SGS U.S. TESTING COMPANY, INC. v. TAKATA CORPORATION et al

Filing 141

OPINION. Signed by Judge Kevin McNulty on 1/26/2017. (seb)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

Civ. No. 09-6007 (KM)

SOS U.S. Testing Company, Inc.,
Plaintiff,

OPINION

V.

TAKATA CORPORATION, TK HOLDINGS,
INC., TAKATA, INC., TAKATA
RESTRAINT SYSTEMS, INC., TAKATA
SEAT BELTS, INC., TK-TAITO, LLC, and
JOHN DOE COMPANIES (1-50),
Defendants.

MCNULTY, District Judge
The plaintiff, SOS U.S. Testing Company (“SOS”),’ tested seatbelts for the
defendants, Takata Corporation and affiliates (collectively, “Takata”). Both were
sued based on theories that the testing was inadequate or the seatbelts
substandard. None of the lawsuits were successful. SOS, having tendered
defense of the lawsuits to Takata, now seeks contractual indemnification of the
costs of defense of seven of those actions (collectively, the “Lawsuits”).
2
Herein, the designation “SOS” shall refer to the plaintiff and its predecessor
entity (U.S. Testing Company, or USTC).
2
The seven Lawsuits were:
1. Eleanora Fernandez, et al v. Takata Corp., SGS US. Testing Company, Inc., et al
(Arizona) Superior Court of Arizona, County of Maricopa, Case No. CV 2002022227, and its predecessor case, same title same court, CV 2002-010887, a
class action suit hereinafter referred to as “Fernandez”.
2. Lohman, M.D., et al vs. Takata Corp., SGS US. Testing Company, Inc., et al (New
-

Mexico) 1st Judicial District Court, County of Santa Fe, New Mexico, Case No.
D-0101-CV-200201279., a class action suit hereinafter referred to as “Lohman”
—

1

In an opinion and order dated April 6, 2016 (ECF nos. 136, 137)3 on
remand from the U.S. Court of Appeals for the Third Circuit, this Court ruled
on the cross-motions of Takata (ECF no. 121) and SGS (ECF no. 122) for
summary judgment on the remaining counts. Relevant now is the Court’s
ruling on Count I (breach of contract) that, pursuant to the parties’ indemnity
contracts, SGS is entitled to recover from Takata some, though not necessarily
all, costs of defending the Lawsuits.

I write primarily for the parties, and familiarity with my prior opinion is
assumed. My ruling on the parties’ summary judgment motions set forth legal
conclusions and rationales governing apportionment. The parties had not given
the Court sufficient information, however, to actually apportion costs. I
therefore permitted SOS to make a supplemental submission stating how
indemnification of SGS’s expenses should be apportioned, and I authorized
Takata to respond. Both parties made supplemental submissions as directed.
(ECF nos. 139, 140)
3. Lupe Zavala and Rosalie Zavala, Individually and On Behaf of all Similarly
Situated Persons, vs. Takata Corp., United States Testing Company, Inc., et al
(California) Superior Court of California, County of Los Angeles, Case No. BC
277327, a class action suit hereinafter referred to as “Zavala”
-

4. Travis and Galen Baggett d/b/a American Motors v. Takata Corp., SGS US.
Testing Company, Inc., et al (Tennessee) Circuit Court for the State of
Tennessee, 28th Judicial District, Haywood County, Case No. 3594, a class
action suit hereinafter referred to as “Baggett”.
-

5. Tracy Price v. Takata Corp., US. Testing Company, Inc., et al., (Texas) United
State District Court, Northern District of Texas, Amarillo Division, Case No.
-

2:08-C V-151-J. Originally filed in New Mexico, removed to Federal Court in
Texas, a personal injury case hereinafter referred to as “Price”.
6. Pete Everett and Marcella Everett, et al., v TK-Taito, LLC, Takata Seat Belts, mc,
et al. (Texas) 30th Judicial District Court of Wichita County, Texas, Case No
157,896A, a class action suit hereinafter referred to as “Everett”.
-

7. Mary Stevic and Ronald Stevic v. Nissan Motor Company, Ltd., TKHoldings, Inc.

aka Takata Seat Belts, mc, et al (Florida) Ninth Judicial Circuit in Orange
County, Florida, Case No. 06—CA-8631, hereinafter referred to as “Stevic”.
-

(See Complaint (ECF no. 1)

¶

11)

SGS US. Testing Co., Inc. v. Takata Corp., No. 09-6007 (KM), 2016 WL 1382364
(D.N.J. Apr. 6, 2016).

2

I.

Claims Asserted in the Lawsuits
As a starting point, it is helpful to summarize the claims made in the

seven Lawsuits.

Against SGS only

Against Takata
only

(Compi., ECF no.
12 1-8, Ex. E;
Am. Compi.,
ECF no. 12 1-9,
Ex. F)

Against both SGS and
Takata
• Fraud! fraudulent
concealment
• Violation of California
Business and
Professions Code §
17203, 17204 [Note:
Several theories are
alleged. SGS is
implicated in two: false
certification of
compliance with safety
standards, and
suppression of
information about safety
problems.]
• Unjust enrichment
• Breach of warranty
(alleging SGS breached
through conspiracy
with Takata)
• Consumer Legal
Remedies Act, CA Civil
Code § 1750, et seq.
[Note: Amended Cplt.
only]

Bagget

•

(Compl. ECF no.
12 1-12, Ex. I)

Price
(See Compi.,
ECF no. 12 1-14,
Ex. K)

Strict product
liability
• Strict liability—
failure to warn
• Breach of
express and
implied
warranties
•

3

•
•

•

•

Tennessee Consumer
Protection Act [Note:
Several theories are
alleged. SGS is
implicated in one: false
certification of
compliance with safety
standards.]
Negligence
Violation of the New
Mexico Unfair Trade
Practices Act
Strict products
liability—
misrepresentation
Punitive damages

Outcome

Bench
trial/Verdict
for defendants.
The court did
not reach
SGS’s
affirmative
defenses.

Voluntarily
dismissed by
plaintiff

Dismissed
before trial as
to SOS
(unopposed).
Trial verdict in
favor of Takata

Fernandez

(Compi., ECF no.
12 1-10, Ex. G;
Am. Compi.,
ECFno. 121-11,
Ex. H)

Lohman

(Compi., ECF no.
12 1-13, Ex. j)

Stevic
(Compi., ECF no.
12 1-15, Ex. L)

Everett

(Compi., ECF flO.
12 1-16, Ex. M)

• Fraudulent
concealment
• Consumer
fraud, A.R.S. §
44-1522
• Punitive
damages
• Unjust
enrichment
[dropped from
Amended Cplt.]
• Constructive
trust [dropped
from Amended
Cplt.]

[Note: The complaint was
originally brought against
both Takata and SGS in
2002. Takata was
dropped from the
Amended Complaint in
2006.1

[Note: Although Takata
was named as a party, it
was neuer served.j

Fraudulent
concealment
. Violation of the
New Mexico
Unfair Trade
Practices Act
• Unjust
enrichment
• Punitive
damages

Initial
dismissal
reversed on
appeal, but
again
voluntarily
dismissed on
remand

SGS motion
for summary
judgment
granted. Case
then dismissed
for want of
prosecution

•

Strict liability
• Strict liability—
failure to warn
• Negligence
•

Fraudulent
concealment
• Violation of the
Texas Deceptive
Trade Practices
Act
• Unjust
enrichment
• Constructive
trust

Settled

•

4

Dismissed for
lack of
standing

II.

The “Active Negligence” Apportionment Rule
4
My April 6, 2016 opinion set forth the rule governing apportionment of

costs under the indemnity contracts between Takata and SOS: SOS may in
general recover costs incurred in defending against the Lawsuits, including
reasonable legal costs. Pursuant to New Jersey case law, however, it may not
recover the “costs of rebutting charges of its own ‘active negligence” SGS US.
5
Testing Co., Inc., 2016 WL 1382364, at *11. This “active negligence” rule “looks,
not to the outcome of the case

but to the nature of the claims (‘charges’)
that the indemnitee was rebutting.” Id. at *7 Therefore, “the ‘charges’ or
.

.

.

,

allegations [must] be sorted in order to apportion liability for costs.” Id. at 9.
As the indemnitee, SOS “bears the burden of persuasion on the allocation or
apportionment.” Cent. Motor Parts Corp. v. E.I. duPont deNemours & Co., 251

N.J. Super. 5, 12, 596 A.2d 759, 762 (App. Div. 1991).
The governing legal principle is that a party cannot be indemnified for its
own fault. See Central Motor Parts Corp. v. E.I. duPont deNemours & Co., 251
N.J. Super. 5, 10, 596 A.2d 759, 762 (App. Div. 1991) (“The bare statement of
the rule is that an indemnitee who has defended against allegations of its

independent fault may not recover its costs.” (emphasis added)). Thus the
“active negligence” limitation on indemnification is not, I think, confined to
actual claims of negligence. The cases surely do not mean to imply, for
cution. I finda party may not be indemnified for its negligence, but may be
indemnified for purposeful or malicious conduct. In Piedmont, on which the
Herein, citations to the parties’ submissions are abbreviated as follows:
Memo =
Plaintiff SOS’s Supplemental Submission in Support of its Motion for
Summary Judgment and in Opposition to Defendants’ Motion for
Summary Judgment
Reply =
Defendants’ Supplemental Submission in Support of Motion for
Summary Judgment and in Opposition to Plaintiff’s Motion for Summary
Judgment
4

I refer the reader to my April 6, 2016 opinion, sections III.A.2 and IlI.A.4, SGS
US. Testing Co., Inc., 2016 WL 1382364, at *7_8, 10, as well as to the decision of the
Third Circuit Court of Appeals, for further explanation, SOS U.S. Testing Co. v. Takata
Corp., 547 F. Appx 147, 149 (3d Cir. 2013).
5

5

Third Circuit relied in this case, the Supreme Court of Nevada used “active
negligence” in that broader sense: “The manufacturer has no duty to defend a
distributor or retailer charged with negligence, breach of warranty, or strict
liability where the latter party is attempting to prove that it was not actively
negligent.” Piedmont Equz. Co. v. Eberhard Mfg. Co., 99 Nev. 523, 529, 665
P.2d 256, 260 (1983) (emphasis added). In Central Motor Parts, on which the
Third Circuit also relied, the Appellate Division similarly broadened the scope
of “active negligence” to include breach of warranty or other independent fault:
“once it is determined, on the above rules, that an indemnitee has defended
against alleged breaches of its own warranties or charges of its independent
fault, the indemnitor is not liable for indemnification for those costs.” 251 N.J.
Super. at 11—12, 596 A.2d at 762 (emphasis added).
The complaints in the Lawsuits asserted various causes of action,
including negligence, fraud, violation of state consumer protection and unfair
trade statutes and professional codes, unjust enrichment, strict product
liability, and breach of warranty. (See Chart, Section I, supra.). I look to
apportion costs between SGS’s defense of claims that SGS acted wrongfully,
and costs SGS incurred defending against charges of Takata’s fault. In doing
so, I am mindful that I am not assessing the merits of the claims (which did not
succeed). Nor am I apportioning liability (there is none). Rather, I am enforcing
a contract of indemnity as limited by the common law, apportioning between
codefendants the cost of defending against these unsuccessful claims.
III.

Analysis
A.

The Parties’ Theories

Neither party really proposes a rigorous method of apportionment that
convincingly implements the active negligence rule as defined by the Third
Circuit and explicated in my prior Opinion. As to Zavala, the most expensive of
the Lawsuits, SOS concedes that the costs incurred in filing its own answer,
defending the depositions of its own witnesses, and the like, representing
about 11% of the total, are properly attributed to its defense of itself, and

6

hence are not reimbursable. SGS suggests, by negative implication, that the
remaining 89% of its costs were not incurred in connection with SGS’s defense
against allegations of its own fault. Takata disagrees; its counterproposal is
that SGS bear 100% of its costs. As has become something of a pattern in this
case, the parties are talking past each other.
SGS tends to sort the legal fees by task, a method which it regards as a
good proxy for a claims-based apportionment. Thus SGS submits that, in the
five Lawsuits in which it was a named defendant, only efforts related to “its
own discovery and its own witnesses would proportionately reflect the
plaintiff’s allegations of ‘active negligence’ by SGS.” (Memo 6) Therefore, SGS
proposes that an indemnification award should exclude only fees and costs
related to the following tasks: (i) answering complaints, (ii) responding to SGS
directed discovery; (iii) preparing SGS witnesses for trial and depositions; (iv)
appearances of witnesses; and (v) expert witnesses hired to testify on technical
issues relating to the testing of seat belts. (Memo 6) For block-billed legal fees
arising from both pertinent and nonpertinent tasks, SGS proposes that it pay
one half. (Id. 9) SGS’s underlying assumption, then, is that only certain
restricted tasks (e.g., depositions of SGS personnel) could have related to its
own fault; by definition, anything else must have been a cost of joint defense of
allegations of wrongdoing by Takata.
6
In support of its task-based approach, SGS relies on Holton v. Altec
Industries, Inc., Civ. A. No. 90—7905, 1992 WL 26031, at *4 (E.D. Pa. Feb. 11,
1992). There, a truck distributor sought indemnification from its codefendant,
a truck manufacturer, for the costs of defending against a personal injury
claim. Applying New Jersey law, the court identified the governing principle as
this: “where an independent theory of liability against a distributor occasions a
portion of the costs of defending against an action, the distributor must bear
Even taken at face value, the theory seems both underinclusive and
overinclusive. It is overinclusive because an SGS witness, for example, could have
been deposed on subjects having to do solely with Takata’s fault. It is underinclusive
because (assuming no vicarious liability), any theory of SGS’s liability must presume
some level of fault.
6

7

the risk of loss.” Id. at *6. The court determined that the distributor
indemnitee should be responsible only for costs of discovery on the narrow
issue of whether the distributor over-sprayed the truck’s brake lines with
paint; all other costs, said the court, were eligible for indemnification. Id. at *6.
The court thus identified the particular theory of negligence that was directed
against the conduct of the distributor, and disallowed costs incurred in
defending against that theory.
As Takata points out, Holton differs from our case because there, the
indemnitee was in the chain of distribution. The manufacturer was said to
have installed the wrong brake cable in a truck and was clearly alleged to be
primarily and strictly liable for the defective product. The distributor, by
overspraying paint on the cable, may have possibly contributed to the
accident. There was little if any evidence, however, on the paint overspray
issue; and indeed both the manufacturer and the plaintiffs were willing to
eliminate the distributor and the paint overspray issue from the case. (The
distributor remained in the case only because another party vetoed the
proposal.) The distributor, in the case primarily because of its position in the
distribution chain, was entitled to indemnification for most of what it had laid
out, both as to damages and costs:
The indemnification doctrine is rooted in the theory that
where the distributor of the manufacturer’s product is exposed to
liability merely because of its place in the chain of distribution and
not because of any act of wrongdoing on its part, the manufacturer
should be made to reimburse the distributor for exposing the
distributor to liability for the manufacturer’s own wrongful act.
Promaulayko v. Johns Mansville Sales Corporation, Inc., 562 A.2d
202, 203 (N.J.1989).
Holton, 1992 WL 26031 at *3•

say “most” because of the active negligence

exclusion:
Moreover, the manufacturer/indemnitor is not liable for
indemnification for those costs incurred by a distributor in defense
of charges of the distributor’s independent fault. [Central Motor
Parts, 596 A.2d1 at 762. “An allocation or apportionment may be
required and ‘the indemnitee may recover only those fees and
8

expenses attributable to the making of defenses which are not
primarily directed toward rebutting charges of active negligence.’”
Id. at 762. Those costs incurred in defending claims on which the
retailer is found only derivatively or vicariously liable are
recoverable. Id. at 762 (1991).
In light of the foregoing, the parameters set by the New
Jersey courts governing the allocation of defense costs of an
indemnitee define the question now before me as whether Elder as
distributor! indemnitee was forced to defend this cause of action
because of active negligence on its own part or merely because it
fell within the chain of distribution from the manufacturer. I then
must further inquire to what extent [Distributor] was kept in the
suit as a result of any theory of liability existing entirely outside its
relationship to [Manufacturer]. To the extent that [Distributor]
remained in this case as a jointly liable, but blameless, tortfeasor,
[Manufacturer] will be required to reimburse [Distributorj’s costs of
defending this action. However, to the extent that [Distributor] was
kept in this suit because of allegations of independent fault,
[Distributor] will be required to shoulder its own burden of defense.
Id.

Under those circumstances, says Takata, the Holton court could
reasonably conclude that all costs not expended on the paint-overspray issue
went to the defense of a product liability claim. There, the product liability
claim overwhelmingly related to the manufacturer, and was based on the
manufacturer’s acts. But not so here, says Takata. Turning around the
reasoning of Holton, Takata asks the court to infer that, because SOS had “no
reason” to defend against the product liability claims (which primarily
implicated Takata), then it must not have done so. (Reply 4). Takata finds it
implausible that SOS would have spent funds for Takata’s benefit, and that
therefore all costs incurred by SOS must have gone to the defense of claims
that SOS was independently at fault. (See Reply 7)
I disagree; I do find it plausible that SOS expended resources in the
defense of claims involving the fault of Takata. SOS posits that these were all
essentially products liability cases against Takata, and that it simply rebutted
charges that it had played a minor role in testing the representative samples of
the seatbelts. The theories of liability in these cases, however, were not so
9

segregated and confined. The plaintiffs alleged that SOS and Takata acted
knowingly and in tandem. In some cases, actual failure of seatbelts was
alleged; in others, it was alleged that SOS’s certification of compliance led the
vehicle manufacturers to ultimately sell vehicles that were not as safe as they
were represented to be. In short, it is not so easy to disentangle claims of
SOS’s fault from claims of Takata’s fault.
Holton teaches that even a defendant who might ultimately shift liability

to another may find itself, rightly or wrongly, in a lawsuit, incurring costs; and
it is the cost of defending against claims, not ultimate liability, that is at issue
here. Most generally, of course, SOS had a vital interest in obtaining a finding
that nothing was wrong with Takata’s seatbelts; that would tend to moot any
claim of damages arising from SOS’s allegedly inadequate testing. A finding of
liability against Takata, on the other hand, might have resulted in joint and
several liability, whether or not primarily based on SGS’s fault. Or it might
have given rise to a claim for contribution. Fear of such passive liability,
potentially disproportionate to SOS’s acts or active negligence, might well have
motivated SGS to assist in Takata’s defense. More general strategic
considerations, too, might have persuaded SGS and Takata that a united front
would benefit both. I also accept that SOS naturally would have participated
in Takata’s general legal defense in several of the Lawsuits. (See, e.g., ECF no.
139-3 (Ex. Bi), 139-9 (Ex. Dl) (itemized bills for legal services in Baggett and
Zavaka describing participation of SOS counsel in telephone conferences with

all defense counsel)).
Takata may be advocating a rule, confined to the facts of Holton, that no
indemnification is due unless the parties were in the same chain of
distribution of a product. If so, that rule would be a poor proxy for the claim
based analysis dictated by the Third Circuit. There is of course a grain of truth
in it; to the extent that a party might be passively or vicariously liable simply
by virtue of its position in the distribution chain, it would not be defending
against a claim of its own, independent fault. But if this simple principle were

10

dispositive, a great deal of the ink in the Third Circuit’s opinion (and mine, on
remand) would still be in the inkwell.
B.

The Court’s Allocation

The upshot of all the foregoing is that this Court is presented with two
tasks:
(a) to isolate any independent theory of liability asserted against SOS
based on its own wrongdoing or fault; and
(b) to suggest a reasonable means of assigning incurred costs to defense
against that theory, and exclude such costs from Takata’s liability for
indemnification.
The parties, although they disagree, have been of some assistance with
task (a). They have been less helpful with task (b), but perhaps unavoidably so.
The evidence submitted does not rigorously demonstrate what “fees and
expenses [are] attributable to the making of defenses

.

.

.

primarily directed

toward rebutting charges of” SOS’s wrongdoing, i.e., its allegedly substandard
testing. SGS U.S. Testing Co. v. Takata Corp., 547 F. App’x 147, 149 (3d Cir.
2013) (quoting Central Motor Parts Corp., 596 A.2d at 762). The issues are
simply too intertwined.
As to such allocation, then, I find myself in much the same position as
the court in Hales v. Monroe, 544 F.2d 331 (8th Cir. 1976). There, a supplier
and distributor of a stove defended against claims of negligence and strict
liability (the negligence theory was withdrawn at trial). They sought indemnity
of the costs of defense from the manufacturer. The court found that although
the manufacturer might bear ultimate responsibility, the supplier and
distributor had been accused of actually knowing that the stove did not work
properly after it was installed and converted to propane, but failing to warn the
customer. Thus the supplier and distributor asserted defenses to liability that
could not have been asserted by the manufacturer; as to those defenses, costs
were ineligible for indemnification. Id. at 332. But despite the fairly clear
division of defenses, the court found that it lacked information sufficient to

11

precisely allocate costs between the two sets of theories, and was forced to
make a rough estimate:
Neither IPS nor Green Colonial attempted to allocate their costs
between the defenses on the separate counts. Indeed, we agree that
would be difficult to do. Under the circumstances, we find 50% of
the amount tendered against the manufacturer to be an equitable
adjustment in the award of attorney fees and costs.
Id.

Here, the claims and defenses are if anything more interrelated than
those in Hales. The seatbelts are not alleged to have become defective as a
result of anything SOS did; rather, SGS was supposed to test seat belts
manufactured by Takata before they were installed in cars and certified to be
safety-compliant. Thus the allocation perhaps cannot be calculated precisely.
But calculate it I must, using the information that has been placed before me.
Zavala
Zavala is the case in which SGS’s costs were greatest, allegedly

amounting to some

$

5.1 million. Applying its task-based approach, SOS

concludes that 11% of those costs went to rebutting accusations of its own
wrongdoing, and seeks indemnification for the remaining 89%. I disagree with
the implication that the remaining issues and accusations did not involve any
independent wrongdoing by SOS.
The Zavala complaint alleged all claims against Takata and SGS jointly.
Portmanteau claims of fraud and fraudulent concealment encompassed both
alleged acts of Takata vis-ã-vis its customers and alleged acts of SOS that
misrepresented the testing results of the belts. Takata (and ultimately the
vehicle manufacturers) represented that the belts met federal standards, and
misleading test results reported by SOS enabled that alleged deception. The
two perhaps could have been sued in separate counts. But they are alleged to
have acted together, in that SOS allegedly failed to perform tests for the benefit
of, with the knowledge and connivance of, and for the purpose of enabling
fraud by, Takata. The allegations under the California Business and
Professions Code contain several sub-theories directed at Takata, but SGS is
12

implicated in two: falsely certifying that the seat belt buckles complied with
federal standards and suppressing information about safety issues. These
claims, too, seem to encompass affirmative wrongful acts of both Takata and
SOS, tending toward the same goal. The California Consumer Legal Remedies
Act follows the same pattern. Unjust enrichment is asserted against both
Takata and SOS, but would seem to relate primarily to Takata vis—à--vis its
customers and the purchasers of cars incorporating its products. Breach of
warranty, too, would tend primarily to implicate the manufacturer/seller, but
in this respect SOS is alleged to have conspired with Takata.
In short, these claims, and the defense of them, cannot neatly be divided.
It is fair to say that they incorporate allegations of actual wrongful conduct by
SOS. It is also fair to say that they allege actual wrongful conduct by Takata,
as manufacturer of the substandard seatbelts, primary perpetrator of the fraud
vis-à-vis the vehicle manufacturers, and a knowledgeable promoter of SGS’s
alleged misrepresentation of the testing results. I therefore do not accept
Takata’s position that, in joining in with the defense of these counts, SOS was
solely defending against accusations of its own, active wrongdoing. Of course,
rebutting accusations of misconduct by Takata was probably to SOS’s direct or
indirect benefit, as discussed above. That is not the same as saying that all of
Takata’s alleged wrongdoing equates to active wrongdoing by SGS.
In light of the foregoing, I can do no better than to conclude that
approximately half of SOS’s expenditures related to allegations of its own
wrongdoing, and the rest to wrongdoing by Takata. Takata shall indemnify SOS
for 50% of the costs SOS incurred in defending the Zavala action.
Bagget
In Bagget, the plaintiff asserted a single claim under a Tennessee
consumer protection statute. The action did not get far; the plaintiff was
persuaded to dismiss it voluntarily. The dismissal was not based on the
litigation by SOS or Takata of any legal theory specific to itself. Rather, it was
based on a decision of the Tennessee Supreme Court that only the state

13

attorney general had standing to bring a consumer class action under that
statute.
Nevertheless, says Takata, the Tennessee state law claim contained two
distinct sub-theories: (1) that Takata concealed a defect and (2) that SOS
skipped the required partial engagement test. Takata claims that SOS’s efforts
necessarily were confined to the defense against theory (2), and therefore
should not be indemnified. (Reply 8—9) For the reasons stated under Zavala,
supra, I think that the theories are intertwined and cannot be so neatly divided.
Here, as there, I will order Takata to indemnify SGS for 50% of the costs SOS
incurred in defending the Bagget action.
Price
Price was a personal injury case arising from an automobile accident,

rather than a putative class action. Against SGS and Takata jointly, the
plaintiff asserted claims of negligence, violation of a state unfair trade practices
statute, strict liability (misrepresentation), and punitive damages. As to Takata
alone, the plaintiff asserted claims of strict products liability, strict liability
(failure to warn), and breach of warranty. SOS participated until shortly before
trial, when it was dismissed from the case.
7
The complaint, to be sure, segregated certain theories and asserted them
against Takata alone. As to these, SOS could not be directly liable as a matter
of law, and I see no direct evidence that it expended any costs in defending
against them.
The remaining theories, as to which SOS did incur costs, were asserted
jointly against both defendants. These theories rested on affirmative acts
committed by both SOS and Takata; they do not appear to rely on passive or
vicarious theories of liability. Particularly as to the pretrial stage (the only stage
at which SGS participated), I see no firm basis in the record before me to find
The plaintiff claimed that the seatbelt was defective because it seemed to be
latched when in fact it was not. Takata and a codefendant, Honda, went to trial and
prevailed on the theory that the plaintiff had not been wearing the seatbelt when the
accident occurred. See Price v. Takata Corp., 384 F. Appx 385, 386 (5th Cir. 2010)
(finding evidence of plaintiffs drug use, even if error, was harmless).
7

14

that SOS incurred costs in discovery or motion practice defending only against
its own acts, or only against Takata’s acts. In the manner described above, the
theories were unavoidably intertwined. Here again, I can do no better than to
find that SOS incurred approximately half of its costs defending against
allegations of its own, independent fault. I will order Takata to indemnify SGS
for 50% of the costs SOS incurred in defending the Price action.
Fernandez

For Fernandez, Takata makes similar arguments, which I dispose of in
the same manner. Here, however, there is an additional factor. An initial
dismissal was reversed on appeal, but on remand the plaintiff voluntarily
dismissed all claims against Takata. The plaintiff filed an Amended Complaint
in which only SOS was named as defendant. Once the claims against Takata
were dismissed on remand, SOS can only have been defending against
allegations of independent fault.
I will therefore order Takata to indemnify SOS for 50% of the costs SOS
incurred in defending the Fernandez action, but only up to the date that
Takata was finally dismissed from the action on remand from the Court of
Appeals. After that date, SOS’s costs are solely its own responsibility.
Lohman, Stevc, and Everett

In Lohman, issue was never joined as to Takata, which was never served.
SOS successfully moved for summary judgment as to all claims brought
against itself; thereafter, plaintiff allowed the case to be dismissed for want of
prosecution. I therefore find it improbable that SOS would have been defending
against anything other than charges of its own independent fault. SOS is
wholly responsible for its costs. As to the Lohman action, no indemnity is
ordered.
Everett represents the obverse of Lohman. In Everett, the parties agree,
SOS was not named as a defendant and incurred no costs. As to Everett, no

indemnity is ordered.

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In Stevic, SGS was not named as a defendant. SOS has not submitted
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itemized invoices of work its counsel performed in Stevio—rather, there is a
general statement of account requesting a lump sum of $28,235.11 (see ECF
no. 139-2, 29 (Certification of Seth R. Tipton, Esq., Exs. A, F)). SGS has
therefore failed to carry its burden that it incurred reasonable costs in Stevic.
The invoice SOS submits describes only administrative tasks and less than
one hour’s worth of work by counsel. (See id.) SGS also fails to explain why or
how it incurred any costs at all in Stevic, when in Everett (where it was also
not named as a defendant), it incurred no costs. Therefore, I find that the
$28,235.11 in costs have not been shown to be reasonably or necessarily
incurred. As to Stevic, no indemnity is ordered.

I have attempted to equitably apportion costs for purposes of
indemnification, taking into account the active negligence limitation and the
considerations set forth in the parties’ supplemental briefing in light of the
claims made in each of the Lawsuits. See Hales, supra. After doing so, I
reviewed the affidavit and legal invoices that SOS submitted with its
supplemental memorandum. (See ECF no. 139-1 (Certification of Seth R.
Tipton, Esq.)) Takata’s objections to the amount and nature of the fees and
costs billed are somewhat generic, and are also dependent on legal arguments
that I have already rejected in this opinion. I do not find that SOS’s claimed
legal costs were unreasonable.

SGS argues that this weighs in its favor: “it is axiomatic that SGS could not
have defended allegations of active negligence because there were no allegations made
against SOS in those cases.” (Memo 9) This rather begs the question of why, in Stevic,
SOS incurred any costs at all.
8

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___________

_____

CONCLUSION
In my April 6, 2016 order and opinion (ECF nos. 136, 137) the summary
judgment motion of Takata (ECF no. 121) was conditionally granted and that of
SOS (ECF no. 122) was conditionally denied, subject to the submission of
evidence sufficient to permit the court to determine the costs eligible for
indemnification. Those supplemental submissions (ECF nos. 139, 140) have
been received, and have furnished the court with a sufficient basis to apportion
costs for purposes of indemnification. It is therefore ordered that the summary
judgment motion of SOS (ECF no. 122) is partially GRANTED, and the motion
of Takata (ECF no. 121) is DENIED, to the extent that Takata shall be ordered
to indemnify SOS to the extent set forth in the foregoing opinion.
An appropriate Order accompanies this opinion. Within seven days, SGS
shall submit a form of judgment, accompanied by a short statement, not to
exceed three pages, indicating the basis of the calculation of the dollar amount.
Within seven days thereafter, Takata may submit an alternative form of
judgment, likewise accompanied by a short statement, not to exceed three
pages, indicating the basis of its calculation of the dollar amount. Such
statements shall not reargue matters already decided, but shall be confined to
the methods of calculation.

Dated: January 26, 2017

2

EVIN MCNULTY
United States District Judge

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