Business & Insurance Litigation Newsletter for Indiana

Landmark Decision Provides Product Defendants with Compliance Defense

In Schultz v. Ford Motor Co., 857 N.E.2d 977 (Ind. 2006), the Indiana Supreme Court finally resolved the long standing issue as to whether defendants in product liability cases are entitled to instruct the jury regarding the product's compliance with governmental regulations. Indiana's Product Liability Act, I.C. §34-20-5-1, provides that "there is a rebuttable presumption that the product...was not defective and that the manufacturer...was not negligent" if the product at issue "complied with applicable codes, standards, regulations, or specifications established, adopted or promulgated, or approved by the United States or by Indiana." Plaintiffs have argued that since this provision establishes a rebuttable presumption, it is only applicable during the summary judgment phase, and by contrast, at trial, once the plaintiff has produced some evidence to rebut the presumption, then the jury should not be instructed on compliance. The Indiana Court of Appeals and several trial courts had agreed with plaintiff's position, which as noted by the Indiana Supreme Court, is logical. However, in reading the provision of the Indiana Product Liability Act together with Indiana Evidence Rule 301, which was recently modified to state that a presumption "shall have continuing effect even though contrary evidence is received," the Indiana Supreme Court held that the spirit of the code and rules of evidence required a jury instruction regarding a product's compliance with governmental regulations. The court reasoned that while the provision used the word "presumption," what was really intended was a permissible inference. Thus, in product liability actions, jurors should be instructed that they may infer that a product is not defective if it complies with state or federal regulations. This is a significant victory for product liability defendants, as jurors tend to find evidence of governmental compliance to be extremely persuasive.