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ZEGER v. JOSEPH RHODES

August 27, 1992

RODNEY ZEGER and STACY ZEGER, h/w, Plaintiffs
v.
JOSEPH RHODES, LTD., Defendant



The opinion of the court was delivered by: JAMES F. MCCLURE, JR.

 August 27, 1992

 BACKGROUND

 Plaintiffs initially filed this action in the Philadelphia Court of Common Pleas on January 4, 1991, seeking damages for injuries sustained by plaintiff Rodney Zeger while attempting to calibrate the back gauges of a sheet metal bending machine manufactured by defendant Joseph Rhodes, Ltd. ("Rhodes"). In their complaint, plaintiffs Rodney and Stacy Zeger assert causes of action based on negligence, strict liability, breach of warranty and loss of consortium. On May 10, 1991, Rhodes removed the action to the United States District Court for the Eastern District of Pennsylvania. Subsequently, on June 12, 1991, the action was transferred to this Court.

 On May 15, 1992, Rhodes filed a motion for partial summary judgment on plaintiffs' strict liability and failure to warn claims. Rhodes maintains that the facts of this case do not warrant application of the principles of strict product liability and support a finding that the instructions provided to plaintiff were adequate. A hearing on Rhodes' motion was held on July 27, 1992.

 RELEVANT FACTS

 Rhodes, which is primarily engaged in the business of manufacturing and selling specialized metal forming machinery, is a company organized and existing under the laws of England with its principal place of business and registered office located at Belle Vue, Wakefield, England. Rhodes is the proprietor of an invention named the Cuboid D sheet metal bending machine. In February 1989, Teledyne initiated negotiations with Rhodes in the hope of securing an exclusive license to manufacture and distribute the Cuboid D in North America.

 Prior to negotiating the licensing agreement with Teledyne, Rhodes had declined to market its equipment in the United States because of the cost of insurance, the risk of liability under the United States' product liability laws, and its inability to provide effective service to customers in the United States due to the great distance between the United States and England. To alleviate Rhodes' concerns, Teledyne agreed to indemnify Rhodes for claims brought under United States product liability laws.

 The resulting agreement, entered into on May 20, 1988, granted Teledyne the exclusive license to manufacture, market and distribute the Rhodes' Cuboid D throughout Canada, the United States and Mexico. As part of the agreement, Rhodes sold one Cuboid D to Teledyne for use as a demonstrator and as a model to assist in the manufacturing process. The agreement provided for delivery of the machine to Teledyne Landis Machine Co. ("Teledyne Landis"), a Teledyne-related corporation located in Waynesboro, Pennsylvania. Although, at the direction of Teledyne, the machine was actually shipped to Chicago for a trade show, it was eventually shipped to Teledyne Landis in Waynesboro. Subsequently, a second machine was sold to Teledyne and shipped directly to Teledyne Landis in Pennsylvania.

 Teledyne intended, with the assistance of Rhodes' employees, to "Americanize" and standardise the Cuboid D so it could be produced in volume. *fn1" Teledyne also intended to revise and rewrite the Rhodes manual for the U.S. market. Rhodes trained Teledyne Landis employees Joel Peters and Keith Straub on the programming and operation of the Cuboid D. Additional training was made available to Teledyne Landis employees.

 Although calibration procedures, including the procedure to calibrate back gauges, take place during the manufacturing of the Cuboid D and are conducted prior to final assembly of the machine, Rhodes inadvertently included calibration procedures under the heading of "Routine Maintenance" in the manual it provided to Teledyne. *fn2"

 In March 1989, plaintiff Ronald Zeger, an employee of Teledyne Landis, was injured while attempting to calibrate the back gauges of the Cuboid D manufactured by Rhodes.

 SUMMARY JUDGMENT STANDARD

 Summary judgment is appropriate only when there is no genuine issue of material fact to be resolved. Fed. R. Civ. P. 56. All doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. The entire record must be examined in a light most favorable to the non-moving party. Continental Insurance v. Bodie, 682 F.2d 436, 438 (3d Cir. 1982). If there is no genuine issue of material fact, ...


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