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

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

July 27, 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.

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

          Lawrence L. Piersol United States District Judge.

         The Court's Order, Document 124, is withdrawn and replaced by this Memorandum Opinion. Defendants have moved for summary judgment on seven 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 apassenger 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.1.; 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 in many situations 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 as now stated in § 14 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 subj ect 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. The apparent manufacturer doctrine is set forth in the South Dakota Pattern Jury Instruction No. 20-130-90.[2] The South Dakota Pattern instructions do not have the force of law but are helpful and persuasive and all commonly used by this Court and the state courts. There is no South Dakota statutory or case law to support the application of the apparent manufacturer doctrine in South Dakota, nor is there any law indicating it should not be applied other than SDCL 20-9-9. The Pattern Jury Instruction for support only states "Reference: Engberg v. Ford Motor Co., 87 S.D. 196, 205 N.W.2d 104 (1973) Restatement of the Law (Second) Torts, § 400." In Engberg v. Ford Motor Co., the South Dakota Supreme Court only recognized for the first time a strict liability cause of action. The 1979 enactment of SDCL 20-9-9 was clearly a legislative response and a limiting of the strict liability doctrine in South Dakota.

         Plaintiffs did not sue the manufacturer of the tire in question. Plaintiffs now urge that this Court should apply the apparent manufacturer doctrine to the current Defendants, neither of whom manufactured the tire. The South Dakota Supreme Court has never considered whether the apparent manufacturer doctrine is a part of the common law of South Dakota. It is clear that SDCL 20-9-9 in many instances precludes the existence of an apparent manufacturer doctrine when considering strict liability claims against a middleman. In the present case, this Court in a previous Order, now withdrawn, assumed the claimed defect was a latent defect and dismissed the strict liability against manufacturer claim. Under reconsideration, the Court recognized that whether or not the claimed defect was "latent" within the meaning of SDCL 20-9-9 was a jury question. Whether the claimed defect is "latent" within the meaning of SDCL 20-9-9 depends upon the situation presented to the middleman distributor, Goodyear Dunlop, when the tire was in its possession, not the situation at the time of manufacturer by Goodyear Dunlop France. See Lindholm v. BMW of North America, LLQ2017 WL 2838215, at*3 (8th Cir. July 3, 2017).[3] Plaintiffs argue on the basis of the apparent manufacturer doctrine that whether or not the claimed defect was "latent" should be decided based on the situation at the time of manufacture. There is expert opinion as to the manufacturing process that would support a conclusion that at the time of manufacture the claimed defect was not latent. There is, however, no expert opinion to support a conclusion that the defect was other than latent at the time the tire was with the middleman, Goodyear Dunlop. In fact, Plaintiffs' expert testified:

Q: Okay. And [what] you're telling me is: You wouldn't have expected Lewis or Rosholt or anyone else in the chain, the distribution chain, to have detected the cord shadows, correct?
A. Correct.

         Statement of Undisputed Facts ¶ 19 (Docket #85).

         There is therefore no jury question to present as to whether the tire had a non-latent defect when it was in the possession of the middleman, Goodyear Dunlop.

         There is still another way that Plaintiffs could proceed in strict liability against the middleman, Goodyear Dunlop. SDCL 20-9-9 goes on to provide that even if the claimed defect is latent, the strict liability claim can still proceed if "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 no evidence that Goodyear Dunlop knew of any defective condition of the tire. Nor is there any evidence that Goodyear Dunlop should have known ...


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