Company Seeks to Avoid Liability for Defective Gas Cans in Georgia Federal Court

Manufacturers, and the stores that sell their goods, know that they have a legal duty not to offer the public unsafe products with no warning. When an unsafe products slips through, there are laws that hold these companies legally and financially accountable for the injuries that result. However, our Atlanta injury lawyers understand that these companies often try to escape accountability for the harms that their products cause.

For example, according to recent news accounts, a company called Blitz USA Inc, the makers of defective plastic gasoline cans, and Wal-Mart Stores Inc (where the defective gasoline cans were sold) are trying to use Blitz’s bankruptcy filings to avoid further product liability lawsuits.

At one point Blitz held 70 percent of the US market of gas cans. The main reason that it was forced into bankruptcy was because the company was hemorrhaging money from 36 product liability lawsuits for harm caused by the cans. The defective gas cans have caused severe damage to people who unsuspectingly suffered severe burns, usually from explosions. The company, based out of Oklahoma, has an insurance policy, but there is a $1 million deductible before the insurance kicks in. The court papers filed by Blitz in November stated that they had already spent $30 million defending these products liability suits stemming from the defective gas cans, which was a “debilitating expense for the company. The company also estimated it owed $3.5 million in lawyer’s fees over defending these lawsuits.

Blitz filed under Chapter 11 last November, which temporarily stopped all lawsuits against it. Recently, attorneys for Blitz asked the judge at the US Bankruptcy Court in Wilmington, Delaware, to halt all related lawsuits against Wal-Mart as the retailer selling the allegedly defective goods. Wal-Mart is Blitz’s most important customer, so the company wants to protect Wal-Mart and is worried about the increasing number of these products liability suits. The bankruptcy judge refused the request to halt the lawsuits against Wal-Mart.

Since the Delaware judge refused, Blitz has been trying to staunch the flood of lawsuits in individual districts. A US District Court judge in Illinois followed the Delaware judge’s lead and refused to stop related lawsuits against Wal-Mart, the biggest retailer in the world. Most recently in our own state of Georgia, on February 28, US District Court Judge Hugh Lawson in Valdosta repeated the refusal to stop lawsuits against Wal-Mart for the defective gas cans. Judge Lawson held that the law allows for halting Georgia product liability lawsuits against non-bankrupt third parties (in this case, Wal-Mart) only when there is a “close identity between the bankrupt party and the third party or if allowing the lawsuits to go forward would irreparably harm the bankrupted party. Otherwise, Judge Lawson stated, the lawsuits should be stopped only in a case of clear hardship, and he determined that Blitz’s indemnification of Wal-Mart was insufficient to meet this legal standard.

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