Vicuna v. O.P. Schuman & Sons, Inc.

• Decision Date: 14 May 2015
• Docket Number: No. 13–CV–2834 (ERK)(VVP).,13–CV–2834 (ERK)(VVP).
• Citation: 106 F.Supp.3d 286
• Parties: Federica VICUNA and Martin Varelas, Plaintiffs, v. O.P. SCHUMAN & SONS, INC., S.K.S. Equipment Co., and AmeriPak Inc., Defendants.
• Court: U.S. District Court — Eastern District of New York

106 F.Supp.3d 286

Federica VICUNA and Martin Varelas, Plaintiffs,

v.O.P. SCHUMAN & SONS, INC., S.K.S. Equipment Co., and AmeriPak Inc., Defendants.

No. 13–CV–2834 (ERK)(VVP).

United States District Court, E.D. New York.

Signed May 14, 2015.

Amended May 19, 2015.

Gregory J. Cannata, Alison Cannata Hendele, Gregory J. Cannata & Associates, New York City, for Plaintiff.

Lisa M. Fitzgerald, Scott Warren Bermack, Ropers Majeski Kohn & Bentley, New York City, for Defendant.

AMENDED MEMORANDUM & ORDER

KORMAN, District Judge.

Plaintiffs Federica Vicuna and Martin Varelas brought this action against O.P. Schuman & Sons, Inc. ("Schuman"), S.K.S. Equipment Co. ("S.K.S."), and AmeriPak Inc. alleging claims sounding in strict product liability, failure to provide proper warnings, breach of express and implied warranties, and negligence based on a workplace injury Vicuna sustained while using a machine manufactured by S.K.S. Schuman, the only remaining defendant, has moved for summary judgment on the plaintiffs' successor liability and failure to warn claims.

BACKGROUND

A. Factual Background

On February 22, 2012, Vicuna, a New York domiciliary, was injured while using a Model 60 horizontal wrapper at her work for Muffins ‘n’ More in Brooklyn, New York. The horizontal wrapper—manufactured by S.K.S., a Pennsylvania corporation—uses a conveyor belt to move baked goods to the point of operation where plastic film is wrapped around them and then heat-sealed by a descending heating element. While operating the machine in manual mode—as she had been instructed by her employer, but contrary to the operations manual—three of her fingers were crushed and burned by the descending heating element, requiring amputation of two of her fingers. Sterner Dep. 115:5–7; Vicuna Dep. 10:23–11:9, 37:4–18. Unlike when the machine runs in automatic mode, the horizontal wrapper can run in manual mode without a polycarbonate guard in place to protect the operator from coming into contact with the heating element. Sterner Dep. 47:18–49:16. Vicuna's employer directed her to put her hand very close to the machine's point of operation while adjusting the baked goods to ensure that they were not damaged during the wrapping process. Vicuna Dep. 54:10–25. She was never given a copy of the operator manual or other written instructions for the machine. Id. at 29:22–30:15, 32:7–18. Vicuna testified that she did not remember seeing any warning decals on the machine the day of the accident. Id. at 49:12–17. She also testified that she did not realize that placing her fingers near the machine's moving parts was dangerous and says that she would not have operated the machine in the way she did had she known of the danger. Id. at 49:18–50:19, 53:8–14.

The Model 60 horizontal wrapper that Vicuna was using when she suffered her injury was the first of a line of wrapping products marketed by S.K.S. under the AmeriPak brand name. Sterner Dep. 34:15–12; Schuman Website, Pl.'s Ex. 11. S.K.S. discontinued manufacturing the Model 60 wrapper in 1999 and the last machine of that model was sold in 2004, although production continued on other models in the AmeriPak line. Schuman Aff., Def.'s Ex. F ¶ 10. Although S.K.S. thrived for a period, by 2004 its sales had decreased and it was forced to either sell the business or allow the bank to take it over. Sterner Dep. 37:14–21, 38:13–21.

In December 2004, Schuman and S.K.S., both Pennsylvania corporations, entered into an Asset Purchase Agreement in which Schuman purchased certain S.K.S. assets for $300,000. Asset Purchase Agreement ¶¶ 1, 2. The primary purpose of the agreement was for Schuman to obtain the AmeriPak product line and continue it under its own control. Schuman Dep. 22:4–15, 51:20–24. Schuman obtained blueprints and patents for the AmeriPak line of machines. Sterner Dep. 75:11–76:19. Schuman also obtained the goodwill that came with the AmeriPak line along with a list of customers and purchase records. Schuman Dep. 40:2–19, 60:2–8, 60:23–61:19. After Schuman purchased S.K.S.'s assets, all eight S.K.S. employees joined Schuman. Sterner Dep. 36:3–14; Schuman Dep. 63:19–22; O'Shea Dep. 55:23–57:17.

The purchase agreement required S.K.S. to refrain from engaging "in any business or other activity, except as required to wind up and dissolve the corporation." Asset Purchase Agreement ¶ 20. S.K.S. was not, however, formally dissolved because the accountant who was to have filed the paperwork dissolving the corporation died before he could do so. Sterner Dep. 38:1–12. While S.K.S. was never formally dissolved, the purchase agreement disposed of S.K.S.'s last potentially profit-bearing assets, id. at 117:4–7, and led to S.K.S. ending its operations, id. at 37:22–24. S.K.S. currently has no assets or liability insurance. Id. at 38:13–19. In addition to the above provisions, the agreement stated that Schuman "shall not assume any debts, liabilities, or obligations of [S.K.S.], including those associated with any potential products liability suits." Asset Purchase Agreement ¶ 3.

Approximately seven weeks before Vicuna's injury, her employer, Muffins ‘n’ More, contacted Schuman to request an operator's manual for the Model 60 horizontal wrapper and some spare machine parts. Schuman Dep. 105:14–106:17, 110:10–24; Manual Invoice, Pl.'s Ex. 12, Def.'s Ex. Q; Parts Invoice, Pl.'s Ex. 13. Muffins ‘n’ More had not purchased any parts from Schuman prior to that time, nor is there any evidence of contact after that point. Schuman Dep. 112:6–113:14. Schuman mailed to Muffins ‘n’ More an operators manual for the machine that included a personalized cover page and designated AmeriPak as "a division of O.P. Schuman and Sons, Inc." although the substance of the manual was written by S.K.S. Sterner Dep. 44:19–45:17. The parties do not dispute that Muffins ‘n’ More never contacted Schuman about servicing their horizontal wrapper machine and that Schuman never made a service call to Muffins ‘n’ More. Pl.'s Rule 56.1 Statement ¶¶ 82, 86.

B. Procedural Background

Plaintiffs filed suit against Schuman on May 14, 2013, asserting claims sounding in strict product liability, failure to provide proper warnings, breach of express and implied warranties, and negligence. A fifth cause of action is a derivative claim for loss of services on behalf of Vicuna's husband, Martin Varelas. Dkt. # 1. On July 17 of the same year, plaintiffs filed an amended complaint adding S.K.S. and AmeriPak Inc. as defendants. Dkt. # 4. This court denied Schuman's motion to dismiss for failure to state a claim in an order dated April 22, 2014, and directed that the motion should be re-filed as a Rule 56 motion for summary judgment. Subsequently, on June 19, 2014, plaintiffs filed a stipulation discontinuing their action against AmeriPak without prejudice. Dkt. # 27. The next day, plaintiffs filed a request for a certificate of default against S.K.S. for failure to plead or otherwise defend the action. Dkt. # 29. Default was entered on August 15, 2014. Dkt. # 40. In addition, Schuman has filed a cross-claim against S.K.S. Dkt. # 36. After discovery, which focused on the questions of successor liability and the failure to warn, Schuman moved for summary judgment on March 16, 2015. Dkt. # 47.

ANALYSIS

A. Standard of Review

Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). A fact is "material" if it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute about a material fact is "genuine" if the "evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. In determining whether there is a genuine issue of material fact, the court must resolve all ambiguities, and draw all inferences, against the moving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962). Nevertheless, the non-moving party may defeat summary judgment only by producing evidence of specific facts that raise a genuine issue for trial. Anderson, 477 U.S. at 256, 106 S.Ct. 2505. "Conclusory allegations will not suffice to create a genuine issue," and "[t]here must be more than a ‘scintilla of evidence’ " to defeat a summary judgment motion. Del. & Hudson Ry. Co. v. Consol. Rail Corp., 902 F.2d 174, 178 (2d Cir.1990) (quoting Anderson, 477 U.S. at 252, 106 S.Ct. 2505 ).

B. Successor Liability

There is no dispute that Schuman did not design, manufacture, or sell the machine that allegedly caused Vicuna's injuries. Pl.'s Rule 56.1 Statement ¶ 23. Rather, those activities were performed by S.K.S., which subsequently sold certain of its assets to Schuman. Thus, Schuman can be held strictly liable for any defects in the product only through successor liability. The resolution of this issue requires a choice of law analysis. Before turning to that analysis, I pause to address Schuman's argument that Vicuna's successor liability claim suffers from procedural flaws. In a short paragraph devoid of citations to authority or the record beyond a general citation to the amended complaint, Schuman asserts that Vicuna's complaint "fails to articulate a theory of successor liability." Def.'s Mem. Supp. Summ. J. 9. The brevity of this argument is matched—if not exceeded—by Vicuna's response which baldly asserts (also without reference to legal authorities or the record) that the successor liability claim had been properly pled, but requesting leave to amend the complaint if necessary. Pl.'s Mem. Opp. Summ. J. 40. The paucity of briefing aside, Schuman's argument lacks merit. Vicuna's amended complaint alleges facts sufficient to establish a claim of successor liability. Specifically, the complaint alleges that Schuman purchased certain assets and liabilities from S.K.S. and that Schuman assumed the position of manufacturing, selling, and...