Friday, June 19, 2009

Case Brief: Schall v. Sturm, Ruger Co.

By Brian A. Comer

Today's brief is of Schall v. Sturm, Ruger Co., 278 S.C.646, 300 S.E.2d 735 (1983). This case is most often cited for the rule that a cause of action for strict liability does not exist if a product entered the stream of commerce prior to the enactment of the strict liability statute, which became effective on July 9, 1974.

FACTUAL AND PROCEDURAL BACKGROUND: There were no plaintiff-specific facts in the opinion. Instead, pursuant to Rule 46, Rules of Practice of the South Carolina Supreme Court, the United States District Court for the District of South Carolina certified a question to the South Carolina Supreme Court. 278 S.C. at 647-48, 300 S.E.2d at 735.

CERTIFIED QUESTION: "Does a cause of action in strict liability exist under Section 15-73-10, Code of Laws of South Carolina, 1976, in favor of a party injured after July 9, 1974, by a product that was placed in the stream of commerce prior to codification of Restatement (Second) of Torts Section 402A?" 278 S.C. at 647-48, 300 S.E.2d at 735.

DISPOSITION: "Absent clear legislative direction, and deferring policy determinations to the General Assembly, we find that a cause of action resting upon strict liability under Section 15-73-10, Code, does not exist in South Carolina where a product entering the stream of commerce prior to July 9, 1974 is alleged to have caused injury thereafter." 278 S.C. at 650, 300 S.E.2d at 737.

RULES AND OPINION: Strict liability became the law of South Carolina by the enactment of 1974 Act No. 1184 (effective July 9, 1974). 278 S.C. at 648, 300 S.E.2d at 736. The Act adopted almost verbatim the rule set forth in Restatement (Second) of Torts section 402A, as well as its comments (as its legislative intent). Id. Strict liability was not recognized by South Carolina's common law prior to the Act. Id. Recovery for strict liability does not rest upon any rights or duties that are established by some transaction, as is the case with a breach of warranty lawsuit. Id. It also renders the concept of a duty irrelevant because a party can recover even though a seller "has exercised all possible care in the preparation and sale of his product. . . . " Id. Rather, it is an entirely new cause of action. Id. For this reason, "operative events" (i.e. time of sale, time of injury, etc.) distort the nature of this theory of recovery. Id. at 649, 300 S.E.2d at 726.
Neither conduct nor obligation underlie recovery but rather the combination of a defective product with an instance of causally related injury. Strict liability would be best analogized to a legal status: inchoate at the moment when the product leaves the seller's hands in a defective condition that is unreasonably dangerous, ripe for determination at the instant of injury, and fixed by action and final judgment.

. Therefore, the nature of strict liability precludes the use of time as being dispositive of the issue. Id. at 649-50, 300 S.E.2d at 736-37. Rather, strict liability's policy objectives govern it, and the General Assembly's adoption of strict liability reflects its legislative judgment as to when the theory of recovery should exist. Id. at 650, 300 S.E.2d at 737. Because there is nothing in the Act to provide guidance as to when inchoate strict liability can be deemed to exist, the court follows the "well-settled rule that a statute may not be applied retroactively in the absence of specific provision or clear legislative intent to the contrary." Id.

NOTES: The rule in Schall is important for any older equipment that is still in service. In my own experience, I have noticed that farm machinery can frequently implicate the policies set forth in Schall. A farmer may purchase older equipment because it is sold at a discounted price, refurbish it, use it, and then resell it to another farmer . . . who continues the cycle. I had a case involving a corn picker that was very old, but was still in use despite its age and modifications over the years. Schall was very important to the outcome of that case.

Furthermore, though products that pre-date the 1974 Act cannot be the subject of a strict liability claim, it may also be difficult for a plaintiff to prevail on other products liability theories, as well (i.e., negligence and breach of warranty). Under any theory of recovery in a South Carolina products liability case, the plaintiff has to prove that the product was in "essentially the same condition" at the time of the injury as when it left the control of the defendant. This is likely to be more difficult with an older product that pre-dates the 1974 Act. The product's age, its modification and maintenance over the years, and any mishandling may detract from arguments that is can satisfy the "essentially the same condition" requirement. For more information on this particular element, see "Same Condition."

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