Civil Practice & Remedies Code § 82.003 – Liability of Nonmanufacturing Sellers

Civil Practice & Remedies Code § 82.003 Summary

This Texas statute, known as the “nonmanufacturing seller statute,” significantly limits the situations in which a seller who did not manufacture a product can be held liable for harm caused by that product in a personal injury claim. Generally, a retailer, distributor, or any other seller who simply sold a product, but did not make it, is not responsible for injuries caused by its defects. However, the law provides seven specific exceptions where such a seller *can* be held liable. These exceptions include instances where the seller participated in the product’s design, altered or modified it, improperly installed it, controlled an inadequate warning label, made an incorrect factual representation that the claimant relied upon, or actually knew the product was defective when sold. Additionally, a nonmanufacturing seller can be held liable if the product’s actual manufacturer is either insolvent (bankrupt) or cannot be sued in Texas courts. This section does not apply if other specific laws, like those governing motor vehicle dealers, cover the liability.

Purpose of Civil Practice & Remedies Code § 82.003

The legislative intent behind this section of the Civil Practice and Remedies Code is to provide a layer of protection for “nonmanufacturing sellers” – entities such as retailers, wholesalers, and distributors – from products liability lawsuits in Texas. Before this statute, these sellers could be held strictly liable for defects in products they merely sold, even if they had no involvement in the product’s design, manufacturing, or warning labels, and had no knowledge of any defect. This situation often placed an undue burden on businesses that were essentially conduits for products, leading to potentially unfair litigation and financial strain.

The statute addresses the problem by shifting the primary responsibility for product defects to the party most capable of preventing them: the manufacturer. By requiring claimants to prove specific fault or unique circumstances (like manufacturer unavailability) on the part of the nonmanufacturing seller, the law encourages direct litigation against the product’s maker. This framework aims to streamline products liability claims, reduce the financial risk for Texas businesses that are not involved in product creation, and ensure that accountability ultimately rests with the source of the defect, while still providing avenues for injured consumers to seek recourse when the manufacturer is out of reach or the seller played an active role in the harm.

Real-World Example of Civil Practice & Remedies Code § 82.003

Imagine a scenario where Sarah purchases a new electric bicycle from “Pedal Power,” a local bicycle shop. The bicycle was manufactured by “Speedster Bikes, Inc.” Several weeks later, while Sarah is riding, the bicycle’s battery pack suddenly catches fire due to a manufacturing defect, causing Sarah to suffer severe burns.

Sarah decides to sue Pedal Power for her injuries. Under Civil Practice & Remedies Code § 82.003, Pedal Power, as a nonmanufacturing seller, is generally protected from liability. Sarah would need to prove one of the specific exceptions to hold Pedal Power accountable:

• No General Liability: If Pedal Power simply sold the bicycle in its original packaging from Speedster Bikes, Inc., without any modifications, and had no knowledge of the battery defect, Sarah’s claim against Pedal Power would likely fail under the general rule of § 82.003. She would be directed to sue Speedster Bikes, Inc., the manufacturer.
• Exception Example (Alteration): If, however, Pedal Power had customized Sarah’s bike by installing a different, non-standard battery pack (not from Speedster Bikes) at her request, and that specific installation or the non-standard battery pack caused the fire, then Pedal Power could be liable under subsection (a)(2) for altering the product.
• Exception Example (Knowledge of Defect): Alternatively, if Pedal Power had received multiple complaints about battery fires from other Speedster Bikes customers before selling Sarah her bicycle, and thus “actually knew of a defect” at the time of sale, Sarah could potentially hold them liable under subsection (a)(6).
• Exception Example (Manufacturer Unavailability): If Sarah discovers that Speedster Bikes, Inc. has declared bankruptcy and is insolvent (subsection (a)(7)(A)), or if Speedster Bikes, Inc. is an overseas company that cannot be legally served or compelled to appear in a Texas court (subsection (a)(7)(B)), then Sarah could sue Pedal Power, even if Pedal Power had no other direct fault.

This example illustrates how the statute shields nonmanufacturing sellers unless they actively contributed to the defect, knew about it, or the manufacturer is simply unreachable.

Related Statutes

Several other statutes in Texas law are closely related to Civil Practice & Remedies Code § 82.003, providing context, definitions, and avenues for indemnity within products liability actions:

• Civil Practice & Remedies Code § 82.001 – Definitions: This section is crucial as it defines key terms used throughout Chapter 82, including “claimant,” “manufacturer,” “product,” and “seller.” Understanding these definitions is essential for applying § 82.003 correctly.
• Civil Practice & Remedies Code § 82.002 – Indemnity: This highly relevant statute allows a seller who is held liable for a product defect (when they are not the manufacturer) to seek indemnity (reimbursement) from the product’s manufacturer. This provision reinforces the legislative intent of § 82.003 by ensuring that ultimate financial responsibility typically falls on the manufacturer, even if a seller is initially found liable under one of the exceptions.
• Civil Practice & Remedies Code Chapter 82 – Products Liability (Generally): Section 82.003 is part of this larger chapter, which establishes the general framework for products liability claims in Texas, including the types of defects (manufacturing, design, warning) that can lead to liability.
• Chapter 2301, Occupations Code – Motor Vehicle Dealers: Subsection (b) of § 82.003 explicitly states that this section does not apply where liability is governed by Chapter 2301 of the Occupations Code, which contains specific rules for motor vehicle manufacturers and sellers. In cases of conflict, Chapter 2301 takes precedence, indicating a specific legislative carve-out for the automotive industry.

Case Law Interpreting Civil Practice & Remedies Code § 82.003

Several Texas appellate courts have interpreted and applied Civil Practice & Remedies Code § 82.003, shedding light on its scope and the application of its exceptions:

• In Fresh Cut, Inc. v. Fazli, 137 S.W.3d 733 (Tex. App.—Dallas 2004), *rev’d in part on other grounds*, 170 S.W.3d 601 (Tex. 2005), the Dallas Court of Appeals discussed the statute’s intent to protect innocent sellers and clarified when a seller might be considered a “manufacturer” for the purposes of products liability. The Texas Supreme Court later addressed the standard for “manufacturer” in that case, but the appellate court’s discussion of the general nonmanufacturing seller protection remains pertinent.
• The application of the “inadequate warning or instruction” exception (subsection (a)(4)) was considered in Simmons v. F. Hoffman-La Roche, Ltd., 334 S.W.3d 30 (Tex. App.—Dallas 2009, pet. dism’d), where the court examined the level of “substantial control” a seller must exercise over a warning for this exception to apply.
• The “actual knowledge of a defect” exception (subsection (a)(6)) was addressed in Conklin v. Taser Intern., Inc., 335 S.W.3d 342 (Tex. App.—Dallas 2010, pet. denied), where the court analyzed what constitutes “actual knowledge” by a nonmanufacturing seller and the causal link required between that knowledge and the claimant’s harm.
• The jurisdictional exception (subsection (a)(7)(B)) was examined in In re Bridgestone Americas Tire Operations, LLC, 410 S.W.3d 446 (Tex. App.—Houston [1st Dist.] 2013, orig. proceeding), where the court considered the process and evidence required to establish that a manufacturer is not subject to the court’s jurisdiction for the purposes of holding a nonmanufacturing seller liable.

These cases illustrate the courts’ careful consideration of the specific conditions under which a nonmanufacturing seller may lose the protection offered by this statute.

Why Civil Practice & Remedies Code § 82.003 Matters in Personal Injury Litigation

Civil Practice & Remedies Code § 82.003 profoundly impacts personal injury litigation in Texas, particularly in cases involving defective products. This statute shapes strategy for both plaintiffs and defendants, making it a critical piece of law for anyone involved in products liability claims.

For Plaintiffs and their Attorneys:
This provision means that simply suing the store where a defective product was purchased is often not enough. Plaintiffs must thoroughly investigate to determine if the actual manufacturer is solvent and subject to Texas jurisdiction. If so, the primary target of the lawsuit will usually be the manufacturer. If the manufacturer is unreachable or bankrupt, or if the seller actively participated in creating the defect or failed in one of the specific ways outlined in the statute, then the plaintiff’s attorney can pursue the nonmanufacturing seller. This requires meticulous discovery to uncover any evidence that fits one of the seven exceptions, making the initial investigation phase crucial.

For Defendants (Nonmanufacturing Sellers) and their Attorneys:
For retailers, distributors, and other sellers, § 82.003 provides a robust defense. If they can demonstrate that they merely sold a product without involvement in its design, manufacture, or modification, and without actual knowledge of a defect, they can often seek early dismissal from a lawsuit. This protection shields many Texas businesses from undue liability. However, sellers must also be aware of the exceptions. If they alter products, make specific claims, provide warnings, or become aware of defects, they can lose this protection. Furthermore, even if initially found liable under an exception, § 82.002 often allows them to seek indemnity from the manufacturer, reinforcing the intent to place ultimate liability on the party responsible for the defect.

Overall Relevance:
The statute ensures that Texas products liability law focuses accountability on the most appropriate party – typically the product’s manufacturer – while still offering recourse for consumers when a seller’s actions contributed to the harm or when the manufacturer is unavailable. It balances consumer protection with a desire to avoid burdening businesses that are simply points of sale. Understanding § 82.003 is paramount for anyone navigating a products liability claim in Texas, influencing everything from initial case assessment to trial strategy and potential settlement negotiations.