Williams v. Rep Corp.

Decision Date21 August 2002
Docket NumberNo. 01-3746.,01-3746.
Citation302 F.3d 660
PartiesDaniel M. WILLIAMS, Plaintiff-Appellant, v. REP CORPORATION and REP France, Defendants-Appellees.
CourtU.S. Court of Appeals — Seventh Circuit

David V. Scott (argued), New Albany, IN, for Plaintiff-Appellant.

Nelson Nettles (argued), John M. Choplin, II, Norris, Choplin & Schroeder, Indianapolis, IN, for Defendants-Appellees.

Before BAUER, COFFEY and RIPPLE, Circuit Judges.

RIPPLE, Circuit Judge.

Daniel Williams severely injured his hand in a machine that he was operating for his employer. He brought this products liability action against the machine's manufacturer, REP International, and the manufacturer's United States distributor, REP Corporation. The district court entered summary judgment for REP Corporation because it did not sell, lease or otherwise put into the stream of commerce the machine that injured Mr. Williams, as required for liability under Indiana law. The district court also dismissed Mr. Williams' claim against REP International for want of personal jurisdiction. For the reasons set forth in the following opinion, we affirm the judgment of the district court.

I BACKGROUND
A. Facts

Mr. Williams injured his hand in July 1995 while operating a V47 rubber injection molding machine for his employer, ENBI of Shelbyville, Indiana ("ENBI/Indiana"). The machine was manufactured by REP International of France1 for ENBI of Holland ("ENBI/Holland").2 Before the machine was shipped to ENBI/Holland, REP International altered the machine, which had been set to comply with European safety requirements, to comply with the requirements for machines used in the United States. See R.54 at 17-20 & Ex.19. The machine was shipped to ENBI/Holland on June 23, 1995. ENBI/Holland then shipped the machine to ENBI/Indiana. On July 12, 1995, REP International sent REP Corporation of Illinois ("REP Corp."), REP's exclusive United States distributor, a message asking REP Corp. to install the machine for ENBI. REP Corp. completed the installation on July 14, 1995. Mr. Williams' hand was injured while using the machine on July 31, 1995.

B. District Court Proceedings

Mr. Williams brought a products liability action in an Indiana state court against REP Corp. REP Corp. removed the case to federal court and sought summary judgment. The district court granted the motion, reasoning that REP Corp. could not be liable under the Indiana products liability statute because it had not sold the machine that injured Mr. Williams.

The district court previously had allowed Mr. Williams to amend his complaint to include a claim against "REP France" because the evidence produced in discovery had shown such an entity to be the manufacturer of the machine that had injured Mr. Williams. After the court granted summary judgment in favor of REP Corporation, the court issued a summons for "REP France" to appear and to file an answer to Mr. Williams' amended complaint. The counsel who had represented REP Corp. thereafter appeared on behalf of the defendant named as "REP France." The same counsel then informed the district court that no entity named "REP France" existed and that REP International (of France) manufactured the machine at issue. Counsel then filed a motion to modify the caption in the case to identify REP International as the defendant. In the same motion, REP International moved to dismiss the case for lack of personal jurisdiction. Mr. Williams did not oppose REP International's motion to modify the caption. The district court therefore directed the clerk of the court to modify the caption to show REP International as the defendant. The court also granted REP International's motion to dismiss for want of personal jurisdiction. It held that Indiana's long-arm statute, Trial Rule 4.4, did not permit the exercise of jurisdiction over REP International and that, even if it did, the exercise of jurisdiction would violate the Due Process Clause of the Fourteenth Amendment.

II DISCUSSION
A. REP Corp.

At the time of Mr. Williams' injury and on the date that he filed this action in state court, the Indiana products liability statute imposed liability for injury caused by a defective product on "a person who sells, leases, or otherwise puts into the stream of commerce" the defective product. Ind. Code Ann. § 33-1-1.5-3(a) (West 1996).3 The district court entered summary judgment for REP Corp. because Mr. Williams produced no evidence that REP Corp. sold, leased or otherwise put into the stream of commerce the allegedly defective machine. We review de novo the district court's grant of summary judgment. See Remer v. Burlington Area School Dist., 286 F.3d 1007, 1010 (7th Cir.2002). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

Section 3 of the Indiana products liability act (the Act) sets out the circumstances under which a person may be subject to strict liability for harm caused by a defective product. It reads in relevant part as follows:

(a) Except as provided in subsection (c), a person who sells, leases, or otherwise puts into the stream of commerce any product in a defective condition unreasonably dangerous to any user or consumer or to the user's or consumer's property is subject to liability for physical harm caused by that product to the user or consumer or to the user's or consumer's property if that user or consumer is in the class of persons that the seller should reasonably foresee as being subject to the harm caused by the defective condition, and if:

(1) The seller is engaged in the business of selling such a product; and

(2) The product is expected to and does reach the user or consumer without substantial alteration in the condition in which it is sold by the person sought to be held liable under this chapter.

* * * * * *

(c) A product liability action based on the doctrine of strict liability in tort may not be commenced or maintained against any seller of a product that is alleged to contain or possess a defective condition unreasonably dangerous to the user or consumer unless the seller is a manufacturer of the product or of the part of the product alleged to be defective.

(d) Nothing in this chapter shall be construed to limit any other action from being brought against any seller of a product. If a court is unable to hold jurisdiction over a particular manufacturer of a product or part of a product alleged to be defective, then that manufacturer's principal distributor or seller over whom a court may hold jurisdiction shall be considered, for the purposes of this section, the manufacturer of the product.

Ind.Code Ann. § 33-1-1.5-3 (West 1996).

Mr. Williams submits that REP Corp. is subject to liability under the Act notwithstanding the fact that it did not actually sell the machine that injured him. He offers several arguments in support of his contention. First, Mr. Williams contends that REP Corp. falls within the Act's definition of "manufacturer" and therefore may be liable under the Act. The Act defines "manufacturer" to include "a seller who: ... (D) is owned in whole or significant part by the manufacturer; or (E) owns in whole or significant part the manufacturer." Ind.Code Ann. § 33-1-1.5-2(3) (West 1996). The Act defines a "seller" in general terms as "a person engaged in the business of selling or leasing a product. ..." Id. § 33-1-1.5-2(5). At the time the district court entered summary judgment for REP Corp., the evidence before the court indicated that "REP France" was the manufacturer of the machine and that REP Corp. was a wholly owned subsidiary of "REP France." Even if REP Corp. could be considered a "seller" under the statute's generic definition, and therefore a "manufacturer" because it is owned by "REP France," there is still no evidence that REP Corp. sold, leased or otherwise put into the stream of commerce the allegedly defective machine as required by Ind.Code § 33-1-1.5-3(a). It was later disclosed that REP International manufactured the machine and did not own REP Corp. This development does not change the basic analysis. REP, the parent corporation, owns REP International and REP Corp. Yet, REP Corp. still cannot be said to have sold, leased or otherwise placed the machine in the stream of commerce.4

Mr. Williams also submits that, if REP Corp. is not a manufacturer or seller of the machine, Section 3(d) of the Act nevertheless subjects it to liability. Section 3(d) provides that

[i]f a court is unable to hold jurisdiction over a particular manufacturer of a product or part of a product alleged to be defective, then that manufacturer's principal distributor or seller over whom a court may hold jurisdiction shall be considered, for the purposes of this section, the manufacturer of the product.

Ind.Code Ann. § 33-1-1.5-3(d) (West 1996). According to Mr. Williams, because REP Corp. is REP International's exclusive distributor and seller in the United States, Section 3(d) subjects REP Corp. to liability. In so doing, Mr. Williams suggests, Section 3(d) reflects a state policy of ensuring that companies are held responsible for the injuries they cause and of preventing companies from structuring themselves in such a way as to avoid liability altogether.5

Section 3(a) identifies the conduct that exposes a person to liability; a person must "sell[], lease[], or otherwise put[] into the stream of commerce" the defective product. Ind.Code Ann. § 33-1-1.5-3(a) (West 1996). If Section 3(d) were to operate as Mr. Williams suggests, it would broaden the scope of liability beyond that provided for in Section 3(a) because it would subject to...

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