Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-arwd-5_06-cv-05177/USCOURTS-arwd-5_06-cv-05177-2/pdf.json

Nature of Suit Code: 195
Nature of Suit: Contract Product Liability
Cause of Action: 28:1332 Diversity-Product Liability

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IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF ARKANSAS

FAYETTEVILLE DIVISION

TYSON FOODS, INC. and

TYSON POULTRY, INC. PLAINTIFFS

v. Civil No. 06-5177

THE DUPPS COMPANY and

RAINS-FLO MANUFACTURING COMPANY DEFENDANTS

O R D E R

Now on this 20th day of November, 2007, come on for consideration the

following motions:

* Motion For Summary Judgment Of The Dupps Company (document #25);

* Amended Motion For Summary Judgment Of The Dupps Company

(document #32);

* Motion For Summary Judgment of defendant Rains-Flo Manufacturing

Company (document #34); and

* Second Amended Motion For Summary Judgment Of The Dupps Company

(document #38),

and from said motions, the supporting documentation, and the responses

thereto, the Court finds and orders as follows:

1. This is a products liability case. Plaintiffs Tyson Foods, Inc.

And Tyson Poultry, Inc. (collectively “Tyson”), allege that a type of

equipment purchased from defendant The Dupps Company (“Dupps”) - referred

to herein as a “Continuous Hydrolyzer” - was defective. Tyson also alleges

that the packing material used in the Continuous Hydrolyzers, manufactured

by defendant Rains-Flo Manufacturing Company (“Rains-Flo”), was defective.

The Amended Complaint sets forth causes of action against Dupps for

breach of express warranty; breach of implied warranty of fitness for a

particular purpose; breach of implied warranty of merchantability;

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negligence; and strict liability. Claims are stated against Rains-Flo for

breach of implied warranty of fitness for a particular purpose; breach of

implied warranty of merchantability; negligence; and strict liability.

Both defendants denied the material allegations of the Amended

Complaint, and both now move for summary judgment. Tyson has responded, and

the motions are ripe for decision.

2. Summary judgment should be granted when the record, viewed in the

light most favorable to the nonmoving party, and giving that party the

benefit of all reasonable inferences, shows that there is no genuine issue

of material fact and the movant is entitled to judgment as a matter of law.

Walsh v. United States, 31 F.3d 696 (8th Cir. 1994). Summary judgment is

not appropriate unless all the evidence points toward one conclusion, and

is susceptible of no reasonable inferences sustaining the position of the

nonmoving party. Hardin v. Hussmann Corp., 45 F.3d 262 (8th Cir. 1995).

The burden is on the moving party to demonstrate the non-existence of a

genuine factual dispute; however, once the moving party has met that

burden, the nonmoving party cannot rest on its pleadings, but must come

forward with facts showing the existence of a genuine dispute. City of Mt.

Pleasant, Iowa v. Associated Electric Co-op, 838 F.2d 268 (8th Cir. 1988).

3. Pursuant to Local Rule 56.1, the parties have filed statements of

facts which they contend are not in dispute. From those statements, the

following significant undisputed facts are made to appear: 

* As one aspect of Tyson's poultry processing business, it operates

several rendering plants, in which poultry waste is rendered to useful

byproducts. One such rendering process is the hydrolyzation of chicken

feathers into protein meal used in animal feed. Hydrolyzation uses a

machine called, appropriately, a hydrolyzer. 

* Between 1996 and 2003, Tyson purchased eight Continuous

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According to an article in Render attached as an exhibit to Dupps' Motion For 1

Summary Judgment, hydrogen sulfide is a colorless gas commonly described as smelling

like rotten eggs. It is a byproduct of decaying organic material such as blood,

feathers, hair, meat, and offal. At exposures of 20-50 ppm (parts per million) it

causes eye irritation; at 500 ppm it causes dizziness and cessation of breathing in a

few minutes; at greater than 1000 ppm a single breath can be lethal. 

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Hydrolyzers from Dupps. The Continuous Hydrolyzer is essentially a huge

pressure cooker with an auger running through it to move the contents. The

auger must be sealed where it enters and exits the vessel. In the Dupps

Continuous Hydrolyzers, the sealed areas are referred to as stuffing boxes,

and are held in place by packing glands which were filled - at times

relevant to this lawsuit - with packing manufactured by Rains-Flo. The

packing glands must be periodically adjusted as the packing material wears

down. Tyson made its first purchase of Rains-Flo packing material on

September 9, 1997.

* Dupps' terms and conditions of sale ("Dupps' Terms And

Conditions") are set out in various documents attached as Exhibit A to the

Affidavit of Jim Lyle. Rains-Flo's terms and conditions of sale ("Rains-Flo

Terms And Conditions") are set out in various documents attached as Exhibit

B and C to the Affidavit of Scott Harris. While the parties dispute the

meaning of some of the provisions of these documents, and dispute when some

of them were received by Tyson, the authenticity of the documents is not in

question, and they will be referred to as needed in this Order.

* Tyson was aware, as early as June 11, 1998, that hydrogen

sulfide (or "H2S") was a byproduct of the feather rendering process, and 1

that the Continuous Hydrolyzers released hydrogen sulfide. It provided

training to its employees about some of the dangers of the gas. The parties

dispute, however, the extent of Tyson's knowledge of the potential levels

and potential dangers of hydrogen sulfide released from the Continuous

Hydrolyzers as of June 11, 1998.

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* On March 14, 2002, Tyson employee Robert Key was reportedly

overcome with hydrogen sulfide from a Continuous Hydrolyzer at Tyson's

Texarkana facility (the "Key Incident"). As a result of the Key Incident,

Tyson's Texarkana Plant Manager, Bill Welborn, sent two e-mails to Tyson

officers and employees on March 14, 2002. While the significance of these

e-mails is disputed, their authenticity is not, and the Court will refer to

them as needed in this Order.

* After the Key Incident, Tyson installed vent hoods over the

stuffing boxes of the Continuous Hydrolyzers in its Texarkana plant to

remove hydrogen sulfide.

* In late 2002, Tyson contacted Rains-Flo about problems with the

packing material, and in January, 2003, Scott Harris of Rains-Flo traveled

to the Tyson plant in Scranton, Arkansas, to review the situation.

* On October 10, 2003, Tyson employee Jason Kelley sustained fatal

injuries at the Texarkana facility (the "Kelley Incident"), reportedly as

a result of hydrogen sulfide exposure while adjusting the packing seals on

a Continuous Hydrolyzer. Tyson employee Billy Drumm was also overcome when

he went to assist Kelley, but Drumm survived the Kelley Incident.

* On December 30, 2003, there was a meeting at Tyson's Springdale

offices attended by John Dupps (President of Dupps); Bill Lovette (Vice

President of Tyson Foods); and other representatives of both companies. At

this meeting, Tyson informed Dupps of the Kelley Incident, and communicated

notice of breach of warranty.

* As a result of the December 30, 2003, meeting, Dupps designed and

supplied to Tyson at no cost a vent hood over the stuffing boxes of its

Continuous Hydrolyzers, the purpose of which was to contain and remove

hydrogen sulfide. Dupps also provided Tyson with warnings about hydrogen

sulfide, and updated its instruction manual by instructing users to shut

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down the units and depressurize them before making adjustments to the

packing, in order to reduce leakage of hydrogen sulfide.

* Both Billy Drumm and the Estate of Jason Kelley filed lawsuits

against Dupps as a result of the Kelley Incident. The Kelley lawsuit

included Rains-Flo as a defendant. Tyson was put on notice of both

lawsuits, and chose not to intervene. Both lawsuits have now been settled

and dismissed with prejudice.

* Three Tolling Agreements were executed by Tyson and Dupps. The

third and last of these, called the First Amended Tolling Agreement,

includes extensions granted in the first two such documents, the Tolling

Agreement and the Amended Tolling Agreement, and tolled the statute of

limitations on all potential claims between Tyson and Dupps from March 2,

2005, until 60 days following August 1, 2006.

* This lawsuit was filed on September 22, 2006.

4. Both Dupps and Rains-Flo contend that the statute of limitations

had expired on Tyson's claims for negligence and strict products liability

before suit was filed. Dupps' argument is predicated upon its assertion

that Tyson had actual knowledge of the alleged defects in the Continuous

Hydrolyzer no later than 2001, when Tyson installed water sprayers over the

stuffing boxes of the Continuous Hydrolyzers in its Scranton facility to

remove hydrogen sulfide from the work environment. Dupps points out that a

three-year statute of limitations governs both negligence (pursuant to

A.C.A. §16-56-105) and strict products liability (pursuant to A.C.A. §16-

116-103), and that even when one takes into consideration the extensions of

the Tolling Agreements, the suit was untimely.

Rains-Flo takes the position that Tyson had knowledge that hydrogen

sulfide was leaking from the stuffing boxes no later than March 14, 2002,

the date of the Keys Incident. There are no tolling agreements between

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Paragraph 18 states that following the Kelley Incident, Tyson "implemented, and 2

installed extensive protective and remedial measures to further insure a safe workplace

for its employees working in and around the Continuous Hydrolyzers and Rains-Flo

packing. . . . These and other actions taken by Tyson are all as a direct and proximate

cause [sic] of the breaches by Dupps and Rains-Flo as described herein."

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Tyson and Rains-Flo, and Rains-Flo contends that the suit filed on September

22, 2006, was untimely.

Tyson responds that Arkansas uses the discovery rule for determining

when the statute of limitations begins to run in product liability actions.

Under the discovery rule, the statute of limitations begins to run when the

plaintiff knew, or by the exercise of reasonable diligence should have

known, of the connection between a defect in the product and the damages

suffered. Martin v. Arthur, 339 Ark. 149, 3 S.W.3d 684 (1999). Tyson points

out that reasonable doubts about when the statute of limitations begins to

run should be resolved in its favor, as the nonmovant. State v. Diamond

Lakes Oil Co., 347 Ark. 618, 66 S.W.3d 613 (2002).

5. While the Amended Complaint does not come right out and say so,

the alleged defect upon which the products liability claim against Dupps is

based is that the Continuous Hydrolyzers leaked hydrogen sulfide to such an

extent as to cause a safety hazard, thus requiring Tyson to expend monies

to modify them. Likewise, the negligence claim rests on allegations related

2

to the leakage of hydrogen sulfide from the machines.

The corresponding claims against Rains-Flo rest on the allegation that

the packing material either leaked, or failed to create a leak-free seal,

so as to prevent hydrogen sulfide from escaping from the Continuous

Hydrolyzers.

Tyson acknowledges knowing, as early as 1998, that hydrogen sulfide -

in the concentrations normally found in its rendering facilities without

regard to the use of the Continuous Hydrolyzers - could cause eye

irritation. It contends, however, that there are genuine issues of material

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As with its products liability claim, Tyson does not come right out and say that 3

its damages are purely economic in the Amended Complaint, but an exhibit to its Combined

Response To Defendants' Statement Of Undisputed Material Facts lists its alleged

damages, and they are all in the "economic loss" category.

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fact in dispute as to when it "became aware of the high emissions of

hydrogen sulfide from the continuous hydrolyzer and the danger they posed."

It contends that it "did not learn of the high concentrations that are

immediately dangerous to life and health until the death of Jason Kelley in

October 2003," and that it did not have a complete cause of action until

Kelley's death.

6. The Court disagrees with Tyson's position that it did not have

a complete cause of action until Kelley's death. It was not necessary that

Tyson be aware that hydrogen sulfide leaking from the Continuous Hydrolyzers

posed a risk of death in order to trigger the running of the statute of

limitations. Tyson is not suing Dupps to recover damages for Kelley's death.

Its claim is for economic loss allegedly incurred because the Continuous 3

Hydrolyzers did not perform as expected and as warranted, but instead leaked

unacceptable amounts of hydrogen sulfide, which required Tyson to expend

money to modify them and the facilities in which they were installed.

Because the cost of those modifications forms the basis of Tyson's damages

claim, it was Tyson's awareness of the need to make such modifications that

triggers the statute of limitations.

The Court finds the following evidence determinative on when Tyson

had, or reasonably should have had, this awareness:

* Tyson employee Jerry Canerday, a safety manager, testified that

he knew, as early as June, 1997, that at sufficient concentrations hydrogen

sulfide was "IDLH," or "immediately dangerous to life and health."

Specifically, he knew that "it could be fatal at over 800 parts per

million." 

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* Canerday testified that "we did not know that we had hydrogen

sulfide at the level at which it was IDLH in our facility," but when

heworked at the Scranton facility in 1998 and 1999 he took weekly readings

with a gas monitor for levels of hydrogen sulfide. He tested a "steam path"

emanating from the Continuous Hydrolyzer. As the monitor approached the

steam path, it began to register higher concentrations of hydrogen sulfide.

When it was placed directly into the steam path, it would "peg the meter

out." The meter was designed to register up to 999 ppm. Canerday

attributed the high readings to a low oxygen concentration in the steam

path, which he understood to distort the meter readings, but there is no

evidence that he obtained a more accurate meter or followed up on these test

results to ascertain the true levels of hydrogen sulfide.

* A Memo dated May 12, 1998, from Dupps employee J. Simmons reports

on a service call made by Dupps employees E. McGhee, Jack Risner, and

Simmons to Tyson's Scranton facility. The Dupps employees met with Tyson

employees Jim Rofkhar, Carl Witmore and Bill Carter. The Memo notes that

during the meeting, Rofkhar told the Dupps employees that Tyson's "hydrogen

sulfide meter reads 25 to 100 ppm on the raw feathers, and that vapor

readings were attempted in the vapor dome. The readings were so high they

went 'off the scale' of the meter. [Rofkhar] did not know what the high-end

ppm value was for this meter." It is clear from the context of the Memo

that the "vapor dome" is part of the Continuous Hydrolyzer.

* A document entitled RIVER VALLEY ANIMAL FOODS HYDROGEN SULFIDE

TEST, dated June 11 & 12, 1998, warned Tyson employees "[w]hen replacing the

packing in the hydrolizers, beware of the steam. This is the area where the

largest concetration [sic] of H2S is present. Always test the area prior to

working on any area of the hydrolizer where steam may be present. If the

test results in the steam path and in the area are below 20 ppm no

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It appears from the testimony of Dupps salesman James Lyle that the River Valley 4

facility and the Scranton facility are the same.

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protection is necessary. If H2S is present between 20 and 100 ppm an air

purification respirator with the appropriate cartridges is required. If the

concentration is greater than 100 ppm an air supplied (SCBA) respirator is

required." 

* A letter from Forrest Adams (also a safety manager or industrial

hygienist) to Jim Rofkahr dated June 16, 1998, stated that air monitoring

at the River Valley facility had identified "the platforms above the

4

hydrolizers" as areas of high levels of hydrogen sulfide. Adams noted that

he had "observed the fans that you installed to help the ventilation near

the hydrolizers. I also understand that you have ordered more fans to

install below the hydrolizers to help push vapors up to the scrubber

system."

* Canerday testified that fans and "spray bars" were being used in

Tyson's Scranton facility as early as 1998, 1999, or 2000 to try to remove

hydrogen sulfide from around the Continuous Hydrolyzers.

* Two e-mails from Bill Welborn, Plant Manager at Tyson's Texarkana

facility, were sent on March 14, 2002, the date of the Key Incident. The

first of these noted:

WE HAD ANOTHER INCIDENT THIS MORNING WITH HYDROGEN SULFIDE ON

THE FEED END BEARING/PACKING AREA. . . . WE MUST ALL UNDERSTAND

HOW VERY DANGEROUS THIS GAS IS - IT CAN KILL YOU! WE HAVE A MAN

IN THE HOSPITAL RIGHT NOW FROM BREATHING THE FUMES THIS MORNING

AND HE ONLY SPENT A FEW MINUTES ON THE HYDROLIZER. SCRANTON HAS

INSTALLED A WATER VAPOR SYSTEM ON THEIR HYDROLIZERS THAT HAS

SOLVED THE H2S PROBLEM. WAYNE AND HIS CREW ARE IN THE PROCESS

OF PUTTING THIS SYSTEM ON OUR HYDROLIZER.

The second e-mail, that same day stated:

FOR THE LIFE OF ME, I CANNOT UNDERSTAND WHY SOMEONE HASN'T TOLD

US ABOUT THE WATER SYSTEM SCRANTON INSTALLED TO ELIMINATE THE

H2S PROBLEM . . . . I AM GOING TO LET MARK @ ROBARDS, DAN @

HARMONY, KANE @ SEDALIA, TIM @ T-VILLE, AND KEITH @ CENTRAL KNOW

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ABOUT THIS IMMEDIATELY BEFORE THEY TOO HAVE SOMEONE OVERCOME

WITH FUMES.

* An "Accident/Injury Information" report was prepared following

the Key Incident, on Tyson letterhead, stating that Robert Key "was checking

the oil on the feed end of the hydrolizer when the fumes over took him."

This report contained the following Note:

On duty Maintenance Supervisor took readings for Hydrogen

Sulfide gases after the incident by holding the unit up around

the seal of the Hydrolizer and recorded a reading of 50 ppm

after unit alarmed at 10 ppm. One hour later the maintenance

supervsor [sic] Wayne Carmichael took readings around the seal

again only closer to where Robert had been working. The unit

alarmed at 10 ppm and reached as high as 900 ppm.

* An "Accident/Injury Follow-Up Report" was prepared on March 15,

2002. This report noted that 

Robert Key was overcome by hydrogen sulfide gas while conducting

preventive maintenance work on the hydrolizer. It appears that

the gas may have come from the packing gland off the feed end of

the hydrolizer. The leak appears to be minor, but the

concentration of hydrogen sulfide were [sic] high (as high as

900 ppm prior to the installation of the misting system).

This appears to only be a problem with "continuous feed" systems

as opposed to "batch" systems.

According to Joe Avance (Safety Manager), Bill Welborn (Plant

Manager) sent an e-mail to determine what other RVAF facilities

with "continuous feed" systems had done in this area. Other

RVAF Plants had installed exhaust ductwork over the hydrolizer

(Harmony, Robards is installing duct work now, this was already

scheduled before this accident occurred). Other locations had

previously installed water mist sprayers (Scranton, Sedalia is

taking immediate action now to install water sprayers).

As noted above, the alleged defect in the Continuous Hydrolyzers is

that they leaked hydrogen sulfide gas to such an extent as to cause a safety

hazard, thus requiring Tyson to expend monies to modify them. The testimony

and documents outlined above leave no doubt that Tyson was aware of this

level of danger well before the Keys Incident. Canerday tested vapor

streams coming from the Continuous Hydrolizer weekly in 1998 and 1999, and

found them to be at a lethal level. He testified that he attributed this

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level to a distortion in his testing equipment, but Tyson offers no evidence

that Canerday did anything to verify that the reading was truly inaccurate,

which would be the expected course of action for any reasonable safety

manager when faced with readings in the lethal level. In addition, the

testing done at the time of the Key Incident suggests that Canerday's

readings were probably not distortions, as the Key Incident test levels

reached 900 ppm. 

Tyson employee Jim Rofkhar was also aware, in 1998, that testing of

the vapors from the Continuous Hydrolyzers went "off the scale" of the meter

he used to conduct the tests. 

The Court finds that these test results of vapors emitted by the

Continuous Hydrolyzers would have put a reasonable employee charged with

testing hydrogen sulfide levels on notice of a serious problem with hydrogen

sulfide being emitted from the Continuous Hydrolyzers. The document

entitled RIVER VALLEY ANIMAL FOODS HYDROGEN SULFIDE TEST is evidence that

the test results did, in fact, put Tyson on notice of such a problem. It

warned employees of the danger, and directed them to test the area before

working on a Continuous Hydrolyzer "where steam may be present" and to wear

respirators at concentrations above 20 ppm.

The letter from Adams to Rofkahr dated June 16, 1998, is evidence that

Tyson was by that date already making modifications - the installation of

fans - in response to dangers from the high levels of hydrogen sulfide

coming from the Continuous Hydrolyzers. Canerday's testimony confirmed

this, in that he stated that fans and "spray bars" were being used in 1998,

1999, and 2000.

The Welborn e-mails on March 14, 2002, are evidence that the Key

Incident was not the first "incident" resulting from hydrogen sulfide leaks

from the Continuous Hydrolyzers, and that other facilities had dealt with

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the problem by "a water vapor system" or "water system." 

When this evidence is viewed as a whole, it points toward only one

conclusion, as to which the Court does not believe there can be any genuine

dispute, or even any reasonable doubt: Tyson was aware, as early as 1998 and

certainly by 2000, that hydrogen sulfide gas escaping from the Continuous

Hydrolyzers posed a safety problem of sufficient magnitude to warrant the

expenditure of funds to correct it. Even if it did not have this awareness,

it certainly could have had it, by the exercise of reasonable diligence.

This knowledge triggered the running of the statute of limitations on any

claim that the Continuous Hydrolyzers leaked hydrogen sulfide to such an

extent as to create a safety hazard and require modification. As the court

said in Martin, it is not necessary that a plaintiff know the full extent

of the harm suffered: "indeed, the manifestation of the nature of the harm

done . . . may be slight." 339 Ark. at 159, 3 S.W.3d at 690. 

7. By the Court's calculations, the First Amended Tolling Agreement

between Dupps and Tyson extended the statute of limitations period by

nineteen months, from March 2, 2005, until on or about October 1, 2006.

Counting back fifty-five months (three years plus nineteen months) from that

date, it appears that products liability or negligence claims against Dupps

which accrued on or after March 1, 2002, would be timely filed. The

negligence and strict liability claims of Tyson against Dupps accrued much

earlier than March 1, 2002, and are not timely. The statutes of limitations

had already expired on those claims when Tyson filed suit on September 22,

2006, and summary judgment on those claims will be granted in favor of

Dupps.

Because there were no tolling agreements between Tyson and Rains-Flo,

the products liability and negligence claims Tyson brings against it are

also untimely. 

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8. Dupps and Rains-Flo next contend that Tyson's breach of warranty

claims on the Continuous Hydrolyzers and packing material had expired before

Tyson filed suit. Dupps contends that the statute began to run with the

delivery of the first Continuous Hydrolyzer to the Texarkana facility, which

is said to be June, 1997. Rains-Flo dates the running of the statute as

against it from the time of the Key Incident, March 14, 2002.

Tyson's position vis-a-vis Dupps mirrors its position as to the tort

claims, i.e., that the statute of limitations for its breach of warranty

claims did not commence until it discovered the alleged breaches, which it

dates as October 10, 2003, the date of the Kelly Incident or, alternatively,

March 14, 2002, the date of the Key Incident.

As to its breach of warranty claims against Rains-Flo, Tyson concedes

that the statute of limitations has expired for packing material delivered

prior to September 22, 2002. It contends, however, that its breach of

warranty claims against Rains-Flo for packing material delivered after that

date are viable.

9. A.C.A. §4-2-725 provides that an action "for breach of any

contract for sale must be commenced within four (4) years after the cause

of action has accrued," and that a cause of action accrues "when the breach

occurs, regardless of the aggrieved party's lack of knowledge of the

breach." It further provides that a breach of warranty occurs "when tender

of delivery is made, except that where a warranty explicitly extends to

future performance of the goods and discovery of the breach must await the

time of such performance the cause of action accrues when the breach is or

should have been discovered."

According to attachments to the Dupps Quotation dated May 13, 1996 -

the authenticity of which is not contested by Dupps - Dupps stated that the

Continuous Hydrolyzer and its and installation would "comply with OSHA

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requirements." Tyson contends that this language constituted an explicit

warranty, and was the type of warranty which triggers the discovery

provisions of §4-2-725. For purposes of analyzing the motions now under

consideration, the Court will treat this language as creating an explicit

warranty, with the caveat that whether or not it did so - and whether such

language accompanied the sale of each Continuous Hydrolyzer - are issues to

be determined by the jury at trial.

The Continuous Hydrolyzers were sold on a "turnkey" basis, whereby

Dupps would set up each machine, get it operational, and train Tyson's

personnel in how to use it. Until a machine became operational, there was

no way to know whether it would "comply with OSHA requirements." For this

reason, the Court finds that the discovery provisions of A.C.A. §4-2-725 are

implicated by the "comply with OSHA requirements" language, a finding that

leads necessarily to the issue of when Tyson should have discovered that the

Continuous Hydrolyzers did not comply with OSHA requirements, if in fact

they did not. 

The gist of Tyson's position is that the Continuous Hydrolyzers did

not comply with OSHA requirements because they created an exposure to

hydrogen sulfide greater than was acceptable under OSHA regulations. Tyson

cites the testimony of Jim Rofkahr to establish this proposition, but

Rofkahr testified that he did not recall the OSHA limits on hydrogen sulfide

exposure as of the date the Continuous Hydrolyzers were delivered to the

Scranton facility. Tyson also cites to an OSHA website, which gives the

current hydrogen sulfide exposure limits. That website indicates that the

maximum permissible exposure limit for general industry "shall not exceed

20 ppm" except that if "no other measurable exposure occurs during the 8-

hour work shift, exposures may exceed 20 ppm, but not more than 50 ppm

(peak), for a single time period up to 10 minutes." The recommended

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exposure limit is 10 ppm.

This information is not particularly helpful, both because it speaks

to current limits, and because it speaks in terms of maximum exposure of an

employee, not maximum emission by a machine. The Court has found nothing

in the submissions of either Dupps or Tyson that would resolve the issue of

whether the Continuous Hydrolyzers emitted hydrogen sulfide in excess of any

limits OSHA imposed on such emissions, or even whether OSHA imposes such

limits. The burden rests upon Dupps, as the moving party, to show that

there is no genuine issue of material fact and that it is entitled to

judgment as a matter of law. The Court, therefore, finds that Dupps has

failed to make the necessary showing on the issue of whether the statute of

limitations had expired on Tyson's claim that Dupps breached an express

warranty that the Continuous Hydrolyzers would "comply with OSHA standards."

For this reason, Dupps' motion will be denied as to this claim.

10. Dupps contends that, as to the five Continuous Hydrolyzers

purchased after the Key Incident on March 14, 2002, Tyson had "actual and

specific knowledge of H2S from the hydrolyzers" and therefore there were no

implied warranties as to those sales, pursuant to A.C.A. §4-2-316.

Subsection (b) of that section provides that "when the buyer before entering

into the contract has examined the goods or the sample or model as fully as

he desired . . . there is no implied warranty with regard to defects which

an examination ought in the circumstances to have revealed to him."

Dupps contends that after the Key Incident, Tyson ordered "5 more

hydrolyzors just like the older ones. There were no design or manufacturing

changes to the hydrolyzors relating to any tendency to release H2S, nor did

Tyson request any changes. The last five hydrolyzors contained the same

alleged defect as the first five." (Emphasis in original.)

Tyson does not deny that the last five Continuous Hydrolyzers were

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exactly like the first ones, but rests instead on its argument that §4-2-316

is not applicable. It points out that it could not examine any given

Continuous Hydrolyzer before Dupps installed it, and relies upon the U.C.C.

Commentary to §4-2-316 to the effect that the seller must demand examination

by the buyer before this section comes into play.

The Court need not determine the applicability of §4-2-316, for two

reasons. First, the submissions of the parties leave no room for genuine

doubt that the disclaimers of implied warranties accompanied each sale of

a Continuous Hydrolyzer, and the Court has determined (see ¶12, infra) that

those disclaimers are effective to exclude the warranties here in question.

Second, Tyson's position here is inconsistent with its position with

regard to notice of breach, i.e., that it put Dupps on such notice after the

Key Incident. It is a generally applicable doctrine that "[d]amages which

the plaintiff might have avoided with reasonable effort without undue risk,

expense, or humiliation are either not caused by the defendant's wrong or

need not have been, and, therefore, are not to be charged against him."

Lewis v. Mobil Oil Corp., 438 F.2d 500, 508 (8th Cir. 1971), citing 11 S.

Williston, Contracts §1353. Given Tyson's position that it gave notice of

breach of warranty to Dupps on the basis of the Key Incident on December 30,

2003, it can hardly be said to have been damaged by fault on the part of

Dupps for purchases of Continuous Hydrolyzers after that date. The Court,

therefore, finds that Dupps is entitled to summary judgment in its favor as

to all damages claims arising from the sales of Continuous Hydrolyzers after

the Key Incident.

11. The foregoing analysis with regard to avoidance of damages

applies equally to Tyson's breach of warranty claims against Rains-Flo for

packing material delivered after September 22, 2002. There is no suggestion

by any party that the composition of the Rains-Flo packing material changed

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after that date, and Tyson continued to purchase the product although it

claims to have believed that the product allowed the leakage of hydrogen

sulfide from the Continuous Hydrolyzers. To allow recovery under those

circumstances would be to allow "[d]amages which [Tyson] might have avoided

with reasonable effort without undue risk, expense, or humiliation." This

the Court will not do. 

12. Dupps contends that all of Tyson's breach of warranty claims are

barred by the disclaimers and limitations of remedies provided in the

documents setting forth the terms and conditions of the sales. 

(a) The evidence in support of Dupps as to disclaimers and

limitations comes from the Affidavit of Jim Lyle, its sales manager, who

avers that his standard sales practice was to include the "terms and

conditions" with each "sales proposal or quote I submit to prospective

customers, including Tyson." Dupps also relies on the Affidavit of Jack

Risner, a sales representative/engineer, who averred that he participated

in some of the sales to Tyson, and in each case "personally sent by fax or

mail the attached Terms and Conditions."

Lyle's Affidavit referred to an attached Quotation - dated August 30,

1996 - which led to the 1997 sale of the Continuous Hydrolyzer to the

Scranton Facility. At the bottom of each page of the Quotation, directly

above the place for a signature showing that the Quotation is accepted, is

a paragraph which includes the statement in all capital letters: "AGREEMENTS

ARE MADE SUBJECT TO THE CONDITIONS ATTACHED HERETO INCLUDING THE LIMITED

WARRANTY." 

Also attached to Lyle's Affidavit is a copy of printed "TERMS AND

CONDITIONS OF SALE," which provides, in relevant part, as follows:

WARRANTY; LIMITATIONS THEREOF

SELLER warrants the equipment of its manufacture to be free from

defective workmanship for a period of ninety (90) days from the

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date of shipment from SELLER'S plant, except rendering

equipment, which shall be guaranteed for one (1) year from date

of shipment from SELLER'S plant when given normal and proper

usage and while owned by the original PURCHASER from SELLER. .

. . PURCHASER'S sole and exclusive remedy against the SELLER

shall be for the repair or replacement of defective parts as

provided herein.

IN NO EVENT WILL THE SELLER BE LIABLE FOR ANY OTHER REMEDY

INCLUDING, BUT NOT LIMITED TO INCIDENTAL OR CONSEQUENTIAL

DAMAGES, LOSSES OR EXPENSES ARISING IN CONNECTION WITH THE USE

OF, OR INABILITY TO USE, ITS EQUIPMENT FOR ANY PURPOSE

WHATSOEVER. THE LIMITED WARRANTY DESCRIBED HEREIN SHALL BE IN

LIEU OF ANY OTHER WARRANTY, EXPRESSED OR IMPLIED, BUT NOT

LIMITED TO, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A

PARTICULAR PURPOSE.

CONDITIONS

THE SELLER MAY HAVE MADE STATEMENTS ABOUT THE EQUIPMENT

DESCRIBED IN THIS AGREEMENT. SUCH STATEMENTS DO NOT CONSTITUTE

WARRANTIES, SHALL NOT BE RELIED ON BY THE PURCHASER, AND ARE NOT

PART OF THIS AGREEMENT. THE ENTIRE CONTRACT IS EMBODIED IN THIS

WRITING WHICH CONSTITUTES THE FINAL AND COMPLETE EXPRESSION OF

THE PARTIES' AGREEMENT, AND NO MODIFICATION OF THIS AGREEMENT

SHALL BE BINDING UPON EITHER PARTY UNLESS SUCH MODIFICATION

SHALL BE IN WRITING DULY ACCEPTED BY PURCHASER AND APPROVED BY

AN OFFICER OF SELLER AT ITS HOME OFFICE.

(Capitalization in original.)

(b) The law regarding disclaimers of implied warranties is found at

A.C.A. §4-2-316(2), which provides that

to exclude or modify the implied warranty of merchantability or

any part of it the language must mention merchantability and in

case of writing must be conspicuous, and to exclude or modify

any implied warranty of fitness the exclusion must be by a

writing and conspicuous. Language to exclude all implied

warranties of fitness is sufficient if it states, for example,

that "There are no warranties which extend beyond the

description on the face hereof."

The term "conspicuous" is defined in A.C.A. §4-1-201(10) as follows:

"Conspicuous", with reference to a term, means so written,

displayed or presented that a reasonable person against which it

is to operate ought to have noticed it. Whether a term is

"conspicuous" or not is a decision for the court. Conspicuous

terms include the following:

(A) a heading in capitals equal to or greater in size than

the surrounding text, or in contrasting type, font, or color to

the surrounding text of the same or lesser size; and

(B) language in the body of a record or display in larger

type than the surrounding text, or in contrasting type, font, or

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color to the surrounding text of the same size, or set off from

surrounding text of the same size by symbols or other marks that

call attention to the language.

(c) The Court finds that the statement "THE LIMITED WARRANTY

DESCRIBED HEREIN SHALL BE IN LIEU OF ANY OTHER WARRANTY, EXPRESSED OR

IMPLIED, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR

A PARTICULAR PURPOSE" is sufficient to disclaim the implied warranties of

merchantability and fitness for a particular purpose. It is written, and

specifically mentions "merchantability." The writing contrasts from

surrounding text by being placed in all capital letters, in a block of text

under the "WARRANTY; LIMITATIONS THEREOF" heading. 

Tyson contends that the type size of the disclaimer is small, its

placement inconspicuous, the material embedded without borders or

indentations, the facsimile impliedly blurry, and the terms not negotiated,

but the Court is not persuaded by these arguments. The typeface is large

enough, and the facsimile copy clear enough, for the Court to read the

disclaimer. Its existence is specifically called to the attention of the

buyer immediately above the signature line for acceptance on each page of

the Quotation, and there is no legal requirement that negotiations have

ensued about the matter before acceptance. 

The Court finds that this disclaimer is so presented that a reasonable

person - especially one charged with making capital equipment purchases for

a large corporation - ought to have noticed it. Cf. Hunter v. Texas

Instruments, Inc., 798 F.2d 299 (8th Cir. 1986)(disclaimer on back of

purchase order, but in larger print than surrounding writing, and called to

attention of buyer by large print above line for buyer's signature on front

of purchase order, was such that it should have attracted attention of

reasonable buyer, and reasonable - not actual - notice is all that is

required). The Court, therefore, concludes that Dupps is entitled to

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Tyson also contends that the limitation is unconscionable, but it does not flesh 5

out this argument, and the Court will not devote any attention to it.

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summary judgment in its favor on Tyson's claims for breach of implied

warranty of merchantability and fitness for a particular purpose.

(d) The law regarding limitation of remedies for breach of an express

warranty (as opposed to disclaimer of the existence of any such warranty)

is found at A.C.A. §4-2-316(4), which provides that "[r]emedies for breach

of warranty can be limited in accordance with the provisions of this chapter

on liquidation or limitation of damages and on contractual modification of

remedy (§§ 4-2-718, 4-2-719)."

A.C.A. §4-2-719, provides that a contract for sale "may limit or alter

the measure of damages recoverable under this chapter, as by limiting the

buyer's remedies to return of the goods and repayment of the price or to

repair and replacement of nonconforming goods or parts." It also provides

that "[c]onsequential damages may be limited or excluded unless the

limitation or exclusion is unconscionable," and that such limitation, in the

case of purely "commercial" loss is not prima facie unconscionable.

Dupps' "TERMS AND CONDITIONS" express such a limitation: "PURCHASER'S

sole and exclusive remedy against the SELLER shall be for the repair or

replacement of defective parts as provided herein," and "IN NO EVENT WILL

THE SELLER BE LIABLE FOR ANY OTHER REMEDY INCLUDING, BUT NOT LIMITED TO

INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES ARISING IN

CONNECTION WITH THE USE OF, OR INABILITY TO USE, ITS EQUIPMENT FOR ANY

PURPOSE WHATSOEVER."

Tyson contends that this limitation of remedy fails of its essential

purpose and that - as a result - it is entitled to remedies as provided in

5

the Uniform Commercial Code subtitle on Sales. It points out that A.C.A.

§4-2-719(2) provides that "[w]here circumstances cause an exclusive or

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limited remedy to fail of its essential purpose, remedy may be had as

provided in this subtitle." 

In Caterpillar Tractor Co. v. Waterson, 13 Ark. App. 77, 83, 679

S.W.2d 814, 818 (1984), the Arkansas Court of Appeals explained the purpose

of a limitation of remedies, and the circumstances under which limited

remedies should be deemed to have failed of their essential purpose:

The purpose of an exclusive remedy of replacement or repair of

defective parts is to give the seller an opportunity to make the

goods conforming while limiting the risks to which he is subject

by excluding direct and consequential damages that might

otherwise arise. From the point of view of the buyer the

purpose of the exclusive remedy is to give him goods that

conform to the contract within a reasonable time after a

defective part is discovered. When the warrantor fails to

correct the defect as promised within a reasonable time he is

liable for a breach of that warranty.

Tyson contends that Dupps has - even to date - failed to replace or

repair the Continuous Hydrolyzers so that they do not leak dangerous amounts

of hydrogen sulfide, and thus the limited remedy has failed of its essential

purpose. Such failure, Tyson contends, is a breach of the express warranty

that the machines would comply with OSHA requirements, and makes available

to Tyson the remedies provided for breach of that warranty under the Uniform

Commercial Code.

Dupps counters that Tyson "never requested that Dupps attempt to

repair or replace any part of the hydrolyzor within the one (1) year

warranty period provided by Dupps' limited and exclusive warranty." This

counter does not, however, address Tyson's claim of an explicit warranty

that the Continuous Hydrolyzers would "comply with OSHA requirements," the

one warranty as to which the Court has found the four-year statute of

limitations has not been shown to apply. As with other issues related to

that warranty, the Court finds that the "failure of essential purpose"

argument must be submitted to the trier of fact.

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13. Dupps next contends that the breach of warranty claims are barred

by A.C.A. §4-2-607, because timely notice of breach was not given. A.C.A.

§4-2-607(3) provides that "[w]here tender has been accepted (a) the buyer

must within a reasonable time after he discovers or should have discovered

any breach notify the seller of breach or be barred from any remedy." Dupps

contends that notice was not given until December 30, 2003, over 21 months

after the Key Incident. It contends this notice was not timely as a matter

of law.

Tyson, for its part, contends that Dupps was notified of the Key

Incident in October, 2002, and put its insurance carrier on notice of a

potential claim as a result. It claims that these circumstances create a

jury issue as to whether notice of the breach of warranty claims was timely

given to Dupps.

As stated in James A. Rogers Excavating, Inc. v. R.A. Young & Son,

Inc., 3 Ark. App. 297, 625 S.W.2d 560 (1981), the reasonableness of notice

of breach is usually a question of fact. The Court finds that especially

true in this case, where the parties do not agree on when the notice was

given. For that reason, as to Tyson's claim for breach of a warranty that

the Continuous Hydrolyzers would "comply with OSHA requirements," Dupps'

motion will be denied.

14. Dupps contends that any attempt by Tyson to recover Workers'

Compensation benefits paid to the Kelley Estate or to Drumm is barred by

Tyson's failure to intervene in the lawsuits filed in regard to those

incidents, pursuant to A.C.A. §11-9-410, and failure to put Dupps on notice

that it was asserting any subrogation rights or claims in respect thereto.

Tyson does not address this contention, and the Court finds no

evidence that Tyson is seeking to recover on this basis. It will not,

therefore, address this argument.

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15. Dupps contends that Tyson has failed to state a claim sounding

in strict products liability because A.C.A. §4-86-102 requires personal

injury, death, or property damage, and Tyson alleges only economic loss.

Because the Court has already determined that the statute of limitations

bars these claims, the Court need not address this contention.

16. Dupps contends that it is entitled to summary judgment because

Tyson has not "disclosed any evidence of damages, which is an essential

element of their prima facie case." The Court notes that Tyson has appended

a document entitled "RVAF Facilities" to its Combined Response To

Defendants' Statement of Undisputed Material Facts. This document is

described in the exhibit list as "Tyson Damages Spreadsheet." While this

document is extremely attenuated, the Court will accept it as some evidence

of damages, and summary judgment on this basis will be denied.

IT IS THEREFORE ORDERED that the Motion For Summary Judgment Of The

Dupps Company (document #25), the Amended Motion For Summary Judgment Of The

Dupps Company (document #32), and the Second Amended Motion For Summary

Judgment Of The Dupps Company (document #38) are granted in part and denied

in part. The motions are denied insofar as they seek summary judgment with

regard to Tyson's claim that Dupps breached an express warranty that its

Continuous Hydrolyzers would "comply with OSHA requirements." The motions

are granted in all other respects, and all claims of Tyson Foods, Inc., and

Tyson Poultry, Inc., against The Dupps Company, except for the claim that

Dupps breached an express warranty that the Dupps Continuous Hydrolyzers

would "comply with OSHA requirements," are dismissed with prejudice.

IT IS FURTHER ORDERED that the Motion For Summary Judgment of

defendant Rains-Flo Manufacturing Company (document #34) is granted, and the

claims of Tyson Foods, Inc., and Tyson Poultry, Inc., against Rains-Flo

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Manufacturing Company are hereby dismissed with prejudice.

IT IS SO ORDERED.

 /s/ Jimm Larry Hendren 

JIMM LARRY HENDREN

UNITED STATES DISTRICT JUDGE

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