Caravan Ingredients v. Azo, Inc. et al

Filing 145

MEMORANDUM AND ORDER granting in part and denying in part 122 plaintiff's Motion for Partial Summary Judgment; granting in part and denying in part 124 plaintiff's Motion for Summary Judgment; denying 126 defendant's Motion for Summary Judgment; denying 129 plaintiff's Motion to Strike ; denying 132 defendant's Motion to Strike ; granting 141 defendant's Motion for Leave to File; and denying 142 plaintiff's Motion to Strike. Signed by Chief Judge J. Thomas Marten on 4/24/15. (mss)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

Caravan Ingredients, Inc.,
Plaintiff,
vs.

Case No. 13-2592-JTM

AZO, Inc.,
Defendant.

MEMORANDUM AND ORDER

By the present Order the court addresses what is essentially the third wave of
motions in this action by Caravan Ingredients, Inc. alleging that a defective screen
manufactured by former defendant Sefar, Inc. and sold by defendant AZO, Inc. caused
contamination of flour produced by the plaintiff. The court has addressed the parties’
earlier motions by two separate Orders (Dkt. 93, 131), the factual findings and legal
conclusions of which are incorporated herein. The present Order is further issued on an
expedited basis to assist in the parties’ scheduled mediation of the matter on April 27, 2015.
Fuller exploration of the issues involved in the present wave of motions may issue at a later
date.

1. Amount of Damages
Caravan seeks summary judgment as to the amount of its damages. Specifically, it
seeks a determination that the failure of the screen on the sifter required it to recall the flour
produced from the sifter. Further, it seeks a determination that it suffered $3,416,901.36 in
damages as a result of the recall of the flour. The damages reflect the costs of claims by
Caravan’s customers, as well as the freight costs to return contaminated flour and to ship
re-ordered flour. Additionally, acknowledging AZO’s defense which alleges that Caravan
should have detected the failure of the wire screen earlier and that its damages should
therefore be limited to a recall of the product during the first week of use (January 9 to 16,
2012), Caravan seeks a determination that its damages for that first week are $1,169,388.00.
The court set forth the controlling summary judgment standards in its previous Orders.
The facts set forth in Caravan’s motion are largely uncontroverted. Indeed, of the
28 paragraphs of uncontroverted fact submitted by plaintiff, AZO explicitly admits 25. Of
the remaining three (¶¶ 2, 26, and 28), AZO offers responses to two which fail to effectively
controvert the requested finding. Thus, Caravan alleges that the screen fragments located
in the flour came from the failed Sefar-AZO screen. AZO denies the requested finding, but
the underlying testimony of AZO’s own expert acknowledges that “it's more probable than
not that the Canada Bread screen fragment came from the destroyed screen.”
Caravan alleges that “AZO has not produced any witness, or evidence challenging
the damage totals set forth above and in the exhibits attached hereto.” AZO’s response
does not deny this contention. Rather, the defendant “admits that it has not produced any
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evidence challenging Caravan’s damage totals to date.” (Dkt. 137, at 11).
However, AZO does argue that Caravan has overstated the amount of damages for
the first week of production (id. at 12-16), and that the damages for the first week are
$932,305.00. AZO premises this contention based on its own separate assessment of the
figures submitted to Caravan in connection with its motion for partial summary judgment
on damages. AZO recalculated the amounts due for the costs of claims
Caravan replies to AZO by arguing that AZO’s calculations should be rejected
because they were not previously disclosed pursuant to FED.R.CIV.PR. 26(a). Further, it
argues that AZO’s calculations lack foundation. The dispute also has generated both
additional motions (Caravan moving to strike AZO’s damages calculations, attached as
Exhibits A - D to its Reply, and AZO moving for leave to file a surreply) and a direct
dispute of fact between counsel.
AZO argues that there is no reason why it should have previously produced
separate calculations as to Caravan’s first week of damages, since Caravan itself only set
forth these calculations in the motion for summary judgment on damages. Caravan states
that this is false.
Both parties dispute whether Caravan’s Exhibit 12 in support of its motion, a listing
of various damages, was tendered to AZO at an earlier date. Caravan has submitted an
affidavit stating that the exhibit was “one of the documents physically handed over to
counsel for AZO and former Defendant, Sefar ... during the deposition.” (Dkt. 143-1, ¶ 5).
AZO has submitted an affidavit from one of its attorneys affirmatively stating that the
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exhibit “was not produced or marked as an exhibit” during the deposition. (Dkt. 141-1, ¶
3). Counsel further states that the exhibit “was not produced in Caravan's Initial Rule 26
Disclosures, any supplemental Rule 26 Disclosures, any bates-stamped documents
produced by Caravan, included in any Caravan exhibit lists, or referenced in the Pre-Trial
Order.” (Id. at ¶ 4).
The court denies the motion to strike and grants leave to surreply. Although AZO’s
damages lack separate expert support, they appear to be fairly straightforward reviews of
Caravan’s own damages calculations. The plaintiff’s foundation arguments lack merit,
given the fact that the only support for its first week damages in its summary judgment
memorandum (Dkt. 123, ¶ 28) is simply a spreadsheet, otherwise entirely lacking in
explanation or foundation.
The court need not resolve the direct factual dispute between counsel as to whether
Exhibit 12 was physically presented at the deposition. Exhibit 12 is a single-page set of
calculations. The document has no formal heading, and could have easily been lost amidst
the other paper presented during the course of the deposition. The exhibit could have been
tendered to counsel for Sefar and not conveyed to AZO.
Most importantly, there is no indication that Caravan ever formally presented these
calculations to AZO as a statement of its claims for damages until the motion for summary
judgment. The court finds that AZO’s recalculations of these figures do not require expert
testimony, that the defendant’s recalculations are not lacking in foundation, and finds that
a material issue of fact exists as to Caravan’s damages during the first week of production.
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The plaintiff’s motion is otherwise granted.

2. AZO Defense Paragraph 2
Caravan has moved for summary judgment as to Paragraph 2 of AZO’s
Comparative Fault Defense, which asserts that Sefar caused the accident by making a
defective screen, as well as any claim by AZO that the accident was caused by the screen
frame, rather than the screen itself. In its Response, AZO agrees that it will not assert that
the screen frame caused the accident. It argues, however, that the existence of a
manufacturing defect by Sefar remains in question.
Caravan’s motion focuses on the report and deposition testimony of AZO’s expert,
Stephen Philip Buckley, P.E. The report sets forth sixteen numbered opinions, none of
which state that Sefar did anything to cause the screen failure. Nor does the report
otherwise state that Sefar did anything to cause the failure. Caravan further notes that in
his January 25, 2015, deposition, Buckley explicitly discounted the existence of a
manufacturing defect:
Q. And is it your understanding that it was [Caravan expert] Dr. [Thomas]
Eagar's opinion that some of those hardness variations were, perhaps,
causative to the screen failure?
A. I got very distinctly that he thought it was causative, but I disagree.
Q. Disagree. Okay. So -- that was my next question. It's your opinion that
any variations in the hardness discovered during the testing were not
causative to the screen failure, but, rather, were a result of the failure?
A. Exactly.
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Further into his deposition, Buckley attributed the failure to overloading, not
variation in wire diameter.
Q. You're not critical of the material Sefar used to make the screen -- the
broken screen?
A. I wouldn't agree with that.
Q. Okay. What is your criticism of the material?
A. The material measurements that I made characterized both the broken
screen, the used screens — actually, when I say "both," I should say all
of the broken, the used, and the new screens. The material dimensions
of the diameters of those wires was smaller than I would have expected,
based on the manufacturing process. And because they were smaller, I
believe that they did not have the characteristics that were stated to be
actual measurements of that wire made by the wire manufacturer.
Q. Okay. So I think we can get that a little more specific. I believe the specs
for the wire called for a diameter of .0065 inches?
A. That's correct.
Q. And you're saying some of the measurements indicated diameters
smaller -- wire diameters smaller than .0065 inches?
A. Yes.
Q. Do you believe those variations in diameter were causative of the failure
of the broken screen?
A. I think that they contributed to the failure of the broken screen.
Q. Explain to me how.
A. Causative is an interesting word. Causative -- the mode of failure is what
you get from a causative situation. A contributing situation is something
that contributed to the cause of failure. In my opinion, the cause of
failure was overload. A contributing factor was the wire diameter.

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Q. Assuming the diameters you found existed at the — when the screen
was installed in operation, if there had not been an overload, would the
screen have failed?
A. I think it's highly unlikely.
Q. So without the overload, but given smaller wire diameters, you think it's
more likely than not that the screen would have remained intact?
A. Yes.
Buckley testified that he had no other criticisms of the material Sefar used, other
than the variation in wire diameter.
In contrast to Buckley, Caravan’s forensic expert on the cause of the screen failure,
Dr. Thomas Eagar, has attributed some of the fault for the accident to Sefar. Dr. Eagar
wrote in his report:
3. It is noted that the lower mesh screen shown in Figure 1 is relatively intact
after four weeks of service, while the upper mesh has been destroyed. Based
on the microhardness test results from Colorado Metallurgical Services, the
upper mesh has vastly higher hardness (strength) on samples CA20 and
CA21 than do samples CAl and CA2 or the broken sample. This higher and
highly non-uniform wire strength in the CA20 and CA21 wire supplied by
Sefar is the most probable cause of the rapid failure of the upper broken
mesh. The steel is much more susceptible to stress corrosion cracking at these
higher hardness levels [Exhibit A]. The SEM photographs of samples CA20
and CA21 show much coarser and more distinct fatigue striations than do the
fractures of samples CAl and CA2. See Figures 2 A and B as compared with
Figures 2 C and D. The coarser fatigue striations in samples CA20 and CA21
are the most probable cause of the rapid crack growth.
In its motion, Caravan attempts to mitigate this attribution by stressing that Eagar
subsequently testified in his deposition that the screen would have failed regardless of the
wire diameter variations. (Dkt. 135, at 14).

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The court finds that summary judgment should not issue. In the cited passage from
his deposition, Dr. Eagar does not directly address his earlier attribution of fault against
Sefar. Rather, Dr. Eagar is simply responding to representations by counsel as to a prior
Order of this court. Dr. Eagar stresses that counsel “just told me about it,” and that he
“didn’t know that types of details of what was in the motion.” (Dep. at 110). Dr. Eagar
cautions that because he hasn’t read the Order, “I’m not going to opine about the opinion.”
(Id. at 111).
The cited deposition testimony thus does nothing to detract from the thrust of Dr.
Eagar’s earlier Report — that the manufacturing defect reflected in the inconsistent wire
diameter was “the most probable cause of the rapid failure of the upper broken mesh.”
(Emphasis added). The deposition testimony, as it relates to the selection of the screen, is
not inconsistent with this result. Dr. Eagar testified that the metal screen would likely fail
eventually:
I’ll go back to my frequency argument. To fail within forty-eight hours when
your inspecition — recommended inspection interval is one week, is
premature in my opinion. Okay? So there’s something else going on here
than just — But stainless steel was not going to last for a long time in any
case. It wasn’t going to be a twenty year product. I don’t know that it would
be a one year product. But I think a lot of people were surprised at fortyeight hours.
Here the screen indeed failed rapidly, contaminating the very first batch of flour
produced. At this stage in the litigation, the court does not weigh the evidence. A rational
fact finder could look at Dr. Eagar’s opinions and determine that Sefar is partially to blame
for this rapid failure.
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As a result, the court grants summary judgment as to any contention that a broken
screen frame caused the plaintiff’s losses. The plaintiff’s motion is otherwise denied.

3. Defendant’s Summary Judgment Motion
The court finds that evidence set forth in earlier summary judgment rulings
precludes granting summary judgment in favor of AZO. In particular, the court finds that,
given evidence relating to AZO’s knowledge of the relative merits of steel and nylon mesh,
AZO is not entitled to summary judgment based upon K.S.A. 60-3306.

4. Exclusion of Defense Expert
Caravan argues that Stephen Buckley’s opinions should be excluded as unreliable
because in his deposition he demurred from explicitly describing himself as a qualified
metallurgist, a certified expert in change management, or a certified expert in human
factors. Caravan also argues that Buckley’s opinion that the accident was caused by its
overproduction is not admissible because it lacks factual support. Specifically, the plaintiff
notes that there is no separate support of Buckley’s theory that four feed hoppers were in
operation at once, and the majority of evidence indicates that Caravan did not exceed the
16,000 pounds of flour per hour limit for the sifters. Finally, it contends that Buckley has
no data to support his opinions that Caravan failed to provide alert and satisfactory
oversight, and that no testing supports his conclusion that variations in wire thickness
contributed to the screen failure.
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The court denies Caravan’s motion. Buckley’s general training and experience in
mechanical engineering and design qualify him to advance the opinions cited in his report.
Although Buckley acknowledged in his deposition that he was not “qualified” in
metallurgy, and was not “certified” in change management or human factors, these
statements in themselves do not require exclusion of his testimony. Buckley otherwise
appears to have significant experience in engineering in general, in fracture mechanics, and
in metal graphics research. He has extensive experience as a forensic expert, and has
testified previously on numerous occasions. Buckley’s mechanical engineering experience
has also given him the ability to address human factors questions as they relate to
mechanical design.
The court similarly rejects the arguments advanced by Caravan as to specific aspects
of Buckley’s testimony. As the court noted in an earlier Order, the testimony of Caravan’s
plant manager can be read as indicating that Caravan produced flour at the rate of 18,000
pounds per hour, an amount in excess of the maximum capacity for the sifter. Certainly
there is other evidence suggesting a lower rate of production, but the court at this point
does not weigh the evidence. A rational fact finder could believe the plant manager’s
testimony, thereby providing support for Buckley’s belief that overproduction contributed
to the screen failure. Buckley’s opinions as to the screen failure are further supported by
his assessment of the capacity of the hopper lines and the testing of a screen at a facility in
Colorado.

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5. Exclusion of Plaintiff’s Expert
The court reaches the same result with respect to AZO’s motion to exclude the
opinion testimony of Caravan’s expert, Dr. Eagar as to (1) whether stainless steel was an
appropriate material for use in the screen, and (2) that the screen failed due to bad design
or integration by AZO. The defendant argues that Dr. Eagar’s opinions should be excluded
because he failed to perform testing on the subject screen or on a nylon alternative. He also
has not reviewed any testing or design documents from AZO.
The court denies the motion to exclude. Dr. Eagar’s training and experience are
substantial, and his opinions are well-grounded in the evidence, including depositions of
AZO employees and documents produced by AZO, as well as recognized texts addressing
structural failure and fatigue. Dr. Eagar also had access to testing on the screens following
the accident. The court finds that Dr. Eagar may testify pursuant to FED.R.EVID. 702.

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IT IS ACCORDINGLY ORDERED this 24th day of April, 2015, that the defendant’s
Motions for Summary Judgment (Dkt. 126) and to Strike Expert Testimony (Dkt. 132) are
denied; defendant’s Motion for Leave to File Surreply (Dkt. 141) is granted; plaintiff’s
Motion for Partial Summary Judgment as to Damages (Dkt. 122) and its Motion for
Summary Judgment on Paragraph 2 and Screen Frame Failure (Dkt. 124) are granted in
part and denied in part as provided herein; plaintiff’s Motion to Strike Expert Testimony
(Dkt. 129) and Motion to Strike Exhibits A through D (Dkt. 142) are denied.

s/ J. Thomas Marten
J. THOMAS MARTEN, JUDGE

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