Grant M. Williams v. Pacific Cycle, Inc.

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 15-15179
Non-Argument Calendar
________________________
D.C. Docket No. 1:13-cv-00875-ODE
GRANT M. WILLIAMS,
Plaintiff-Appellant,
versus
PACIFIC CYCLE, INC.,
d.b.a. Schwinn Bicycles,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(October 11, 2016)
Before TJOFLAT, MARTIN and JILL PRYOR, Circuit Judges.
PER CURIAM:
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After he suffered a bicycle accident, Grant Williams brought a products
liability action against Pacific Cycle, Inc. (“Pacific Cycle”) on claims of strict
liability, negligence, and failure to warn. The district court granted summary
judgment in favor of Pacific Cycle on all three counts. Our careful review
persuades us to affirm the ruling of the district court.
I.
Williams fell from his bicycle on March 23, 2011 and struck his head on the
pavement. As a result, he suffered a severe brain injury. At the time of the
accident, Williams was wearing a Pulsar model Schwinn bicycle helmet (“the
Pulsar”).
Pacific Cycle owns the Schwinn brand name for bicycles and bicycle
accessories, including helmets. Before June 26, 2008, Pacific Cycle had licensed
the right to sell bicycle helmets under the Schwinn brand to PTI Sports (“PTI”).
Then on June 26, 2008, Pacific Cycle purchased certain assets from PTI including
inventory of Schwinn bicycle helmets, certain sales orders, and purchase contracts.
The Pulsar helmet Williams was wearing at the time of his accident had been
manufactured by Strategic Sports, Limited (“Strategic”) on July 2, 2008. Pacific
Cycle says Strategic alone designed the Pulsar model line and that Pacific Cycle’s
role was merely to brand it “the Pulsar.” It was PTI that selected an existing
Strategic product, the P-13 helmet model, and set certain design specifications and
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requirements a product needed to meet in order to be branded as the “Pulsar”
helmet. Williams argues that by taking these actions, PTI designed the helmet. In
support of this theory, Williams points to a “bill of materials” that includes a
requirement of “[f]iber tape for reinforcement, apply to foam per PTI specs.” The
record also reflects that PTI created an owner’s manual that was distributed with
the Pulsar and gave Strategic a “header card” for the helmet that detailed style
conventions including the font for the Schwinn branding. Strategic placed required
labels on the Pulsar line. The record is unclear about whether PTI or Pacific Cycle
placed the order with Strategic, but demonstrates that after the helmet was
manufactured, Pacific Cycle imported the shipment of Pulsars and distributed them
to retailers.
As an importer of bicycle helmets, Pacific Cycle is subject to federal
regulations promulgated by the United States Consumer Products Safety
Commission (“CPSC”). See 16 C.F.R. § 1203. These regulations require that
either the importer or foreign manufacturer conduct a “reasonable testing program”
to ensure compliance with CPSC standards. Id. § 1203.34(e)(1). Strategic
conducted these tests as part of its agreement with PTI and Pacific Cycle.
II.
We review the grant of summary judgment de novo. Byars v. Coca-Cola
Co., 517 F.3d 1256, 1263 (11th Cir. 2008). Summary judgment is appropriate only
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“if the movant shows that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see
also Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2552 (1986).
Williams seeks relief under three possible tort theories: (1) strict liability for
design defect; (2) negligent design and manufacture, and negligent import, sale,
and distribution; and (3) failure to warn. The district court granted summary
judgment on all three claims. We address each in turn.
A.
Williams’s strict liability claim hinges on whether Pacific Cycle meets the
definition of a “product seller” under Georgia law. Georgia law categorically
excludes from strict liability any “product sellers,” defined as:
[A] person who, in the course of a business conducted for
the purpose leases or sells and distributes; installs;
prepares; blends; packages; labels; markets; or assembles
pursuant to a manufacturer’s plan, intention, design,
specifications, or formulation; or repairs; maintains; or
otherwise is involved in placing a product in the stream
of commerce. This definition does not include a
manufacturer which, because of certain activities, may
additionally be included within all or a portion of the
definition of a product seller.
O.C.G.A. § 51-1-11.1. Georgia courts have made clear that this statutory scheme
is intended to “confine strict liability to actual manufacturers—those entities that
have an active role in the production, design, or assembly of products and placing
them in the stream of commerce.” Alltrade, Inc. v. McDonald, 445 S.E.2d 856,
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858 (Ga. Ct. App. 1994) (quoting Freeman v. United Cities Propane Gas of Ga.,
Inc., 807 F. Supp. 1533, 1540 (M.D. Ga. 1992)).
Williams points out that PTI provided the instructional booklet and header
card for the Pulsar; provided some design specifications; imported the Pulsar; and
shipped the Pulsar to a retailer. Williams argues that by these actions, Pacific
Cycle “exercised ‘input’ or was actively involved” so as to raise a material issue of
fact as to whether Pacific Cycle is a manufacturer rather than a product seller.
Williams also asserts that due to Pacific Cycle’s role as an importer, it was
affirmatively required under CPSC regulations to verify the Pulsar’s compliance
with safety standards. In Williams’s view, the record creates a material question of
fact about whether Pacific Cycle was more than a product seller. We agree with
the district court that each of Williams’s arguments fail as a matter of law.1
First, Georgia courts have repeatedly recognized that the actions Williams
attributes to Pacific Cycle are not sufficient to make Pacific Cycle a manufacturer.
Providing an instructional booklet and header card is akin to, and perhaps even part
of, labelling the product. See Alltrade, 445 S.E.2d at 858 (“[O]ne who merely
labels a product as its own prior to its sale . . . is a product seller.”). Similarly,
1
Pacific Cycle argues that the distinction between manufacturer and product seller is
irrelevant. It says that PTI was a mere licensee of the Schwinn brand (including the Pulsar), and
that Pacific Cycle assumed no liabilities for PTI’s pre-purchase conduct when acquiring PTI.
Like the district court, we find that there is a genuine dispute of fact about what liabilities Pacific
Cycle assumed from PTI. However, this is not material because even if Pacific Cycle assumed
every liability alleged by Williams, Georgia law still categorically excludes Pacific Cycle, the
product seller, from strict liability.
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Georgia courts have rejected the idea that shipping and distributing a product
makes a company a manufacturer. See Ream Tool Co. v. Newton, 433 S.E.2d 67,
69–70 (Ga. Ct. App. 1993) (finding that a company that ships, distributes, and sells
a product is a product seller). Georgia courts have also made clear that even
providing requirements or minor design specifications is not sufficient to make a
company a manufacturer under Georgia law. See Schneider v. Tri Star Int’l, Inc.,
476 S.E.2d 846, 847–48 (Ga Ct. App. 1996) (informing manufacturers of
requirements for product size, appearance, hardness, and packaging requirements
was within the role of a product seller); Boyce v. Gregory Poole Equip. Co., 605
S.E.2d 384, 388 (Ga. Ct. App. 2004) (finding that a company was a product seller
under Georgia law even where the company’s general manager served on the
advisory board for the manufacturer’s design team). As for PTI, its specifications
did not change the P-13 model that Strategic had already designed. It merely
provided stylistic additions and packaging instructions and materials.2
2
In arguing that Pacific Cycle is a manufacturer, Williams also relies on Nelson v. C.M.
City, Inc., 463 S.E.2d 902 (Ga. Ct. App. 1995), for the proposition that “a company [that] has put
its own trade name on a product, thus leading the public to believe it manufactured the product
even though it did not” should be held as a manufacturer. Id. at 905 (quoting Alltrade, 445
S.E.2d at 761 (Pope, C.J., concurring)). However, Williams’s reliance on Nelson is misplaced.
Nelson required that the defendant “designed” the product in dispute and “conceived the idea . . .
according to [the company’s] intention, design, specifications, and formulation,” specifically
distinguishing a company that “merely ha[d] its name stamped on [products].” Id. at 903–04.
Pacific Cycle’s role in stamping the Schwinn brand upon Strategic’s P-13 design falls squarely
within the latter role of a product seller.
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Second, the fact that Pacific Cycle is a bicycle helmet importer subject to
federal regulations does not make it a manufacturer under Georgia law. Williams
argues that CPSC regulations placed an affirmative responsibility upon Pacific
Cycle to meet certain safety standards, including the duty to “conduct a reasonable
testing program” to ensure compliance with such standards. 3 16 C.F.R. § 1203.33.
Williams says this active role, imposed by federal regulations, raises a question of
fact about whether Pacific Cycle is a manufacturer under Georgia law. However,
the same CPSC regulations allow Pacific Cycle to rely on Strategic, its foreign
manufacturer, to conduct the testing program, so Pacific Cycle had no active role
in testing. See 16 C.F.R. § 1203.34(e). And in any event, Georgia courts have
held that the presence of a testing program is not sufficient to bring a company
within the definition of a manufacturer under Georgia law. See Schneider, 476
S.E.2d at 848 (finding that a company that conducted routine “spot tests and
quality checks” on imported products was a product seller).
B.
For his negligence claim, Williams argues that the district court improperly
granted summary judgment in favor of Pacific Cycle for two reasons: (1) Pacific
Cycle was an “ostensible manufacturer” under Georgia law and thus may be liable
3
Williams also emphasizes that under CPSC regulations, an importer of helmets
manufactured abroad is specifically defined as a “manufacturer.” See 16 C.F.R. § 1203.32(b).
However, the definition of a “manufacturer” under federal regulations does not govern the
definition under Georgia law for strict liability purposes.
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for negligent design and manufacture; and (2) as a bicycle helmet importer, Pacific
Cycle had an affirmative duty under CPSC federal regulations to inspect the Pulsar
helmets, and therefore may be held liable for negligent importation, sale, and
distribution in failing to notice and correct a product defect. 4 These arguments
also fail as a matter of law.
First, Pacific Cycle cannot be held liable for negligent manufacture or design
as an “ostensible manufacturer” because neither Pacific Cycle nor PTI designed or
manufactured the Pulsar. The “ostensible manufacturer” rule says 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.” Alltrade, 445 S.E.2d at 858
(quotation omitted) (quoting Second Restatement of the Law of Torts, § 400).5
But to be liable for negligent manufacture or design a company must have
breached its duty of reasonable care in the manufacture or design process. And in
4
The parties dispute whether the Pulsar’s design was actually defective. We do not
address the arguments on this issue because they were not presented to the district court. In any
event, the existence of a defect is irrelevant to the disposition of these claims.
5
The validity of the “ostensible manufacturer” doctrine in negligent manufacture or
design claims under Georgia law after Georgia’s 1987 statutory tort reform is not clear. Alltrade
made clear that this doctrine does not apply in strict liability claims, and the doctrine’s
applicability in negligence has not been examined in any Georgia case since 1994, when Alltrade
was decided. See Alltrade, 445 S.E.2d at 858. In re Stand ‘N Seal, No. 1:07MD1804, 2009 WL
2145911, at *3–4 (N.D. Ga. July 15, 2009), and Powell v. Harsco Corp., 433 S.E.2d 608, 609
(Ga. Ct. App. 1993), indicate that the “ostensible manufacturer” doctrine might still be valid for
some negligence claims, such as negligent failure to warn. A product seller will necessarily have
some involvement in the duty to warn, but not necessarily in the duty of reasonable care that
applies to the manufacture or design process. We need not decide the ongoing viability of
Georgia’s “ostensible manufacturer” doctrine here, so we do not.
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order to breach this duty the company must have had some involvement in the
manufacture or design of the product. See Ream, 433 S.E.2d at 70; see also
Buford v. Toys R’ Us, 458 S.E.2d 373, 375 (Ga. Ct. App. 1995). As explained
above, PTI’s minor specifications are not sufficient to raise a material question of
fact as to whether it was actively involved in the manufacture or design of
Strategic’s preexisting P-13 model. Pacific Cycle therefore cannot be held liable
for negligent manufacture or design.
Second, Pacific Cycle cannot be held liable for negligent importation, sale,
or distribution based on the affirmative duties imposed on it by CPSC federal
regulations, including the implementation of a testing program. Georgia law
places no duty on the seller of a product to test or inspect the product. See Fed.
Ins. Co. v. Farmer’s Supply Store, Inc., 555 S.E.2d 238, 240 (Ga. Ct. App. 2001).
While CPSC federal regulations do impose such a duty on Pacific Cycle, those
regulations allow Pacific Cycle to delegate that duty to the foreign manufacturer.
See 16 C.F.R. § 1203.34(e). Pacific Cycle did just that. And in any event,
Williams has offered no evidence that Pacific Cycle may have breached its duty.
Rather, Williams concedes that, in testing conducted by Strategic, the Pulsar met
all minimum requirements mandated by CPSC federal regulations.
C.
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Finally, Williams asserts that the district court improperly granted summary
judgment to Pacific Cycle on his failure to warn claim. Under Georgia law, a
product seller has a duty to warn only of dangers that are either actually or
constructively known to the seller at the time of sale. Farmer v. Brannan Auto
Parts, Inc., 498 S.E.2d 583, 585 (Ga. Ct. App. 1998). A product seller is on notice
of a danger if the seller has actual knowledge or should have reasonably foreseen a
danger from the product. See id. The plaintiff carries the burden of proving the
defendant’s actual or constructive knowledge. John Crane, Inc. v. Wommack, 489
S.E.2d 527, 530 (Ga. Ct. App. 1997).
Williams pointed to no evidence that Pacific Cycle was aware of any
lawsuit, incident, complaint, or recall involving the Pulsar. The Pulsar was fully
compliant with CPSC federal regulations. There is therefore no material question
about whether Pacific Cycle had any notice of any danger regarding the Pulsar, and
the district court properly granted summary judgment for Pacific Cycle on the
failure to warn claim.
We affirm the district court’s grant of summary judgment as to all claims.
AFFIRMED.
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