Opinion ID: 1400724
Heading Depth: 2
Heading Rank: 1

Heading: Ordinary and Occasional Sellers

Text: Under New York law, the seller of a product ordinarily is strictly liable for injuries caused by any manufacturing, design, or warning defect. Sukljian v. Charles Ross & Son Co., 69 N.Y.2d 89, 94, 511 N.Y.S.2d 821, 823, 503 N.E.2d 1358 (1986). The strict liability doctrine is not so broad as to cover every seller of every good, however. New York courts distinguish between ordinary or regular sellers of a productthose who sell the product on a regular basis, through the ordinary course of businessand casual or occasional sellersthose who sell the product in sporadic transactions that are incidental to their businesses. The liability of a casual seller extends only insofar as it fails to warn the person to whom the product is supplied of known defects that are not obvious or readily discernible. Id. at 94-97, 511 N.Y.S.2d at 823-25, 503 N.E.2d 1358. [4] Moreover, the New York Court of Appeals has expressly noted that the question whether the doctrine of strict products liability applies to regular sellers of used goods is an open question in New York. See Stiles v. Batavia Atomic Horseshoes, Inc., 81 N.Y.2d 950, 951, 597 N.Y.S.2d 666, 667, 613 N.E.2d 572 (1993). There are two principal reasons for imposing strict products liability on ordinary sellers. The first is that those who sell products in the normal course of business, by reason of their continuing relationships with manufacturers, are most often in a position to exert pressure for the improved safety of products and can recover increased costs within their commercial dealings, or through contribution or indemnification in litigation. Sukljian, 69 N.Y.2d at 95, 511 N.Y.S.2d at 823, 503 N.E.2d 1358. The second is that those who market products as a regular part of their businesses may be said to have assumed a special responsibility to the public, which has come to expect them to stand behind their goods. Id. In contrast, the occasional seller exception is based upon the opposite presumptions. [T]he occasional seller has neither the opportunity, nor the incentive, nor the protection of the manufacturer or seller who puts that product into the stream of commerce as a normal part of its business, and the public consumer does not have the same expectation when it buys from such a seller. Id. at 95-96, 511 N.Y.S.2d at 824, 503 N.E.2d 1358. While the reasons behind the ordinary seller rule and occasional seller exception are clear, where to draw the line between ordinary and occasional sellers is not.
The principal case on which Jaramillo relies to argue that Weyerhaeuser is an ordinary seller of used FFGs is Galindo v. Precision American Corp., 754 F.2d 1212 (5th Cir.1985). Applying Texas law, the Fifth Circuit rejected the view of the district court in that case that `getting rid of the depreciated equipment used for production of the goods and services that constitute the business of the seller' can never constitute a business in which the seller is engaged. Id. at 1219 (quoting district court). In dictum, the court opined that a business that sells its obsolete assets [c]learly would not be exempt from strict products liability if: (1) the company ha[d] a policy of purchasing new equipment ... [for example,] every five years; (2) the company ha[d] a division or department devoted to selling the used equipment; (3) the department advertise[d] the availability of equipment on a widespread basis; and (4) the company realize[d] substantial revenues from this activity. Id. The court concluded that there may well exist circumstances in which, because of the number of sales or the extent of sales activities, a seller of depreciated equipment would fit squarely within the rationale for imposition of strict liability. Id. at 1220-21.
The leading New York case on the ordinary/occasional seller distinction, and the one on which Weyerhaeuser relies heavily, is Sukljian v. Charles Ross & Son Co., 69 N.Y.2d 89, 511 N.Y.S.2d 821, 503 N.E.2d 1358. In that case, General Electric Corporation (GE) purchased a grinding mill for about $4,000, had the manufacturer install a safety switch and removable feed hopper, used the machine for about eleven years, and then sold it in a surplus sale. The mill was the only piece of equipment of its kind sold at this sale, the terms of which were as is, where is. Bidders were invited to inspect the machine, and were told that there were no warranties on the equipment. There was some evidence that the sale was advertised in newspapers and magazines. The mill was sold for $35, and thereafter passed through various handsincluding a used equipment dealer that rebuilt the machine to its original specifications, removing the safety switch and feed hopperbefore eventually being sold to the plaintiff's employer. Id. at 92-94, 511 N.Y.S.2d at 822-23, 503 N.E.2d 1358. The plaintiff injured his hand while using the mill and sued the manufacturer as well as the intermediate seller who had rebuilt it. GE was impleaded on a strict liability theory and moved for summary judgment, inter alia, dismissing the strict liability claim on the ground that the company was an occasional seller of grinding mills. The Supreme Court granted this branch of the motion and the Appellate Division affirmed. Id. The New York Court of Appeals affirmed as well, holding that there was no showing that General Electric was regularly engaged in the business of selling the equipment in issue. Id. at 96, 511 N.Y.S.2d at 824, 503 N.E.2d 1358. The Court relied on the facts that: (1) the machine was sold by GE after more than 11 years in use; (2) the surplus sale was on an as is, where is basis; (3) purchasers were invited to inspect the property before buying and were denied any warranties; and (4) the price was $35, less than one percent of GE's own purchase price for the equipment. Id. The Court referenced the dictum in Galindo, but ultimately concluded that, [e]ven if we were to recognize that liability might be imposed in a case such as hypothesized in Galindo i.e., regular, periodic dispositions of sawmill equipment, a division devoted to selling that equipment, widespread advertising, and substantial revenues from that activitythis record contains no such facts. Id. at 96-97, 511 N.Y.S.2d 821, 503 N.E.2d 1358; 511 N.Y.S.2d at 824, 503 N.E.2d 1358 (citations omitted).