Green Plains Otter Tail, LLC v. Pro-Envtl., Inc.

• Citation: 953 F.3d 541
• Decision Date: 20 March 2020
• Docket Number: No. 18-3357,18-3357
• Parties: GREEN PLAINS OTTER TAIL, LLC Plaintiff - Appellant v. PRO-ENVIRONMENTAL, INC. Defendant - Appellee
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

953 F.3d 541

GREEN PLAINS OTTER TAIL, LLC Plaintiff - Appellant

v.PRO-ENVIRONMENTAL, INC. Defendant - Appellee

No. 18-3357

United States Court of Appeals, Eighth Circuit.

Submitted: November 12, 2019

Filed: March 20, 2020

A. Elizabeth Burnett, Scott G. Johnson, ROBINS & KAPLAN, Minneapolis, MN, Brian G. Cunningham, NIELSEN & ZEHE, Chicago, IL, Michael Sean Errera, Thomas B. Orlando, FORAN & GLENNON, Chicago, IL, Michael L. Foran, CLAUSEN & MILLER, Chicago, IL, for Plaintiff-Appellant.

Teri Bentson, LAW OFFICE OF THOMAS P. STILP, Golden Valley, MN, Amanda Margaret Cialkowski, Brian N. Johnson, NILAN & JOHNSON, Minneapolis, MN, John Christopher Syverson, JOHN SYVERSON LAW FIRM, Golden Valley, MN, Brendan R. Tupa, ENTREPRENEURS & FREE MARKETS, Minneapolis, MN, for Defendant-Appellee.

Before COLLOTON, WOLLMAN, and BENTON, Circuit Judges.

BENTON, Circuit Judge.

Green Plains Otter Tail, LLC owns and operates an ethanol production facility. In 2014, an explosion and fire extensively damaged it. Green Plains sued Pro-Environmental, Inc. for negligence and products liability, alleging defective design and failure to adequately instruct and warn users. The district court granted summary judgment to PEI. Green Plains appeals. Having jurisdiction under 28 U.S.C. § 1291, this court affirms in part, reverses in part, and remands.

I.

Green Plains produces ethanol in Fergus Falls, Minnesota. Producing ethanol makes pollutants. These pollutants are burned off in a regenerative thermal oxidizer (RTO). Dampers control the flow of vapors in and out of the RTO’s chambers. These dampers are powered by a hydraulic pump unit (HPU). In an emergency, the RTO should (1) close to keep unprocessed vapors out and (2) release the vapors already inside into the atmosphere. Both functions require hydraulic pressure (1) to close the input damper, and (2) to open the release damper.

The HPU has an accumulator that supplies hydraulic fluid for the RTO’s regular cycles. If a hydraulic pump within the HPU fails, the accumulator should force its fluid back into the system, moving the dampers to safe positions. In order to operate, the accumulator must be recharged with nitrogen.

The HPU’s hydraulic pump is connected to the other parts of the HPU by couplings. In 2014, a coupling failed, causing a loss of hydraulic pressure to the HPU. Several alarms sounded. Green Plains’s staff discovered that the dampers did not move to safe positions. An hour later, an explosion damaged the RTO, other equipment, and buildings.

The RTO’s dampers could move to safe positions only if the accumulator was sufficiently precharged. Post-explosion investigations showed almost no precharge of the HPU’s accumulator. The HPU manual that PEI gave Green Plains said:

The accumulator is precharged at time of commissioning to a predetermined pressure with inert nitrogen. A charging and gauging assembly should periodically be attached

to the accumulator charge port to check the accumulator precharge, and should be recharged as needed using only dry, inert nitrogen. These operations should be performed with the system off, and all hydraulic pressure relieved from the system.

The manual added: "It is suggested that a check be made a week after installation, and thereafter once a month." A label on the HPU unit warned, in all capital letters, that failure to follow directions can cause malfunctions leading to death, personal injury, and property damage. The label directed users to a website with instructions. Green Plains never checked the level of precharge, or recharged the nitrogen, during the six years between the RTO’s commissioning and the explosion, nor did Green Plains keep on-site the parts to check the precharge.

Green Plains sued PEI in 2016, alleging negligence and products liability for defective design of the RTO, and inadequate warnings of the importance of the accumulator. The district court granted summary judgment to PEI, ruling that Green Plains’s lack of maintenance was a superseding cause negating PEI’s liability for any design defect, and that the design was not unreasonably dangerous. The court also granted summary judgment on Green Plains’s failure-to-warn claim, stressing the absence of evidence in the record that employees read the warnings in the manuals. Green Plains Otter Tail, LLC v. Pro-Environmental, Inc. , 349 F. Supp. 3d 768, 780 (D. Minn. 2018).

Minnesota law governs this diversity action. Lamoureux v. MPSC, Inc. , 849 F.3d 737, 739 (8th Cir. 2017). This court reviews de novo the grant of summary judgment. Thompson v. Hirano Tecseed Co., Ltd. , 456 F.3d 805, 808 (8th Cir. 2006). Summary judgment is proper if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). "Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial." Torgerson v. City of Rochester , 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc), citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

II.

Under Minnesota law, a products liability claim for defective design requires:

(1) the product was in a defective condition unreasonably dangerous for its intended use; (2) the defect existed when it left the manufacturer’s control; and (3) the defect was the proximate cause of the injury sustained. Adams v. Toyota Motor Corp ., 867 F.3d 903, 916-17 (8th Cir. 2017), citing Bilotta v. Kelley Co. , 346 N.W.2d 616, 623 n.3 (Minn. 1984). A manufacturer has a duty to design its product to avoid an unreasonable risk of harm when the product is used as intended or in an unintended yet reasonably foreseeable manner. Id. at 621. "Whether a product is defective is generally a question of fact; only where reasonable minds cannot differ does the question become one of law." Thompson , 456 F.3d at 809 (applying Minnesota law).

"Minnesota merges negligence and strict liability claims into a single products liability theory, which employs a reasonable-care balancing test to determine whether a product is defective." Id. "To determine whether there is enough evidence to submit the claim to a jury, the court must balance the ‘the likelihood of harm, and the gravity of harm if it happens, against the burden of the precaution which would be effective to avoid the harm.’ " Young v. Pollock Eng’g Grp., Inc. , 428 F.3d 786, 789 (8th Cir. 2005), citing Bilotta , 346 N.W.2d at 621.

"An important factor in this balancing test is the availability of a feasible, safer alternative design." Id. To demonstrate that the product is unreasonably dangerous, "the plaintiff ordinarily has the burden of showing the existence of an alternative design that was safer." Kallio v. Ford Motor Co. , 407 N.W.2d 92, 96 (Minn. 1987). If the manufacturer presents evidence to dispute the product is unreasonably dangerous "the trier of fact will resolve the ‘unreasonably dangerous’ issue." Id.

Green Plains insists that the RTO’s design was defective and unreasonably dangerous, emphasizing that the dampers use hydraulic pressure for movement, while other potential designs, like compressed air or weighted dampers, could move the dampers without a precharged accumulator. Green Plains introduced evidence of the existence of alternative designs that are safer.

Green Plains points to deposition testimony of the owner of a company that designs ethanol production plants, where dampers move by compressed air, not hydraulics. According to him, in a compressed-air system, dampers have an automatic fail position and can fail "open" with a loss of pressure. Green Plains also points to the testimony of its chief boiler engineer that after the explosion, Green Plains added weights to the dampers so that if the hydraulics failed, employees could manually open the dampers.

PEI counters that the RTO design was consistent with industry standards, and that Green Plains’s expert never tested the alternative designs. The district court ruled, "PEI’s design struck an acceptable balance among competing factors and was not unreasonably dangerous." Green Plains , 349 F. Supp. 3d at 775-76.

While a manufacturer’s compliance with industry standards can be evidence of a reasonable design, it "is not conclusive proof on the question of whether a manufacturer exercised reasonable care." Zimprich v. Stratford Homes, Inc. , 453 N.W.2d 557, 560 (Minn. App. 1990), citing Schmidt v. Beninga , 285 Minn. 477, 173 N.W.2d 401, 408 (1970). Here, Green Plains’s experts did not need to test the alternatives to prove their feasibility, because they were successfully in use. See Young , 428 F.3d at 790. "Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge." Torgerson , 643 F.3d at 1042, citing Reeves v. Sanderson Plumbing Prods., Inc. , 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000). In Minnesota, "the jury ultimately decides whether the [product is] unreasonably dangerous." Young , 428 F.3d at 791.

Because reasonable minds could differ about whether the RTO was defective, Green Plains submitted sufficient evidence of a defective design to survive summary judgment.

III.

It is undisputed that if the accumulator had been recharged, the explosion would not have happened. PEI argues that the lack of recharging is a superseding cause that cuts off liability for any alleged defect. The district court was "unconvinced that any alleged defect was the proximate cause of the fire and explosion." Green Plains , 349 F. Supp. 3d at 776. It ruled that "Green Plains’ own lack of maintenance was a superseding cause that broke any causal connection between an alleged design defect and the fire and explosion." Id.

Proximate cause is generally a question of fact for the jury. Lubbers v. Anderson , 539 N.W.2d 398, 402 (Minn. 1995). However, "where reasonable minds can arrive at only...