Farmers Insurance Company, Inc. v. Big Lots, Inc.

Filing 25

OPINION AND ORDER by Chief Judge Gregory K Frizzell ; granting in part and denying in part 20 Motion to Dismiss (hbo, Dpty Clk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
FARMERS INSURANCE COMPANY, INC.,
a/s/o DARRELL THOMPSON AND LISA
THOMPSON,
Plaintiff,
v.
BIG LOTS, INC., an Ohio corporation,
Defendant.

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Case No. 15-CV-97-GKF-PJC

OPINION AND ORDER
Before the court is the Motion to Dismiss under Rule 12(b)(6) [Dkt. #20] of defendant
Big Lots, Inc. (“Big Lots”). This case arises from a fire caused by a pre-lit Christmas tree sold
by Big Lots to plaintiffs Darrell and Lisa Thompson (“the Thompsons”). Plaintiff Farmers
Insurance Company (“Farmers”), as subrogee of the Thompsons, brought this action against Big
Lots alleging claims of negligence, product liability, and breach of warranty. [Dkt. #2].
Similarly, the Thompsons, as plaintiff interveners, filed a separate complaint against Big Lots,
asserting the same facts and claims. [Dkt. #8]. Big Lots now moves to dismiss the plaintiffs’
complaints for failure to state a claim.
I.

The Allegations

Prior to December 13, 2013, the Thompsons obtained a pre-lit Christmas tree that had
been marketed and sold by Big Lots and set up the tree in their home. On December 13, 2013,
Lisa Thompson returned home after visiting her parents, turned on the tree, and went outside.
After coming back inside, she heard a popping noise coming from the tree and, immediately
thereafter, saw fire erupting from the middle of the tree, engulfing the entire tree in flames. She
attempted to extinguish the fire, but was overcome by smoke and lost consciousness. The

Broken Arrow Police Department rescued Ms. Thompson. She was taken by ambulance to the
hospital where she was treated for internal and external burns and smoke inhalation. In addition
to Ms. Thompson’s injuries, the Thompsons’ home and associated personal property were
severely damaged by smoke and fire.
During this time, the Thompsons’ home was insured under a policy issued by Farmers,
which provided coverage for damages to their home and personal property. Following the fire,
Farmers reimbursed the Thompsons for damages to their home and personal property.
II.

Discussion

In considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the
court determines whether the complaint contains “enough facts to state a claim to relief that is
plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). The
plausibility requirement “does not impose a probability requirement at the pleading stage; it
simply calls for enough fact to raise a reasonable expectation that discovery will reveal
evidence” of the conduct necessary to make out the claim. Id. at 556. “[A] plaintiff’s obligation
to provide the grounds of his entitle[ment] to relief requires more than labels and conclusions,
and a formulaic recitation of the elements of a cause of action will not do.” Id. at 555
(quotations omitted). The court “must determine whether the complaint sufficiently alleges facts
supporting all the elements necessary to establish an entitlement to relief under the legal theory
proposed.” Lane v. Simon, 495 F.3d 1182, 1186 (10th Cir. 2007).
Here, Big Lots contends that the plaintiffs have failed to allege sufficient facts to state a
claim for product liability, negligence, or breach of warranty. The court considers these claims
in turn.

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A. Product Liability
In Kirkland v. General Motors Corp., 521 P.2d 1353, 1361 (Okla.1974), the Oklahoma
Supreme Court recognized a cause of action for manufacturer’s product liability against
“processors, assemblers, and all other persons who are similarly situated in processing a
distribution.” Under this cause of action, “the seller of a product in a defective condition, which
is unreasonably dangerous to the user or consumer, is strictly liable for the physical harm to the
person or property caused by the defect.” Allenberg v. Bentley Hedges Travel Serv., Inc., 22
P.3d 223, 227 (Okla. 2001). Since Kirkland, Oklahoma courts have applied manufacturers’
product liability to various members of the manufacturer’s marketing chain, including retailers,
dealers or distributor, importers and lessors. Id. at 227–28; Honeywell v. GADA Builders, Inc.,
271 P.3d 88, 94-95 (Okla. Civ. App. 2011) (“Middlemen in the chain of distribution are subject
to strict products liability.”).
In 2014, Oklahoma enacted a law limiting the liability of non-manufacturing product
sellers:
No product liability action may be asserted against a product seller other than the
manufacturer, unless:
1. The product seller exercised substantial control over the aspect of the
design, testing, manufacture, packaging, or labeling of the product that
caused the alleged harm for which recovery of damages is sought; or
2. The product seller altered or modified the product, and the alteration or
modification was a substantial factor in causing the harm for which
recovery of damages is sought; or
3. The product seller made an express warranty as to such product
independent of any express warranty made by a manufacturer as to such
product, such product failed to conform to the product seller's warranty,
and the failure of such product to conform to the warranty caused the harm
complained of by the claimant; or
4. The claimant is unable, despite a good-faith exercise of due diligence, to
identify the manufacturer of the product; or
5. The manufacturer is not subject to service of process under the laws of the
state; or
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6. The court determines that the claimant would be unable to enforce a
judgment against the manufacturer.
76 O.S. § 57.2(E). The statute became effective November 1, 2014.
Big Lots contends that 76 O.S. § 57.2(E) is applicable here and that the plaintiffs’
complaints fail to plead facts sufficient to invoke any of the statute’s exceptions. In
response, plaintiffs submit that § 57.2(E) is a substantive rule and thus can only apply to
claims accruing after November 1, 2014. Because their claim accrued in December 2013,
plaintiffs maintain that the statute does not apply to their case.
“The general rule in Oklahoma is that statutes, and amendments, are to be construed to
operate only prospectively unless the Legislature clearly expresses a contrary intent. However,
… remedial or procedural statutes which do not create, enlarge, diminish, or destroy vested
rights are generally held to operate retrospectively.” Welch v. Armer, 776 P.2d 847, 850 (Okla.
1989). “In case of doubt, the doubt should be resolved against retrospective effect.” Multiple
Injury Trust Fund v. Pullum, 37 P.3d 899, 906 (Okla. 2001).
The Oklahoma Constitution places further limitations on the retroactive effect of newly
enacted statutes. Under Article 5, § 54 of the Oklahoma Constitution,1 “[s]tatutes which affect
parties’ substantive rights and liabilities are shielded from amendatory change.” Shepard v.
Oklahoma Dep’t of Corr., 345 P.3d 377, 388 (Okla. 2015). Thus, even if “a statute directs that it

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Article 5, § 54 of the Oklahoma Constitution states, “The repeal of a statute shall not revive a
statute previously repealed by such statute, nor shall such repeal affect any accrued right, or
penalty incurred, or proceeding begun by virtue of such repealed statute.” Although this
provision reads as protecting only accrued rights derived from repealed statutes, the Oklahoma
Supreme Court has interpreted this provision as protected accrued rights created either by statute
or common law. See Ricks Exploration Co. v. Oklahoma Water Res. Bd., 695 P.2d 498, 504
(Okla. 1984); Oklahoma Water Res. Bd. v. Cent. Oklahoma Master Conservancy Dist., 464 P.2d
748, 755 (Okla. 1968); see also Resolution Trust Corp. v. Wright, 868 F. Supp. 301, 304 n.2
(W.D. Okla. 1993).
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be applied retroactively,” a court must “disregard that statutory directive and apply the law
prospectively if the law affects the substantive rights of the parties.” Hillcrest Med. Ctr. v.
Powell, 295 P.3d 13, 16 (Okla. 2013) (emphasis omitted). In particular, § 54 protects “accrued
right[s].” Okla. Const. art V, § 54. “An accrued right within the meaning of § 54 is a matured
cause of action or legal authority to demand redress.” City Of Tahlequah v. Lake Reg’l Elec. Coop, Inc., 30 Fed. App’x 839, 841 (10th Cir. 2002); accord Cole v. Silverado Foods, Inc., 78 P.3d
542, 547 n.24 (Okla. 2003). A statute “affects the parties’ substantive rights and liabilities”—
and thus is limited to prospective application—if it “increases or diminishes the amount of
recoverable compensation or alters the elements of [a] claim or defense by imposition of new
conditions.” Cole, 78 P.3d at 548; accord Hillcrest Med. Ctr., 295 P.3d at 16.
Here, 76 O.S. § 57.2(E) does not contain any language indicating that it should operate
retroactively. Thus, unless it constitutes a “remedial or procedural [reform] which do[es] not
create, enlarge, diminish, or destroy vested rights,” Welch, 776 P.2d at 850, the statute must be
limited to prospective application only, see id.; Hillcrest Med. Ctr., 295 P.3d at 16. Section
57.3(E) alters the elements of a product liability action as against non-manufacturing product
sellers. In particular, the statute adds a new element to the cause of action, thereby making it
more difficult for plaintiffs to recover against such defendants.2 Such a reform “cannot be
viewed as solely a remedial or procedural change and [thus] cannot be retrospectively applied.”
See Sudbury v. Deterding, 19 P.3d 856, 860 (Okla. 2001); see also Am. Airlines Inc. v. Crabb,
221 P.3d 1289, 1292-93 (Okla. 2009) (holding that a statute which “add[ed] a new element that a
claimant must prove” to prevail on a workers’ compensation claim “intrude[d] on substantive

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Any of the six exceptions listed in 76 O.S. § 57.2(E) would add a new element to a product
liability action as against a non-manufacturing product seller.
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rights” and thus could not be applied retroactively); Cole, 78 P.3d at 548 (holding that a statute
which “refashion[ed a statutory defense] into a different and more extensive liability-defeating
mechanism” “represented more than a merely procedural reform” and thus could not be applied
retroactively). Thus, Big Lots’ motion to dismiss as to plaintiffs’ product liability claim is
denied.
B. Negligence
The court next addresses plaintiffs’ negligence claims. In Oklahoma, “[a] product
liability action may be based on a theory of negligence liability or strict products liability.”
Honeywell, 271 P.3d at 96; Braswell v. Cincinnati Inc., 731 F.3d 1081, 1093 n.4 (10th Cir. 2013)
(“Notwithstanding Kirkland, Oklahoma has not eliminated a freestanding negligence claim for
defective products.”). “Under Oklahoma law, the three essential elements of a claim of
negligence are: (1) a duty owed by the defendant to protect the plaintiff from injury, (2) a failure
to properly perform that duty, and (3) the plaintiff’s injury being proximately caused by the
defendant’s breach.” Gaines-Tabb v. ICI Explosives, USA, Inc., 160 F.3d 613, 620 (10th Cir.
1998) (quoting Lockhart v. Loosen, 943 P.2d 1074, 1079 (Okla.1997)). “Whether a duty of care
exists in a particular case is a question of law for the court to determine.” Swift v. Serv. Chem.,
Inc., 310 P.3d 1127, 1133 (Okla. Civ. App. 2013). In Oklahoma, a seller or supplier of a product
who
in [the] exercise of ordinary care knows or should know [that if the product] is
defective it will be dangerous to all who come in contact therewith, … owes a
duty to ascertain the condition of the product by exercising reasonable care to see
that it is safe for the use for which it is intended. A vendor who fails to exercise
ordinary care to ascertain the true condition and safety of the instrumentality, and
chooses to sell without notice or warning of the dangerous characteristics and
dangers inherent in use thereof is liable for injuries proximately caused by use of
the instrumentality.

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Bower v. Corbell, 408 P.2d 307, 315-16 (Okla. 1965); see also Swift, 310 P.3d at 1133 (“Under a
negligence theory of recovery, a seller or supplier of a product has a duty to use reasonable care
to provide adequate warnings or instructions to avoid injury to a foreseeable plaintiff.”);
Restatement (Second) of Torts § 401 (1965) (setting forth a standard substantially similar to
Corbell). “In addition, although a seller generally does not have a duty to inspect products, such
a duty may arise if it knows or has reason to know that the product is or is likely to be
dangerous.” Crispin Co. v. Petrotub-S.A., No. CIV-05-159-C, 2006 WL 2812535, at *7 (W.D.
Okla. Sept. 28, 2006) (citing Restatement (Second) of Torts § 402 (1965)).
In 2014, Oklahoma enacted a law codifying the elements of a negligence claim against
non-manufacturing product sellers:
A product seller other than a manufacturer is liable to a claimant on the basis of
negligence if the claimant establishes that:
1. The product seller sold the product involved in such action;
2. The product seller did not exercise reasonable care:
a. in assembling, inspecting, or maintaining such product, or
b. in passing on warnings or instructions from such product's
manufacturer about the dangers and proper use of such
product; and
3. Such failure to exercise reasonable care was a proximate cause of the
harm complained of by the claimant.
76 O.S. § 57.2(G). This provision, like the previous, became effective November 1, 2014.
Big Lots contends that the plaintiffs’ complaints fail to allege sufficient facts to state a
negligence claim under Oklahoma law. In response, plaintiffs submit that § 57.2(G) is a
substantive rule and thus cannot be applied retroactively.
Here, plaintiffs’ description of Big Lots negligence consists of the following: “BIG
LOTS breached its duty to act with reasonable care in the marketing and sale of the pre-lit tree.”
[Dkt. #2, p. 3; Dkt. #8, p. 3]. Whether analyzed under § 57.2(G) or the law in effect at the time

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their claim accrued, this allegation fails to state a claim.3 Plaintiffs do not allege any facts
showing that Big Lots knew or, in the exercise of reasonable care, should have known that the
pre-lit tree was defective or dangerous. Plaintiffs, for example, do not allege that Big Lots failed
to properly inspect the tree or to otherwise warn about known or reasonably discoverable defects.
Further, plaintiffs do not allege any facts showing that Big Lots’ alleged negligence was the
proximate cause of their injury. For these reasons, Big Lots’ motion to dismiss is granted with
regard to plaintiffs’ negligence claim.
C. Breach of Warranty
Finally, Big Lots moves to dismiss plaintiffs’ breach of warranty claims. In Kirkland,
521 P.2d at 1365, the Oklahoma Supreme Court held that “[b]reach of implied warranty [was] no
longer an appropriate remedy for recovery in products liability actions except as provided in the
Uniform Commercial Code.” Section 2-314 of Oklahoma’s version of the Uniform Commercial
Code (“U.C.C.”) provides that “[u]nless excluded or modified …, a warranty that the goods shall
be merchantable is implied in a contract for their sale if the seller is a merchant with respect to
goods of that kind.” 12A O.S. § 2-314(1). To qualify as “merchantable,” a good must be “fit for
the ordinary purposes for which such goods are used.” Id. § 2-314(2)(c).
Big Lots contends that plaintiffs’ breach of warranty claims must be dismissed “because
no such separate cause of action exists in the State of Oklahoma,” [Dkt. #20, p. 5], and because
“[p]laintiffs’ current pleadings do not allege a cause of action under [the] Oklahoma Uniform
Commercial Code.” [Dkt. #24, p. 7]. In response, plaintiffs contend that their complaints allege

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Notably, plaintiffs do not explain how § 57.2(G) altered the law as it stood at the time their
claims arose. As relevant here, the statute merely appears to codify the common law of
negligence with regard to non-manufacturing product sellers.
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sufficient factual matter to state a claim under 12A O.S. § 2-314, regardless of whether their
pleadings specifically mention that provision.
Plaintiffs’ complaints allege (1) that Big Lots marketed and sold the pre-lit tree, (2) that
Big Lots was in the business of marketing and selling several products, including pre-lit trees, (3)
that Big Lots warranted that the tree was merchantable, (4) that the Thompsons set up the tree in
their home and plugged it in and that shortly thereafter the tree ignited, and (5) that as a result
plaintiffs suffered physical injuries and property damage. Although their complaints do not
specifically reference § 2-314, these allegations are sufficient to state a plausible claim for
breach of implied warranty under that provision. See Collins Radio Co. of Dallas, Tex. v. Bell,
623 P.2d 1039, 1053 (Okla. Civ. App. 1980) (“To recover for a breach of the implied warranty of
merchantability a plaintiff must prove: (1) a sale of goods by a merchant, (2) the goods were not
‘merchantable’ at the time of sale, (3) injury and damage to the plaintiff or his property
proximately caused by the defective nature of the goods, and (4) appropriate notice of breach to
the seller.”); Gonzalez v. Pepsico, Inc., 489 F. Supp. 2d 1233, 1246 (D. Kan. 2007) (“To state a
claim for breach of the implied warranty of merchantability, plaintiffs must allege that the goods
were defective, that the defect was present when the goods left the [merchant’s] control and that
the defect caused plaintiffs’ injuries.”); cf. Townsend v. Benjamin Enterprises, Inc., 679 F.3d 41,
57 (2d Cir. 2012) (“The failure in a complaint to cite a statute, or to cite the correct one, in no
way affects the merits of a claim. Factual allegations alone are what matters.” (quoting Albert v.
Carovano, 851 F.2d 561, 571 n.3 (2d Cir. 1988) (en banc)). Accordingly, Big Lots’ motion to
dismiss plaintiffs’ breach of warranty claims is denied.
III.

Conclusion

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Wherefore, Big Lots’ motion to dismiss [Dkt. #20] is granted in part and denied in part.
The motion is granted with respect to plaintiffs’ negligence claims and denied as to plaintiffs’
product liability and breach of implied warranty of merchantability claims.
ENTERED this 13th day of October, 2015.

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