International Paper Co et al v. Deep South Equipment Co et al

Filing 197

MEMORANDUM RULING denying 133 Deep South's Motion for Summary Judgment; denying 131 Motion for Summary Judgment on Depreciation of Sprinkler System; granting 120 Deep South's Motion for Summary Judgment on the Rekindle Issue; Plaintif fs' claims for damages caused by the second fire are dismissed; granting 129 NACCO's Motion for Summary Judgment. All of Plaintiffs' remaining claims against NACCO are dismissed with prejudice. Signed by Magistrate Judge Mark L Hornsby on 3/19/2015. (crt,Keifer, K)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
SHREVEPORT DIVISION

INTERNATIONAL PAPER CO., ET AL

CIVIL ACTION NO. 11-cv-0017

VERSUS
DEEP SOUTH EQUIPMENT CO., ET AL

MAGISTRATE JUDGE HORNSBY

MEMORANDUM RULING
Introduction
International Paper (“IP”) operates a paper mill near Mansfield, Louisiana. It leased
a warehouse in nearby Red River Parish to store used paper and corrugated containers that
would be used as feedstock. Tango Transport (“Tango”) operated the warehouse for IP.
Tango rented a lift truck from Deep South Equipment Company (“Deep South”) to
use in the warehouse. The truck was built by NACCO Materials Handling Group, Inc.
(“NACCO”). Several days after the truck arrived at the warehouse, it was parked in an area
lit by a high-intensity light made by Sylvania. An employee smelled smoke and discovered
that a fire had broken out near the truck. The warehouse was destroyed.
IP had an insurance policy from Factory Mutual Insurance Company (“FM”). The
insurer paid IP for its losses, including the cost of demolition and rebuilding the warehouse.
IP and FM (“Plaintiffs”) then filed this complaint against Deep South, NACCO, and
Sylvania. They alleged that the only potential sources of ignition of the fire were the truck

and the light. Before the court are a four motions for summary judgment filed by Deep South
and NACCO .
Summary Judgment Burdens
Summary judgment is appropriate “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. Pro. 56(a). A fact is “material” if it might affect the outcome of the suit under
governing law. Anderson v. Liberty Lobby, Inc., 106 S.Ct. 2505, 2510 (1986). A dispute
is “genuine” if there is sufficient evidence so that a reasonable jury could return a verdict for
either party. Anderson, supra; Hamilton v. Segue Software Inc., 232 F.3d 473, 477 (5th Cir.
2000).
The party seeking summary judgment has the initial responsibility of informing the
court of the basis for its motion, and identifying those parts of the record that it believes
demonstrate the absence of a genuine dispute of material fact. Celotex Corp. v. Catrett, 106
S.Ct. 2548 (1986). If the moving party carries his initial burden, the burden then falls upon
the nonmoving party to demonstrate the existence of a genuine dispute of a material fact.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 106 S.Ct. 1348, 1355-56 (1986).
Deep South’s Motion for Summary Judgment (Doc. 133)
Plaintiffs originally alleged that Sylvania, the manufacturer of a metal halide lamp
used in the warehouse, may have been responsible for the fire. Plaintiffs’ experts collected
and examined two lamps near the area of origin, and they were identified as E-10 and E-11.
Sylvania filed a motion for summary judgment and argued that Plaintiffs did not have
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sufficient evidence from which a reasonable juror could conclude that its light was the
proximate cause of the damages. Sylvania argued that the lightbulb in the area of origin was
destroyed so it could not be examined for evidence of defects, and Plaintiffs could not
otherwise establish a defect at trial. Sylvania pointed out that IP had conceded in response
to a request for admissions that discovery had produced evidence that appeared to negate the
assertion that a lamp-related fire was a viable theory. Plaintiffs did not file opposition to the
motion. The court granted summary judgment for Sylvania and dismissed it from the case.
The requests for admissions were served by Sylvania on IP. They asked that IP admit
that neither it nor its insurer could identify the metal halide lamp that they alleged in the
complaint was a cause of the fire. The request asked for some other admissions about the
lamp. IP responded to each of them as follows:
Plaintiff’s initial investigation initially supported the conclusion that a lamprelated fire was one viable alternative theory as to the cause of the fire;
however, subsequent discovery has produced evidence that appears to have
negated that assertion. Further, the lamp located in the area of origin was not
collected or retained as evidence.
Forest Smith, an expert for Plaintiffs, stated in his report that he examined evidence
including the remains of a metal halide lighting fixture and lamp found on the floor near the
right front tire of the forklift. He expressed an opinion that the cause of the fire was not due
to any electrical failure or malfunction of the lighting fixture and lamp located above the
forklift. Mr. Smith later issued a supplemental report in which he discussed the lighting
issues in more detail and again opined that the available evidence was sufficient to a

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reasonable degree of engineering certainty to eliminate the lighting fixture and lamp located
above the forklift as a potential cause of the event.
Deep South argues that Mr. Smith examined the lighting fixture and lamp designated
as item E-ll, did not mention in his reports item E-10, and could not have examined what
Deep South contends is a third (missing) light fixture. Mr. Smith backs his report with an
affidavit in which he stated that both items E-10 and E-11 exhibit similar appearances that
indicate they both sustained damage in the fire but did not fail in such a manner as to cause
the fire. Plaintiffs contend that Deep South’s argument for the existence of a third missing
lamp is based on inartful language in the record and that “there is not a third metal halide
lamp which was or was not analyzed.”
Plaintiff stated in a discovery admission that the lamp located in the area of origin was
not collected or retained as evidence, but there is other evidence in the record that light
fixtures in the area were preserved and examined. There may be some inconsistencies in the
record, but the court is not comfortable in finding that there is no genuine issue as to whether
there was a third light fixture, of more relevance than E-10 and E-11, that was not examined.
More important, Deep South’s motion is based on the narrow argument that it is
entitled to summary judgment because Plaintiffs cannot establish that the alleged missing
lamp is ruled out as a cause of the fire. Deep South contends that it is entitled to summary
judgment so long as there is evidence of an alternate potential source of ignition if the
evidence of that alternate source is not available for examination. Deep South does not cite
any Louisiana jurisprudence to back this argument.
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Deep South cites in support only two cases from other jurisdictions. The first, Howells
v. General Electric Co., 2013 WL 419244 (D. Nev. 2013), involved a claim that a defective
microwave oven caused a kitchen fire. The homeowners did not see the fire start, but they
did see flames in a microwave oven mounted above a stove. The homeowners had no expert
to identify the cause of the fire or to suggest the microwave suffered from a defect. The
evidence permitted only an inference that the fire originated in the cooking area of the
kitchen. The court granted summary judgment for the manufacturer of the microwave. Deep
South overstates the holding of this case as granting summary judgment because the stove
could not be ruled out as a cause. That factor was mentioned, but there is no indication that
the mere possibility that the stove was the source was alone sufficient to warrant summary
judgment for the maker of the microwave.
Deep South also cites Kozar v. Sharp Electronics Corp., 2005 WL 2456227 (W.D. Pa.
2005) in which the court granted a Daubert challenge to an expert opinion based on the
process of elimination theory to determine the cause of a fire; there was a television power
cord that had not been recovered and analyzed. The decision might be of benefit if this were
a Daubert challenge to the methodology used, but it is not. Kozar did not address the
summary judgment issue at hand in this case.
Deep South’s motion is based on a contention that there is a missing lamp or lighting
fixture that is a potential source of the fire that was not collected and preserved. There is an
indication of that in the discovery responses, but the other facts in the record cast doubt on
whether that is actually the case. Deep South has also not shown that the burden on Plaintiffs
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under Louisiana law warrants summary judgment based on the mere existence of an alternate
potential cause of the fire that cannot be examined. For these reasons, Deep South’s Motion
for Summary Judgment (Doc. 133) will be denied.
Deep South argued in a supplemental memorandum (Doc. 196) that Plaintiffs’ claims
should be dismissed because they no longer have an expert who can opine as to the origin
of the fire. That is a much broader and different argument than presented in the original
motion and the other briefs. It is not appropriate to consider an argument raised for the first
time in a reply brief or other point in the briefing when the opponent was not allowed an
adequate opportunity to respond. Vais Arms, Inc. v. Vais, 383 F.3d 287, 292 (5th Cir. 2004).
Deep South did not raise this argument until the sixth and final brief related to this motion,
so it will not be considered.
NACCO’s Motion for Summary Judgment (Doc. 129)
Plaintiffs’ complaint sets forth a number of theories of liability against NACCO, the
manufacturer of the truck. One of them was a claim under the Louisiana Products Liability
Act that NACCO should have warned Deep South (the distributor) that the truck was unsafe
for use in paper handling service because, among other reasons, loose paper could be drawn
into the engine compartment and brought into contact with exhaust components.
Plaintiffs retained John Howard as a human factors expert to testify in support of their
failure to warn claim. Howard opined that, although NACCO does recommend the use of
a paper package when a lift truck will be operated in the paper industry, NACCO’s warning
information system was not emphatic enough to impress upon Deep South the need to
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impress upon end users the importance of using the paper package. NACCO contends in its
motion for summary judgment that this is now the sole claim that Plaintiffs present against
NACCO. Plaintiffs have not contested that assertion in their briefs.
After NACCO filed its motion for summary judgment, the court granted NACCO’s
motion to preclude the testimony of Mr. Howard regarding NACCO’s duty to warn. The
court stated that Howard could testify regarding the communications between Deep South
and the end user (because Deep South had not filed a timely Daubert challenge to Howard’s
opinions), but Howard could not offer opinions regarding the adequacy of NACCO’s
warnings to Deep South. Doc. 182.
NAACO seeks summary judgment on the grounds that (1) Deep South was a
sophisticated user to whom NACCO did not owe a duty to warn and (2) the warning NACCO
provided was adequate. With regard to the first argument, a manufacturer has no duty under
Louisiana law to warn a sophisticated purchaser. “Louisiana does not hold the manufacturer
as compelled to warn sophisticated purchasers of dangers of which the buyer either knows
or should be aware.” Davis v. Avondale Indus., Inc., 975 F.2d 169, 172 (5th Cir. 1992). As
for the adequacy of a warning, it is ordinarily a question for the trier of fact, but summary
judgment is appropriate if a plaintiff has presented no expert testimony or other evidence to
support his claim. Jack v. Alberto-Culver USA, Inc., 949 So.2d 1256, 1259 (La. 2007);
Ricks v. City of Alexandria, 2014 WL 4274144, *5 (W.D. La. 2014).
NAACO does not sell directly to end users. It offers to the dealers that purchase its
trucks an optional paper package that can be used when a truck is operated in a paper
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environment. The package includes items such as a vented hood and muffler wraps that help
reduce the accumulation of paper debris near hot components. The court noted in its prior
ruling (Doc. 182) that the appropriate ANSI standard does not mandate that paper package
type add-ons be standard equipment on all lift trucks, and OSHA places the responsibility
on the end user to determine the appropriate equipment for the work environment.
The evidence shows that NACCO issued a number of product information bulletins
to its dealers regarding a paper applications kit. The bulletins stated that the kits were for use
where loose paper product material is present at floor level, and dealers were encouraged to
add the option to trucks going into any paper industry application where waste scraps were
present. The bulletins stated that the kits would reduce the potential for fire by limiting the
contact of paper scraps with hot surfaces. Plaintiffs and Deep South complain that four of
the eight bulletins provided by NACCO to Deep South did not specifically address the risk
of fire, and they complain that Deep South was not provided a SPED study conducted by
NACCO regarding the movement and accumulation of paper in the engine compartment of
the lift truck operated in a paper environment.
Deep South is the authorized dealer of NACCO lift trucks in this area, with eight
offices and thousands of customers in Louisiana, Mississippi, Texas, and Oklahoma. It states
on its website that its salesmen and technicians are experts in dealing with the truck at issue.
General Sales Manager Lindsey Hernandez, who handled this rental, had over two decades
of experience selling lift trucks in various environments. Hernandez testified at a deposition
that Hyster/NACCO recommends a paper application kit on a lift truck to be operated in
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paper-handling services. Hernandez said the purpose of the recommendation was to keep
paper from getting on the hot surfaces and acknowledged that a paper kit was recommended
“on any truck going into an application like Tango.”
The uncontested evidence is that Deep South was about as sophisticated a purchaser
of the lift truck as one could find. NACCO provided a number of recommendations to Deep
South that a paper kit be used in a paper environment, and some of the bulletins stated the
rather obvious reason for the kit, which was to reduce the risk of fire. The very experienced
manager who handled this particular transaction was aware of the kits, the reason for their
existence, and that they were recommended in the environment at issue. Plaintiffs have no
expert testimony or any other particular evidence, beyond the bulletins themselves, to support
their claims that the warnings were inadequate.
NACCO has shown that there is no genuine issue that Deep South was a sophisticated
purchaser who knew of the danger, so NACCO had no duty under Louisiana law to warn
Deep South about this issue.

Furthermore, the warnings that were given were

straightforward, common sense, and more than adequate. The complaints by Plaintiffs that
Deep South was not also provided the SPED report do not give rise to a genuine issue of
material fact. That report was the underlying engineering document that described the testing
that led to the resulting warning that the paper package be used in a paper environment.
There is no indication from the testimony of Manager Hernandez or otherwise that the result
would have been any different had NACCO provided Deep South the SPED report along
with the bulletins about which Hernandez was already aware but chose to disregard. See
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Bloxom, 512 So.2d at 850 (additional warning would have been futile when consumer
admitted he never read the manual). Accordingly, NACCO’s Motion for Summary Judgment
(Doc. 129) will be granted, and all remaining claims against NACCO dismissed with
prejudice.
Deep South’s Motion for Summary Judgment on the Rekindle Issue (Doc. 120)
Plaintiffs alleged in their complaint that a fire broke out in the vicinity of the truck and
light on January 7, 2010. Plaintiffs alleged that, three weeks later, hot ashes from the original
fire reignited the fire and destroyed bales of used paper and a corrugated container that were
stacked to the north of the destroyed warehouse. FM allegedly made payment to IP for its
losses from both the original and second fire. Complaint, ¶¶ 13-16.
Plaintiffs retained Johnny Thornton as their expert on the origin and cause of the fire.
Thornton issued his expert report in which he analyzed information and offered an opinion
that the original fire was caused by an ignition of paper products that were in close proximity
to the unprotected exhaust manifold of the lift truck. He also opined that the second fire was
caused by a rekindling of the original fire. He stated that his opinion regarding the second
fire was “based on the same methodology as stated within this report.”
Deep South moves for summary judgment prohibiting Plaintiffs from recovering any
damages caused by the second fire. It argues that the second fire cannot be attributed to its
truck, which had already been destroyed. Deep South argues that Thornton’s opinion linking
the second fire to the original fire is unfounded and subject to a Daubert challenge, and that
Plaintiffs do not have any other evidence to prove that the second fire was caused by the first.
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Plaintiffs responded (Doc. 156) by relying on Thornton’s report and an affidavit he
offered to back his report. He testified about personal observations at the scene and repeated
his conclusion that the second fire was a rekindle of the first, which had never been
extinguished. Plaintiffs did not point to any other witnesses or evidence they could present
to support their contention that the second fire was related.
After the summary judgment briefs were filed, the court addressed several Daubert
challenges including one to the testimony of Johnny Thornton. Defendants argued that
Thornton’s opinions were based on inadequate facts and data, not the result of reliable
application of principles and methods to the fact, and were per se defective under the
applicable standards of NFPA 921. The court noted that Thornton was no longer licensed
in Texas and had never been licensed in Louisiana. He had not maintained his certification
in the relevant area, and his deposition testimony showed that he was not knowledgeable
about the current version of NFPA 921, which he purported to rely upon to form his opinion.
For those reasons, the Daubert motion that challenged Thornton’s opinions as an expert was
granted. Doc. 182.
Deep South’s current motion squarely challenged Plaintiffs’ ability to present
evidence that the second fire was a rekindle of the first (and therefore possibly caused by the
truck). Plaintiffs responded by offering the opinion of Thornton, which has now been found
inadmissible. There might be other acceptable forms of evidence on the issue, but Plaintiffs
did not shoulder their summary judgment burden by pointing to any other admissible
evidence that might demonstrate a genuine dispute of fact on this point. Deep South met its
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summary judgment burden by challenging Plaintiffs to point to admissible evidence on this
issue, and Plaintiffs did not meet that challenge. Deep South is, therefore, entitled to
summary judgment dismissing all claims for damages based on the second fire.
Deep South’s Motion for Summary Judgment; Depreciation of Sprinkler System (Doc.
131)
When the warehouse was built in about 2000 there was no requirement that a building
of its purpose have a sprinkler system. Louisiana adopted a new code in 2007 and required
that a new structure built for the same purpose as the warehouse must have a sprinkler
system. IP’s warehouse was grandfathered so that the owner was not required to upgrade to
a sprinkler system as long as the building was not modified.
The fire and the required replacement of the building mandated that the new building
meet the requirements of the new code. Plaintiffs’ experts estimated the replacement cost
of the warehouse at approximately $4,100,000, of which $1,017,500 is attributed to the
sprinkler system required by the code upgrade.
Earlier motion practice resulted in a ruling (Doc. 115) regarding (1) whether Plaintiffs
should be allowed to recover the cost of the sprinkler system and (2) whether recovery of the
cost of rebuilding the warehouse must be reduced to reflect depreciation. The court
employed the damages principles set forth in Roman Catholic Church of Archdiocese of New
Orleans v. Louisiana Gas Service Co., 618 So.2d 874, 876 (La. 1993). Courts have stated
different tests, such as fair market value before property damage, or cost of replacement less
depreciation, but Roman Catholic Church admonished “no mechanical rule can be applied

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with exactitude in the assessment of property damage under Article 2315 and that every case
must rest upon its own facts and circumstances.” Id. at 877. The Court set forth flexible
guides, rather than arbitrary formulae, to foster the goals of the Civil Code of compensating
a victim to the full extent of his loss and restoring him to as good a position as he held before
the damage. Id. at 879-80.
This court applied those rules and determined that a jury, given a proper showing by
Plaintiffs, could award damages for the cost of the fire sprinkler code upgrades. With respect
to the replacement of the building itself, the court held that the movants had satisfied their
summary judgment burden that any award for replacement of the warehouse must reflect the
expert’s estimate of $812,398 in depreciation of the building. Otherwise, Plaintiffs would
receive the windfall of a brand new building to replace one that was several years old.
Deep South now asks the court to grant it summary judgment by holding that any
award for the cost of the sprinkler system must also be reduced to reflect depreciation. The
motion cites no authority other than the court’s prior ruling. The court finds that Deep South
has not established that it is entitled to summary judgment on this issue. The damage
assessment is different with respect to the sprinkler system because it is the installation of
a entirely new system that was allegedly required because of the fault of the defendants.
There was no earlier, aged sprinkler system that was replaced with a new system that would
be expected to have a greater life. Accordingly, the principles that warrant the consideration
of depreciation in valuing the loss of the warehouse do not apply equally to the cost of

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installing the newly mandated sprinkler system. Accordingly, Deep South’s Motion for
Summary Judgment on Depreciation of Sprinkler System (Doc. 131) will be denied.
Conclusion
For the reasons set forth above, Deep South’s Motion for Summary Judgment (Doc.
133) and Motion for Summary Judgment on Depreciation of Sprinkler System (Doc. 131)
are denied. Deep South’s Motion for Summary Judgment on the Rekindle Issue (Doc. 120)
is granted; Plaintiffs’ claims for damages caused by the second fire are dismissed. NACCO’s
Motion for Summary Judgment (Doc. 129) is granted; all of Plaintiffs’ remaining claims
against NACCO are dismissed with prejudice.
THUS DONE AND SIGNED in Shreveport, Louisiana, this 19th day of March, 2015.

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