Appellate Court Hands Retailers Important Victory

On September 15, 2011 the California Court of Appeals, First Appellate District handed down a favorable decision for retailers in the case of Jerry Bailey v. Safeway, Inc. (Sept. 15, 2011, A13149). The decision holds that a manufacturer of a defective product may not seek equitable indemnity against a non-negligent retailer whose fault rests solely on a strict product liability theory.

In short, a retailer may be held strictly liable for injuries suffered by third parties as a result of defective products that the retailer does not manufacture but does offer for sale. The retailer is held jointly and severally liable with the manufacturer of the product on public policy grounds promoting recovery for injured consumers. However, unless the retailer has some independent negligence with respect to a plaintiff’s injuries, the retailer’s liability is treated as secondary to that of the manufacturer. The manufacturer, or an assignee of the manufacturer’s rights, is not entitled to equitable indemnity against the retailer unless the retailer’s independent negligence contributed to the injury. In this way, retailers are jointly and severally liable to plaintiffs on a strict liability theory of recovery, but are only “liable” to other defendants on a theory of equitable indemnity under comparative fault principles.

As a practical matter, in situations where a plaintiff is injured while in a retailer’s store solely as a result of a defective product, the retailer’s liability as to the plaintiff for the defective product is joint and several, but it has no exposure to the manufacturer on indemnity grounds absent independent negligence.

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