Edwards v. Pepsico, Inc.

FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES CO URT O F APPEALS
M arch 10, 2008
Elisabeth A. Shumaker
FO R TH E TENTH CIRCUIT Clerk of Court
SAM UEL D . ED W ARD S,
Plaintiff-Appellant,
v. No. 06-7032
(D.C. No. CIV-04-096-W )
PEPSICO , INC., a North Carolina (E.D. Okla.)
corporation; B.W . SIN CLAIR, IN C.,
a Texas corporation,
Defendants-Cross-Defendants-
Cross-Claimants-Third-
Party-Plaintiffs-Appellees,
W M . W . M EYER & SONS, IN C.,
an Illinois corporation; PEPSI-CO LA
COM PA NY, a North Carolina
corporation,
Defendants-Cross-Defendants-
Cross-Claimants-Appellees,
LO CK W OOD GREEN E EN GINEER S,
INC., a foreign corporation,
Defendant-Cross-Defendant-
Cross-Claimant-Third-
Party-Defendant-Appellee,
CONOPCO, INC., d/b/a Thomas J.
Lipton Company, a V irginia
corporation,
Defendant-Cross-Defendant-
Cross-Claimant-Third-
Party-Plaintiff,
W H ITLOCK PA CK A G IN G
CORPORATIO N, IN C.,
Third-Party-Defendant,
and
JOH N D OE; JAN E DO E,
Defendants.
OR D ER AND JUDGM ENT *
Before M U RPH Y, PO RFILIO, and EBEL, Circuit Judges.
In this diversity action, plaintiff Samuel D. Edw ards sued several business
entities alleging they were responsible for defects in the design and manufacture
of the machine that caused a severe injury to his hand. The jury awarded actual
damages in the total amount of $1.5 million against defendants Pepsico, Inc.,
Pepsi-Cola C ompany, and B. W . Sinclair, Inc., but found in favor of defendants
W m. W . M eyer & Sons, Inc., and Lockwood Greene Engineers, Inc. On appeal,
M r. Edwards challenges the unfavorable portion of the jury verdict and the
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent w ith Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
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district court’s entry of judgment as a matter of law on his punitive-damages
claim. W e affirm the judgment of the district court.
I. Background
M r. Edwards had three fingers severed from his dominant hand while
working on a bulk bag unloading unit (BBU) at the place of his employment,
W hitlock Packaging Corporation, Inc. (W hitlock). His lawsuit asserted that,
under Oklahoma state-law theories of manufacturers’ product liability and gross
negligence, defendants were responsible for design flaw s in the BBU and a failure
to w arn of safety concerns. 1
At trial, the jury learned about the BBU and the roles played by the various
defendants. The BBU was designed for Pepsi-Cola Company, a division of
Pepsico, Inc. (Pepsi), as part of a system for the production of ready-to-drink
beverages bottled under the Lipton Tea name. Pepsi pressed for an accelerated
manufacturing schedule because it had identified bottled tea as a lucrative
product.
The BBU holds a 1,600-pound sack of tea leaves and allows the leaves to
flow through its rotary feeder component to unload a specified weight into a large
brew basket. Lockwood Greene Engineers (LGE), a design and procurement firm,
1
W ith the consent of the parties, M r. Edwards’ case was assigned to a
United States M agistrate Judge for all purposes, including final disposition. See
28 U.S.C. § 636(c)(1). The magistrate judge conducted the jury trial in this
matter.
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created the initial design and, as Pepsi’s agent, hired B. W . Sinclair, Inc. to
manufacture ten of the systems. W m. W . M eyer & Sons, Inc. (M eyer) entered
into a contract with Sinclair to supply the BBU feeder component. During the
bidding process, M eyer deleted a discharge guard for the feeder component from
the quote at the request of a Sinclair manufacturing representative. M eyer
delivered the feeders, with attached warning stickers, additional warning stickers,
and manuals warning against operating the feeder without a guard on the
discharge end and warning the user to keep hands away from the feeder. Sinclair
incorporated the feeders into the systems and delivered them to designated
facilities.
One of the ten systems was installed at Whitlock, which installed a guard
on the feeder approximately two years before M r. Edwards’ injury but removed it
because it interfered with the flow of tea. At the time of the incident,
M r. Edwards believed there was a clog in the BBU. He attempted to remedy the
problem without shutting off the power or noticing the warning signs. He knelt
down and placed his dominant hand into the unguarded discharge opening of the
feeder. The rotating vanes inside the feeder sliced off his fingers.
M r. Edwards’ experts testified that the unguarded moving blades of the
feeder were unreasonably dangerous and that defendants had cost-effective,
alternative-design options. They also stated that the existing warnings were too
small, blocked by hardw are, or in the wrong place. Plaintiff’s theory of the case
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was that “speed and greed . . . controll[ed] the project rather than engineering
standards.” Aplt. Br. at 10.
Defendants put on evidence indicating that, prior to M r. Edwards’ incident,
there had been no reports of similar injuries to workers on any of the ten
manufactured systems. An experienced manufacturing manager testified that he
had never seen a guard on the discharge outlet of a BBU because there was no
expectation that an operator would be near it. In addition, they demonstrated that
M r. Edwards was aware of Whitlock’s safety rules prohibiting employees from
putting their hands into moving machines and requiring employees to shut off
power before working on equipment.
The district court denied defendants’ motions for judgment as a matter of
law on M r. Edwards’ claims for negligence and manufacturers’ product liability.
Before sending the case to the jury, however, the court dismissed the claim for
punitive damages. The court also declined to give M r. Edwards’ two proposed
instructions on the law of agency.
The jury returned a verdict against the Pepsi defendants and Sinclair, but in
favor of LGE and M eyer. The jury awarded M r. Edwards a total of $1,500,000.
In allocating fault with regard to the negligence claim, the jury found
M r. Edwards 10% negligent, Pepsi 50% negligent, Sinclair 20% negligent,
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W hitlock (a non-party) 20% negligent, and LG E and M eyer 0% negligent. The
district court entered judgment on the jury verdict. 2
II. Discussion
M r. Edwards raises three issues on appeal. He asserts that: (1) the district
court should have instructed the jury on the law of agency, (2) there was sufficient
evidence to submit his punitive-damages claim to the jury, and (3) he was entitled
to judgment as a matter of law against M eyer and LGE on his manufacturers’
products liability claim. W e will address M r. Edwards’ issues in the order in
which they arose at trial.
A. Proposed Jury Instructions on Law of Agency
W e review the trial court’s refusal to give M r. Edwards’ requested
instructions for abuse of discretion. See United States v. M oran, 503 F.3d 1135,
1146 (10th Cir. 2007), petition for cert. filed (U .S. Dec. 21, 2007) (No. 07-8500).
Assessing an exercise of discretion requires a de novo determination of “whether,
as a whole, [the instructions] correctly stated the governing law and provided the
jury with an ample understanding of the issues and applicable standards.” World
Wide Ass’n of Specialty Programs v. Pure, Inc., 450 F.3d 1132, 1139 (10th Cir.
2
After entering judgment on the jury verdict, the district court ruled in favor
of Pepsi on its cross-claim against Sinclair for indemnity and contribution. This
court has affirmed the district court’s judgment requiring Sinclair to indemnify
Pepsi. Edwards v. Pepsico, Inc., No. 06-7036, 2007 W L 2962214, *1 (10th Cir.
Oct. 11, 2007).
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2006) (quotation omitted). “The question of the substance of a jury instruction in
a diversity case is controlled by state law although the grant or denial of the
instruction is a matter of federal procedure.” Kieffer v. Weston Land, Inc., 90 F.3d
1496, 1500 (10th Cir. 1996).
On appeal, M r. Edwards asserts that his proposed agency instructions w ould
have made a difference in the outcome of his case: the jury may have decided
M eyer, the feeder-component supplier, was as culpable as Sinclair, the
manufacturer. He claims that a properly instructed jury could have found M eyer
liable for its sales agent’s acquiescence in Sinclair’s request to remove a guard
from the final quote or, alternatively, concluded “that M eyer was acting as an
agent of Sinclair.” Aplt. Br. at 27-28. W e reject M r. Edw ards’ contentions.
The sales agent’s employment relationship with M eyer was evident from
the testimony. The jury instructions made it plain that an “act or omission of
an . . . employee while acting within the scope of his employment is the act or
omission of the particular Defendant for whom the . . . employee worked.” A plt.
App., Vol. I at 191. Another instruction on this issue would be duplicative and
thus unnecessary. See United States v. M cKinney, 822 F.2d 946, 949 (10th Cir.
1987) (stating that “requested instructions that are . . . repetitious are correctly
refused”). Further, no evidence supports M r. Edwards’ theory of a M eyer/Sinclair
agency. A party is only entitled to an instruction on a legal doctrine if enough
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evidence was presented at trial for a reasonable jury to find in favor of that party
based on the doctrine. Cf. Kieffer, 90 F.3d at 1500-01.
The instructions provided the jury with an accurate understanding of the
relevant legal standards and factual issues in the case. W e see no error and,
accordingly, no abuse of discretion in connection with the jury instructions.
And, in any event, our review of the record reveals that M r. Edwards’ proposed
instructions w ould have had no bearing on the outcome of the trial.
B. Punitive damages
The trial court granted defendants’ motion for judgment as a matter of law
and dismissed M r. Edwards’ punitive-damages claim. W e review this ruling
de novo, considering the entire record in the light most favorable to the
non-moving party. Herrera v. Lufkin Indus., Inc., 474 F.3d 675, 685 (10th Cir.
2007). Although we analyze the underlying claim under state law, “[t]he
appropriateness of a Rule 50 judgment as a matter of law is a federal procedural
question.” City of Hobbs v. Hartford Fire Ins. Co., 162 F.3d 576, 581 (10th Cir.
1998) (quotation omitted). Cf. Eck v. Parke, Davis & Co., 256 F.3d 1013, 1016
(10th Cir. 2001) (“This diversity action is governed by Oklahoma’s substantive tort
law, but we are governed by federal law in determining the propriety of the district
court’s grant of summary judgment”).
Under federal procedural rules, judgment as a matter of law is warranted
only “‘[i]f during a trial by jury a party has been fully heard on an issue and there
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is no legally sufficient evidentiary basis for a reasonable jury to find for that
party.’” Herrera, 474 F.3d at 685 (quoting the version of Fed. R. Civ. P. 50(a)(1)
effective until Dec. 1, 2007). “[T]o affirm the grant of judgment as a matter of
law, this court must be certain that the evidence conclusively favors one party such
that reasonable men could not arrive at a contrary verdict. This court must construe
the evidence and inferences most favorably to the non-moving party, the Plaintiff.”
Black v. M & W Gear Co., 269 F.3d 1220, 1239 (10th Cir. 2001) (quotation and
citation omitted). Nevertheless, “the question is not whether there is literally no
evidence supporting the nonmoving party but whether there is evidence upon which
a jury could properly find for that party.” Herrera, 474 F.3d at 685 (quotation
omitted). The nonmoving party “must present more than a scintilla of evidence
supporting [his] claim.” Id.Oklahoma substantive law provides, inter alia, that “[p]unitive damages are
awarded ‘only when the evidence plainly show s oppression, fraud, malice, or gross
negligence.’” Sims v. Great Am. Life Ins. Co., 469 F.3d 870, 893 (10th Cir. 2006)
(quoting M cLaughlin v. Nat’l Benefit Life Ins. Co., 772 P.2d 383, 386 (Okla. 1988)
(further quotation omitted)); see Okla. Stat. tit. 23, § 9.1 (permitting recovery of
punitive damages within statutory limits if a jury finds by clear and convincing
evidence that the defendant has been guilty of reckless disregard for the rights of
others or acted intentionally and with malice towards other). “Under § 9.1, for
punitive damages to be allowed there must be evidence, at a minimum, of reckless
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disregard toward another’s rights from which malice and evil intent may be
inferred.” Badillo v. M id Century Ins. Co., 121 P.3d 1080, 1106 (O kla. 2005).
And “‘reckless disregard’” means that the defendant “‘was either aware, or did not
care that there was a substantial and unnecessary risk that [its] conduct would
cause serious injury to others.’” Black, 269 F.3d at 1239 (quoting Okla. U nif. Civil
Jury Instruc. 5.6, available at http://www.oscn.net/applications/oscn). “‘[T]he
conduct . . . must have been unreasonable under the circumstances, and also there
must have been a high probability that the conduct would cause serious harm to
another person.’” Id.M r. Edwards states that the punitive damages claim should have been
presented to the jury because there was some “competent evidence” supporting
the elements of his punitive damage claim. Aplt. Br. at 15, Reply Br. at 14.
In contrast, the district court determined that M r. Edwards had “failed to
demonstrate . . . that any of the defendants were aware that the failure to place
a guard or further warnings on the bulk bag unloader would place someone in
plaintiff’s circumstances in substantial risk of serious injury.” A plt. App., Vol. III
at 1033. Further, the evidence did not “show that any of the named defendants did
not care that their actions would result in injury.” Id. In the district court’s view ,
“[t]he requisite high probability that defendant[s’] actions w ould result in injury is
simply lacking.” Id.-10-
Our review of the appellate record convinces us the trial court correctly
withheld the issue of punitive damages from jury consideration: the record does
not contain competent evidence from which a reasonable jury could find reckless
disregard sufficient to support an inference of evil intent and malice.
C. Judgm ent as a m atter of law against M eyer and LG E
M r. Edwards argues that he was entitled to judgment as a matter of law
against M eyer and LGE. A “particularly strict” standard is applied when the party
with the burden of proof moves for judgment as a matter of law. Weese v.
Schukman, 98 F.3d 542, 547 (10th Cir. 1996). Under these circumstances, “[t]he
evidence is tested for its overwhelming effect.” Id. (quoting Hurd v. Am. Hoist &
Derrick Co., 734 F.2d 495, 499 (10th Cir. 1984)). The movant is entitled to a
favorable ruling “only if the evidence is such that without weighing the credibility
of the witnesses the only reasonable conclusion is in his favor.” Id. (quoting Hurd,
734 F.2d at 499).
M r. Edwards asserts that, as a matter of law , M eyer and LGE should be held
strictly liable for their participation in the manufacture of the BBU. An Oklahoma
manufacturers’ product liability claim requires a plaintiff to demonstrate three
elements: (1) the product caused plaintiff’s injury; (2) a defect in the product
existing at the time it left the defendants’ possession and control; and (3) the defect
rendered the product unreasonably dangerous. Kirkland v. Gen. M otors Corp.,
521 P.2d 1353, 1363 (Okla. 1974). “The alleged defect may be the result of
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a problem in the product’s design or manufacture, or it may be the result of
inadequate warnings regarding use of the product.” Wheeler v. HO Sports Inc.,
232 F.3d 754, 757 (10th Cir. 2000) (quotation omitted).
M r. Edwards’ argument against M eyer and LG E begins and ends with the
proposition that, under Oklahoma law , a manufacturers’ product liability claim
applies to manufacturers, “processors, assemblers, and all other persons who are
similarly situated in processing and distribution.” Kirkland, 521 P.2d at 1361.
There is no legal support, however, for M r. Edwards’ attempt to extend this
principle and make all defendants w ithin the chain of distribution automatically
liable for a defective product. Rather, “responsibility for the defect must still be
traced to the proper Defendant.” Id. at 1365. Thus, “which Defendant is
responsible for an alleged defect [is] determined in the trial court.” Id.
At trial, the jury was presented with competing versions of the facts relating
to the design and manufacture of the BBU. As a result, M r. Edwards was not
entitled to judgment as a matter of law. The district court correctly entered
judgment on the jury verdict in favor of M eyer and LGE.
The judgment of the district court is AFFIRMED.
Entered for the Court
David M . Ebel
Circuit Judge
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