Yoder v. Honeywell Inc., Civ. A. 94-B-1256.

• Court: U.S. District Court — District of Colorado
• Writing for the Court: Daniel F. Warden, Michael L. Singer, Denver, CO, for Defendant Bull HN
• Citation: Yoder v. Honeywell Inc., 900 F.Supp. 240 (D. Colo. 1995)
• Decision Date: 10 October 1995
• Docket Number: Civ. A. 94-B-1256.
• Parties: Regina M. YODER and Lester L. Yoder, Plaintiffs, v. HONEYWELL INC. and Bull Information Systems Inc., formerly known as Honeywell Information Systems Inc., Defendants.

900 F. Supp. 240

Regina M. YODER and Lester L. Yoder, Plaintiffs, v. HONEYWELL INC. and Bull Information Systems Inc., formerly known as Honeywell Information Systems Inc., Defendants.

Civ. A. 94-B-1256.

United States District Court, D. Colorado.

October 10, 1995.

COPYRIGHT MATERIAL OMITTED

Richard M. Foster, Cockrell, Quinn & Creighton, Denver, CO, Marc P. Weingarten, Greitzer and Locks, Philadelphia, PA, Steven J. Phillips, Levy Phillips & Koenigsberg, New York City, for plaintiffs.

Robert J. Potrykus, Giovanni M. Ruscitti, Popham, Haik, Schnobrich & Kaufman, Ltd., Denver, CO, Russell S. Ponessa, Robert B. MacDonald, Popham, Haik, Schnobrich & Kaufman, Ltd., Minneapolis, MN, Bert L. Wolff, Skadden, Arps, Slate, Meagher & Flom, New York City, for Defendant Honeywell.

Daniel F. Warden, Michael L. Singer, Denver, CO, for Defendant Bull HN.

AMENDED MEMORANDUM OPINION AND ORDER

BABCOCK, District Judge.

Plaintiffs Regina M. Yoder and Lester L. Yoder (the Yoders) bring this product liability action against defendants Honeywell Inc. (Honeywell) and Bull Information Systems Inc. (Bull) for injuries caused to Ms. Yoder from her use of an allegedly defective computer keyboard. Presently before me are Honeywell's motion for summary judgment and Bull's motion to dismiss. Honeywell asserts entitlement to judgment because it did not manufacture the keyboards at issue and it is not the "alter ego" of Bull, the manufacturer. Bull contends the Yoders' claim against it is barred by the applicable statute of limitations. The motions are fully briefed and orally argued. For the reason set forth in this order, I grant both motions.

I.

The following facts are not genuinely disputed. This action was originally filed on December 29, 1992 in the Eastern District of New York as part of a multiple party litigation. On April 21, 1994 Honeywell moved for and was granted a transfer of venue to this district.

From May 1990 until November 1990 Ms. Yoder was diagnosed with or underwent surgery for the following conditions: bilateral radial tunnel syndrome, bilateral thoracic outlet syndrome, bilateral tendinitis of the upper extremities; corrective surgery for left carpal tunnel syndrome; and corrective surgery for right carpal tunnel syndrome. Complaint, ¶¶ 69-70. Ms. Yoder claims that she incurred these injuries while employed by United Airlines at Stapleton Airport in Denver as a result of her use of an allegedly defective, unsafe and unreasonably dangerous computer keyboard designed, manufactured, marketed and sold by Honeywell and/or Bull, including Honeywell Information Systems, Inc. (HIS).

At a Scheduling/Planning conference on August 17, 1994, Honeywell contested liability based on product identification. Both parties were present at an inspection of the subject keyboards on December 7, 1994. Charles L. Fauble conducted the inspection on behalf of Honeywell.

In support of its motion, Honeywell presents the affidavit of Charles L. Fauble (Fauble). Fauble has been employed in the keyboard manufacturing business since 1978. Fauble Aff., ¶ 1. He was employed by Honeywell from 1986 to 1993 as the director of engineering for its keyboard division. Fauble Aff., ¶ 2. On December 7, 1994 Fauble examined several of the keyboards at the United Airlines Reservation Center at Stapleton Airport where Ms. Yoder worked and disassembled three. Fauble Aff., ¶ 8. On July 19, 1995 Fauble examined another seven keyboards. Fauble Aff., ¶ 9.

None of the seven keyboards examined bore trademarks identifying the manufacturer on the front of the keyboard enclosures. Fauble Aff., ¶ 13. Each of the seven keyboards had labels bearing a trademark on the bottom of the keyboard enclosures. Fauble Aff., ¶ 14. Three of the keyboards bore the trademark name Incoterm and four bore the Honeywell trademark. Id. Based on Fauble's examination of the keyboards he determined that the keyboards were not manufactured by Honeywell. Fauble Aff., ¶ 10. Plaintiffs have made no showing that a genuine issue of fact exists that Honeywell manufactured, sold, or distributed any computer keyboard alleged to be defective.

Honeywell also submits the affidavit of its current secretary Sigurd Ueland, Jr. in support of its contention that it is not the alter ego of HIS. Ueland has served in an executive capacity for Honeywell since 1973. Ueland Aff., ¶ 3. He has served as corporate secretary for a number of Honeywell subsidiaries including HIS. Id.

HIS was formed in 1970 for the purpose of designing, developing, manufacturing and marketing a complete line of computers and computer-related services. Ueland Aff., ¶ 11. HIS was owned by General Electric and Honeywell from 1970 to 1977. In 1977, HIS became a wholly-owned subsidiary of Honeywell and remained so until 1987. Ueland Aff., ¶ 13. In 1987, Honeywell sold 57.5% of its interest in HIS to Compagnie des Machines Bull (Machines Bull), and NEC Corporation, who renamed HIS, Honeywell Bull Inc. (Honeywell Bull). Ueland Aff., ¶ 14. In 1988, Honeywell sold an additional 22.6% of its interest in Honeywell Bull to Machines Bull. Honeywell Bull was then renamed Bull HN Information Systems. Ueland Aff., ¶ 15. Honeywell sold its remaining interest in Bull to Groupe Bull, formerly Machines Bull, in 1991.

In 1969 Incoterm Corporation (Incoterm) was formed to design, develop, manufacture, market and service electronic data computer-related products and software. Ueland Aff., ¶ 17. Incoterm was merged with BWL Terminal Sales, Inc. a wholly owned subsidiary of Honeywell in 1977, which retained the name Incoterm. In 1979 Incoterm was merged into HIS. Ueland Aff., ¶ 21.

At all times HIS observed corporate formalities including annual shareholder meetings and regular board of director meetings evidenced by corporate minutes. Ueland Aff., ¶ 26. HIS maintained its own bank accounts and corporate offices. Ueland Aff. ¶ 28-29. In 1970 at its formation, HIS had assets in excess of $1.3 billion dollars and sales of $859 million. Ueland Aff., ¶ 30. Honeywell's sales to HIS from 1973 to 1985 were never more than 0.5% of Honeywell's total sales. For the same period, HIS's sales to Honeywell never exceeded 3.3% of sales. Ueland Aff., ¶ 35.

Until 1979 the board of directors of HIS and the board of directors of Honeywell consisted of the same individuals. Plaintiff's Response Brief, Exh. E, Ueland Deposition (Ueland Depo.), p. 28-29. From 1979 to 1987, HIS's board of directors included the chief financial officer of Honeywell, the chief accounting officer of Honeywell, and the head operating person of the computer business at HIS. Ueland Depo., p. 29. None of the employees of Honeywell were employed by HIS. Ueland Aff., ¶ 36.

On March 26, 1987, Honeywell and HIS entered into a trademark license agreement. Pursuant to the terms of the agreement, HIS was granted the right to use the Honeywell trade name, service mark and trademark as part of its corporate name. Plaintiff's Response Brief, Exh. D., p. 1. In return, HIS agreed that all products produced by HIS which bore the Honeywell trademark would comply with quality control standards prescribed by Honeywell. Id., p. 6.

The Yoders argue that HIS was merely an instrumentality of Honeywell and, therefore, as HIS's alter ego, Honeywell is liable for Ms. Yoder's injuries. In the alternative, the Yoders assert that Honeywell is liable for Ms. Yoder's injuries even if it did not manufacture the subject keyboard because it was the apparent manufacturer. I disagree.

On February 3, 1995, Honeywell informed counsel for the Yoders that it believed that the products at issue were not manufactured by Honeywell but, instead, by Honeywell Information Systems, Inc. (HIS), now known as Bull Information Systems (Bull). On March 3, 1995, the Yoders moved to amend their complaint to add Bull as a party defendant. The motion was granted and the amended complaint was filed on March 15, 1995.

Bull then filed a motion to dismiss on April 17, 1995, contending that the complaint must be dismissed for failure to bring the action within the two year limitations period established by C.R.S. XX-XX-XXX. I agree.

II.

Summary judgment shall enter where 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). If a movant establishes entitlement to judgment as a matter of law given uncontroverted, operative facts contained in the documentary evidence, summary judgment will lie. Mares v. ConAgra Poultry Co., Inc., 971 F.2d 492, 494 (10th Cir.1992). The operative inquiry is whether, based on all the documents submitted, a reasonable trier of fact could find by a preponderance of evidence that the plaintiff is entitled to a verdict. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986); Mares, 971 F.2d at 494. Summary judgment should not enter if, viewing the evidence in a light most favorable to the nonmoving party and drawing a reasonable inferences in that party's favor, a reasonable jury could return a verdict for that party. Anderson, 477 U.S. at 252, 106 S.Ct. at 2512; Mares, 971 F.2d at 494.

III.

"Because this is a suit based on diversity jurisdiction, we apply the law of the forum state, in this case Colorado." Lowell Staats Mining Co. v. Pioneer Uravan, Inc., 878 F.2d 1259, 1262 (10th Cir.1989). Whether a parent corporation should be held liable for the acts of its subsidiary based on the "alter ego" doctrine is based on the analysis of the following factors:

(1) the parent corporation owns all or majority of the capital stock of the subsidiary; (2) the parent and subsidiary corporations have common directors or officers; (3) the parent corporation finances the subsidiary; (4) the parent corporation subscribes to all the capital stock of the subsidiary or otherwise causes its incorporation; (5) the subsidiary has grossly inadequate capital; (6) the parent corporation pays the salaries or expenses or

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