Trade Association Tort Liability

Co-written by William S. Defoe

Although trade associations do not manufacture, distribute, or sell products,

such organizations have been targets of product liability litigation. A critical

threshold question in cases against trade associations is whether the

association owed a duty of care to the plaintiff. This issue has become the

subject of a growing body of case law.

Promulgation of Standards

Trade associations, which promulgate standards for the products made by their

member companies, have been sued by plaintiffs claiming that the standards were

inadequate. Traditionally, the key issue in these cases has been whether the

association exercised control over its member companies. The trend in the

earlier cases was to absolve the associations from liability when they did not

have the ability to require the member companies to follow the standards. See,

e.g. Howard v. Poseidon Pools, Inc., 506 N.Y.S.2d 523 (N.Y. App. 1986)

(National Spa and Pool Institute would not be liable for negligence in

promulgating standards because it did not have the authority to control the

manufacturers who produce the swimming pools); Beasock v. Dioguardi

Enterprises, Inc., 494 N.Y.S.2d 974 (N.Y App. 1985) (although standards

promulgated by Tire and Rim Association had become the industry standards,

because the association neither monitored nor mandated the use of its standards

by any manufacturer, it lacked control necessary to impose liability).

The Supreme Court of Alabama departed from previous case law in holding that

a trade association which does not control the actions of its members may

nevertheless owe a duty to the public to exercise reasonable care when it

undertakes to promulgate standards for the needs of the consumer. King v.

National Spa and Pool Institute, Inc., 570 So. 2d 612, 618 (Ala. 1990). In

the aftermath of widespread roof failures in Hurricane Andrew, a federal court

in Florida followed King in holding that the American Plywood Association had a

duty to homeowners to exercise due care in promulgating construction standards. Prudential

Property and Casualty Insurance Company v. American Plywood Association,

1994 WL 463527 (S.D. Fla. 1994).

Product Certification

Some trade associations go beyond the development of product standards; they

examine products and certify that they meet established standards. Courts have

held such associations liable if a "certified" product proves

defective and causes injury. See, e.g., FNS Mortgage...