Andrew Torres Amanda Torres, Husband and Wife Walter Torres Debra Torres v. Goodyear Tire & Rubber Company, Inc., an Ohio Corporation

901 F.2d 750, 14 U.S.P.Q. 2d (BNA) 1521, 1990 U.S. App. LEXIS 5442, 1990 WL 41699

• Court: Court of Appeals for the Ninth Circuit
• Decided: April 13, 1990
• Docket: 87-2062
• Status: Published

Opinions

CYNTHIA HOLCOMB HALL, Circuit Judge:

Because we set forth the factual details of this litigation in Torres v. Goodyear Tire & Rubber Co., Inc., 867 F.2d 1234, 1235-36 (9th Cir.1989) [hereinafter Torres /], we merely summarize them here. Plaintiffs-appellants the Torreses sued to recover for personal injuries suffered as a result of an automobile accident. They asserted four theories under which they believe defendant-appellee Goodyear Tire & Rubber Company (“Goodyear”) should be held liable for their injuries: (1) the “apparent manufacturer” doctrine; (2) principles of apparent agency or agency by estoppel; (3) the Arizona law of manufacturers’ warranties; and (4) the “enterprise theory” of strict products liability.

The district court exercised diversity jurisdiction pursuant to 28 U.S.C. § 1332(a)(1). The district court granted summary judgment in favor of Goodyear, concluding that “neither the Arizona courts nor the Arizona legislature have accepted the expansive liability doctrines argued by the plaintiffs.”

In Torres I, 857 F.2d at 1236-37, we affirmed summary judgment in favor of Goodyear on appellants’ first three theories of liability. We then certified to the Arizona Supreme Court the remaining issue of whether appellants could rely on an “enterprise theory” to hold Goodyear strictly liable for their injuries. Id. at 1239.

The Arizona Supreme Court concluded that Arizona’s common law and statutes would countenance the imposition of strict liability on trademark licensors significantly involved in the overall process by which the product reaches consumers. Answer to Certified Questions, 786 P.2d 939, 945 (Ariz.1990) [hereinafter Torres II]. Because we find Goodyear’s involvement significant, we reverse and remand to the district court.

I

Analyzing state common law, the Arizona Supreme Court noted that an underlying objective of strict liability doctrine is to shift the risk of loss to those “in the chain of distribution of defective, unreasonably dangerous goods.” Id. at 942. The court eschewed semantic niceties about the terms “seller” or “manufacturer” in Comment f to § 402A of the Restatement (Second) of Torts,¹ and instead focused on the degree of control a trademark licensor exercised over the design, manufacture, and sale of the defective product. Id. at 943-44. It concluded:

[A]s a common law matter, trademark licensors who significantly participate in the overall process by which the product reaches its consumers, and who have the right to control the incidents of manufacture or distribution, are subject to liability under the rules of Restatement § 402A as adopted and applied in Arizona. Like lessors of products, they are the functional equivalent of manufacturers and sellers.

Id. at 946.

There is no question that Goodyear’s involvement in the overall process by which the tires in question reached the Torres’ fits the above description. See Torres, 857 F.2d at 1235-36. Accordingly, the district court erred in ruling that Arizona common law rendered Restatement § 402A inapplicable.

II

Turning to state statutory law, the Arizona Supreme Court acknowledged that there were no legislative provisions explicitly addressing the question of whether a trademark licensor should qualify as a “manufacturer” or “seller” for purposes of strict liability. Torres II, at 947. However, it also noted that the broad definition of “manufacturer” in Ariz.Rev.Stat.Ann. § 12-681(1)² could encompass certain trademark licensors. The court concluded:

Surely the entity that dictates and controls the design, specifications for formulation, technique for production, quality of production, marketing, advertising, sale and warranty of a product can qualify as one “who otherwise prepares the product ‘prior to its sale.’ ”

Id.

Because Goodyear’s involvement was extensive, albeit indirect, see Torres, 857 F.2d at 1235-36, it fell well within the Arizona Supreme Court’s interpretation of § 12-681. Thus, the district court’s interpretation of Arizona statutory law was also erroneous.

Ill

For these reasons, we REVERSE the district court’s remaining order in this case that the Torres could not sue Goodyear under an “enterprise liability” theory of strict liability. We REMAND to the district court for further proceedings consistent with this opinion. REVERSED and REMANDED.

1 . Arizona adopted § 402A in O.S. Stapley Co. v. Miller, 103 Ariz. 556, 559-60, 447 P.2d 248, 251-52 (1968). It also uses the terms "seller" and "manufacturer” in applying § 402A. See id. 103 Ariz. at 559, 447 P.2d at 251.

2 . Section 12-681(1) defines a manufacturer as one "who designs, assembles, fabricates, produces, constructs or otherwise prepares a product or component part of the product prior to its sale to a user or consumer ...”

[Footnote 1 is omitted]