Opinion
IP 98-1742-C-M/S.
March 7, 2001.
ORDER ON MOTION FOR PARTIAL SUMMARY JUDGMENT
This matter comes before the Court on a motion by one of the defendants, Honeywell International Inc. ("Honeywell"), requesting that the Court find as a matter of law that, at the time of the accident which is the subject of this litigation, it owed no duty to the plaintiffs for the pre-sale condition of the engine of the helicopter that crashed, or for the condition of any of the component parts used in that engine. This motion encompasses liability for defects in design and manufacture, as well as liability for the duties to warn or to instruct about the proper use of these products. However, this motion does not encompass Count III of the plaintiffs' Third Amended Complaint, which addresses alleged post-sale negligence on the part of Defendant.
Honeywell makes two separate arguments. First, it contends that it cannot be held liable for any alleged design or manufacturing defects involving those components of the engine that it manufactured before 1987 because the Indiana products liability statute extinguishes any cause of action which accrues more than ten years after a product is sold. Second Honeywell contends that it cannot be held liable for any alleged defects in the planetary gears that were used as replacement parts within the ten year statutory period because it neither manufactured nor sold those replacement gears to the Army.
The plaintiffs counter both arguments. First, the plaintiffs contend that the engine involved in the crash was rebuilt within ten years of the accident, and that therefore Indiana's products liability statute of repose does not apply to bar the plaintiffs cause of action against the original manufacturer Honeywell. Second, the plaintiffs argue that even if Honeywell was not the primary manufacturer of the replacement planetary gears, Honeywell was still responsible for providing, and then revising, the design specifications that were used in making them. Therefore, plaintiffs contend that Honeywell must be considered a manufacturer of those parts in the sense intended by the Indiana products liability statute.
The Court has considered fully the parties' arguments and, for the reasons discussed below, finds that Honeywell is entitled to judgment as a matter of law with regard to the first argument, but not with respect to its second argument. Therefore, the Court GRANTS Honeywell's motion for partial summary judgment on all of Plaintiffs' claims that are based solely on alleged pre-sale defects in the engine or carrier assembly. However, the Court DENIES Honeywell's motion for summary judgment regarding any alleged defects in the replacement planetary gears or any alleged duty to warn regarding potential dangers to plaintiffs who use the replacement gears in the expected manner.
I. FACTS
The relevant facts in the light most favorable to the plaintiffs are these:
On March 1, 1997, a National Guard Bell UH-1 helicopter crashed near Camp Atterbury in Southern Indiana, killing one occupant, Thomas Miller, and severely injuring the other two, Lewis Keith Pyle and Todd Bouslog (hereinafter, collectively referred to, along with decedent's representative Josephine Miller, as "Plaintiffs"). Second Amended Complaint ¶¶ 18-19; Affidavit of Honeywell's senior product safety specialist David Looper ("Looper Aff.") ¶ 4. This accident apparently was caused by the failure of the forward reduction gear assembly component of the helicopter's engine. Id. ¶ 9. This part of the engine contains three planetary gears, a sun gear, and an output gear, all mounted in a carrier assembly unit. Looper Aff. ¶ 7. One of the planetary gears failed, breaking into several pieces, and causing the crash. Looper Aff. ¶ 9.
The engine, a gas turbine engine, model T53-L-13B, was manufactured by the Lycoming Turbine Engine Division of Avco Corporation in 1971 and sold to the U.S. Army under a military procurement contract. Looper Aff. ¶¶ 5-6 and Ex. B. Lycoming was acquired by Allied Signal in 1994. Id. ¶ 1. Allied Signal and Honeywell Corporation merged in 1999, doing business from then on under the Honeywell name. Id. ¶ 5. (The original manufacturer and its successor companies will be identified hereinafter as "Defendant.")
A carrier assembly consists of three major components, the forward carrier, the rear torquemeter plate, and the aft carrier. Looper Aff. ¶ 19. Three planetary gears are attached to the carrier assembly between the forward and aft parts. Id. ¶¶ 7-8. The planetary gears are each held in place in the carrier assembly by two roller bearings. Id. ¶ 8. The forward and aft carrier each contain three bore holes into which the roller bearings are placed. Id. ¶ 8. The carrier bore holes and the roller bearings maintain the relative alignment of the planetary gears. Id.
The particular carrier involved in the crash was manufactured by Defendant at some undetermined time prior to 1977. Looper Aff. ¶ 19, 22. Army records show that it was inspected by a Corpus Christi Army Depot ("CCAD") employee on August 26, 1977, and documented as a serviceable overhauled part. Deposition of aircraft equipment specialist Ross Havel ("Havel Dep.") at 45-46 and Exs. 153, 155. The carrier assembly was then placed in inventory where it remained in Army possession, unused, until September 1990, when the CCAD undertook to rebuild the engine of the UH-1 helicopter that is the subject of this litigation. Id. at 50-6 and Ex. 155. At that time, the carrier assembly was installed into said engine. Id. Defendant's product safety specialist who investigated the crash reported that the bore holes in this particular carrier assembly were mislocated and that the mislocation was sufficient as to have caused a misalignment between the planetary gears and their mating output gears. Looper Aff. ¶ 9.
The carrier assembly unit was overhauled again in 1996 by the Missouri National Guard, and various component parts were replaced. Deposition of Master Sergeant Charles Collins ("Collins Dep.") at 3, 6, 10, 12-13, 25-6, 43-60, 67-8, 90-1; Ex. 144 pp. 816-1196; Ex. 313 pp. 04-05. In particular, new planetary gears and roller bearings were installed. Collins Dep. at 285-6; Exhibit 313, p. S0005. These parts were sold to the Army by Precision Gear ("Precision") and shipped on or about October 2, 1991. Deposition of Precision vice president William Giramonte ("Giramonte Dep.") at 99. Defendant imposed written quality standards on Precision in its role as a supplier to the military of planetary gears. Deposition of Defendant's quality control engineer Frank Neville ("Neville Dep.") at 109-10. Moreover, the replacement gears and bearings were manufactured in accordance with Defendant's drawings and design specifications. Giramonte Dep. at 99-101, 119-20.
The record is somewhat ambiguous on this point. Defendant's quality control engineer Neville states rather vaguely that Defendant imposed standards on its suppliers. Neville Dep. at 109. Although he was not asked to be more specific, the context suggests that he was talking, in particular, about the planetary gears made by Precision. Id. at 109-11. And, the standards seemed to involve such issues as the type of steel used, the amount of heat used, and the precise size and shape of the gear teeth. Id. at 110.
The planetary gears involved in the crash had been stamped with the letters AK. Id. at 99-101, 140. This amounted to a certification by Precision that they had been manufactured according to Defendant's revised specification or blueprint, called Revision AK. Id. at 85-86, 99-101, 119-20. Giramonte asserted that Precision would not deviate from Defendant's specifications without written authorization from Defendant. Id. at 85-6. In his own words, "we sell this part with the part number that's on the blueprint. So basically the part must conform to that piece of paper and all its requirements. So, now, if we were looking to change something, anything, . . ., we would have to go back to what we refer as the OEM's [original manufacturer's] engineering and get their written authorization before you could change one iota of the drawing." Id. at 85.
In 1991, Precision discovered a problem in the gear design involving the location of a timing mark that might cause stress on the gear, and requested Defendant's permission to change the blueprint for Revision AK. Id. at 65 and Ex. 359, p. 26. Rather than revise the entire specification, Defendant chose instead to approve an alteration in one of the sketches that dictated how Precision should interpret Revision AK. Id. at 66-7, Ex. 359, p. 35-6. Precision began using the altered Revision AK in June 1991, four months before the gears involved in the crash were shipped to the Army. Id. at 99-101. Defendant ultimately changed the design blueprint in 1993, creating Revision AP. Id. at 67, 108, Ex. 360B.
Precision manufactured the planetary gears involved in the crash and sold them directly to the Army. Looper Aff. ¶ 15. The Army maintained an agent who inspected the gears that were to be shipped to the Army. Giramonte Dep. at 142-3. At the same time, Precision was also manufacturing planetary gears of the same (or similar) design for the Defendant. Neville Dep. at 108-114; Giramonte Dep. at 155, 181. The Defendant sent its own quality control personnel to Precision's manufacturing plant to inspect the planetary gears that Precision was producing. Neville Dep. at 108-114. The record gives no indication that Defendant's personnel ever inspected any shipments that were intended for the Army. More specifically, Precision vice president Giramonte asserted that he has no knowledge that any agent of Defendant inspected the particular shipment that contained the gears involved in the crash. Giramonte Dep. at 142-3.
Defendant asserts that there is only evidence of one inspection by its own personnel, namely that of the witness Neville. Defendants Reply Brief at 10. However, Neville's testimony is clear that he personally inspected the gears "a couple of times," by which it appears from context that he meant at least three. Neville Dep. at 108-14. Moreover, he explicitly states that he went because he was filling in for someone else, presumably the quality control agent who was ordinarily responsible for more regular inspections. Neville Dep. at 110.
After receiving a number of complaints that there might be problems with premature wear and shortened life for the planetary gears, Defendant began testing gears and carriers in January of 1990. Exs 112, 120, 157-61; Deposition of Anthony Joseph Zizzi ("Zizzi Dep.") at 97. Defendant ultimately concluded, by no later than June 27, 1991, that the bore holes in the carrier assembly were misplaced. Looper Aff. ¶ 8. This caused a misalignment when the gears and bearings were attached to the carrier assembly via the bore holes, and that misalignment was, in turn, causing excessive gear wear. Ex. 120; Neville Dep. at 106; Ex 112 at 2519. Defendant did not warn or instruct the Army either that the carrier assembly was misaligned or that gear life would be shortened as a result. Plaintiffs Contentions — Amended Case Management Order at 4-5 (presumed true by the Defendant for purposes of this motion).
II. STANDARDS A. SUMMARY JUDGMENT
Summary judgment is granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the 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). An issue is genuine only if the evidence is such that a jury reasonably could return a verdict for the opposing party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A disputed fact is material only if it might affect the outcome of the suit in light of the substantive law. Id. "In deciding a motion for summary judgment, the court will conclude that there is no genuine issue as to any proposed finding of fact to which no response is set out." Hartley v. Wisconsin Bell, Incorporated 124 F.3d 887, 890 (7th Cir. 1997); Fed.R.Civ.P. 56(e).
The moving party has the initial burden to show the absence of genuine issues of material fact. Schroeder v. Barth, 969 F.2d 421, 423 (7th Cir. 1992). This burden does not entail producing evidence to negate claims on which the opposing party has the burden of proof. See Green v. Whiteco Indus., Inc., 17 F.3d 199, 201 n. 3 (7th Cir. 1994). The party opposing a summary judgment motion bears an affirmative burden of presenting evidence that a disputed issue of material fact exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Scherer v. Rockwell Int'l Corp., 975 F.2d 356, 360 (7th Cir. 1992). The opposing party must "go beyond the pleadings" and set forth specific facts to show that a genuine issue exists. See Hong v. Children's Mem. Hosp., 993 F.2d 1257, 1261 (7th Cir. 1993), cert. denied, 511 U.S. 1005 (1994). This burden cannot be met with conclusory statements or speculation, see Weihaupt v. American Med. Ass'n, 874 F.2d 419, 428 (7th Cir. 1989), but only with appropriate citations to relevant admissible evidence. See Local Rule 56.1; Brasic v. Heinemann's Inc., Bakeries, 121 F.3d 281, 286 (7th Cir. 1997); Waldridge v. American Hoechst Corp., 24 F.3d 918, 923-24 (7th Cir. 1994). Evidence sufficient to support every essential element of the claims on which the opposing party bears the burden of proof must be cited. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
In considering a summary judgment motion, a court must construe all facts and draw all reasonable inferences "in the light most favorable" to the opposing party. Spraying Sys. Co. v. Delavan, Inc., 975 F.2d 387, 392 (7th Cir. 1992). The Court must review all the evidence in the record, and it may not make credibility determinations or weigh the evidence. Reeves v. Sanderson Plumbing Products Inc., 126 S.Ct. 2097, 2110 (2000). If a reasonable fact finder could find for the opposing party, then summary judgment is inappropriate. Shields Enters., Inc. v. First Chicago Corp., 975 F.2d 1290, 1294 (7th Cir. 1992). On the other hand, if the standard embraced in Rule 56(c) is met and the Court determines that a reasonable jury could not find for the party opposing the motion, then summary judgment is mandatory. Celotex Corp., 477 U.S. at 322-23; Shields Enters., 975 F.2d at 1294.
B. INDIANA'S PRODUCTS LIABILITY STATUTE 1. APPLICABILITY OF THE STATUTE
Indiana's products liability statute, Indiana Code § 34-20-1, provides:
Sec. 1. This article governs all actions that are:
(1) brought by a user or consumer;
(2) against a manufacturer or seller; and
(3) for physical harm caused by a product; regardless of the substantive legal theory or theories upon which the action is brought.
The Indiana Code defines the term "manufacturer," in relevant part, as an "entity who designs . . . or otherwise prepares a product or a component of the product before the sale of the product to a user or consumer." Indiana Code 34-6-2-77. According to the statute, an action based on strict liability in tort can be commenced or maintained against "a manufacturer of the product," if the product contains "a defective condition unreasonably dangerous to the user or consumer." Indiana Code 34-20-2-3. The manufacturer's liability does not depend on whether or not it is also the seller of the product. Rather, its liability arises from the fact that it "puts into the stream of commerce [a] product [that is] unreasonably dangerous to [a] consumer or user. . . ." Indiana Code 34-20-2-1. In order for a manufacturer to be held strictly liable, however, the user must have been someone in the foreseeable class of persons who might be harmed, and the product must have reached the user without substantial alteration. Id. Furthermore, the defective condition must have been present in the product at the time it was conveyed to the initial user or consumer. Indiana Code 34-20-4-1. See also Stump v. Indiana Equipment Co., Inc., 601 N.E.2d 398, 402 (Ind.Ct.App. 1992).
A product is considered to be defective under Indiana law not only if it contains physical flaws, but also if the seller of the product "fails to . . . give reasonable warnings of danger about the product; or give reasonably complete instructions on [its] proper use." Indiana Code 34-20-4-2. Thus, a manufacturer may be found liable if it puts a product into the stream of commerce without adequate warnings that could reasonably have been given, if the lack of such warnings rendered the product unreasonably dangerous for its expected use. Downs v. Panhandle Eastern Pipeline Co. 694 N.E.2d 1198, *1211 (Ind.Ct.App. 1998).
2. STATUTE OF REPOSE ON PRODUCTS LIABILITY ACTION
The liability of a manufacturer for a product that it places into the stream of commerce is not unending. The statute provides that:
(b) . . . a product liability action must be commenced:
(1) within two (2) years after the cause of action accrues; or
(2) within ten (10) years after the delivery of the product to the initial user or consumer.
Notwithstanding that this law occasionally allows that an action can be commenced as much as twelve years after the delivery of the product to the initial user, the Court will refer to this statute as "the ten year statute of repose" without risk of confusion in this case. The ten year statute of repose applies to any product liability action where the theory of liability is based on either strict liability or ordinary negligence. Id.
III. DISCUSSION
For the purposes of this limited motion, Defendant concedes that both the carrier assembly and the planetary gear which fractured might have been defective. Therefore, the Court will presume that any or all of the following assertions may be a basis for Plaintiffs' product liability claim: (1) The engine was defective. (2) The carrier assembly was defective. (3) The planetary gear was defective.
In denying that it is liable with respect to the first two assertions, Defendant relies on Indiana's ten year statute of repose to bar any product liability claim that might otherwise have arisen. Unlike a statute of limitations which typically runs from the date that the plaintiff's cause of action accrues or is discovered, Indiana's product liability statute of repose runs from the date that the new product is injected into the stream of commerce. Indiana Code 34-20-3-1. Defendant sold the engine to the initial user, namely the Army, in 1971. The accident did not occur until 1997, long after Defendant's liability based on the original sale had expired. Therefore, the burden is on the Plaintiffs to explain why the statute of repose should not run from 1971 in this case.
Generally, a statute of repose cannot be tolled, because its very purpose is to provide the manufacturer with closure as to potential liability after a specified number of years. Dague v. Piper Aircraft Corp., 418 N.E.2d 207, 210-11 (Ind. 1981). To allow special circumstances to stop the clock would undermine that purpose. Id. (The policy of absolute time limits "would be defeated by applying a tort limitation which would not begin to run until after an injury [occurred]."). However, there are two notable situations under Indiana law in which the liability of a manufacturer can be revived, and a new ten year repose period begun. First, if the manufacturer supplies replacement parts for the product and the replacement parts are the cause of the plaintiff's injury, then the ten year statute of repose begins to run from the time the manufacturer supplied the parts. See e.g. Richardson v. Gallo Equip. Co., 990 F.2d 330 (7th Cir. 1993) (Manufacturer of replacement parts which are defective cannot hide behind original manufacturer's statute of repose.) and Black v. Henry Pratt Co., 778 F.2d 1278 (7th Cir. 1985) (Replacement parts themselves must be defective, or related to the defect, in order for manufacturer of replacement parts to be held liable.). Second, if the manufacturer rebuilds the product, to the point of significantly extending the life of the product and rendering it in like-new condition, then the statute of repose begins to run from the time the rebuilt product is delivered into the stream of commerce. See e.g. Denu v. Western Gear Corp., 581 F. Supp. 7 (S.D.Ind. 1983) (genuine issue of fact whether printing press reconditioned by original manufacturer became a new product for purposes of applying Indiana's ten year statute of repose) and Whitaker v. T. J. Snow Co., Inc., 953 F. Supp. 1034 (N.D.Ind. 1997) (work done in refurbishing welder was mere service and not the sale of a new product).
After 1971, the record discloses three critical dates at which, depending on various findings of fact, the statute of repose clock arguably should have been restarted: (1) 1977 when the Army reconditioned the carrier assembly involved in the crash, (2) 1990 when the Army overhauled the engine involved in the crash, (3) 1996 when the Army overhauled the carrier assembly involved in the crash and installed new planetary gears in it. The significance of each date depends upon factual determinations as to: (A) whether the product in question at the time in question was in fact rebuilt, as opposed to being merely serviced or reconditioned, (B) whether the Defendant, as the original manufacturer, was somehow responsible for the rebuild or for the parts used in the rebuild, and (C) whether the rebuilt or replaced parts for which the manufacturer was responsible were, in fact, the cause of the accident. Black, 778 F.2d at 1283. For the purpose of evaluating Defendant's motion that Plaintiffs' cause of action should be time-barred, the Court will assume some of the facts that favor the Plaintiffs are true.
A. ENGINE DEFECTS
It is not disputed that the engine in question was sold by Defendant to the Army in 1971 and that the Army was the initial user of the engine in the sense intended by the Indiana products liability Law. Therefore, the original statute of repose began to run in 1971.
Still, the Plaintiffs argue that Defendant's potential liability should have been revived in 1990, because the engine was rebuilt at that time. The Court will assume, without deciding, that the facts on the record are sufficient to support the claim that the engine was rebuilt, according to the rigorous legal meaning of that term. Even so, Plaintiffs' argument is not sufficient.
Plaintiffs seem to be proposing that whenever a product is rebuilt, even by a third party, the original manufacturer should be held liable for any defects in the rebuilt product, and the statute of repose clock should begin to run again from the time that the rebuilt product is delivered to its initial consumer. They cite Johnson v. Kempler Industries, Inc., 677 N.E.2d 531, 536-7 (Ind.Ct.App. 1997) (a case that acknowledges the hypothetical possibility of re-starting the statute of repose clock in order to make its point that the argument was inapt where the product clearly had not been rebuilt); Hinds v. Compair Kellogg, 776 F. Supp. 1102, 1106 (E.D.Va. 1991) (applying Indiana law and explicitly rejecting at 1106-7 the very proposition that Plaintiffs are now proposing); and Denu, 581 F. Supp. 7, 8. It is true that all of these cases provide at least some support for the narrower proposition of law, applied in Denu, that if a product is rebuilt by the original manufacturer, then the original manufacturer should be treated as having introduced a new product into the stream of commerce. As Judge Posner explained it in Richardson, to hold otherwise would give manufacturers an economically inefficient incentive to rebuild products rather than make new ones in order to avoid responsibility under the products liability laws. 990 F.2d at 331.
Plaintiffs are attempting to apply the principles of Denu and Richardson in a context which neither court ever intended. Here, the facts on the record unequivocally show that the Defendant, as original manufacturer, did not rebuild the engine and then reinject it into the stream of commerce. Rather, the Army, who was the initial consumer, rebuilt the engine and then continued to use it for its own purposes.
Even if, as Plaintiffs suggest, Plaintiffs' Response Brief at 4-5 (citing no authority), the reasoning in the two cases could be extended to apply to a case where the original manufacturer did not actually rebuild the product itself, but did exercise significant control over the rebuilding process, there is no evidence that Defendant exercised such control in this case. Plaintiffs claim that Defendant manufactured the carrier assembly which was used by the Army in the rebuild and that the carrier assembly itself may have been rebuilt using replacement parts designed or supplied by Defendant. But this argument properly belongs in the discussion of defects in the carrier assembly below. As to the engine itself, Defendant's liability for manufacturing it cannot be revived simply because some user of the product (in this case, the Army) decided to rebuild it.
B. CARRIER ASSEMBLY DEFECTS
The carrier assembly involved in the accident was reconditioned by the Army in 1977 and installed in 1990. Apparently, it was not the original carrier assembly, although it was presumably one of the same design. The uncontradicted evidence on the record shows that this particular carrier assembly unit had been placed in storage after it was reconditioned, and remained in the continuous possession of the Army, unused, from 1977 until 1990. Even assuming that the service performed on the carrier assembly in 1977 was sufficient to constitute a rebuild, and even assuming that the Defendant somehow exercised significant control over the rebuilding process, the statute of repose would have provided the Defendant with immunity from liability by 1987, long before the crash occurred.
Nevertheless, Plaintiffs argue that because the engine was rebuilt in 1990, the statute of repose for the carrier assembly ought to begin again from that point. They cite no case law to support this proposition. The facts on the record make clear that the carrier assembly unit was reconditioned in 1977. There is no evidence that anything was done to the unit between 1977 and 1990. Therefore, the Plaintiffs cannot succeed in arguing that the carrier assembly was rebuilt in 1990. The carrier assembly was merely installed into the engine in 1990.
Similarly an argument that the carrier assembly was rebuilt in 1977, but not placed into the stream of commerce until 1990 must fail. The carrier assembly remained unused from 1977 to 1990. During that period, it remained in the possession of the initial user, not in the possession of the manufacturer. The purpose of the statute of repose in products liability is to give the manufacturer of the product a predictable outer limit as to the period of time in which it can be held liable for a product's defects. That purpose would be undermined if the initial user could toll the statute of repose simply by not using the product for an extended period of time. Therefore, whatever liability the manufacturer might have incurred from the alleged rebuild in 1977 must have expired by 1987.
In the alternative, Plaintiffs argue that the carrier assembly was rebuilt again in 1996 when, in particular, the planetary gears that were involved in the crash were installed in the carrier assembly. Taking the evidence in the light most favorable to Plaintiffs, the Court will assume that the overhaul of the carrier assembly at this time constituted a rebuild. Even so, this rebuild was performed by the Army and not by the Defendant. Therefore, it is hard to see how Defendant could be implicated.
Plaintiffs further argue that the carrier assembly was fitted with replacement planetary gears when it was rebuilt in 1996. These gears were manufactured by Precision in 1991. Although Defendant claims that it had nothing to do with the manufacture of these gears, Plaintiffs assert that Defendant exercised significant indirect control, both in terms of providing design specifications and in terms of inspecting Precision to see if it was building the gears properly. Even if this is true, it would not implicate Defendant in rebuilding the carrier assembly. It would only implicate Defendant in providing replacement parts that were arguably defective. Plaintiffs seem to be suggesting that merely by providing replacement parts, the original manufacturer becomes responsible anew for any defects that existed in the original product in which the replacement parts were used. But that precise argument was rejected in Hinds v Compair Kellogg, 776 F. Supp. 1102 (E.D.Va. 1991) (applying Indiana law) (Sale of replacement parts by original manufacturer for use in original product did not reinstate cause of action for defects in the original product, nor establish a renewed duty to warn about defects, absent a showing that the replacement parts themselves were defective.) and in Black v. Henry-Pratt Co., 778 F.2d 1278 (7th Cir. 1985) (applying Indiana law) (same). Other cases have applied similar reasoning, although with somewhat different facts. See e.g. Richardson v. Gallo Equipment Co., 900 F.2d 330 (7th Cir. 1993) (applying Indiana law) (Manufacturer of replacement part cannot invoke statute of repose for the original product as a defense against liability for a defect in the replacement part.). With respect to Indiana's statute of repose at least, the law clearly treats a replacement part as a manufactured product in its own right. Therefore, Defendant can only be held liable to the extent that it was a manufacturer of the replacement planetary gears, and the planetary gears themselves were defective.
C. PLANETARY GEAR DEFECTS
The replacement planetary gears were manufactured and sold to the Army in 1991, even though they were not mounted in the carrier assembly until 1996. Whether 1991 or 1996 is the relevant date, however, makes no difference. Neither of these dates would allow Defendant to use the statute of repose as a defense to its alleged liability for defects in the planetary gears. In addition, for the purpose of this partial summary judgment motion, Defendant does not contest that the planetary gears were defective or that those defects caused the accident. Instead, Defendant argues that it is not implicated in the manufacture or sale of these gears to the Army, and therefore it cannot be held liable for any injuries that might have resulted.
The point of Defendant's argument is simple. Precision is an independent manufacturer. The Army purchased the replacement gears from Precision, not from Defendant. Moreover, Plaintiffs did not even attempt to establish that Precision was acting as an agent or subcontractor for Defendant. Therefore, according to Defendant, it cannot be held liable for Precision's product.
Defendant's argument is a claim that Precision was the primary manufacturer of the replacement gears. Indiana's products liability statute does not limit liability to primary manufacturers. Nor does it require that there be only one manufacturer. Rather, the law imposes liability on any manufacturer of a product that is defective, if the defect causes harm to the expected user. Indiana Code 34-20-2-3. The question, then, is whether Defendant was a manufacturer too. Indiana law explicitly prescribes that an entity who designs a product is a manufacturer of that product. Indiana Code 34-6-2-77. The facts on the record show that Defendant provided the design blueprints, known as Revision AK, which Precision used to manufacture the replacement gears. Moreover, even though the Court does not know what financial arrangements were involved, Precision clearly used those blueprints with Defendant's knowledge and approval. It follows that Defendant was a manufacturer of the replacement planetary gears.
Still, Defendant argues that it should not be considered a manufacturer of the replacement parts even if it did provide the Revision AK blueprint, because those design specifications were provided in 1986, so that by 1996, according to Defendant's logic, it was no longer a manufacturer. This argument mixes two separate issues — whether Defendant was a manufacturer and whether Defendant had a legitimate statute of repose defense. As noted above, Indiana law is clear in establishing that Defendant is a manufacturer. There is no statute of repose on the fact of being a manufacturer. Therefore, Defendant's only viable argument is that Plaintiffs' cause of action against it for being the designer of the product should be time barred. But this argument, too, must fail because the language of the Indiana products liability statute is clear in stating that the ten year statute of repose begins to run on the date when the product is delivered to the initial user or consumer. Indiana Code 34-20-3-1. The undisputed facts of this case show that the planetary gears involved in the crash were first delivered to the Army in 1991, and Plaintiffs cause of action accrued in 1997. Therefore, the cause of action is not time barred.
That should settle the issue. The statute is not ambiguous on these points. But the Court is troubled by the possibility implicit in this discussion that a designer of a product could find itself faced with unending liability for its original design, contrary to the Indiana legislature's apparent intent. If, for example, a third party manufacturer bought the design rights, and then the original designer had nothing more to do with the manufacturing of the product from that day on, it would seem to defeat the whole point of the statute of repose for the original designer to continue to be held responsible indefinitely for actions by the third party over which it had no further control. Indeed, Defendant cites Goldsmith v. Olon Andrews. Inc., 941 F.2d 423 (6th Cir. 1991) (applying Ohio's products liability law) which makes precisely that point. The Sixth Circuit held that the original designer was not liable, where that designer discontinued the product and simply made its designs available without licensing, sanctioning, or approving their use. The Court noted that the original designer lacked any control over the activities of the new manufacturer or any ability to ensure conformance with its designs. Id.
Of course, if a manufacturer does sell the design rights to a third party, presumably the manufacturer would incorporate the risk of liability into the contract.
However, this case does not present the proper set of facts with which to test the issue under Indiana law. Although the precise contractual relations and obligations between the Army, Precision Gear, and Defendant are unclear to the Court, it is evident from the record that all three parties continued to cooperate in manufacturing and in testing the safety of the planetary gears that Precision was producing. It is simply not the case that Defendant provided the Revision AK blueprints in 1986 and then had nothing more to do with manufacturing the planetary gears.
In particular, Plaintiffs suggest two concrete ways in which they continued to rely on Defendant to ensure the quality of the gears. The first involves the ongoing quality control efforts made by the Defendant. The second involves Defendant's central role in clarifying (or altering) the AK specifications when they were found to have a problem . . .
Plaintiffs second argument is more compelling than the first. The facts on the record indicate that Defendant remained actively involved in the design of the planetary gears, at least through 1991. In the first place, Defendant upgraded its planetary gear designs on a regular basis, creating Revisions AL and AN prior to 1991 and Revision AP in 1993. Taken alone, this fact would not implicate Defendant in the manufacture of the actual gears used by the Army, because there is no evidence that the Army ever used Revisions AL or AN. Giramonte Dep. at 155. Apparently (though the record is not clear and neither party discussed the issue), these revisions were not made available to the Army because the Army had not paid for the right to use them. Giramonte Dep. at 156-7. This would tend to support Defendant's conclusory argument that it was not responsible for what the Army chose to do regarding design specifications after 1986. Def. Reply Brief at 10; Giramonte Dep. at 154 (establishing only that 1986 was the date at which Revision AK was sent by Defendant to Precision, not the date at which the planetary gears of this design were first shipped to the Army). But that conclusion is inconsistent with the facts, already cited above, which show that, as late as June 1991, Precision turned to the Defendant when it discovered a flaw in Revision AK and asked Defendant's permission to make a revision. If the right to the blueprints simply belonged to the Army, the obvious choice would have been to ask the Army's quality control engineer for permission to alter the blueprints. Yet, Precision asked Defendant. Moreover, Defendant obviously thought that the question was appropriate. It did not respond by saying in effect: "this is none of our business." Rather, it responded by rejecting Precision's proposed revision, and substituting a less substantial alteration.
With respect to the quality control issue, the record only shows definitively that Defendant inspected those gears which were being shipped back to Defendant. The Army maintained its own quality control officer to inspect the gears that were being shipped directly to the Army. However, taken together with Defendant's other activities in cooperating with the Army and with Precision, including the aforementioned design alterations and the fact that Defendant spent significant time and money testing for the cause of the excess gear wear during the period from 1990 to 1991, a reasonable trier of fact could conclude, as Plaintiffs suggest, that Defendant held itself out to the Army as approving both the quality of the design and the quality of the manufacturing process at Precision Gear. Indeed, the mere facts that Defendant altered the design of Revision AK in 1991 and that the altered Revision AK gears were most likely the ones involved in the crash would suffice to establish that: (1) Defendant was a genuine manufacturer of the planetary gears involved in the crash, even if the meaning of manufacturer is interpreted more narrowly so as to avoid the possibility of unending liability, and (2) Defendant's liability for faults in the design of the gears made according to the altered Revision AK would not have expired at the time of the crash.
For these reasons, the Court finds that summary judgment for the Defendant is not justified with respect to the alleged defects in the planetary gears.
D. DUTY TO WARN
Plaintiffs make much out of the fact that Defendant investigated the problem of excessive gear wear in the early 1990's and discovered a problem with the alignment of the carrier assembly that would explain, either in whole or in part, the premature wearing out of the gears. Plaintiffs do not say so explicitly, but they seem to be suggesting that the law should impose a duty on Defendant to warn the Army of the problem and that the statute of repose should begin to run from the moment that Defendant discovered what the problem was. However, in the seminal case of Dague v. Piper Aircraft Corp., 418 N.E.2d 207 (Ind. 1981), the Supreme Court of Indiana held that: (1) Indiana's product liability statute of repose applies to any cause of action which entails a defect in the product at the time of delivery to its initial user, whether the action sounds in negligence or in strict liability, and (2) Indiana's product liability statute of repose cannot be circumvented by asserting that the manufacturer continued to be negligent (indefinitely) for failing in its duty to warn of known dangers after the product was delivered to its initial user. See also Black v. Henry Pratt Co., 778 F.2d 1278, 1282 (7th Cir. 1985) (No cause of action can exist for failure to warn under Indiana's Product Liability Act if it accrues more than ten years after the product was placed into the stream of commerce.)
Applied to the case at hand, the allegations by the Plaintiffs in Counts I and II both involve pre-sale defects in either the carrier assembly or the planetary gears. Therefore, the statute of repose for those defects began to run from the time that the defective product was delivered to the initial user. It follows that an inquiry into when the Defendant discovered the defect can have no relevance with regard to whether Defendant's exposure to liability for failure to warn has expired. All that matters is: when was the product, to which the duty to warn attached, first placed into the stream of commerce?
This last question is precisely the same as the one analyzed above. Defendant's term of exposure for failing to warn about a dangerous product that it introduced into the stream of commerce is precisely the same as its term of exposure for a defective product that it introduced into the stream of commerce. Therefore, the conclusion must be the same. Defendant's duty to warn with regard to the engine and the carrier assembly had expired by the time that the crash occurred. But Defendant's duty to warn with regard to the expected use of the replacement part planetary gears had not expired.
IV. CONCLUSION
Defendant was a manufacturer of the planetary gears involved in the crash. As such defendant owed a duty under Indiana's products liability statute to ensure that the product was not in a "defective condition unreasonably dangerous to any user. . . ." Indiana Code 34-20-2-1.
Whether the planetary gears were defective is not a question that the Court can properly consider in this motion. However, the Court will reiterate that it is not enough for Plaintiffs to show that the planetary gears wore out because the carrier assembly was defective. It has already been established that the carrier assembly was neither manufactured nor rebuilt by the Defendant within the ten year statutory period. Therefore, the Plaintiffs may only properly litigate defects associated with the planetary gears themselves. Of course, the failure to warn about a product is one of the "defects" that can attach to a product under Indiana law. Indiana Code 34-20-4-2. It entails not only structural flaws but also dangers that may result if the product is put to its expected use. Indiana Code 34-20-4-2 and 34-20-4-3. However, the Court will express no opinion at this time on how broad the duty to warn might be.
Having considered fully the parties' arguments, and for the reasons discussed above:
(1) The Court GRANTS Defendant's motion for partial summary judgment on all of Plaintiffs' claims that are based solely on alleged pre-sale defects in the engine or carrier assembly.
(2) The Court DENIES Defendant's motion for summary judgment with regard to any alleged defects in the replacement planetary gears or any alleged duty to warn regarding potential dangers to plaintiffs who use the replacement gears in the expected manner.