Yanmar America Corp. v. Nichols – Gray Market Product Liability

The Alabama Supreme Court recently weighed a product liability lawsuit stemming from injury by dangerous industrial equipment that had been purchased on the so-called “gray market.” In Yanmar America Corp. v. Nichols, the state high court reversed a trial judgment in favor of plaintiff, who had suffered amputation of his right arm and serious hip injuries when equipment overturned. tractorred

The outcome is not all that surprising, given that the Arkansas Supreme Court decided similarly when Yanmar Co. Ltd. v. Slater was before it as a case of national first impression.

In both cases, courts held that the Japanese manufacturer and its U.S. subsidiary should not be held liable because it owed no duty to the decedent, largely because of the way the product came to be on U.S. soil in the first place.

Our Collier County injury lawyers understand these cases establish that products purchased on the “gray market” may not need to adhere to the same kinds of strict standards as those purchased on the regular market.

Before delving into the individual facts of these cases, it’s important to establish what it means to have a “gray product” or for a good to have been sold in a “gray market.” A “gray market” is one where the manufacturer did not intend the product to be sold.

These cases involved the use of Japanese tractors that were manufactured in the late 1970s. These pieces of equipment were intended for market in Japan, specifically for use in the flat, rice paddy terrain that is common in many regions there. However, a number of these tractors were shipped to the U.S. in the early 2000s, and sold to industrial equipment stores.

The tractors are not equipped with rollover protection structures required for most other tractors sold in the U.S., as it is anticipated they may be used in relatively hilly terrain on occasion.

In the Nichols case, plaintiff’s brother purchased the tractor from a local industrial equipment supply store. It came with a front-end loader and a “brush hog,” which they used to help mow areas of a neighbor’s field. The plaintiff said he was looking forward while operating the tractor when the vehicle hit a slope, causing it to roll over. Plaintiff suffered severe injuries.

He’d had more than three decades of experience operating tractors and other heavy equipment, and he’d operated this one nearly two dozen times prior to this accident.

Prior to the accident, plaintiff’s brother obtained an English-language version of the operating manual, which did explain the product was “gray market,” originally not intended for sale in the U.S., but had been purchased used by a dealer or broker and brought to the U.S. There was also information in the manual regarding the risk of roll-overs and other stability issues. However, plaintiff’s brother did not share this information with him or offer him a review of the manual.

Plaintiff sued the manufacturer’s American counterpart for failure to warn. A jury awarded plaintiff nearly $1 million in damages. However, the Alabama Supreme Court reversed, asserting plaintiff did not establish by way of substantial evidence that the subsidiary increased the risk of harm by not warning users of their products being sold on the gray market. As a result, his failure to warn claim was dismissed.

If you have been injured in an accident, contact the Hollander Law Firm at 888-751-7777 for a free and confidential consultation. There is no fee unless we win.

Additional Resources:

Yanmar America Corp. v. Nichols, Sept. 30, 2014, Alabama Supreme Court

More Blog Entries:

R. L. Haines Construction v. Santamaria – $2M Construction Accident Verdict Reversed, Sept. 26, 2014, Naples Product Liability Lawyer Blog