Sedgwick Insurance v. F.A.B.E. Custom Downstream Systems, Inc.
Docket: Case No. 13-10485
Court: District Court, E.D. Michigan; January 21, 2015; Federal District Court
The Court denied Defendant F.A.B.E. Custom Downstream Systems, Inc.'s motion for summary judgment regarding all claims in the case brought by Plaintiff Angela Sarazin. The motion, filed on June 16, 2014, followed a stipulated extension for the Plaintiff's response, which was submitted on July 17 and corrected on July 18, 2014. The case had previously been consolidated on August 16, 2013, with Sedgwick Insurance v. CDS, Inc., and the Defendant's name was corrected in the pleadings. A hearing occurred on September 26, 2014, where the Court provided its reasoning for denying the motion.
The background of the case involves an incident on February 24, 2010, where Sarazin suffered a severe hand injury while operating a Servo-Fly Knife Cutter (SFK Cutter) at Fagerdala USA-Marysville, Inc., while on loan from a temporary employment agency. Fagerdala produced foam products, including pool noodles, using various machines. The manufacturing process involved an extruder that melted polyethylene resin, which was then cooled in a water bath before being cut to length by the SFK Cutter. The SFK Cutter's blade operated automatically based on signals from the preceding puller machine, cutting foam strands at predetermined intervals regardless of the extrusion process.
Plaintiff Sarazin had been employed at Fagerdala for three weeks, working at the end of the conveyor belt, checking pool noodles as they came off the line. She was not trained on the SFK Cutter and did not operate it as part of her job. On February 24, 2010, she was instructed to clean up after a machine shutdown, during which she noticed noodles stuck in the SFK Cutter's feed. Believing the machines were off and unaware of the blade's presence, she inserted her hand to retrieve the noodles. A supervisor, Barry Jorgensen, was in the process of shutting down the machines when he saw Sarazin injured. The SFK Cutter severed three-quarters of her right hand, and although doctors attempted to reattach it, the procedure failed, leading to an amputation up to her mid-forearm thirteen months later. Sarazin had not received any safety training regarding the machines prior to the incident.
The SFK Cutter involved in this case is the model CSFK 6.5, designed and manufactured by Defendant CDS. Negotiations for its purchase by Fagerdala began around 2004 and were finalized in January 2006. CDS's sales representative, Anthony Pécora, confirmed he visited Fagerdala during this period. Upon shipment, the cutter included a blade guard and bushings that rendered it unusable without modification. CDS acknowledged that the cutter could not operate without the removal or drilling of these bushings. A safety guard option was available for purchase, but there is no evidence that Fagerdala was informed of this.
At the time of Plaintiff Sarazin's injury, a 12-inch tunnel guard, fabricated by Fagerdala's maintenance technician Dwain Seitz at the direction of maintenance manager Victor Moenaert, was installed on the cutter. Seitz could not recall the original length of the guard but initially believed it was longer than 12 inches. After the injury, Seitz extended the guard to 32 or 36 inches. Moenaert acknowledged they decided on the guard's length but could not recall the original specifications provided by CDS or any relevant OSHA guidelines regarding guard length. Both he and Seitz expressed uncertainty about whether the guard had been altered after its initial fabrication.
Both Plaintiff Sarazin’s experts, John Lauhoff and Harold Josephs, along with Defendant’s expert David Eby, concur that MIOSHA statutes reference ANSI safety standards for machine tools. Sarazin’s experts identify both Defendant CDS and Fagerdala as 'safeguarding suppliers' under ANSI definitions. Lauhoff asserts that CDS breached ANSI standards by failing to provide adequate machine guarding, specifically a 32 to 36-inch tunnel guard, while Eby contends that Fagerdala bore the responsibility for safeguarding the SFK Cutter, as they altered the machine by adding the tunnel guard. Eby emphasizes that proper safeguarding of the SFK Cutter must occur within the assembly line context, and that standard 36-inch tunnel guards might necessitate machine modifications. He also indicates that there are alternative safeguarding methods available under MIOSHA and ANSI, such as location or barrier guards, implying CDS was not obligated to supply tunnel guards. Eby clarifies that CDS lacked knowledge of the SFK Cutter's assembly process since they did not install the machine, yet they had sufficient information to safeguard the puller by positioning it appropriately. ANSI standards define a 'supplier' as any entity providing equipment or services, while a 'user' is one that utilizes or modifies the machinery. The responsibilities of the safeguarding supplier include ensuring that protective measures comply with design and installation standards, and if the user engages in modifications, they assume the role of the supplier. Changes to production that may impact safeguarding include machine modifications.
Defendants and Plaintiff seek summary judgment under Rule 56(a) of the Federal Rules of Civil Procedure, which allows for judgment when there is no genuine issue of material fact, and the movant is entitled to judgment as a matter of law. Summary judgment is warranted when the moving party shows no genuine issue exists regarding an essential element of the nonmoving party's case, which bears the burden of proof at trial. The moving party must inform the court of the basis for its motion and identify relevant evidence demonstrating the absence of such issues. A "material" fact is one that could establish or refute essential elements of a cause of action or defense. A fact dispute is "genuine" if a reasonable jury could favor the nonmoving party. Conversely, if no reasonable jury could find for the nonmoving party, no genuine issue exists for trial. The court evaluates evidence and draws reasonable inferences in favor of the nonmoving party. If the moving party meets its burden, the nonmoving party must provide specific facts, not mere allegations, to show a genuine issue for trial. This necessitates the introduction of "evidence of evidentiary quality," surpassing mere speculation or minimal evidence, to avoid summary judgment.
Defendant CDS seeks to dismiss Plaintiff Sedgwick Insurance’s complaint under Fed. R.Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted. A court reviewing such a motion must view the complaint favorably to the plaintiff, accepting allegations as true while disregarding legal conclusions and unfounded factual inferences. CDS's motion references evidence outside the pleadings, necessitating consideration as a summary judgment motion under Fed. R.Civ. P. 56(a).
Plaintiff Sarazin’s complaint includes five counts: Negligence, Implied and Expressed Warranty of Fitness and Merchantability, Products Liability under Mich. Comp. Laws 600.2945 et seq., Knowledge of Defective Product under Mich. Comp. Laws 600.2949a, and Gross Negligence, based on the defective design of the SFK Cutter. CDS does not address these claims individually but argues broadly that it cannot be liable due to modifications made to the product by Fagerdala post-purchase, that it owed no duty to Sarazin, and that its actions do not establish proximate cause for Sarazin's injuries. Therefore, CDS contends that the negligence, warranty, products liability, and knowledge of defect claims should be dismissed, along with Sedgwick’s claim, as CDS is not liable for Sarazin’s injuries.
To establish a prima facie case for product liability under Michigan law, a plaintiff must demonstrate that the defendant supplied a defective product that caused the injury. Defects can arise from negligent design, manufacture, failure to warn, breach of warranty, or misrepresentation. In this case, Plaintiff Sarazin is pursuing a claim based on negligent design. A manufacturer is obligated to design products to eliminate unreasonable risks of foreseeable injury. A product is deemed defective if it is not reasonably safe for its intended uses, encompassing both manufacturing and design defects.
To prove a design defect, a plaintiff must show the product was not reasonably safe when it left the manufacturer and that a feasible alternative design could have prevented the harm without significantly compromising the product’s utility. This involves a risk-utility analysis that considers the manufacturer’s design choices and the foreseeable risks.
The plaintiff must satisfy several criteria: foreseeability of injury severity and likelihood, availability and practicality of an alternative design, and that the absence of this alternative rendered the product not reasonably safe. While Defendant CDS does not explicitly contest the establishment of a prima facie case in its summary judgment motion, it argues in its reply that the bushings on the SFK Cutter made the machine safe upon delivery, suggesting that Sarazin cannot prove the product was not reasonably safe when it left CDS's control, as mandated by statutory requirements.
The SFK Cutter was deemed 'reasonably safe' when it left Defendant CDS, as it featured bushings that prevented the blade from cutting. However, this safety claim is weakened by the Michigan Supreme Court's ruling that a product is considered 'defective' if it is not reasonably safe for foreseeable uses. To establish a design defect in Michigan, a plaintiff must demonstrate that the product is unsafe for its intended uses and that a risk-utility analysis indicates a safer design is available. Evidence suggests that the SFK Cutter was inoperable until the bushings were removed, supporting the plaintiff's case against CDS.
Defendant CDS contended that it owed no duty to Plaintiff Sarazin, arguing that its duty of care only encompassed foreseeable risks. CDS cited Fredericks v. General Motors and Villar v. E.W. Bliss Co. to support its position. In Fredericks, the plaintiff lost part of his hand using an unguarded power press and could not establish negligent entrustment since CDS did not know of the unsafe usage. The Michigan Supreme Court also rejected the plaintiff's claim that the unguarded die was defective, stating that the die could be used safely with guarding. The court emphasized that it was not foreseeable to CDS that its product would be used unsafely, particularly given the statutory duty of the plaintiff's employer to ensure safe work conditions.
In Villar, the Michigan Court of Appeals addressed a case where the plaintiff was injured while operating a press manufactured by the defendant. The plaintiff alleged negligent design and breach of implied warranty, and after a jury awarded damages, the defendant appealed the trial court’s refusal to grant a directed verdict. The appellate court reversed the lower court's decision, citing the precedent set in Fredericks, which established that an existing statute imposed a duty on employers to maintain a safe workplace. The court noted that the press, like the dies in Fredericks, was part of a broader system and was inoperable without proper integration into that system. There was unchallenged testimony indicating that the press could have been safely operated with a specific feeding mechanism. Consequently, the court found it was not foreseeable that the employer would fail to use the press correctly within a safe system. Additionally, the court highlighted that the plaintiff, while not claiming negligent entrustment, did not demonstrate that the manufacturer had knowledge of the employer’s unsafe use of the machine, which is a necessary element for such a claim.
Plaintiff Sarazin asserts that the precedent set in Villar is outdated following the Michigan Supreme Court's ruling in Ghrist v. Chrysler Corp. Sarazin argues that Defendant CDS's reliance on Villar, which depends on the earlier case Fredericks, is erroneous. In Ghrist, the plaintiff sustained injuries from a die press due to its unsafe design, which had pinch points even when operated correctly. The plaintiff's products liability claim included allegations of negligent design, asserting that the die could have been made safer without losing functionality. The trial court referenced Fredericks, concluding that without evidence the manufacturer knew the die would be used unsafely, there was no obligation to include safety devices not requested by the purchaser. This reasoning was upheld by the Michigan Court of Appeals.
However, the Michigan Supreme Court distinguished Ghrist from Fredericks and White, emphasizing that Ghrist involved the actual designer and manufacturer of the die, granting them unique knowledge of the product's risks and capabilities. The Court stated that manufacturers are in the best position to implement safety improvements and that by marketing a product, they imply its safety for all reasonable uses. The Court ruled that the inert nature of the die does not exempt the manufacturer from liability, particularly when the manufacturer is aware of unsafe uses or when such uses are foreseeable.
The issue in Ghrist was whether the die was defective and unsafe for foreseeable uses. The plaintiff contended that the die's design was flawed and that his injuries were predictable. The defendant countered, citing Fredericks, claiming it was not foreseeable that the employer would use the die unsafely due to MIOSHA regulations requiring a safe workplace. The Supreme Court rejected this defense, asserting that MIOSHA does not absolve manufacturers from their duty to design safe products and that manufacturers cannot rely solely on the employer's compliance with safety regulations to fulfill their responsibilities. The Court emphasized the public interest in ensuring safety devices are included in manufacturing processes, warning against placing the burden of safety on the less knowledgeable employer.
Defendant CDS argues it had no duty to Plaintiff Sarazin, asserting that Fagerdala held both statutory and common law responsibilities to ensure the safety of the SFK Cutter. CDS claims the SFK Cutter was harmless in its received condition and could not cause injury until integrated into a manufacturing system, thereby absolving itself of foreseeable liability for its use. CDS points to MIOSHA and ANSI standards as Fagerdala's obligations to safeguard the equipment, arguing that it was not foreseeable that the cutter would be used unsafely with inadequate guarding.
In contrast, Plaintiff Sarazin cites the Michigan Supreme Court's ruling in Ghrist to assert that CDS cannot evade liability by relying on Fagerdala’s statutory duties. Sarazin emphasizes Michigan’s comparative fault system, which evaluates the fault of all parties before determining liability, arguing that CDS cannot shift its duty to Fagerdala. The court notes that, unlike the dies in Villar and Fredericks, the SFK Cutter is a standalone machine designed to cut, and its intended use is foreseeable. Moreover, the Ghrist decision indicates that even inert machinery can incur liability under certain circumstances.
Evidence suggests that CDS may have been aware of Fagerdala’s specific use of the SFK Cutter, raising genuine issues of material fact regarding the foreseeability of Sarazin’s injury resulting from Fagerdala's unsafe practices. The court emphasizes that determining whether CDS owes a duty to Sarazin is a legal question, while issues of design defect and risk of injury remain factual questions. CDS also references testimony suggesting that the SFK Cutter could have been better safeguarded, indicating ongoing disputes over the adequacy of safety measures.
Defendant CDS’s representative, Pécora, visited Plaintiff Sarazin’s facility and engaged in extensive negotiations regarding the SFK Cutter and puller for over a year. Testimony indicates that CDS was aware the SFK Cutter's bushing needed to be bored out for it to function properly. Viewing the evidence favorably for Sarazin, a jury could deduce that CDS had actual knowledge of the Cutter's operational requirements and the risks associated with unguarded blades, especially since CDS offered 36-inch interlocking tunnel guards for sale at the time of the Cutter's purchase. Importantly, CDS admitted that once the bushings were removed, the blades posed a severe injury risk.
CDS argues it is entitled to summary judgment because Fagerdala modified the Cutter after receipt, claiming such alterations were not reasonably foreseeable under Michigan law. CDS asserts that since the Cutter arrived with intact bushings and no guards, Fagerdala's modifications eliminated CDS's liability. However, the fact that the Cutter could not be operational without boring out the bushings suggests it was reasonably foreseeable that Fagerdala would modify the machine to use it as intended. Therefore, unresolved factual issues prevent the court from concluding that CDS could not foresee the risk of injury from the Cutter's design and operation.
Defendant CDS contests the foreseeability of Fagerdala’s modification of the SFK Cutter to include a short 12-inch tunnel guard, arguing that such changes were not predictable. However, the court finds material factual questions concerning CDS's knowledge of the product's use by Fagerdala, which prevents a determination that CDS owed no duty to Plaintiff Sarazin. The court deems summary judgment inappropriate in light of ongoing questions about the foreseeability of Fagerdala’s alterations post-purchase.
In addressing proximate cause, CDS claims that even if it owed a duty, its failure to include 36-inch tunnel guards was not the direct cause of Sarazin's injury, asserting that Plaintiff cannot demonstrate that her injury would not have occurred "but for" the absence of the longer guards. Notably, CDS concedes that Sarazin’s injury would not have happened if the safety guard had been longer than 12 inches, thereby acknowledging the "but for" causation necessary for establishing proximate cause. The court clarifies that proximate cause encompasses both cause in fact and legal cause, which involves assessing the foreseeability of the consequences of CDS's actions. Lastly, it emphasizes that negligence must be a substantial factor in producing the injury for it to be considered proximate cause.
Defendant CDS contends that the absence of 36-inch interlocking tunnel guards on the SFK Cutter is not a significant cause of Plaintiff Sarazin’s injury, primarily due to her inadequate training by Fagerdala and the installation of a shortened 12-inch guard. CDS argues that since Fagerdala altered the guard, the Court should deduce that any guard installed by CDS would also have been shortened, eliminating any proximate cause related to the lack of the 36-inch guard. However, it is disputed whether the guard was originally longer than 12 inches, and for the purposes of this ruling, the facts must be viewed favorably towards Sarazin, suggesting the guard was not shortened. Moenaert, a key witness, indicated a lack of awareness regarding MIOSHA standards for tunnel guard length and confirmed that a 36-inch guard would not impede machine functionality or employee use, establishing that Fagerdala's production line could accommodate a longer guard.
CDS further argues that the absence of the 36-inch guard cannot be deemed a substantial factor contributing to Sarazin’s injury, as it would not have addressed her inadequate training. CDS references Miller v. Bliss, where liability was severed due to significant safety device disablement and improper training. However, the circumstances here differ; Sarazin was not instructed to manually remove materials from the machine, nor did Fagerdala disable any safety devices. Rather, it is uncontested that Sarazin was advised against placing her hands in the machine, and a 36-inch guard would have prevented any hand insertion, regardless of training. CDS’s arguments about proximate cause and intervening acts do not hold, leading the Court to determine that summary judgment on this issue is not warranted. Additionally, CDS seeks dismissal of Sarazin’s claims for gross negligence and knowledge of defective condition, asserting that there is insufficient evidence of recklessness or knowledge of defects on its part.
Defendant CDS contends that Plaintiff Sarazin cannot demonstrate that CDS was aware of any defect in the SFK Cutter since Fagerdala accepted the machine and began using it, suggesting it was operable. However, a defective product is defined as one that is "not reasonably safe for its foreseeable uses," indicating that genuine issues of material fact persist regarding the product's defectiveness. Testimonies indicate that the SFK Cutter was intended for specific tasks, and there is uncertainty about CDS's knowledge of its usage by Fagerdala. Summary judgment is thus deemed inappropriate due to these unresolved questions.
In terms of gross negligence, defined as conduct showing a substantial lack of concern for potential injury, CDS argues its actions were not reckless since the machine was harmless when delivered and it had "verbally offered" a safety guard to Fagerdala, which was declined. However, testimony suggests CDS was aware that the SFK Cutter was unsafe without guarding when certain components were removed, and there is no documentation confirming the specific offer and rejection of the safety guard. Evidence indicates that CDS's failure to provide safety features, despite their availability, could be interpreted as gross negligence by a reasonable jury.
Regarding Plaintiff Sedgwick Insurance's complaint, which seeks reimbursement for workers' compensation benefits paid to Sarazin and aligns with Sarazin's claims against CDS, the latter has moved to dismiss Sedgwick's complaint under Fed. R. Civ. P. 12(b)(6). CDS argues that if it is granted summary judgment and found not liable to Sarazin, Sedgwick's claims must also be dismissed as they are identical. Sedgwick has not responded to CDS's motion for summary judgment.
Defendant CDS requests the dismissal of its complaint due to the plaintiff's failure to respond. However, the Court identifies genuine issues of material fact regarding Plaintiff Sarazin’s claims, leading to the denial of Defendant CDS’s dismissal request concerning Plaintiff Sedgwick’s claims. The Court also declines to dismiss Plaintiff Sedgwick’s complaint based solely on the lack of response to Defendant CDS’s motion.
The Court denies Defendant F.A.B.E. Custom Downstream Systems, Inc.’s Motion for Summary Judgment. It notes that Fagerdala USA-Marysville, Inc. ceased operations around October 1, 2011, and was succeeded by Michigan Foam and Fabrication. Testimony indicates that a safety guard over the machine's blade shuts off the machine when opened. Defendant CDS does not distinguish claims but argues that Plaintiff Sarazin has not proven gross negligence. It is inferred that Defendant CDS’s arguments regarding duty and proximate cause apply to Sarazin’s claims of negligence, warranty, and product liability.
Michigan law establishes that a prima facie case for design defects requires proof of foreseeable risks and the existence of alternative safety devices. The Court references prior cases indicating that proof of negligent entrustment is not essential when proving a negligent defect. It cites a Michigan Supreme Court decision that limits liability for a manufacturer when safety standards are violated by a third-party manufacturer.
Defendant CDS contends that proper training could have prevented Plaintiff Sarazin’s injury and admits that a safety guard would have mitigated the risk. The Court finds that reference to hearsay from a former employee about safety practices is irrelevant to the current case involving a different machine model. Lastly, the excerpt discusses the distribution of recovery payments from third-party damages under the Michigan Worker’s Compensation Act, which mandates reimbursement of employers for any paid benefits before compensating the employee.
