Opinion ID: 1718181
Heading Depth: 1
Heading Rank: 3

Heading: Strict Liability and Breach of Implied Warranty of Merchantability.

Text: A. Iowa Code section 613.18(1)(a) (1993). The district court sustained Thermogas' motion for directed verdict on these two claims based on Thermogas' contention that Iowa Code section 613.18(1)(a) immunized it from liability. Section 613.18(1) provides: A person who is not an assembler, designer, or manufacturer and who wholesales, retails, distributes or otherwise sells a product is: a. Immune from suit based upon strict liability or breach of implied warranty of merchantability which arises solely from an alleged defect in the original design or manufacture of the product. Iowa Code § 613.18(1). The district court found that Thermogas did not assemble, design, or manufacture the tank that exploded. Instead, the district court found that Thermogas simply filled the tank with its product. On that basis, the court concluded that section 613.18(1)(a) applied and granted Thermogas' motion for directed verdict. 1. Applicable law. The issue therefore is whether Thermogas was an assembler, designer, or manufacturer. Of the three terms, assembler seems the most appropriate here. The Iowa Code does not define the word. We therefore resort to its common and ordinary meaning. See Gerst v. Marshall, 549 N.W.2d 810, 814 (Iowa 1996). The verb assemble means to bring together or gather together into one place, company, body, or whole. Webster's Encyclopedic Unabridged Dictionary 125 (rev. ed.1996). Assembler is defined as a person or thing that assembles. Id. Thus, the dictionary meanings of assemble and assembler contemplate a person or thing that brings together [two or more] things into a whole. The dictionary definition of assembler closely resembles the definition of assembler in a torts liability setting. For example, under the theory of assembler's liability, a party [that] incorporates a defective component part into its finished product and places the finished product into the stream of commerce is liable for injuries caused by a defect in the component part. Baughman v. Gen. Motors Corp., 780 F.2d 1131, 1132 (4th Cir.1986); see also Exxon Shipping Co. v. Pac. Res., Inc., 789 F.Supp. 1521, 1526 (D.Haw.1991); Rauch v. Am. Radiator & Standard Sanitary Corp., 252 Iowa 1, 9, 104 N.W.2d 607, 611-12 (1960); Ford Motor Co. v. Wood, 119 Md.App. 1, ___, 703 A.2d 1315, 1331 (1998); Comstock v. Gen. Motors Corp., 358 Mich. 163, ___, 99 N.W.2d 627, 633 (1959); E.L. Kellett, Annotation, Products Liability: Manufacturer's Responsibility for Defective Component Supplied by Another and Incorporated in Product, 3 A.L.R.3d 1016, 1024 (1965); 63 Am.Jur.2d Products Liability § 237, at 252 (1996). Under this theory, the assembler is liable even though the assembler did not manufacture the component part. Baughman, 780 F.2d at 1132; Exxon, 789 F.Supp. at 1526; 63 Am.Jur.2d Products Liability § 237, at 252. The rule has been applied in negligence, strict-liability, and breach-of-warranty cases as well. See 63 Am. Jur.2d Products Liability § 140, at 182; 3 A.L.R.3d at 1038-41. The evolution of the rule began with the tort of negligence. Under a negligence analysis, courts imposed liability on the assembler of a finished product because of the assembler's duty to test or inspect those components for defects. See Nelson v. Coleman Co., 249 S.C. 652, 155 S.E.2d 917, 920 (1967); 3 A.L.R.3d at 1024. Through further refinements, the rule evolved to the point at which the assembler of a finished product was held responsible for the failure of a component part if the assembler held out the finished product as its own. Ford Motor Co. v. Mathis, 322 F.2d 267, 272-73 (5th Cir.1963). For liability purposes under negligence, courts considered the assembler as the manufacturer of the component parts included in the finished product. Id. at 273. Under strict liability, the focus shifted to whether the assembler sold the defective component part and thus placed it in the stream of commerce. See generally Restatement (Second) of Torts § 402A (1965) (imposing liability upon one who sells a product in a defective condition unreasonably dangerous to the consumer). Whether the theory of liability is negligence, strict liability, or breach of warranty, authorities recognize several justifications for holding the assembler liable for the failure of a component it did not manufacture. One justification that the the public has a right to expect that a reputable seller will stand behind its goods, and the burden of accidental injuries is properly placed upon those who market the defective component. Exxon, 789 F.Supp. at 1527 (citing Restatement (Second) of Torts § 402A cmts. c, e); 63 Am.Jur.2d Products Liability § 140, at 183. Another justification is that the assembler is in a position to exert pressure on the manufacturer of the defective component part to enhance the safety of the manufacturer's product. Exxon, 789 F.Supp. at 1527; 63 Am.Jur.2d Products Liability § 140, at 183. Other justifications include the following: the assembler derives an economic benefit from the sale of the product that incorporates the defective component; the assembler has the ability to test and inspect the component when it is in its possession; and by including the defective component in its finished product, the assembler represents to the consumer and ultimate user that the component is safe. Baughman, 780 F.2d at 1132-33; Wood, 703 A.2d at 1331; 63 Am.Jur.2d Products Liability § 140, at 183. However, to establish assembler liability, the plaintiff must show that the assembler actually sold or otherwise placed the defective product on the market. Baughman, 780 F.2d at 1132 (refusing to hold truck manufacturer liable for defective wheel rim that was placed on vehicle after sale and that manufacturer did not supply); Exxon, 789 F.Supp. at 1527 (refusing to hold designer of mooring terminal liable for defective replacement chain). This requirement follows from the elementary principle in tort law that the plaintiff must show a causal connection between the defendant manufacturer and the product. Ryan v. Eli Lilly & Co., 514 F.Supp. 1004, 1006-07 (D.S.C.1981); see also Annotation, Products Liability: Necessity and Sufficiency of Identification of Defendant as Manufacturer or Seller of Product Alleged to Have Caused Injury, 51 A.L.R.3d 1344, 1349 (1973) (stating that, regardless of theory upon which liability is based, to hold a producer, manufacturer, or seller liable for injury caused by a particular product, there must first be proof that the defendant produced, manufactured, sold, or was in some way responsible for the product). One other principle is important here: [T]he containers in which products are sold are so closely identified with the sale of the product that the container's dangerous propensities are the equivalent of the dangerous propensities of the product itself. Fulbright v. Klamath Gas Co., 271 Or. 449, ___, 533 P.2d 316, 320 (1975). The Restatement (Second) of Torts is in accord with this rule: The defective condition may arise not only from harmful ingredients, not characteristic of the product itself either as to presence or quantity, but also from ... the way in which the product is prepared or packed. No reason is apparent for distinguishing between the product itself and the container in which it is supplied; and the two are purchased by the user or consumer as an integrated whole. Where the container is itself dangerous, the product is sold in a defective condition. Thus a carbonated beverage in a bottle which is so weak, or cracked, or jagged at the edges, or bottled under such excessive pressure that it may explode or otherwise cause harm to the person who handles it, is in a defective and dangerous condition. The container cannot logically be separated from the contents when the two are sold as a unit, and the liability stated in this Section arises not only when the consumer drinks the beverage and is poisoned by it, but also when he is injured by the bottle while he is handling it preparatory to consumption. Restatement (Second) of Torts § 402A cmt. h. One writer sees the rule as one of common sense: The tide of decisions has swept away the highly metaphysical distinction between the product and the container in which it is sold, which used to perplex some courts in the food cases. The two are sold as an integrated whole, and it is inconceivable that anyone would buy one without the other. When a bottle of beer explodes and puts out the eye of the man about to drink it, surely nothing should be less material than whether the explosion is due to a flaw in the glass of the bottle or to overcharged contents. W. Page Keeton, et al., Prosser & Keeton on the Law of Torts § 99, at 694-95 (5th ed.1984) [hereinafter Prosser]. When the legislature excepted an assembler from the immunity provisions of section 613.18(1)(a), we think it had in mind the assembler liability theory exemplified by the foregoing cases. We think all of the justifications for the theory prompted the legislature not to immunize from liability assemblers who incorporate defective component parts into their finished product and then place that product into the stream of commerce. 2. Merits. Viewing the evidence in the light most favorable to Weyerhaeuser, we think the jury could find the following facts. Thermogas is in the business of providing LP tanks of various sizes, which it fills with liquid propane, to its customers for use on forklifts. It does so by trucking the LP tanks to its customers on a periodic basis. In the case of Weyerhaeuser, Thermogas delivered approximately fifteen LP tanks per day. When delivering the filled LP tanks, the Thermogas delivery person would pick up the empty LP tanks Weyerhaeuser used on the preceding day. The Thermogas delivery person would place the full LP tanks he delivered to Weyerhaeuser on racks or shelving in a metal shed used solely for LP tank storage. Each day, the delivery person would remove the empty tanks and replace them with filled tanks. As needed, the Weyerhaeuser employees would take the filled tanks and place them on their forklifts and place the empty tanks in the storage shed. In the three years immediately preceding the fire, Weyerhaeuser did not receive LP tank deliveries from any source other than Thermogas. The tank in question was a 43.5 pound LP cylinder weighing 26.5 pounds when empty. When properly filled to eighty percent capacity, the tank would hold ten gallons of liquid propane. The tank was manufactured in 1980. According to federal regulations, LP tanks like those used in Thermogas' business must not explode when placed in a fire. The regulations also require suppliers like Thermogas to periodically test or recertify the tanks to ensure they remain safe for use. Once a tank is tested, it need not be retested until the applicable period of certification expires. Earlier testing is required if the tank shows (1) bad dents, (2) other evidence of rough usage, (3) corrosion to such an extent as to indicate possible weakness, or (4) it has lost as much as five percent of its official tare weight. The tank in question had an early recertification in 1985 and again in 1987. Such early recertifications were unusual and suggested that something had happened to the tank or there was some reason to suspect a problem. At the time of the fire, the tank in question was two and one-half years past its mandatory testing date. As Weyerhaeuser's expert, Richard L. Simpson, testified, the tank exploded prematurely under the circumstances and the premature explosion must have been caused by a defect in the tank. The tank should not have exploded before fire fighters arrived on the scene. The containerthe tankcannot logically be separated from its contentsthe liquid propanewhen the two are placed in the stream of commerce as a unit. The finished product was the LP tank filled with liquid propane, which Thermogas placed into the stream of commerce. Thermogas combined a defective component partits tankwith its liquid propane. All the justifications for applying assembler liability to Thermogas exist here. Thermogas derives an economic benefit from the sale of a product that included a defective component. Thermogas had the ability to test and inspect the defective component when it was within its possession. Thermogas also had the ability to exert pressure on the manufacturer of the defective component to enhance the component's safety. Finally, by placing its product into the stream of commerce, Thermogas represented to the consumer and ultimate userin this case, Weyerhaeuserthat the component was safe. Conversely, Weyerhaeuser had a right to expect that Thermogas would stand behind its product. Given these facts, we conclude that, as a matter of law, Thermogas was an assembler as that term is used in section 613.18(1)(a). We therefore hold as a matter of law that the immunity provisions of section 613.18(1)(a) did not apply to Thermogas, and the district court erred in concluding otherwise. B. Defective, unreasonably dangerous condition. As to the strict-liability claim, Thermogas seeks to uphold the district court's directed verdict ruling on another basis: there was insufficient evidence that the tank had a defect rendering the product unreasonably dangerous. Thermogas also asserts that the district court was correct in directing a verdict as to the implied-warranty-of-merchantability claim on the alternative basis that there was insufficient evidence that the tank had a defect. We agree with Weyerhaeuser that Bredberg v. Pepsico, Inc., 551 N.W.2d 321 (Iowa 1996), is dispositive of these contentions. In Bredberg, a bottle of pop exploded in the plaintiff's hand, injuring him. We held that [p]roof that a product was sold in a defective, unreasonably dangerous condition can be made by circumstantial evidence. Bredberg, 551 N.W.2d at 326-27. 1. Defect. In Bredberg, the remains of the exploded bottle were not available for inspection. We held, however, that the plaintiff had produced sufficient evidence of a defect based on expert testimony that the bottle exploded due to a defect in it: In our view, plaintiff's testimony, corroborated by [his expert], that the bottle exploded can be weighed by a jury as circumstantial evidence that the bottle and/or its contents were in a defective condition at the time they were placed into the stream of commerce. Assuming that the bottle exploded, as we must in this case, it appears that either the bottle or the pressurized product inside was in a defective condition. Bredberg, 551 N.W.2d at 328 (citations omitted); see also Restatement (Second) of Torts § 402A cmt. h. As mentioned, here, Simpson testified the tank exploded prematurely under the circumstances, and the premature explosion must have been caused by a defect in the tank. Additionally, Simpson conducted tests supporting his premature explosion theory. (We describe those tests in more detail later in this opinion.) Also corroborating Simpson's opinion are the early recertifications and testimony about them suggesting a problem with the tank. Additionally, the tank was two and one-half years past its mandatory testing date. Viewing this evidence in the light most favorable to Weyerhaeuser, we conclude there was substantial evidence of a defect in the tank. 2. Unreasonably dangerous. A product is unreasonably dangerous if the defect is not `one contemplated by the user or consumer which would be unreasonably dangerous to him in the normal and intended use or consumption thereof.' Bredberg, 551 N.W.2d at 328 (quoting Aller v. Rodgers Mach. Mfg. Co., 268 N.W.2d 830, 834 (Iowa 1978)). In Bredberg, we said: Without hesitation, we believe an exploding bottle of Diet Mountain Dew is unreasonably dangerous as the defect which causes the explosion is not one contemplated by the user or consumer which would be unreasonably dangerous to him in the normal and intended use or consumption thereof. Id.; see also Restatement (Second) of Torts § 402A cmt. h. We likewise believe that the premature explosion of the LP tank here was unreasonably dangerous because the defect that caused the explosion was not one that Weyerhaeuser as a user or consumer would contemplate in the normal and intended use of the tank. At least a jury could reasonably make that finding based on the evidence before it.