In a ruling that may have important implications for future product liability lawsuits, the New York Court of Appeals (the highest court in that state) issued a ruling in Finerty v. ABEX Corp. rejecting a plaintiff’s argument that despite no basis to pierce the corporate veil, a parent business should be liable for a foreign subsidiary because it was the best situated to impose pressure for improved products.
While product distributors have been strictly liable for dangerous product defects on the basis of ability/ duty to exert pressure for safer products, this theory for derivative liability had not been applied before to parent companies of wholly-owned subsidiaries. But with the decision, the New York state’s highest court rejected the idea that a parent company in the U.S. should be considered the “guardian” of the brand globally.
Of course, this is not great news for plaintiff in Finerty, who filed the lawsuit after being diagnosed with mesothelioma as a result of exposure to Ford-manufactured asbestos products in the United Kingdom. However, he is still free to pursue his case against Ford UK, which is the entity alleged to have manufactured, produced, distributed and sold the parts in question. Continue reading