Arçelik, A.?. v. E.I. Du Pont de Nemours & Co.
| Docket Number | Civil Action No. 15-00961-TBD |
| Decision Date | 05 August 2022 |
| Parties | ARÇELIK, A.Ş., Plaintiff, v. E.I. DU PONT DE NEMOURS AND COMPANY, Defendant. |
| Court | U.S. District Court — District of Delaware |
April M. Ferraro, John M. Seaman, Abrams & Bayliss LLP, Wilmington, DE, Christopher M. Ryan, Pro Hac Vice, Jonathan L. Greenblatt, Pro Hac Vice, for Plaintiff.
John Anderson Sensing, Brandon Ryan Harper, Clarissa Rae Chenoweth-Shook, Jennifer Penberthy Buckley, Potter Anderson & Corroon, LLP, Wilmington, DE, for Defendant.
Pending before the court is Defendant E.I. Du Pont de Nemours and Company's motion for summary judgment on all four of Plaintiff Arçelik, A.Ş.'s remaining claims for damages arising from its recall of defective clothes dryers. These claims are: (1) negligent manufacture, (2) negligent misrepresentation, (3) violation of the Delaware Consumer Fraud Act, 6 Del. C. §§ 2511-2527, and (4) tortious interference with a contract. See Def.'s Mot. Summ. J., D.I. 187. Upon consideration of the parties' briefs, oral argument, and the record evidence, the court GRANTS Defendant's motion.
The following facts are either undisputed or are taken in the light most favorable to the non-movant, Plaintiff, Arçelik, A.Ş. ("Arcelik"). Arcelik is a Turkish consumer appliance company that manufactures and sells household appliances under multiple brands in over 100 countries. See Am. Compl., D.I. 19, ¶ 12. One of its product lines is electric tumble dryers for drying clothes. Id. ¶ 15. In October 2012, Arcelik began receiving customer complaints of its electric tumble dryers catching fire. See Pl.'s Ex. 14, at 23; Dep. of Polat Sen, Def.'s Ex. 4 ("Sen Tr."), at 28:8-11; Dep. of Gokhan Ozgurel, Pl.'s Ex. 7 ("Ozgurel Tr."), at 111:20-112:09.1 In response to the fires, Arcelik issued a voluntary recall of the affected dryers in European countries, offering to replace or repair all affected dryers and compensating customers for various property damage caused by the dryer fires. See Pl.'s Ex. 14, at 23. Arcelik maintains that it incurred substantial costs and other damages as a consequence.
The results of multiple independent investigations showed that the dryer fires were caused by a defect in a flame retardant that was incorporated into a nylon resin (or plastic material) called "Zytel FR50,"2 which was incorporated in electrical capacitors,3 which were in turn incorporated in Arcelik's dryers. D.I. 29-1 ¶ 4; Pl.'s Ex. 14 at 23-24; Pl.'s Ex. 38; Pl.'s Ex. 43. Arcelik alleges that the flame retardant contained higher than normal levels of sodium, bromide, and chloride-free ions, resulting in "ionic contamination" that lowered the Zytel FR50's electrical resistivity in the presence of high temperatures and humidity levels. See Pl.'s Ex. 14, at 19, 24; Pl.'s Ex. 23, at DUP0006371-72. This in turn caused the dryers to overheat and catch fire.
Defendant E.I. Du Pont de Nemours and Company ("DuPont") asserts that it did not manufacture or sell the Zytel FR50. See Def.'s Br. Supp. Summ. J. ("Def.'s Mot."), D.I. 188, at 16. Rather, various entities not parties to this action were involved in the Zytel FR50 manufacturing processes. The flame retardant was produced by a Chinese company named Shandong Brother, which is neither owned nor controlled by DuPont. Starting in 2010, Shandong Brother sold the flame retardant to another Chinese company, DuPont China Holding Co. Ltd. ("DuPont China") (a DuPont subsidiary), which used it in the manufacture of Zytel FR50 (the plastic material) at its plant in Shenzhen, China. See Dep. of Richard A. Mayo, Pl.'s Ex. 2 ("Mayo Tr."), at 08:22-10:12; Decl. of Richard Mayo ¶ 5; Dep. of David Donofrio, Pl.'s Ex. 4 ("Donofrio Tr."), at 49:05-09. DuPont China then sold the Zytel FR50 containing the Shandong Brother flame retardant to E.I. Du Pont India Private Limited ("DuPont India") (another DuPont subsidiary), which in turn sold it to non-party EPCOS India, an entity neither owned nor controlled by DuPont. See Pl.'s Ex. 20, at 20-21; Mayo Tr. 32:12-33:1, 33:21-24; Answer to Am. Compl. ¶ 18, D.I. 47.
Either EPCOS India or EPCOS AG—a related German entity and subsidiary of TDK Corporation (a Japanese Corporation)—used the Zytel FR50 as a component part in the manufacture of electrical capacitors that were sold to Arcelik. See Answer ¶ 127. The Zytel FR50 was used to form the top disc that "seals the body of the capacitor case from the terminal lugs and also includes a 'shield' that separates the terminal lugs from each other," as shown in the following illustration:
Image materials not available for display.
Am. Compl. ¶ 21. EPCOS AG then sold the electrical capacitors containing Zytel FR50 to Arcelik pursuant to a contract the two companies entered into in 2009. Id. ¶ 107; Ozgurel Tr. 50:22-51:02. The capacitors were incorporated in Arcelik's dryers.
On October 22, 2015, Arcelik initiated this action for damages related to the dryer fires caused by the defective Zytel FR50, raising six claims under both Delaware common law and the Delaware Consumer Fraud Act ("DCFA"). See Compl., D.I. 1., ¶¶ 103-10.4 Arcelik did not bring suit against any of the above-mentioned direct participants in the manufacturing process, but rather against DuPont, the Delaware-based parent company of DuPont China and DuPont India. Defendant DuPont moved to dismiss the complaint on various grounds. Def.'s Br. Supp. Mot. to Dismiss, D.I. 7.
The court granted DuPont's motion to dismiss, in-part because Arcelik had failed to "adequately allege agency relationships between DuPont and any entities under its direction or control." Mem. Order 6, D.I. 16. Five of the six claims were dismissed without prejudice. Id. at 1. (The breach of implied warranty claim was dismissed with prejudice.) Arcelik subsequently filed an Amended Complaint reasserting those five claims and adding allegations regarding the agency relationship between DuPont and its subsidiaries. Am. Compl. ¶ 17.
DuPont again moved to dismiss, this time on the basis that, even assuming DuPont's subsidiaries were agents of DuPont, Arcelik had failed to state any claim upon which relief could be granted. Mem. Op., D.I. 36 at 3 (citing Stipulation & Proposed Order re Renewed Mot. to Dismiss, D.I. 27 at 3). On March 20, 2018, the court granted in part and denied in part DuPont's motion. Id. at 1. In its memorandum opinion, the court first held that EPCOS AG and EPCOS India were not necessary parties under Rule 19. Id. at 5-8. On the merits, the court held: (1) the economic loss doctrine did not require dismissal of Arcelik's negligence claims, (2) Arcelik had sufficiently pled its negligent misrepresentation, DCFA, and tortious interference with a contract claims, and (3) Arcelik had failed to adequately plead its fraud claim. See id. at 8-16.
As a result of that ruling, Arcelik was left with four claims: (1) negligent manufacture, (2) negligent misrepresentation, (3) violation of the DCFA, and (4) tortious interference with a contract. Id. at 8-16. The case was previously assigned to the Honorable Leonard P. Stark and was reassigned on March 11, 2022, following the decisions on the motions to dismiss and the conduct of most of the discovery, to the undersigned, a United States Circuit Judge on the Court of Appeals for the Federal Circuit sitting in this district by designation. See 3/11/22 Min. Entry.
Following discovery, on May 23, 2022, DuPont moved for summary judgment on all four surviving claims. Def.'s Br. Supp. Summ. J. ("Def.'s Mot."), D.I. 188, at 9. The parties' briefing on the motion for summary judgment concluded on June 27, 2022, see Def.'s Reply Supp. Summ. J. ("Def.'s Reply"), D.I. 200, and on July 12, 2022, the court heard oral argument on the motion, see 7/12/22 Min. Entry.
The court has jurisdiction over Plaintiff's claims under 28 U.S.C. § 1332. See Am. Compl. ¶ 10. The parties have stipulated that Delaware law governs each of Arcelik's claims. See Stip. & Proposed Order re Choice of Law, D.I. 139, at 1.
Under Rule 56(a) of the Federal Rules of Civil Procedure, "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party has carried its burden, the nonmovant must then "come forward with 'specific facts showing that there is a genuine issue for trial.' " Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting Fed. R. Civ. P. 56(e)). "[T]he court must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000).
At the outset, the court notes that it has been somewhat difficult to parse exactly what Arcelik's contentions are since they have not been articulated with clarity in many instances, and many of Arcelik's contentions have changed throughout the course of the litigation. The court now understands the following four theories to be asserted.
Arcelik argues that DuPont is directly liable for the negligent manufacture of the Zytel FR50. 7/12/22 Hr'g Tr., D.I. 203, at 06:06-07:01. The negligent act, Arcelik alleges, is that "DuPont did not exercise reasonable care when manufacturing Zytel because it did nothing to detect or mitigate the risk of ionic contamination, despite its knowledge that, because of the nature of the flame-retardant additive, such contamination was likely to occur and would severely degrade the product's electrical and flammability characteristics and suitability for...
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