LOU v. OTIS ELEVATOR Co.

• Decision Date: 03 September 2010
• Docket Number: No. 09-P-632.,09-P-632.
• Citation: 77 Mass.App.Ct. 571,933 N.E.2d 140
• Parties: Kevin LOU & others v. OTIS ELEVATOR COMPANY.
• Court: Appeals Court of Massachusetts

77 Mass.App.Ct. 571

933 N.E.2d 140

Kevin LOU ¹ & others ² v.OTIS ELEVATOR COMPANY.

No. 09-P-632.

Appeals Court of Massachusetts,Worcester.

Argued Feb. 12, 2010.

Decided Sept. 3, 2010.

COPYRIGHT MATERIAL OMITTED.

Rory FitzPatrick, Boston, for the defendant.

Christopher E. Mullady (Jeffrey S. Raphaelson with him), Boston, for the plaintiffs.

Present: KANTROWITZ, GREEN, & MEADE, JJ.

GREEN, J.

In October 1998, while traveling with his parents to visit his grandparents in the People's Republic of China, then-four year old Kevin Lou (a resident of Worcester County) was injured after catching his hand between the skirt panel and treads of an escalator in the Changzhou Tianyuan Department Store. The escalator was manufactured and sold by China Tianjin Otis Elevator Company, Ltd. (CTOEC), under license from the defendant, Otis Elevator Company (Otis). Kevin and his parents sought damages against Otis in a suit filed in the Superior Court, and after a lengthy trial, a jury returned a verdict awarding $3.35 million in damages; judgment entered thereafter in that amount, plus prejudgment interest in the amount of $3.3 million. ³ Among the issues raised by the defendant on appeal is a question of first impression: does the Restatement (Third) of Torts: Products Liability § 14 (1998) (Third Restatement), and, specifically, comment d thereto, reflect the law of Massachusetts? ⁴ We conclude that the trial judge correctly instructed the jury in accordance with § 14, comment d, and discern no merit in the defendant's separate claim that the judge erred in awarding prejudgment interest. We accordingly affirm the judgment.

Background. We summarize the facts the jury could have found.

While descending an Otis E510 escalator with his grandmother in the Changzhou Tianyuan Department Store, Kevin's hand became trapped between the skirt panel and step tread of the escalator. As a result, Kevin was dragged a considerable distance down the escalator; his hand was almost completely severed at the mid- palm, and he has suffered a permanent thirty-one percent whole-body impairment. ⁵

Otis is incorporated in New Jersey and has its principal place of business in Farmington, Connecticut. CTOEC is a joint venture formed in 1984 among Otis, Tianjin Elevator Company, and China International Trust & Investment Corporation, directed toward the manufacture in the People's Republic of China of elevators and escalators pursuant to Otis design standards and bearing the Otis trademark. Shortly after forming the joint venture, Otis entered into a trademark license agreement (trademark agreement) and a technical cooperation agreement (technical agreement) with CTOEC. Under the trademark agreement, Otis licensed to CTOEC the right to use the Otis trademark within China. Under the technical agreement, Otis agreed to furnish to CTOEC “Otis' Know-How,” defined as: “(a) engineering and product design drawings, data, and information; (b) process, production, installation, maintenance, testing, and inspection methods; (c) quality standards; (d) factory and general management methods; and (e) any other data, documents, and information owned and furnished” to CTOEC by Otis. A “Technical Annex” appended to the technical agreement specified a broad range of technical and managerial support that Otis would provide to CTOEC in support of CTOEC's manufacture of elevators and escalators bearing the Otis trademark, including renovation of the Tianjin factory facility, modernization of factory production and management methods, and detailed technical specifications for products manufactured under the agreement. By amendment to the technical agreement in 1994, Otis added the E510 escalator to the list of product technology it agreed to furnish to CTOEC under that agreement. Key components specified for the E510 escalator were manufactured and supplied by Otis GmbH, a wholly-owned subsidiary of Otis incorporated in Germany. Otis assigned management personnel to the CTOEC factory, including individuals responsible for management of escalator production. ⁶ The escalator that caused Kevin's injuries was manufactured by CTOEC, pursuant to the trademark agreement and the technical agreement. It prominently bore the Otis trademark, embossed in metal on the comb plates at the top and bottom of the escalator, and the escalator bore no other trade name or mark.

Discussion. 1. Waiver. Before addressing the merits of the defendant's two claims of error, we must consider the plaintiffs' contention that Otis waived them both. Under Mass.R.Civ.P. 51(b), 365 Mass. 816 (1974), “[n]o party may assign as error the giving or the failure to give an instruction unless he objects thereto before the jury retires to consider its verdict, stating distinctly the matter to which he objects and the grounds of his objection.” The plaintiffs direct us to the fact that, during the charge conference, Otis submitted proposed instructions which included instruction under comment d to § 14 of the Third Restatement. On the subject of prejudgment interest, the plaintiffs observe that Otis did not object to the substance of the judge's instruction on compensatory damages, and raised no claim concerning prejudgment interest until filing its motion to amend the judgment.

As we have observed, the trial was lengthy: it began on November 5, 2007, and concluded on December 20 of that year. At the close of the plaintiffs' evidence, Otis moved for a directed verdict, based on its contention that Otis (which did not manufacture the escalator in question) could not be held liable without evidence that Otis was a seller at any point in the distribution chain; according to Otis, the fact that it was not a seller necessarily excluded it from the “apparent manufacturer doctrine” described in § 400 of the Restatement (Second) of Torts (1965) (Second Restatement). ⁷

The charge conference involved several lengthy discussions among the trial judge and the parties, over the span of one week, concerning how the jury should be instructed. Both parties initially asked the judge to instruct the jury under Chinese law, but presented sharply different versions of how Chinese law on liability should be described. The trial judge concluded that he was unable to determine applicable Chinese law with confidence, and informed the parties that he would instruct the jury under Massachusetts law. See Restatement (Second) of Conflicts of Law § 6(g) (1971). ⁸ The judge then invited the parties to submit proposed instructions under Massachusetts law. The proposed instructions submitted by Otis included instruction on the plaintiffs' claim that it could be held liable as an “apparent manufacturer.” The instruction was principally directed to the law on parent and subsidiary corporations and the requisites necessary to pierce the corporate veil, but also included language from a portion of the Third Restatement § 14 comment d.

At the continuation of the charge conference thereafter, Otis expressed its view that application of the apparent manufacturer doctrine to it, on the facts of this case, would constitute an unwarranted piercing of the separate corporate identities between it and CTOEC, and sought to excise from the jury charge any instruction suggesting that Otis could be held liable as an apparent manufacturer. The plaintiffs disagreed. The trial judge attempted to reconcile the parties' disagreement, acknowledged their respective positions, and stated his intention to instruct the jury on the apparent manufacturer doctrine. The judge advised the parties that their objections were noted, and that his instructions would incorporate portions of the language submitted by each of the parties. At that point, Otis indicated that, to the extent that the judge had decided, despite Otis's objection, to instruct the jury that Otis could be found liable as an apparent manufacturer, the wording that the judge intended to employ in his instruction on § 14 comment d was acceptable.

Following the charge to the jury, ⁹ but before the jury retired to deliberate, the judge convened a conference for the purpose of placing the parties' objections formally on the record. Otis renewed its objection to the judge's instruction under the apparent manufacturer doctrine.

We are satisfied that the repeated objections by Otis to instruction under comment d to § 14, and particularly its formal repetition of that objection at the conference convened by the judge for the specific purpose of recording the parties' respective objections to the charge, were sufficient to satisfy the purpose of Mass.R.Civ.P. 51, and to preserve its rights on appeal. ¹⁰ See Rotkiewicz v. Sadowsky, 431 Mass. 748, 751-752, 730 N.E.2d 282 (2000).

There is likewise no merit to the plaintiffs' contention that Otis waived any objection to the assessment of prejudgment interest by agreeing that the case should be submitted to the jury under Massachusetts law on damages. During the charge conference, the parties appear to have agreed that the laws of China and Massachusetts are congruent on the issue of the measure of damages. Without waiving its contention that Chinese law should apply, Otis then agreed that it would not object to the proposed instruction on damages, which was based on Massachusetts law, and that it could be given to the jury “as though” it were Chinese law. ¹¹ As expressed to the jury, the instruction on damages made no reference to either jurisdiction. Though Otis did not raise any question concerning the availability of prejudgment interest until after the jury returned their verdict, there was no reason to address the question during the charge conference as the issue did not bear on the jury function in determining compensatory damages. ¹² A postjudgment motion in fact appears to be a rather typical procedural vehicle to raise a question concerning the choice of law on an issue of prejudgment interest. See, e.g., Salvi v. Suffolk County Sheriff's...