Opinion ID: 1881328
Heading Depth: 1
Heading Rank: 2

Heading: liability for voluntary retrofit campaign

Text: Ostendorf next argues that Clark is liable to him because of its retrofit campaign. Ostendorf's claims are based on the voluntary retrofit program Clark began after developing safety improvements in 1983. Although Clark had begun to retrofit its model C-300 forklifts, the forklift involved in the accident injuring Ostendorf was never retrofitted. While not clear from Ostendorf's brief in this appeal, it appears from the Court of Appeals' opinion that Ostendorf claims Clark failed to adequately notify customers of the availability of and the need for the new safety features, and that it failed to provide its dealers with sufficient incentives to implement the retrofit program. Clark maintains that it mailed Delta notice of the program in 1985, but Delta denies ever receiving the notice. Ostendorf first contends that, under the common law principle of voluntary assumption of a duty, Clark negligently conducted its retrofit campaign. Ostendorf next asserts that Clark failed to meet the standard for an appropriate retrofit campaign under the Restatement (Third) of Torts: Products Liability § 11 (1998). Ostendorf's common law argument is that a manufacturer who voluntarily undertakes a retrofit program can be held liable for negligently performing that program. Ostendorf looks, in part, to Bell Helicopter, 594 S.W.2d 519, to support his claim. In that case, the manufacturer began a retrofit campaign to remedy a defective tail rotor system in a helicopter, but the helicopter flown by the plaintiffs had not yet been retrofitted when it crashed. The Texas Court of Civil Appeals held that Bell assumed the duty to improve upon the safety of its helicopter by replacing the defective part in its helicopter line and [o]nce the duty was assumed, Bell had an obligation to complete the remedy [in this particular helicopter] by using reasonable means available to it.... Bell Helicopter, 594 S.W.2d at 532. But Bell Helicopter is easily distinguishable from the present case. In Bell Helicopter , a Bell-authorized service station purchased the helicopter before the accident but after the retrofit campaign had begun. The service station was aware of the retrofit and the danger a failure to retrofit posed. The service station sold the helicopter without retrofitting it and the crash followed. The court imputed the failure to retrofit to Bell. Unlike that case, the record in the case at bar is devoid of evidence that the defendant in any way had or regained control over the product that led to the plaintiff's injury. Ostendorf also quotes well-settled Kentucky case law to support his case: one who volunteers to act, though under no duty to do so, is charged with the duty of acting with due care. Sheehan v. United Services Auto Ass'n, Ky.App., 913 S.W.2d 4, 6 (1996); see also Estep v. B.F. Saul Real Estate Inv. Trust, Ky.App., 843 S.W.2d 911, 914 (1992). This is an accurate statement of the law, but falls short of attaching liability to Clark. As the Court of Appeals recognized, traditionally, the purpose of imposing liability upon a party who has assumed a duty to act is premised upon reliance. See, e.g., Louisville Cooperage Co. v. Lawrence, 313 Ky. 75, 78, 230 S.W.2d 103, 105 (1950). The Restatement (Second) of Torts § 324A (1965), which considers liability based on negligent performance of an undertaking, includes reliance as one of three bases for imposing a duty: One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third person or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking, if (a) his failure to exercise reasonable care increases the risk of such harm, or (b) he has undertaken to perform a duty owed by the other to the third person, or (c) the harm is suffered because of reliance of the other or the third person upon the undertaking. Under this framework, Ostendorf would have to demonstrate not only that Clark undertook a retrofit campaign on the C-300 forklifts for the protection of third persons, but also that Clark's negligent performance of that task (a) increased the risk of harm to Ostendorf, (b) was incompatible with the discharge of a duty by Ostendorf's employer, Delta, or (c) caused Ostendorf to suffer harm because either Delta or Ostendorf relied on Clark to complete the retrofit. See Tabieros, 944 P.2d at 1302; see also Flock v. Scripto-Tokai Corp., 2001 WL 34111725, 2001 U.S. Dist. Lexis 23885 (S.D. TX 2001); Morrison v. Kubota Tractor Corp., 891 S.W.2d 422 (Mo.App.1994); but see Blossman Gas Co. v. Williams, 189 Ga.App. 195, 375 S.E.2d 117 (1988). While it is clear that Clark began a retrofit campaign, there is no evidence that any of the three additional conditions existed. In fact, regarding reliance, Delta and Ostendorf deny ever receiving notice of the retrofit program from Clark. As discussed, supra, the existence of a duty is essential to a negligence claim. In the absence of one of these three conditions, Clark owed no duty to Ostendorf based on the voluntary retrofit campaign. The Restatement (Third) of Torts: Products Liability § 11 (1998), however, does not impose such stringent requirements to establish liability, at least in the context of product recalls. That section provides: One engaged in the business of selling or otherwise distributing products is subject to liability for harm to persons or property caused by the seller's failure to recall a product after the time of sale or distribution if: (a)(1) a governmental directive issued pursuant to a statute or administrative regulation specifically requires the seller or distributor to recall the product; or (a)(2) the seller or distributor, in the absence of a recall requirement under Subsection (a)(1), undertakes to recall the product; and (b) the seller or distributor fails to act as a reasonable person in recalling the product. Ostendorf argues that § 11(a)(2) applies to this case. Ostendorf further alleges that Clark's voluntary recall was merely an attempt to avoid a government mandated recall or retrofit, as explained in Comment c to § 11: In the context of products liability, courts appear to assume that voluntary recalls are typically undertaken in the anticipation that, if the seller does not recall voluntarily, it will be directed to do so by a governmental regulator. Having presumably forestalled the regulatory recall directive, the seller should be under a common-law duty to follow through on its commitment to recall. But § 11 has not been adopted in Kentucky. And Ostendorf fails to cite a single case from any jurisdiction that relies on § 11 to impose liability on a manufacturer for a negligent retrofit campaign. More importantly, adopting the § 11 approachwith its lax requirementswould have the perverse effect of discouraging voluntary retrofits and recalls. A retrofit campaign is a complex process requiring an abundance of technical, administrative, and legal coordination. Imposing liability on a company for a good faithbut perhaps incompleteeffort to undertake that task might dissuade that company from acting until required to by a government directive. Moreover, a company that would have begun a voluntary campaign in the absence of such strict liability but refrains in the face of such liability might never be compelled to perform that campaign. [3] The result is delay in the first instance and complete omission in the second, and a heightened risk of injury to consumers either way. In the interest of the safety of the citizens of this Commonwealth, we decline to adopt § 11. We think the better course is to impose liability under the dictates of the Restatement (Second) § 324A, which requires proof of reliance, action inconsistent with a duty owed by another party, or increased risk of harm. As discussed, supra, and by the Court of Appeals: If a product was defective at the time of [sale], then the seller may be liable for injuries resulting from that defect. However if the product was not defective at the time of [sale], the seller's post[sale] conduct must contribute to the injury before liability will be imposed. Based on the facts in this case, we hold that by initiating a voluntary retrofit campaign, Clark did not assume a duty sufficient to impose liability for Ostendorf's injuries.