In North Carolina, a seller who is not involved in the manufacture of a product can often use the “sealed container” as a defense to liability. North Carolina’s product liability act broadly defines the term “manufacturer” as one “who designs, assembles, fabricates, produces, constructs, or otherwise prepares a product or component part of a product prior to its sale. If a retailer, wholesaler, or distributor did not engage in those actions, N.C.G.S. 99B-2 can be a complete defense to liability.
That statute removes all liability (except actions for breach of express warranty) if the seller acquired and sold the product in either a sealed container, or under circumstances where it was given no reasonable opportunity to inspect the product in a manner that would have revealed the alleged defect. More importantly, a non-manufacturing seller acting as a mere conduit for a product doesn’t even have a duty to inspect or test products made by reputable manufacturers, unless the seller has reason to know of the product’s dangerous propensities. Nicholson v. American Safety Utility Corp., 124 N.C.App. 59, 476 S.E.2d 672 (1996).
However, there are exceptions to the successful assertion of the “sealed container” defense, including:
1) The seller damaged or mishandled the product;
2) The manufacturer is not subject to the jurisdiction of North Carolina courts;
3) The manufacturer has been judicially declared insolvent; or
4) The seller or distributor is deemed to be an “apparent manufacturer”.
With respect to the last exception, North Carolina has adopted §400 of the Restatement (Second) of Torts and ruled that if a seller holds itself out to the public as the manufacturer of a product, it may not be protected by the “sealed container” defense. For example, if the seller’s name is affixed to the product or to its warranty, and the seller fails to clearly disclose that it is not the actual manufacturer, the jury may consider whether the seller should be deemed to be the apparent manufacturer. See Warzynski v. Empire Comfort Systems, Inc., 102 N.C.App. 222, 401 S.E.2d 801 (1991),
However, under the right factual circumstances, the “sealed container” defense is a useful and winning defense for sellers of consumer products in North Carolina.
