National Can Corp. v. Whittaker Corp.
Decision Date | 13 January 1981 |
Docket Number | No. 80 C 2008.,80 C 2008. |
Citation | 505 F. Supp. 147 |
Parties | NATIONAL CAN CORPORATION, Plaintiff, v. WHITTAKER CORPORATION, Defendant. |
Court | U.S. District Court — Northern District of Illinois |
Richard C. Bollow, Richard F. Bernstein, Jenner & Block, Chicago, Ill., for plaintiff.
Dennis A. McMahon, John M. Carroll, Mayer, Brown & Platt, Chicago, Ill., Ronald M. Greenberg, Whittaker Corporation, Los Angeles, Cal., for defendant.
National Can Corporation ("National Can") has filed an eight-count Complaint charging Whittaker Corporation ("Whittaker") with supplying two types of defective solid Polyvinyl Chloride ("PVC") compounds for use in making seals and gaskets for soft drink and beer bottle caps ("crowns").1 Counts I through VI allege breach of various warranties, while Counts VII and VIII allege the tort of negligent misrepresentation. Whittaker has moved to dismiss the latter two Counts under Fed. R.Civ.P. 12(b)(6). For the reasons stated in this memorandum opinion and order, Whittaker's motion is granted.
National Can claims that Whittaker's two PVC compounds suffered from decomposition after assembly of the crowns, so that particles became visible in the beverage contained in the bottles. This created the need to destroy large quantities of National Can's finished products and, as alleged in each of the two Counts:
As a proximate result of Whittaker's negligence, Hutchinson has sustained damage due to rejection of goods by its customers, claims by its customers, loss of profits, and other incidental and consequential damages.
There are no allegations of any physical injury resulting from the defective products.
In this diversity action all substantive questions must be decided in accordance with Illinois law. Although the Illinois Supreme Court has yet to speak directly to the issue presented here, under the circumstances this Court will follow the law as enunciated by the intermediate Illinois Appellate Courts, most particularly those that sit here in Chicago (the Illinois Appellate Court for the First District).2
Although National Can argues otherwise, it is unquestionable that the damages it asserts are of the sort characterized by the controlling Illinois cases as "economic loss." As Mr. Justice Simon of the Illinois Appellate Court stated just last month (immediately before taking his seat on the Illinois Supreme Court), in his thoughtful opinion in Fireman's Fund American Insurance Cos. v. Burns Electronic Security Services, Inc. (93 Ill.App.3d 298, 48 Ill.Dec. 729, 417 N.E.2d 131 (1st Dist.1980)):
In the Fireman's Fund appeal the choice presented was between strict liability in tort and contract theories of liability. But the Illinois Appellate cases (cited with approval in Fireman's Fund) had first established the identical doctrine of no recovery for economic losses in negligence actions. Album Graphics, Inc. v. Beatrice Foods Co., 87 Ill.App.3d 338, 350, 42 Ill.Dec. 332, 341, 408 N.E.2d 1041, 1050 (1st Dist.1980); Alfred N. Koplin & Co. v. Chrysler Corp., 49 Ill.App.3d 194, 7 Ill.Dec. 113, 364 N.E.2d 100 (1st Dist.1977); see J & L, 626 F.2d at 284-85 (3d Cir. 1980).4
National Can seeks to escape the force of this uniform body of law by characterizing its claim as one under the tort of negligent misrepresentation, recognized in Rozny v. Marnul, 43 Ill.2d 54, 60, 250 N.E.2d 656, 659 (1969); McAfee v. Rockford Coca-Cola Bottling Co., 40 Ill.App.3d 521, 526, 352 N.E.2d 50, 54 (2d Dist.1976); and Restatement (Second) of Torts § 552. If the Court may be pardoned a bad pun, National Can is seeking to put new wine into old bottles.
Restatement § 552, as well as the Illinois case law National Can seeks to rely on, deals with an essentially different kind of situation from that involved here. Section 552 imposes liability for detrimental reliance upon "one who in the course of his business or profession supplies information for the guidance of others in their business transactions." That tort has been recognized almost exclusively in situations where information was supplied that damaged a plaintiff in its relations with third parties, see Green, The Duty To Give Accurate Information, 12 U.C.L.A.L.Rev. 464 (1965).
Though the tort of negligent misrepresentation may arguably be stretched to fit the claim in this case, it takes an impermissible double stretch to import general language as to the kind of damages recoverable in such tort cases (including economic loss, Rozny, 43 Ill.2d at 62, 250 N.E.2d at 660) into the present case. Such general language cannot prevail over the specific rejection of damages based on economic loss in the Illinois cases cited earlier in this opinion. To return full circle to the point discussed earlier in this opinion (both in the text at footnote 2 and in that footnote), this Court is certainly not...
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