Shelton, et al v. Young's Welding and Machine Shop, LLC

Filing 39

MEMORANDUM AND ORDER - Show-Me's Motion to Dismiss is granted 26 . Young's Welding's Third-Party Complaint (Filing No. 20 ) is dismissed; and The Clerk's office is directed to terminate Show-Me as a party to the above- captioned action. Ordered by Chief Judge Laurie Smith Camp. (MKR)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
WILLIAM SHELTON and
ALECIA SHELTON,
CASE NO. 8:14CV165
Plaintiffs,
v.

MEMORANDUM
AND ORDER

YOUNG'S WELDING
AND MACHINE SHOP, LLC,
Defendant and ThirdParty Plaintiff,
v.
SHOW-ME SHORTLINE COMPANY, LLC
Third-Party Defendant.

This matter is before the Court on a Motion to Dismiss Third-Party Plaintiff’s
Complaint (“Third-Party Complaint”) (Filing No. 26) filed by Third-Party Defendant
Show-Me Shortline Company, LLC (“Show-Me”). For following reasons, the motion will
be granted.
BACKGROUND AND FACTS
For purposes of the pending motion, all well-pled facts are accepted as true,
though the Court need not accept proposed conclusions of law. The following is a
summary of the factual allegations.
This case arises out of an accident that occurred on February 21, 2012 (the
“Accident”). In the course of the Accident, Plaintiff William Shelton (“Shelton”) sustained
injuries when attempting to use a hydraulic bag wrapper machine (“Machine”). (Pl. Am.
Compl., Filing No. 37.)

The Machine was manufactured by Young’s Welding and

Machine Shop, LLC (“Young’s Welding”) at the request of Show-Me. Show-Me is in the

business of marketing farm equipment. Show-Me provided photographs to Young’s
Welding specifying how it wanted the Machine manufactured. Thereafter, Show-Me
sold the Machine to an agricultural equipment distributor. Young’s Welding understood
from its dealings with Show-Me, that Show-Me, as the distributor of the Machine, would
train its distributors in the proper use and operation of the Machine.
PROCEDURAL HISTORY
On June 3, 2014, Shelton and Alecia Shelton (collectively “Plaintiffs”) filed a
Complaint (Filing No. 1) against Young’s Welding alleging that Young’s Welding is
strictly liable in tort for Plaintiffs’ injuries and damages arising out of the Accident.
Subsequently, Plaintiffs filed an Amended Complaint (“Plaintiffs’ Complaint”) (Filing No.
37) alleging the same strict liability tort claims against Young’s Welding. 1

Young’s

Welding filed a Third-Party Complaint (Filing No. 20) against Show-Me alleging that
Show-Me is liable to Young’s Welding based on the following theories: strict liability,
negligence, and breach of implied warranties of merchantability and fitness.
STANDARD OF REVIEW
A complaint must contain “a short and plain statement of the claim showing that
the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). “[A]lthough a complaint need
not include detailed factual allegations, ‘a plaintiff's obligation to provide the grounds of
his entitlement to relief requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.’” C.N. v. Willmar Pub. Sch.,
Indep. Sch. Dist. No. 347, 591 F.3d 624, 629-30 (8th Cir. 2010) (quoting Bell Atl. Corp.
1

The Amended Complaint included additional allegations with respect to jurisdictional
requirements. (Compare Filing No. 1 at ECF 1, with Filing No. 27 at ECF 1.) With the exception of the
amount of damages suffered by Plaintiffs, the remainder of the allegations in the Amended Complaint are
identical to those in the original complaint. (Compare Filing No. 1 at ¶7(a), with Filing No. 37 at ¶8(a)).

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v. Twombly, 550 U.S. 544, 555 (2007)). “Instead, the complaint must set forth ‘enough
facts to state a claim to relief that is plausible on its face.’” Id. at 630 (citing Twombly,
550 U.S. at 570).
“A claim has facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Ritchie v. St. Louis Jewish Light, 630 F.3d 713, 716 (8th Cir.
2011) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)) (internal quotation marks
omitted).

“Courts must accept . . . specific factual allegations as true but are not

required to accept . . . legal conclusions.” Outdoor Cent., Inc. v. GreatLodge.com, Inc.,
643 F.3d 1115, 1120 (8th Cir. 2011) (quoting Brown v. Medtronic, Inc., 628 F.3d 451,
459 (8th Cir. 2010)) (internal quotation marks omitted). “A pleading that merely pleads
‘labels and conclusions,’ or a ‘formulaic recitation’ of the elements of a cause of action,
or ‘naked assertions’ devoid of factual enhancement will not suffice.” Hamilton v. Palm,
621 F.3d 816, 817-18 (8th Cir. 2010) (quoting Iqbal, 556 U.S. at 678). The complaint’s
factual allegations must be “sufficient ‘to raise a right to relief above the speculative
level.’” Williams v. Hobbs, 658 F.3d 842, 848 (8th Cir. 2011) (quoting Parkhurst v.
Tabor, 569 F.3d 861, 865 (8th Cir. 2009)).
When ruling on a defendant's motion to dismiss, a judge must rule “on the
assumption that all the allegations in the complaint are true,” and “a well-pleaded
complaint may proceed even if it strikes a savvy judge that actual proof of those facts is
improbable, and ‘that a recovery is very remote and unlikely.’” Twombly, 550 U.S. at
555, 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

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The complaint,

however, must still “include sufficient factual allegations to provide the grounds on which
the claim rests.” Drobnak v. Andersen Corp., 561 F.3d 778, 783 (8th Cir. 2009).
“Two working principles underlie . . . Twombly. First, the tenet that a court must
accept as true all of the allegations contained in a complaint is inapplicable to legal
conclusions. Threadbare recitals of the elements of a cause of action, supported by
mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678 (citing Twombly,
550 U.S. at 555). “Second, only a complaint that states a plausible claim for relief
survives a motion to dismiss.”

Id. at 679 (citing Twombly, 550 U.S. at 556).

“Determining whether a complaint states a plausible claim for relief will . . . be a contextspecific task that requires the reviewing court to draw on its judicial experience and
common sense.” Id.
DISCUSSION
I.

Strict Liability in Tort
Young’s Welding alleges that Show-Me is liable on a theory of strict tort liability

because Show-Me placed the Machine on the market with the following defects: there
were no warning labels on the Machine; there were no instruction labels on the
Machine; and there was no emergency shut-off on the Machine. Young’s Welding also
alleges that Show-Me did not train its distributors in the proper use and operation of the
Machine.
Under Nebraska law,2 “[i]n products liability, there is a significant distinction
between a manufacturer's liability for the manufactured product on account of strict

2

Nebraska has adopted Restatement (Second) of Conflicts of Law § 146 (1971), Malena v.
Marriott Int'l, Inc., 651 N.W.2d 850, 856 (Neb. 2002), which provides:

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liability in tort, as opposed to liability based on negligence.” Kudlacek v. Fiat S.p.A., 509
N.W.2d 603, 609-10 (Neb. 1994). With respect to products liability actions based on
negligence, the question is “whether the manufacturer's conduct was reasonable in view
of the foreseeable risk of injury, whereas in a cause of action based on strict liability in
tort, the question involves the quality of the manufactured product, that is, whether the
product was unreasonably dangerous.” Id. at 610. Nebraska law prohibits plaintiffs
from bringing actions based on the doctrine of strict liability in tort against “any seller or
lessor of a product which is alleged to contain or possess a defective condition
unreasonably dangerous to the buyer, user, or consumer unless the seller or lessor is
also the manufacturer of the product or the part thereof claimed to be defective.” Neb.
Rev. Stat. § 25-21,181 (2008) (emphasis supplied).
Show-Me argues that it cannot be held strictly liable in tort under Nebraska law
because it was not the manufacturer of the Machine. Young’s Welding admits that it
manufactured the machine referenced in Plaintiffs’ Complaint; however, Young’s
Welding argues that Show-Me should still be held liable under the doctrine of strict
liability because (1) Show-Me “was involved in the manufacturing and design process,”
and (2) Show-Me “was part of the common enterprise that produced the [Machine].”
(Filing No. 29 at ECF 3,4.)

In an action for a personal injury, the local law of the state where the injury occurred
determines the rights and liabilities of the parties, unless, with respect to the particular
issue, some other state has a more significant relationship under the principles stated in
§ 6 to the occurrence and the parties, in which event the local law of the other state will
be applied.
Plaintiffs’ injuries occurred in Nebraska, and the parties do not dispute that Nebraska law applies
to Young’s Welding’s claims against Show-Me.

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A. Show-Me’s Involvement in the Manufacture of the Machine
Show-Me’s alleged involvement in the manufacture of the Machine does not
make Show-Me a manufacturer. The Third-Party Complaint does not allege that ShowMe assisted in, or even influenced, the construction, assembling, packaging, or labeling
of the Machine. The only allegation in the Third-Party Complaint supporting the claim
that Show-Me was involved in the manufacturing process is that Show-Me provided
photographs to Young’s Welding depicting how it wanted the Machine manufactured.
This is not enough to raise Show-Me to the status of a manufacturer. See Sherman v.
Sunsong Am., Inc., 485 F. Supp. 2d 1070, 1079 (D. Neb. 2007) (finding that providing
testing standards for a product to a manufacturer did not raise supplier and distributor to
the status of manufacturer of a product).
B. Apparent Manufacturer Doctrine
Young’s Welding claims that “Nebraska law recognizes that a non-manufacturer
can be sued for strict liability” and that “a fact finder can transfer the liability of a
manufacturer to a separate entity holding itself out as manufacturer.” (Filing No. 29 at
ECF 5.) This argument appears to be based on the “apparent manufacturer doctrine.”
First, in support of its argument, Young’s Welding cites an opinion issued by this
Court, Sherman v. Sunsong America, Inc., 485 F. Supp. 2d 1070 (2007), discussing the
apparent manufacturer doctrine and declining to apply it in a case governed by
Nebraska law. Id. at 1080. It was recognized that the apparent manufacturer doctrine
“allows a fact finder to transfer the liability of a manufacturer to a separate entity holding
itself out as the manufacturer.” Id. at 1079 (quoting Stones v. Sears, Roebuck & Co.,
558 N.W.2d 540, 544 (Neb. 1997)) (internal quotation marks omitted). The Nebraska
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Supreme Court has not adopted the doctrine, however, and, in Sherman, this Court
concluded that even if the Nebraska Supreme Court did adopt the doctrine, it would not
apply under the facts of Sherman because there was no evidence that the plaintiffs
“relied upon any brand name, apparent or not, in choosing” the allegedly defective
product. Id. at 1080.
The reasoning in Sherman also applies here. There are no allegations in the
Plaintiffs’ Amended Complaint or in the Third-Party Complaint to support an inference
that the ultimate purchaser of the Machine relied on any brand name. Nor are facts
alleged supporting an inference that Show-Me held itself out as a manufacturer. In the
Third-Party Complaint, Young’s Welding alleged that Show-Me was in the business of
marketing farm equipment, not the business of manufacturing farm equipment. This
Court concludes that even if the apparent manufacturer doctrine were adopted in
Nebraska, it would not apply under the facts of this case.
II.

Negligence
Under Nebraska law, to recover in a negligence action, “a plaintiff must show a

legal duty owed by the defendant to the plaintiff, a breach of such duty, causation, and
damages.” Martensen v. Rejda Bros., Inc., 808 N.W.2d 855, 861-62 (Neb. 2012).
A. Duty
In a negligence action, whether a legal duty exists is a threshold question that is
a “question of law dependent on the facts in a particular situation.” Durre v. Wilkinson
Dev., Inc., 830 N.W.2d 72, 80 (Neb. 2013). Nebraska law defines legal duty as “an
obligation, to which the law gives recognition and effect, to conform to a particular
standard of conduct toward another.

If there is no duty owed, there can be no
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negligence.” Id. (internal citations omitted). With respect to legal duty in negligence
cases, the Nebraska Supreme Court has adopted the analysis of the Restatement
(Third) of Torts: Liability for Phys. & Emot. Harm (“Restatement (Third)”).

A.W. v.

Lancaster Cnty. Sch. Dist. 0001, 784 N.W.2d 907, 918 (Neb. 2010); Olson v. Wrenshall,
822 N.W.2d 336, 342-43 (Neb. 2012). Under § 7 of the Restatement (Third) (“§ 7”),
ordinarily, an actor has a “duty to exercise reasonable care when the actor's conduct
creates a risk of physical harm.” Restatement (Third) of Torts: Phys. & Emot. Harm § 7
(2010).3 Generally, the inverse of § 7 is also true, in that, “an actor whose conduct has
not created a risk of physical harm to another has no duty of care to the other.” Olson,
822 N.W.2d at 343 (citing the Restatement (Third) § 37 (Proposed Final Draft No. 1,
2005) (published in 2012)).
The Third-Party Complaint alleges that Show-Me negligently placed the Machine
on the market with no warning labels, instruction labels, or emergency shut-off feature.
It further alleges that Show-Me sold the Machine to a “distributor of agricultural
equipment.” (Filing No. 20 ¶5.) Assuming that Show-Me had any duty to place warning
labels, instruction labels, and an emergency shut-off feature on the Machine, the
alleged conduct of placing the Machine on the market without such safety features did
not create a risk of physical harm to Young’s Welding.

The Court concludes that

Young’s Welding failed to allege facts supporting a reasonable inference that Show-Me
owed a duty of care to Young’s Welding with respect to Show-Me’s placement of the
Machine on the market.

3

A.W., 784 N.W.2d at 915, 918 (expressly adopting §7 of the Restatement (Third)).

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B. Breach, Causation, and Damages
Even if Show-Me did owe a duty of care to Young’s Welding, Young’s Welding
still must demonstrate that Show-Me’s breach of that duty was the cause of some
damage to Young’s Welding. Considering all reasonable inferences that may be drawn
from the facts alleged in the Third-Party Complaint, the only damage Young’s Welding
has or will suffer as a result of the Accident is payment of damages to Plaintiffs if
Plaintiffs succeed on their claim against Young’s Welding for strict liability in tort. Such
damages are insufficient when pleading a claim for negligence. See Lesiak v. Cent.
Valley Ag Co-op., Inc., 808 N.W.2d 67, 81 (Neb. 2012) (“[T]he economic loss doctrine
precludes tort remedies . . . where the damages caused were limited to economic
losses and . . . a defective product caused the damage . . . . [E]conomic losses are
defined as commercial losses, unaccompanied by personal injury or other property
damage.”)
Moreover, if the negligence claim against Show-Me was intended as a claim for
contribution based on a theory of negligence, Young’s Welding failed to plead such a
claim. To proceed on a claim for contribution, Young’s Welding must share a common
liability in tort with Show-Me.

See Estate of Powell ex rel. Powell v. Montange, 765

N.W.2d 496, 502 (Neb. 2009). Plaintiffs only asserted claims against Young’s Welding
on a theory of strict liability in tort. Thus, at the culmination of Plaintiffs’ action against
Young’s Welding, any liability found on the part of Young’s Welding will be based on
strict liability in tort. As explained above, Show-Me, a non-manufacturer, does not share
in this liability under Nebraska law.

Thus, Young’s Welding has not alleged any

common liability with Show-Me, and any claims for contribution will be dismissed.
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III.

Breach of Implied Warranties
In Nebraska, actions for breach of implied warranties arise under Nebraska’s

Uniform Commercial Code Neb. Rev. Stat. (“Neb. UCC”) § 1-101 to § 10-104. Neb.
UCC sections 2-314 and 2-315 describe a seller’s obligation with respect to implied
warranties of merchantability and fitness for a particular purpose. A seller's implied
warranty extends to buyers and non-buyer third-parties if the third-party is a “natural
person who is in the family or household of his buyer or who is a guest in his home if it
is reasonable to expect that such person may use, consume or be affected by the
goods and who is injured in person by breach of the warranty.” Neb. UCC § 2-318. The
implied warranties of merchantability and fitness for a particular purpose run from the
seller to the buyer and third-party beneficiaries, not the opposite. See Neb. UCC §§ 2314, 2-315; see also In re Gen. Dynamics Asbestos Cases, 539 F. Supp. 1106, 1112
(D. Conn. 1982) (“[T]he representation that a product is safe for its intended use
normally flows from the manufacturer to the purchaser, not vice versa.”).
Here, the only sales transactions alleged in the Plaintiffs’ Amended Complaint
and the Third-Party Complaint are the sale of the Machine from Young’s Welding to
Show-Me and the sale of the Machine from Show-Me to an agricultural equipment
distributor. With respect to the first transaction, Young’s Welding was the seller, not the
buyer.

With respect to the second transaction, Young’s Welding was not a party.

Young’s Welding failed to allege any facts supporting a reasonable inference that it was
a buyer in any relevant sales transaction. Further, it did not allege any facts supporting
an inference that it was a third-party beneficiary to any sales contract. Thus, Young’s

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Welding failed to allege facts from which it can be inferred that it has standing to bring
claims for breach of implied warranties.
CONCLUSION
The Third-Party Complaint alleged claims for strict liability in tort, negligence, and
breach of implied warranties. Because Young’s Welding failed to allege that Show-Me
was a manufacturer of the Machine, the claim for strict liability in tort against Show-Me
is prohibited under Nebraska law.

With respect to the negligence claim, the facts

alleged do not support any inference that Show-Me owed a duty of care to Young’s
Welding.

Finally, with respect to claims for breach of implied warranties, Young’s

Welding did not allege facts from which it can be inferred that it has standing as a buyer
or third-party beneficiary to a sales contract with Show-Me. The Court concludes that
the Third-Party Complaint fails to state any claims against Show-Me upon which relief
can be granted, and the Third-Party Complaint will be dismissed.
IT IS ORDERED:
1. Show-Me’s Motion to Dismiss (Filing No. 26) is granted;
2. Young’s Welding’s Third-Party Complaint (Filing No. 20) is dismissed; and
3. The Clerk’s office is directed to terminate Show-Me as a party to the abovecaptioned action.
Dated this 20th day of January, 2015.
BY THE COURT:
s/Laurie Smith Camp
Chief United States District Judge

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