Limitation of Liability under the LPLA: Can Internet Retailers be Manufacturers?

It seems intuitive that people have an obligation to avoid potentially harmful conditions that are open and obvious. Nevertheless, treatment of open and obvious conditions in Louisiana law has proved tricky because many cases did not apply a uniform analytical framework. In Farrell v. Circle K Stores, Inc. and the City of Pineville, the Louisiana Supreme Court recently offered needed guidance on the appropriate analysis for open and obvious conditions.

The plaintiff stopped at a gas station and decided to walk her dog in a nearby grassy area. To get to the grassy area, Farrell had to cross a pool of water that was “approximately the length of a tractor-trailer.” Farrell attempted to jump across the narrowest part of the pool, but slipped and fell. She sued for damages arising from her injuries. The defendants moved for summary judgment on the grounds that the condition was open and obvious. The trial court and court of appeal denied the defendants’ motion. However, the Louisiana Supreme Court reviewed the matter and reversed.

In finding that the condition was open and obvious, the court began its analysis by outlining the elements that a plaintiff must establish to recover for damage arising from a defect under Louisiana Civil Code articles 2315, 2316, 2317 and 2317.1:

• That the defendant owed plaintiff a duty to conform its conduct to a specific standard;
• That the defendant breached the duty owed;
• That the defendant’s conduct was the cause-in-fact of the plaintiff’s injuries;
• That the defendant’s conduct was the legal cause of the plaintiff’s injuries; and,
• That the plaintiff suffered damages.

The court also highlighted the requirement under La. R.S. 2317.1 that plaintiff show the defendant knew or should have known of the condition before the injury occurred.

The court noted that some courts had assessed whether a condition was open and obvious in the context of whether the defendant owed the plaintiff a duty, while other courts had assessed whether a condition was open and obvious in the context of whether the defendant had breached the duty that was owed. In Farrell, the court found a duty was owed under the code articles referenced above. It clarified that whether a condition was open and obvious should be considered during analysis of whether the duty was breached, pursuant to Louisiana’s “risk/utility” test. This test requires consideration of whether the condition presented an unreasonable risk of harm, which considers whether the condition had any social utility; the likelihood and magnitude of harm the condition presented; the cost of preventing the harm; and the nature of the plaintiff’s conduct, including whether plaintiff’s conduct was socially useful or inherently dangerous.

Specifically, whether a condition is open and obvious should be considered in determining the likelihood of harm and magnitude of harm to an objectively reasonable person. The court further advised that the specific nature of the condition should be considered, such as its location and size. In contrast, a plaintiff’s particular and subjective knowledge of the condition is not relevant in determining whether defendant has breached a duty.

The Farrell court applied this analysis to the facts. It found that the pool served no useful purpose. No evidence existed regarding the cost to eliminate the risk. With respect to Farrell’s conduct, the court found that walking a dog was not dangerous by nature and may have an important social function, but this did not weigh heavily in the analysis. However, with respect to whether the condition as open and obvious, the court considered the location of the pool at the edge of the parking lot, the size of the pool, and the fact that it was apparent to all who encountered it. Thus, the condition was open and obvious, and the likelihood of and magnitude of the harm was minimal.

The court concluded that these factors collectively showed the condition was not unreasonably dangerous. The defendants did not breach their duty to plaintiff, and summary judgment should have issued for the defendants. In so holding, the Supreme Court provided clarifying guidance on analysis of open and obvious conditions under Louisiana law.

Case Reference:

Farrell v. Circle K Stores, Inc. and the City of Pineville, 2022-000849 (La. 3/17/23), --- So.3d ----, 2023 WL 2550503.

Louisiana is a fact-pleading state. Accordingly, Louisiana law requires that a petition contain “a short, clear and concise statement of all causes of action and material facts arising out of the transaction or occurrence that is the subject matter of the litigation.” See La. C.C.P. art. 891. Generally, the pleader must state what act or omission he will establish at trial. Legal conclusions disguised as factual allegations do not meet the pleading standards required by Louisiana law.

This concept recently was examined in Henderson v. State Farm Mut. Auto. Ins. Co., 2021-0654 (La. App. 4 Cir. 12/17/21), 2021 WL 7162224, where the court considered bad faith allegations the plaintiff tried to assert against an insurer in his petition for damages. At the time of the underlying accident, the plaintiff was a passenger in a Lyft vehicle that was struck by an unknown driver. Steadfast Insurance Company was the Lyft driver’s insurer, and the plaintiff named Steadfast as a defendant to recover damages under its policy.

The plaintiff later amended his petition to seek uninsured/underinsured motorist benefits under the Steadfast policy. He also sought penalties from Steadfast for alleged bad faith and dealing in its insurance practices. In turn, Steadfast filed an exception of no cause of action, arguing that plaintiff’s petition only contained legal conclusions and not specific facts, which were insufficient to support a cause of action. The trial court overruled the exception.

The Fourth Circuit Court of Appeal reversed the decision. Plaintiff’s amended petition alleged that Steadfast “refused to deal with him in good faith, including but not limited to, refusing to issue unconditional (McDill) tenders and taking actions in violation of La. R.S. 22:1892 and La. R.S. 22:1973.” The plaintiff also generally alleged the insurer acted “arbitrarily, capriciously and without probable cause” in its failure to pay money under its policy.

The Court noted that the plaintiff’s allegations were legal conclusions asserted as facts, which could not be considered as well-pleaded factual allegations for purposes of a no cause of action. Importantly, the court reiterated that a court may not consider legal conclusions “clothed as facts,” citing Hooks v. Treasurer, 06-0541, p. 10 (La. App. 1 Cir. 5/4/07), 961 So.2d 425, 431-32. Accordingly, the plaintiff’s allegations, absent additional information, were insufficient to state a cause of action. The plaintiff failed to state specific actions or omissions that would be established at trial. Hence, he failed to state a cause of action.

During week seven of the 2025 Regular Session, Louisiana Governor Jeff Landry signed the following bills into law:

HB450 legislatively overrules Housley v. Cerise, 579 So. 2d 973 (La. 1991) (which provided a presumption of medical causation where plaintiff had no pre-existing history) and became effective upon signature by the governor. The Act has prospective application only and shall not apply to causes of action arising prior to the effective date.

HB434 modifies “No Pay/No Play” and bars uninsured motorists from recovering for the first $100,000.00 of bodily injury and the first $100,000.00 of property damage based on any cause or right of action arising out of an automobile accident. The Act allows for an uninsured motorist, who institutes an action to recover damages, regardless of fault, and is awarded an amount equal to or less than $100,000.00, to be held liable for all court costs incurred by all parties to the action. The Act’s effective date is August 1, 2025.

HB436 bars unauthorized aliens from recovering general damages and past and future wages for damages arising from an automobile accident. The Act does not apply to a claim made against an uninsured or underinsured motorist policy which names the unauthorized alien as an insured. The Act’s effective date is August 1, 2025.

HB431 provides for modified comparative fault and bars claimants, who are found greater than or equal to 51% at fault, from recovering for damages. If fault attributable to the claimant is less than 51%, the amount recoverable shall be reduced in proportion to the fault attributable to the claimant. The bill does not say whether this applies only to auto claims. We expect this will be clarified. The Act’s effective date is January 1, 2026.

HB549 requires a premium discount for policyholders of commercial motor vehicles with installed dashboard cameras and telematic systems and who meet the other requirements enumerated in the Act. The Act’s effective date is January 1, 2026.

HB148 requires insurance companies to display prior premium amounts in close proximity to the renewal premium. The Act also provides for rate filing standards and methods and changes the process by which the insurance commissioner can disapprove a rate if he determines it is excessive, inadequate or unfairly discriminatory. The Act’s effective date is August 1, 2025.