• October 31, 2012

It is coincidental that the New York Times had a lengthy article about the terrible dangers (and deaths) that occur on U.S. farms inside silos this week and, this past week, Minnesota Court of Appeals Judge Margaret H. Chutich authored an opinion reversing a trial court win for a Minnesota silo maker in its attempt to avoid liability for a silo-related injury that occurred in Montana.

“Choice of law” is one of the more confusing aspects of U.S. legal practice from the lay-person’s perspective.  The puzzle of what law a Minnesota court should apply in a case brought by a Tennessee corporation with principal place of business in South Dakota against a Minnesota company based on a claim for indemnity arising from an accident that occurred in Montana even tripped up the Stearns County District Court, the Court of Appeals held.

The appellate court opinion does not tell us much about the “exploding hatch atop the [Belgrade] silo” that appears to have injured Judith Ficek in 2006.  We only learn that the silo was made made of concrete, it was made by Belgrade Steel Tank Company, a Minnesota based company, and it ended up being bought by a company, Envirocon, in Montana.

But Belgrade sold the silo to Kolberg who sold the silo to Hall-Perry who sold the silo to Envirocon.  So it should be unsurprising that Kolberg, when it got sued, would take the position that any liability that it would have should be on Belgrade’s tab rather than Kolbergs.  After all, it would seem that Kolberg was little more than a detour as the silo made its way from manufacturer to end-user.

Under Minnesota law, a downstream seller in a distribution chain, such as Kolberg, may obtain indemnity from the product’s manufacturer when the seller is sued in strict product liability because the product was defectively designed or manufactured….

Under Montana law, Belgrade’s settlement

with Ficek extinguished its duty to indemnify Kolberg.

So, the Court of Appeals had to decided whether to apply Minnesota or Montana law.  I believe it correctly applied Minnesota law.  Here we have a Minnesota company asking a Minnesota court to apply Montana law so that it can avoid liability under Minnesota law.  This seems hard to swallow when our touchstones to decide such questions are (1) “predictiability of result,” (2) “maintenance of interstate order,” (3) “simplification of the judicial task,” (4) “advancement of the forum’s governmental interest,” and, finally, (5) “application of the better rule of law.”

And, moreover, if there are challenging and dangerous aspects of silo design, plainly it is the silo manufacturer rather than some downstream commercial intermediary, who is in the best position to minimize the risk and price the product to hedge against whatever risk there must be (a.k.a., in the best position to buy insurance to cover the risk).

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