Source: https://www.crossborderlaw.com/extending-american-products-liability-jurisprudence-to-canadian-plaintiffs-lessons-from-a-seven-year-battle/
Timestamp: 2019-04-19 10:14:56+00:00

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While Canada and the United States share a legal heritage grounded in the principles of English common law, a host of procedural and substantive differences exist between the judicial systems of the two nations. As economic activity, tourism and other contacts between the two countries has expanded in recent years, a growing number of prospective clients face legal issues which implicate “cross-border” concerns. When approached by a plaintiff whose interests may reach across the international border, an understanding of the subtle differences between the American and Canadian legal systems is critical. A working knowledge of the areas in which the two systems diverge – especially in the fields of tort law – can increase the likelihood that the law most favorable to your client’s interests are applied to the facts presented.
Products liability law is one subspecies in the tort field where this maxim holds particularly true. While products liability litigation in Canada is governed by traditional principles of negligence, the American system has generally adopted a “strict liability” approach to injuries caused by defective products – an approach which focuses more on the product itself, and less on the manufacturer’s knowledge or intent at the time the product was made. The American approach holds significant advantages for an injured plaintiff – provided that the plaintiff can first convince an American court to apply American law to its case. But when a Canadian plaintiff is injured by an American-manufactured product, how do the courts determine where the trial should be held, and which country’s law to apply? Do American courts look merely to the law of the place where the injury occurred for answers, or are other factors important as well? Could a Canadian injured in Canada by an American-made product seek redress in U.S. courts, under U.S. law?
Many of these questions were addressed in Tepei v. Uniroyal Goodrich Tire Company, et. al., a products liability and personal injury action for six British Columbia plaintiffs which my firm recently brought to judgment in Washington state. Arising out of an October 1996 tire blowout and rollover accident on Interstate 5 in southwest Washington, the Tepei case took over seven years to conclude – in large part because of the wrangling between the parties over whether Washington or British Columbia law should apply to the product liability claims alleged against the tire manufacturer. At the conclusion of an eight week trial on April 23, 2004, the Lewis County, Washington jury awarded $9.1m US in damages to the six plaintiffs – a verdict which the Vancouver Sun reported as the largest judgment ever entered against an ICBCinsured driver for negligence. While the jury ultimately concluded that the driver’s negligence was the sole cause of the plaintiffs’ injuries, the Tepei case offers its most important lessons for future B.C. plaintiffs who find themselves injured by American products, and illustrates how thorough knowledge of the laws on both sides of the border is essential to maximizing your client’s recovery whenever United States law is implicated in litigation.
Facts of the Case On October 27, 1996, the Tepei family was involved in a single vehicle accident when the right rear tire on their 1991 Toyota Previa minivan blew out approximately 10 miles south of Chehalis, Washington. The Tepeis – father Peter, mother Dina, and six children – emigrated to Canada from Romania in 1983. Originally settling in Ontario, the family eventually migrated west to Port Coquitlam to be closer to relatives in Oregon and Washington. The Tepeis made regular trips to the Portland area to visit their extended family, and were returning from a wedding in Portland on the day of the accident. Peter was driving the vehicle, with Dina in the front passenger seat, their two daughters Angelica and Camelia in the middle bench seat, and their three sons Adrian, Ben and Dan in the rear of the van. The only member of the Tepei family not in the car on the day of the accident was the family’s oldest son, Christian. Tragically, Christian had been involved in an auto accident in 1995 which rendered him a paraplegic, making long-distance travel difficult.
Heading north from the Portland area, Peter Tepei noticed on two occasions that his minivan appeared to be “running rough” – but he assumed that the car’s handling had something to do with the pavement, and the problem quickly passed. As the vehicle reached milepost 67 on Interstate 5, both driver and passengers heard a loud bang, followed by repetitive noises coming from the right rear wheel well of the vehicle. Peter, who had worked as a truck driver both in Romania and Canada, soon suspected that the noise was coming from his tire. He maintained control of the vehicle for approximately 15 to 20 seconds after first recognizing there was a problem, but was unable to get to the shoulder of the road or significantly slow his vehicle on account of adjacent traffic on the highway. The right rear tire eventually suffered a catastrophic loss of air pressure, causing Peter to lose control of the vehicle approximately three seconds after the final blowout occurred. The Previa flipped over the median barrier of the highway, eventually coming to rest upside-down in the southbound lanes of Interstate 5. Adrian, Angelica Ben and Camelia were ejected from the vehicle, while the other family members remained inside the van. Amazingly, all family members survived the collision.
The Tepeis had purchased the Toyota Previa in February of 1996 from a used car lot in Port Moody. The right rear tire on the vehicle was a Uniroyal Tiger Paw XTM, which had been manufactured at Uniroyal’s Ardmore, Oklahoma plant in October of 1990. Uniroyal had since been purchased by Michelin North America, meaning that Michelin would be subject to successor liability for any injuries proven to be caused by Uniroyal’s product. The tire in question had been on the vehicle at the time the Tepeis purchased it, and still had approximately 20 percent of its usable tread remaining. It was unknown whether the tire was original issue equipment for the Previa, or if it had been purchased after-market by the van’s previous owner.
The immediate injuries sustained by the family members in the collision were severe. Adrian suffered a broken collarbone and collapsed lung, as well as a closed head injury. Angelica sustained multiple compound fractures to her thoracic and anterior vertebrae. Ben had a severe compound fracture to his right elbow, while Dan presented with a T-11 transverse process fracture. Remarkably, despite being ejected, Camelia Tepei was the least injured member of the family, sustaining only lacerations and facial scars, while Dina Tepei suffered soft tissue neck and back injury along with the severe emotional distress caused by witnessing the horrific trauma sustained by five of her six children.
As time passed, some of the family members recovered, while others found themselves suffering from after-effects of the collision which were not immediately apparent at the scene. Both Dina and Camelia’s injuries resolved with modest medical treatment, although the emotional trauma caused by the accident remained. Angelica spent twelve days in the hospital post-accident, and developed chronic back pain which significantly limited her daily activities. Ben’s elbow fracture did not heal properly, leading to three months in the hospital, significant connective tissue and bone loss, and a permanently withered dominant arm/forearm. Adrian, who spent several days in the hospital post-collision, was later found to have sustained frontal lobe damage as a result of his head injury, leading to memory loss and aggression control problems.
Of all the family members, Dan Tepei’s situation was most tragic. A gregarious, outgoing person before the accident, Dan became withdrawn and increasingly forgetful in the months following the collision. His co-workers noticed an immediate change in his behavior – eventually leading his employer to let him go from his job as a stone cutter, citing safety concerns. Approximately six months after the collision, Dan was institutionalized as a result of increasingly violent outbursts and erratic behavior. He was eventually diagnosed as suffering from a schizophrenia-like psychosis, which his family and medical providers attributed to a head injury sustained in the collision.
My Initial Involvement in the Case Shortly after their accident, the Tepeis retained Matt Fahey of Epstein Wood in Vancouver to pursue claims for injuries against their father’s ICBC policy, in his capacity as driver of the vehicle. ICBC’s initial investigation, in turn, suggested that the tire itself might be partially or wholly at fault for causing the accident. Early in its claims investigation, ICBC retained William Max Nonamaker, a tire failure analyst from Akron, Ohio with years of experience inside and outside the tire industry. Mr. Nonamaker’s initial evaluation of the remnants of the Tepeis’ right rear tire suggested that the tire may have had a foreign substance manufactured into the body of the tire itself, which he felt might have contributed to the belt separation and blowout that eventually occurred. Since the Tepeis’ case would need to be pursued in Washington state, either as a predicate to asserting an underinsured motorist claim under the Insurance (Motor Vehicle) Act, or as an independent action against the American manufacturer of the tire, Matt Fahey approached me about assisting him with prosecution of the action in Washington state. As one of a limited number of attorneys cross-licensed in both British Columbia and Washington, my firm was uniquely situated to join with Mr. Fahey and the Tepeis in navigating the thickets of Canadian and American law that this case was certain to pass through on its way to final judgment.
The Loan Agreement One of the first issues that the parties needed to confront was the role that Peter Tepei would play in the case. As the driver of the vehicle in which his family was traveling, Peter was an essential defendant in any action we would file on behalf of the family. Likewise, a judgment against Peter would have to be obtained before the family could proceed with an underinsured action against ICBC – an action I was certain would follow any lawsuit, given the severity of the plaintiffs’ injuries and Peter’s $200,000 CDN liability limits under his own ICBC policy.
Washington law gave us added incentive to retain Peter as a defendant through to judgment in the action. Washington’s compensatory damages scheme permits “fault-free” plaintiffs to hold multiple defendants jointly and severally liable for all injuries caused. If the plaintiffs settled with Peter prior to trial, his share of liability would be forever extinguished by the settlement – preventing us from having a chance of collecting Peter’s share of any damages against the tire manufacturer, in the event that both parties were found to have shared fault for the collision.
Still, as a family member, Peter’s interests were not entirely adverse to those of the plaintiffs. He knew better than anyone the extent to which his family had suffered, and wanted to see his family receive fair compensation for their injuries. Further, Peter expressed a strong belief that the tire was primarily at fault for the accident, and wished to have an opportunity to exonerate himself through the litigation process.
In July of 1999, prior to filing suit in this action, the plaintiffs, Peter Tepei and ICBC reached an agreement which provided some immediate financial and strategic benefits to the plaintiffs while ensuring that any eventual damages awared would be governed by Washington’s joint and several liability laws. The plaintiffs received $150,000 CDN from Peter Tepei, paid by ICBC out of the partial proceeds of Peter Tepei’s Autoplan coverage. In exchange for this payment, which was defined by the parties as an ‘advance loan’ and not a settlement, the plaintiffs agreed not to execute any judgment against Peter obtained in the Washington state action beyond his $200,000 CDN policy limits. The parties further agreed that Peter’s counsel would assist the plaintiffs in the prosecution of claims against the tire manufacturer, and established a pro-rata repayment of ICBC’s legal fees incurred in Peter’s defense in the event that the parties succeeded in establishing liability on the part of Michelin (Uniroyal’s successor-in-interest). Finally, the parties agreed that the loan agreement in no way impaired the ability of the plaintiffs to pursue an UIM claim against ICBC in the event of a judgment entered solely against Peter Tepei.
The “loan agreement” provided several tangible benefits to the plaintiffs. It provided some immediate financial benefit to my clients – funds which were used both to satisfy uncompensated expenses arising from the accident, and to defray some of the costs of what we expected would be costly litigation against Michelin regarding the tire’s role in the accident. The agreement also provided a framework for the position that Peter Tepei and his counsel would play in respect to the litigation – establishing that while Peter would contest his own liability for the collision, he would join us in aggressively pursuing a case against Michelin, and would not challenge the damages claims asserted by the plaintiffs. Most importantly, the fact that Peter Tepei left $50,000 CDN in liability “on the table” to be determined in the Washington action ensured that Peter would remain in the action through to judgment and preserve joint and several liability with Michelin in the event of a plaintiff verdict (an assumption that Michelin later challenged, as you will see). Shortly after negotiating the loan agreement, the plaintiffs filed their complaint in Lewis County, Washington Superior Court, alleging negligence claims against Peter Tepei and strict liability defective products claims against Uniroyal/Michelin.
From the outset, it became clear to us that Michelin intended to contest our allegations of defective manufacture and design with every legal means available. Initial discovery began during the year 2000, but did not progress rapidly (in large part due to the fact that several of the plaintiffs had yet to reach a point of medical stability where the full extent of their claims could be evaluated by the parties). Michelin retained outside counsel in Los Angeles to take the lead in managing the litigation. In addition, the manufacturer retained the law firm of Perkins Coie in Seattle to assist them in addressing the cross-border issues implicated by a Canadian family suing a U.S. manufacturer for a U.S. accident. Perkins Coie is perhaps best known in the Seattle legal community for its relationship with the Boeing Corporation, which has faced numerous product liability lawsuits brought by foreign nationals in the U.S. courts over the years. The appearance of Perkins Coie as co-counsel suggested that Michelin intended to contest U.S. jurisdiction and the applicability of U.S. law to our accident – despite the fact that the accident had occurred in Washington, and the Uniroyal Tiger Paw was designed and manufactured in the United States.
In February of 2001, Michelin filed a motion in Lewis County seeking to have our lawsuit dismissed to British Columbia under the doctrine of forum non conveniens. As in Canada, courts in the United States are vested with discretionary power to decline jurisdiction over any case where the interests of justice and convenience would be strongly favored by removal to an alternative forum. However, the American courts have developed a framework for balancing the factors for and against FNC dismissal which varies from the Canadian approach.
The seminal forum non conveniens case outlining the American approach, Gulf Oil Corp. v. Gilbert1 ,requires that a defendant seeking FNC dismissal first establish that an adequate alternative forum exists for the action to be heard. The “adequate alternative” test is generally an easy threshold for a defendant to cross. A forum may be considered “adequate” for FNC purposes even if it offers drastically reduced compensation to an injured plaintiff, or bars certain elements of a plaintiff’s claims. So long as “the remedy provided by the alternative forum is [not] so clearly inadequate or unsatisfactory that it is no remedy at all”2 , the “adequate forum” prong of Gulf Oil is generally satisfied.
In contrast, “public interest” factors implicate broader policy concerns relevant to the fora at issue, including  the congestion of court dockets in the proposed fora  the risk of imposing jury duty on people of a community with no significant relation to the litigation  the local interest in having localized controversies decided at home, and  the preference for holding trial in the forum whose law is most likely to apply to the issues presented in the litigation.
The Gulf Oil factors, which were first endorsed and employed by the Washington Supreme Court in 1976 , encourage the trial court to conduct a complex balancing of competing interests – which inevitably lead to factspecific decisions arising out of the reported cases. While the discretionary nature of the doctrine and the strong preference of the American courts to respect a plaintiff’s choice of forum certainly worked in my clients’ favour, Michelin was able to find ample fodder from which to craft an argument in favor of FNC dismissal to British Columbia, where both liability and damages law would work strongly in Michelin’s favor.
To enhance their chances of securing a dismissal, Michelin offered to waive any defense they would possess under the British Columbia statute of limitations were the case dismissed to Canada. The litigation was filed in Washington within its three year statute of limitations for tort actions, but after the two year statute had expired in British Columbia. Wisely, Michelin recognized that a dismissal to Canada which ended in an outright dismissal on statute of limitations grounds would deprive the plaintiffs of any remedy at all – thus bringing into question whether B.C. would function as an “adequate alternative forum” for the case.
In response, the plaintiffs argued that Michelin’s offer to waive the statute of limitations defense did not guarantee that a B.C. court would accept jurisdiction over the case. Discovery had established that while Michelin was licensed to do business in Washington, it conducted no business activities in British Columbia. Significant questions regarding personal jurisdiction and statute of limitations concerns remained, raising the possibility that B.C. might not accept the case – thus failing to satisfy the “adequate alternative” prong of the Gulf Oil test.
1 330 U.S. 501 (1947). 2 Piper Aircraft v. Reyno, 454 U.S. 235, 254 (1981). 3 Gulf Oil, 330 U.S. at 508-09. 4 See Johnson v. Spider Staging Corp., 87 Wn.2d 577, 555 P.2d 997. 5 See generally RCW 7.72 et. seq., and the cases interpreting same. 6 RCW 7.72.030(2)(a). 7 RCW 7.72.030(3). 8 RCW 7.72.030(1)(a). 9 See Meyers v. Boeing Co., 115 Wn.2d 123, 133 at n.6, 794 P.2d 1272(1990). 10 See Washington Civil Rule 9(k)(3). 11 See Johnson, footnote 4, supra. 12 Restatement(Second) of Conflict of Laws §6(2). 13 Restatement(Second) of Conflict of Laws §145(2). 14 E.g., see Kozoway v. Massey-Ferguson, Inc., 722 F. Supp. 641 (D. Colo. 1989).
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