Chen v. L.A. Truck Centers, LLC
7 Cal. App. 5th 757
| Cal. Ct. App. | 2017Background
- Ten Chinese tourists on a California-organized tour were injured or killed in a 2010 Arizona bus rollover; driver’s excessive speed caused the accident and passengers lacked seat belts.
- The tour bus was built by Starcraft in Indiana; Buswest (L.A. Truck Centers), a California dealer, ordered the bus without passenger seat belts, picked it up in Indiana, kept it in California inventory, then sold it to a California tour company (delivery in Nevada/Las Vegas).
- Plaintiffs sued Starcraft (manufacturer), Buswest (dealer), TBE (tour operator), and the driver; TBE and the driver settled for $5 million; Starcraft later settled for $3.25 million, leaving Buswest as sole defendant.
- The trial court initially applied Indiana products liability law (more defendant-favorable) after a pretrial choice-of-law ruling; plaintiffs sought reconsideration after Starcraft’s settlement but the court denied it and the case proceeded under Indiana law.
- Under Indiana law (which incorporates a negligence standard into design-defect claims), the jury found Buswest not liable; plaintiffs appealed, arguing the court should have applied California strict products liability law.
- The Court of Appeal reversed, holding the trial court erred in applying Indiana law after Starcraft’s dismissal and that California law governs the products liability issues between the Chinese plaintiffs and California dealer Buswest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court should reconsider its pretrial choice-of-law ruling after the Indiana manufacturer (Starcraft) settled | Choice-of-law rulings made pretrial are in limine and subject to reconsideration when facts change; Starcraft’s dismissal removed Indiana’s interest | Original ruling was final; allowing reconsideration would enable gamesmanship and prejudice defendants who relied on the ruling | Court held reconsideration was required; the original in limine choice-of-law ruling was not immune to change when a party altering interests was dismissed |
| Which state’s products liability law applies (California vs. Indiana) | California law should apply because Buswest is a California dealer who placed the bus into the California market; California’s strict-liability policy interests (safety incentives, cost allocation) are implicated | Indiana law applies because the bus was manufactured in Indiana and Indiana has an interest protecting its manufacturers and business-friendly rules | Court held California law applies: Indiana has no meaningful interest after Starcraft’s settlement, while California’s products-liability interests are strongly implicated |
| Whether Indiana’s seller-negligence requirement (design-defect must show lack of reasonable care) governs plaintiff’s claim | California permits strict products liability and risk-benefit design-defect analysis even if the seller exercised reasonable care; that doctrine should govern here | Indiana’s statute requires plaintiffs to prove the seller failed to exercise reasonable care in design, which is more favorable to defendants | Court held Indiana’s negligence-based rule does not apply; California’s strict liability/risk-benefit framework governs |
| Prejudice from applying the wrong law (whether error was harmless) | Applying California law would likely permit a risk-benefit instruction and could have led to a plaintiffs’ verdict given the evidence that inexpensive lap belts would have prevented ejections | Even under California law, industry custom and compliance with standards would be admissible and could still favor defendants; two jurors favored plaintiffs under Indiana instructions | Court held the error was prejudicial: reasonably probable that a properly instructed jury under California law would have reached a more favorable result for plaintiffs |
Key Cases Cited
- Reich v. Purcell, 67 Cal.2d 551 (Cal. 1967) (adoption of governmental interest test for choice of law)
- Hurtado v. Superior Court, 11 Cal.3d 574 (Cal. 1974) (framework for governmental interests and analysis of wrongful-death choice-of-law)
- Barker v. Lull Engineering Co., 20 Cal.3d 413 (Cal. 1978) (establishing California’s risk-benefit test and strict products liability principles)
- McCann v. Foster Wheeler LLC, 48 Cal.4th 68 (Cal. 2010) (state interest in applying business-friendly law to out-of-state companies doing business within the state)
- Soule v. General Motors Corp., 8 Cal.4th 548 (Cal. 1994) (standard for reversal when an error of state law is shown to be prejudicial)