In the

United States Court of Appeals

For the Seventh Circuit

No. 01-2025

Charles Land and April Land,

Plaintiffs-Appellants,

v.

Yamaha Motor Corporation, U.S.A.,

and Yamaha Motor Co., LTD.,

Defendants-Appellees.

Appeal from the United States District Court 

for the Southern District of Indiana, Indianapolis Division.

No. IP00-0220C-HG--David F. Hamilton, Judge.

Argued October 29, 2001--Decided November 29, 2001 

 Before Flaum, Chief Judge, and Posner and

Diane P. Wood, Circuit Judges.

 Flaum, Chief Judge. The district court

granted summary judgment in favor of

defendants Yamaha Motor Corporation,

U.S.A. ("YMUS") and Yamaha Motor Co.,

Ltd. ("YMC"), holding plaintiffs Charles

and April Land’s product liability suit

barred by the Indiana Statute of Repose.

For the reasons stated herein, we affirm.

I. Background

 When appellant Charles Land, an Indiana

resident, attempted to start a Yamaha

WaveRunner Model WR500G on Heritage Lake

in Indiana on June 25, 1998, the vehicle

exploded and caused Land permanent back

injury. Both parties agree that the

WaveRunner was defective in design: it

allowed fuel fumes to accumulate in the

hull of the boat, posing serious risk of

fire upon ignition. The parties also

stipulate that the WaveRunner was in

substantially the same condition on the

day of Land’s injury as when it left the

possession of the defendants on July 7,

1987, and was delivered to the initial

user on July 28, 1987. For purposes of

the summary judgment motion, the district

court assumed that the plaintiffs could

prove their product liabil-ity claim on

the merits. That is, it assumed that when

the WaveRunner left the possession and
control of the defendants, it was in a

defective condition unreasonably

dangerous to anticipated users.

Furthermore, it is undisputed that the

Lands filed suit on December 23, 1999,

and that both the injury and the filing

of the suit occurred more than ten years

after the WaveRunner was delivered to

Wallace Richardson, the first user.

 The Indiana Statute of Repose, Ind. Code

sec.34-20-3-1(b)(2), provides in relevant

part that product liability actions must

be commenced within ten years after the

delivery of the product to the initial

user or consumer.

 YMC, a Japanese corporation with its

principal place of business in Japan,

designed, manufactured, and tested the

WaveRunner in Japan. It petitioned for an

exemption from the United States Coast

Guard’s requirement that every vehicle

like the WaveRunner have a fan to

ventilate fuel fumes out of the hull of

the boat. YMUS knew of the test results,

and, according to the Lands, gave false

information to the Coast Guard as to the

known danger of the WaveRunner design in

order to keep its exemption from the fan

requirement. YMUS, which maintains its

principal place of business in

California, participated in developing

the WaveRunner and imported it to the

United States. YMUS, while it has no

office in Indiana, is authorized and does

business in the state. On July 7, 1987,

YMUS sold and shipped the vehicle to a

boating store in Kentucky. On July 28,

1987, Wallace Richardson, an Indiana

resident, purchased the WaveRunner. Larry

Bush, another Indiana resident,

subsequently bought the WaveRunner in

1989 or 1990. Bush was the registered

owner when the WaveRunner caused Land’s

injury. From the time of Bush’s purchase,

the boat was registered, garaged, and

serviced in Indiana. 

 Between 1988 and 1998, 24 other

WaveRunners were reported to have

exploded. YMUS twice recalled certain

models of WaveRunners for modifications

to reduce the likelihood of fuel leakage.

It never recalled the WR500 series. 

II. Discussion

 Appellants argue that although they did

not commence their action until well over

ten years after delivery to the initial
user, their case is not barred because:

1) California law, which includes no

statute of repose, governs the action; 2)

Even if the Indiana Statute of Repose

does apply, the post-sale failure to warn

is outside its scope; and 3) The Statute

of Repose violates the Indiana

Constitution. 

 We review a grant of summary judgment de

novo, construing the evidence in the

light most favorable to the nonmoving

party. Gordon v. United Airlines, 246

F.3d 878, 885 (7th Cir. 2001). Summary

judgment is appropriate if there is no

genuine issue as to any material fact and

the moving party is entitled to judgment

as a matter of law. Id. 

A. Choice of Law

 A federal court sitting in diversity

jurisdiction must apply the substantive

law of the state in which it sits. Erie

R.R. Co. v. Tompkins, 304 U.S. 64 (1938);

Jean v. Dugan, 20 F.3d 255, 260 (7th Cir.

1994). The Erie doctrine extends to

choice-of-law principles and requires the

court to apply the conflicts rules of the

forum state. Id. (citing Klaxon Co. v.

Stentor Elec. Mfg. Co., 313 U.S. 487,

496-97 (1941)). Therefore, the district

court properly applied the choice-of-law

rule of Indiana. 

 Indiana applies a two-step conflicts

analysis. Hubbard Mfg. v. Greeson, 515

N.E.2d 1071, 1073 (Ind. 1987). First, the

court must determine if the place where

the last event necessary to make the

defendant liable--that is, the place of

the injury--is insignificant. Id. If it

is not, the law of that state applies.

Id. Only if the court finds that the

place of injury is insignificant does it

move to step two which requires the court

to consider "other factors such as: 1)

the place where the conduct causing the

injury occurred; 2) the residence or

place of business of the parties; and 3)

the place where the relationship is

centered." Id. at 1073-74. In the instant

case, we, like the district court, arrive

at the inevitable conclusion that the

place of the injury-- Indiana--is not

insignificant. Therefore, we apply

Indiana law and need not address the

second prong in Indiana’s choice-of-law

analysis. See Judge v. Pilot Oil Corp.,

205 F.3d 335 (7th Cir. 2000). 
 Charles Land was injured while operating

the WaveRunner in Indiana. He was a

resident of Indiana, the owner of the

boat was a resident of Indiana, and the

boat had been garaged and serviced in

Indiana for a decade before it caused

Land’s injury. There is no evidence in

the record that the WaveRunner was ever

used outside of Indiana. It was not mere

fortuity that the injury occurred in

Indiana, as the Lands suggest by

comparing this choice-of-law

determination with those involving passthrough automobile or airplane accidents

in which the place of the injury is given

little weight, and the argument that

Indiana’s contacts have little or no

relevance to the legal action simply

cannot withstand scrutiny. Therefore, our

analysis of Indiana choice-of-law policy

must end with step one. 

 The Lands argue that California, where

YMUS was incorporated and where the

defendant’s tortious conduct occurred,

has greater relevance. Maybe so./1 This

analysis belongs in step two of the

Indiana conflicts policy, however, which

we cannot reach. Some states use the

"most significant relationship" approach

suggested by the Restatement (Second) of

Conflict of Laws. If Indiana did so, we

would skip step one of our analysis and

instead "isolate the pertinent issue,

examine each state’s connection to the

occurrence, identify the governmental

policies espoused by each state relevant

to the issue, and proclaim applicable the

law of the state with the superior

interest." Jaurequi v. John Deere Co.,

986 F.2d 170, 173 (7th Cir. 1993)

(internal citations omitted). That case

might have a different outcome from the

one at hand. Indiana does not adhere to

the most significant relationship

analysis, however, and the Supreme Court

of Indiana has not signaled that it

intends to overrule Hubbard. Although

Hubbard does note some discomfort with

the rigid place of injury, or lex loci

delicti, approach, it still adheres to an

analysis that uses the place of injury as

a baseline. 515 N.E.2d at 1073-74. If the

place of injury is not insignificant, we

must apply its law regardless of the

greater interest another state may have.

 The Lands propose an approach whereby

the law of the place of the tortious
conduct is controlling in product liabil

ity cases. The state of Indiana has given

us no indication that it intends to

change its choice-of-law policy to reach

such a result, and we decline to make

that policy decision for it. Indiana’s

contacts to this case are not

insignificant. Therefore, its law,

including the Statute of Repose, applies.

B. Post-Sale Negligence

 The Lands alternately contend that even

if Indiana law applies, their case is not

barred by the Statute of Repose. They

claim, in part, that YMUS and YMC were

negligent when they breached their duty

to warn customers of the dangerous defect

in the WaveRunner that they learned of

after the original sale of the boat in

question. Because this duty arose after

the sale, they argue, that point in time

is irrelevant and the Statute of Repose

does not apply. The Indiana Products

Liability Act clearly states, however,

that it governs "all actions that are: 1)

brought by a user or consumer; 2) against

a manufacturer or seller; and 3) for

physical harm caused by a product;

regardless of the substantive legal

theory or theories upon which the action

is brought." Ind. Code sec.34-20-1-1.

Furthermore, the Supreme Court of Indiana

has held that the Statute of Repose

cannot be circumvented by claiming that

the manufacturer continued its negligence

after the initial sale by failing to warn

customers of known dangers. Dague v.

Piper Aircraft Corp., 418 N.E.2d 207

(Ind. 1981). Similarly, this Court has

held that post-sale failure-to-warn

claims merge with the underlying product

liability claims which are barred, in

their entirety, by the Indiana Statute of

Repose. Avery v. Mapco Gas Prods., 18

F.3d 448 (7th Cir. 1994). Unless the

defect in the product was not present at

the time of the initial sale, the Statute

of Repose bars all claims brought more

than ten years after that sale. See Stump

v. Indiana Equip. Co., 601 N.E.2d 398

(Ind. Ct. App. 1992) (noting that postsale negligence claims are not barred by

the Statute of Repose when no defect was

present at the time of the original

sale). In this case, the Lands concede

that the WaveRunner was in the same

defective condition at the time of

initial sale as it was at the time of

injury. They argue that a separate defect
arose with the failure to warn upon

knowledge of risk--a defect that was not

present at the time of the sale--and

therefore falls into the Stump exception

to the Statute of Repose. This argument

fails, however. If the product’s

underlying defect was present at the time

of the initial sale, as the WaveRunner’s

was, the post-sale duty to warn claim

does not circumvent the Statute of

Repose. 

C. Constitutionality of the Statute of

Repose

 Lastly, the Lands argue that even if

Indiana law applies and the Statute of

Repose would bar their claim in its

entirety, the statute violates Article I,

sec.sec. 12 and 23 of the Indiana

Constitution. Section 23 states that

"[t]he General Assembly shall not grant

to any citizen, or class of citizens,

privileges or immunities, which, upon the

same terms, shall not equally belong to

all citizens." Section 12 provides for

"remedy by due course of law" for

injuries to "person, property, or

reputation." Although several other

states have held that their statutes of

repose for product liability cases

violate their own state constitutions by

potentially extinguishing the right to

remedy before that right arises, Indiana

has expressly (and recently) held that

the Statute of Repose contained in the

Indiana Products Liability Act does not

violate Article I, sec.12 or sec.23 of

the state Constitution. McIntosh v.

Melroe Co., 729 N.E.2d 972, 973 (Ind.

2000) (The Statute of Repose is "a

permissible legislative decision to limit

the liability of manufacturers of goods

over ten years old and does not violate

either constitutional guarantee."). We

are bound by this decision.

III. Conclusion

 Because Indiana law governs this case

and because the Indiana Statute of Repose

bars product liability actions that, like

this one, are brought more than ten years

after delivery of the product to the

initial user or consumer, we find that

the district court properly granted

summary judgment in favor of the

defendants. We AFFIRM.

FOOTNOTE
/1 However, the design, manufacture, and testing of

the WaveRunner largely took place in Japan, not

California, the parties had no relationship based

in California, and only one of the three parties

"resides" in California. It is far from clear

that, even if Indiana bore little relationship to

the action, California law would be deemed most

significant under the second step of Hubbard.