Manufacturing a Product for a Customer? Better Be Careful!

IMG_3255-200x300by HWC Partner Carter Clay

Although not terribly common, there are occasions where an individual or company may go to a fabricator or a product manufacturer and ask them to manufacture a product or part based upon an exemplar or design specifications created by the customer. If the manufacturer agrees to make the product or part, what are the manufacturer’s responsibilities? Can they blindly follow the design specifications provided by the customer? Under Alabama law, the answer is no, the manufacturer cannot blindly follow the design specifications and escape liability if the product or part that it makes is defective and injures someone.

“[I]t is well established… that an ultimate consumer can recover in negligence against a manufacturer even in the absence of privity of contract.” Ex parte Grand Manor, Inc., 778 So. 2d 173, 178 (Ala. 2000). Where injury is foreseeable, the contracting party owes the duty to those who could be injured:

“Where one party to a contract assumes a duty to another party to that contract, and it is foreseeable that injury to a third party—not a party to the contract—may occur upon a breach of that duty, the promisor owes that duty to all those within the foreseeable area of risk.”

Ex parte Grand Manor, Inc. 778 So. 2d at 178, quoting Harris v. Board of Water & Sewer Comm’rs of the City of Mobile, 294 Ala. 606, 613, 320 So. 2d 624 (1975).

In Ex parte Grand Manor, the plaintiffs ordered a manufactured home from a seller, who contracted with Grand Manor to manufacture the home. Grand Manor, however, negligently manufactured the home, causing damage. Grand Manor argued that it owed no duty to the plaintiffs, but the Alabama Supreme Court rejected the argument. While the court ultimately found the plaintiffs could not recover because they were not physically injured, the Court concluded that there was a duty owed. The Court held that the evidence supported the finding of a duty because “the evidence, when viewed in a light most favorable to the Dykes, does tend to show that they were potentially at risk of suffering physical injury as a result of the Grand Manor’s alleged negligent manufacture of the mobile home…” Ex parte Grand Manor, Inc. 778 So. 2d at 179.

The Alabama Supreme Court has established a test to determine what the duty a manufacturer or other party has when given specifications. The Alabama Supreme Court has declared that plans may be followed unless the plans are obviously dangerous or apparently defective:

“‘An independent contractor owes no duty to third persons to judge the plans, specifications or instructions which he has merely contracted to follow. If the contractor carefully carries out the specifications or instructions which he has merely contracted to follow. If the contractor carefully carries out the specifications provided him, he is justified in relying upon the adequacy of the specifications unless they are so obviously dangerous that no competent contractor would follow them.'”

Hannah v. Gregg, Bland & Berry, 840 So. 2d, 847 (Ala. 2002), quoting McFadden v. Ten- T Corp., 529 So. 2d 192, 200 (Ala. 1988).

“Based upon the rule recognized in McFadden, ‘an independent contractor is not free to comply with obviously defective plans and specifications that the contractor should know may create unreasonably dangerous conditions. Rather, a contractor is expected to act reasonably under the particular circumstances in order to avoid accidents.'” Hannah, 840 So. 2d at 847 quoting Aldridge v Valley Steel Constr., Inc., 603 So. 2d 981, 984 (Ala. 1992). In other words, “A builder or contractor is justified in relying upon the plans and specifications which he has contracted to follow, unless they are so apparently defective that an ordinary builder of ordinary prudence would be put upon notice that the work was dangerous and likely to cause injury.”” Nickolson v. Alabama Trailer Co., 791 So. 2d 926, 929 (Ala. 2000), quoting McFadden, 529 So. 2d at 200.

For example, in Hannah, the decedent was crushed to death between two large machines, a belt wrapper and a re-coilder, at Reynolds Metals. Before the accident, the Defendant, Gregg, Bland & Berry (“GBB”) had been hired by Reynolds to reconfigure the belt wrapper in accordance with specifications provided by Reynolds. The specifications, however, failed to include a barrier guard to protect people, like the decedent, who were working between the machines.

The trial court granted summary judgment to GBB finding no duty, but the Alabama Supreme Court reversed. As evidence that the specifications were obviously or apparently defective, plaintiff’s expert testified that “the absence of a barrier guard at the area between the belt wrapper and the re-coiler [was] a defect that should have been obvious to an experienced general contractor like [GB&B], who had been doing jobs like this at Reynolds for many years, especially given the fact that OSHA and its safety standards had been in effect for over 20 years by this time.” Hannah, 840 So. 2d at 848 (alterations in original). The expert further noted “Most of the industrial general contractors that I have dealt with in my years of experience in this field would have noted the missing barrier guard and missing lockout/tagout device in this case and, at a bare minimum, would have altered Reynolds in writing of the problem,” and “that [GB&B’s] failure to at least notify Reynolds of the problem simply falls below the level of care most industrial contractors would give to such a situation.” Id. An employee of Reynolds similarly testified that “anytime you are aware of a pinch point or crush point you should correct it.” Id. at 849.

IMG_0791-300x200Based on this evidence, the Alabama Supreme Court held that the evidence was “sufficient to create a genuine issue of material fact as to whether the absence of a barrier guard between the belt wrapper and the re-coiler was an obvious defect that GB&B should have recognized and remedied.” Id.

Similarly, in Nickolson, supra, the decedent was killed when a pile of power poles he was working on came loose from a trailer. The trailer had been designed by the employer, Alabama Power Company, and the trailer was assembled pursuant to the instructions. The specifications, however, did not include “stanchions” which would have prevented poles that were stacked above the first tier from rolling off after the straps were removed. Alabama Trailer argued that it owed no duty, and the trial court granted summary judgment. The Alabama Supreme Court reversed.

The plaintiff introduced expert testimony stating: “Based upon my review of the [depositions and other evidence], my education, and my work and professional experience, it is my opinion that a responsible and reasonable trailer manufacturer would have questioned the absence of stanchions in the bolster dogs and would not have followed the plans and specifications without informing the purchaser of this significant defect in the plans and specifications. A responsible and reasonable manufacturer would not have built the subject trailer without stanchions in the bolster dogs.”

Nickolson, 791 So. 2d at 930. Alabama Trailer argued that it owed no duty because it did not know how Alabama Power would use the trailer and therefore would not know that the design was dangerous. The Alabama Supreme Court held that this conflicting testimony created a question of fact and “Viewing the evidence in a light most favorable to Ms. Nickolson, we conclude that the trial court erred in the entering the summary judgment in favor of Alabama Trailer.” Id.

Thus, a manufacturer or fabricator of a product or part should be diligent and thorough when being presented with an exemplar or design specifications from a customer. It is incumbent upon the manufacturer to ask questions and act as a reasonably prudent manufacturer. For instance, it would be a good idea to ask what the product will be used for, whether the original manufacturer has design specifications to follow, why they did not get the product or part made by the original manufacturer. If the manufacturer asks no questions and simply builds the exemplar or follows the customer’s design specifications, then if a user or bystander is injured, the manufacturer could be exposed to liability.

Contact Information