Cigna Insurance Co. v. OY Saunatec, Ltd.

Cigna Insurance Co. (Cigna) (plaintiff) brought a subrogation action against OY Saunatec, Ltd. (Saunatec) for claims arising from a fire that started after a towel covered a racquet club’s sauna heater, which was manufactured by Saunatec. Cigna alleged that the heater was defective because it was not encased in a grill. Saunatec argued that Cigna’s claims should be prohibited or reduced because of product misuse. Saunatec contended that the club ignored risks by continuing to use the heater after an earlier fire. Cigna asserted that Saunatec could have foreseen the heater might become covered with a towel because Saunatec placed a towel over the heater during product testing. Cigna settled the club’s claim for damages resulting from the fire and then sued Saunatec in a subrogation action in federal district court for products-liability and warranty claims. Cigna’s action was a diversity suit governed by Massachusetts law. Saunatec argued the club’s product misuse and failure to install a sprinkler constituted an affirmative defense to Cigna’s claims. Saunatec also argued the club’s use of the heater constituted comparative negligence. The judge instructed the jury on comparative negligence but not on the misuse affirmative defense. The jury found that Saunatec had breached its warranty but that, due to the club’s misuse of the heater, Saunatec had an affirmative defense against liability. Regarding Cigna’s products-liability claims, the jury found the club 35 percent negligent. The jury awarded Cigna damages of around $850 million, and the trial court judge reduced Cigna’s award by 35 percent under comparative-negligence concepts. Cigna appealed, arguing against the comparative-negligence jury instruction. Cigna also appealed a jury instruction regarding the club’s duty to install sprinklers. Saunatec cross-appealed, asserting that a misuse affirmative defense jury instruction was required.