When a defective product fails and causes property damage, many jurisdictions permit recovery against all entities in the chain of distribution. They are deemed jointly and severally liable.  This means that any defendant found to be even 1% at fault is ultimately liable for 100% of the damages. This ensures that an injured party is not left uncompensated if one or more defendants are insolvent, out of business, or cannot be identified or severed process.

Arizona, however, departed from joint and several liability for product defect claims in State Farm Insurance Companies v. Premier Manufactured Systems, 217 Ariz. 222 (2007). The Arizona Supreme Court sought to reconcile strict product liability principles with Arizona’s Uniform Contribution Among Tortfeasors Act’s fault-allocation requirements. The court limited traditional chain-of-commerce strict liability by reintroducing party-specific fault considerations: “Fault is thus found because of what each tortfeasor did on its own—distribute a defective product—rather than because of its relationship to other wrongdoers … each is liable solely for its own conduct.” A subsequent Arizona Court of Appeals decision, Grubb v. Do It Best Corp., 230 Ariz. 1 (App. 2012), emphasized that plaintiffs should identify domestic importers, distributors, or sellers and establish liability based on their “participatory connection” with the manufacturer that originated the defect.

This change in Arizona law has created difficulties in recovering for product defect claims, especially  if foreign manufacturers cannot be brought into U.S. courts. Often the product itself, while sold by a U.S. based retailer, is manufactured by a foreign company overseas. In Arizona, the retailer defendants may file notices of non-parties at fault which allow the jury to allocate fault to non-parties, thereby potentially reducing a plaintiff’s damages. For example, if a jury finds that the foreign manufacturer bears a larger percentage of fault for manufacturing the defective product, then the retailer defendants are only liable for whatever percentage fault the jury assigned to them. In fact, a jury could assign 100% of the fault to the foreign manufacturer and the plaintiff could recover nothing.

As a result, Arizona product liability litigation is fact specific. It requires every effort to identify and serve foreign companies around the world. It also requires concerted efforts to identify and prove the specific fault of the retailers and any other domestic defendant within the chain of distribution of the product. In practice, property subrogation outcomes can turn on factors such as the extent of a domestic company’s involvement in product design, the scope and content of its marketing and informational materials, and whether its actions facilitated importation to the United States and what they knew about any defects or problems with the product.

While the doctrine of strict product liable survives in Arizona, liability is not joint and several, thereby making property subrogation recoveries relating to defective products far more difficult in Arizona. Successful product defects claims in Arizona require navigating the State’s fault‑focused product liability framework.

If you have any questions about subrogation recovery, please contact Paul Landis at 480.502.4664 Ext. 4225 or e-mail at plandis@blwmlawfirm.com,  or Lubko Berezowsky at 480.502.4664 Ext. 4216  lberezowsky@blwmlawfirm.com.