US Lighting Service, Inc. v. Llerrad Corp.

• Decision Date: 13 July 1992
• Docket Number: No. 1:89 CV 315.,1:89 CV 315.
• Citation: 800 F. Supp. 1513
• Parties: UNITED STATES LIGHTING SERVICE, INC., Plaintiff, v. The LLERRAD CORPORATION, d/b/a Fluor-Tech, et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

800 F. Supp. 1513

UNITED STATES LIGHTING SERVICE, INC., Plaintiff, v.The LLERRAD CORPORATION, d/b/a Fluor-Tech, et al., Defendants.

No. 1:89 CV 315.

United States District Court, N.D. Ohio, E.D.

July 13, 1992.

John S. Chapman, Schneider, Smeltz, Ranney & LaFond, Cleveland, Ohio, for plaintiff.

Eugene B. Meador, Kitchen, Messner & Deery, Cleveland, Ohio, for the Llerrad Corp. d/b/a Fluor-Tech.

Rita A. Bartnik, Arter & Hadden, Cleveland, Ohio, and Michael Zazzara, Chicago, Ill., for Underwriters Laboratories.

ORDER

BATTISTI, District Judge.

Before the Court are motions for summary judgment filed by Plaintiff United States Lighting Service (U.S. Lighting) and DefendantUnderwriters Laboratories, Inc.(UL).For the reasons set forth below, both motions are denied.¹

FACTUAL BACKGROUND

On August 3, 1990, the Court denied motions to dismiss filed by the Llerrad Corporation(Llerrad) and UL.United States Lighting Service, Inc. v. The Llerrad Corporation,745 F.Supp. 426(N.D.Ohio1990).On May 21, 1992, the Court heard oral arguments on motions for summary judgment filed by UL and U.S. Lighting.At that time, it denied the motions and indicated that the present order would follow.

Plaintiff U.S. Lighting is an Ohio corporation that purchases, installs and services lighting equipment for commercial establishments.In May 1987, U.S. Lighting purchased 7,145 Fluor-Tech Energy-Savers from Llerrad.It then installed the Energy-Savers for one of its customers.Shortly after the Fluor-Tech Energy-Savers were put into operation, some of them began to burn, melt, malfunction and self-destruct.The problems with the Energy-Savers resulted in fires which scorched the ceiling tiles around the lights.Pl.Ex. 5.Upon notification of these problems, U.S. Lighting removed the lights, and determined that 965 of 7,145 had malfunctioned and self-destructed.SeeU.S. Lighting,745 F.Supp. at 427;Monin Aff.Supp.at 2;Pl.Ex. 4.During the course of events, U.S. Lighting retained ownership of the Energy-Savers.

Defendant UL is a Delaware corporation with its principal place of business in Illinois.It is an independent and not-for-profit testing organization that, for a fee, examines and approves or disapproves of products submitted by its clients.Coen Aff.at 1.UL is involved in the litigation because it had approved the Energy-Savers as meeting its standards.Llerrad marketed the Energy-Savers as bearing the UL label.Pl.Ex. 3.The manner in which UL evaluated the Energy-Savers deserves further explanation.

In June 1984, Llerrad sought an evaluation of its Energy-Savers.In February 1985, UL informed Llerrad that Energy-Savers did not meet UL standards.²Some time thereafter, UL also informed Llerrad that two other products were eligible for UL listing.SeePl.Ex. 7.

In July 1986, Llerrad again requested review of the Energy-Savers, following UL procedures for products substantially similar to ones previously approved for UL listing.For reasons that are unknown, two separate groups of engineers began independent investigations.

On August 1, 1986, a group of engineers found that Energy-Savers were within UL standards.Thus, Energy-Savers were approved for UL listing.Pl.Ex. 9, 10, 13.UL prepared a card text for Energy-Savers, which is its document showing approval of a product.

On September 5, 1986, however, another group of engineers found that Energy-Savers did not comply with UL standards.In particular, the product failed a temperature test.Pl.Ex. 12.Thus, Energy-Savers should not have been approved for UL listing.Pl.Ex. 15.UL later stated in a telegram to U.S. Lighting:

After reviewing the past correspondence, we found that Energy-Savers were added in the card text mistakenly during other revision work under project 86SC12773.Our records show that Energy-Savers were investigated in Project86SC12929 and unacceptable results were obtained.¶ In view of the above, we are deleting Energy-Savers from the card text of file E92625.We apologize for any inconvenience or confusion that this may cause you ...

Id.

It was only after the events giving rise to this litigation, on May 24, 1988, that UL amended the card text to show that the Energy-Savers in fact did not meet its standards.Pl.Ex. 15.It is unclear whether prior to that revision of the card text, UL made any efforts to correct its error.

U.S. Lighting and UL did not have any contractual arrangement.When UL authorized Llerrad to affix the UL mark to the Energy-Savers, those two companies entered into a follow-up service agreement.Under the terms of that agreement, Llerrad agreed not to use the UL mark on products "not made in compliance with the Procedure and other requirements of UL."Def.Ex. C.In addition, Llerrad agreed that use of the mark "constituted a declaration" of compliance with UL requirements.Finally, Llerrad agreed:

UL in performing its functions in accordance with its objects and purposes does not assume or undertake to discharge any responsibility of Llerrad to any other party or parties.Llerrad recognizes that the opinions and findings of UL represent its judgment given with due consideration to the necessary limitations of practical operation and in accordance with its objects and purposes and agrees that UL does not warrant or guarantee its opinions or that its findings will be recognized or accepted.

Id.

In the present action, U.S. Lighting seeks damages in the amount of the cost of purchasing Energy-Savers, the cost of installing them, expected profit upon their installation, and costs associated with their removal.At the time of its motion for summary judgment, these damages totalled approximately $115,000.00.

Although both U.S. Lighting and UL had claims against Llerrad, it apparently has filed for bankruptcy in the United States Bankruptcy Court for the Central District of California.While U.S. Lighting and UL have indicated that they wish to continue prosecution against Llerrad, neither of their motions contain discussions of claims against Llerrad, or the effect of bankruptcy proceedings.In any event, Llerrad is no longer presenting an active defense in this matter.

DISCUSSION

I.THE EXISTENCE OF A DUTY OF CARE

Jurisdiction is premised on diversity of citizenship.At the time of the earlier order the choice of law had not been determined, but it now is clear that Ohio law governs the case.

As a threshold issue, Defendant UL argues that Ohio courts have not recognized a cause of action against it.In essence, UL asserts that it does not owe any duty of care to a purchaser of a product bearing its mark.In the absence of a duty of care, U.S. Lighting cannot maintain a negligence action."The existence of a duty in a negligence action is a question of law for the court to determine."Mussivand v. David,45 Ohio St.3d 314, 318, 544 N.E.2d 265(1989)(listing elements of negligence action).As the Court finds that UL owed a duty of care to U.S. Lighting, the latter may maintain a negligence action.

The parties and the Court have not located any Ohio decision addressing the potential liability of a product endorsement service.Only a few courts from other jurisdictions have considered the subject, but an increasing number have recognized an action in negligence.See cases collected inH. Rockwell, Annotation, Product Liability of Endorser, Trade Association, Certifier or Similar Party Who Expresses Approval of Products, 1 A.L.R. 5th 431(1992).See, e.g., Hanberry v. Hearst Corp.,276 Cal.App.2d 680, 81 Cal.Rptr. 519(4th Dist.1969)(allowing negligence claim concerning Good Housekeeping Seal under California law);Restatement (Second) of Torts§ 324(A), § 552.Three cases contain discussions of a negligence action against UL in particular.Hempstead v. General Fire Extinguisher Corp.,269 F.Supp. 109(D.Del.1967)(cause of action under Virginia law);Yassin v. Certified Grocers of Illinois, Inc.,150 Ill.App.3d 1052, 104 Ill.Dec. 52, 502 N.E.2d 315(1st Dist.1986)(cause of action under Illinois law);Benco Plastics, Inc. v. Westinghouse Electric Corp.,387 F.Supp. 772(E.D.Tenn.1974)(no cause of action under Tennessee law).

Two of the three decisions concerning UL recognize a cause of action sounding in negligence.Hempstead, the earliest case, concerned a fire extinguisher certified by UL.It was discussed in the Court's prior opinion.SeeU.S. Lighting,745 F.Supp. at 433.Yassin, decided by an intermediate appellate court in Illinois applying its own state law, concerned a commercial meat tenderizer which had caused physical injury to the plaintiff.Yassin,104 Ill.Dec. at 56-57, 502 N.E.2d at 319-20.Yassin affirmed the trial court, which had directed a verdict in favor of UL on a strict liability theory, and instructed the jury on liability for UL on a negligence theory.The jury returned a verdict for UL.The appellate court observed that very little case law had developed around claims against independent testing laboratories.It cited Hempstead, but concluded without further discussion, "we assume, without deciding, that such suits against independent testing laboratories can be brought in Illinois as well ..."Id. at 67, 502 N.E.2d at 330.

The only contrary decision is Benco Plastics, where the allegedly defective product was a lampholder for neon lighting used in signs.Again, the product carried UL approval.Although Benco Plastics and the present case are superficially similar in that both involve lighting, the Benco Plastics opinion is neither binding nor persuasive.The opinion followed a bench trial and is expressly limited to the particular fact pattern.Benco Plastics,387 F.Supp. at 786.The court was influenced "most importantly" by the possible recovery that would be available despite dismissal of claims against UL.Id.Furthermore, the public policy motivations for the holding are taken into account through the requirements of a negligence action, as discussed infra.

The parties have...