Brosch et al v. K-Mart Corporation

Filing 167

OPINION AND ORDER denying 155 RULE 56 MOTION to Strike Affidavit of Lisa Jacobsen filed by Tiffany R Brosch and 139 MOTION for Partial Summary Judgment filed by Tiffany R Brosch. Signed by Judge Rudy Lozano on 9/10/2012. (kds)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
TIFFANY R. BROSCH, as
Parent and Natural Guardian
of minors JWB and JB,

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Plaintiffs,
vs.
K-MART CORPORATION, et al.,
Defendants.

NO. 2:08-CV-152

OPINION AND ORDER
This matter is before the Court on: (1) Plaintiff’s Motion to
Strike the Affidavit of Lisa Jacobsen, filed on June 20, 2012; and
(2) Plaintiff’s Motion for Partial Summary Judgment, filed on
February 1, 2012.

For the reasons set forth below, these motions

are DENIED.

BACKGROUND
On February 1, 2012, Plaintiff filed her motion for partial
summary judgment, arguing that Defendants Kmart and Dorel are
strictly liable for the defective kitchen island under Indiana’s
“domestic distributor” rule and that Kmart is also liable for
negligence because it held itself out as the manufacturer of the
kitchen island.

On February 29, 2012, Defendants filed their

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response in opposition to plaintiff’s motion.

In their response,

Defendants relied on the Affidavit of Lisa Jacobsen to assist in
raising a genuine issue of material fact as to who manufactured the
kitchen island.

On March 15, 2012, Plaintiff filed her reply.

In

addition, Plaintiff filed a motion to strike Lisa Jacobsen’s
affidavit.

DISCUSSION
Motion to Strike
Defendants have offered the affidavit of Lisa Jacobsen, a
Kmart

Buyer,

judgment.

in

response

to

Plaintiff’s

motion

for

summary

Attached to her affidavit is a purchase order for the

kitchen island, which reflects Zhi Jia Furniture Company, Ltd. as
the manufacturer.

Plaintiff challenges the admissibility of the

purchase order for two separate reasons.

First, Plaintiff submits

that the affidavit is insufficient to establish the authenticity of
the purchase orders referenced.

Second, Plaintiff claims that the

affidavit and purchase order conflict with Ms. Jacobsen’s prior
testimony.

These arguments will be addressed in turn.

Plaintiff has failed to establish
that Lisa Jacobsen’s Affidavit is insufficient
to establish the authenticity of the purchase orders.
Rule 56(c)(4) of the Federal Rules of Civil Procedure provides
that:

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An affidavit or declaration used to support or oppose a
motion must be made on personal knowledge, set out facts
that would be admissible in evidence, and show that the
affiant or declarant is competent to testify on the
matters stated.
Plaintiff argues that Lisa Jacobsen’s affidavit in opposition to
the motion for summary judgment does not meet the requirements of
Rule 56(c)(4) because it is inadmissable hearsay.
Pursuant to Rule 803(6), documents prepared in the normal
course of business are excluded by the hearsay rule and are
admissible.

“A party establishes a foundation for admission of

business records when it demonstrates through the testimony of a
qualified witness that the records were kept in the course of a
regularly conducted business activity, and that it was the regular
practice of that business to make such records.”
Given, 164 F.3d 389, 394 (7th Cir. 1999).

United States v.

Plaintiff argues that

the requirements for Rule 803(6) have not been met.
To start, Plaintiff argues that Lisa Jacobsen is not a
“qualified witness” to provide testimony about the purchase order
“because the purchase order was generated by another Kmart employee
in Hong Kong.” (Pl. Motion, p. 6).

Despite Plaintiff’s argument,

“Rule 803(6) does not require that the qualified witness be the
person who prepared the record, or that the witness have personal
knowledge of the entries in the records.”
F.3d 331, 337-338 (7th Cir. 1998).

Collins v. Kibort, 143

Rule 803(6) requires “that the

witness have knowledge of the procedure under which the records
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were created.”

Id.

Based upon the deposition excerpts and

affidavit itself, it is appears that Lisa Jacobsen has knowledge of
the procedures under which the purchase order was created, that the
purchase order was kept in the ordinary course of business, and
that

it

was

regular

practice

to

make

such

purchase

orders.

Accordingly, at this stage, the motion to strike the purchase order
as hearsay is denied as it appears admissible under Rule 803(6) of
the Federal Rules of Evidence.

Lisa Jacobsen’s affidavit is
not inconsistent with her prior testimony.
In her 2008 deposition, Lisa Jacobsen testified that it was
her “understanding of the process [] that Dorel designed this
[kitchen island] and then they had Chensheng [Furniture Company
Limited], their manufacturing company in China, manufacture it for
them. . ..”
her

(Jacobsen Dep. p. 107).

recently

filed

affidavit,

Lisa

However, in paragraph 10 of
Jacobsen

states

that

the

purchase order marked as Exhibit A to the affidavit reflects the
factory name of Zhi Jia Furniture Co., Ltd. as being where the
kitchen island at issue in this litigation was manufactured.
Plaintiff

argues

that

Lisa

Jacobsen’s

affidavit

is

inconsistent with her previous deposition testimony and, therefore,
is insufficient to create a genuine issue of material fact as to
whether

another

entity

other

than

kitchen island.
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Chensheng

manufactured

the

“[I]t is well established that a party cannot create a genuine
issue of material fact by submitting an affidavit containing
conclusory allegations which contradict plain admissions in prior
depositions or otherwise sworn testimony.”

Diliberti v. United

States, 817 F.2d 1259, 1263 (7th Cir. 1987).

However, Lisa

Jacobsen’s affidavit does not contain conclusory allegations that
contradict her admissions in a prior testimony.
In her 2008 deposition, Lisa Jacobsen testified about two
purchase orders in front of her; however, she intimated that there
may be more purchase orders for the kitchen island. (Jacobsen dep.
p. 131).

Her current affidavit provides another purchase order

that she did not have during her deposition.

Jacobsen now states

that the purchase order, which she did not have at her deposition,
identified as Exhibit A to her affidavit, lists the factory name of
Zhi Jia Furniture Co., Ltd.
manufactured.

as being where the kitchen island was

This statement is not a mere conclusory allegation;

it is based upon the purchase order.
Moreover, the statement in the affidavit does not conflict
with her prior sworn testimony.

Notably, Ms. Jacobsen did not

testify about that purchase order during her deposition.

In fact,

it appears as though she did not know about its existence at the
time she was deposed. Jacobsen’s statement about what the purchase
order reflects does not contradict her prior testimony regarding
her understanding of the design and manufacturing process of the

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kitchen island.

These are two related, yet separate issues of

fact.

Motion for Summary Judgment
The standards that generally govern summary judgment motions
are familiar. Pursuant to Rule 56(c) of the Federal Rules of Civil
Procedure, summary judgment is proper only if it is demonstrated
that there is no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of law.

See

Nebraska v. Wyoming, 507 U.S. 584, 590 (1993); Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23 (1986).

In other words, the record

must reveal that no reasonable jury could find for the nonmovant.
Karazanos v. Navistar Int'l Transp. Corp., 948 F.2d 332, 335 (7th
Cir. 1991); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
250 (1986).

In deciding a motion for summary judgment, a court

must view all facts in the light most favorable to the nonmovant.
Anderson, 477 U.S. at 255; Nucor Corp. v. Aceros Y Maquilas De
Occidente, 28 F.3d 572, 583 (7th Cir. 1994).
The burden is upon the movant to identify those portions of
"the

pleadings,

depositions,

answers

to

interrogatories,

and

admissions on file, together with the affidavits," if any, that the
movant believes demonstrate an absence of a genuine issue of
material fact.

Celotex, 477 U.S. at 323.

Once the movant has met

this burden, the nonmovant may not rest upon mere allegations but

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"must set forth specific facts showing that there is a genuine
issue for trial."

Fed. R. Civ. P. 56(e); Becker v. Tenenbaum-Hill

Assocs., Inc., 914 F.2d 107, 110 (7th Cir. 1990); Schroeder v.
Lufthansa German Airlines, 875 F.2d 613, 620 (7th Cir. 1989).
"Whether

a

fact

is

material

depends

on

the

substantive

law

underlying a particular claim and 'only disputes over facts that
might affect the outcome of the suit under governing law will
properly preclude the entry of summary judgment.'"

Walter v.

Fiorenzo, 840 F.2d 427, 434 (7th Cir. 1988) (citing Anderson, 477
U.S. at 248).
"[A] party who bears the burden of proof on a particular issue
may not rest on its pleading, but must affirmatively demonstrate,
by specific factual allegations, that there is a genuine issue of
material fact which requires trial." Beard v. Whitley County REMC,
840 F.2d 405, 410 (7th Cir. 1988) (emphasis in original); see also
Hickey v. A.E. Staley Mfg., 995 F.2d 1385, 1391 (7th Cir. 1993).
Therefore, if a party fails to establish the existence of an
essential element on which the party bears the burden of proof at
trial, summary judgment will be appropriate.

Facts1
The parties’ given facts center around the identity of the

1

Noticeably absent from Plaintiff’s supporting brief is a section
labeled “Statement of Material Facts,” as required by Local Rule 56-1,
formerly titled 56.1.

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manufacturer who built the kitchen island that is the subject of
this litigation, Model DAKM1670.
Dorel Asia SRL is a Barbados corporation with offices in
Canada.

(Dorel Ans. to Int. #1; Carter Dep. pp. 39-40).

Dorel

Asia SRL was the distributor and designer of the kitchen island.
(Jacobsen Dep. p. 107). Dorel Asia used Jardine Enterprises, Ltd.,
a Belize corporation with offices in Taiwan, to act as a sourcing
agent.

As a sourcing agent, Jardine would find factories to use

for the production of the kitchen island and oversee the production
and communicate with the manufacturer.

(Gisondi Dep. p. 16).

Dorel Asia sent a third party sales representative, Cathy Carter,
to Kmart to present the kitchen island to Kmart for sale.

(Carter

Dep. p. 8; Jacobsen Dep. p. 42).
Once Kmart decided to purchase the island, it sent that
information to its overseas office in Hong Kong to set the item up
in Kmart’s computer system and create a purchase order.
Dep. p. 107, 109).

(Jacobsen

The purchase order is created from the Hong

Kong Kmart office, which starts pre-production testing and gets a
sample of the product.

(Jacobsen Aff. pp. 110, 113).

Dorel Asia

ordered this type of kitchen island for Kmart from June 2006 to
March 2007.
In
Assurance

his
at

(Gisondi Dep. p. 17).
deposition,
Dorel,

Silvio

stated

Gisondi,

that

manufactured the kitchen island.

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Manager

Chensheng

of

Quality

Furniture

Company

(Gisondi Dep. p. 11).

However,

Gisondi also acknowledged that some of Kmart’s internal documents
list Zhi Jia as the manufacturer of the kitchen island.
Dep. p. 43).

(Gisondi

Gisondi knows that the two names - Chengsheng

Furniture and Zhi Jia - are used interchangeably; however, he does
not know the reason why or the business structure of either
company.

(Gisondi Dep. p. 43).

Jardine Enterprises, Ltd., also

identified Chensheng as the manufacturer of the kitchen island.
(Jardine Ans. To Int. #4).
In discovery, Kmart produced four purchase orders identifying
Zhi Jia as the manufacturer of the kitchen island.

(Jacobsen Aff.

Exs. A-D). The four purchase orders are dated April 28, 2006, June
16, 2006, August 8, 2006 and August 25, 2006.

The purchase orders

show Kmart purchasing many units of the kitchen islands from Dorel
Asia that were manufactured by Zhi Jia.

In her 2008 deposition,

Lisa Jacobsen testified that it was her “understanding of the
process [] that Dorel designed this [kitchen island] and then they
had Chensheng [Furniture Company Limited], their manufacturing
company in China, manufacture it for them. . ..” (Jacobsen Dep. p.
107).

However, Lisa Jacobsen has concluded that the April 28,

2006, purchase order is the purchase order for the kitchen island
that resulted in the shipment and receipt of the Essential Home
Kitchen Island to the Kmart Corporation’s Griffith, Indiana, store
on or before August 11, 2006.

Additionally, Dorel Asia identified

“Chensheng Furniture Co. Ltd./Dong Guan Zhi Jia Wooden Industry,

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Co. Ltd.” as the manufacturer.

(Dorel. Ans. to Int. #4).

Kmart

also identified Zhi Jia Furntiture Co. Ltd. as the manufacturer.
(Kmart Ans. to Int. #4).
Plaintiff hired APS international to translate the summons and
complaint into Chinese and to have them properly served upon
Chensheng Furniture. APS served the documents upon the Ministry of
Justice of the People’s Republic of China and, on May 27, 2011, the
Ministry of Justice responded that the documents could not be
served

because

the

company’s

business

registration

had

been

cancelled. (Pl. Ex. 7).
Plaintiff named Zhi Jia Furniture Co., Ltd. as a potential
manufacturer of the kitchen island and Plaintiff served Zhi Jia,
but no answer was ever filed and Zhi Jia has not otherwise pled.
(DE# 123).

An entity named Dong Guan Zhi Jia Wooden Industry Co.,

Ltd. (“Dong Guan”) was not named as a party and was not served;
however, Dong Guan did file a letter denying they manufactured the
kitchen island.

(DE# 122).

Domestic Distributor Rule
“Indiana’s Products Liability Act governs all actions brought
by a user or consumer against a manufacturer or seller for the
physical harm caused by a product.”
N.E.2d 776, 779 (Ind. 2004).

Kennedy v. Guess, Inc., 806

Typically, “[a]ctions for strict

liability in tort are restricted to manufacturers of defective

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products.”

Id. at 880.

However, “[i]f a court is unable to hold

jurisdiction over a particular manufacturer of a product . . .
alleged

to

be

defective,

then

that

manufacturer’s

principal

distributor or seller over whom a court may hold jurisdiction shall
be considered . . . the manufacturer of the product.”
34-20-2-4.

This

distributor” rule.

is

commonly

referred

to

as

the

Kennedy, 806 N.E.2d at 781.

Ind. Code §
“domestic

The purpose of

this rule is to “provide a remedy for Indiana consumers who are
injured by defective products manufactured by an overseas entity
over which Indiana courts have no jurisdiction.”

Id. at 782.

The domestic distributor rule can be invoked if two conditions
are met.

First, Dorel and Kmart must be the kitchen island’s

principal distributor or seller over whom this Court can hold
jurisdiction; and second, this Court must be unable to hold
jurisdiction over the actual manufacturer.

The parties’ dispute

centers around the second prong; the identity of the actual
manufacturer of the kitchen island and whether the court is unable
to hold jurisdiction over that manufacturer.
There is a question of fact as to the identity of the actual
manufacturer of the kitchen island.
Chensheng,

while

other

evidence

Some evidence points to

points

to

Zhi

Jia,

manufacturer of the alleged defective kitchen island.

as

the

To add to

the uncertainty, there is also evidence that the names Chensheng
and Zhi Jia are used interchangeably; however, it is unknown why

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the names have been used interchangeably.

It may be that the

companies are alter egos of one another or that they be otherwise
related.

The problem is that this Court has not been given any

undisputed evidence to determine what relationship, if any, there
is between Chengsheng and Zhi Jia.
Knowing whether Chensheng or Zhi Jia manufactured the kitchen
island is essential in determining whether Kmart and Dorel could be
held strictly liable for harm caused by the kitchen island.
Jia

was

named

accordingly.

as

a

potential

manufacturer

and

was

Zhi

served

However, Zhi Jia has not answered or otherwise pled.2

Plaintiffs assert that “there is no evidence the Court may hold
jurisdiction over [Zhi Jia] even if it did receive the copy of
summons and complaint.”
the

sale

of

the

(DE# 147, p. 10).

kitchen

island

from

Plaintiff then details

China

and,

without

any

supporting legal authority, concludes that Zhi Jia does not have
sufficient minimum contacts with Indiana to be hailed into Court
here.

However, Plaintiff’s argument is based, in large part, on

speculation at this point. Whether Zhi Jia could be held under the
jurisdiction of this Court is a genuine issue of material fact.
At this stage, this Court cannot conclude as a matter of law
whether Chengsheng or Zhi Jia manufactured the kitchen island or
whether this Court could hold jurisdiction over Zhi Jia.

2

As such,

It is unclear whether Dong Guan Zhi Jia Wooden Industry, Co., Ltd, the company that was not named as a party, but filed a letter denying it
manufactured the kitchen island- is the same entity as Zhi Jia.

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Plaintiff has not satisfied her burden of proof to establish that
the domestic distributor rule applies at trial as a matter of law.

Apparent Manufacturer
Section 400 of the Restatement (Second) of Torts provides,
“[o]ne who puts out as his own product a chattel manufactured by
another is subject to the same liability as though he were its
manufacturer.

Kennedy,

806

N.E.2d

(Second) of Torts § 400 (1965)).

at

784(citing

Restatement

The “apparent manufacturer” rule

has been used to “hold a vendor liable for the negligence of the
manufacturer where the vendor placed its name on the product and
gave no indication of who was the actual manufacturer.” Id.(citing
Dudley Sports Co. v. Schmitt, 279 N.E.2d 266, 273 (Ind. App. Ct.
1972)).

The Indiana Court of Appeals reasoned that:

When a vendor puts his name exclusively on a product, in
no way indicating that it is the product of another, the
public is induced to believe that the vendor was the
manufacturer of the product.
This belief causes the
public to rely upon the skill of the vendor.
When
products are held out in this manner the ultimate
purchaser has no available means of ascertaining who is
the true manufacturer. By this act of concealment, the
vendor vouches for the product and assumes the
manufacturer’s responsibility as his own.
Dudley, 279 N.E.2d at 273.
Plaintiff argues that Kmart should be held out to be the
“apparent manufacturer” because Kmart held out the kitchen island
as its own product by making the label read “Made in China for
Kmart,” and because Kmart had extensive involvement with the
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kitchen island from the design through the distribution process.
Both parties cite to Mello v. K-Mart Corp., 604 F.Supp. 769 (D.C.
Ma. 1985), in support of their positions.
In Mello, the plaintiffs purchased a hydraulic jack from KMart and were injured while using it to repair an automobile.
Plaintiffs sued K-Mart and argued that K-mart should be liable to
the same extent as the manufacturer of the jack because K-mart
represented itself to be the product’s manufacturer. In support of
this argument, plaintiffs presented evidence:
showing that the name “K-Mart” printed in bold letters on
both the jack and the contained in which it was packaged.
On the container appear the words: “Manufactured in
Taiwan Republic of China for K Mart Corporation.”
Id. at 773.
The court reasoned that, in determining whether the apparent
manufacturer rule applies, “[t]he crucial factor determining a
retailer’s amenability to suit on a theory of negligence is whether
the labeling on a particular product is likely to cause a consumer
to rely on the retailer’s reputation as an assurance of the
product’s quality.”

Id.

The court relied on the Restatement

(Second) of Torts section 400, which explained:
The mere fact that the goods are marked with additional
words as “made for” the seller, or describe him as the
distributor, particularly in the absence of a clear and
distinctive designation of the real manufacturer or
packer, is not sufficient to make inapplicable the rule
stated in this Section. The casual reader of a label is
likely to rely upon the featured name, tradename, or
trademark, and overlook the qualification of the
description of source.
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Restatement (Second) of Torts § 400 (1965).
Applying these principles, the court found that “there clearly
exists a question of fact as to whether the words appearing on the
jack and its container would convey the impression that the device
was manufactured either by K-Mart or especially for K-Mart by
another company.”

Mello, 604 F.Supp. at 774.

Kmart’s label here was substantially similar to the label in
Mello. Finding the reasoning in Mello persuasive, this Court holds
that the conclusion reached in Mello is the same conclusion to
reach here.

Accordingly, there exists a question of fact as to

whether the words appearing on the kitchen island container would
convey to a consumer the impression that the kitchen island by KMart or especially for K-Mart by another manufacturer.
Plaintiff attempts to avoid this conclusion by distinguishing
the

present

situation

from

Mello.

Without

any

citations

to

supporting legal authority, Plaintiff argues that because “Kmart
controlled the labeling and packaging of the kitchen island cart,”
Kmart was holding itself out as the apparent manufacturer as a
matter of law.

Plaintiff’s attempt to distinguish our case from

Mello is unavailing.

“Whether a ‘holding out’ has occurred should

be judged from the viewpoint of the purchasing public, examining
whether the public has been induced to believe that the vendor was
the actual manufacturer of the product.”

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Kennedy, 806 N.E.2d at

784(citing Hebel v. Sherman Equipment, 442 N.E.2d 199 (Ill. 1982)).
Thus, the main question that needs to be answered is not who
controlled the words that appeared on the container.

Instead, it

is whether the words appearing on the kitchen island container
would convey to a consumer the impression that the kitchen island
was manufactured by K-Mart or especially for K-Mart by another
manufacturer. There remains a genuine issue of material fact as to
that question.

CONCLUSION
For the reasons set forth above, Plaintiff’s motion to strike
and motion for summary judgment are both DENIED.

DATED:

September 10, 2012

/s/RUDY LOZANO, Judge
United States District Court

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