Product Liability Update

In Pounders v. Enserch E&C, Inc., decided on August 21, 2013, the Arizona Supreme Court gave a fresh examination to the application of choice of law principles to product liability lawsuits, in particular actions involving long-latency diseases.  The Court ruled that, even though Plaintiff resided in Arizona and his injury became manifest in that state, the conflicting law of New Mexico should govern the claims because the injury-producing conduct occurred within New Mexico.  In so ruling, the Court recognized that the state in which the claimed tortious conduct took place may have a greater interest in regulating activities undertaken within that state than the forum state, which is concerned only with ensuring that resident claimants receive proper compensation for their injuries.

To reach its determination, the Court followed the “most significant relationship” choice of law test and balanced the factors underlying that test.  Although previous Arizona choice of law rulings placed considerable weight on the place of the injury, the Pounders Court indicated that the place of injury “is only one factor to consider.” Because the Pounders Plaintiff’s location of injury in Arizona was fortuitous, on the facts of this case that factor “holds little significance in our contacts analysis[.]”  In a long-latency situation where a period of many years separates exposure and manifestation of injury, the Court reasoned, individuals will likely disperse to different regions and may take up residence in virtually any state.  Accordingly, neither the place where the injury became manifest nor Plaintiff’s state of residence deserves substantial weight in evaluating state interests in the choice of law analysis.  On the other hand, the place where the defendant’s conduct allegedly injurious conduct occurred has direct ties to the parties and to the injury and therefore should receive “particular weight.”  Further, the state in which the defendant’s actions occurred has a specific interest in governing conduct that takes place within its borders.

Ultimately, the Court determined that New Mexico, which seeks to encourage business activities in the state by limiting tort liability through operation of a statute of repose, had a greater interest in applying its law to the cause of action than did Arizona, as the place of the plaintiffs’ residence and the fortuitous location of injury manifestation.  Thus, the Pounders holding may signal a new receptiveness in Arizona courts to choice of law arguments urging application of a foreign state’s law in product liability lawsuits arising from actions that took place outside Arizona.