Facts
- Linda Two Two and Patricia Fodge worked in a federal office building in Portland, Oregon.
- In separate incidents in 2008, the same elevator allegedly dropped unexpectedly and stopped abruptly, causing physical injuries.
- The federal government contracted with Fujitec America, Inc. to modernize the elevator, including installation of new components and a new control system.
- The modernization contract was lump-sum, did not require separate billing for parts, and allowed the government to supply parts itself.
- After modernization, a government contracting officer sent a letter praising Fujitec for “providing the best possible products” at cost-effective prices.
- Plaintiffs sued Fujitec for (1) negligence in designing, installing, and maintaining the elevator and (2) strict products liability based on an allegedly defective and unreasonably dangerous elevator.
Issues
- Whether summary judgment was improper on plaintiffs’ negligence claim because the record permitted a reasonable inference that Fujitec’s design, installation, or maintenance caused the elevator malfunction and resulting injuries.
- Whether Fujitec could be treated as a “seller” or “supplier” in the chain of distribution for strict products liability when it performed a lump-sum modernization service and did not separately sell or bill for component parts.
Decision
- The Oregon Supreme Court affirmed in part and reversed in part the Court of Appeals.
- The court reversed summary judgment for Fujitec on the negligence claim, holding that plaintiffs produced evidence creating a triable issue of fact.
- The court affirmed summary judgment for Fujitec on the strict products liability claim, holding that Fujitec was not a seller or supplier of products for purposes of strict liability.
- The case was remanded for further proceedings on negligence.
Legal Principles
- On summary judgment, evidence and reasonable inferences must be viewed in the light most favorable to the nonmoving party; judgment is proper only if no genuine issue of material fact exists and the movant is entitled to judgment as a matter of law.
- Strict products liability applies to entities in the business of selling or supplying products in the chain of distribution, not to service providers whose transactions are primarily for services, even if tangible components are installed incidentally.
- A lump-sum modernization contract that does not itemize or separately charge for parts, and that allows the customer to supply parts, supports treating the contractor as a service provider rather than a product seller.
- Service providers may still be liable in negligence for careless design, installation, or maintenance of equipment, independent of strict products liability doctrines.
- General statements in a commendation letter referring to “products” do not, by themselves, convert a service transaction into a sale placing the contractor in the distribution chain for strict liability purposes.
Conclusion
The court allowed plaintiffs’ negligence claim to proceed because the record supported a reasonable inference of negligent modernization or maintenance, but it rejected strict products liability because the modernization arrangement was a service contract that did not make Fujitec a product seller or supplier in the chain of distribution.