Benco Plastics, Inc. v. Westinghouse Electric Corp.

• Decision Date: 19 July 1974
• Docket Number: Civ. A. No. 8317 and 8457.
• Citation: 387 F. Supp. 772
• Parties: BENCO PLASTICS, INC. v. WESTINGHOUSE ELECTRIC CORP. CHEKER OIL COMPANY v. BENCO PLASTICS, INC. and Westinghouse Electric Corp. v. UNDERWRITERS' LABORATORIES.
• Court: U.S. District Court — Eastern District of Tennessee

387 F. Supp. 772

BENCO PLASTICS, INC. v. WESTINGHOUSE ELECTRIC CORP.

CHEKER OIL COMPANY v. BENCO PLASTICS, INC. and Westinghouse Electric Corp. v. UNDERWRITERS' LABORATORIES.

Civ. A. Nos. 8317 and 8457.

United States District Court, E. D. Tennessee, N. D.

July 19, 1974.

William P. Newkirk, Kenneth E. Hall, Egerton, McAfee, Armistead, Davis & McCord, Knoxville, Tenn., for Benco Plastics, Inc.

Philip P. Durand, Knoxville, Tenn., for Cheker Oil Co.

James A. Ridley, III, R. Arnold Kramer, Kramer, Dye, Greenwood, Johnson, Rayson & McVeigh, Knoxville, Tenn., for Westinghouse.

Bell, Boyd, Lloyd, Haddad & Burns, Chicago, Ill., McCampbell, Young, Bartlett & Woolf, Knoxville, Tenn., for Underwriters'.

MEMORANDUM

ROBERT L. TAYLOR, District Judge.

Introduction

This action is a consolidation of cases 8317 and 8457 and in both cases jurisdiction is based on diversity of citizenship.

In Case Number 8317, Benco Plastics claims that Bryant Electric (a division of Westinghouse Electric Corp.)¹ misrepresented the quality and character of neon lampholders and that Bryant relied on such misrepresentations. Additionally, by way of amended complaint, Benco claims that Underwriters' Laboratories (U.L.) misrepresented the quality and character of the same product when U.L. listed and made the representation that the lampholders in question were suitable for outdoor use. Pursuant to Pretrial Order, the plaintiff in 8317 relies solely upon applicable theories of tort law as articulated under the common law and the Restatement of Torts, Second, and does not rely upon any theory of warranty law as set forth under the Uniform Commercial Code.

In Case Number 8457, Cheker Oil Company, a purchaser of outdoor signs from Benco, claims that Benco negligently misrepresented to Cheker that certain outdoor display signs which Benco sold to Cheker from 1968 to 1972, and which incorporated the Bryant lampholders in question, were free of defects and suitable for plaintiff's intended use. Cheker, in the alternative, adopts the theories of Benco in Case Number 8317 as against Bryant. Benco, in turn, filed a third party complaint against U.L. and a cross claim against Bryant alleging that any responsibility for misrepresentation lay with Westinghouse and U.L. Cheker's action against Benco is premised upon theories of both tort and warranty.

This case was tried before the Court without a jury and, pursuant to Rule 52, F.R.Civ.P., the following findings of fact and conclusions of law are made.

Benco Plastics, which locally employs approximately 100 persons, is engaged in the design, production and selling of enclosed outdoor signs. These signs are typical of the outdoor variety and are principally constructed of embossed or formed plastic mounted on an aluminum frame. An interior electrical system, consisting in the main of a ballast, lampholders, and neon lamps, serves to illuminate the exterior plastic surfaces at night.² The interior electrical wiring and lampholders are situated within a protective metal structure referred to as the raceway. The neon lamps and raceways may be mounted either horizontally or vertically within the sign's interior frame. Underwriters' Laboratories certified and listed both Benco's finished signs and the Bryant lampholders.

The Bryant Division of Westinghouse, located at Bridgeport, Connecticut, manufactures approximately 14,000 electrical products, including 200 different styles of fluorescent lampholders.³ In 1964, Mr. James McLaughlin, a Bryant design engineer, first designed the original 620S and 620P⁴ fluorescent lampholders. Evidently, Mr. McLaughlin's development of the original 620 series was prompted by Bryant's marketing department's determination that there was a potential market for such an outdoor snap-in fluorescent lampholder. In designing the 620 lampholders, Mr. McLaughlin examined similar lampholders manufactured by competitors, in particular, lampholders designed by General Electric and Leviton. The original 620S and P were first formally manufactured and distributed in 1965.

In the early part of 1966, Mr. James Foley, a manufacturer's representative, contacted Mr. Ronald Smith, at the time the purchasing agent at Benco, and presented the 620S and P lampholders to him for possible incorporation into Benco's outdoor signs. Samples of the 620S and P lampholders were forwarded to Benco and at a second visit to Benco's plant, Mr. John Kofoed, Bryant's sales manager at the time, and Mr. Foley again presented the 620 lampholders. During this second visit, Mr. Foley and Mr. Kofoed were shown through the Benco plant by Mr. Smith and were made aware of the use for which the lampholders were intended. At that time, Mr. Kofoed gave Mr. Smith a catalog page from Bryant's catalog, which described the features of the 620S and P lampholders. (Exhibit 5). Included under a listing of the lampholder's features is a final statement appearing at the bottom of the page: "Approved for use in enclosed outdoor signs and fixtures."

On November 29, 1969, Benco placed an initial order for 5,000 sets of lampholders. (Exhibit 11). Although a specific date was not mentioned, some time after Benco received its initial order on December 19, 1966, Mr. Smith received a complete Bryant catalog which included sheet number 49 entitled "standard conditions of sale." (Exhibits 9 and 10). Benco continued to order 620S and P lampholders from Bryant until Benco terminated its relationship with Bryant sometime in January 1973 as a result of its belief that the lampholders were defective. During this period from 1966 to 1972, Benco purchased over 400,000 lampholder pairs from Bryant. In 1965, the 620S and P lampholders were listed by Underwriters' Laboratories for use in enclosed outdoor signs.

As a result of requests by its customers for the production of a thinner stationary socket and the need on Bryant's part to increase production capacity, Bryant in 1965 under the direction of Mr. Roy Wiley, Manager for the Engineering Section, designed and manufactured a "low profile" 620S lampholder. Originally, Mr. Landisi, Product Manager in Charge of Marketing at Bryant from June 1957 to June 1973, requested Mr. Wiley to design the new lampholder to be interchangeable with the existing 620S lampholder which had been suitable for outdoor use. Ultimately, however, the new low profile 620S lampholder was not designed to be interchangeable with the old 620S lampholder because the thinner more compact design of the new 620S did not comply with Underwriters' Laboratories' standards for minimum spacing⁵ for use in an outdoor environment. Mr. Wiley testified that he thought he had advised the Marketing Department that the new 620S was not designed for indoor use. More specifically, Exhibits 64 and 65, respectively, indicate that while the old 620S lampholder (after 1969 denominated 620-SO) complied with the minimum through air spacing of the U.L. standards, the new low profile 620S did not comply with the same standard. That is to say, the reduction in spacing between the live contact points of the lampholder and the bezel (ground) of the lampholder from .390 inch to .196 in the 1969 low profile design caused the 620S lampholder to be in noncompliance with the U.L. standard for outdoor use. It is significant to note that, according to Exhibit 63, the spacing between the live contact point and the grounded bezel of .390 inch is the same in the 620P (plunger) as the old 620S.

On April 22, 1969, Mr. F. E. Devlin, a laison engineer with Bryant, submitted to U.L. twelve samples of the new 620S and requested that the Laboratories list the redesigned lampholder like its former companion lampholder but specifically noted that the redesigned lampholder was "for indoor use only." (Exhibit 50). Thereafter, on May 2, 1969, Mr. Devlin received from U.L. a "Notice of Acceptability For Listing," (Exhibit 51) which, as the name implied, informed Bryant that the product was acceptable to Underwriters'. The Laboratories' May 21, 1969 report on the new low profile 620S indicated the lampholder was similar to its former model but that with respect to spacing, the report indicated that they were "Min. 1/8 in. for indoor use through air and over surface between live metal parts of opposite polarity and between live metal parts and dead metal parts." (Exhibit 52, Sec. 5, page 5). Thereafter, Bryant received from U.L. a guide care which in essence was a listing of Bryant lampholders that had been approved by U.L. This listing indicated by the use of an asterisk following the catalog number that the new 620S was "also for use in enclosed outdoor signs." This card was a duplication in part of the listing that appeared on page 189 of the August 1970 Underwriters' Laboratories, Inc. — Electrical Construction Materials List, (Exhibit 12), which was distributed to the public and which likewise indicated that the new 620S lampholder was "also for use in enclosed outdoor signs."

Mr. Smith testified that in July or August 1969 Benco received from Bryant a shipment of the new 620S lampholders. Since the low profile lampholder differed considerably in appearance from the old 620S as a result of the reduced profile, Mr. Smith contacted a Bryant representative about the change and was assured by Bryant that the new 620S was just as good as the old lampholder in every respect. Having received the assurances that the new 620S could be incorporated into Benco's outdoor signs, Mr. Smith made no further inquiries regarding the lampholders' electrical and functional properties. Mr. Smith testified that when he initially inquired about the new low profile 620S lampholder in 1969 he was informed by Bryant that the old 620S lampholder had been discontinued and could not have been purchased even if Benco had specifically requested the old 620S.

Around September 1971 Benco began receiving its first complaints from purchasers of its signs that certain signs were experiencing "burn...