Ninth Circuit Seeks New York Court of Appeals’ Guidance on Auto Manufacturer Liability for Vehicle Theft

A recent order from the Ninth Circuit Court of Appeals has brought a somewhat novel legal question to the forefront: Do automobile manufacturers owe municipalities a duty of reasonable care in designing, manufacturing, and distributing vehicles to prevent theft?

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The case arises from multidistrict litigation involving several US cities and towns that allege Hyundai and Kia’s failure to include anti-theft technology in certain vehicle models led to a nationwide spike in car thefts and related public safety harms.

The municipalities, including five in New York, claim that the manufacturers’ decision to not install engine immobilizers or similar anti-theft features made their vehicles particularly vulnerable to theft, resulting in significant costs to local governments. The litigation follows a social media trend that exposed the ease of stealing these vehicles, leading to a surge in thefts and associated criminal activity.

At the heart of the case is whether the car manufacturers owed a legal duty to the New York municipalities to prevent these thefts. While New York law provides certain limited exceptions to the general rule that there is no duty to prevent third-party crime, there is no controlling precedent addressing whether any exception applies to extend a duty to municipalities under the present circumstances.

The district court previously allowed the municipalities’ negligence claims to proceed, finding it foreseeable that a manufacturer’s failure to implement anti-theft measures could impose significant burdens on municipalities. The court also weighed public policy considerations, noting the relatively minor burden on manufacturers to install anti-theft technology compared to the substantial harms suffered by municipalities. New York courts, however, unlike many other states, will not create duties based on foreseeability alone but rather based on several factors, including public policy. As a result, the Court of Appeals has rarely created a duty where one has not previously existed.

For businesses, the case underscores the evolving landscape of product liability (and negligence generally) and the potential for expanded duties to non-consumer third parties, such as municipalities to protect them against crimes perpetrated by third parties. Manufacturers should be aware that design decisions, particularly those affecting public safety, may increasingly expose them to liability beyond traditional consumer claims, especially as courts grapple with the societal costs of product misuse.

We will continue to monitor this case closely, as its resolution may influence future risk assessments, product design strategies, and litigation exposure for the entire consumer product industry.

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