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McAllister-Lewis v. Goodyear Dunlop Tires North America, Ltd.

United States District Court, D. South Dakota, Southern Division

May 24, 2017

JUDITH McALLISTER-LEWIS, individually, and as Special Administrator of the Estate of Robert L. Lewis, Deceased, Plaintiffs,
v.
GOODYEAR DUNLOP TIRES NORTH AMERICA, LTD., an Ohio limited liability company; and THE GOODYEAR TIRE & RUBBER COMPANY, an Ohio corporation, Defendants.

          ORDER ON DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT, DOC. 80, 83

          Lawrence L. Piersol United States District Judge

         Defendants have moved for summary judgment on all eight claimed causes of action. The eight claimed causes of action are: First, Strict Products Liability - Design Defect; Second, Strict Products Liability - Manufacturing Defect; Third, Negligence; Fourth, Failure to Warn - Strict Liability; Fifth, Negligent Failure to Warn; Sixth, Breach of Implied Warranty of Merchantability; Seventh, Breach of Implied Warranty of Fitness; and Eighth, Loss of Consortium.

         A summary of the facts is that Plaintiff Judith McAllister-Lewis was a passenger on the 2003 Harley-Davidson Ultra Classic Electra Glide Motorcycle being driven by her husband, the decedent, Robert L. Lewis. While traveling west on Interstate 90 in South Dakota on August 7, 2010, the rear tire failed. The tire was manufactured by Goodyear Dunlop Tires France, a non-party. The decedent lost control of the motorcycle and died as a result of the injuries from the resulting crash. Judith McAllister-Lewis also suffered injuries from the crash. Ms. McAllister-Lewis and her husband were pulling a two wheel trailer that had a cooler affixed to the tongue of the trailer ahead of the box on the trailer.

         The relationship of the non-party manufacturer of the tire to the Defendants is as follows: Defendant The Goodyear Tire & Rubber Company (Goodyear Tire & Rubber) in Document 32-1 submitted sworn information concerning the ownership of Goodyear Dunlop Tires France (Goodyear Dunlop France), the manufacturer of the tire in question. The result after going through ownership concerning Goodyear Dunlop Tires France is that Defendant The Goodyear Tire & Rubber Company, through other companies owns 75% of Goodyear Dunlop Tires France and Defendant Goodyear Dunlop Tires North America, Ltd., (Goodyear Dunlop) now Sumitomo Rubber Industries, Ltd. owns 25% of Goodyear Dunlop Tires France. The intervening holdings that result in Defendant The Goodyear Tire & Rubber Company owning 75% of Goodyear Dunlop Tires France involved: Property Leasing S.a.r.l.; Goodyear S.A. in Luxembourg; and Goodyear Canada Inc.

         DISCUSSION

         Even though 75% of Goodyear Dunlop France is ultimately owned by Defendant Goodyear Tire & Rubber, the evidence in the case is that Goodyear Tire & Rubber did not design, import, distribute or sell the tire in question that says "Dunlop" on the sidewall as does the limited warranty card accompanying the sale of the tire. 75% ultimate ownership of another company, standing alone, does not without other factors, warrant a piercing of the corporate veil to bring potential liability to the parent company.

         The Court will separately consider each claim for summary judgment as to each Defendant. Defendant Goodyear Dunlop had been purchased by Sumitomo Rubber USA, LLC. The operative facts of this case all took place while it was still Goodyear Dunlop, and for clarity the Court will continue to refer to the corporation by that name.

         The first claimed cause of action is strict liability for design defect. Defendants argue Plaintiffs do not present evidence of a claim on that basis. Plaintiffs agree and that claim will be dismissed as to both Defendants.

         The second claimed cause of action is for strict liability for a manufacturing defect. Neither of the Defendants manufactured the tire in question. The two Defendants do ultimately own the manufacturer of the tire, Goodyear Dunlop France, 75% being owned by Goodyear Tire & Rubber, and 25% being owned by Goodyear Dunlop. Goodyear Tire & Rubber did not import, distribute or sell the tire while Goodyear Dunlop did import, distribute and sell this tire at wholesale. SDCL 20-9-9 precludes strict liability claims for a middleman, referred to in SDCL 20-9-9 as a distributor, dealer, wholesaler or retail seller. Plaintiffs urge the adoption of the apparent manufacturer doctrine as stated in Restatement (Second) of Torts § 400 (1965). That statement has been superseded by Restatement (Third) of Torts: Products Liability § 14 (1998). The doctrine is that "One engaged in the business of selling or otherwise distributing products who sells or distributes as its own a product manufactured by another is subject to the same liability as though the seller or distributor were the product's manufacturer." The South Dakota Supreme Court has not ruled upon the conflict between SDCL 20-9-9 and the apparent manufacturer common law doctrine. SDCL 20-9-9 was enacted in 1979. It provides that a product's distributors, wholesalers, dealers or sellers are immune from strict liability except for manufacturers or those who knew, or in the exercise of ordinary care, should have known, of the latent defective condition of the product.[1] The Court finds that SDCL 20-9-9 is with regard to strict liability contrary to the apparent manufacturer doctrine and thus the apparent manufacturer doctrine with regard to strict liability would likely not be adopted if and when that issue is presented to the South Dakota Supreme Court.

         Defendant Goodyear Tire & Rubber has not been shown to have anything to do with the tire in question that would subject it to strict liability even if the apparent manufacturer doctrine was applied. As for Goodyear Dunlop, strict liability does not apply due to the application of SDCL 20-9-9. The claimed defect in the tire in question is a latent defect. Were it not for SDCL 20-9-9, and if the apparent manufacturer doctrine was applied, the strict liability claims would proceed against Goodyear Dunlop. Accordingly, the strict liability manufacturing defect claim, count two, is dismissed as to both Defendants. That result is consistent with what appears to be the intent of the South Dakota Legislature in adopting SDCL 20-9-9. The Legislature in enacting SDCL 20-9-9 did provide what amounts to a negligence exception which will be discussed with regard to count three, negligence.

         The third cause of action is for negligence. An exception to SDCL 20-9-9 as applicable to this case is "unless said dealer, wholesaler, or retail seller knew, or in the exercise of ordinary care, should have known, of the defective condition of the final product." There is scant evidence that Goodyear Dunlop as the importer and distributor of this tire should have, in the exercise of ordinary care, known of the latent defect in this tire. However, taking the evidence in a light most favorable to the Plaintiffs, the Court will submit the negligence question to the jury, not as to negligent manufacturing, but instead, whether as a wholesaler Goodyear Dunlop knew, or in the exercise of ordinary care, should have known, of the defective condition of the tire in question.

         Aside from the above reason for submission of the negligence claim, a discussion of the apparent manufacturer doctrine is that the apparent manufacturer doctrine would apply to Goodyear Dunlop as the tire itself and the accompanying literature call the tire a "Dunlop" tire and Goodyear Dunlop did import, distribute and sell by wholesale the tire as a Dunlop tire even though it was made by a non-party entity, Goodyear Dunlop France. As a result if the apparent manufacturer doctrine as limited were adopted, the negligence claim would proceed against Goodyear Dunlop. The reason the negligence claim would proceed is not that Goodyear Dunlop was 25% of Goodyear Dunlop France as no basis for piercing the corporate veil has been shown. Instead, the reason would be that Goodyear Dunlop held the Dunlop tire out as its own under the apparent manufacturer doctrine. However, the inquiry on the negligence claim applying the apparent manufacturer doctrine as against Goodyear Dunlop does not end there. If the apparent manufacturer doctrine is applied it has to be applied in a manner as limited by SDCL 20-9-9 to preclude strict liability but not other claims. If not applied in that manner, then SDCL 20-9-9 would defeat the apparent manufacturer doctrine in its entirety. The apparent manufacturer doctrine is now in Restatement (Third) of Torts:

         Product Liability, Section 14 (1998). Comment B to that Restatement states:

However, many jurisdictions by statute treat nonmanufacturers more leniently. See ยง 1, Comment e. To the extent that a statute specifies responsibilities, the statutory terms control. But to the extent that a statute does not, ...

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