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Venmar Ventilations, Inc. v. Von Weise USA, Inc.: US District Court : TORT - contribution claim by product mfr versus component supplier, alleged collaborator, can proceed

17
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
VENMAR VENTILATION, INC.,
Third-Party Plaintiff,
v.
VON WEISE USA, INC.,
f/k/a/ FASCO INDUSTRIES, INC.
Third-Party Defendant.
Civil No. 07-1314 (JRT/FLN)
ORDER ADOPTING REPORT AND
RECOMMENDATION OF
MAGISTRATE JUDGE
William A. Lemire, Christopher D. Newkirk, and Timothy J. Carrigan,
ARTHUR, CHAPMAN, KETTERING, SMETAK & PIKALA, P.A.,
500 Young Quinlan Building, 81 South Ninth Street, Minneapolis, MN
55402, for third-party plaintiff.
Hal A. Shillingstad and Andrea D. Kiehl, FLYNN, GASKINS &
BENNETT, LLP, 333 South Seventh Street, Suite 2900, Minneapolis, MN
55402, for third-party defendant.
This matter is before the Court on third-party defendant Von Weise USA, Inc.s
(Von Weise) objections to a Report and Recommendation issued by United States
Magistrate Judge Franklin L. Noel on October 24, 2008. The Magistrate Judge
recommended denying Von Weises motion for summary judgment. After a de novo
review of those objections, see 28 U.S.C. 636(b); Local Rule 72.2(b), the Court adopts
the Report and Recommendation for the reasons stated below.
BACKGROUND
In March 2005, a heat recovery ventilator (HRV) owned by Jon and Diane
Taxdahl caught fire, causing extensive damage to their home. (Compl., Docket No. 1,
- 2 -
4.) The HRV was manufactured by Venmar Ventilation, Inc. (Venmar), and
contained a motor manufactured by Von Weise, formerly known as Fasco Industries, Inc.
(Fasco).1 (Third-Party Compl., Docket No. 11.). The Taxdahls filed an action against
Venmar on February 26, 2007. (Compl., Docket No. 1.) In April 2007, Venmar brought
a third-party complaint against Fasco, and later settled with the Taxdahls. (Third-Party
Compl., Docket No. 11; Stipulation for Dismissal With Prejudice, Docket No. 99.)
Venmar alleges that Fasco negligently failed to provide warnings about dangers created
by the Fasco motor, and seeks contribution for the damages to the Taxdahls home.
Venmar contends that the Fasco motor was dangerous because it included a
cycling thermal protector instead of a one-shot thermal protector. Thermal protectors
regulate electrical current and are designed to shut down the motor when it gets too hot.
(See LeMire Aff., Docket No. 87, Ex. K.) After shutting the motor down, a cycling
thermal protector allows the motor to turn back on once it is cool. (Id., Ex. F at 54-56.)
In contrast, a one-shot protector permanently shuts down the overheated motor, and the
motor must then be replaced. (See id., Ex. C at 62.) Venmar claims that Fasco had a
duty to recommend a one-shot thermal protector instead of the cycling thermal protector,
because Fasco knew that a cycling protector could eventually wear down through
repeated use, and could ultimately cause a fire by failing to turn off an overheated motor.
Fasco, on the other hand, claims that the actual cause of the Taxdahls fire was
another part of the HRV called the capacitor. The capacitor sits on top of the motor to
1 For ease of reference, the Court adopts the parties practice of using the name Fasco
when referring to the third-party plaintiff.
- 3 -
help it run more efficiently. (Shillingstad Aff., Docket No. 79, Ex. S at 11.) Some
capacitors include devices that automatically shut down the capacitor if the pressure
inside of it gets too high. (Id., Ex. A at 52.) Venmar originally purchased capacitors
from Fasco that included this protective device, but later elected to purchase capacitors
from other suppliers that did not include this protection. (Id., Ex. A at 51-52.)
Venmar adds that it has a close, collaborative relationship with Fasco in the design
of its HRVs. (See, e.g., Forest Aff., Docket No. 93, 5-15.) Affidavits from Venmar
employees indicate that Venmar had little expertise in motor design and relied on Fasco
to design a custom motor for the HRVs. (See, e.g., To Aff., Docket No. 88, 8.)
Venmar employees further aver that they relied on Fascos recommendations for how to
incorporate Fascos custom motors into the final, integrated HRV. (See, e.g., Forest Aff.,
Docket No. 93, 13.) Fasco disputes this characterization, arguing that it had no role in
designing Venmars final product.
Fasco now moves to dismiss Venmars third-party complaint on summary
judgment. On October 24, 2008, the Magistrate Judge issued a Report and
Recommendation recommending that the motion be denied. The Magistrate Judge
determined that (1) there are genuine issues of material fact as to whether Fascos
participation in the design of the HRVs was sufficient to trigger a duty to warn; and
(2) there are genuine issues of material fact as to whether certain indemnification terms
were incorporated into the parties final contract, preventing the Court from concluding
as a matter of law that Venmar agreed to indemnify Fasco for any damages. Fasco now
objects to the Report and Recommendation on three grounds: (1) Fasco did not
- 4 -
substantially participate in the HRV design and is therefore protected from liability by the
Component Part Supplier Doctrine; (2) the Report and Recommendation fails to apply
case law demonstrating the level of participation required for the substantial
participation exception to the Component Part Supplier Doctrine; and (3) Venmar has
failed to demonstrate all of the elements required for a claim of negligent failure to warn.2
ANALYSIS
I. STANDARD OF REVIEW
Summary judgment is appropriate where there are no genuine issues of material
fact and the moving party can demonstrate that it is entitled to judgment as a matter of
law. Fed. R. Civ. P 56(c). A fact is material if it might affect the outcome of the case,
and a dispute is genuine if the evidence is such that it could lead a reasonable jury to
return a verdict for either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247
(1986). A court considering a motion for summary judgment must view the facts in the
light most favorable to the non-moving party and give that party the benefit of all
reasonable inferences that can be drawn from those facts. Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986).
2 Because Fasco does not object to the Magistrate Judges assessment of its
indemnification defense, the Court adopts the Magistrate Judges analysis of that issue without
further discussion.
- 5 -
II. FASCOS OBJECTIONS
A. The Component Part Supplier Doctrine and the Substantial
Participation Exception
Fasco first argues that it is shielded from liability by the Component Part Supplier
Doctrine. Under the Component Part Supplier Doctrine, a manufacturer of a nondefective,
multi-use component part is generally not liable for injuries caused by the
finished product when its parts are integrated into a larger system. In re
Temperomandibular Joint (TMJ) Implants Prods. Liability Litig., 97 F.3d 1050, 1056 (8th
Cir. 1996) (applying Minnesota law). There is, however, an exception to this doctrine. A
component part supplier may be liable if the supplier exercised some control over the
design of the final product. In re TMJ Implants, 97 F.3d at 1057 n.8; see also Estate of
Carey by Carey v. Hy-Temp Mfg., Inc., 702 F. Supp. 666, 670 (N.D. Ill. 1988) ([T]he
component maker can be held liable if it does control or influence how the component is
incorporated into the final product.). Courts and treatises elsewhere have clarified that
this exception requires substantial participation in the integration of a component into a
final product in order for the components supplier to be liable. See Restatement (Third)
of Torts: Products Liability 5(b)(1); Buonanno v. Colmar Belting Co. Inc., 733 A.2d
712, 719 (R.I. 1999) (We hold that this case stands for the proposition that the primary
duty is owed by the designer of the assembled machine and not the supplier of the
component parts in the absence of substantial participation in the integration of the
component into the design of the product.) (emphasis added). Finally, this substantial
participation exception has been applied specifically in cases addressing the duty to
- 6 -
warn. See In re TMJ Implants, 97 F.3d at 1058 (finding no duty to warn where, inter
alia, the component supplier exercised no control over the design, testing, or
manufacturing of the final product); Crossfield v. Quality Control Equip. Co., 1 F.3d
701, 706 (8th Cir. 1993) (finding that a defendant had no duty to warn under Missouri
law because, inter alia, the component supplier had no connection with the design or
installation of the integrated product).
Thus, Fasco may be liable for failing to warn of potential defects in the use of the
Fasco motor in the integrated Venmar HRV if it substantially participated in the
integration of that motor into the design of the HRV. As the Magistrate Judge thoroughly
explained, Venmar has presented sufficient evidence of such substantial participation
to defeat summary judgment. Venmar submitted an affidavit from its vice president of
research and development indicating that Venmar repeatedly consulted with [Fasco]
representatives during the period in which we developed Venmar Ventilations first
HRVs. (To Aff., Docket No. 88, at 5). This employee further indicated that Fasco
completely designed the blower [a motor with a fan and a thermal protector included],
which is the most important part of the HRV, and that Fascos recommendation about
which blower to use affected how we configured the HRVs shape and size. (Id.,
13-15). Another employee indicated that Venmar provided and showed Fasco detailed
information about our new products and Fasco in turn actively participated in the
evolutive HRV design process by providing advice and recommendations. (Forest Aff.,
Docket No. 93, 13.) A third employee described visits by Venmar and Fasco
employees to each others facilities, and indicated that [g]iven the importance of the
- 7 -
motor to our HRVs, it is accurate to say Fasco was a business partner rather than a mere
parts supplier. (Janelle Aff., Ex. 90, 10-11.) Finally, Venmar has provided a series
of faxes and drawings that could along with the affidavits referenced above support a
finding that Fasco substantially participated in the HRV design. (See Forest Aff.,
Docket No. 93, Exs. A-J.) In those circumstances, the Court agrees with the Magistrate
Judge that there is a genuine issue of material fact as to whether Fasco substantially
participated in the design of the HRV.
Fasco argues that this Court should nonetheless grant its motion for summary
judgment because there are depositions and thousands of pages of competent evidence
that contradict the sworn statements of Venmars employees. Fasco further argues that
many of the Venmar witnesses had been involved in HRV design in earlier time periods,
and were not in a position to know specific details about the exact HRV model involved
in the fire. In another case, Fasco criticizes Venmars testimony by noting that a witness
was not the designer of the HRV, but rather supervised the designers, who allegedly
contradicted their supervisor in their testimony. These contentions, however, go to the
weight of Venmars evidence, rather than its legal sufficiency. Even where witnesses are
not able to speak to the exact model that was involved in the Taxdahls fire, their
testimony as to the practices that had developed between Venmar and Fasco in the
development of prior HRV models would certainly be probative as to their approach to
later models. Ultimately, the question of whether this and the rest of Venmars evidence
is outweighed by the evidence relied on by Fasco is simply a question for a jury.
- 8 -
Fasco separately argues that the Magistrate Judge ignores case law that establishes
a particularly high bar for establishing substantial participation. Fasco argues that in
Thompson v. Hirano Tecseed Co., LTD, 456 F.3d 805 (8th Cir. 2006), the Eighth Circuit
found the component part supplier substantially participated because it
observed and assisted in the installation of its part into the whole system, it
provided training for the whole system, it tested the system, it observed the
subject-defect and instructed users on how to work around the defect, and a
contract between the parties existed placing responsibility for the design of
the system on [the component part supplier].
(Objections, Docket No. 110 at 10.) Fasco argues that Venmar has failed to submit
similar specific facts.
Nothing in Thompson, however, demonstrates that the Magistrate Judge reached
an improper result. As an initial matter, the defendant in Thompson was the manufacturer
of the entire product in question, not merely a component part. Thompson, 456 F.3d at
808-09. The question before the court was whether a manufacturer is liable for a design
defect if it follows a customer's specifications in manufacturing a finished product. Id.
at 809. To the extent that Thompson drew an analogy to the component supplier doctrine
to determine whether the manufacturer sufficiently participated in the disputed design
to be held liable nothing in Thompson purports to establish an exclusive list of facts that
must be met in order to establish substantial participation. Substantial participation can
take various forms, including designing a component that will perform specifically as
part of the integrated product, or deciding which component best serves the requirements
- 9 -
of the integrated product. See Restatement (Third) of Torts: Product Liability, 5,
cmt. e.3
B. Negligent Failure to Warn
Fasco also argues that Venmar has not established one of the prima facie elements
of a negligent failure to warn and therefore fails in its claim as a matter of law. Under
Minnesota law, to establish a claim for negligent failure to warn, Venmar must show
that: (1) there was a duty to warn about the risk in question; (2) the warnings given, if
any, were inadequate; and (3) the lack of an adequate warning was the cause of the
plaintiffs injuries. U.S. Xpress, Inc. v. Great N. Ins. Co., No. 01-195, 2003 WL
124021, *4 (D. Minn. 2003) (citing Balder v. Haley, 399 N.W.2d 77, 81 (Minn. 1987)).
Fasco argues that Venmar has failed to establish that its alleged failure to warn
caused the injury. According to Fasco, Venmars claim is that Fasco failed to warn that a
cycling protector could fail in a closed position,4 and thereby cause a fire. Fasco
argues that in order to satisfy this third element, Venmar must show that the thermal
protector in the Taxdahls HRV actually failed in a closed position. Fasco claims that
3 Fasco also briefly argues that courts have held that without knowledge of the final
product, the component part manufacturer cannot be said to have substantially participated.
(Objections, Docket No. 110 at 10.) While it is unclear what Fasco believes was lacking in its
notice, there is adequate evidence that Fasco participated in the design of Venmar HRVs from
their inception, and that Fasco was aware of the design, specifications, and operating parameters
of the finished Venmar HRV product.
4 The cycling protector is designed to regulate electrical current by opening and
closing. (LeMire Aff., Docket No. 87, Ex. F at 54-55.) Once the motor reaches a particular
temperature, two small metallic contacts open. (Id.) This stops the electrical current from
flowing to the motor and allows the motor to cool. (Id.) Once the motor is sufficiently cool, the
contacts close again, allowing the electrical current to continue. (Id.)
- 10 -
Venmar has not, and cannot, establish this element. In response, Venmar argues that
Fascos explanation of Venmars failure to warn claim represents only half of that
claim. The other half, Venmar argues, is simply that Fasco failed to tell Venmar of an
existing safer alternative the one-shot thermal protector and that this failure caused
the Taxdahls fire.
Regardless of how broadly Venmars claim is characterized, the Court agrees with
the Magistrate Judge that Venmar has provided sufficient evidence to defeat summary
judgment. Testimony from Fasco suggests that it had been aware far in advance of this
incident that an aging cycling protector could fail in a closed position, and that this could
cause a fire. (LeMire Aff., Docket No. 87, Ex. F at 32-36.) In addition, Venmar has
submitted an expert report by Dr. Robert J. Svare, which concludes the following: (1) the
Taxdahls fire started inside the HRVs blower motor, which was manufactured by Fasco,
(id., Ex. X at 1); (2) the Fasco motors cycling thermal protector provided inadequate
protection against overheating, creating a risk that the protector would fail in a closed
position and cause a fire, (id., at 7); (3) one-shot protectors were available and known to
Fasco before it manufactured the Taxdahls motor and the fire would have been avoided
had Fasco used one, (id., at 8); (4) Fasco failed to tell Venmar about the problems with
auto-resetting thermal protectors and the Taxdahls fire would have been avoided if it had
done so, (id., at 18); and (5) Fascos use of an auto-resetting thermal protector was
negligent, (id., at 19-20).
The Court agrees that a reasonable jury could find this to be sufficient evidence
that Fascos failure to recommend the one-shot thermal protector caused the Taxdahls
- 11 -
fire. In addition, in light of the evidence about the specific vulnerabilities of the cycling
protector, a reasonable jury could rely on this evidence to infer that the fire occurred after
the protector failed in a closed position. In sum, viewing the evidence in the light most
favorable to Venmar, this Court finds that a genuine issue of material fact remains as to
whether Fascos failure to warn caused the Taxdahls damages.
This case will be placed on the Courts next available trial calendar.
ORDER
Based on the foregoing, all the files, records, and proceedings herein, the Court
OVERRULES Third-Party Defendants objections [Docket No. 110] and ADOPTS the
Report and Recommendation of the Magistrate Judge dated October 24, 2008 [Docket
No. 109]. IT IS HEREBY ORDERED that the Third-Party Defendants Motion for
Summary Judgment [Docket No. 75] is DENIED.
DATED: March 24, 2009 ____s/ ____
at Minneapolis, Minnesota. JOHN R. TUNHEIM
United States District Judge
 

 
 
 

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