“Sealed Container” Defense does not Apply to UCC Breach of Warranty Claims

July 29, 2009

Alabama appellate courts have long held that the “sealed container” defense applies to retailers and distributors sued on products liability claims under the Alabama Extended Manufacturer’s Liability Doctrine (AEMLD).  Pursuant to Atkins v. American Motor Corp., 335 So.2d 134 (Ala. 1976), a retailer or distributor may avoid liability under the AEMLD if it shows:

…that he is in the business of either distributing or processing for distribution finished products; he received a product already in a defective condition; he did not contribute to this defective condition; he had neither knowledge of the defective condition, nor an opportunity to inspect the product which was superior to the knowledge or opportunity of the consumer.

Plaintiffs, in two separate actions, sued defendants, alleging claims under the AEMLD and for breach of the Uniform Commercial Code (UCC) implied warranties of merchantability and fitness for a particular purpose, in an action involving injuries from their ingestion of diatary suppliments.  Defendants removed the cases to federal court, contending that the retailer, the only Alabama defendant, was fraudulently joined.

The federal court certified a question to the Alabama Supreme Court, inquiring whether the sealed container defense applied to the UCC warranty claims.  The Court provided a lengthy response, and in a 5-4 opinion, held that is was inapplicable to the UCC claims.  Sparks v. Total Body Essential Nutrition, Inc., No. 1071708.

The Court discussed the history of the UCC and its predecessor, the Uniform Sales Act.  In Bradford v. Moore Bros. Feed & Grocery, 268 Ala. 217, 105 So.2d 825 (1958), the Supreme Court held that the sealed container defense was applicable to claims brought under the Uniform Sales Act.  However, the Court recognized that that when the UCC was enacted, it did not specifically include any reference to the defense.  In holding that the defense did not apply to the UCC claims, the Court stated “we view this silence as an abrogation of the common-law defense, rather that permission to carry it forward,” and that the question was “a policy matter best left to the wisdom of the legislature.”

This opinion is troublesome for product liability defendants.  Often, claims under the AEMLD are joined with UCC warranty claims. Although the sealed container defense remains applicable to the AEMLD claim, the Sparks opinion clearly holds that it does not apply to the warranty claims, thus preventing summary judgment on those claims.  Moreover, the facts presents in Sparks are quite common. Frequently, the retailer will be the only local defendant, and its inclusion in the suit will destroy diversity, rendering the action nonremovable to federal court. Hopefully, the Alabama legislature will accept the invitation of the Court, and make the sealed container defense applicable to warranty claims under the UCC.