Sara Lee Corp. v. Homasote Co.

• Decision Date: 09 August 1989
• Docket Number: Civ. No. B-86-418.
• Citation: 719 F. Supp. 417
• Parties: SARA LEE CORPORATION, etc., Conoplex Insurance Company, Ltd. v. HOMASOTE COMPANY, Rex Plastics, Inc., BASF Corporation, Atlantic Richfield Company, etc.
• Court: U.S. District Court — District of Maryland

719 F. Supp. 417

SARA LEE CORPORATION, etc., Conoplex Insurance Company, Ltd. v. HOMASOTE COMPANY, Rex Plastics, Inc., BASF Corporation, Atlantic Richfield Company, etc.

Civ. No. B-86-418.

United States District Court, D. Maryland.

August 9, 1989.

COPYRIGHT MATERIAL OMITTED

James L. Fetterly and Stanley E. Siegel, Minneapolis, Minn., and Robin Page West, Baltimore, Md., for plaintiffs.

A. Douglas Owens and Rodger O. Robertson, Baltimore, Md., for defendant Homasote Co.

E. Charles Dann, Jr. and Kevin M. Soper, Towson, Md., for defendant Rex Plaxtics, Inc.

James E. Gray, David W. Allen and Linda S. Woolf, Baltimore, Md., for defendant BASF Corp.

Larry D. Espel, Minneapolis, Minn., and M. Jennifer Crump and David M. Grove, Baltimore, Md., for defendant Atlantic Richfield Co.

WALTER E. BLACK, Jr., District Judge.

Pending before the Court are Motions for Summary Judgment filed by the four remaining defendants in this case: Rex Plastics, Inc. (Rex Plastics), Atlantic Richfield Company (ARCO), B.A.S.F. Corporation (BASF), and Homasote Company (Homasote). The issues were fully briefed, and the Court had the benefit of oral argument of counsel.

This litigation arises out of a fire on May 16, 1983, at a pickle processing plant in Hurlock, Maryland. In the Amended Complaint, Sara Lee Corporation, to its own use and to the use of Conoplex Insurance Company, Limited, alleges that the products made by each of the four defendants contributed to rapid flame growth and development, causing the fire damage and resulting losses incurred by plaintiffs. Defendants' products allegedly comprised different parts of a ceiling that was remodeled in the manufacturing area of the pickle plant in January of 1981. Plaintiffs allege that a wood-based product made by defendant Homasote was used for the underside of the ceiling. Defendant Rex Plastics allegedly provided a polyethylene film which served as a vapor barrier above the Homasote panels. Defendants ARCO and BASF produce a raw material known generically as expandable polystyrene beads ("EPS beads"). Plaintiffs allege that EPS beads made by one or both of these defendants were sold to Foam Industries, which converted this raw material into EPS board insulation and sold the finished product to Moore's retail hardware store. Plaintiffs further allege that EPS board insulation made by Foam Industries was bought from Moore's and incorporated in the ceiling above the Homasote panels. Plaintiffs state four theories of liability in support of their claims against defendants: strict liability, negligence, intentional failure to warn, and violation of certain reporting rules promulgated by the Consumer Product Safety Commission.

Under Rule 56 of the Federal Rules of Civil Procedure, a motion for summary judgment shall be granted only if the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits, show that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). Summary judgment is appropriate when a party fails to sufficiently show the existence of an essential element of its complaint on which it will have the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The burden on the movant can at times be heavy, as the standard for passing on motions for summary judgment is strict. Clarke v. Montgomery Ward & Co., 298 F.2d 346, 348 (4th Cir.1962). If interpretations conflict or reasonable persons might differ, summary judgment is improper. Morrison v. Nissan Motor Co., 601 F.2d 139, 141 (4th Cir.1979). Nevertheless, summary judgment is appropriate if a reasonable jury could not decide in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The standard for ruling on a motion for summary judgment is the same as that for a directed verdict: that is, whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law. Id.

When a motion for summary judgment has been made and supported, an adverse party may not rest upon mere allegations or denials of the adverse party's pleading, but must set forth specific facts showing that there is a genuine issue for trial. Fed.R.Civ.P. 56(e). The mere existence of a scintilla of evidence is insufficient; there must be evidence on which the jury could reasonably find for the nonmoving party. See Anderson, 477 U.S. at 252, 106 S.Ct. at 2512. In the absence of such a minimal showing, the moving party should not be required to undergo the considerable expense of preparing for and participating in a trial. In Bland v. Norfolk and Southern Railroad Co., 406 F.2d 863, 866 (4th Cir.1969), Judge Winter aptly stated:

While a day in court may be a constitutional necessity when there are disputed questions of fact, the function of a motion for summary judgment is to smoke out if there is any case, i.e., any genuine dispute as to any material fact, and if there is no case, to conserve judicial time and energy by avoiding an unnecessary trial and by providing a speedy and efficient summary disposition.

Defendants ARCO and BASF assert that the bulk supplier/sophisticated user defense shields them from liability for a failure to warn the ultimate user about the dangers of their product and, therefore, are entitled to summary judgment as to Counts I, II and III of the Amended Complaint. The Court agrees. Defendants primarily rely on opinions by Judge Smalkin in Higgins v. E.I. DuPont de Nemours & Co., 671 F.Supp. 1055 (D.Md.1987), aff'd, 863 F.2d 1162 (4th Cir.1988) and Judge Kiser in Goodbar v. Whitehead Bros., 591 F.Supp. 552 (W.D.Va.1984), aff'd sub nom. Beale v. Hardy, 769 F.2d 213 (4th Cir. 1985). The Court finds these opinions persuasive and controlling as to the failure to warn claims against ARCO and BASF. In the absence of any controlling Maryland decision, this Court in Higgins was confident that the Court of Appeals of Maryland would recognize the sophisticated user/bulk supplier defense in a failure to warn claim based on negligence under Restatement (Second) of Torts § 388 or on strict liability under Restatement (Second) of Torts § 402A. See Higgins, 671 F.Supp. at 1059-60 and cases cited therein. Under this defense, a bulk supplier who supplies a dangerous product to a sophisticated purchaser cannot be held liable for not warning the ultimate users of the product of its dangers. The Court stated that "the recognition of the ... defense logically follows from the sense of § 388, as clearly pointed out by Judge Kiser in Goodbar, and as recognized by the Fourth Circuit." 671 F.Supp. at 1059. The Court in Higgins cited with approval the analysis by Judge Kiser of § 388 in Goodbar. Id. at 1058-59. § 388 states:

One who supplies directly or through a third person a chattel for another to use is subject to liability to those whom the supplier should expect to use the chattel ... if the supplier

(a) knows or has reason to know that the chattel is or is likely to be dangerous for the use for which it is supplied, and

(b) has no reason to believe that those for whose use the chattel is supplied will realize its dangerous condition, and

(c) fails to exercise reasonable care to inform them of its dangerous condition or of the facts which make it likely to be dangerous.

As in Goodbar and Higgins, the application of § 388 to the facts in this case turns upon whether the requirements of Clause (c) have been met. There is a genuine issue of material fact as to Clause (a) —whether ARCO and BASF knew that the EPS beads were dangerous for their intended use, and Clause (b) — whether ARCO and BASF had reason to believe that the owners of the pickle plant would realize the dangers of EPS board insulation. In order to analyze Clause (c), the Court in Goodbar looked to Comment n of § 388 entitled "Warnings given to third person," which delineates various factors that must be balanced in determining what precautions the supplier must take to satisfy the Clause (c) requirement of reasonable care including:

(1) the dangerous condition of the product; (2) the purpose for which the product is used; (3) the form of any warnings given; (4) the reliability of the third party as a conduit of necessary information about the product; (5) the magnitude of the risk involved; and (6) the burden imposed on the supplier by requiring that he directly warn all users.

Goodbar, 591 F.Supp. at 557. This comment "recognizes that a balancing of these considerations is necessary in light of the fact that no single set of rules could possibly be advanced that would automatically cover all situations." Id. The Court in Goodbar went on to state: "Critical in my view is the recognition that `(m)odern life would be intolerable unless one were permitted to rely to a certain extent on others doing what they normally do, particularly if it is their duty to do so.'" Id.

In Goodbar, the Court granted summary judgment in favor of bulk suppliers, who supplied silica sand and silica-containing products to the Lynchburg Foundry, on a negligent failure to warn claim brought by employees of the foundry who allegedly contracted the respiratory disease of silicosis from exposure to these products. The Court held that under Virginia law there is no duty on product suppliers to warn employees of knowledgeable industrial purchasers as to product-related hazards. Id. at 559. The Court stated that when the supplier has reason to believe that the purchaser of the product will recognize the dangers associated with the product, it is the purchaser and not the supplier that has the duty to guard against the danger to the purchaser's employees. The Court found that the Lynchburg Foundry had extensive knowledge of the hazards of inhaling silica dust, the disease of silicosis, and...