Merfeld et al v. Dometic Corporation
Filing
50
MEMORANDUM OPINION AND ORDER - Defendants motion (Doc. No. 26 ) for summary judgment is granted in its entirety and all claims are hereby dismissed with prejudice. Trial, currently scheduled to begin July 23, 2018, is hereby canceled. Judgment shall enter in favor of the defendant and against the plaintiffs. Defendants motion to dismiss (Doc. No. 28) for spoliation of evidence is denied as moot. Signed by Chief Judge Leonard T Strand on 1/25/2018. (src)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
EASTERN DIVISION
MARK MERFELD, et al.,
No. C16-2096-LTS
Plaintiffs,
MEMORANDUM OPINION AND
ORDER ON MOTION FOR
SUMMARY JUDGMENT AND
MOTION FOR SANCTIONS FOR
SPOLIATION OF EVIDENCE
vs.
DOMETIC CORPORATION,
Defendant.
____________________
I.
INTRODUCTION
This action arises from a fire that caused damage to personal property and a
structure located in Independence, Iowa. Plaintiffs Mark and Debra Merfeld and Merfeld
Transport, Inc., allege that the fire was caused by a defective refrigerator manufactured
and sold by defendant Dometic Corporation (Dometic).
This case is currently before me on two motions. The first is Dometic’s motion
(Doc. No. 26) for summary judgment. Dometic’s supporting brief (Doc. No. 26-5)
includes, inter alia, arguments concerning the alleged spoliation of evidence. Plaintiffs
filed a resistance (Doc. No. 36) and Dometic filed a reply (Doc. No. 43-1).
The second, filed the same day, is Dometic’s separate motion (Doc. No. 28) for
the sanction of dismissal based on spoliation of evidence. In support of this motion,
Dometic relies entirely on the spoliation section of its summary judgment brief. See Doc.
No. 28-1 at 1. Plaintiffs filed a resistance (Doc. No. 33) and Dometic filed a reply (Doc.
No. 35).1 I find that oral argument is not necessary on either motion. Both are fully
submitted and ready for decision.
II.
PROCEDURAL HISTORY
Plaintiffs commenced this action on August 15, 2016, by filing a complaint (Doc.
No. 1) against Dometic. They allege that on October 10, 2014, plaintiffs Mark and
Debra Merfeld owned a 2003 Forest River Cardinal 33TS RV (the RV) and that Dometic
had “manufactured, designed and/or assembled refrigerators that were equipped in Forest
River’s RVs.” Doc. No. 1 at ¶¶ 6, 7, 10. They further allege that during the relevant
time period, Dometic was the “exclusive retailer of Dometic brand refrigerators in the
United States” and, upon information and belief, that the RV was “equipped with a
refrigerator designed, Manufactured [sic], assembled and sold” by Dometic. Id. at ¶¶ 89.
According to the complaint, a failure in the RV’s refrigerator caused a fire that
consumed the RV and caused damage to a building owned by Mark and Debra Merfeld
and to personal property owned by all of the plaintiffs. Id. at ¶ 12. The complaint
includes the following counts against Dometic: (1) negligence in the manufacturing and/or
design of the refrigerator, in the construction and/or assembly of the refrigerator and in
the distribution of the refrigerator; (2) breach of express and/or implied warranty; (3)
post sale failure to warn and (4) strict liability. Id. at pp. 3-4. Plaintiffs invoke the
court’s diversity jurisdiction and allege damages in excess of $75,000. Id. at ¶¶ 1-5.
1
In their resistance (Doc. No. 33), plaintiffs argue that Dometic’s separate motion for sanctions
is improper and should have been brought as a motion for summary judgment (which, of course,
it was). Plaintiffs cite no authority for this proposition. In fact, Eighth Circuit authority suggests
that a request for sanctions based on spoliation may be brought as an independent motion. See
Menz v. New Holland N. Am., Inc., 440 F.3d 1002 (8th Cir. 2006); Bakhtiari v. Lutz, 507 F.3d
1132 (8th Cir. 2007); see also Estate of Seaman ex rel. Seaman v. Hacker Hauling, 840 F. Supp.
2d 1106 (N.D. Iowa 2011). In any event, Dometic covered all of its bases by including its
spoliation arguments in its summary judgment motion and its sanctions motion. I will address
both motions in this order.
2
Dometic filed an answer (Doc. No. 5) on September 15, 2016, in which it denies
liability and raises various defenses.
Dometic then filed the motions at issue on
November 27, 2017. In responding to Dometic’s summary judgment motion, plaintiffs
voluntarily dismissed Count 2 (breach of express and/or implied warranty) and Count 3
(post sale failure to warn).
Doc. No. 36-5 at 3 n. 2.
Thus, Count 1 (negligent
manufacture and/or design) and Count 4 (strict liability) remain for consideration.
III.
RELEVANT FACTS
The following facts are undisputed except where otherwise noted.
Mark and Debra Merfeld are residents of Iowa and owners of a storage building
(the Building) located in Independence, Iowa. They owned personal property in the
Building. Merfeld Transport, Inc., is an Iowa corporation that also owned personal
property in the Building. The Building was over 12,000 square feet, was wired for
electricity and contained numerous vehicles, boats, farm equipment, tractors and other
items, including the RV. Debra Merfeld purchased the RV in 2005. The RV contained
a refrigerator.2
Dometic is a retailer of various products, including refrigerators. Prior to 2009,
Dometic purchased refrigerators from Dometic AB, a distinct entity, to sell to its
customers. In 2009, Dometic assumed manufacturing responsibilities from Dometic AB.3
In 2006, and again in 2007 or 2008, Dometic issued a recall for Dometic brand RV
refrigerators.
On October 11, 2014, a fire occurred at the Building. The fire caused damage to
the RV, the Building, and other personal property stored in the Building, with the dollar
2
The parties dispute whether the refrigerator has been identified as a Dometic brand refrigerator.
3
As will be discussed further below, the parties dispute whether Dometic had some role in
manufacturing and/or designing refrigerators prior to 2009.
3
value of the loss allegedly reaching at least $1.5 million.4 At the time of the fire, plaintiffs
were insured by State Farm Fire and Casualty Company (State Farm). State Farm
retained George Howe, a fire investigator, to determine the cause of the fire.
Howe viewed the scene for the first time on October 14, 2014. He did not conduct
a thorough investigation at the time, as he intended to wait for a joint inspection with
representatives of parties who may have been responsible for the fire. On October 16,
2014, State Farm sent a notice of claim and inspection to Dometic. This notice stated
that Dometic may be responsible for the loss and invited Dometic to send a representative
to participate in the joint inspection, which was scheduled to take place on November 4,
2014.
Before the joint inspection took place, Mark Merfeld and his son Ryan Merfeld,
along with other individuals, removed debris from the north, east and west sides of the
Building, up to the area in which the RV was located. Some cleanup also occurred on
the south side of the building, without disturbing the RV. A substantial amount of debris
was removed from the scene before the joint inspection occurred.
Additional facts will be addressed as necessary, below.
IV.
SUMMARY JUDGMENT STANDARDS
Any party may move for summary judgment regarding all or any part of the claims
asserted in a case. Fed. R. Civ. P. 56(a). Summary judgment is appropriate when “the
pleadings, depositions, answers to interrogatories, and admissions on file, together with
affidavits, if any, show that there is no genuine issue of material fact and that the moving
party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986).
4
The precise amount of the loss is unclear. Dometic claims it is over $1.5 million. Doc. No.
26-5 at 5. Plaintiffs claim it is over $1.7 million. Doc. No. 36-5 at 3. The exact number is
immaterial for purposes of the pending motions.
4
A material fact is one that “‘might affect the outcome of the suit under the
governing law.’” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Thus,
“the substantive law will identify which facts are material.” Id. Facts that are “critical”
under the substantive law are material, while facts that are “irrelevant or unnecessary”
are not. Id.
An issue of material fact is genuine if it has a real basis in the record, Hartnagel
v. Norman, 953 F.2d 394, 395 (8th Cir. 1992) (citing Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)), or when “‘a reasonable jury could
return a verdict for the nonmoving party’ on the question.” Woods v. DaimlerChrysler
Corp., 409 F.3d 984, 990 (8th Cir. 2005) (quoting Anderson, 477 U.S. at 248). Evidence
that only provides “some metaphysical doubt as to the material facts,” Matsushita, 475
U.S. at 586, or evidence that is “merely colorable” or “not significantly probative,”
Anderson, 477 U.S. at 249-50, does not make an issue of material fact genuine.
As such, a genuine issue of material fact requires “sufficient evidence supporting
the claimed factual dispute” so as to “require a jury or judge to resolve the parties’
differing versions of the truth at trial.” Anderson, 477 U.S. at 248-49. The party moving
for entry of summary judgment bears “the initial responsibility of informing the court of
the basis for its motion and identifying those portions of the record which show a lack of
a genuine issue.” Hartnagel, 953 F.2d at 395 (citing Celotex, 477 U.S. at 323). Once
the moving party has met this burden, the nonmoving party must go beyond the pleadings
and by depositions, affidavits, or otherwise, designate specific facts showing that there
is a genuine issue for trial. Mosley v. City of Northwoods, 415 F.3d 908, 910 (8th Cir.
2005). The nonmovant must show an alleged issue of fact is genuine and material as it
relates to the substantive law. If a party fails to make a sufficient showing of an essential
element of a claim or defense with respect to which that party has the burden of proof,
then the opposing party is entitled to judgment as a matter of law. Celotex, 477 U.S. at
322.
5
In determining if a genuine issue of material fact is present, I must view the
evidence in the light most favorable to the nonmoving party. Matsushita, 475 U.S. at
587-88. Further, I must give the nonmoving party the benefit of all reasonable inferences
that can be drawn from the facts. Id. However, “because we view the facts in the light
most favorable to the nonmoving party, we do not weigh the evidence or attempt to
determine the credibility of the witnesses.” Kammueller v. Loomis, Fargo & Co., 383
F.3d 779, 784 (8th Cir. 2004). Instead, “the court’s function is to determine whether a
dispute about a material fact is genuine.” Quick v. Donaldson Co., Inc., 90 F.3d 1372,
1376-77 (8th Cir. 1996).
V.
DISCUSSION
State law applies to products liability actions based on diversity. Adams v. Toyota
Motor Corp., 867 F.3d 903, 916 (8th Cir. 2017). Thus, Iowa law applies to this action.
As noted above, the remaining causes of action are (1) strict liability and (2) negligence
in the manufacturing and/or design of the refrigerator, construction and/or assembly of
the refrigerator and distribution of the refrigerator. However, Iowa law has essentially
eliminated the distinction between negligence and strict liability for product defect claims.
Nationwide Agribusiness Ins. Co. v. SMA Elevator Constr. Inc., 816 F. Supp. 2d 631,
643 (N.D. Iowa 2011). With regard to design defect claims, the Iowa Supreme Court
has held that it is improper to submit a strict liability claim and a negligence claim
premised on the same alleged defect to a jury. Wright v. Brooke Grp. Ltd., 652 N.W.2d
159, 169 (Iowa 2002). Instead, the court directed that a claim based on a defective
product design be labeled as a “design defect claim without reference to strict liability or
negligence principles.” Id.
In seeking summary judgment on the remaining claims, Dometic relies primarily
on the statutory immunity set forth in Iowa Code § 618.13. Dometic makes various
other, alternative arguments, including its argument for dismissal based on spoliation of
evidence. I will begin by addressing the statutory immunity issue.
6
A.
Statutory Immunity
1.
Parties’ arguments
Dometic argues that it is entitled to summary judgment on plaintiffs’ product defect
claims because Dometic was not the manufacturer, designer or assembler of the
refrigerator and thus enjoys immunity under Iowa Code § 613.18(1). Doc. No. 26-5 at
7. Dometic argues that it did not start manufacturing refrigerators until 2009, while the
refrigerator present in the 2003 RV would have been manufactured no later than 2003.
Id. at 9–10.
Plaintiffs respond that the statute does not grant Dometic immunity from liability
because there is a question of material fact as to whether Dometic was a manufacturer or
designer of the refrigerator. Doc. No. 36-5 at 2. They argue that Dometic’s Director of
Engineering, Patrick McConnell, was closely involved with the Dometic AB design team,
and his involvement essentially made Dometic a manufacturer such that it is disqualified
from the statutory protection. Id. at 2–3, 5-9, 14. Plaintiffs also argue that Dometic
admitted it was the manufacturer when it issued the product recall, such that for consumer
purposes it is liable as a manufacturer under the apparent manufacturer doctrine. Id. at
9–10, 12–13.
In response, Dometic contends there is no evidence that input from McConnell
contributed in any way to the alleged defect. Doc. No. 43-1 at 8. Dometic also argues
that the apparent manufacturer doctrine is not currently viable under Iowa law and is
inconsistent with the language of Section 613.18. Id. at 2–3. Finally, Dometic contends
that even if the doctrine is viable, it would not apply under these facts. Id. at 4.
2.
Analysis
Iowa Code § 613.18 states, in relevant part:
1. A person who is not the assembler, designer, or manufacturer, and who
wholesales, retails, distributes, or otherwise sells a product is:
7
a. Immune from any suit based upon strict liability in tort or breach of
implied warranty of merchantability which arises solely from an alleged
defect in the original design or manufacture of the product.
b. Not liable for damages based upon strict liability in tort or breach of
implied warranty of merchantability for the product upon proof that the
manufacturer is subject to the jurisdiction of the courts of this state and has
not been judicially declared insolvent.
2. A person who is a retailer of a product and who assembles a product,
such assembly having no causal relationship to the injury from which the
claim arises, is not liable for damages based upon strict liability in tort or
breach of implied warranty of merchantability which arises from an alleged
defect in the original design or manufacture of the product upon proof that
the manufacturer is subject to the jurisdiction of the courts of this state and
has not been judicially declared insolvent.
Iowa Code Ann. § 613.18 (2017). If the claim arises “solely from an alleged defect in
the original design or manufacture of the product,” then subsection 613.18(1)(a) applies.
Nationwide, 816 F. Supp. 2d at 645 (quoting Bingham v. Marshall & Huschart Mach.
Co., Inc., 485 N.W.2d 78, 80 (Iowa 1992)).5 Subsection 613.18(1)(b) applies if the
claim does not arise solely from an alleged defect in the original design or manufacture,
such as a claim for failure to warn. Id. Further, “[t]he immunity provided by subsection
613.18(1)(a) is not dependent upon proof that the manufacturer . . . is subject to the
5
As noted above, with regard to a design defect claim the Iowa Supreme Court has eliminated
the labels of strict liability and negligence, instead directing that the claim be designated “as a
design defect claim without reference to strict liability or negligence.” Wright, 652 N.W.2d at
169. The Court also noted that the elements of a design defect claim are based on negligence
principles. Id. at 168. Because § 613.18(1) provides immunity only with regard to “any suit
based upon strict liability in tort or breach of implied warranty of merchantability,” there is some
question of whether design defect claims still fall within the scope of the statutory immunity.
See, e.g., Anderson v. Kmart Corp., No. 4:13-cv-00216-RAW, 2014 WL 11514683 at *4 (S.D.
Iowa Oct. 20, 2014) (identifying the issue without deciding it). As in Anderson, the parties have
not briefed the question of whether design defect claims in the post-Wright era are subject to §
613.18. I do note that the statute itself refers to “an alleged defect in the original design or
manufacture of the product.” Iowa Code § 613.18(1)(a) (emphasis added). Absent further
clarification from the Iowa Supreme Court, I will assume that the design defect claim plaintiffs
assert in this case is subject to § 613.18(1).
8
jurisdiction” of the court, meaning subsection (1)(b) is not a limitation on subsection
(1)(a) immunity. Id. Subsection 613.18(2) applies to retailers who assemble the products
they sell. Id.
Here, plaintiffs’ remaining claims arise solely from an alleged defect in the original
design or manufacture of the product at issue. Therefore, the question is whether
Dometic qualifies as a manufacturer or designer under Subsection 613.18(1)(a). See
Bredberg v. Pepsico, Inc., 551 N.W.2d 321, 327 (Iowa 1996) (under the statute, neither
designers nor manufacturers are immune from strict liability claims).
Plaintiffs’
arguments tend to conflate manufacturer with designer. However, the purpose of §
613.18 is to ensure that liability extends only to those who have “some responsibility for
the design or manufacture of a product.” Housley v. Orteck Int’l, Inc., 488 F. Supp. 2d
819, 832 (S.D. Iowa 2007) (quoting Stoffel v. Thermogas Co., 998 F. Supp. 1021, 1031
(N.D. Iowa 1997)). Therefore, the kind of defect claims plaintiffs may bring against
Dometic depends on what role Dometic played.
Stoffel, 998 F. Supp. at 1033 (“If a
defendant’s only role was to design the product, only a design defect claim may be
brought. If a defendant both designed and manufactured a product, then either a design
defect or a manufacturing defect claim, or both, may be brought.”).
a.
Was Dometic a manufacturer?
The statute does not define “manufacturer.”
Therefore, I must rely on the
common definition. See Nationwide, 816 F. Supp. 2d at 648 (relying on dictionary
definitions of “manufacture” and “design” because the statute lacks a definition). To
manufacture means “to make into a product suitable for use,” “to make from raw
materials by hand or by machinery,” or to “invent, fabricate.” Id. at 648 n.5 (quoting
Merriam Webster’s Collegiate Dictionary 709 (10th ed. 1995)).
To argue that Dometic was a manufacturer of the refrigerator at issue, plaintiffs
rely on a letter from Patrick McConnell, Dometic’s Director of Engineering, to the
National Highway Traffic Safety Administration (NHTSA) Office of Defects
9
Investigation Enforcement. The letter stated that Dometic had manufactured and sold
certain refrigerators with defects. Doc. No. 36-5 at 8; Doc. No. 36-1 at 13. The recall
letter Dometic sent to its customers also stated that a defect was found in “refrigerators
that it manufactured.” Doc. No. 36-1 at 15.
Dometic, however, cites the testimony of David Fuller, its general counsel, to
demonstrate that it was not a manufacturer or designer of the refrigerator in question.
Doc. No. 26-5 at 10. Fuller testified that Dometic did not start manufacturing RV
refrigerators until 2009. Doc. No. 26-2 at 29, 31, 36. Until that time, Dometic AB was
the manufacturer and Dometic was a selling company only. Id. at 31, 32. Fuller also
testified that the statements in the recall notice about Dometic being the manufacturer
were wrong and stated “relative to the recall, it doesn’t matter what the public was told.”
Id. at 34. McConnell similarly testified that Dometic did not manufacture refrigerators
until 2009 or 2010 and that the designation of Dometic as the manufacturer in the recall
notice was an error. Id. at 41, 43, 52. Roy Leitch, a specialty sales and product manager
with Dometic, testified that manufacturing refrigerators was a new undertaking for
Dometic in 2009. Id. at 56.
Apart from the statements in the recall notice and the NHTSA letter, there is no
evidence that Dometic actually had a role in the manufacturing process before 2009.
Indeed, plaintiffs admit that “manufacturing responsibilities shifted to Dometic
Corporation in 2009” and that the refrigerator in the RV could not have been
manufactured later than 2003. Doc. Nos. 36 at 5; 26-1 at 9. Thus, I find no genuine
issue of material fact on the question of whether Dometic was involved in manufacturing
the refrigerator at issue in this case. It was not.
While Dometic did not manufacture the refrigerator, plaintiffs cite Tice v.
Wilmington Chem. Corp., 141 N.W.2d 616 (Iowa 1966), to argue that under the apparent
manufacturer doctrine, Dometic should be treated as the manufacturer for purposes of §
613.18. In Tice, the Iowa Supreme Court noted that in a prior case, it had “by reference
adopted the precepts set forth in Restatement of the Law of Torts, sections 388, 400, 401
10
and 402, holding in brief that one who puts out as his own a chattel manufactured by
another is subject to the same liability as though he had in fact manufactured the product.”
Id. at 628 (citing Rauch v. American Radiator & Standard San. Corp., 104 N.W.2d 607
(Iowa 1960)).
A similar argument was made in Allianz Global Corp. v. Watts Regulator Co.,
No. 4:14-CV-00253, 2016 WL 4435094 (S.D. Iowa Apr. 7, 2016). The Allianz court
noted that in Wright, the Iowa Supreme Court “abandoned at least one of the Restatement
sections cited in Tice in favor of the Restatement (Third) of Torts: Products Liability
section 1 and 2, which does not contain a similar provision.” Id. at *5 n.2. Thus, the
court determined it to be unclear whether the apparent manufacturer doctrine “even
remains cognizable under Iowa law.” Id.
I agree that the status of the doctrine under Iowa law is not entirely clear. The
Restatement (Third) did retain the common law apparent manufacturer doctrine in Section
14, which provides that “one engaged in the business of selling or otherwise distributing
products who sells or distributes as its own a product manufactured by another is subject
to the same liability as though the seller or distributor were the product’s manufacturer.”
Restatement (Third) of Torts: Products Liability § 14 (1998).
However, the Iowa
Supreme Court did not adopt Section 14 in Wright and has not addressed the apparent
manufacturer doctrine in the 50-plus years since Tice.
The doctrine makes an entity strictly liable for manufacturing and design defects,
even if it was not responsible for those defects, so long as the entity represented to the
public that it is the manufacturer. Doc. No. 36-5; Tice, 141 N.W.2d at 628. This
doctrine is consistent with the common law principles of product liability.
See
Restatement (Third) of Torts: Products Liability §§ 1 cmt. e; 2 cmt. o. However, the
Restatement (Third) recognizes that some states have altered the common law on this
issue, noting that “many jurisdictions by statute treat nonmanufacturers more leniently,”
and “to the extent that a statute specifies responsibilities, the statutory terms control.”
Id. § 14 cmt. b.
11
Here, plaintiffs argue that Iowa Code § 613.18 “embodies the Apparent
Manufacturer Doctrine.” Doc. No. 36-5 at 12. I disagree. Section 613.18 was enacted
in 1986, long after Tice. Rather than codifying Tice’s holding that a seller or distributor
bears the same liability as a product’s manufacturer, § 613.18 expressly immunizes one
who “wholesales, retails, distributes, or otherwise sells a product” from various claims
under specified circumstances. Iowa Code § 613.18(1)-(2). The statute does not create
an exception for nonmanufacturing sellers that hold themselves out as manufacturers of
a product.6
As noted above, the Iowa statute does not define “manufacturer.” The common
dictionary definition does not encompass a non-manufacturer that holds itself out as being
the manufacturer. Thus, I find that the apparent manufacturer doctrine does not create
an exception to § 613.18 and is not viable under Iowa law. As a matter of law, Dometic
was not a “manufacturer” of the refrigerator for purposes of the statute.
b.
Was Dometic a designer?
The statute likewise does not define “designer.”
The common dictionary
definition of “design” is “to create, fashion, execute, or construct according to plan:
devise, contrive.” See, e.g., Nationwide, 816 F. Supp. 2d at 648 n.5 (quoting Merriam
Webster’s Collegiate Dictionary 709 (10th ed. 1995)). In Nationwide, the court noted
that a purchaser who provides a manufacturer with desired product specifications (such
as height, capacity, usage rate, etc.) for the manufacturer to use in designing, assembling
and constructing a product is not a “designer” within the meaning of the statute. Id. The
6
Notably, some states enacting similar statutes have included such exceptions. See Kan.
Stat. Ann. § 60-3302 (2017) (“manufacturer” definition includes a product seller that holds
itself out as a manufacturer); Idaho Code Ann. § 6-1402 (2017) (same); La. Rev. Stat. Ann.
§9:2800.53(1)(a) (2017) (same); Wash. Rev. Code Ann. §7.72.040(2)(e)(2017) (stating that a
nonmanufacturing product seller shall have the same liability as a manufacture if the product was
marketed under a trade or brand name of the product seller).
12
court explained that such conduct “is simply providing the information any purchaser
would provide to get a product designed to meet its requirements, not fabricating the
necessary apparatus from raw materials or conceiving or devising the necessary apparatus
to fulfill the function.” Id.
By contrast, the Allianz court found a genuine issue of material fact as to whether
the defendant “designed” the product at issue. 2016 WL 4435094, at *5. Allianz sought
damages from Watts after a water leak that was caused by a failed part known as a wye
strainer. Id. at *1. The court explained the situation as follows:
The . . . wye strainers were manufactured by a Taiwanese company called
Fortune Manufacturing Co., Ltd. (“Fortune”) at Watts' request with the
understanding that the parts would be resold to Watts' customers. When
establishing a business relationship with Fortune, Watts provided Fortune
with exemplars of a similar wye strainer it had previously purchased from
a different supplier. Fortune then used that exemplar to develop and
manufacture the wye strainer at issue here. The parties dispute whether
Watts, or only Fortune, should be considered the designer of the wye
strainer, and whether Watts had input on the material composition used in
the manufacturing process.
Id. (record citations omitted).
The court described deposition testimony from Watts employees suggesting that
Watts had a significant role in the design of the product, including the material
composition of the strainer. Id. at 5. For example, Watts’ Director of Engineering
testified that Watts had an employee who reviewed and approved Fortune’s assembly
drawing for the strainer, that Watts had to approve any changes Fortune made to the
design and that Watts could have asked for changes in the material composition of the
product. Id. at *5. Based on this evidence, the court thus found that Watts “did more
than just provide specifications” and had at least some responsibility for and control over
the design of the product, thus creating a question of material fact as to whether Watts
was a “designer” of the strainer for purposes of § 613.18. Id.
13
Here, plaintiffs cite the deposition testimony of Patrick McConnell to argue that
there is a question of material fact as to whether Dometic is a designer of the refrigerator
at issue. Doc. No. 36-5 at 2, 5–9.7 McConnell testified that the RV refrigerators were
manufactured by Dometic AB but that he, as a Dometic employee, identified North
American safety standards and reviewed samples sent by Dometic AB to ensure the
designs complied with those safety standards. Doc. No. 36-1 at 6. Once Dometic AB
finished manufacturing and testing the product in Sweden, it sent the product to
McConnell, who tested it again. Id. at 7. McConnell also attended “aesthetic design
meetings” in Sweden, during which the sales team had input on the look, colors and
texture of the product and he addressed how the aesthetic decisions affected the safety
requirements. Id. at 8. However, he answered affirmatively when asked if he was “just
there to observe . . . the input that was being put out there, as opposed to giving [his]
own opinions . . . about the look, the colors, and the textures.” Id. at 10.
McConnell’s testimony reflects a level of involvement in product design that is not
as extensive as that in Allianz, but nonetheless more significant than merely providing
specifications. Additional analysis is necessary to determine whether that involvement
disqualifies Dometic from statutory immunity as a “designer” under the facts of this case.
In applying § 613.18(1)(a), the Iowa Supreme Court focuses on the defendant’s role with
regard to the dangerous condition of the product. In Kolarik v. Cory Intern. Corp, 721
N.W.2d 159 (Iowa 2006), the Court considered claims brought by a plaintiff who suffered
a dental injury after biting an olive that contained a pit or pit fragment. Id. at 161. The
defendants were importers and wholesalers of the olives, which had been imported from
Spain. Id.
In arguing that the defendants were not entitled to immunity under § 613.18(1)(a),
the plaintiff asserted that they were “assemblers” because they removed bulk olives from
7
McConnell’s deposition was taken in another case, Bowman v. Dometic Corp., 4:15-CV-00089SMR-HCA in the United States District Court for the Southern District of Iowa (decision on
motion to dismiss reported at 2015 WL 11117319 (S.D. Iowa Dec. 22, 2015)).
14
drums and repackaged the olives into jars.
Id. at 162. In disagreeing, the Court
explained:
We are convinced that the assemblers' exclusion contained in section
613.18(1)(a) is aimed at those situations in which an assembling process
has some causal connection to a dangerous condition in the product that
gives rise to a strict-liability claim or a product condition that constitutes a
breach of an implied warranty of merchantability. Because the repackaging
of the olives by defendants did not contribute to the condition that underlies
plaintiff's product-liability claim, defendants are afforded the immunity
granted by the statute.
Id. (emphasis added).
While Kolarik addressed the role of “assembler” under § 613.18(1)(a), rather than
that of “designer,” I find no basis for analyzing the roles distinctly. Just as one who has
some role in the assembly process retains statutory immunity absent some contribution to
the product’s dangerous condition, the same concept logically applies to one who has
some role in the design process. Here, then, Dometic’s limited involvement in the design
of the refrigerators manufactured by Dometic AB cannot deprive Dometic of statutory
immunity absent evidence that Dometic’s activities “contribute[d] to the condition that
underlies” plaintiffs’ claims.
That condition involves the refrigerator’s boiler tube. The recall notice Dometic
issued for Forest River RVs in 2007 stated that the refrigerators in certain RVs “may
have a defect in the boiler tube” and “pressurized coolant solution could be released into
an area where an ignition source (gas flame) is present.” Doc. No. 36-2 at 186. This
notice also stated that the release of the coolant under certain conditions could result in a
fire. Id. Dometic’s recall notice issued in 2006 stated that the potential defect in the
refrigerators is “associated with [the] cooling unit at the back” and that some of the
“potentially affected refrigerators have experienced a fatigue crack that may develop in
the boiler tube in the area of the weld between the boiler tube and the heater pocket.”
Doc. No. 26-2 at 14. The notice stated that this defect may release coolant into an area
where an ignition source is present. Id.
15
Plaintiffs’ experts state that the RV refrigerator at issue in this case experienced a
failure in the boiler section. Doc. No. 36-1 at 38. Specifically, corrosion of the boiler
tube allowed combustible gases to be released and ignite, causing the fire. Doc. No. 362 at 161; 36-1 at 71–72, 76, 85; 36-1 at 38; 36-3 at 2. Thus, the alleged defect in this
case, according to plaintiffs’ experts, relates to the refrigerator’s boiler tube.
As described above, McConnell, on behalf of Dometic, had some limited
involvement in design-related activities with regard to refrigerators made and sold by
Dometic AB. However, the record contains no evidence that McConnell’s activities
related in any way to the boiler tube. Nor is there any other evidence suggesting that
Dometic had any role in designing the boiler tube or otherwise “contribute[d] to the
condition that underlies” plaintiffs’ claims. As such, I find as a matter of law that
Dometic was not a “designer” within the meaning of Iowa Code § 613.18(1)(a).
Because Dometic was neither a “manufacturer” nor a “designer,” it is entitled to
statutory immunity under Iowa law as to plaintiffs’ product defect claims. This leaves
for consideration only plaintiffs’ claims for negligent assembly and negligent distribution.
B.
Remaining Negligence Claims
Apart from their product defect claims, plaintiffs claim Dometic was negligent in
the assembly and distribution of the refrigerator. However, plaintiffs do not dispute that
Dometic did not assemble the refrigerator. As such, I will grant summary judgment in
Dometic’s favor on the negligent assembly claim.
As for negligent distribution, Dometic argues that Iowa law does not recognize a
cause of action against a seller for “negligent distribution” and notes that plaintiffs have
not presented any evidence supporting such a claim, even if it exists. Id. at 15–16.
Plaintiffs did not respond to Dometic’s arguments as to this claim. As such, I need not
delve into the question of whether a claim of negligent distribution is available under
Iowa law.
I will grant Dometic’s motion for summary judgment on the negligent
distribution claim.
16
C.
Spoliation of Evidence
The conclusions set forth above dispose of all plaintiffs’ remaining claims. Thus,
Dometic’s arguments for dismissal based on spoliation of evidence are largely moot.
However, I will address that issue to determine whether an alternative basis exists for
dismissing this case.
1.
Parties’ arguments
Dometic argues that dismissal is warranted because plaintiffs intentionally
destroyed evidence to suppress the truth by cleaning up the northern, eastern and western
areas of the building before the joint inspection that was scheduled for November 4,
2014. Doc. No. 26-5 at 19–20. Dometic contends that Mark Merfeld intentionally
destroyed evidence after George Howe instructed him not to touch the fire scene. Id. at
27. Dometic then argues that the cleanup was prejudicial because its experts did not have
the opportunity to examine potential alternative sources of origin for the fire, other than
the RV. Id. at 33–35, 39. Dometic defines the fire scene as the entire building and
claims that any destruction of that scene creates prejudice. Id.
Plaintiffs argue that there was no spoliation of evidence because (1) the fire scene
is limited only to the RV, not the entire building and (2) Merfeld did not intend to destroy
evidence when he cleaned the northern, eastern and western areas of the building.8 Doc.
No. 36-5 at 18, 19, 24.
2.
Analysis
“Spoliation” is the “intentional destruction, mutilation, alteration or concealment
of evidence.” Spoliation, Black’s Law Dictionary (10th ed. 2014). In diversity cases,
federal law applies to sanctions imposed for the spoliation of evidence. Sherman v.
8
Plaintiffs make a third argument, that dismissal is not favored under Iowa law, but as noted in
the following section, federal law governs the sanctions available for a finding of spoliation.
17
Rinchem Co., Inc., 687 F.3d 996, 1006 (8th Cir. 2012). District courts have the inherent
power to “fashion an appropriate sanction for conduct which abuses the judicial process.”
Gallagher v. Magner, 619 F.3d 823, 844 (8th Cir. 2010) (quoting Chambers v. NASCO,
Inc., 501 U.S. 32, 44–45 (1991)). Dismissal is warranted only if the court finds that the
plaintiffs intentionally destroyed evidence in such a way that “indicat[es] a desire to
suppress the truth.” Id.; Menz v. New Holland North America, Inc., 440 F.3d 1002,
1006 (8th Cir. 2006).9 This standard is higher than the “knew or should have known”
negligence standard sometimes used by other courts. See Rattray v. Woodbury Cty.,
Iowa, 761 F. Supp. 2d 836, 845 (N.D. Iowa 2010). To warrant dismissal, Dometic also
must show that it has been prejudiced by the destruction of the evidence. Estate of
Seaman ex rel. Seaman v. Hacker Hauling, 840 F. Supp. 2d 1106, 1115 (N.D. Iowa
2011).
a.
Intent
A court has “substantial leeway to determine intent through consideration of
circumstantial evidence, witness credibility, motives of the witnesses . . . and other
factors.” Estate of Seaman, 840 F. Supp. 2d at 1115. The ultimate focus is whether
there was “intentional destruction of evidence indicating a desire to suppress the truth”
and not simply that the parties were aware of the prospect of litigation. Greyhound Lines,
Inc. v. Wade, 485 F.3d 1032, 1035 (8th Cir. 2007). In Stevenson, the Eighth Circuit
addressed a situation that “tests the limits” of what actions qualify as bad faith, or
intentional destruction.
354 F.3d at 747–48.
In that case, the defendant railroad
destroyed a voice recording pursuant to its routine retention policy, but had general
9
A finding of intentional destruction is also necessary to warrant an adverse inference instruction.
Menz, 440 F.3d at 1006; Burris v. Gulf Underwriters Ins. Co., 787 F.3d 875, 879 (8th Cir.
2015). Other sanctions may be imposed without a finding of intentional destruction, such as
prohibiting the party from introducing certain evidence or expert testimony. Stevenson v. Union
Pacific R. Co., 354 F.3d 739, 747 n.2 (8th Cir. 2004).
18
knowledge that such recordings would be important in any litigation in which an accident
resulted in death or serious injury. Id. at 748. A claims representative for the railroad
received notice of the accident at issue shortly after it occurred and started an
investigation. Id. at 747. The recording at issue was the only contemporaneous recording
of the accident. Id. at 748. Further, the railroad made immediate efforts to preserve
other types of evidence, but not the voice recording, and had made efforts to preserve
voice recordings in other cases when doing so was beneficial to the railroad. Id. The
court found that “[t]he prelitigation destruction of the voice tape in this combination of
circumstances, though done pursuant to a routine retention policy, creates a sufficiently
strong inference of an intent to destroy it for the purpose of suppressing evidence of the
facts surrounding the operation of the train at the time of the accident.” Id.
Here, the fire occurred on October 11, 2014. Doc. No. 26-1 at 1. Plaintiffs’
insurance adjuster, Brooks Combs of State Farm, met the plaintiffs at the Building on
October 12, 2014. Id. at 17. State Farm’s fire investigator, George Howe, viewed the
Building on October 14, 2014. Id. at 14. He did not conduct a thorough investigation,
but took some pictures and examined one outlet. Id. at 11. On October 16, 2014, State
Farm sent a Notice of Claim and Inspection to Dometic, indicating that Dometic may be
responsible for the property loss at the building. Id. at 12. A joint inspection was
scheduled for November 4, 2014. Id. Mark Merfeld knew the joint inspection was
scheduled for November 4. Id. at 15.
Sometime in October, Mark Merfeld and others began cleaning up debris from the
building. Doc. Nos. 26-2 at 115; 26-3 at 9. Ryan Merfeld, Mark Merfeld’s son,
estimated that twenty 40-foot semi-trailers of material were removed and between 20–30
people came through the Building prior to the inspection. Doc. No. 26-1 at 12. The RV
itself was preserved and covered with tarp during the cleanup. Doc. No. 36-3 at 168.
The parties agree that the Building had been substantially altered when the November 4
inspection occurred. Id. at 14. The parties also agree that Combs and Howe directed
Mark Merfeld not to alter the scene in any way before the joint inspection. Doc. Nos.
19
26-3 at 28, 30–31. Howe also suggested to Merfeld that the RV and the area between
the RV and the wall be covered with tarp in order to preserve it. Doc. No. 26-2 at 90,
91.
However, despite the initial instructions not to disturb the fire scene, at some point
after the fire – but before the joint inspection – Combs and Howe told Mark Merfeld that
he could do some cleanup in the building. Doc. No. 26-3 at 33, 34. Combs testified
that the cleanup authorization was to knock down a dangerous wall on the north end of
the building. Id. at 34. He claims that he did not authorize a cleanup to the extent that
the building was ultimately cleaned. Id. at 33–34
Howe’s testimony about what he told Mark Merfeld is similar. Doc. No. 26-2 at
89, 90. Howe stated that he authorized Mark Merfeld to inventory a portion of the
building and “to just stay away from the area around the RV.” Id. at 94. He also said
the Merfelds could knock down a precarious wall on the north side of the building. Id.
However, he testified that he did not believe the conversation authorized Mark Merfeld
to remove and dispose of the physical debris to the extent it was ultimately cleaned. Id.
Mark Merfeld testified that he cleaned up some “trash and fire debris” but, to his
knowledge, did not remove or destroy evidence because any items found in or around the
location of the fire, the RV, were preserved. Doc. No. 36-1 at 20. He stated that he
was instructed not to clean up anything in the first days after the fire and did not do so,
but then Combs gave him permission to “clean up everything up to the point and around”
the RV. Doc. No. 36-3 at 171, 173. He also stated that he retained items from the north
area of the building for further investigation. Id. at 173.
Ryan Merfeld testified that they put the tarp on the RV because they were not
allowed to touch it during the cleanup, as they were instructed to keep everything the
same. Id. at 168. He also testified that they were told to keep the side near the RV, the
south wall, intact because of the “electricity . . . just in case they found something over
there,” but they were allowed to clean up everything else. Id. He stated they were never
told specifically not to disturb the scene to the east, north or west side of the RV. Id.
20
Under these circumstances, it is clear that State Farm’s directives to the Merfelds
were unclear and, indeed, bordered on the ridiculous. With a joint inspection already
scheduled, it is absurd that State Farm authorized its insureds to take any action
concerning the Building. However, the evidence does not permit a finding of intentional
destruction of evidence for the purpose of suppressing the truth. Plaintiffs held off on
doing any work with regard to the Building until they received permission from Combs.
The extensive cleanup work that followed arose from a miscommunication about the
scope of the area plaintiffs were authorized to clean. There is no evidence that either
State Farm or the Merfelds acted with the intent to destroy evidence that would have
revealed an alternative cause of the fire.
b.
Prejudice
While I have already found that dismissal is not appropriate, I will briefly address
the issue of prejudice. Prejudice may be shown simply by the nature of the evidence that
was destroyed. Stevenson, 354 F.3d at 748. The destroyed evidence need not be a
“smoking gun” to be prejudicial. Rattray, 761 F. Supp. 2d at 845–46. There is no
prejudice if there is no support for the speculation that the destroyed evidence would have
affected the litigation. Gallagher, 619 F.3d at 844; See also Koons v. Aventis Pharm.,
Inc., 367 F.3d 768, 780 (8th Cir. 2004). If the missing evidence would be different or
more helpful to the party claiming spoliation than the evidence that already exists, there
is likely prejudice. See Cedar Rapids Lodge & Suites, LLC v. JFS Dev., Inc., No. 09CV-175-LRR, 2011 WL 5975127, at *6 (N.D. Iowa Nov. 29, 2011).
Both parties agree that disturbing a fire scene can compromise the investigation.
Doc. Nos. 26-1 at 23; 36 at 11. Due to the cleanup, Dometic was unable to perform a
thorough inspection of other areas of the building to determine whether there was an
alternative origin point for the fire. Walter Oliveaux, Dometic’s fire inspector, stated in
his report that testing of other possible fire origins was not possible due to the extent of
cleaning. Id. at 107–08. He suggested that another person, Steve Bonefas, could have
21
been responsible for the ignition because he was at the building during the day of the fire
and was a smoker, but it was not possible to confirm this. Id. at 106–08. Derek Starr,
another fire investigator for Dometic, stated that the alteration to the building made it
impossible to test alternative origin hypotheses. Id. at 91.
Plaintiffs argue that eyewitness testimony confirms that the fire started at the RV.
Doc. No. 36-5 at 24.
Marvel Van Note testified that she first observed the fire
“underneath the camper on the north side and flames coming out of the top of the north
side of the camper.” Doc. No. 36-3 at 165. Ryan Merfeld also reported that he first
noticed smoke and flames between the wall of the camper and where the kitchen was
located in the camper. Doc. Nos. 36-3 at 167; 26-3 at 106. Plaintiffs argue that these
accounts are sufficient to show there was no prejudice because the fire clearly started at
the RV and the RV itself was preserved. However, the existence of these eyewitness
accounts do not change the fact that the Dometic was deprived of the opportunity to
investigate other possible causes. According to Oliveaux, because of the cleanup there
was “extremely limited evidence to verify the statements provided by all parties and
virtually no evidence to support any statements of Ryan Merfeld.” Doc. No. 26-3 at
107–08.
Clearly, the fire scene is the unique and primary source of evidence concerning
the cause of the fire. The significant disturbance that occurred in this case was prejudicial
to Dometic. See Stevenson, 354 F.3d at 748. Thus, but for the lack of evidence
establishing an intent to destroy evidence, I would find spoliation to be an alternative
basis for dismissal.
VI.
CONCLUSION
For the reasons set forth herein:
1.
Defendant’s motion (Doc. No. 26) for summary judgment is granted in its
entirety and all claims are hereby dismissed with prejudice.
2.
Trial, currently scheduled to begin July 23, 2018, is hereby canceled.
22
3.
Judgment shall enter in favor of the defendant and against the plaintiffs.
4.
Defendant’s motion to dismiss (Doc. No. 28) for spoliation of evidence is
denied as moot.
IT IS SO ORDERED.
DATED this 25th day of January, 2018.
__________________________
Leonard T. Strand, Chief Judge
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