SMITH et al v. AMERICAN HONDA MOTOR COMPANY,INC.,et al
Filing
213
MEMORANDUM OPINION AND ORDER signed by JUDGE CATHERINE C. EAGLES on 4/4/2016; that the defendant Honeywell International, Inc.'s motion for summary judgment, (Doc. 163 ), is GRANTED in part and DENIED in part as stated herein: 1. Summary judgment in favor of Honeywell is granted as to the plaintiff's claims for punitive damages and for fraud; 2. The plaintiff's claims for negligence, negligent failure to warn, defective design, wrongful death, and breach of implied warranty shall proceed to trial. (Sheets, Jamie)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
SUSAN ELIZABETH SMITH,
Individually and as Personal
Representative of the Estate of
LEONARD SMITH, Deceased,
Plaintiff,
v.
AMERICAN HONDA MOTOR CO.,
INC., et al.,
Defendants.
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1:14-CV-943
MEMORANDUM OPINION AND ORDER
Catherine C. Eagles, District Judge.
Defendant Honeywell International, Inc., is successor-in-interest to Bendix
Corporation, which sold brakes containing asbestos. The plaintiff, Susan Smith, alleges
that her husband, the decedent Leonard Smith, was exposed to asbestos fibers from these
brakes, as a result of which he developed mesothelioma and passed away. She asserts
causes of action for negligence, breach of implied warranty, fraud, failure to warn, and
wrongful death, and contends she is entitled to recover actual and punitive damages.
Honeywell concedes that there are genuine issues of material fact as to the negligence
and wrongful death causes of action, but moves for summary judgment on Ms. Smith’s
remaining causes of action and on her claim for punitive damages.
Upon review of the record and after hearing from counsel, the Court concludes
that the evidence is sufficient to raise a genuine question of material fact as to the breach
of implied warranty and products liability claims. The Court further concludes that Ms.
Smith’s evidence is insufficient to support a finding of willful and wanton conduct and
that the evidence does not give rise to a genuine question of material fact as to punitive
damages. The plaintiff agreed at the hearing that there was insufficient evidence to
support her fraud claim, as to which summary judgment will also be granted.
I.
Standard of Review
Summary judgment should be granted if the movant shows 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. P. 56(a). The moving party has the initial burden of demonstrating the
absence of any material issue of fact; once the moving party meets its initial burden, the
non-moving party must come forward with evidentiary material demonstrating the
existence of a genuine issue of material fact requiring a trial. Ruffin v. Shaw Indus., Inc.,
149 F.3d 294, 300-01 (4th Cir. 1998) (per curiam) (citing Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986)).
The parties agree that North Carolina law applies in this diversity case.
II.
Analysis
A. Breach of Implied Warranty
Ms. Smith contends that Honeywell sold asbestos-containing brakes without
adequate warnings and breached the implied warranty of merchantability.1 For such
1
Counsel for Ms. Smith made clear at the summary judgment hearing that her implied
warranty of merchantability claim is based exclusively on an inadequate warning theory. See
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claims, the first inquiry is whether the warnings provided sufficient notice of the danger
so as to render the goods merchantable, and the second is whether the failure to warn was
the proximate cause of the plaintiff’s injuries. See Bryant v. Adams, 116 N.C. App. 448,
468-69, 448 S.E.2d 832, 843 (1994); Reid v. Eckerds Drugs, Inc., 40 N.C. App. 476, 48687, 253 S.E.2d 344, 350-51 (1979).
Here, the evidence, viewed in the light most favorable to the plaintiff, shows that
Bendix included a warning on its brake packaging from 1973 to 1986 that breathing
asbestos dust could cause serious bodily harm. (Doc. 182-6 at 14). The warnings did
not, however, include the words asbestosis, lung cancer, or mesothelioma, (id.; Doc. 1828 at 202-03), and there is a factual dispute as to whether the warning labels were
prominently located. (See Docs. 182-8 at 122; 182-54; 182-55). Ms. Smith has thus
made a sufficient forecast of evidence to reach a jury on the issue of whether Bendix’s
warnings were inadequate and rendered its brakes unmerchantable. Ziglar v. E.I. Du
Pont De Nemours & Co., 53 N.C. App. 147, 156-57, 280 S.E.2d 510, 516-17 (1981)
(noting, in finding a disputed question of material fact, that the skull and crossbones
symbols on the label were small: only 4/17 of an inch square); Reid, 40 N.C. App. at 48384, 253 S.E.2d at 349-50 (denying summary judgment for defendant where warnings on
aerosol deodorant mentioned the product’s flammability generally, but did not warn of
N.C. Gen. Stat. § 25-2-314(2)(e). Counsel also agreed Ms. Smith was not pursuing a claim for
breach of the implied warranty of fitness for a particular purpose.
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the harm the plaintiff suffered—that the product could be flammable after applied to the
body as directed).
Honeywell contends its warnings conformed to Occupational Safety and Health
Administration labeling requirements in place at the time. (Doc. 164 at 10). However,
compliance with federal standards is not conclusive evidence that the warnings were
adequate. Reid, 40 N.C. App. at 483, 253 S.E.2d at 349; Ziglar, 53 N.C. App. at 155-56,
280 S.E.2d at 516; Foyle v. Lederle Labs., 674 F. Supp. 530, 535 (E.D.N.C. 1987).
North Carolina courts typically hold that proximate cause is a question for the
jury. See Bryant, 116 N.C. App. at 469, 448 S.E.2d at 843. A plaintiff’s “deposition
testimony to the effect that he would have heeded any warnings and safety
recommendations had they been adequately provided raises a question of fact as to
whether [the plaintiff’s] injuries were proximately caused by the seller’s failure to warn.”
Id. Here, Ms. Smith produced evidence that Mr. Smith never saw any warnings on the
packages of the brakes he used. (Doc. 182-1 at 28). Mr. Smith testified that if he had
received warnings about the dangers of asbestos and mesothelioma, he would have paid
attention to them. (Id.). While Honeywell presented evidence challenging the credibility
of this testimony, (see id. at 22; Doc. 182-2 at 41), that will be for a jury to resolve.
Ms. Smith has produced evidence demonstrating a genuine issue of material fact
as to whether Honeywell’s warning labels were adequate and as to whether inadequacy of
warnings was a proximate cause of Mr. Smith’s injury. Therefore, Honeywell’s motion
for summary judgment on the implied warranty of merchantability claim will be denied.
B. Punitive Damages
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Ms. Smith seeks punitive damages, contending that Honeywell’s failure to provide
an adequate warning and its sale of defective replacement brakes was willful and wanton.
Ms. Smith’s evidence is insufficient to raise a genuine issue of material fact, and
Honeywell’s motion for summary judgment will be granted as to punitive damages.
Under North Carolina law, punitive damages may only be awarded if an
aggravating factor was present and related to the injury. N.C. Gen. Stat. § 1D-15(a);
Springs v. City of Charlotte, 222 N.C. App. 132, 136, 730 S.E.2d 803, 805 (2012). The
only aggravating factor at issue in this case is willful and wanton conduct, (see Doc. 182
at 22), which is defined as “the conscious and intentional disregard of and indifference to
the rights and safety of others, which the defendant knows or should know is reasonably
likely to result in injury, damage, or other harm” and “means more than gross
negligence.” N.C. Gen. Stat. § 1D-5(7). A general awareness of danger is not enough to
establish a conscious disregard of a known duty. See Lee v. CertainTeed Corp., No.
5:13-CV-826-FL, 2015 WL 4526165, at *11 (E.D.N.C. July 27, 2015). In the case of a
claim against a corporation, a plaintiff must demonstrate that “the officers, directors, or
managers of the corporation participated in or condoned the conduct constituting the
aggravating factor giving rise to punitive damages.” N.C. Gen. Stat. § 1D-15(c). The
statute does not define “manager,” and North Carolina courts use the plain-meaning
definition as “one who conducts, directs, or supervises something.” Miller v. B.H.B.
Enters., Inc., 152 N.C. App. 532, 539-40, 568 S.E.2d 219, 225 (2002) (quotation marks
omitted); Everhart v. O’Charley’s Inc., 200 N.C. App. 142, 153, 683 S.E.2d 728, 738
(2009) (quotation marks omitted).
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A plaintiff must prove a claim of punitive damages by clear and convincing
evidence. Cockerham-Ellerbee v. Town of Jonesville, 190 N.C. App. 150, 151, 660
S.E.2d 178, 179 (2008). To survive summary judgment, a plaintiff must “produce a
forecast of evidence demonstrating that the plaintiff will be able to make out at least a
prima facie case at trial.” George v. Greyhound Lines, Inc., 210 N.C. App. 388, 392, 708
S.E.2d 201, 205 (2011) (quotation marks omitted).
Here, Ms. Smith has not made a forecast of sufficient evidence of willful and
wanton conduct. Bendix provided a warning beginning well before Mr. Smith’s use of its
brake products, and there is no evidence that Bendix’s failure to provide a better warning
meets the extremely high standard required under North Carolina law for punitive
damages. The internal memos she proffers tend to show a corporation struggling to
understand evolving scientific knowledge about asbestos and mesothelioma, (see Docs.
182-35 at 7-8; 182-44; 182-48; 182-50), and while they do not suggest Bendix was
proactive, neither do these internal communications show an active “concealment or
misrepresentation of facts regarding the dangers of asbestos in the brakes.” Yates v. Air
& Liquid Sys. Corp., No. 5:12-cv-752-FL, 2014 WL 4923603, at *21 (E.D.N.C. Sept. 30,
2014), reconsidered on other grounds sub nom. Yates v. Ford Motor Co., No. 5:12-CV752-FL, 2015 WL 9222834 (Dec. 17, 2015).2 Even if Ms. Smith could show willful and
2
See also Fussman v. Novartis Pharm. Corp., No. 1:06–CV–149, 2010 WL 4273195, at *5
(M.D.N.C. Oct. 25, 2010) (finding jury issue where plaintiff forecast evidence purporting to
show defendant concealed or misrepresented information about risk factors and clinical trial
findings, controlled the flow of information about the link between its drugs and disease, and
refused to acknowledge such a link in spite of contrary evidence).
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wanton conduct, she produces no facts indicating Bendix managers perpetrated that
conduct.
Ms. Smith points to a 1966 letter from Bendix employee E.A. Martin enclosing an
article concerning federal regulation of asbestos to someone at Johns Manville in Canada.
In that letter, Mr. Martin jokes about trees being a source of contamination, and then
comments: “My answer to the problem is: if you have enjoyed a good life while working
with asbestos products why not die from it. There’s got to be some cause.” (Doc. 182-33
at 2). Gallows humor in one letter by an employee of unknown responsibilities and with
no demonstrated connection to any decision about sales of asbestos-containing products
or warnings on such products is insufficient to establish willful and wanton conduct.
Accordingly, summary judgment will be granted on the claim for punitive damages.
C. Fraud
As noted supra, Ms. Smith does not oppose Honeywell’s motion for summary
judgment on the fraud claim, and it will be granted.
D. Negligent Failure to Warn
Honeywell has moved for summary judgment on two statutory products liability
claims grouped in Ms. Smith’s amended complaint into the fifth cause of action for
failure to warn. (See Doc. 136 at ¶¶ 51-59). Ms. Smith has made a sufficient forecast of
evidence to proceed on her claims under N.C. Gen. Stat. §§ 99B-5 and 99B-6.
1. Claim Based on Inadequate Warning or Instruction
North Carolina law provides that a plaintiff pursuing a claim based on failure to
warn must prove “that the manufacturer or seller acted unreasonably in failing to provide
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such warning or instruction, that the failure to provide adequate warning or instruction
was a proximate cause of the harm for which damages are sought” and either that a
dangerous condition existed when the product left the manufacturer’s control or that the
manufacturer later became aware of a substantial risk and failed to take reasonable action.
N.C. Gen. Stat. § 99B-5(a); Evans v. Evans, 153 N.C. App. 54, 57-58, 569 S.E.2d 303,
306 (2002). A manufacturer “is under an obligation to provide warnings of any danger
associated with the product’s use that are sufficiently intelligible and prominent to reach
and protect all those who may reasonably be expected to come into contact with the
product.” Sparks v. Oxy-Health, LLC, No. 5:13-CV-649-FL, 2015 WL 5773591, at *22
(E.D.N.C. Sept. 15, 2015) (quoting Nicholson v. Am. Safety Util. Corp., 124 N.C. App.
59, 65, 476 S.E.2d 672, 676 (1996), aff’d as modified, 346 N.C. 767, 488 S.E.2d 240
(1997)) (alterations omitted).
As discussed supra in connection with the implied warranty claim based on
inadequate warnings, Ms. Smith proffered evidence that the warning Bendix placed on its
boxes was not sufficiently prominent and did not adequately instruct users of the dangers
of asbestos nor of safety measures to mitigate the risk. (See Doc. 182 at 23). She has
also presented evidence that Bendix knew or should have known that asbestos exposure
was dangerous and could result from the sanding or grinding that accompanied
installation of its brakes. (Docs. 182-59; 182-44; 182-50). See also Smith v. WyethAyerst Labs. Co., 278 F. Supp. 2d 684, 706 (W.D.N.C. 2003) (“Defendant’s knowledge,
or lack thereof, regarding the potential dangers of its product are indeed relevant to the
issues of duty and causation.”). Honeywell has not offered undisputed evidence of
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contributory negligence or any other affirmative defense, and, as noted supra, Ms.
Smith’s evidence on proximate cause is sufficient to raise a disputed question of material
fact. The motion for summary judgment will be denied as to this claim.
2. Claim Based on Inadequate Design or Formulation3
To establish a products liability claim based on inadequate design or formulation
under North Carolina law, a plaintiff must prove that at the time of manufacture, “the
manufacturer acted unreasonably in designing or formulating the product” and “that this
conduct was a proximate cause of the harm for which damages are sought.” N.C. Gen.
Stat. § 99B–6(a). Additionally, a plaintiff must prove either: (1) that the manufacturer
unreasonably failed to adopt a safer, practical, feasible, and otherwise reasonable
alternative design that could have been reasonably adopted at the time and that would
have prevented or substantially reduced the risk of harm without substantially impairing
the usefulness of the product or (2) that the design of the product was so unreasonable
that a reasonable person, aware of the relevant facts, would not use or consume a product
of this design. N.C. Gen. Stat. § 99B–6(a).
Honeywell asserts that Ms. Smith’s design defect claim fails as a matter of law
because she has not made the requisite showing of a feasible alternative design, which
3
While Ms. Smith has captioned her fifth cause of action as a “Failure to Warn,” (Doc. 136
at p. 16), she specifically alleges in this section of her amended complaint that Honeywell
“fail[ed] to design . . . [its] products in a manner intended to minimize exposure during normal
working conditions” and “fail[ed] to recall [its] defective product or manufacture a reasonably
safer alternative.” (Id. at ¶ 54(f), (h)). The parties have treated this aspect of the fifth cause of
action as a design defect claim under N.C. Gen. Stat. § 99B–6, though it appears to overlap
substantially if not entirely with the first cause of action for negligence.
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Honeywell contends must be established by competent expert testimony. (Doc. 164 at
10-11). It does not appear that North Carolina courts require expert testimony to prove
defective design.4 Rather, “N.C. Gen. Stat. § 99B–6(b) provides a list of seven nonexclusive factors to be considered when determining whether a manufacturer acted
‘unreasonably.’” DeWitt v. Eveready Battery Co., 144 N.C. App. 143, 154-55, 550
S.E.2d 511, 518-19 (2001), aff’d, 355 N.C. 672 (2002). These considerations include
“the scope of the risks associated with the product’s design in light of the intended and
reasonably foreseeable uses, modifications, or alterations; the likely awareness of users of
the risks whether that awareness is based on warnings, general knowledge, or otherwise;
design compliance with applicable government standards; extent to which labeling
conformed to applicable government or private standards; utility of design; feasibility of
alternative designs at the time of manufacture; and the nature and magnitude of
foreseeable risks.” Sparks, 2015 WL 5773591, at *16 (internal quotes and alterations
omitted). While a plaintiff need not present evidence on all of those factors, “the plaintiff
must present substantial evidence the manufacturer ‘unreasonably failed’ to adopt an
alternative design or formulation under section 99B–6(a)(1) or manufactured a product
4
The cases Honeywell cites in its summary judgment brief do not support its assertion that
proof of a feasible, alternative design must be established by competent expert testimony. See
Howerton v. Arai Helmet, Ltd., 358 N.C. 440, 471-72, 597 S.E.2d 674, 694 (2004) (“[R]eview of
whether Arai failed to adopt a safer, feasible design alternative under N.C.G.S. § 99B-6 is
enmeshed with, if not altogether dependent on, the opinions of Howerton’s experts.”);
Richardson v. Gen. Motors Corp., 223 F. Supp. 2d 753, 758 (M.D.N.C. 2002) (“Although
Plaintiff's complaint appears to assert claims for design defects, breach of warranty, and failure
to warn, Plaintiff does not cite the North Carolina Products Liability Act, N.C. General Statute §
99B–1 et seq., nor does either party address its provisions.”).
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with a design or formulation ‘so unreasonable that a reasonable person’ would not use or
consume the product under section 99B–6(a)(2).” DeWitt, 144 N.C. App. at 155, 550
S.E.2d at 519. While Ms. Smith has not produced evidence on all of the factors relevant
to whether Honeywell acted unreasonably in designing its replacement brakes with
asbestos, she has made a sufficient forecast of evidence to survive summary judgment.
III.
Conclusion
Honeywell is entitled to summary judgment on Ms. Smith’s fraud-based claims
and her claim for punitive damages. Otherwise, the motion will be denied.
It is ORDERED that the defendant Honeywell International, Inc.’s motion for
summary judgment, (Doc. 163), is GRANTED in part and DENIED in part as stated
herein:
1. Summary judgment in favor of Honeywell is granted as to the plaintiff’s claims
for punitive damages and for fraud;
2. The plaintiff’s claims for negligence, negligent failure to warn, defective
design, wrongful death, and breach of implied warranty shall proceed to trial.
This the 4th day of April, 2016.
__________________________________
UNITED STATES DISTRICT JUDGE
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