Propane supplier dismissed from lawsuit

In late January 2021, the South Central Judicial District of North Dakota trial judge granted complete summary judgment to CHS, a wholesaler of odorized propane, when it was sued along with Tri-Energy Cooperative, a propane retailer, for claims arising out of a tragic propane explosion on Dec. 14, 2016, which killed a Mr. and Mrs. Howe and injured one of Mrs. Howe’s children.

CHS had been wholesaling odorized propane as Tri-Energy’s sole supplier since the early 2000s. CHS had entered into a series of contracts with Tri-Energy through which it provided several iterations of warnings over the years to Tri-Energy. CHS required that Tri-Energy properly train any of its employees, agents or other vendors that come in contact with the propane it received from CHS. CHS also required that all of the mentioned persons be aware of the availability of gas detectors. Tri-Energy was a knowledgeable propane retailer that was also required to comply with the duty to warn its end users of the dangers associated with the use of propane, including odor fade, and the availability of gas detectors that may assist in detection of leaks.

Arguments presented

Plaintiffs alleged that CHS was negligent in its design of the propane it sold to Tri-Energy because it did not come with a gas detector. This is a unique argument that has been circulating litigation in the propane industry for many decades. It is asserted against both retail and wholesale suppliers of propane. The argument is made that propane is defective and unreasonably dangerous if it is not sold with a gas detector as part of the sale. This argument was front and center in this lawsuit.

In its effort to be completely dismissed from this lawsuit, CHS provided evidence that there is no legal requirement in any state, let alone North Dakota, that propane be sold with a gas detector. There is no industry custom or practice to sell gas detectors with the sale of propane.

CHS contracted with Tri-Energy that it would ensure its employees, agents and vendors were aware of the availability of gas detectors. And it ensured via this contract that Tri-Energy would inform its end user retail customers of the availability of gas detectors as an additional warning agent of a gas leak. The court determined that these steps represented reasonable care under the circumstances as a matter of law. The court was able to do this because no one disputed these essential facts.

Decision made

The court was not generally impressed with the general liability theory that plaintiffs espoused, i.e., that CHS had to sell gas detectors with its propane to sell a product that was not unreasonably dangerous and thus defective.

CHS sold propane. There was no dispute that it was properly odorized based on testing of the odorant in the gas. It did not sell gas detectors. The court could find no case law or statutes that required a manufacturer of one product to design, manufacture and sell another product alongside its product to avoid selling a defective product. This is in essence what this type of claim is attempting to assert.

While this case deals only with a bulk supplier – a company that sells to retailers and never directly to the end user – it has potential broader application. The decision shows the specious reasoning of any claim that a gas detector must be included in the sale of propane to the end user to make it a safe product not subject to product liability claims. Here, there were ample warnings about the risks related to propane leaks, the availability of gas detectors and reasons for the consumer to obtain their own gas detectors. Retailers that provide warnings can use this same analysis to defeat similar claims that they must sell gas detectors with the propane they sell.

John V. McCoy is with McCoy, Leavitt, Laskey LLC. His firm represents industry members nationally. He can be reached at 262-522-7007.