Opinion ID: 2825255
Heading Depth: 2
Heading Rank: 3

Heading: The First Appeal: M7 Aerospace

Text: On appeal, the plaintiffs challenge the district court’s grant of summary judgment for M7 on two grounds. First, they argue that the district court erred in finding that M7 did not have a duty to warn by operation of law about the need to install an EGPWS.3 Second, they argue that the district court erred in not finding that M7 had voluntarily undertaken a duty to warn. We review the district court’s grant of summary judgment de novo. Omnicare, Inc. v. UnitedHealth Grp., Inc., 629 F.3d 697, 705 (7th Cir. 2011). A federal court sitting in diversity applies state substantive law, Malen v. MTD Prods., Inc., 628 F.3d 296, 303 (7th Cir. 2010), and the parties agree that Illinois law governs here. It may seem counterintuitive to apply Illinois law to this dispute when none of the relevant conduct occurred in Illinois. However, the parties both cite to it and no one has pointed out a conflict between the bodies of law that might apply. So, we apply the law of the forum state. Gould v. Artisoft, Inc., 1 F.3d 544, 549 (7th Cir. 1993).
A duty is a legal obligation to conform one’s conduct to a certain standard for the benefit or protection of another. Kurtz v. Wright Garage Corp., 635 N.E.2d 897, 899 (Ill. App. Ct. 3The plaintiffs suggest that M7 had a duty to warn of other defects besides the need for an EGPWS. But like the district court, we find that the plaintiffs do not elucidate the nature of any alleged defects other than the absence of an EGPWS, and so we will focus on the warning system as the district court did. To the extent the plaintiffs try to argue about other alleged “defects,” they have waived those arguments by failing to raise them on summary judgment. Cooper v. Lane, 969 F.2d 368, 371 (7th Cir. 1992). Nos. 14-1707, 14-2481 15 1994). Illinois courts have recognized a limited cause of action against the purchaser of a product line for failing to warn of defects in its predecessor’s products. Caballero v. Uniloy Milacron, Inc., No. 02 C 3086, 2003 WL 22053629 at  (N.D.Ill. 2003). To determine the presence of a nexus or relationship effective to create a duty to warn, the following factors have been considered: (1) the succession to a predecessor’s service contracts; (2) coverage of the particular machine under a service contract; (3) service of that machine by the purchaser corporation; and (4) a purchaser corporation’s knowledge of defects and the location or owner of that machine. Gonzalez v. Rock Wool Eng’g & Equip. Co., 453 N.E.2d 792, 795 (Ill. App. Ct. 1983); see also Kaleta v. Whittaker Corp., 583 N.E.2d 567, 574 (Ill. App. Ct. 1991). “[T]he critical element required for the imposition of this duty is a continuing relationship between the successor and the predecessor’s customers benefiting the successor.” Gonzalez, 453 N.E.2d at 795. The district court found that there was an insufficient nexus between M7 and Transair to impose an independent duty to warn on M7, and we agree. None of the four Gonzalez factors are met, and the plaintiffs have not presented evidence of any relationship between M7 and Transair with respect to the Aircraft. M7 did not assume any of Fairchild’s service contracts; consequently, the Aircraft was not covered by any service contract. M7 never serviced the Aircraft, and there is no evidence that M7 knew Transair was the current owner and operator of the Aircraft. The plaintiffs argue that because Transair was included on M7’s customer list, M7 knew the identity and location of the operator of the Aircraft. While this evidence may establish that M7 knew of the existence of Transair as an airline in general, the plaintiffs 16 Nos. 14-1707, 14-2481 have presented no evidence from which a reasonable jury could conclude that M7 knew Transair was the operator of this Aircraft. The plaintiffs do not even allege that M7 knew Transair was the operator of the Aircraft. The plaintiffs argue that the district court should not have placed so much emphasis on the fact that the first two Gonzalez factors were not met, because they were impossible to meet: Fairchild did not have any service contracts for M7 to assume. The lack of service contracts could be indicative of a diminished continuing buyer-seller relationship such that their absence would weigh on the “no duty” side of the scale. However, even if we were to accept the plaintiffs’ preferred position of marking the first two factors with “not applicable,” the plaintiffs fail the last two factors as well. M7 never serviced, maintained, or repaired the Aircraft. See Gonzalez, 453 N.E.2d at 795 (no duty to warn where successor did not service, maintain, or repair the machine involved in the accident). And M7 did not know the location of the Aircraft or who its current owner was. The plaintiffs make much of the fact that M7 had a continuing relationship with the product line in general, including servicing other Metros and issuing service and safety bulletins. However, Illinois courts have refused to adopt the product line exception to the general rule of nonliability for a purchaser of assets, Kaleta, 583 N.E.2d at 572, and have been hesitant to impose a duty on a successor corporation “unless circumstances following the corporate transfer give rise to the duty,” Nguyen v. Johnson Mach. & Press Corp., 433 N.E.2d 1104, 1109 (Ill. App. Ct. 1982). Illinois decisions addressing the duty to warn by operation of law reject imposing liability where there is not a continuing relationship between the Nos. 14-1707, 14-2481 17 successor and owner with respect to the specific machine involved in the accident. See Kaleta, 583 N.E.2d at 574 (“Our review of the record has found no evidence of a continuing relationship between Tug and American [A]irlines with respect to servicing of the 660 line of beltloaders.”); see also Gonzalez, 453 N.E.2d at 795 (“[I]n the absence of any evidence indicating a continuing relationship between Bemis and Forty-Eight Insulations, we find that there is no basis for the imposition of liability upon Bemis for breach of a duty to warn.”).4 The plaintiffs essentially ask us to impose a duty to warn where the successor has a relationship with the product line in general, but not with the specific owner (beyond the inclusion of Transair on a mailing list for possibly unrelated products) and the specific machine. But we are not at liberty to impose our own view as to what the law of a state should be. Leannais v. Cincinnati, Inc., 565 F.2d 437, 441 (7th Cir. 1977). Illinois courts have consistently chosen not to recognize product line successor liability for a variety of policy reasons, see Diguilio v. Goss Int’l Corp., 906 N.E.2d 1268, 1278 (Ill. App. Ct. 2009), and so we must reject the plaintiffs’ argument that as a policy matter, we should plug a supposed gap in tort law. Notably, the Illinois Supreme Court has found that even a corporation in Fairchild’s position would 4 The use of the word “continuing” is informative in our conclusion that the relevant relationship is the one that is a continuation of the purchased (allegedly defective) product. The plaintiffs have not presented evidence that any relationship between Transair and M7 is related to, and thus a continuation of, Transair’s acquisition of the Aircraft. That Transair may have bought products for other planes from M7 does not show an ongoing relationship with respect to the Aircraft. 18 Nos. 14-1707, 14-2481 not have a duty to warn Transair to install an EGPWS, since the allegedly defective GPWS was not installed until 2003, ten years after Fairchild sold the plane to Aerovias. See Jablonski v. Ford Motor Co., 955 N.E.2d 1138, 1160 (Ill. 2011) (“[A] manufacturer is under no duty to issue postsale warnings or to retrofit its products to remedy defects first discovered after a product has left its control.”) (internal citations and quotations omitted)).5 Considering the evidence in the light most favorable to the plaintiffs, under Illinois law, there is not enough of a continuing relationship between M7 and Transair with respect to the Aircraft to justify the imposition of a duty.
In addition to a duty to warn by operation of law, Illinois law offers a voluntary assumption of duty theory. Ordman v. Dacon Mgmt. Corp., 633 N.E.2d 1307, 1310 (Ill. App. Ct. 1994). “In situations in which a duty would not otherwise arise, a duty to act reasonably may be imposed when a defendant negligently performs a voluntary undertaking.” Id. The theory of voluntary assumption of a duty is narrowly construed. Bell v. Hutsell, 955 N.E.2d 1099, 1104 (Ill. 2011). “The extent of the duty imposed on one who voluntarily undertakes to perform an act is limited to the extent of the undertaking.” Ordman, 633 N.E.2d at 1310. And where, like here, the plain- 5Since the plaintiffs have brought up pragmatic, policy concerns, we note that Transair (and seemingly everyone in the aviation industry) knew of the need to install an EGPWS. In 2000, the FAA mandated that Metro owners install an EGPWS by March 2005. The ATSB required installation by June 2005. It is tragic that this accident occurred less than two months prior to the Australian regulatory deadline, but it is unclear how any warning from M7 would have made a difference. Nos. 14-1707, 14-2481 19 tiff seeks to hold the defendant liable for nonfeasance (omission to perform a voluntary undertaking) rather than misfeasance (negligent performance of a voluntary undertaking), Illinois law requires that the harm suffered must be a result of one’s reliance upon the undertaking. Bell, 955 N.E.2d at 1107–08. We agree with the district court that even if the plaintiffs were able to show that M7 voluntarily undertook the task of warning Transair of the need to install an EGPWS, the plaintiffs have not established reliance. In Frye v. Medicare-Glaser Corp., the Supreme Court of Illinois upheld the grant of summary judgment for the defendants because there was “no evidence” that the plaintiff’s injury “was due to his reliance on the defendants’” actions. 605 N.E.2d 557, 560 (Ill. 1992). Similarly here, the plaintiffs have failed to provide any evidence that demonstrates that their injuries occurred because of Transair’s reliance on M7. The plaintiffs contest the district court’s statement that they had not proffered sufficient evidence of reliance as more burdensome than the summary judgment standard mandates, but we find that the plaintiffs have presented no evidence that Transair relied upon M7 to warn it of supposed defects. The plaintiffs argue that because M7 holds itself out as the original manufacturer and an authority on safety concerns for Metros, “it is logical to assume that owners and operators” rely on M7 to warn them of defects in the Metros. But whether other owners relied upon M7 to warn it of defects does not answer the question of whether Transair, the relevant entity, relied upon M7. And surviving summary judgment requires evidence, not assumptions. Sybron Transition Corp. v. Sec. Ins. Co. of Hartford, 107 F.3d 1250, 1255 (7th Cir. 1997) (“A party must present more than mere speculation or conjecture to defeat a 20 Nos. 14-1707, 14-2481 summary judgment motion.”). There is no evidence that Transair read M7’s newsletters, regularly checked the service bulletins, communicated with M7, or attended any of M7’s conferences. Furthermore, Transair knew of the need to install an EGPWS. It is actually illogical to think that Transair relied upon M7’s lack of warning as justification for not installing an EGPWS, when Transair was required by the ATSB to install the system.