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Jaramillo v. Weyerhaeuser Company and Technology Licensing Associates

March 31, 2009

MARIO MIGUEL JARAMILLO, APPELLANT,
v.
WEYERHAEUSER COMPANY AND TECHNOLOGY LICENSING ASSOCIATES, INC., RESPONDENT,
CORRUGATED GEAR AND SERVICES, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Read, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

The United States Court of Appeals for the Second Circuit has asked us whether a company that sold one of its used machines (itself purchased used) to a different company can be held strictly liable for a workplace accident involving that machine, which occurred 16 years later. In light of our precedents and the policy considerations underlying strict products liability, we answer the certified question in the negative.

I.

On March 9, 2002, plaintiff Mario Miguel Jaramillo seriously injured his right hand when he caught it between two rollers of an industrial Flexo Folder Gluer machine (FFG) that he was operating while working for his employer, Glenwood Universal Packaging Products Corporation, a manufacturer of corrugated containers, at its plant in Yonkers, New York. Jaramillo had worked for Glenwood for about five years and had operated the FFG uneventfully many times before.

In 1986, Glenwood purchased the FFG as a used machine from defendant Weyerhaeuser Company, an international forest products company with its principal place of business in the state of Washington. As part of its business, Weyerhaeuser operates numerous plants where cardboard boxes are fabricated from corrugated cardboard sheets; FFGs are used to make these boxes.

Weyerhaeuser's Investment Recovery Business (IRB), the division through which the company generally disposes of its obsolete or unneeded equipment, marketed the FFG sold to Glenwood. The IRB distributes quarterly catalogs of items for sale, advertises in trade journals, telemarkets, and conducts market research on potential buyers and dealers of used equipment. The United States District Court for the Southern District of New York found that there was no genuine dispute of fact that the FFG was sold to Glenwood in "as-is, where is" condition, and the Second Circuit agreed (Jaramillo v Weyerhaeuser Co., 536 F3d 140, 144 n 1 [2d Cir 2008]; 2007 WL 194011, at *1 n 7 [SD NY Jan. 24, 2007]).

The IRB grossed somewhere between $7.5 and $8.5 million in 1986, the year Glenwood bought the FFG involved in Jaramillo's accident. This accounted for approximately 0.15 percent of Weyerhaeuser's net sales of about $5.65 billion for that year. There is no evidence in the record to show Weyerhaeuser's sales of used FFGs before 1986, but Jaramillo contends that Weyerhaeuser sold more than 60 FFGs from 1986 to 2006.

Older FFGs such as the one sold by Weyerhaeuser to Glenwood have "open architecture," or open spaces between operating sections that a worker can enter while the machine is running, which is what Jaramillo did when he injured his right hand. By contrast, "closed architecture" machines, as the name implies, do not permit entry. Open architecture machines may be retrofitted with a safety device to shut them down automatically if an open space is accessed; for example, an interlocking device or a safety mat, which causes the machine to stop when stepped on, may be installed. Weyerhaeuser has furnished some of its open architecture FFGs with interlocking devices, or has asked the manufacturer to do this. Further, the Second Circuit noted "evidence that Weyerhaeuser owns patents related to technology used in FFGs, and that the company maintains relationships with FFG manufacturers. [Weyerhaeuser] has occasionally made recommendations to manufacturers about how to improve FFG design, including with regard to safety features. When it has detected safety issues with an FFG, the company has also sometimes suggested that the manufacturer install a new safety mechanism in the machine in question" (536 F3d at 143).

The FFG involved in Jaramillo's accident was originally manufactured in about 1964 by S & S Manufacturing, a Brooklyn-based company that went bankrupt around 1986; it was sold new to the General Foods Company. Weyerhaeuser purchased the FFG from General Foods in 1971 for roughly $36,500, and placed the machine in its Lynchburg, Virginia box plant. Weyerhaeuser added new parts to the FFG over the years and replaced worn ones, at a total cost of about $282,000, but did not change the safety mechanisms installed by S & S in the original manufacture. The machine was disassembled in Virginia by a Glenwood employee, and transported to Yonkers, where it was reassembled at the Glenwood plant.

Jaramillo filed a complaint in Supreme Court against Weyerhaeuser, Corrugated Gear and Services, Inc. (the successor-in-interest to S & S), Technology Licensing Associates, Inc. and Prime Technology, Inc. (purchasers of some of S & S's bankrupt estate), and Kraft Foods Global, Inc. (the successor-in-interest to General Foods), seeking damages for his personal injuries. Jaramillo's claim against Weyerhaeuser sounded principally in strict products liability. He argued that by 1986 open architecture FFGs were defective if not equipped with a safety device to shut off operation in the event a person or a foreign object, such as a human extremity, was sensed in the machine's open spaces, and that Weyerhaeuser did not add any such device to the FFG that it sold to Glenwood that year.

On March 7, 2003, Jaramillo's suit was removed to federal court. On May 22, 2006, Weyerhaeuser sought summary judgment on the basis that it was a casual seller of FFGs and therefore was not strictly liable under New York law for any defects. On June 20, 2006, Jaramillo cross-moved for summary judgment on the issue of whether Weyerhaeuser was an ordinary seller of FFGs, potentially subject to strict products liability. On January 24, 2007, the District Court Judge granted Weyerhaeuser's motion for summary judgment, denied Jaramillo's cross-motion, and dismissed the complaint. The Judge noted that "[t]he New York Court of Appeals has held that strict products liability is imposed on manufacturers and sellers who engage in product sales in the ordinary course of their business" (Jaramillo, 2007 WL 194011, at * 3, citing Sprung v MTR Ravensburg, 99 NY2d 468, 473 [2003]), but has limited "the duty of a casual or occasional seller [to] warn[ing] the person to whom the product is supplied of known defects that are not obvious or readily discernible" (id., quoting Sukljian v Ross & Son Co., 69 NY2d 89, 97 [1986] [quotation marks omitted]). "This is so because unlike the manufacturer or the seller of a product in the normal course of business, the occasional seller is not part of the regular commercial network for that product" (id., quoting Sukljian, 69 NY2d at 97 [quotation marks omitted; internal citations omitted in district court opn]). Acknowledging that there was no controlling authority from our Court requiring a ruling in his favor, Jaramillo "urge[d]" the District Court Judge "to adopt dicta in Sukljian and find that under these facts defendant [was] a regular seller of the machine" (id. at *4). The Judge "decline[d] plaintiff's invitation" for three reasons:

"First, . . . the facts . . . [were] not . . . meaningfully distinguishable from those that the Sukljian court found supportive of a casual seller finding. Second, a policy analysis support[ed] a casual seller holding. Third, on the facts of this case, there [was] no cogent reason to impose strict liability" (id.).

Jaramillo appealed the District Court's order. In an opinion and order issued August 1, 2008, the Second Circuit discussed the current state of strict products liability law in New York at length. Citing Sukljian, the Court noted that New York courts make a distinction between "'ordinary' or 'regular' sellers of a product -- those who sell the product on a regular basis, through the ordinary course of business," who are "strictly liable for injuries caused by any manufacturing, design, or warning defect"; and "'casual' or 'occasional' sellers -- those who sell the product in sporadic transactions that are incidental to their businesses," whose "liability . . . extends only insofar as it fails to warn the person to whom the product is supplied of known defects that are not obvious or readily discernible" (Jaramillo, 536 F3d at 145). The Court ...


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