commonly called "93A," after its codification, the latter theory of unfair or deceptive practices is favored by plaintiffs' lawyers for its allowance of punitive damages upon an up-to-treble multiplier.  Massachusetts allows punitive damages only upon statutory authorization, and 93A is generous, tracking tort liability theories, including product liability, that would not be thought of as statutory consumer protection in other states.

The U.S. Supreme Court ruled in 2008 that state law claims are not necessarily preempted by regulatory approval under the 1976 Medical Device Regulation Act (MDA).  To survive preemption, a plaintiff's claim must parallel, and not exceed, federal regulatory requirements.

Justice Gaziano
Applying the Supreme Court standard, the SJC determined that the plaintiff's claims met the standard.  Specifically, "negligent failure to warn, breach of warranty, negligent manufacture, products liability, and violations of [chapter] 93A—all can be interpreted as coextensive with the comprehensive Federal requirements."

Contrary to implication by the defense, the SJC held that a plaintiff asserting medical-device liability in parallel with the MDA is not required to plead with the high level of particularity (Rule 9(b)) required in fraud.  Rather, the requisite pleading standard is "plausibility": "plaintiffs asserting parallel State-law claims based upon a violation of FDA regulations must articulate only "factual allegations plausibly suggesting (not merely consistent with) an entitlement to relief" (quoting SJC precedent).

Nevertheless, the plaintiff failed to meet that standard.  The complaint alleged foreseeability of "significant dangers," known or reasonably knowable "dangerous propensities," and, as an alternative theory, adulteration or defect of the product.  But the plaintiff alleged no factual support for causation linking the injection to the injury other than "temporal proximity."  Evidence of other complaints about the product would have helped, the Court suggested.  But deficiency of pleading does not entitle a plaintiff to discovery.

Accordingly, the Court reversed the trial court's denial of the defense motion to dismiss.

The case is Dunn v. Genzyme Corp., No. SJC-12904 (Mass. Jan. 29, 2021).  Justice Frank M. Gaziano authored the opinion of the unanimous Court.

Thursday, August 30, 2018

Statute of repose bars tort-like consumer claim, Mass. high court rules

Yesterday the Massachusetts Supreme Judicial Court (SJC) held that a statute of repose bars a claim under the Commonwealth's key consumer protection statute, chapter 93A.  The case examines the oddly "contort" (contracts-torts) role of 93A and occasions a majority-dissent dispute over judicial construction of statute vs. "usurpation of ... legislative prerogative," i.e., corrective justice vs. distributive justice.

Chapter 93A is important in Massachusetts tort law because it is drawn much more broadly than the usual state consumer protection statute.  In a Massachusetts tort case, chapter 93A often provides a parallel avenue for relief and can afford a plaintiff double or treble damages, as well as fee shifting.  That makes it a powerful accountability tool in areas such as product liability, well beyond the usual consumer protection fare in trade practices.

The SJC, per Justice Cypher, published a sound primer on statutes of limitation and repose:

Statutes of repose and statutes of limitations are different kinds of limitations on actions. A statute of limitations specifies the time limit for commencing an action after the cause of action has accrued, but a statute of repose is an absolute limitation which prevents a cause of action from accruing after a certain period which begins to run upon occurrence of a specified event....  A statute of repose eliminates a cause of action at a specified time, regardless of whether an injury has occurred or a cause of action has accrued as of that date....  Statutes of limitations have been described as a "procedural defense" to a legal claim, whereas statutes of repose have been described as providing a "substantive right to be free from liability after a given period of time has elapsed from a defined event." Bain, Determining the Preemptive Effect of Federal Law on State Statutes of Repose, 43 U. Balt. L. Rev. 119, 125 (2014). The statutes are independent of one another and they do not affect each other directly as they are triggered by entirely distinct events.  [Citations omitted.]

Chapter 93A is covered by a four-year statute of limitations.  A six-year statute of repose covers tort actions arising from deficiencies in improvements to real property: "after the earlier of the dates of: (1) the opening of the improvement to use; or (2) substantial completion of the improvement and the taking of possession for occupancy by the owner."

In the instant case, the plaintiff sought relief for damage resulting from a fire 15 years ago.  The plaintiff attributed the fire to multiple deficiencies in electrical work completed by defendant contractors.  Arguing that the electrical work was not done in compliance with the state code, the plaintiff characterized 93A as "neither wholly tortious nor wholly contractual in nature."  The court, however, found the plaintiff's claim "indistinguishable from a claim of negligence," so barred by the statute.

Three justices dissented.   Chief Justice Gants in dissent pointed out that the general statute of repose does not mention chapter 93A, while the general limitations provision does.  And yet another statute, stating terms of both limitation and repose, purports to govern both contract and tort malpractice actions against doctors.  So the legislature knew how to write what it meant.  The general statute of repose, the chief observed, predated chapter 93A, so could not have anticipated it.  Moreover, statutes of limitation and repose have distinct policy objectives:

In short, as is alleged in this case, the property owner may be barred by the statute of repose from bringing a claim before he or she knows, or reasonably should know, that he or she even has a claim -- even where the defendant has fraudulently concealed the claim from the plaintiff. Consequently, a statute of repose reflects a legislative decision that it is more important to protect certain defendants from old claims than it is to protect the right of plaintiffs to enforce otherwise valid and timely claims.

Thus a statute of repose should not be construed to cover 93A absent plain legislative direction.  The chief concluded: "[T]his is a usurpation of a distinctly legislative prerogative."

The case is Bridgwood v. A.J. Wood Construction, Inc., No. SJC-12352 (Mass. Aug. 29, 2018) (PDF opinion; oral argument via Suffolk Law School).