Land v. Yamaha Motor Corp. U.S.A & Yahama Motor Co., 01-2025

• Decision Date: 10 December 2001
• Docket Number: No. 01-2025,01-2025
• Citation: 272 F.3d 514
• Parties: (7th Cir. 2001) Charles Land and April Land,Plaintiffs-Appellants, v. Yamaha Motor Corporation, U.S.A.,and Yamaha Motor Co., LTD.,Defendants-Appellees
• Court: U.S. Court of Appeals — Seventh Circuit

Page 514

272 F.3d 514 (7th Cir. 2001)

Charles Land and April Land,Plaintiffs-Appellants, v. Yamaha Motor Corporation, U.S.A.,and Yamaha Motor Co., LTD.,Defendants-Appellees.

No. 01-2025

United States Court of Appeals For the Seventh Circuit

Argued October 29, 2001

Decided November 29, 2001

Corrected December 10, 2001

Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. IP00-0220C-HG--David F. Hamilton, Judge.

Before Flaum, Chief Judge, and Posner and Diane P. Wood, Circuit Judges.

Flaum, Chief Judge.

The district court granted summary judgment in favor of defendants Yamaha Motor Corporation, U.S.A. ("YMUS") and Yamaha Motor Co., Ltd. ("YMC"), holding plaintiffs Charles and April Land's product liability suit barred by the Indiana Statute of Repose. For the reasons stated herein, we affirm.

I. Background

When appellant Charles Land, an Indiana resident, attempted to start a Yamaha WaveRunner Model WR500G on Heritage Lake in Indiana on June 25, 1998, the vehicle exploded and caused Land permanent back injury. The plaintiffs contend that the WaveRunner was defective in design: it allowed fuel fumes to accumulate in the hull of the boat, posing serious risk of fire upon ignition. The WaveRunner was in substantially the same condition on the day of Land's injury as when it left the possession of the defendants on July 7, 1987, and was delivered to the initial user on July 28, 1987. For purposes of the summary judgment motion, the district court assumed that the plaintiffs could prove their product liabil-ity claim on the merits. That is, it assumed that when the WaveRunner left the possession and control of the defendants, it was in a defective condition unreasonably dangerous to anticipated users. Furthermore, it is undisputed that the Lands filed suit on December 23, 1999, and that both the injury and the filing of the suit occurred more than ten years after the WaveRunner was delivered to Wallace Richardson, the first user.

The Indiana Statute of Repose, Ind. Code sec.34-20-3-1(b)(2), provides in relevant part that product liability actions must be commenced within ten years after the delivery of the product to the initial user or consumer.

YMC, a Japanese corporation with its principal place of business in Japan, designed, manufactured, and tested the WaveRunner in Japan. It petitioned for an exemption from the United States Coast Guard's requirement that every vehicle like the WaveRunner have a fan to ventilate fuel fumes out of the hull of the boat. YMUS knew of the test results, and, according to the Lands, gave false information to the Coast Guard as to the known danger of the WaveRunner design in order to keep its exemption from the fan requirement. YMUS, which maintains its principal place of business in California, participated in developing the WaveRunner and imported it to the United States. YMUS, while it has no office in Indiana, is authorized and does business in the state. On July 7, 1987, YMUS sold and shipped the vehicle to a boating store in Kentucky. On July 28, 1987, Wallace Richardson, an Indiana resident, purchased the WaveRunner. Larry Bush, another Indiana resident, subsequently bought the WaveRunner in 1989 or 1990. Bush was the registered owner when the WaveRunner caused Land's injury. From the time of Bush's purchase, the boat was registered, garaged, and serviced in Indiana. Between 1988 and 1998, 24 other WaveRunners were reported to have exploded. YMUS twice recalled certain models of WaveRunners for modifications to reduce the likelihood of fuel leakage. It never recalled the WR500 series.

II. Discussion

Appellants argue that although they did not commence their action until well over ten years after delivery to the initial user, their case is not barred because: 1) California law, which includes no statute of repose, governs the action; 2) Even if the Indiana Statute of Repose does apply, the post-sale failure to warn is outside its scope; and 3) The Statute of Repose violates the Indiana Constitution.

We review a grant of summary judgment de novo, construing the evidence in the light most favorable to the nonmoving party. Gordon v. United Airlines, 246 F.3d 878, 885 (7th Cir. 2001). Summary judgment is appropriate if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Id.

A. Choice of Law

A federal court sitting in diversity jurisdiction must apply the substantive law of the state in which it sits. Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938); Jean v. Dugan, 20 F.3d 255, 260 (7th Cir. 1994). The Erie doctrine extends to choice-of-law principles and requires the court to apply the conflicts rules of the forum state. Id. (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941)). Therefore, the district court properly applied the choice-of-law rule of Indiana.

Indiana applies a two-step conflicts analysis. Hubbard Mfg. v. Greeson, 515 N.E.2d 1071, 1073 (Ind. 1987). First, the court must determine if the place where the last event necessary to make the defendant liable--that is, the place of the injury--is insignificant. Id. If it is not, the law of that state applies. Id. Only if the court finds that the place of injury is insignificant does it move to step two which requires the court to consider "other factors such as: 1) the place where the conduct causing the injury occurred; 2) the residence or place of business of the parties; and 3) the place where the relationship is centered." Id. at 1073-74. In the instant case, we, like the district court, arrive at the inevitable conclusion that the place of the injury-- Indiana--is not insignificant. Therefore, we apply Indiana law and need not address the second prong in Indiana's choice-of-law analysis. See Judge v. Pilot Oil Corp., 205 F.3d 335 (7th Cir. 2000).

Charles Land was injured while operating the WaveRunner in Indiana. He was a resident of Indiana, the owner of the boat was a resident of Indiana, and the boat had been garaged and serviced in Indiana for a decade before it caused Land's injury. There is no evidence in the record that the WaveRunner was ever used outside of Indiana. It was not mere fortuity that the injury occurred in Indiana, as the Lands suggest by comparing this choice-of-law determination with those involving pass- through automobile or airplane accidents in which the place of the injury is given little weight, and the argument that Indiana's contacts have little or no relevance to the legal action simply cannot withstand scrutiny. Therefore, our analysis of Indiana choice-of-law policy must end with step one.

The Lands argue that California, where YMUS was incorporated and where the defendant's tortious conduct occurred, has greater relevance. Maybe so.¹ This analysis belongs in step two of the Indiana conflicts policy, however, which we cannot reach. Some states use the "most significant relationship" approach suggested by the Restatement (Second) of Conflict of Laws. If Indiana did so, we would skip step one of our analysis and instead "isolate the pertinent issue, examine each state's connection to the occurrence, identify the governmental policies espoused by each state relevant to the issue, and proclaim applicable the law of the state with the superior interest." Jaurequi v. John Deere Co., 986 F.2d 170, 173 (7th Cir. 1993) (internal citations omitted). That case might have a different outcome from the one at hand. Indiana does not adhere to the most significant relationship analysis, however, and the Supreme Court of Indiana has not signaled that it intends to overrule Hubbard. Although Hubbard does note some discomfort with the rigid place of injury, or lex loci delicti, approach, it still adheres to an analysis that uses the place of injury as a...