Court Opinion

ID: 9466853
Source: CourtListenerOpinion
Date Created: 2023-08-05 01:30:35.690869+00
Date Added: 2024-06-11T17:40:00.804210
License: Public Domain

TATE, Circuit Judge,
dissenting:
I respectfully dissent.
The majority’s persuasive opinion is thoughtful and scholarly. However, like the district judge whom we reverse, my Erie guess is that, in the particular configuration of facts before us, the Texas courts would hold that strict liability recovery is allowable.
As acknowledged by the majority, the chief difficulty in the present legal characterization of the “product,” the “defect,” and the “economic loss” arises from the nature of the present product and its defect, unique in jurisprudence to date concerning strict liability for product defects. The “product” is commercially-sold semen, here used for artificial insemination of the heifers in a fine herd of one hundred breeding cattle. The “defect” in this product was a recessive gene of syndactylism, a genetic abnormality that results in the birth of deformed or stillborn calves (when both dam and sire have the recessive genes). All the calves sired by Farro suffered damage from this recessive gene, four dying stillborn and twenty-two becoming carriers of the syndactylism gene. In my view, my brothers of the majority improperly disallow this damage as being purely an “economic loss,” a loss of market value of the “product.”
The damage to these calves, though partially measured in terms of loss of market value, is not an “economic loss” in the technical sense used in the Texas products liability cases. Tort-recovery for physical damage to an automobile caused by a third person’s negligence could similarly be described as an “economic loss,” because such damage can be measured by the difference between the automobile’s market value before and after the tort-caused damage. Moreover, aside from any technical conceptual characterization based solely on the measure.of damage, the judicial determination of strict liability in tort should be based upon the nature of the loss and upon whether recovery is appropriate in the light of the purposes of strict liability for defective products. In my view, the damage here suffered is appropriately recovered under strict liability.
The majority valiantly struggles with the three most recent Texas cases discussing strict liability recovery for “economic loss” resulting from a product’s defect, Signal Oil and Gas Co. v. Universal Products, 572 S.W.2d 320 (Tex.1978); Mid Continent Aircraft Corp. v. Curry County Spraying Service, Inc., 572 S.W.2d 308 (Tex.1978); Nobility Homes of Texas, Inc. v. Shivers, 557 *1254S.W.2d 77 (Tex.1977), and admits that none of these cases control the present circumstances. However, my brothers of the majority conclude that strict liability is not appropriate in this case because they believe that the semen was not unreasonably dangerous and that the facts of this case do not fall within the policy rationale of strict liability and the economic loss cases. It is with these two conclusions that I respectfully disagree.
To begin with, I believe that the majority errs in determining that, as a matter of law, the semen in this case was not unreasonably dangerous. As stated in Reyes v. Wyeth Laboratories, 498 F.2d 1264, 1288 (5th Cir. 1974) (italics ours), “As an appellant court, our sole function is to ascertain whether there is a rational basis in the record for the jury’s verdict; we are forbidden to usurp the function of the jury by weighing the conflicting evidence and inferences and then reaching our own conclusion.” I believe that the conclusion reached by the jury has a rational basis.
Although the evidence indicates that purchasers of bull semen are aware that there may be some recessive genes, the jury was not compelled to excuse the distributor from liability for damage directly resulting from a defective gene that essentially destroyed the value of the calves for which the semen had been purchased. Four of the calves died in their mothers’ wombs, and the calves that became carriers of the defective gene lost all value except for purposes of slaughter.1 This sort of fatal result is far beyond any custom or consumer expectation. I think that the majority errs in holding that the jury was not, as a matter of law, entitled to conclude that a genetic defect of this magnitude was unreasonably dangerous.
With respect to whether the damage suffered by the calves in this case is recoverable under strict liability as opposed to being simply an “economic loss,” I think that the most applicable cases are Signal Oil and Gas Co. v. Universal Products Inc., 572 S.W.2d 320 (Tex.1978), and C. A. Hoover and Son v. O. M. Franklin Serum Company, 444 S.W.2d 596 (Tex.1969).2 In Signal Oil a defective heater (the product) exploded, causing damage not only to itself but also to the rest of the refinery (other property). There, in upholding a products liability cause of action for all damages thereby sustained, the Texas court held that products liability recovery is available where “collateral property damage exists in addition to damage to the product itself,” 572 S.W.2d at 320. In my opinion, the semen should be classified as the “product” and the defective calves as “other property” that was damaged. (Only by conceptualizing the “product” as both the semen sold and the calves thereafter conceived and nurtured in the heifers’ wombs until born months later, may the present facts be forced into the Mid Continent formula so as to deny recovery.)
Unlike the majority, I believe that analogizing to the Signal Oil decision reaches a result that is consistent with the policy behind strict liability and the cases that have distinguished purely “economic loss” from other types of damage. In the seed cases relied on by the majority, the product simply failed to perform as expected. In the instant case, however, as in Signal Oil and C. A. Hoover, the defect in the product has caused physical injury to the other property of the purchaser. In the instant case the injury is no less a “physical injury” because produced by the injection of recessive genes than if, instead, permanent injury to the calves had been caused by the injection of defective serum, as in C. A. Hoover.3
The real issue, as the majority remarks in closing, is whether this type of damage should be borne by the consumer (as merely his unfulfilled commercial expectation), or should instead be borne by the distributor of a product presenting an unreasonably *1255dangerous risk of injury to the property of others (in order to protect individual consumers from unwarranted loss and to spread the risk among the consuming public). The issue is close, but in my view the Texas supreme court, more likely than not, would allow products liability recovery in this case and hold that the distributor of this defective semen is strictly liable for the damages it caused.
Therefore, I would allow products liability recovery at least the damages resulting from (a) the loss of the four calves stillborn due to Farro’s unreasonably dangerous semen and (b) the loss in value of the 22 calves due to their being born afflicted by the defect resulting from such semen. Accordingly, I respectfully dissent.

. As noted in footnote 1 of the majority opinion, the value of the female calves that became carriers was reduced from $725 to $125.

. In C. A. Hoover strict liability tort recovery was allowed when impure serum caused death and permanent injuries to calves.

. See note 2, supra.