Non-Manufacturing U.S. Distributor May Be Liable For Defective Product Where Owned In Part By Foreign Manufacturer Under North Dakota Law

The U.S. District Court for the District of Minnesota confronted the extent to which non-manufacturing sellers can be liable under North Dakota law in a case involving a worker’s injuries sustained when a hose part of a paint-spray system failed while painting the inside of a wind turbine tower.  Under a North Dakota law, a non-manufacturing seller is to be dismissed from a case once the product manufacturer is properly identified subject to certain exceptions.  The product in this case was manufactured by a Swiss corporation not a party to the lawsuit.  Although the court found that the purchaser of the hose used in the paint spray system and the installer of the hose into that system should be dismissed because they could not be liable, the court found that a reasonable jury could find that the U.S. distributor for the Swiss manufacturer could be liable because the distributor arguably fell within the definition of “manufacturer” under the North Dakota statute.  The court explained that the manufacturer’s wholly owned subsidiary had an ownership interest in the distributor such that the distributor could be fairly treated as ownership by the manufacturer for purposes of the statute, and that the ownership of the distributor during the relevant time period was “significant.”