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Practice Tip: The Economic Loss Rule

By Jason P. Thomas and John L. Tate
December 18, 2009

A relative youngster in terms of legal doctrines, the Economic Loss Rule has quickly gained widespread acceptance in state and federal courts. First recognized by California in 1965, it has now been endorsed in some form by the U.S. Supreme Court and nearly every state.

Kentucky and Tennessee are the two most recent states to adopt the Rule, in Industrial Risk Insurers v. Giddings & Lewis, 2009 Ky. App. LEXIS 106 (Ky. App., July 2, 2009), and Lincoln Gen. Ins. Co. v. Detroit Diesel Corp., 2009 Tenn. LEXIS 512 (Tenn. Aug. 21, 2009). Reflecting this trend, the Third Restatement of Torts also endorses the Economic Loss Rule. Restatement (Third) Torts: Product Liability ' 21.

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