Owens & Minor, Inc. v. Ansell Healthcare Products, Inc.

251 S.W.3d 481, 51 Tex. Sup. Ct. J. 643, 2008 Tex. LEXIS 236, 2008 WL 821035
CourtTexas Supreme Court
DecidedMarch 28, 2008
Docket06-0322
StatusPublished
Cited by43 cases

This text of 251 S.W.3d 481 (Owens & Minor, Inc. v. Ansell Healthcare Products, Inc.) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Owens & Minor, Inc. v. Ansell Healthcare Products, Inc., 251 S.W.3d 481, 51 Tex. Sup. Ct. J. 643, 2008 Tex. LEXIS 236, 2008 WL 821035 (Tex. 2008).

Opinions

[482]*482Justice GREEN

delivered the opinion of the Court, in which

Chief Justice JEFFERSON, Justice HECHT, Justice WAINWRIGHT, and Justice BRISTER joined.

Section 82.002 of the Texas Civil Practice and Remedies Code entitles an innocent seller to seek indemnity for litigation costs from the manufacturer of a product alleged to be defective. The United States Court of Appeals for the Fifth Circuit certified to this Court the following question concerning the scope of the manufacturer’s indemnity obligation under Section 82.002:

When a distributor sued in a products liability action seeks indemnification from less than all of the manufacturers implicated in the case, does a manufacturer fulfill its obligation under Texas Civil Practice and Remedies § 82.002 by offering indemnification and defense for only the portion of the distributor’s defense concerning the sale or alleged sale of that specific manufacturer’s product, or must the manufacturer indemnify and defend the distributor against all claims and then seek contribution from the remaining manufacturers?

Burden v. Johnson & Johnson Med., 447 F.3d 371, 375 (5th Cir.2006). In Ansell Healthcare Products, Inc. v. Owens & Minor, Inc., the court of appeals concluded that the Section 82.002 indemnity duty is not fulfilled by a manufacturer’s “offer to defend” only its own products. 189 S.W.3d 889, 896-98 (Tex.App.-Texarkana 2006, pet. filed). We disagree. Section 82.002 does not require a manufacturer to indemnify a distributor against claims involving products other manufacturers released into the stream of commerce. Therefore, a manufacturer that offers to defend or indemnify a distributor for claims relating only to the sale or alleged sale of that specific manufacturer’s product fulfills its obligation under Section 82.002.

I

Owens & Minor, Inc. and Owens & Minor Medical, Inc. (Owens, collectively) distributed latex gloves manufactured by other companies. In January 2000, Kathy Burden and members of her family filed a products liability action in Texas state court. The plaintiffs alleged that Burden had developed a Type I systemic allergy from defective latex gloves manufactured and sold by Owens, Ansell Healthcare Products, Inc., Becton, Dickinson and Company, and more than thirty other manufacturers and sellers of latex gloves. It is undisputed that Owens was an innocent seller in the chain of distribution of these products and that Ansell and Becton manufacture latex gloves.

Owens rejected offers of defense and indemnity from both Ansell and Becton and chose instead to hire outside counsel. In March 2000, Owens requested that An-' sell, Becton, and eleven other latex glove manufacturers defend it pursuant to Section 82.002 of the Texas Civil Practice and Remedies Code. Ansell responded with an offer to defend Owens. The offer limited Ansell’s defense to gloves it manufactured, and Owens rejected it. Becton had made a similar offer to defend Owens in a latex glove case in July 1995. The offer said that Becton would “defend, indemnify and hold harmless” Owens against claims involving gloves it manufactured until it was determined that the plaintiff was not exposed to its gloves. Owens likewise declined Becton’s offer. Four years later, Becton made a second offer to “defend and indemnify” Owens in all latex glove cases on the same terms as the original offer. But Owens again rejected Becton’s offer.

On May 3, 2000, the underlying case was removed to the United States District Court for the Southern District of Texas, which transferred the case to the United States District Court for the Eastern Dis[483]*483trict of Pennsylvania as part of a broader multi-district litigation process. Because the plaintiffs were unable to show that Owens sold any of the latex gloves that allegedly injured Burden, they nonsuited their claims against Owens. The case was then returned to the original federal district court in Texas, and thereafter the plaintiffs voluntarily dismissed the case against all defendants for the same or similar reasons. No court found any party acted negligently or caused Burden’s alleged injuries. Owens filed cross-claims for indemnity against Ansell, Becton, Johnson & Johnson Medical, Inc., and Smith & Nephew, Inc. Owens eventually settled with Johnson & Johnson and Smith & Newphew, but it did not settle with Ansell or Becton. Ansell and Becton moved for summary judgment on the adequacy of their offers to defend and indemnify Owens. The district court granted the motion and terminated the case, holding that Ansell and Becton had satisfied the Section 82.002 requirements when they offered to defend Owens against all claims involving their own products. Burden v. Johnson & Johnson Med., Inc., 332 F.Supp.2d 1028, 1029 (S.D.Tex.2004). Owens appealed to the United States Court of Appeals for the Fifth Circuit, which in turn certified to this Court the question before us. Burden, 447 F.3d at 875.

Analysis

Our focus when construing a statute is the intent of the Legislature. City of LaPorte v. Barfield, 898 S.W.2d 288, 292 (Tex.1995). To give effect to the Legislature’s intent, we rely on “the plain and common meaning of the statute’s words.” Liberty Mut. Ins. Co. v. Garrison Contractors, Inc., 966 S.W.2d 482, 484 (Tex.1998). “[I]t is a fair assumption that the Legislature tries to say what it means, and therefore the words it chooses should be the surest guide to legislative intent.” Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 866 (Tex.1999).

At common law, a seller was not entitled to indemnification from a manufacturer unless and until there was a judicial finding of negligence on the part of the manufacturer. Humana Hosp. Corp. v. Am. Med. Sys., Inc., 785 S.W.2d 144, 145 (Tex.1990). In 1993, the Texas Legislature supplemented the common law by enacting Section 82.002,1 which allows an [484]*484innocent seller to seek indemnification from the manufacturer of an allegedly defective product. Act of Feb. 23, 1993, 73d Leg., R. S., ch. 5, § 1,1993 Tex. Gen. Laws 13, 13; Tex. Civ. PRAC. & Rem.Code § 82.002(a); see also Fitzgerald, 996 S.W.2d at 866 (“The duty [to indemnify] is a new, distinct statutory duty....”). Thus, under Section 82.002, the manufacturer is now liable to the seller regardless of how the injury action is resolved. § 82.002(e)(1). The manufacturer’s duty begins when it is given notice that a seller has been sued. See Meritor Auto., Inc. v. Ruan Leasing Co., 44 S.W.3d 86, 89 (Tex.2001) (stating that the plaintiffs pleadings are sufficient to invoke the manufacturer’s duty under Section 82.002).

Owens argues that Section 82.002 requires manufacturers to indemnify and hold harmless innocent sellers from all losses arising out of a products liability action. Owens thus contends that it may impose liability upon any manufacturer for Owens’s costs in defending a products liability action, even one that did not make the product.

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Bluebook (online)
251 S.W.3d 481, 51 Tex. Sup. Ct. J. 643, 2008 Tex. LEXIS 236, 2008 WL 821035, Counsel Stack Legal Research, https://law.counselstack.com/opinion/owens-minor-inc-v-ansell-healthcare-products-inc-tex-2008.