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ORION INS. CO. v. UNITED TECHS. CORP.

October 8, 1980

The ORION INSURANCE COMPANY, LTD.
v.
UNITED TECHNOLOGIES CORP. and Amtel, Inc. Richard GEHRING, as Executor and Personal Representative of the Estate of Herman W. Gehring, Deceased v. UNITED TECHNOLOGIES CORP. and Amtel, Inc.



The opinion of the court was delivered by: HUYETT

MEMORANDUM AND ORDER

Defendant Amtel, Inc. has moved for summary judgment. *fn1" The resolution of this motion depends upon whether the manufacturer of a component part which was manufactured to the specifications of a third party and in which there was no manufacturing defect can be held liable for a design defect allegedly stemming from the use to which the third party put the part.

 This case arises from the crash of a helicopter in Jeddah, Saudi Arabia, which was unloading a freighter anchored in that port. The helicopter crashed into the hold of the ship, killing the pilot. These suits were brought by the representative of the deceased pilot and by the insurer of the helicopter. The defendants are United Technologies Corporation (UTC) which through its Sikorsky division manufactured the helicopter and Amtel, Inc. (Amtel) which through its Fenn Manufacturing division (Fenn) machined the "stationary star" (star) of the helicopter. A stationary star is a portion of the main rotor head assembly on a helicopter. It is undisputed that following the crash the stationary star of the helicopter in question was in a fractured condition. The plaintiffs allege that the star, weakened by fatigue cracks broke apart while the helicopter was in flight, thus causing the accident. The defendants claim that the star was fractured by the force of the crash.

 Plaintiffs' complaint asserts claims based on negligence and strict liability. The complaint alleges that both defendants were negligent as to the design, manufacture, and inspection of the helicopter and the star. The strict liability claim alleges defective design and manufacture. In addition, the plaintiffs also assert negligence and strict liability based on the failure of both defendants to warn potential users of the defective condition of the helicopter and the star.

 It is clear that Amtel's only involvement with the events which gave rise to this lawsuit is the fact that it "machined" the stars for Sikorsky's helicopters. The already forged stars would arrive at Amtel's Fenn division. Fenn personnel would then machine the star to the specifications provided by Sikorsky. The machining process included "lathing of the interior diameter of the stationary star, and grinding the star to various dimensions." Fenn inspectors would inspect the star after the process and then pass it along to Sikorsky inspectors located at the Fenn plant, if the star met with their approval then it would be placed in a bonded storage area. Fenn also machined an inner collar for the star which like the star was manufactured to specifications supplied by Sikorsky, and inspected by Sikorsky personnel.

 The drafters of the Federal Rules of Civil Procedure anticipated that discovery would serve to narrow the allegations of the complaint. Hickman v. Taylor, 329 U.S. 495, 500, 67 S. Ct. 385, 388, 91 L. Ed. 451 (1947); 8 C. Wright & A. Miller, Federal Practice and Procedure § 2001, at 15 (1970). It has served that purpose here. Plaintiff has in effect conceded that it cannot prove a manufacturing defect in Amtel's product. That leaves only its design related allegations. Thus, Amtel has filed the present motion for summary judgment posing the question: can a component parts manufacturer who manufactured a part to another's specifications be liable for a design defect.

 To answer this question, I must integrate two little explored lines of precedent: the liability of one who manufactures his product according to specifications of his commercial buyer and the liability of component parts manufacturers when the final product into which their component was incorporated causes injury. These two lines are pertinent because Fenn manufactured the star to Sikorsky's specifications and then sold the product to Sikorsky and because the design defect arose in this case, if at all, from Sikorsky's incorporation of the star into their final product, the helicopter.

 The plaintiffs cite Schreffler v. Birdsboro, 490 F.2d 1148 (3d Cir. 1974) for the proposition that even one who manufactures a product to another's specifications can be liable under § 402A. In Schreffler, the Third Circuit affirmed a directed verdict which I granted for the defendants. In the course of its opinion, the court observed, "(t)he specifics of the machinery ... represented a joint effort of the two companies." Id. at 1150. Plaintiffs' reliance on this case is misplaced both because it did not involve specifications and because liability was not imposed.

  In Spangler v. Kranco, Inc., 481 F.2d 373 (4th Cir. 1973), the United States Court of Appeals for the Fourth Circuit held that a manufacturer which built a crane in accordance with specifications supplied by the customer and which failed to equip the crane with a warning device to be activated when the crane was in motion could not be held liable for injuries sustained by the customer's employee when struck by the crane. The plaintiff had alleged counts based on negligence and strict liability relying upon defendant's failure to equip the crane with a warning device. Emphasizing that the crane had been produced to "the plans and specifications of the purchaser," the count concluded that Kranco's reliance on those plans was reasonable and therefore it was not liable for negligence. On the strict liability count, the court found there was no defect in the crane. The court noted "the products liability rule holding a manufacturer liable does not apply where the product has been manufactured in accordance with the plans and specifications of the purchaser except when such plans are so obviously dangerous that they should not reasonably be followed. Id. at 375, citing Littlehale v. E.I. du Pont & Co., 268 F. Supp. 791, 802 n.16 (S.D.N.Y.1966), aff'd, 380 F.2d 274 (2d Cir. 1967). Thus, the court inquired whether reliance on the plans was reasonable and whether the plans were so obviously dangerous that they should not have been followed.

 Before applying these rules to the present case, I note that this case may be governed by Pennsylvania law so I must consider whether the Pennsylvania Supreme Court's opinion in Azzarello v. Black Bros., Co., 480 Pa. 547, 391 A.2d 1020 (1978) effects the applicability of the Kranco rule in Pennsylvania.

 In Azzarello, the Pennsylvania Supreme Court held that negligence concepts have no place in Pennsylvania 402A law so far as the trial, evidence, and jury charge are concerned. See Azzarello v. Black Bros., Co., 480 Pa. at 553, 391 A.2d at 1020; Bailey v. Atlas Powder Co., 602 F.2d 585 (3d Cir. 1979). But the case does not eliminate negligence concepts such as reasonableness from a court's determination of liability as a matter of law. This motion presents the question of when and to whom liability under § 402A should attach. Reasonableness can be considered on this type of inquiry. Holloway v. J. B. Systems, Ltd., 609 F.2d 1069, 1071 n.5 (3d Cir. 1979); Abdul-Warith v. Arthur G. McKee and Co., 488 F. Supp. 306, 314 (E.D.Pa.1980). Accordingly, I find that even if Pennsylvania law applies, consideration of the factors of reasonableness applied by the Kranco court to a specifications case is not precluded by Azzarello.

 With respect to the negligence count, it cannot be said that in relying on the Sikorsky specifications the defendant, Amtel, acted unreasonably. They had a past course of dealings with Sikorsky. Sikorsky had an established reputation for producing aircraft. It was not unreasonable as a matter of law for Amtel to rely on the plans.

 On the issue of whether Amtel can be held strictly liable it appears that similar considerations apply. Amtel was dealing not with specifications submitted by a consumer but by a business entity ...


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