Yanmar America Corporation v. Randy Nichols ( 2014 )

REL:09/30/2014
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
SPECIAL TERM, 2014
____________________
1130214
____________________
Yanmar America Corporation
v.
Randy Nichols
Appeal from Marion Circuit Court
(CV-09-900054)
BOLIN, Justice.
Yanmar America Corporation ("Yanmar America") appeals
from a judgment entered in favor of Randy Nichols following a
trial by a jury of his claims alleging a negligent failure to
warn. We reverse and remand.
1130214
Facts and Procedural History
I. The Accident
In May 2005, Autrey Nichols purchased a Yanmar model
2210BD tractor from Northside Motors, LLC ("Northside"), in
Hamilton. The Yanmar tractor came equipped with a front-end
loader and a "bush hog" attachment.1 The Yanmar tractor did
not have a rollover-protection structure ("ROPS"). On May 1,
2008, Randy Nichols, the plaintiff and Autrey's brother, used
the Yanmar tractor to bush hog a neighbor's property. The
particular area of the property Randy was to bush hog was a
field that contained a hill, the slope of which increased as
he moved toward the center of the field. Randy did not "walk"
the field to inspect the terrain before bush hogging the
field. Randy testified that he was operating the tractor in
tall grass at "walking speed" when he glanced back at the bush
hog to make sure it was operating properly. Randy stated that
when he looked forward it appeared that the right front tire
suddenly "took a dip," causing the tractor to roll over. The
1
"'Bush Hog' is the trade name of a large mower generally
drawn by a tractor. The term 'bush hog' is often used
generally for such mowers and as a verb indicating the use of
such mowers." Ammons v. Massey-Ferguson, Inc., 663 So. 2d 961,
963 (Ala. 1995).
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right front tire of the tractor encountered a slight "drop
off" on the side of the hill, which caused the tractor to roll
over 360 degrees and come to a rest upright on its tires.
Randy was thrown from the tractor. He stated that he
remembered the bush hog "coming over on me" and that he tried
to roll out of the way but was unable to do so. Randy
testified that he threw his arm up to protect his head and
felt excruciating pain. Randy suffered severe injuries,
including an amputated right arm, a crushed hip and leg, and
various other injuries. Before the accident, Randy had
more than 30 years' experience operating tractors and other
heavy equipment. Randy had operated the subject Yanmar tractor
approximately 15 to 20 times without incident before the
accident. Randy testified that he had experience operating
tractors with implements such as front-end loaders, backhoes,
bush hogs, "graderplates," "breaking plows," and "planters."
Randy testified that he had operated tractors both with and
without the ROPS and that he was comfortable operating a
tractor that was not equipped with the ROPS. Randy stated
that he knew that any tractor had the potential to roll over
and that, if a tractor that was not equipped with a ROPS
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rolled over, the driver could be seriously injured or killed.
He further testified that he knew how to operate a tractor,
that he was a "safe" tractor operator, and that he had never
rolled a tractor over before the accident in this case.
II. The Gray-Market2 Tractor and Factors Contributing to the
Rollover
The subject Yanmar tractor was manufactured on March 5,
1979, by Yanmar Diesel Engine Co., Ltd. ("Yanmar Japan"),3 at
its Kinomoto plant in Japan. At the time of its manufacture,
the tractor was equipped with a rotary tiller. The tractor was
sold on March 29, 1979, to Kounomiya Yanmar, an authorized
Yanmar dealer in Japan. The Yanmar tractor was "purpose
built" for primary use in the rice paddies of Japan. The
tractor was designed and manufactured in accordance with
Japanese industry and governmental standards in existence at
2
"Gray market" has been defined as a "'market in which the
seller uses legal but sometimes unethical methods to avoid a
manufacturer's distribution chain and thereby sell (esp.
imported goods) at prices lower than those envisioned by the
manufacturer.'" Rife v. Hitachi Constr. Mach. Co., 363 S.C.
209, 217, 609 S.E.2d 565, 570 (S.C. Ct. App. 2005) (quoting
Black's Law Dictionary 989 (8th ed. 2004)). "Gray-market"
products include products that have been produced abroad with
authorization and payment and have been imported into
unauthorized markets. Id.
3
Yanmar Japan subsequently changed its name to Yanmar Co.,
Ltd.
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the time. The original operator's manual for the tractor
printed by Yanmar Japan and the warning labels affixed to the
tractor were all written in Japanese.
Before 1991, Yanmar Japan had manufactured Yanmar brand
tractors specifically for distribution in the United States.
Subsequent to its entry into the United States market in the
late 1970s, Yanmar Japan established Yanmar America in 1981.
Yanmar America is a wholly owned subsidiary of Yanmar Japan;
one of its functions is to distribute parts for Yanmar
tractors authorized for sale in the United States. In 1991,
Yanmar Japan ceased manufacturing and distributing Yanmar
tractors for sale in the United States market.
Significant design differences existed between those
Yanmar brand tractors manufactured for use in the Japanese
market and those Yanmar brand tractors manufactured for use in
the United States market. The tractors manufactured for the
Japanese market: (1) had relatively slow travel speed, which
was conducive to rice-paddy tilling; (2) had much higher
"lugs" on the tractor tires, which were specially suited for
use in muddy rice paddies; (3) had a standard rotary-tiller
attachment suitable for tilling rice paddies rather than a
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front-end loader or a bush hog; and (4) had a four-speed
"power take-off" to accommodate the varying tiller speeds
required in rice-paddy tilling. The operator's manuals and
warning decals for those tractors were printed in Japanese.
Because of the significant differences in the design and
performance of the tractors, the tractors intended for the
Japanese market were never intended to be sold or used in the
United States market.
Dennis Skogen, Yanmar America's engineering and accident-
reconstruction expert witness, testified that the factors
contributing to the rollover here included operating the
tractor on the side slope; encountering the "drop off" on the
side slope; and the configuration of the tractor, which
included operating the tractor with the front-end loader in
the raised position, a lack of ballast in the tires, and the
bush hog on the back. Skogen testified that ballast in the
tires would have decreased the likelihood of a rollover
because it would have lowered the center of gravity of the
tractor. Skogen also stated that operating the tractor with
the front-end loader in the lowered position would also lower
the center of gravity. Skogen also testified that a properly
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attached ROPS would have "more likely as not" prevented the
tractor from rolling past 90 degrees, but, given the slope of
the hill on which the rollover occurred, it was possible that
the ROPS would not have prevented the tractor from rolling
past 90 degrees. However, Skogen also stated that the tractor
was not unreasonably dangerous because it was not equipped
with a ROPS. Rather, Skogen testified that the tractor should
not have been imported and sold in the United States in the
first place because it was designed and manufactured for use
in the rice paddies of Japan, and not for use in the United
States equipped with a front-end loader and a bush hog.
Skogen testified as follows:
"Q. Well, what ... made a difference, in your
opinion, about this tractor rolling over and this
injury to Randy ... occurring?
"A. Well, we talked about that before. It's the
slope. It's the drop-off itself. We're talking
about what the tractor is, what the tractor –- its
configuration. It has tires on it, as an example,
for use in rice paddies. It's not the type of tire
that would we would normally see for use on other
tractors in a similar situation .... [T]his tractor
shouldn't have been imported in the first place, so
there wouldn't have been a rollover with this
tractor in the second place with or without a ROPS.
"Q. Okay. What differences that existed in this
tractor that you have listed, as you say it was
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designed for use in Japan, made a difference in
causing this rollover or the injuries to Randy?
"A. Well, start off with a tiller on the back.
Now, if you're going to bring the tractor into this
country, it would have a tiller on the back. It
wouldn't have a mower on the back. You wouldn't be
using it for ... mowing. It's used for tilling rice
paddies. You wouldn't have a front-end loader
because, again, the purpose is to have a tiller on
the back. The tiller would be lower in its
configuration. It wouldn't have been used in this
field in the first place because this is not a rice
paddy.
"Q. All right. What else?
"A. Again, I talked about before about the
configuration with the tires. They have higher
tread on them, which can in a sense raise the center
of gravity versus a tractor that has turf tires or
tires that don't have the rice paddy type tires.
"Q. And other than the fact that the tractor
wouldn't be here, you know, if they hadn't imported
it for use in the United States, I want to know
specifically anything besides the tiller and the
fact it wouldn't have a front-end loader, in your
opinion, that are the features you say were made for
Japan that you think were specifically causative in
contributing to this rollover?
"A. It's the configuration of the entire piece
of equipment. It's the fact that it had a mower on
the back and not the tiller. Again, it's a tiller.
The tractor used in Japan didn't have a front-end
loader. Now we come to the configuration of the
tractor, the size of the tractor, the width of the
tractor, the length of the tractor, the weight of
the tractor. It's the tractor that rolls over. You
can't say that there's one part of the tractor that
caused it to roll over in the absence of another
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part. It's the configuration of the tractor given
this slope, which, again, I talked about before is
steep, and then given the drop-off or ledge as I
described it before."
Dr. Thomas Carpenter, an agricultural engineer and safety
expert, testified that the primary cause of the rollover was
the lack of stability of the tractor, caused by its narrow
wheel spacing, and the front-end loader being attached to the
tractor. Dr. Carpenter stated that the Yanmar tractor in
question had a tipping angle of 37.4 degrees and a tread width
of 40 inches, whereas similarly sized American-made tractors
manufactured in the same year as the Yanmar tractor at issue
had tipping angles in excess of 45 degrees and tread widths
that varied between 51 inches and 75 inches. Dr. Carpenter
opined that the relative instability of the Yanmar tractor
based on tread width and tipping angle, when compared to the
similarly sized American-made tractors, "resulted in it
overturning" under the conditions in which it was being used
on the day of Randy's accident. Dr. Carpenter further
testified that the addition of the front-end loader
"definitely increased the instability" of the tractor by
moving the center of gravity of the tractor higher and
forward. Dr. Carpenter stated that, based on what he knew of
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this tractor's stability characteristics, he would not have
used it to bush hog the property Randy was bush hogging. Dr.
Carpenter testified that a ROPS would likely have prevented
the tractor from rolling more than 90 degrees but that, even
if the tractor had been equipped with a ROPS, he would not
have used it to bush hog the property.
III. The Purchase of the Gray-Market Tractor
Arnold Trimm owned Artec Tractor and Equipment, Inc.
("Artec"), from 1994 until 2006. In the late 1990s Trimm saw
an advertisement in a magazine for used Japanese farm
tractors. Trimm contacted the suppliers of the tractors and
eventually traveled to Japan to meet with the suppliers.
Trimm testified that he was told by the suppliers that the
tractors were "good used farm tractors." Trimm stated that he
was not told that the tractors had been specifically designed
and manufactured for use in Japan and not for use in the
United States. Trimm testified that Artec imported and sold
the used Japanese farm tractors from 1998 until 2005. Artec
sold parts for the used "gray-market" Yanmar tractors it
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imported. Artec became an authorized Yanmar America dealer in
July 2005.4
In 2005, some 26 years after the subject Yanmar tractor
Randy was operating was manufactured and first sold primarily
for use in the rice paddies of Japan, Artec purchased the
tractor from a gray-market supplier and imported the tractor
into the United States. On April 28, 2005, Artec sold the
Yanmar tractor to Northside, which, in turn, sold the tractor
to Autrey Nichols.
After purchasing the tractor, Autrey purchased an
English-language version of the operator's manual for the
tractor. The operator's manual explained that the Yanmar
model 2210BD tractor was a gray-market tractor that was
originally manufactured for sale in Japan and that was
subsequently purchased used by a dealer or broker and imported
into the United States. The manual explained certain
differences between the gray-market tractors and the Yanmar
brand tractors manufactured for use in the United States,
4
The 2005 dealer agreement appointed Artec as an
authorized dealer of certain Yanmar brand excavators, wheel
loaders, crawler carriers, and compact back-hoe loaders.
Artec did not become an authorized dealer of Yanmar tractors
because Yanmar had ceased distributing Yanmar tractors to the
United States market in 1991.
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including the fact that Japan does not require its tractors to
be equipped with a ROPS, although the tractors manufactured
for use in the United States are required to be equipped with
a ROPS. The manual also contained information and warnings on
the risk of rollovers, particularly while operating the
tractor on slopes; stability issues and the need for ballasts
when operating the tractor with a front-end loader; the
importance of a ROPS; and the need to inspect unfamiliar
terrain before operating the tractor. Autrey did not provide
Randy with the manual and did not discuss with him any
information contained in the manual. Additionally, the front-
end loader and bush hog attachment that accompanied the Yanmar
tractor when it was purchased also came with operator manuals,
and each was affixed with warning decals. Those warning
decals were printed in English and warned of the possibility
of rollover and recommended using a ROPS at all times.
When asked whether he usually read all warning labels
before operating a tractor or other equipment, Randy stated
that he "probably glanced at them, but ... felt like [he] was
a safe operator, and [he] just overlooked them." Randy
testified that he did not need a warning with regard to the
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Yanmar tractor in this case. He stated that when he glanced
at the labels on the tractor he was not concerned that the
labels were in Japanese. Randy never saw the operator's manual
for the tractor, the front-end loader, or the bush hog. He
testified that he did not need to read an operator's manual to
know how to operate a tractor and the attached front-end
loader and bush hog. He stated that reading the operator's
manuals for either piece of equipment did not interest him
because he had become so familiar with operating heavy
equipment that he did not need to read the manuals in order to
know how to operate the tractor with the attachments.
IV. Yanmar America's Efforts to Warn Against the Gray-Market
Tractors
Ryan Pott, the director of legal affairs for Yanmar
America, testified that Yanmar America first discovered in
1990 that gray-market Yanmar tractors were being imported into
the United States. Pott testified as to various documents
relating to the gray-market tractors. In December 1991, Gary
Bilek, an employee of Yanmar America, notified Yanmar Japan by
letter of certain "problems" Yanmar America was having with
the gray-market tractors, specifically noting that the
purchasers of the gray-market tractors were being told that
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they could purchase parts for the tractors from Yanmar
America. Bilek stated in his letter that "we've been
instructed not to help these customers procure spare parts
because they come into the United States without any rollover
protection." Bilek then asked "can anything be done in Japan
to stop the unauthorized sale of these units?"
In 1992, Yanmar America began disseminating in various
trade publications safety notices concerning the safety issues
associated with the gray-market tractors. On July 24, 1992,
Yanmar Tractor Service U.S.A., Inc.,5 issued a statement to
all Yanmar tractor parts and service dealers, informing them
that the gray-market tractors were not designed for
distribution in the United States, that they were being
imported without the approval of Yanmar Japan, and that,
therefore, a parts- and service-support network was not
available for the gray-market tractors. Yanmar America
5
Yanmar Tractor Service U.S.A., Inc. ("Yanmar Tractor
Service"), was a former distributor of authorized Yanmar
tractors in the United States. Subsequent to Yanmar Japan's
cessation of the distribution of Yanmar tractors to the United
States market in 1991, Yanmar Tractor Service became a service
and parts provider for Yanmar tractors in the United States.
It appears from the record that at some point Yanmar Tractor
Service merged with Yanmar America, and Yanmar America became
the service and parts provider for Yanmar tractors intended
for the United States market.
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requested that the dealers inform those considering purchasing
a gray-market tractor as to the lack of available parts and
service support and to inform them that most all the safety
decals were printed in Japanese. Yanmar America also noted in
this statement that "the long term response to the problems
created by Gray Market Tractors will take some time and
careful consideration."
In August 1992, Yanmar Japan conducted a "Study Meeting
on Policy to Cope with Sales in USA of Used Tractors that were
Manufactured for Domestic Market." The purpose of the meeting
was to discuss the concerns of Yanmar Japan management
regarding potential liability arising from the sales in the
United States of the gray-market tractors. It was determined
at this meeting that Yanmar Japan would honor the requests for
parts for the gray-market tractors while it continued to
assess the issue of the gray-market tractors. Pott testified
that there was an internal debate within Yanmar Japan at the
time as to whether it should support the gray-market tractors
with parts and service.
In May 1995, John Sonnentag, a manager in the parts and
service department at Yanmar America, reported by internal
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memorandum addressed to Koju Saski, a manager with Yanmar
Japan, regarding a recent meeting he had attended in Japan in
which it had been "indicated [that] all parts are available,
regardless of status." Sonnentag also noted in his memorandum
that the "above information contradicts the position taken by
Gary Bilek's letter." Pott stated that this correspondence
indicated that the gray-market tractors would be supported
with parts and service.
On January 18, 2000, Yanmar America posted on its Web
site an "Important Safety Notice" regarding the gray-market
tractors, which was intended for the parts and service
dealers, for potential purchasers of gray-market tractors, and
for owners of gray-market tractors. The safety notice
explained what a gray-market tractor was and also explained
the important design and operating differences between a gray-
market tractor and those Yanmar tractors specifically
manufactured for use in the United States. The safety notice
did not contain any specific reference to differences in the
stability of gray-market tractors and those tractors
manufactured for use in the United States, nor did the notice
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contain a specific warning regarding the use of front-end
loaders or bush hogs with the gray-market tractors.
In 2002, Yanmar America implemented a computer parts-
blocking program to combat the sale of Yanmar gray-market
tractors in the United States. The parts-blocking program was
designed to stop the sale of replacement parts for the gray-
market tractors. The program required a parts dealer
purchasing parts from Yanmar America to specify both the model
number and the serial number of the tractor for which the part
was being purchased. Yanmar America would be able to discern
from a computer database whether the part was being purchased
for a gray-market tractor based on the model and serial
numbers, and it could then block the sale of that part.
On July 20, 2005, Yanmar America issued another
"Important Safety Notice" that was posted to its Web site
regarding "Gray Market Tractors, Excavators, Wheel Loaders,
and Carriers." This safety notice was substantially similar
to the safety notice issued in January 2000, except that this
notice included excavators, wheel loaders, and carriers, in
addition to the gray-market tractors. The safety notice
explained what a gray-market product was and also explained
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the important design and operating differences between gray-
market products and those Yanmar products specifically
manufactured for use in the United States. This particular
safety notice also explained that, as the result of those
safety issues, Yanmar Japan would not support gray-market
tractors, excavators, wheel loaders, and carriers with
replacement parts. Again, this safety notice did not contain
any specific reference to differences in the stability of
gray-market tractors and tractors manufactured for use in the
United States, nor did the notice contain a specific warning
regarding the use of front-end loaders or bush hogs with the
gray-market tractors.
Pott testified that Yanmar Japan and Yanmar America
became concerned that equipment dealers selling gray-market
tractors, owners of gray-market tractors, and potential
purchasers of gray-market tractors may not have been aware of
the important differences between the gray-market tractors and
those Yanmar tractors manufactured and intended for
distribution in the United States market. Pott testified that
the need for warnings arose out of the way the gray market had
developed, as well as Yanmar Japan's decision to support the
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gray-market tractors with genuine Yanmar parts during a period
of time in the 1990s, which, he stated, created confusion as
to whether there were significant differences between the
gray-market tractors and those Yanmar tractors intended for
use in the United States market. Pott testified that he
therefore directed in 2008 that the safety notices be mailed
to all authorized Yanmar dealers of parts and service,
construction, and industrial equipment. Artec did not receive
the safety notice until 2010, two years after the accident
that is the basis of this action. Pott explained that the
safety notices were not all mailed out at the same time but
that they were done over time.
Yanmar America has filed trademark-infringement lawsuits
seeking to stop the importation and sale of gray-market
tractors through the Internet site "eBay."6 In January 2004,
Yanmar America sent a letter to HDI Tractor, a nonauthorized
Yanmar tractor dealer, threatening legal action if HDI Tractor
did not cease importing and selling gray-market Yanmar
tractors. Yanmar America further demanded that HDI Tractor
6
The Internet site eBay is a consumer-to-consumer online
auction and shopping Web site in which individuals and
businesses buy and sell a wide variety of goods worldwide.
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contact its customers who had purchased gray-market Yanmar
tractors and inform them that the tractors were not intended
for use in the United States, that they may not be equipped
with proper safety features for use in the United States, and
that HDI Tractor would refund the full purchase price of the
tractor. Yanmar and HDI Tractor eventually entered into a
settlement agreement in which HDI Tractor agreed to send
copies of the "Important Safety Notice" to its customers that
had purchased a gray-market tractor.
In September 2005, Yanmar America sent notices to its
authorized parts and service dealers prohibiting those dealers
from selling gray-market tractors and from providing parts and
service for gray-market tractors. The authorized dealers were
required to acknowledge in writing that they would not sell
gray-market products, or they risked losing their status as an
authorized Yanmar dealer. In several instances authorized
parts and service dealers continued to participate in gray-
market activity; those dealers' authorized dealer agreements
were terminated by Yanmar America. It appears from the record
that the notices prohibiting the sale of Yanmar gray-market
tractors and the supply of parts and services for the gray-
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market tractors were sent only to authorized Yanmar parts and
service dealers and not to authorized dealers of Yanmar
equipment such as Artec.
As mentioned above, Artec became an authorized dealer of
Yanmar equipment in July 2005. Prior to Artec's becoming an
authorized equipment dealer in July 2005, Yanmar America did
not inquire whether, or confirm that, Artec was selling gray-
market tractors and parts. Artec did not receive any notice
from Yanmar America regarding gray-market tractors until 2010.
Yanmar eventually discovered that Artec had continued to
participate in gray-market activity and terminated its dealer
agreement in April 2013, approximately three weeks before the
start of the trial in this case.
On October 1, 2009, Randy sued Yanmar Japan, Yanmar
America, Artec, and Northside, asserting claims under the
Alabama Extended Manufacturer's Liability Doctrine ("AEMLD")
and a claim alleging breach of an implied warranty. Count I
of the complaint alleged that the tractor was unreasonably
dangerous because it was designed, manufactured, distributed,
and sold without a ROPS. Count II of the complaint alleged
the defendants' negligence in designing, manufacturing,
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distributing, and selling the tractor without a ROPS as
standard equipment. Count III of the complaint alleged that
the defendants breached the implied warranty of fitness for a
particular purpose in manufacturing, distributing, and selling
the tractor without a ROPS as standard equipment.
On November 10, 2011, Yanmar Japan moved the trial court,
pursuant to Rule 12(b)(2), Ala. R. Civ. P., to dismiss the
complaint against it for lack of in personam jurisdiction. On
February 28, 2012, Randy amended his complaint to allege that
Yanmar Japan and Yanmar America were:
"a). Reckless or negligent in manufacturing and
selling Yanmar parts which [they] knew were being
ordered for use in Yanmar gray market tractors in
the United States, for which tractors there would
not have been a viable market in the United States
without such parts;
"b). Reckless or negligent in issuing warnings that
Yanmar gray market tractors could not be retrofitted
with ROPS;
"c). Reckless or negligent in performing dealer
audits of Artec before and after it became an
authorized Yanmar dealer, which audits if done in a
reasonable manner would have revealed that Artec was
and had been for many years a volume seller of
Yanmar gray market tractors, and which would have
resulted in gray market tractor warnings being
issued to Artec and prohibitions being imposed on
Artec against selling Yanmar gray market tractors;
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"d). Reckless or negligent in failing to warn their
own authorized dealer Artec that Yanmar gray market
tractors were not manufactured in a manner which met
U.S. safety standards, and were not manufactured for
sale in the U.S. as well as in Japan, in the same
manner which it undertook to warn other authorized
Yanmar dealers in Alabama prior to the sale by Artec
of the subject tractor and prior to Randy
Nichols'[s] injuries;
"e). Negligent in not instructing their authorized
dealer Artec to provide to any purchasers and owners
of Yanmar gray market tractors which Artec had sold
Yanmar's 'Important Safety Notice,' and in not
instructing Artec to advise such purchasers and
owners that suitable ROPS were available for
retrofit on their Yanmar tractors and that such
tractors were not reasonably safe for operation
unless ROPS were installed on the tractors.
"f). Negligent in not prohibiting their authorized
dealers in Alabama from selling Yanmar gray market
tractors, while undertaking to prohibit Yanmar
authorized dealers in Alabama from selling parts
for use in Yanmar gray market tractors."
On March 23, 2012, the trial court conducted a hearing on
Yanmar Japan's motion to dismiss the complaint against it for
lack of in personam jurisdiction. On April 10, 2012, the
trial court entered an order allowing the parties to engage in
further discovery and supplemental briefing addressing Randy's
amended complaint. Following consideration of the parties'
briefs and arguments, the trial court, on October 5, 2012,
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entered an order granting Yanmar Japan's motion to dismiss for
lack of in personam jurisdiction.
On February 27, 2013, Randy moved to voluntarily dismiss
the claims against Northside. Randy entered into a pro tanto
settlement with Artec to settle the claims against it for
$550,000. On April 8, 2013, Randy moved the trial court to
dismiss Artec because of the pro tanto settlement the parties
had reached. On April 10, 2013, the trial court entered an
order granting Randy's motion for a pro tanto dismissal of the
claims against Artec. On April 29, 2013, the trial court
entered an order granting Randy's motion to voluntarily
dismiss Northside, leaving only Yanmar America as a defendant.
On March 18, 2013, Yanmar America moved the trial court for a
summary judgment arguing, among other things, that it was
entitled to a summary judgment on the claim that it
negligently failed to warn Artec that Yanmar gray-market
tractors did not meet United States safety standards. On April
24, 2013, the trial court entered an order denying Yanmar
America's motion for a summary judgment.
The case proceeded to trial against Yanmar America on
April 29, 2013. At the close of Randy's evidence, Yanmar
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America moved the trial court for a preverdict judgment as a
matter of law ("JML"), which the trial court denied. Yanmar
America renewed its motion for a preverdict JML at the close
of all the evidence, which the trial court also denied. On May
3, 2013, the jury returned a verdict in favor of Randy and
against Yanmar America awarding Randy $900,000 in damages.
The trial court reduced the damages award by the amount of the
$550,000 pro tanto settlement with Artec and entered a
judgment of $350,000 in favor of Randy.
On May 31, 2013, Yanmar America moved the trial court for
a postverdict JML or, in the alternative, for a new trial. On
August 14, 2013, the parties filed a joint motion consenting
to extend the time for the trial court's consideration and
ruling on Yanmar America's postverdict motion. Following a
hearing, the trial court, on October 15, 2013, entered an
order denying Yanmar America's postverdict motion. Yanmar
America timely appeals.
Standard of Review
The standard of review for a ruling on a motion for a JML
is as follows:
"'When reviewing a ruling on a motion
for a JML, this Court uses the same
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standard the trial court used initially in
deciding whether to grant or deny the
motion for a JML. Palm Harbor Homes, Inc.
v. Crawford, 689 So. 2d 3 (Ala. 1997).
Regarding questions of fact, the ultimate
question is whether the nonmovant has
presented sufficient evidence to allow the
case to be submitted to the jury for a
factual resolution. Carter v. Henderson,
598 So. 2d 1350 (Ala. 1992). The nonmovant
must have presented substantial evidence in
order to withstand a motion for a JML. See
§ 12–21–12, Ala. Code 1975; West v.
Founders Life Assurance Co. of Florida, 547
So. 2d 870, 871 (Ala. 1989). A reviewing
court must determine whether the party who
bears the burden of proof has produced
substantial evidence creating a factual
dispute requiring resolution by the jury.
Carter, 598 So. 2d at 1353. In reviewing a
ruling on a motion for a JML, this Court
views the evidence in the light most
favorable to the nonmovant and entertains
such reasonable inferences as the jury
would have been free to draw. Id. Regarding
a question of law, however, this Court
indulges no presumption of correctness as
to the trial court's ruling. Ricwil, Inc.
v. S.L. Pappas & Co., 599 So. 2d 1126 (Ala.
1992).'
"Waddell & Reed, Inc. v. United Investors Life Ins.
Co., 875 So. 2d 1143, 1152 (Ala. 2003)."
CSX Transp., Inc. v. Miller, 46 So. 3d 434, 450-51 (Ala.
2010).
Discussion
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Although Randy asserted various theories of recovery
against Yanmar America, the case was tried on a theory that
Yanmar America voluntarily assumed a duty to warn Randy of the
safety issues relative to operating a Yanmar gray-market
tractor by voluntarily undertaking activities to warn Yanmar
dealers, as well as the owners and potential purchasers of
Yanmar gray-market tractors, of the safety issues associated
with operating the Yanmar gray-market tractors and that Yanmar
America then negligently performed that duty to warn.
I. Voluntary Assumption of the Duty to Warn
Initially, we note that Yanmar America was not the
supplier or manufacturer of the Yanmar gray-market tractor
involved in this case; therefore, it initially owed no duty to
warn the expected users of the gray-market tractor of the
safety issues relative to its use. See Ex parte Chevron Chem.
Co., 720 So. 2d 922 (Ala. 1998). However, "[i]t is well
settled under Alabama law that one who undertakes to perform
a duty he is not otherwise required to perform is thereafter
charged with the duty of acting with due care." King v.
National Spa & Pool Inst., Inc., 570 So. 2d 612, 614 (Ala.
1990). See also United States Fid. & Guar. Co. v. Jones, 356
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So. 2d 596, 598 (Ala. 1977)("The law, simply stated, is that
one who volunteers to act, though under no duty to do so, is
thereafter charged with the duty of acting with due care."),
and Fireman's Fund American Ins. Co. v. Coleman, 394 So. 2d
334, 349 (Ala. 1980) (Jones, J., concurring in the result and
stating that "[t]he rule is well established that common law
liability to third parties can arise from the negligent
performance of even a voluntary undertaking").
The trial court concluded as a matter of law that Yanmar
America voluntarily undertook a duty to warn Randy of the
safety concerns associated with the use of a Yanmar gray-
market tractor. Yanmar America acknowledged at trial that it
voluntarily undertook a duty to warn; however, it did not
believe that that duty to warn extended to Randy. Yanmar
America argues on appeal that, by issuing the safety notices
and undertaking activities such as the parts-blocking program
in order to impede the sale of gray-market tractors, it did
not voluntarily assume a duty to warn "every potential user"
of the dangers associated with the use of a gray-market
tractor.
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The evidence indicates that Yanmar America became
concerned that Yanmar equipment dealers selling gray-market
tractors, owners of gray-market tractors, and potential
purchasers of gray-market tractors were not aware of the
important differences between the gray-market tractors and
those Yanmar tractors manufactured and intended for
distribution in the United States. Pott stated that the need
for warnings arose out of the way the gray market had
developed in the United States, as well as Yanmar Japan's
decision to support the gray-market tractors with genuine
Yanmar parts during a period in the 1990s, which, he stated,
created confusion as to whether there were significant
differences between the gray-market tractors and those Yanmar
tractors intended for use in the United States. Thus, Yanmar
America began disseminating safety notices for the purpose of
warning Yanmar dealers, owners of gray-market tractors, and
potential purchasers of gray-market tractors of the safety
concerns associated with operating a Yanmar gray-market
tractor. This campaign to warn Yanmar dealers, owners of gray-
market tractors, and potential purchasers culminated in 2008
with a mass mailing to all authorized dealers of Yanmar parts
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and service and construction and industrial equipment. Artec,
the importer and party responsible for putting the gray-market
tractor at issue into the stream of commerce, was an
authorized equipment dealer of Yanmar America at the time.
Pott testified that the purpose of the safety notices was to
prevent injury and death to the owners and potential
purchasers of the Yanmar gray-market tractors.
In addition to issuing safety warnings regarding the
gray-market tractors, Yanmar America engaged in other
activities, such as the parts-blocking program, in order to
impede the sale of the gray-market tractors. Thus, it is
clear from the record, as well as from Yanmar America's own
acknowledgment at trial, that it voluntarily assumed a duty to
warn of the safety hazards associated with operating a Yanmar
gray-market tractor.
As for whether the duty to warn undertaken by Yanmar
America extends to Randy,7 we note that "'[t]he ultimate test
of duty to use [due] care is found in the foreseeability that
7
We reiterate that Yanmar America conceded on the record
that it indeed had assumed a duty to warn. Pott testified
that the warnings were intended for owners and potential
purchasers of the gray-market tractors and that the purpose of
the warnings was to prevent injury and/or death.
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harm may result if care is not exercised.'" King, 570 So. 2d
at 615 (quoting Bush v. Alabama Power Co., 457 So. 2d 350, 353
(Ala. 1984)). As discussed above, Yanmar America undertook a
duty to issue safety warnings to owners and potential
purchasers of Yanmar gray-market tractors in order to prevent
injury and death resulting from the operation of those
tractors. Therefore, the duty to warn that Yanmar America
voluntarily undertook would apply to foreseeable owners or
operators of the gray-market tractor Autrey purchased.
Obviously, it was foreseeable to Yanmar America that Autrey,
as an owner of a Yanmar gray-market tractor, needed to be
warned of the safety hazards associated with the operation of
a gray-market tractor or risk Autrey's being injured or killed
while operating the tractor. Moreover, it was just as
foreseeable that someone other than Autrey -- in this case
Randy -- might operate the tractor and would also be in need
of a warning via Autrey regarding the hazards associated with
operating the tractor. Thus, we conclude that the duty to
warn of potential hazards associated with operating the gray-
market tractor extended to Randy and that the trial court did
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not err as a matter of law in extending the duty to warn to
him.
II. Breach of the Duty to Warn
Randy claims that Yanmar America breached its voluntarily
undertaken duty to warn because: (1) Yanmar America's warnings
were insufficient to warn of the safety hazard that actually
caused the gray-market tractor to overturn, which was the
propensity of the tractor to roll over under certain
conditions because of its relative instability owing to its
narrow wheel spacing and weight configuration or distribution,
coupled with tires with higher tread patterns that raised the
center of gravity of the tractor, and (2) because Yanmar
America had failed to ensure that the safety warnings were
disseminated in such a manner that they would actually reach
the potential purchasers and users of the Yanmar gray-market
tractors.
As this Court noted in Beasley v. MacDonald Engineering
Co., 287 Ala. 189, 249 So. 2d 844 (1971),8 liability for the
breach of a duty voluntarily undertaken is governed by
Restatement (Second) of Torts § 324A (1965), which states:
8
We have not been asked to overrule caselaw adopting
Restatement (Second) of Torts § 324A (1965).
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"'Liability to third person for negligent
performance of undertaking. One who undertakes,
gratuitously or for consideration, to render
services to another which he should recognize as
necessary for the protection of a third person or
his things, is subject to liability to the third
person for physical harm resulting from his failure
to exercise reasonable care to protect his
undertaking, if
"'(a) his failure to exercise
reasonable care increases the risk of such
harm, or
"'(b) he has undertaken to perform a
duty owed by the other to the third person,
or
"'(c) the harm is suffered because of
reliance of the other or the third person
upon the undertaking.'"
287 Ala. at 193, 249 So. 2d at 487 (quoting Restatement
(Second) of Torts § 324A). See also Commercial Union Ins. Co.
v. DeShazo, 845 So. 2d 766 (Ala. 2002). In accordance with §
324A(a), the trial court instructed the jury that Yanmar
America could be held liable for negligently failing to warn
Randy based on its voluntarily assuming a duty to warn only if
"Yanmar America's negligence increased the risk of harm to
Randy."
Yanmar America argues on appeal that it did nothing to
increase the risk of harm to Randy by issuing the safety
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notices in this case and by undertaking other activities to
impede the importation, sale, and use of the gray-market
tractors in the United States. "Section 324A(a) applies only
to the extent that the alleged negligence of the defendant
'exposes the injured person to a greater risk of harm than had
existed previously.'" Herrington v. Gaulden, 294 Ga. 285, 288,
751 S.E.2d 813, 816 (2013) (quoting Taylor v. AmericasMart
Real Estate, 287 Ga. App. 555, 559, 651 S.E.2d 754, 758
(2007)). Moreover, the "test is not whether the risk was
increased over what it would have been if the defendant had
not been negligent. Rather, a duty is imposed only if the
risk is increased over what it would have been had the
defendant not engaged in the undertaking at all." Myers v.
United States, 17 F.3d 890, 903 (6th Cir. 1994). Liability
can be imposed on one who voluntarily undertook the duty to
act only where the actor "affirmatively either made, or caused
to be made, a change in the conditions which change created or
increased the risk of harm" to the plaintiff. Id. See also
Patentas v. United States, 687 F.2d 707, 717 (3d Cir. 1982)
("[T]he comment [c] to section 324A makes clear that
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'increased risk' means some physical change to the environment
or some other material alteration of the circumstances.").
As mentioned above, Randy claims in part that Yanmar
America breached the duty to warn that it had voluntarily
undertaken by issuing insufficient safety warnings that failed
to warn of the safety hazards that actually caused the tractor
he was operating to roll over. The evidence is undisputed
that those safety warnings never reached Artec or Randy.
Because neither Artec nor Randy ever saw the safety warnings,
Yanmar America's failure to include more specific information
regarding the hazards of operating a Yanmar gray-market
tractor could not possibly have increased the risk to Randy
over the risk that already existed in the absence of a notice.
See McMellon v. United States, 338 F.3d 287, 295 n.5 (4th Cir.
2003) (observing that "[t]he plaintiffs do not contend, nor
could they, that the government, by posting signs that the
plaintiffs did not see, increased the risk to the plaintiffs
over that which they would have faced had no signs been
posted"), vacated and remanded on other grounds, 387 F.3d 329
(4th Cir. 2004).
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Randy also bases his argument that Yanmar America
breached the duty to warn on his claim that Yanmar America had
failed to ensure that the safety warnings were disseminated in
a manner by which they would actually reach the potential
purchasers and users of the Yanmar gray-market tractors. He
points to the testimony of Trimm and Randy in support of this
contention. Trimm testified that if he had been warned that
the Yanmar gray-market tractor was not designed for, and not
safe to operate in, the United States, he would have "passed
the information on" to Northside and would have offered to
purchase the tractor back from Northside. Randy testified
that had he known of the stability issues associated with the
Yanmar gray-market tractor he would not have used it. Randy
argues that Yanmar America's negligence in failing to ensure
that the safety warnings were disseminated to Randy increased
his risk of harm. We disagree.
Yanmar America conceded that it undertook a duty to warn
owners and potential purchasers of the safety hazards
associated with the operation of a Yanmar gray-market tractor
in the United States. Yanmar America issued safety warnings
and also undertook other activities to impede the importation
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and sale of gray-market tractors in the United States, the
importations and gray-market sales being circumstances beyond
its control. Although it is undisputed that those safety
warnings never reached Randy, the result is the same as if
Yanmar America had elected not to undertake any such
activities to warn the foreseeable users of the Yanmar gray-
market tractors. By issuing the safety warnings and failing
to ensure that they were disseminated to Randy, Yanmar America
exposed Randy to no greater a risk of harm than he would have
been exposed to previously had Yanmar America chosen not to
act in order to warn the potential users of the gray-market
tractors. Herrington, supra.
We conclude that Randy failed to establish by substantial
evidence that Yanmar America participated in an activity that
increased his risk of harm over any risk of harm that would
have existed had Yanmar America chosen not to warn potential
users of the gray-market tractors in this case. Accordingly,
the trial court erred as a matter of law in denying Yanmar
America's motions for a JML on Randy's failure-to-warn claim.
Conclusion
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We reverse the judgment of the trial court and remand the
case for the trial court to enter a judgment consistent with
this opinion.
REVERSED AND REMANDED.
Stuart, Wise, and Bryan, JJ., concur.
Parker, J., concurs specially.
Murdock and Main, JJ., concur in the result.
Moore, C.J., recuses himself.
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PARKER, Justice (concurring specially).
I am not yet convinced that the "increases the risk of
such harm" standard set forth in Restatement (Second) of Torts
§ 324A(a) (1965) and applied by the majority in this case
applies to any and all voluntary-warning situations.
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MURDOCK, Justice (concurring in the result).
I agree that nothing in the warnings posted by Yanmar
America Corporation or in the physical notices mailed by it to
dealers increased the risk of harm to anyone who might have
seen or received the same, much less someone in Autrey
Nichols's or Randy Nichols's position. As a threshold matter,
however, I question whether Yanmar America conceded that it
understood a duty to warn any person (including Autrey and
Randy) who did not happen upon its Web site postings or
actually receive one of its mailings, and I am not persuaded
that the evidence presented, including the testimony of Ryan
Pott, supports a contrary conclusion. I therefore concur in
the result.
40