Radiation Sterilizers, Inc. v. US

• Decision Date: 31 October 1994
• Docket Number: No. CS-91-155-AAM,CS-91-154-AAM.,CS-91-155-AAM
• Citation: 867 F. Supp. 1465
• Parties: RADIATION STERILIZERS, INC., Plaintiff, v. UNITED STATES of America, et al., Defendants. IOTECH, INC., Plaintiff, v. UNITED STATES of America, et al., Defendants.
• Court: U.S. District Court — District of Washington

867 F. Supp. 1465

RADIATION STERILIZERS, INC., Plaintiff, v. UNITED STATES of America, et al., Defendants.

IOTECH, INC., Plaintiff, v. UNITED STATES of America, et al., Defendants.

Nos. CS-91-155-AAM, CS-91-154-AAM.

United States District Court, E.D. Washington.

October 31, 1994.

COPYRIGHT MATERIAL OMITTED

Clifford J. Zatz, Luis R. Mejia and Cindy M. Bryton of Akin, Gump, Strauss, Hauer and Feld, L.L.P., Washington, DC and James S. Berg of Halverson & Applegate, Yakima, WA, for plaintiff Iotech, Inc. (in No. CY-91-154-AAM only).

Roy P. Lessy, Jr. and Jeffrey K. Sherwood of Akin, Gump, Strauss, Hauer and Feld, L.L.P., Washington, DC and James S. Berg of Halverson & Applegate, P.S., Yakima, WA, for plaintiff Radiation Sterilizers, Inc. (in No. CY-91-155-AAM only).

David F. Jurca of Helsell, Fetterman, Martin, Todd & Hokanson, Seattle, WA, for defendant Rockwell Intern. Corp. (in both cases).

William R. Squires of Davis Wright Tremaine, Seattle, WA, for defendant Battelle Memorial Institute (in both cases).

Assistant U.S. Atty. James Schivley, Spokane, WA, and Frank W. Hunger and Richard R. Stone, U.S. Dept. of Justice, Washington, DC, for defendant Dept. of Energy of the U.S. of America (in No. CY-91-155-AAM only).

ORDER DETERMINING APPLICABLE STATE LAW

MCDONALD, District Judge.

Before the Court for resolution without oral argument¹ is Defendant Rockwell's Motion for Order Determining Applicable State Law, Ct.Rec. 135 in No. CY-91-154-AAM and Ct.Rec. 219 in No. CY-91-155-AAM. Plaintiff Iotech, Inc. ("Iotech"; in No. CY-91-154-AAM only) is represented by Clifford J. Zatz, Luis R. Mejia and Cindy M. Bryton of Akin, Gump, Strauss, Hauer and Feld, L.L.P., Washington, D.C., and James S. Berg of Halverson & Applegate, P.S., Yakima, Washington. Plaintiff Radiation Sterilizers, Inc. ("RSI"; in No. CY-91-155-AAM only) is represented by Roy P. Lessy, Jr. and Jeffrey K. Sherwood of Akin, Gump; and Berg. Defendant Rockwell International Corporation ("Rockwell"; in both cases) is represented by David F. Jurca of Helsell, Fetterman, Martin, Todd & Hokanson, Seattle, Washington. Defendant Battelle Memorial Institute ("Battelle"; in both cases) is represented by William R. Squires of Davis Wright Tremaine, Seattle, Washington. Defendant Department of Energy of the United States of America ("DOE"; in No. CY-91-155-AAM only) is represented by Assistant United States Attorneys Frank W. Hunger and James Schivley of Spokane, Washington; and Richard R. Stone of the United States Department of Justice, Washington, D.C.²

A. FACTUAL BACKGROUND³

As a part of its defense waste management program, DOE decided in the 1970s to separate cesium-137 from radioactive military wastes at the Hanford Nuclear Reservation in Washington. DOE also decided to encapsulate the cesium in double-walled steel cylinders.

Rockwell and Battelle performed the majority of the design and testing work for this program. They also ran the waste separation program and manufactured the cesium capsules.

In the mid-1980s, DOE entered into discussions with Iotech and RSI about using DOE's cesium capsules as a radiation source in plaintiffs' commercial irradiators. (Iotech and RSI are separate private corporations in the business of using radiation to sterilize consumer goods.) Shortly thereafter, Iotech and RSI leased the cesium capsules from DOE and took possession of them.

About two years later, one of the capsules in RSI's Decatur, Georgia plant leaked in the plant's storage pool. The leak seriously contaminated the facility, caused the complete shutdown of operations, and required several years of cleanup operations.

After determining that the leak might have been caused by capsule defects, DOE recalled all cesium capsules from both plaintiffs' facilities.

B. LITIGATION BACKGROUND

Plaintiffs filed suit, claiming that defendants designed, tested, manufactured, and leased capsules that were unsafe as designed and as manufactured. Plaintiffs' claims against Rockwell and Battelle are brought under the Washington Product Liability Act ("WPLA") and the Uniform Commercial Code. RSI's claims against DOE are brought under the Federal Tort Claims Act, which incorporates the WPLA. RSI also alleges tortious spoilation of evidence against DOE and Battelle, alleging that they destroyed evidence by conducting destructive testing on the leaking capsule.

Plaintiffs' original and first amended complaints, filed in mid-1991, addressed only federal law. Plaintiffs' second amended complaints, addressing Washington law, were filed on January 6, 1992.⁴ Iotech's current complaint alleges:

IOTECH is a Colorado corporation....

DOE's negligence was the proximate cause of injury to IOTECH.... As a direct and proximate result of Rockwell and Battelle's negligence in failing to provide postmanufacture warnings.... and as a direct and proximate result of this breach of Rockwell and Battelle's express warranty to IOTECH that the cesium capsules would be safe for use in IOTECH's commercial irradiator.... and as a direct and proximate result of this breach of Rockwell and Battelle's implied warranty that the WESF capsules they designed and manufactured were safe, merchantable, and fit the intended and foreseeable uses of the capsules, IOTECH sustained damages and losses including loss of its property in that its license was restricted and the cesium capsules were rendered unsafe to use in IOTECH's Colorado facility; loss of profits; loss of customers; loss of goodwill; interruption of business at the Northglenn, Colorado facility; loss of access to operating cash and credit; loss of business opportunities; loss of investment; diversion of management time and resources; and future costs of demolishing the Northglenn, Colorado facility....

Second Amended Complaint and Demand for Jury Trial, Ct.Rec. 47 in No. CS-91-154 "Iotech's Complaint", at 2, 41-45.⁵ RSI's current complaint alleges:

RSI is a California corporation....

DOE's negligence was the proximate cause of injury to RSI.... As a direct and proximate result of the above — Rockwell and Battelle's defective design and manufacture of the capsules; failure to provide adequate warnings; and breach of express and implied warranties — RSI has sustained damages for which Rockwell and Battelle are strictly liable.... As a direct and proximate result of Rockwell and Battelle's negligence in failing to provide post-manufacture warnings.... and as a direct and proximate result of this breach of Rockwell and Battelle's express warranties.... and as a direct and proximate result of this breach of Rockwell and Battelle's implied warranties.... and as a direct and proximate result of DOE's breach and spoilation of evidence.... and as a direct and proximate result of Battelle's spoilation, RSI sustained damages and losses including loss of use of the Decatur, Georgia facility; loss of use of the Westerville, Ohio facility; loss of profits; loss of customers; destruction of irradiation equipment and Ohio and Georgia facilities through radioactive contamination; interruption of business at the Decatur, Georgia and Westerville, Ohio facilities; costs for cleanup activities related to decontamination of the Decatur, Georgia facility; cost of replacement of radioisotope sources for use at Westerville, Ohio; loss of access to operating capital and credit; loss of market share; diminution of value of the company; increased financing costs; loss of business opportunities; diversion of management time and resources; increased operating costs; additional administrative costs; future costs of reopening (if permitted to do so) or permanently closing the Decatur, Georgia facility; adverse publicity; loss of customer confidence; increased costs of and potential failure to recover damages in civil litigation as a result of destruction of evidence; harm to RSI's business reputation; and such other damages as RSI may prove at trial.

Third Amended Complaint and Demand for Jury Trial, Ct.Rec. 72 in No. CS-91-155 "RSI's Complaint", at 2, 44, 48-52, 57-62.

Defendants filed motions to dismiss in late 1991. The Court on July 30, 1993 transferred Iotech's claims against DOE to the Court of Claims. The Court on June 10, 1994 dismissed RSI's claims against DOE for failure to warn, and for negligent design, manufacture and testing of the capsules. Claims against DOE for negligent lease of defective products remain, as do all claims against Rockwell and Battelle.

Dispositive motions are due by November 22, 1994. Hearing is set for January 17, 1995, at 9:30 a.m., in Yakima, Washington.⁶

Trial is set for May 16, 1995, at 9:30 a.m., in Yakima, Washington.⁷

C. DETERMINATION OF APPLICABLE STATE LAW

Party contentions. Rockwell moves for an order determining that the applicable state law is the substantive law of Georgia. It contends that plaintiffs' claims arise from a "nuclear incident" that occurred in Georgia within the meaning of the Price-Anderson Act. DOE joins in Rockwell's motion.

RSI opposes Rockwell's motion. RSI contends that the doctrines of judicial estoppel, equitable estoppel and waiver preclude reliance on the Price-Anderson Act. It contends that plaintiffs have long known of the Price-Anderson Act but chose to rely on Washington law, and that change of controlling law now would be inequitable. Alternatively, RSI contends that even if the Price-Anderson Act applies, that its choice of law provisions require application of Washington law. It contends that the "nuclear incident" was the manufacture, design, testing and marketing of the cesium capsules, which occurred in Washington.

Iotech also opposes Rockwell's motion. It contends that the Price-Anderson act is inapplicable to its claims because it is not alleging public liability arising out of a "nuclear incident". (None of Iotech's capsules leaked.) Rather, it sues under product liability law, alleging the defective design and manufacture of the capsules it leased. Alternatively, Iotech argues...