Wilson et al v. Recreational Water Products Inc et al

Filing 59

MEMORANDUM OPINION. Signed by Senior Judge Inge P Johnson on 12/10/2013. (AVC)

FILED
2013 Dec-10 PM 02:11
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
NORTHEASTERN DIVISION
CHRISTOPHER WILSON, et al.,
Plaintiffs,
vs.

CASE NO. CV-12-J-2721-NE

RECREATIONAL WATER PRODUCTS,
INC., et al.,
Defendants.
MEMORANDUM OPINION
Pending before the court is defendants’ motion for summary judgement (doc.
52), memorandum and evidence in support (docs. 53 and 54), to which the plaintiffs
filed a response and evidence in opposition (docs. 55-57), and the defendants
thereafter filed a reply (doc. 58).
FACTUAL BACKGROUND
The court set out the factual background of this case in its ruling on the
defendants’ motion to strike the plaintiffs’ expert’s testimony (doc. 50), and adopts
the same here. In sum, the undisputed facts establish that this is a products liability
action in which plaintiff Christopher Wilson asserts he was injured while opening a
container of AquaChem 1” chlorine tablets. Complaint, ¶¶ 5-6. Upon opening the
lid, a cloud of visible gas emerged from the container and rendered Christopher

Wilson unconscious. Depo. of J. Wilson, at 89-90. Christopher Wilson alleges he
suffered severe and permanent injuries as a result. Complaint, ¶ 17. Plaintiff Jean
Wilson alleges loss of consortium from those injuries. Id., ¶ 20.
Relevant to the pending motion, the product at issue was manufactured by nonparty BioLab, Inc. (“BioLab”), a wholly owned subsidiary of defendant Chemtura
Corporation. See affidavit of Stephen M. Venzon (doc. 54-1), at ¶¶ 2-4. In turn,
defendant Recreational Water Products, Inc. (“RWP”), is a wholly owned subsidiary
of BioLab. Id., ¶ 6. The defendants argue that because neither of the named
defendants designed, manufactured, packaged, or sold the chlorinating tablets at
issue, they can have no liability for the plaintiffs’ injuries. The plaintiffs respond that
the three businesses, Chemtura, BioLab, and RWP “operate as an integrated business
with common ownership and control and share key financial and operational
systems.” Plaintiffs’ response (doc. 56), at 2. On that basis, the plaintiff’s argue,
their claims are not barred.
STANDARD OF REVIEW
A moving party is entitled to summary judgment if there is no genuine issue of
material fact, leaving final judgment to be decided as a matter of law. See Federal
Rule of Civil Procedure 56; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 587, 106 S.Ct. 1348, 1355-56 (1986). An issue is “material” if it is a legal
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element of the claim under the applicable substantive law which might affect the
outcome of the case. It is “genuine” if the record taken as a whole could lead a
rational trier of fact to find for the nonmoving party. Allen v. Tyson Foods, Inc., 121
F.3d 642, 646 (11th Cir.1997).
The facts, and any reasonable inferences therefrom, are to be viewed in the
light most favorable to the non-moving party, with any doubt resolved in the
nonmovant’s favor. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 158, 90 S.Ct.
1598, 1609 (1970). Once met by the moving party, however, the burden shifts to the
non-moving party to come forward with evidence to establish each element essential
to that party’s case sufficient to sustain a jury verdict. See Celotex Corp. v. Catrett,
477 U.S. 317, 322, 106 S.Ct. 2548, 2552 (1986); Earley v. Champion Int’l Corp., 907
F.2d 1077, 1080 (11th Cir.1990).
A party opposing a properly submitted motion for summary judgment may not
rest upon mere allegations or denials of his pleadings, but must set forth specific facts
showing that there is a genuine issue for trial. Eberhardt v. Waters, 901 F.2d 1578,
1580 (11th Cir.1990). In addition, the non-moving party's evidence on rebuttal must
be significantly probative and not based on mere assertion or be merely colorable.
See Rule 56(e); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct.

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2505, 2511 (1986). Speculation does not create a genuine issue of fact. Cordoba v.
Dillard’s, Inc., 419 F.3d 1169, 1181 (11th Cir.2005).
The court must consider the evidence in the light most favorable to the plaintiff
and may not make credibility determinations nor weigh the parties’ evidence.
Frederick v. Sprint/United Management Co. 246 F.3d 1305, 1311 (11th Cir.2001);
Stewart v. Booker T. Washington Insurance., 232 F.3d 844, 848 (11th Cir.2000).
LEGAL ANALYSIS
The issue before the court is whether the plaintiffs have pleaded and
established a sufficient factual basis to hold the named defendants liable for injuries
resulting from a product which they claim was not manufactured, sold, designed, or
packaged by either of them.
Plaintiffs brought claims under the Alabama Extended Manufacturer’s Liability
Doctrine (“AEMLD”), negligent/wanton design, fitness for a particular purpose, and
loss of consortium. For all but loss of consortium, the plaintiffs must demonstrate an
injury caused by a manufacturer, supplier, or seller who markets a product not
reasonably safe when applied to its intended use in the usual and customary manner.
See e.g., Entrekin v. Atlantic Richfield Co., 519 So.2d 447, 449 (Ala.1987); Casrell
v. Altec Industries, Inc., 335 So.2d 128 (Ala.1976), Atkins v. American Motors Corp.,
335 So.2d 134 (Ala.1976).
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1. Whether Either Defendant Designed, Manufactured, Packaged or Sold
the Chlorinating Tablet, or whether Alabama Code § 6-5-521 Bars Plaintiffs’
Claims
To establish liability under the AEMLD, the plaintiffs must prove they suffered
injuries or damages by one who sold a product in a defective condition unreasonably
dangerous to the plaintiffs as the ultimate users or consumers, if (a) the seller was
engaged in the business of selling such a product, and (b) it was expected to, and did,
reach the user or consumer without substantial change in the condition in which it
was sold.1 Culpepper v. Stryker Corp., 2013 WL 4852307, 5-6 (M.D.Ala.2013).
Defendants argue simply that they were not the “manufacturer, supplier, or seller” of
the chlorine tablets at issue. The plaintiffs ask the court to ignore this shortcoming

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Proof of an accident and injury is not in itself sufficient to establish liability under the
AEMLD; a defect in the product must be affirmatively shown. Townsend v. General Motors
Corp., 642 So.2d 411, 415 (Ala.1994); Jordan v. General Motors Corp., 581 So.2d 835, 836–37
(Ala.1991). Without evidence to support the conclusion that the product was defective and/or
unreasonably dangerous when it left the hands of the seller, the burden is not sustained. Tanksley
v. ProSoft Automation, Inc., 982 So.2d 1046, 1051) citing Jordan, 581 So.2d at 837. This court
has previously ruled that plaintiffs’ expert may not testify as to whether the container was airtight
or whether different packaging could have prevented the injury, both of which are necessary
prerequisites given the plaintiffs’ theory of injury. Memorandum Opinion and Order of
November 6, 2011, at 14-17 (“[b]ecause Brazel’s testimony concerning the need for different
packaging requires a finding that the current packaging is insufficient, and that finding
necessarily requires evidence that Christopher Wilson read and heeded the warnings that were on
the packaging, the court will not allow testimony regarding redesigning the packaging at this
juncture.”). Thus, while the court noted a factual chasm in plaintiffs’ evidence, defendants opted
not to file a motion for summary judgment on the actual merits of plaintiffs’ claims, and their
deadline for doing so has passed.
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and allow this action to proceed on the basis that Chemtura, BioLab and RWP have
common ownership.2
As a general rule, in Alabama, a parent corporation is a distinct entity from its
subsidiary and is not liable for the acts of its subsidiary unless it is a mere adjunct,
instrumentality, or alter ego of the parent corporation.3 Ford v. Carylon Corp., Inc.,
937 So.2d 491, 498 (Ala.2006) (“A parent corporation generally cannot be held
liable for the acts of its subsidiary unless the latter’s corporate veil can be pierced as
a result of the parent’s abuse of control.”). Even with wholly owned subsidiaries,
such as those before the court, a parent corporation which owns all the stock of a
subsidiary corporation is not liable for acts of its subsidiary corporation, unless the
parent corporation so controls the operation of the subsidiary corporation as to make
it a mere adjunct, instrumentality, or alter ego of the parent corporation. Hill v.
Fairfield Nursing and Rehabilitation Center, LLC, 2013 WL 3242867, 9 (Ala.2013),
citing Baker v. Hospital Corporation of America, 432 So.2d 1281 (Ala.1983).

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Notably, plaintiffs have not sued BioLab. Although defendants removed this case from
state court on August 16, 2012, the first mention this court finds by the defendants that they are
not the proper defendant was in April 2013, long after plaintiffs deadline to amend their
pleadings had passed.
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Although Chemtura, BioLab and RWP are Delaware corporations, both parties cite
Alabama law regarding liability of the defendants based on subsidiary or parent corporation
status. The court notes that applying the law of either state garners the same result concerning
corporate entity liability, and thus has applied Alabama law on this issue.
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The plaintiffs argue that these exceptions apply to the corporations here, and
that they should not be considered distinct legal entities. The court has considered
the time-honored indicia of control, and finds, from the evidence before it, that (a) the
parent corporation owns all or most of the capital stock of the subsidiary; (b) the
parent and subsidiary corporations have common directors or officers; (c) the parent
corporation finances the subsidiary; that (d) the parent corporation subscribes to all
the capital stock of the subsidiary or otherwise causes its incorporation; and (f) the
parent corporation pays the salaries and other expenses or losses of the subsidiary.
See e.g., Evntl. Waste Control, Inc. v. Browning–Ferris Indus., Inc., 711 So.2d 912,
914 (Ala.1997); Duff v. Southern Ry. Co., 496 So.2d 760, 762 (Ala.1986).
Conversely, the court has either no evidence or insufficient evidence before it that (e)
the subsidiary has grossly inadequate capital;(g) the subsidiary has substantially no
business except with the parent corporation or no assets except those conveyed to it
by the parent corporation; (h) in the papers of the parent corporation or in the
statements of its officers, the subsidiary is described as a department or division of
the parent corporation, or its business or financial responsibility is referred to as the
parent corporation’s own; (i) the parent corporation uses the property of the
subsidiary as its own; (j) the directors or executives of the subsidiary do not act
independently in the interest of the subsidiary but take their orders from the parent
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corporation; or (k) the formal legal requirements of the subsidiary are not observed.
Id.
Although none of these factors is dispositive, Duff, 496 So.2d at 763, the court
has considered the relevant weight due each, as the underlying purpose is to examine
whether the parent’s control amounts to “total domination of the subservient
corporation, to the extent that the subservient corporation manifests no separate
corporate interests of its own and functions solely to achieve the purposes of the
dominant corporation. Kwick Set Components, Inc. v. Davidson Industries, Inc., 411
So.2d 134, 137 (Ala.1982) (quoting Indus. Supply Co. v. Nat'l Distillers & Chem.
Corp., 483 F.2d 1098, 1106 (5th Cir.1973). See also Madison County Communications
District v. CenturyLink, Inc., 2012 WL 6685672, 3 (N.D.Ala.2012). Further, even
when the subservient corporation appears to be an alter-ego, to pierce the corporate
veil, “[t]here must be the added elements of misuse and control and harm or loss
resulting from it.” South Alabama Pigs, LLC v. Farmer Feeders, Inc., 305 F.Supp.2d
1252, 1258 (M.D.Ala.2004).
The plaintiffs fail to provide the court any evidence which suggests that
Chemtura has “misused” BioLab or RWP, nor is there evidence from which a trier of
fact could conclude that Chemtura exercises control over either of these subsidiaries

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to the extent that they manifest no separate corporate interests of their own or
function solely to achieve the purposes of Chemtura.
In consideration of the foregoing, the court will grant the motion for summary
judgment for Chemtura, as there is no genuine issue of material fact concerning
Chemtura’s possible liability on the theories set forth by the plaintiffs.
The court finds otherwise in regard to defendant RWP. On the one hand,
defendants have submitted affidavits of employees of BioLab, in which these
gentlemen swear under oath that BioLab, Inc., manufactures and sells the AquaChem
tablets relevant here. On the other hand, plaintiffs have produced evidence such as
the product label, which states “Manufactured for/Fabricado por: Recreational Water
Products, AquaChem Division.” Doc. 57-14, at 4. Similarly, the information
provided to the Environmental Protection Agency for its Material Data Safety Sheet
reflects the manufacturer as “Recreational Water Products, Aqua Chem, P.O Box
1449, Buford, GA, 30515-1449.” Doc. 57-15, at 3. Defendants freely admit that
RWP holds the Federal Insecticide, Fungicide and Rodenticide Act (“FIFRA”)
registration. Affidavit of Mark Jernigan (doc. 54-2), ¶ 6. Therefore, the court shall
deny summary judgment to RWP as genuine issues of material fact remain concerning
whether RWP “designed, manufactured, packaged, or sold” the tablets.

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2. Whether Warning Claims against RWP are Pre-Empted or Barred by
Federal Law
Plaintiffs assert that “RWP is the only one entitled to [this] exemption as it is
the only one with an approved label registered with the EPA.” Plaintiffs’ response
(doc. 56) at 11. The court takes said assertion as an admission that defendant RWP
is entitled to judgment in its favor on any warning claims brought by the plaintiffs.4
3. Plaintiff Jean Wilson’s Loss of Consortium Claim
Defendants argue that because they are due summary judgment on all of the
product liability claims, they are also due judgment in their favor on plaintiff Jean
Wilson’s claim for loss of consortium, as it is derivative of the other claims. Given
that the court disagrees with defendants on whether RWP is due such judgment in its
favor on the plaintiffs’ product liability claims, the court must therefore deny
defendants’ motion on plaintiff’s claim for loss of consortium.
CONCLUSION
In accordance with the foregoing, the court finds that defendant Chemtura is
entitled to summary judgment in its favor on all counts of the complaint, as no
genuine issues of material fact exist, and the court shall grant defendants’ motion in
this regard by separate Order. The court further finds that defendants’ motion for

4

The court has previously commented that no “failure to warn” claim appears in
plaintiffs’ complaint. See Memorandum Opinion and Order of November 6, 2011, at 10, n.1.
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summary judgment on behalf of RWP is due to be denied on all counts of the
complaint, and shall so rule by separate Order for the reasons set forth herein.
To the extent the plaintiffs have brought any claim for failure to warn,
judgment is granted in favor of defendant RWP and against the plaintiffs on said
claim.
DONE and ORDERED this the 10th day of December, 2013.

INGE PRYTZ JOHNSON
SENIOR U.S. DISTRICT JUDGE

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