Court Opinion

ID: 3035517
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:52:48.61377+00
Date Added: 2024-06-11T11:48:37.868578
License: Public Domain

United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                  ___________

                                  No. 03-3658
                                  ___________

Timothy Gamradt; Carla Gamradt,        *
                                       *
                     Appellants,       *
                                       * Appeal from the United States
      v.                               * District Court for the
                                       * District of Minnesota.
Federal Laboratories, Inc.; Mace       *
Securities International; Defense      *
Technology Corporation of America,     *
                                       *
                      Appellees.       *
                                  ___________

                            Submitted: June 14, 2004
                               Filed: August 25, 2004
                                ___________

Before LOKEN, Chief Judge, and HEANEY and BYE, Circuit Judges.
                               ___________

HEANEY, Circuit Judge.

    Timothy and Carla Gamradt appeal from the district court’s adverse grant of
summary judgment. We affirm in part and reverse in part.

                                BACKGROUND

      On June 2, 1998, Timothy Gamradt, a prison guard, was involved in a training
exercise at the Federal Prison Camp in Duluth, Minnesota. Gamradt took part in a
staged scenario in which some staff, acting as prisoners, rebelled by taking hostages
and holding them in a deserted building. To aid in the simulation, several devices
were approved for use by the role players, including high-powered paint guns, flash-
bang grenades (grenades that made a loud bang sound when detonated), and black
smoke grenades (grenades that emitted a black smoke-like substance). Gamradt’s
team of responders were tasked with securing the building in which the hostages were
being held. His team cleared the first floor of the building, but were fired upon by the
prisoners as they approached the second floor via the stairwell. The drill called for
the use of a flash-bang grenade in order to disperse the prisoners on the second floor.
Since none were available, Gamradt’s supervisor gave the order to activate a black
smoke grenade. None of the guards were wearing gas masks, or any other protective
devices, to shield them from the pyrotechnic smoke. The black smoke grenade was
intended to be detonated in the second floor hallway. Instead, the grenade hit a
concrete wall and fell back into the stairwell, near Gamradt’s team. Gamradt was one
of fourteen participants who was affected by smoke inhalation – at least seven of
whom sought medical treatment. He has suffered from shortness of breath, persistent
coughing, and a 60% permanent loss in his aerobic capacity.

       Gamradt and his wife, Carla Gamradt, filed suit against Federal Laboratories,
Inc., Mace Securities International, and Defense Technology Corporation of America
(DTCA), alleging the manufacturers failed to warn of the dangers associated with
activating a black smoke grenade in an enclosed area. After the parties stipulated to
dismissing Federal Laboratories, Inc., and Mace Securities International as
defendants, DTCA moved for summary judgment arguing that it could not be held
liable because it did not manufacture or sell the black smoke grenade at issue. Rather,
Defense Technology Corporation of America of Casper, Wyoming (DTCA-
Wyoming) manufactured and sold the black smoke grenade to the United States
Bureau of Prisons. DTCA acquired DTCA-Wyoming after the sale of the grenade
had occurred. DTCA admitted, solely for the purposes of the summary judgment

                                          -2-
motion, that the black smoke grenade was manufactured by DTCA-Wyoming and that
the black smoke grenade displayed no warning regarding use indoors.

       The district court found that a genuine issue of material fact remained as to the
existence of a de facto merger between DTCA and DTCA-Wyoming; a fact which,
if proven at trial, could open up DTCA to liability for defective products
manufactured and sold by DTCA-Wyoming. The district court granted summary
judgment to DTCA, however, on alternate grounds. Sua sponte, the court found that
the dangers raised by the black smoke grenade were open and obvious, relieving a
manufacturer of its duty to warn of reasonably foreseeable dangers. In addition, the
court found that DTCA was not compelled to warn the Bureau of Prisons about
DTCA-Wyoming’s products because DTCA did not have knowledge of a defect, nor
did it have knowledge of the product’s location; both of which are factors when
imposing liability on a successor corporation in a failure to warn case. The Gamradts
appeal. We affirm in part and reverse in part.

                                     ANALYSIS

      We review the district court’s determination of state law, its conclusions of
law, and its grant of summary judgment de novo. See Liberty Mut. Ins. Co. v. FAG
Bearings Corp., 335 F.3d 752, 757 (8th Cir. 2003); Boerner v. Brown & Williamson
Tobacco Corp., 260 F.3d 837, 841 (8th Cir. 2001). After evaluating the facts in the
light most favorable to the nonmoving party, if no genuine issue of material fact
remains, summary judgment is appropriate. Id.; Fed. R. Civ. P. 56(c). We apply the
substantive law of Minnesota in this diversity case.1 Karjala v. Johns-Manville Prods.
Corp., 523 F.2d 155, 158 n.4 (8th Cir. 1975) (relying on the substantive law of

      1
       The Gamradts urged the district court to adopt New York law as the
substantive law of the case. The district court declined to do so, however, and the
Gamradts do not appeal that determination.

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Minnesota, the forum state, in a product liability case). This court can affirm the
district court’s grant of summary judgment on any ground supported by the record.
Habib v. NationsBank, 279 F.3d 563, 566 (8th Cir. 2001). Here, the district court
granted summary judgment on two independent grounds; we review each in turn.

A. Open and Obvious Danger

      Under Minnesota law, a manufacturer has a duty to warn consumers of
reasonably foreseeable dangers. Huber v. Niagara Mach. & Tool Works, 430 N.W.2d
465, 467 (Minn. 1988); Harmon Contract Glazing, Inc. v. Libby-Owens-Ford Co.,
493 N.W.2d 146, 151 (Minn. Ct. App. 1992). This duty is relieved, however, when
the danger the product poses is open and obvious. Indep. Sch. Dist. No. 14 v.
AMPRO Corp., 361 N.W.2d 138, 143 (Minn. Ct. App. 1985). Whether a
manufacturer has a duty to warn is a question of law decided by the court. Germann
v. F.L. Smithe Mach. Co., 395 N.W.2d 922, 924 (Minn. 1986) (“The question of
whether a legal duty to warn exists is a question of law for the court – not one for jury
resolution.”).

       The district court found that DTCA was not obligated to warn users2 of the
dangers of using a black smoke grenade indoors because the dangers are open and
obvious. We disagree. Knowledge of the general danger associated with minor
smoke inhalation is not enough to relieve the manufacturer of its duty to warn about
foreseeable dangers associated with indoor use of a black smoke grenade. Cf.
Willmar Poultry Co. v. Carus Chem. Co., 378 N.W.2d 830, 835 (Minn. Ct. App.
1985) (“Past experience with a product, however, does not necessarily alert users to
all of the dangers associated with the product.”). The specific risk of permanent

      2
        We note that even though Gamradt did not activate the black smoke grenade,
the manufacturer’s duty extends to “any person who may reasonably be expected to
be in the vicinity of [the product’s] use.” McCormack v. Hankscraft Co., 154 N.W.2d
488, 496 (Minn. 1967).

                                          -4-
respiratory damage posed by using the black smoke grenade indoors must have been
obvious to the user.

       In AMPRO, a school district sued the manufacturer of foam landing mats after
two school children lighted the mats on fire. The students intended to “make a little
smoke,” but instead the mats “burned very rapidly, with intense heat, and emitted
black, dense smoke.” 361 N.W.2d at 141. In finding that the dangers posed by
igniting the mats were not open and obvious, the Minnesota Court of Appeals noted:

      [The defendants], however, fail to distinguish ordinary burning from the
      hot, rapid, smoky burning of which [the plaintiff] presented evidence.
      This is a different, more serious, and more unexpected danger than that
      posed by ordinary flammable items. Such a danger is not obvious, and
      while [the plaintiff] admitted knowing that [the mats] might burn, it
      indicated no knowledge of the speed or intensity with which they
      burned.

Id. at 143.

      In this case, while it may be obvious that a black smoke grenade may emit an
opaque gas, and it may be obvious that the substance could cause minor discomforts,
we do not think it is obvious that a person could permanently lose 60% of his aerobic
capacity as a result of being exposed to a black smoke grenade that was detonated
indoors. According to the black smoke grenade’s Material Safety Data Sheet, a
document provided by the manufacturer, the hazardous ingredients contained in the
grenade are: zinc oxide, hexachloroethane, and aluminum powder. In the health
hazards section of the same form, the symptoms of exposure include “in high
concentrations . . . a narcotic effect,” and potential kidney and liver damage. (J.A. at
14.) We do not think that the exact nature and effects of the smoke-causing agents
contained in the black smoke grenade, as detailed by the Material Safety Data Sheet,
are open and obvious.

                                          -5-
       After reviewing the record,3 it appears that black smoke grenades serve a dual
purpose: to disperse a crowd and to create a visual screen so that one’s maneuvers are
shielded from view. In order to assess the risk posed by using a black smoke grenade
indoors, one must be able to discern how the black smoke grenade accomplishes these
goals. One could easily conclude that the ingredients used to create the visual screen
are not toxic, or even akin to smoke at all; or, that the dispersing qualities of the black
smoke grenade are merely minor irritants caused by a light layer of smoke. Such a
conclusion would have been incorrect in this case. Gamradt’s injuries are proof that
the hazardous materials contained in the black smoke grenade can cause permanent
injuries if the grenade is detonated in a confined space. Quite obviously, the dangers
posed by activating a black smoke grenade indoors are “different, more serious, and
more unexpected” than the general dangers of detonating a black smoke grenade
outdoors. AMPRO, 361 N.W.2d at 143.

B. Successor Corporation’s Duty To Warn

      We now must address what the district court terms as its alternative ground for
granting summary judgment to DTCA. Under Minnesota law, a duty to warn can be
imposed on a successor corporation only after considering the following, non-
exhaustive, list of relevant factors: “Succession to a predecessor’s service contracts,
coverage of the particular machine under a service contract, service of that machine
by the purchaser corporation, [and] a purchaser corporation’s knowledge of defects

      3
        Because the district court, sua sponte, chose the “open and obvious danger”
ground as one of its bases for granting summary judgment, the parties did not have
a chance to develop the record below as fully as they might have had they been given
notice that this legal theory would decide the case. See Williams v. City of St. Louis,
783 F.2d 114, 116 (8th Cir. 1986) (stating that the district court should have given the
plaintiffs notice of its intention to rely on a particular legal theory when that theory
was not raised in defendant’s summary judgment motion so that the plaintiffs could
have a meaningful opportunity to respond). Given our view of the dangers based on
the existing record, however, a remand on this issue is unnecessary.

                                           -6-
and of the location or owner of that machine.” Niccum v. Hydra Tool Corp., 438
N.W.2d 96, 100 (Minn. 1989). The crux of the inquiry is whether the successor
corporation has benefitted economically from its relationship with the predecessor’s
customers. Restatement (Third) of Torts: Prods. Liab. § 13 cmt. b; Sherlock v.
Quality Control Equip. Co., 79 F.3d 731, 734 (8th Cir. 1996) (applying Missouri law,
which utilizes the same factors as Minnesota in determining whether the successor
corporation is obligated to warn consumers of dangers from a predecessor’s
products); accord Leannais v. Cincinatti, Inc., 565 F.2d 437, 442 (7th Cir. 1977).

       Focusing exclusively on the last two factors – whether DTCA had knowledge
of defects in the black smoke grenades and knew where the grenades were sold – the
district court found that the Gamradts had not proven DTCA had a duty to warn
DTCA-Wyoming’s customers of dangers posed by detonating a black smoke grenade
indoors. We agree that the Gamradts have not created a genuine issue of material fact
on this issue. To the district court and on this appeal, the only argument that the
Gamradts advance is that after the sale of DTCA-Wyoming, DTCA had a copy of
DTCA-Wyoming’s customer list and the Material Safety Data Sheet for the black
smoke grenade. These facts, however, do not demonstrate that DTCA had any kind
of continuing, economically advantageous relationship with DTCA-Wyoming’s
customers. There is no indication that DTCA used the customer lists to their
advantage – the only proof that DTCA possessed the customer lists is contained in
the sale agreement.

       More importantly, even if the Gamradts could prove that DTCA benefitted
from DTCA-Wyoming’s customer lists, there is no suggestion that DTCA was aware
of the defect in the black smoke grenade. The defect, as alleged in the complaint, is
the lack of warning on the grenade cautioning against inside use. In order for DTCA
to be obligated to warn DTCA-Wyoming’s customers of this defect, it would have to
know that some of the black smoke grenades were not properly labeled. There is no

                                         -7-
evidence to this effect. DTCA cannot owe a duty to warn about a defect it did not
know existed. See Niccum, 438 N.W.2d at 100.

C. De Facto Merger

      Even though DTCA did not have an independent duty to warn DTCA-
Wyoming’s customers, that does not mean that DTCA escapes liability altogether.
The district court found that an issue of fact was created as to whether a de facto
merger between DTCA and DTCA-Wyoming occurred. If proven at trial, this could
make DTCA liable for DTCA-Wyoming’s failure to label the black smoke grenades
with appropriate cautions regarding indoor use. While a successor corporation
generally cannot be held liable for the debts and liabilities of the predecessor
corporation, there is an exception “where the transaction amounts to a consolidation
or merger of the corporation.” J & B Co. v. Bellanca Aircraft Corp., 911 F.2d 152,
153 (8th Cir. 1990) (per curiam). Therefore, the nature of DTCA-Wyoming’s sale to
DTCA may have resulted in DTCA assuming liability for DTCA-Wyoming’s failure
to warn. A genuine issue of material fact on this issue remains.

                                 CONCLUSION

      In sum, we find that the dangers associated with using a black smoke grenade
indoors were not open and obvious; that DTCA did not have an independent duty to
warn DTCA-Wyoming’s customers of the dangers of using the black smoke grenade
indoors; and, that an issue of fact remains as to whether DTCA could be liable for
DTCA-Wyoming’s failure to place a warning on the black smoke grenade.4

      4
      We note that the issue of whether a warning was in fact affixed to the black
smoke bomb remains undecided, as DTCA admitted only for purposes of this
summary judgment motion that there was no warning.

                                        -8-
Accordingly, we affirm in part, reverse in part, and remand for further proceedings
consistent with this opinion.
                       ______________________________

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