Bornsen v. Pragotrade, LLC , 2011 N.D. LEXIS 192 ( 2011 )

CROTHERS, Justice.

[¶ 1] The United States District Court for the District of North Dakota certified a question to this Court whether we apply the “apparent manufacturer” doctrine to N.D.C.C. ch. 28-01.3. We answer the question “No.”

I

[¶ 2] Ruth and Nathan Bornsen brought a products liability action in state district court against Pragotrade, LLC, Pragotrade, Inc., and Cabela’s Retail, Inc., for negligence, strict liability, and breach of warranty, alleging Ruth Bornsen injured her hand on November 21, 2007, while using a meat grinder manufactured by Pragotrade and purchased from Cabe-la’s. The Bornsens’ action was removed to the United States District Court for the District of North Dakota.

[¶ 3] Before answering the complaint, Cabela’s moved to dismiss the action and submitted an affidavit under N.D.C.C. § 28-01.3-04, asserting it was not liable to the Bornsens because it was a nonmanu-facturing seller of the meat grinder. Cabela’s claimed Pragotrade manufactured the meat grinder. Pragotrade answered, admitting it participated in the design and distribution of the meat grinder, but denying it manufactured the grinder. The Bornsens resisted Cabela’s motion to dismiss, claiming Cabela’s was not a nonman-ufacturing seller of the meat grinder and was not entitled to a dismissal under N.D.C.C. § 28-01.3-04.

[¶ 4] At a hearing on the motion to dismiss, the Bornsens cited Reiss v. Komatsu Am. Corp., 735 F.Supp.2d 1125 (D.N.D.2010), and argued Cabela’s was an “apparent manufacturer” of the meat grinder under the Restatement of Torts and was not entitled to dismissal under N.D.C.C. § 28-01.3-04.

[¶ 5] After supplemental briefing by the parties, the United States District Court for the District of North Dakota certified the following question to this Court:

“Whether the North Dakota Supreme Court intends to adopt the ‘apparent manufacturer’ doctrine set forth in the Restatement (Second) of Torts § 400 or more recently, the Restatement (Third) of Torts: Product Liability § 14?”

The United States district court’s certification stated:

“II. Statement of Facts Relevant to Question Certified.

On November 21, 2007, Ruth Born-sen’s left hand was injured when it became lodged in a meat grinder her husband purchased from Cabela’s Retail, Inc. Plaintiffs Ruth and Nathan Bornsen have sued Pragotrade, LLC, Prago-trade, Inc., and Cabela’s, alleging claims of negligence, strict liability, and breach of warranty. The Bornsens allege a design defect due to large dimensions of the grinder opening and failure to properly warn. Cabela’s has asserted that Pragotrade manufactured the grinder, and seeks dismissal under N.D. Cent. Code § 28-01.3-04. The Bornsens contend that Cabela’s is not entitled to dismissal because it is an ‘apparent manufacturer’ of the product.

“III. Statement of Lack of Controlling Precedent in North Dakota.

The Court believes that this question involves interpretation of North Dakota law of some magnitude. Adopting the Restatement (Second) of Torts § 400 or the Restatement (Third) of Torts: Product Liability § 14 appears to contradict the plain language of the definition of manufacturer as set forth in N.D. Cent. Code § 28-01.3-01 and likewise appears to be inconsistent with the legislature’s intent in enacting N.D. CentCode § 28-01.3-04. The United States District Court, District of North Dakota, finds there exists no controlling precedent from the North Dakota Supreme Court on the certified question of law. Resolution will be determinative to the proceedings currently pending in the United States District Court and will impact future product liability cases.

“IV. This Court’s Opinion.

There is a decision from the District Court for the District of North Dakota that predicts the North Dakota Supreme Court would adopt the so-called apparent manufacturer doctrine. Reiss v. Komatsu America Corp., 735 F.Supp.2d 1125 (D.N.D.2010). This Court is unconvinced and is of the opinion that adoption of the apparent manufacturer doctrine is inconsistent with the law in North Dakota regarding liability for non-manufacturing sellers. The Court believes this question presents two reasonable interpretations of North Dakota law and it ought to be resolved by the North Dakota Supreme Court.”

II

[¶ 6] Certification of questions to this Court by federal courts and by our sister states’ appellate courts is permitted under our appellate rule providing:

“(a) Power to Answer. The supreme court may answer questions of law certified to it by the United States Supreme Court, a court of appeals of the United States, a United States district court, or the highest appellate or intermediate appellate court of any other state, when requested by the certifying court and the following conditions are met:

(1) questions of law of this state are involved in any proceeding before the certifying court which may be determinative of the proceeding;

(2) it appears to the certifying court there is no controlling precedent in the decisions of the supreme court of this state.”

N.D.R.App.P. 47(a).

[¶ 7] Certified questions from foreign courts are appropriate when the legal issue “may be determinative of the proceeding” pending in that court. N.D.R.App.P. 47(a)(1). By contrast, certified questions from a North Dakota court to this Court must meet a more stringent requirement that the legal question “is determinative of the proceeding.” N.D.R.App.P. 47.1(a)(1)(A). The reason for the disparate treatment of certified questions has been described as follows:

“A less stringent standard will be applied, however, in exercising our discretion to answer certified questions from courts of other jurisdictions under Rule 47, N.D.R.App.P. There is a logical policy basis for this apparent dichotomy. If we decline to answer questions certified by a court of this State, the parties may, as a matter of right, appeal from the final judgment or order of the trial court and obtain resolution of the relevant questions of law in this court. Thus, in the interest of judicial economy and orderly procedure, we will only answer certified questions which are dispositive of the issues in the case. However, if we decline to respond to questions certified by a federal court or court of another state, we leave that court to speculate upon unsettled issues of North Dakota law, and the parties have no recourse in the appellate courts of this State.”

McKenzie County v. Hodel, 467 N.W.2d 701, 704 (N.D.1991).

[¶ 8] Here, the certifying court made findings exceeding the requirements of N.D.R.App.P. 47(a), recognizing, “[T]his question involves interpretation of North Dakota law of some magnitude,” and stating:

“The United States District Court, District of North Dakota, finds there exists no controlling precedent from the North Dakota Supreme Court on the certified question of law. Resolution will be determinative to the proceedings currently pending in the United States District Court and will impact future product liability cases.”

The certifying court also noted:

“There is a decision from the District Court for the District of North Dakota that predicts the North Dakota Supreme Court would adopt the so-called apparent manufacturer doctrine. Reiss v. Komatsu America Corp., 735 F.Supp.2d 1125 (D.N.D.2010). This Court is unconvinced and is of the opinion that adoption of the apparent manufacturer doctrine is inconsistent with the law in North Dakota regarding liability for non-manufacturing sellers.”

[¶ 9] The District Court certified the question to us without expressly stating whether it has concluded Cabela’s is or is not a “manufacturer” under N.D.C.C. § 28-01.3-01(1). It appears implicit in the certification of the “apparent manufacturer” question that the court determined Cabela’s is not a “manufacturer” under North Dakota law. However, we are neither reviewing the federal court’s decision nor deciding whether Cabela’s is a manufacturer under the facts of this case. Rather, our role is limited to determining whether the federal court’s certification meets the requirements of N.D.R.App.P. 47 and, if so, whether we should answer the question.

[¶ 10] The federal court certified to us its finding that our decision in this case “will be determinative,” which is more than the “may be determinative” certification required under N.D.R.App.P. 47(a)(1). The federal court also stated the “apparent manufacturer” doctrine runs counter to North Dakota’s product liability law and it noted its disagreement with another court’s recognition of the doctrine in Reiss v. Komatsu America Corporation. These statements underscore the lack of controlling precedent from this Court, as well as highlight the pitfall of a divided federal district if we do not answer the question. See N.D.R.App.P. 47(a)(2). These findings and expressions by the certifying court convince us that the requirements of N.D.RApp.P. 47(a) are satisfied, and we proceed to answering the certified question.

Ill

[¶ 11] The Bornsens seek a “yes” answer to the certified question, arguing North Dakota should adopt the “apparent manufacturer” doctrine. They argue the doctrine does not conflict with products liability law in N.D.C.C. ch. 28-01.3. They argue legislative changes to the definition of manufacturer since 1979 suggest apparent manufacturers are now considered manufacturers under N.D.C.C. ch. 28-01.3. Cabela’s seeks a “no” answer to the certified question. It argues North Dakota has enacted a specific and unambiguous statutory scheme for products liability in N.D.C.C. ch. 28-01.3, which generally provides broad protection against liability for nonmanufacturing sellers like Cabela’s. Cabela’s contends this Court should not judicially adopt the “apparent manufacturer” doctrine.

[¶ 12] The Restatement (Third) of Torts: Products Liability § 14 (1998) embodies the common law “apparent manufacturer” doctrine. See id. cmt. b. Section 14 provides that “[o]ne engaged in the business of selling or otherwise distributing products who sells or distributes as its own a product manufactured by another is subject to the same liability as though the seller or distributor were the product’s manufacturer.” Restatement (Third) of Torts: Products Liability § 14 (1998). The Restatement (Second) of Torts § 400 (1965) was a predecessor to section 14 and also describes the common law “apparent manufacturer” doctrine, providing that “[o]ne who puts out as his own product a chattel manufactured by another is subject to the same liability as though he were its manufacturer.”

[¶ 13] North Dakota has enacted N.D.C.C. ch. 28-01.3 for products liability actions. Section 28-01.3-01(1), N.D.C.C., defines a “manufacturer” as “a person or entity who designs, assembles, fabricates, produces, constructs, or otherwise prepares a product or a component part of a product prior to the sale of the product to a user or consumer.” A “seller” is defined as “any individual or entity, including a manufacturer, wholesaler, distributor, or retailer, who is engaged in the business of selling or leasing any product for resale, use, or consumption.” N.D.C.C. § 28-01.3-01(3). Section 28-01.3-04, N.D.C.C., deals with liability of nonmanufacturing sellers and provides:

“1. In any products liability action maintained against a seller of a product who did not manufacture the product, the seller shall upon answering or otherwise pleading file an affidavit certifying the correct identity of the manufacturer of the product allegedly causing the personal injury, death, or damage to property.

“2. After the plaintiff has filed a complaint against the manufacturer and the manufacturer has or is required to have answered or otherwise pleaded, the court shall order the dismissal of the claim against the certifying seller, unless the plaintiff can show any of the following:

a. That the certifying seller exercised some significant control over the design or manufacture of the product, or provided instructions or warnings to the manufacturer relative to the alleged defect in the product which caused the personal injury, death, or damage to property.

b. That the certifying seller had actual knowledge of the defect in the product which caused the personal injury, death, or damage to property.

c. That the certifying seller creáted the defect in the product which caused the personal injury, death, or damage to property.

“3. The plaintiff may at any time prior to the beginning of the trial move to vacate the order of dismissal and reinstate the certifying seller if the plaintiff can show any of the following:

a. That the applicable statute of limitation bars a product liability action against the manufacturer of the product allegedly causing the injury, death, or damage.

b. That the identity of the manufacturer given to the plaintiff by the certifying defendant was incorrect.”

[¶ 14] The Legislature has informed us that “[t]he [North Dakota Century C]ode establishes the law of this state respecting the subjects to which it relates.” N.D.C.C. § 1-02-01. Section 1-01-06, N.D.C.C., states, “[T]here is no common law in any case in which the law is declared by the code.” We have recognized that “it is for the legislature to determine policy, not for the courts.” Doyle v. Sprynczynatyk, 2001 ND 8, ¶ 14, 621 N.W.2d 353 (quoting Treiber v. Citizens State Bank, 1999 ND 130, ¶ 16, 598 N.W.2d 96). We have further noted that “[i]t must be presumed that the Legislature intended all that it said, and that it said all that it intended to say.” City of Dickinson v. Thress, 69 N.D. 748, 755, 290 N.W. 653, 657 (1940).

[¶ 15] In Vandall v. Trinity Hosps., 2004 ND 47, ¶¶ 14-15, 676 N.W.2d 88, we explained the standard for analyzing the potential coexistence of common law and statutory provisions under N.D.C.C. § 1-01-06:

“to mean that statutory enactments take precedence over and govern conflicting common law doctrines. See Northern Pac. R.R. Co. v. Herbert, 116 U.S. 642, 654 [6 S.Ct. 590, 29 L.Ed. 755] (1886); In the Interest of M.C.H., 2001 ND 205, ¶ 9, 637 N.W.2d 678; Hill v. Weber, 1999 ND 74, ¶ 9, 592 N.W.2d 585; Martin v. Rath, 1999 ND 31, ¶ 20, 589 N.W.2d 896; Cermak v. Cermak, 1997 ND 187, ¶ 9, 569 N.W.2d 280; Olson v. Souris River Telecomms. Coop., Inc., 1997 ND 10, ¶ 13, 558 N.W.2d 333; Burr v. Trinity Med. Ctr., 492 N.W.2d 904, 907-10 (N.D.1992); Nuelle v. Wells, 154 N.W.2d 364, 365-66 (N.D.1967); Fitzmaurice v. Fitzmaurice, 62 N.D. 191, 196-200, 242 N.W. 526, 527-29 (1932); Reeves & Co. v. Russell, 28 N.D. 265, 275-83, 148 N.W. 654, 657-61 (1914) (on petition for rehearing).

“In Hill, 1999 ND 74, ¶ 9, 592 N.W.2d 585, we said ‘[w]here the provisions of the statute differ from previous case law, the statute prevails.’ In Rath, 1999 ND 31, ¶ 20, 589 N.W.2d 896, we said ‘[statutory principles govern over general common law if there is a conflict.’ In Burr, 492 N.W.2d at 907-10, we recognized a hierarchy which favored statutory law over common law, and we declined to apply a common law doctrine of equitable tolling to toll a malpractice statute of limitations. In Nuelle, 154 N.W.2d at 365-66, we concluded statutory provisions in N.D.C.C. § 9-10-06 for negligence actions prevailed over the common law doctrine that unemanci-pated minors could not maintain tort actions against their parents. In Fitzmaurice, 62 N.D. at 196-200, 242 N.W. at 527-29, we held the common law rule that a wife may not sue her husband in tort was abrogated by statute. In Herbert, 116 U.S. at 654 [6 S.Ct. 590], the United States Supreme Court discussed the predecessor of N.D.C.C. § 1-01-06, and said the code governs where it declares the law, but the common law prevails where the code is silent, and if language in the code is not defined by the code, that language can be explained by case law. The common thread in the cases applying the language of N.D.C.C. § 1-01-06 is ‘[t]here cannot be two rules of law on the same subject contradicting each other.’ Herbert, at 654 [6 S.Ct. 590]. See also Rath, at ¶ 20 (‘[statutory principles govern over general common law if there is a conflict.’).”

[¶ 16] Here, the Legislature adopted a products liability act containing a “Declaration of legislative findings and intent” that states:

“1. The legislative assembly finds that products liability reforms enacted in 1979, 1987, and 1993 have provided a needed degree of certainty in the laws governing civil actions against product manufacturers and sellers.

“2. In recent years it has become increasingly evident that there are still serious problems with the current civil justice system. As a result, there is an urgent need for additional legislation to establish clear and predictable rules with respect to certain matters relating to products liability actions.”

N.D.C.C. § 28-01.3-07. The Act broadly applies to any “product liability action,” which means:

“[A]ny action brought against a manufacturer or seller of a product, regardless of the substantive legal theory or theories upon which the action is brought, for or on account of personal injury, death, or property damage caused by or resulting from the manufacture, construction, design, formula, installation, preparation, assembly, testing, packaging, labeling, or sale of any product....”

N.D.C.C. § 28-01.3-01(2).

[¶ 17] The specificity included in the Legislature’s adoption of N.D.C.C. ch. 28-01.3 indicates to us the clear message that it intended to restrict, rather than expand, the availability of product liability actions as a remedy for personal injury, death or property damage arising out of use of defective products. One means utilized by the Legislature to carry out its intent was to define who is a “manufacturer,” to define who is a “seller” and then to sharply curtail liability of a “nonmanufacturing seller.” See N.D.C.C. §§ 28-01.3-01(1) and (3) and N.D.C.C. § 28-01.3-07. We read this statutory direction as being both clear and comprehensive, leaving no room for us to recognize — or in the certifying court’s words, “adopt” — the common law or the Restatement theory of “apparent manufacturer” liability.

[¶ 18] Our outcome was foreseen by authors of the Restatement (Third) of Torts: Products Liability § 14 (1998), where they noted:

“To the extent that nonmanufacturers in the chain of distribution are held to the same standards as manufacturers, the rule stated in this Section is of little practical significance. However, many jurisdictions by statute treat nonmanu-facturers more leniently. See § 1, Comment e. To the extent that a statute specifies responsibilities, the statutory terms control. But to the extent that a statute does not, the rule in this Section states the common-law rule.”

Restatement (Third) of Torts: Products Liability § 14 cmt. b. (1998). Here, the North Dakota Products Liability Act treats nonmanufacturing sellers “more leniently” than did the common law rule. That is a legislative determination which we are bound to follow.

IV

[¶ 19] On the record certified in this case, we answer the certified question “No.”

[¶ 20] GERALD W. VANDE WALLE, C.J., and DALE V. SANDSTROM, J., concur.