Colorado Case Law Update

Colorado Case Law Update

PRODUCTS LIABILITY – COLORADO SUPREME COURT RULES REGARDING APPROPRIATE TEST TO DETERMINE DEFECTIVE DESIGN

Walker v. Ford Motor Co., 2017 CO 102, 406 P.3d 845 (R’Hrg denied 12/18/17)

Plaintiff motorist brought a products liability action based on strict liability and negligence claims against an automobile manufacturer alleging the driver’s seat was defectively designed. After the trial court instructed the jury to apply either the consumer expectation test or the risk-benefit test to determine whether the seat was defectively designed, the jury returned a verdict in favor of the motorist in the amount of nearly $3 million dollars.

Holding and Reasoning

The Colorado Supreme Court reversed, finding the trial court erroneously instructed the jury to apply either the consumer expectation test of the risk-benefit test. In affirming previous cases holding the risk-benefit test is the proper test in matters involving prescriptions drugs and motorcycles, the Court held an automobile manufacturers design of a driver’s car seat fell squarely within the realm of previous Colorado rulings addressing technical and scientific matters where the risk-benefit test was used as the appropriate test.

The Court reasoned that manufacturers of such complex products such as motor vehicles invariably have greater access than the ordinary consumer to the information necessary in reaching an informed decision concerning the effectiveness and value of potential safety measures. Because of this gap in information between the consumer and manufacturer, the consumer expectation test was inappropriate in the instant case.

WAIVERS – 10TH CIRCUIT UPHOLDS VIABILITY OF RECREATIONAL WAIVER FOR NEGLIGENCE-BASED CLAIMS IN FAVOR OF SKI RESORT

Brigance v. Vail Summit Resorts, Inc., 2018 WL 314942 (Certified for Publication on January 8, 2018.)

Plaintiff, Dr. Teresa Brigance, was injured during a ski lesson at Keystone Mountain Resort when her ski boot became wedged between the ground and the chairlift and she was unable to unload a ski lift. As a result, Dr. Brigance’s femur fractured. Dr. Brigance filed suit against Vail Summit Resorts, Inc. (operator of Keystone Mountain Resort) for (1) negligence, (2) negligence per se, (3) negligent supervision and training, (4) negligence (respondeat superior), (5) negligent hiring, and (6) violation of the Colorado Premises Liability Act, Colo. Rev. Stat. §13-21-115.

After the District Court dismissed Dr. Brigance’s negligence and negligence per se claims pursuant to a Motion to Dismiss, Vail Resorts brought a Motion For Summary Judgment on all remaining claims, alleging Dr. Brigance’s claims were barred as a result of her execution of a waiver signed prior to participating in her ski lesson, as well as the waiver contained on the back of her lift ticket. The District Court granted summary judgment.

Holding and Reasoning

The 10th Circuit Court of Appeals affirmed the District Court’s grant of summary judgment in favor of Vail Resorts. In doing so, the Court explicitly endorsed the previous holding of Espinoza v. Ark. Valley Adventures, LLC (10th Cir. 2016) 809 F.3d 1150, 1152. In Espinoza, the Court opined under Colorado common law, it is long settled that courts will not give effect to contracts purporting to release claims for intentional, knowing, or reckless misconduct. However, claims of negligence are treated differently as long-settled Colorado common law does not prohibit the enforcement of contracts seeking to release claims of negligence. Espinoza, at 1152.

Prior to Espinoza, the Colorado Supreme Court instructed courts to consider four factors when determining the enforceability of releases: (1) the existence of a duty to the public; (2) the nature of the service performed; (3) whether the contract was fairly entered into; and (4) whether the intention of the parties is expressed in clear and unambiguous language. Jones v. Dressel (Colo. 1981) 623 P.2d 370, 376.

In examining the four Jones factors, the Court relied heavily on the recreational nature of the services provided by Vail Resorts. In its holding, the Court noted Colorado’s long-standing relatively permissive public policy towards recreational releases and noted that if more restrictive laws concerning recreational waivers were to be instituted, it would need to come at the hands of the Colorado General Assembly.

PERSONAL JURISDICTION – 10TH CIRCUIT APPLIES “PURPOSEFUL DIRECTION” REQUIREMENT TO FIND STATE OF COLORADO HAS NO PERSONAL JURISDICTION OVER OUT-OF-STATE DEFENDANT

Old Republic Ins. Co. v. Continental Motors, Inc., 877 F.3d 895 (10th Cir. 2017)

After the 2014 crash of an airplane insured by Plaintiff, Old Republic Insurance Company, it brought suit in Colorado District Court against defendant Continental Motors, Inc., an Alabama-based airplane engine manufacturer. The crash resulted in Old Republic paying a claim for $330,000 to the insured/owner of said plane.

As part of its business, Continental Motors allows airplane repair businesses (known as “fixed base operators”) to subscribe to online access of its service manuals for an annual fee. One of Continental Motors’ customers was Arapahoe Aero, a Colorado company servicing the subject plane before it crashed. Continental Motors’ operation of a website and its ongoing business relationship with Arapahoe Aero were the primary, if not sole, bases for Old Republic’s claim that Continental Motors was subject to the jurisdiction of the State of Colorado. The District Court disagreed, and held that Continental Motors was not subject to personal jurisdiction in the State of Colorado.

Holding and Reasoning

The 10th Circuit Court of Appeals affirmed the District Court’s decision holding that Continental Motors did not purposely direct its activities at Colorado residents sufficient to subject it to the personal jurisdiction of the state.

For a court to have jurisdiction over a defendant (including a business entity), a plaintiff must make a showing that defendant has sufficient minimum contacts with the forum state. The minimum contacts test encompasses two distinct requirements: (i) defendant must have “purposefully directed its activities at residents of the forum state,” and (ii) “plaintiff’s injuries must arise out of the defendant’s forum-related activities.” Burger King v. Rudzewicz (1985) 471 U.S. 462, 475.

In analyzing the “purposeful direction” requirement, Court’s are charged with analyzing whether defendant (1) has continuing relationships with the forum state, (2) deliberately exploited the forum state market, and (3) whether defendant’s contacts resulted in harmful effects in the forum state. Burger King, supra, at 472-73.

In affirming the District Court’s decision, the 10th Circuit noted the record supports a showing of only the following contacts: (1) Continental Motors maintained a geographically-neutral website that allowed Colorado-based fixed base operators to access online service manuals; (2) Continental Motors entered into repeated one-year agreements with 20 Colorado-based fixed base operators in the five years preceding the accident; (3) provided ongoing customer support to these agreements with fixed base operators; (4) Continental Motors listed all fixed base operators participating in their support program on its website; (5) it sent an account activation e-mail to anyone setting up a one-year agreement; (6) it earned $5,200 a year from the fixed base operator program; (7) one of the fixed base operators has participated in Continental Motors’ program since 1996; and (8) Arapahoe Aero’s reliance on Continental Motors’ alleged defective, geographically-neutral online content led to the crash at issue.

In sum, these contacts fall short of the showing required under the “purposeful direction” requirement to establish specific jurisdiction over an out-of-state defendant.

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