DTCI: No New Exception to Product Liability Act

By J.T. Larson and Alexandra Robinson French

The Indiana Products Liability Act (IPLA) includes a 10-year statute of repose, which time-bars claims brought more than 10 years after delivery of the product to the buyer. Until recently, it was an open question of law whether a company refurbishing or repairing a product restarted the statute of repose clock. In March 2020, the Indiana Supreme Court unanimously rejected this proposed exception based on the plain meaning of the statute. The decision provides long-needed clarity on an important legal issue, and also potentially signals a shift on the court back to applying the statute of repose as written.

Supreme Court Applies Plain Meaning of IPLA’s Statute of Repose

Estabrook v. Mazak Corp., 19S-CQ-590, 2020 WL 993422 (Ind. Mar. 2, 2020), confirms that in most product liability cases (i.e., those not involving asbestos products), there exists only one exception to the application of the 10-year repose, for actions accruing “at least eight (8) but less than ten (10) years” after delivery of the product. The court’s unanimous opinion, penned by Justice Geoffrey Slaughter, clarifies the time limitations on product liability cases and underscores the court’s commitment to interpreting statutes based on their plain meaning.

Case Background

The Indiana Supreme Court heard Estabrook on a certified question from the United States District Court for the Northern District of Indiana.

Estabrook filed suit in 2016, alleging that a machine his employer, General Products Corporation, purchased from Mazak Corporation injured him in 2014. Mazak argued that Estabrook’s claims were time-barred, because Estabrook sued 13 years after the product was delivered new in 2003. Plaintiff sought to employ a judicially created exception to the IPLA’s statute of repose based on Mazak’s post-sale repairs to the machine.

Finding no controlling case law on point, the district court sought the Court’s ruling on the following question: “Can the statute of repose codified in Ind. Code § 34-20-3-1(b) be extended by post-sale repair/refurbishment/reconstruction of the product, and if so, what is the appropriate test to be used to determine whether the seller has done sufficient work to trigger the extension?”

History of Plaintiff’s Proposed Exception

Plaintiff asked the court to adopt an exception to the IPLA statute of repose that would restart the clock at the time a manufacturer refurbished, repaired, or reconstructed a product. Plaintiff’s theory relied on a line of cases that suggested, but did not specifically hold, that an exception for repaired or refurbished products might exist.

These cases began with the Southern District of Indiana’s 1983 decision in Denu v. Western Gear Corp., 581 F. Supp. 7 (S.D. Ind. 1983). There, an employee injured his foot while cleaning a press his employer purchased after the defendant manufacturer reconditioned it and resold it to the employer. The press had been placed into the stream of commerce more than 10 years prior, but the district court noted that refurbishing the product and reselling it may restart the statutory limitations clock. However, such an inquiry would involve disputed material facts, so defendant’s motion for summary judgment was denied.

The Seventh Circuit made a similar statement in Richardson v. Gallo Equip. Co., 990 F.2d 330 (7th Cir. 1993). There, an injured worker argued his suit against an equipment manufacturer was timely because the manufacturer modified the equipment and therefore reset the 10-year repose period. The Seventh Circuit upheld dismissal, noting the Denu exception did not apply to modifications that do not extend the useful life of the product.

The Indiana Court of Appeals found Denu instructive in Wenger v. Weldy, 605 N.E.2d 796, 798 (Ind. Ct. App. 1993). There, a retired farm equipment dealer modified a hay baler hitch in 1975 and later leased it to his son. The modified hitch separated during use, and the plaintiff (who was working with the dealer’s son) was struck in the head with a separated part. The appellate court affirmed summary judgment, finding that even if the proposed exception to the statute of repose applied, plaintiff’s claims would still be time-barred, since the 1988 injury occurred 13 years after the modification.

Finally, in Florian v. GATX Rail Corp., 930 N.E.2d 1190 (Ind. Ct. App. 2010), the Court of Appeals again suggested an exception to the statute of repose for refurbished or modified products but held that repainting a train car did not fall within the exception, since repainting did not constitute a “new component.” The Florian decision was the closest that an Indiana state court even came to fully embracing the proposed exception.

The Court Rejects the Exception

Despite the history of plaintiff’s proposed exception, the court roundly rejected the plaintiff’s argument, noting plaintiff’s “approach would oblige courts to craft a test for assessing when a manufacturer’s modification to its product is sufficiently different in degree that the result is a new product, different in kind from its predecessor. We decline Estabrook’s invitation.” Estabrook, Slip Op. at 5.

The court’s opinion rests on two principles of statutory interpretation: (1) the “plain meaning” principle and (2) the principle against “surplusage.” The former relies on a textual interpretation of the statute, while the latter permits a court to depart from the literal text, but only in order to support the logical or obvious meaning of the law.

Plain Meaning Prevails

Indiana courts interpret statutes “consistent with [their] plain meaning, by giving effect to what the legislature both said and did not say,” Estabrook, Slip Op. at 5 (citing KS&E Sports v. Runnels, 72 N.E.3d 892, 907 (Ind. 2017)). As Justice Slaughter’s opinion aptly notes, the IPLA provides just one exception to the statute of repose, “and it does not mention ‘repair’, refurbishment’, reconstruction’, or any comparable term that would authorize restarting the limitations clock when a manufacturer’s subsequent, post-delivery actions have purportedly transformed the ‘product’ initially delivered.” Id. at 6.

The court’s textual approach emphasizes that the legislature’s statement prevails over persuasive authority, even when that persuasive authority is backed by a public policy interest. See id at 7. The role of the courts as held in KS&E and reaffirmed here in Estabrook, is neither to “applaud the wisdom” nor “condemn [the] folly” of the General Assembly. See id. at 6. Instead, Indiana courts are obliged to interpret the statute before them, without taking a view between competing policy choices.

The Principle against Surplusage Shows That the Legislature Meant “And,” Not “Or”

Although presented only with the question regarding the proposed exception to the statute of repose, the Court went on to address a separate issue of statutory interpretation associated with the IPLA’s statutes of limitations and repose. The IPLA states: “[A] product liability action must be commenced: (1) within two (2) years after the cause of action accrues; or (2) within ten (10) years after the delivery of the product to the initial user or customer.” Ind. Code § 34-20-3-1(b) (emphasis added).

“Or” is disjunctive – and therefore, on its face, the statute allows suit under two separate circumstances: (1) where a plaintiff sues within two years of accrual of her claim; or (2) where a plaintiff sues within 10 years of the delivery of the product. In other words, the second condition would never bar a claim, because a plaintiff could sue within two years of her injury, regardless. Indeed, Estabrook’s suit was brought within two years of his injury (i.e., when his cause of action accrued), but more than 10 years after his employer purchased the machine. So, if the plain meaning principle fully controlled, then Estabrook’s claim would be considered timely.

However, the Court employed the principle against surplusage, stating: the “Court is not bound to blindly give effect to the word ‘or,’ when a disjunctive reading of the terms of the statute would render meaningless a portion of the statute.” Estabrook, Slip Op. at 8 (quoting Dague v. Piper Aircraft Corp., 275 Ind. 520, 418 N.E.2d 207 (1981)). Therefore, the principle against surplusage empowers the logical meaning of the statute, although departing from a strict textual reading. Under this principle, the “or” in IPLA’s limitations and repose provision should be read in the conjunctive, because if read disjunctively, the IPLA’s exception for causes of action that accrue more than eight but less than 10 years after delivery of the product would be meaningless. Id.

What Estabrook Can Tell Us about Recent Changes in the Indiana Supreme Court: Contrasting Estabrook with Myers

The Estabrook decision starkly contrasts the Court’s last major decision interpreting and applying the IPLA’s statute of repose. Only a few years ago, in a 3-2 decision, the Court upended established law and held that the statute of repose is inapplicable in asbestos cases. Myers v. Crouse-Hinds Div. of Cooper Indus., Inc., 53 N.E.3d 1160, 1162 (Ind. 2016). In doing so, the Court overturned AlliedSignal, Inc. v. Ott, 785 N.E.2d 1068, 1069 (Ind. 2003), a decision that rejected the Myers’ plaintiffs argument that the statute of repose violated the Indiana Constitution’s equal privileges and immunities clause by differentiating between asbestos plaintiffs. The Myers court also adopted an exception to the statute of repose for “protracted exposures” that predate the amended IPLA. See Covalt v. Carey Canada, Inc., 543 N.E.2d 382, 383 (Ind. 1989). The “protracted exposures” exception effectively destroys the statute of repose in asbestos litigation. This exception to the statute of repose – like the exception proposed in Estabrook – is absent from the IPLA’s text.

The Myers opinion drew strong dissents from Chief Justice Loretta Rush and Justice Mark Massa. The Chief Justice focused her dissent on the Court’s rejection of stare decisis, adopting the same arguments that had been rejected in Ott, and the consequences for the court’s institutional credibility and the rule of law. Justice Massa went further. His dissent also objected to the majority’s rejection of established law and refusal to follow stare decisis. But he saved his harshest critiques for the “protracted exposures” exception, which he described as “particularly disturbing” given the straightforward nature of the statute of repose language. Many commentators, including in this publication, have echoed the dissents’ critiques.

How quickly things change. Only one member of the Myers narrow majority remains on the court (Justice Steven David). Justice Slaughter, the author of Estabrook, was not on the court when Myers was decided, and his 5-0 opinion drew no dissents. The Estabrook court hewed closely to the plain language of the IPLA’s statute of repose and refused to inject its own policy preferences where the Legislature had clearly spoken. Unlike Myers, the Estabrook court’s method of statutory interpretation would seem to leave no room for judicially created exceptions and defers to the Legislature’s policy decisions. As then-Chief Justice Randall Shepard observed more than 30 years ago, the 10-year straightforward statute of repose for product liability claims is “a model of legislative clarity.” Covalt, 543 N.E.2d at 388 (dissenting). It seems that the current court agrees.

Implications for Defense Counsel

Estabrook clarifies the authority and interpretation of statutory limitations and repose periods, which provides numerous signals for Indiana corporations and defense counsel alike.

First, Indiana companies can be assured that their efforts to repair or refurbish a customer’s equipment do not “restart” the limitations clock in Indiana. This may help incentivize repairs or replacement in pre-suit negotiation.

Second, the Indiana Supreme Court’s pronouncement bolsters the effectiveness of the statute of repose on two fronts, both by eliminating a judicially created exception that had gained traction in state and federal court over 37 years, and by affirming that the provision must be read to give the statute of repose effect.

Third, as noted, the case evidences jurisprudential changes in the makeup of court. If the Myers court was willing to disturb established law and rewrite the statute of repose, the Estabrook court clearly was not. It seems that a majority of the Estabrook court strongly disfavors any judicially crafted exceptions to the IPLA’s statute of repose. It may be that in the appropriate case the court may reconsider Myers’ constitutional and statutory holdings and return the statute of repose to its plain meaning.•

J.T. Larson is an associate in the Indianapolis office of Barnes & Thornburg LLP whose practice focuses on medical device and pharmaceutical litigation defense. Alexandra Robinson French is an associate in the Indianapolis office of Barnes & Thornburg LLP whose practice focuses on agriculture and food processing industries and general litigation. Opinions expressed are those of the authors.