Fireman's Fund Ins. Co. v. Xerox Corp.

Citations: 30 F. Supp. 2d 823; 51 Fed. R. Serv. 3d 98; 1998 U.S. Dist. LEXIS 20305; 1998 WL 896891Docket: 1:96-cv-01613

Court: District Court, M.D. Pennsylvania; October 30, 1998; Federal District Court

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In the case of Fireman's Fund Insurance Co. v. Xerox Corporation, the United States District Court for the Middle District of Pennsylvania addressed a subrogation action stemming from a fire at the Commonwealth's Transportation and Safety Building. The plaintiff, Fireman's Fund, sought recovery for damages caused by a fire allegedly initiated by a Xerox 1090 Model photocopier, which had been purchased by the Commonwealth and was under a service contract with Xerox.

The court evaluated Xerox's motion for summary judgment concerning three claims: strict products liability, breach of express warranty, and negligence. The judge determined that there were no genuine issues of material fact regarding the strict liability and breach of express warranty claims, leading to a grant of summary judgment in favor of Xerox on those counts. Conversely, the court found that there were genuine issues of material fact concerning the negligence claim, resulting in the denial of summary judgment for that count.

The legal standards for summary judgment were outlined, emphasizing that a moving party must demonstrate the absence of genuine issues of material fact and that the nonmoving party must provide affirmative evidence to counter the motion. The court's analysis was guided by principles that require resolving doubts against the moving party and evaluating the record in the light most favorable to the nonmoving party.

Conclusory allegations or denials in pleadings are inadequate to resist a motion for summary judgment after the moving party has submitted evidentiary materials. Under Rule 56, summary judgment must be granted if a party fails to demonstrate an essential element of their case, which they must prove at trial. In a strict products liability claim involving a Xerox 1090 photocopier, the plaintiff asserts that the product was unreasonably dangerous, invoking § 402A of the Restatement of Torts, Second. The defendant seeks summary judgment, arguing that the copier is not unreasonably dangerous based on a risk-utility analysis. Pennsylvania law, which follows the Restatement (Second) of Torts, holds that a seller is liable for defects causing harm if the product is sold in a defective condition that is unreasonably dangerous. The determination of whether the risk of loss should fall on the manufacturer is a legal question for the court, as established in Azzarello v. Black Bros. Co. The Third Circuit has indicated that this analysis involves weighing the product's utility against the risk and severity of potential injuries, as well as precautionary measures that could mitigate harm. The Pennsylvania Superior Court has identified seven factors, known as the Wade factors, to guide this risk-utility analysis, including the product's usefulness and safety aspects.

The excerpt outlines several critical factors in evaluating the safety and utility of the Xerox 1090 model photocopier under a risk-utility analysis. Key points include:

1. **Substitute Products**: The analysis considers whether there are safer alternatives available, with the plaintiff not identifying any substitute that meets the same needs as the 1090 model.

2. **Manufacturer's Ability to Mitigate Risks**: The manufacturer's capability to eliminate any unsafe characteristics of the product without compromising its utility or increasing costs is examined, although the excerpt indicates that this factor may not be further analyzed if the product is not deemed unsafe.

3. **User's Care and Awareness**: The user's responsibility in avoiding danger through careful use and their awareness of potential risks associated with the product are also assessed.

4. **Utility and Desirability**: The court concludes that the Xerox 1090 photocopier is highly useful, supported by its widespread deployment (over 50,000 units) and extensive operational history (approximately 150 billion copies made).

5. **Risk of Harm**: Factors evaluating the gravity of the risk and the manufacturer’s ability to eliminate danger reveal that, despite 22 reported fire incidents, none occurred while the copier was in the "off" position, leading to the conclusion that there is a low likelihood of serious injury.

6. **Overall Risk-Utility Balance**: The majority of Wade factors either support the defendant's position or are neutral. Since the court does not find the 1090 model to be unsafe, further exploration of mitigating measures is deemed unnecessary.

The court's analysis leans in favor of the defendant, suggesting that the benefits of the Xerox 1090 model outweigh its potential risks.

Plaintiff contends that it could not exercise due care regarding the alleged latent defect in the copier due to defendant’s exclusive control and maintenance. However, the fifth and sixth Wade factors favor the defendant, as the plaintiff has not provided evidence indicating the 1090 model copier is unsafe in normal use. The seventh Wade factor is neutral; while the defendant could distribute the risk of loss, there is insufficient justification to do so in this case. The court finds that the risk of fire from the A6/J1 connector is extremely remote, supported by the lack of similar incident reports and the widespread use of the copier since 1985. Consequently, the plaintiff fails to establish that the 1090 model is unreasonably dangerous under Pennsylvania law, leading to the conclusion that the strict products liability claim is unviable and the defendant's motion for summary judgment on this count is granted.

Regarding the express warranty claim, the defendant argues that the Service Purchase Contract does not establish an express warranty for mandatory retrofits. The contract states that Xerox will maintain the equipment and that the customer must allow Xerox to install mandatory retrofits, but it does not guarantee their performance. The court agrees that there is no genuine issue regarding the existence of an express warranty for retrofit installation, thus granting the defendant's summary judgment motion on this claim.

For the negligence claim, the defendant seeks summary judgment on two grounds: the lack of foreseeability of harm and the exclusion of plaintiff's expert testimony due to non-compliance with Federal Rule of Evidence 702 and the Daubert standard. To succeed in negligence, the plaintiff must prove a legal duty, a breach of that duty, a causal link to the injury, and actual damages.

Plaintiff asserts that the defendant had a duty of care to the Commonwealth in the design and manufacture of the 1090 model, emphasizing the foreseeability of connector loosening potentially causing a fire. The defendant, which designed, manufactured, and sold the 1090 model, was aware of prior incidents involving looseness at specific multi-pin connectors and had implemented a mandatory retrofit to address the issue. The plaintiff contends that these loose connectors were significant factors in the fire's occurrence, creating a genuine issue of material fact on foreseeability.

The defendant seeks to exclude the testimony of Mr. Rodems or, alternatively, hold an evidentiary hearing to evaluate whether his testimony meets Daubert standards for scientific evidence. The defendant claims that without Rodems's testimony, the plaintiff cannot establish the causation element necessary for their negligence claim, thereby justifying summary judgment. The key issues include whether Rodems's testimony qualifies as "scientific evidence" requiring a preliminary assessment of its methodology and whether an evidentiary hearing is warranted if the testimony is deemed technical rather than scientific. The defendant argues that Daubert standards apply to all expert testimony, citing relevant case law.

In contrast, the plaintiff argues that Daubert's scientific criteria do not pertain to Rodems's engineering evidence and that an evidentiary hearing is unnecessary. After reviewing the case law and Rodems's testimony, it is determined that his conclusions are not based on scientific methods but rather on general electrical engineering principles and his extensive experience. Consequently, it is concluded that the Daubert inquiries for scientific reliability do not apply, and an evidentiary hearing is deemed inappropriate.

The Court must assess the admissibility of Mr. Rodems's testimony under Federal Rule of Evidence 702, which requires that expert testimony be reliable and relevant. The judge serves as a "gatekeeper" per Daubert, ensuring that: 1) the witness is an expert, 2) the testimony involves scientific, technical, or specialized knowledge, and 3) it aids the trier of fact. Mr. Rodems, with over fifty years of experience in evaluating electrical systems and twenty-five years investigating electrical accidents, qualifies as an expert. He will testify that an electrical failure in a 1090 model copier caused a fire. The Court finds this testimony relevant and beneficial for the trier of fact. The Federal Rules favor the admission of evidence that assists the trier of fact, with cross-examination and contrary evidence serving as means to challenge its credibility. Consequently, Mr. Rodems's testimony regarding causation is deemed admissible under Rule 702, leading to the denial of the defendant's motion for summary judgment on the plaintiff's negligence claim (count III). Conversely, the defendant's motion for summary judgment is granted regarding the strict products liability (count I) and breach of express warranty claims (count II). An order reflecting these rulings is forthcoming. The Court notes the Supreme Court's four inquiries for assessing the reliability of scientific testimony, while acknowledging that the applicability of Daubert to non-scientific testimony remains unresolved in the Third Circuit.