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Nufeeds, Inc. v. Westmin Corp.

April 17, 2006

NUFEEDS, INC., PLAINTIFF
v.
WESTMIN CORP., OUTOKUMPU COPPER, INC., AND OUTOKUMPU AMERICAN BRASS, INC., DEFENDANTS



The opinion of the court was delivered by: Thomas M. Blewitt United States Magistrate Judge

MEMORANDUM AND ORDER

I. Background

This breach of contract, breach of implied and express warranties, strict liability and negligence action was commenced on April 14, 2004, by Plaintiff Nufeeds, Inc., ("Nufeeds") against Defendants Westmin Corp., Outokumpu Copper, Inc., and Outokumpu American Brass, Inc.*fn1 in the Court of Common Pleas of Susquehanna County, Pennsylvania. (Doc. 23, Ex. A). On May 13, 2004, Defendant American Brass removed this case to this Court pursuant to 28 U.S.C. § 1441. (Doc. 1). The Defendant invoked the diversity jurisdiction of this Court. 28 U.S.C. §1332(a). (Doc. 1, p. 3, ¶ 7.). The parties consented to proceed before a Magistrate Judge 28 U.S.C. §636(c)(1), and the District Court entered an Order reassigning this case to a Magistrate Judge (Doc. 10) for pre-trial and trial purposes.

Defendant American Brass filed an Answer to the Plaintiff's Complaint on May 20, 2004 and a cross-claim against Defendant Westmin Corp. (Doc. 4). Defendant Westmin Corp. filed its Answer to the Complaint on August 23, 2004 and a Cross-claim against American Brass. (Doc. 12). Discovery then ensued.

On October 3, 2005, American Brass filed a Motion for Summary Judgment. (Doc. 22). American Brass also filed a Statement of Material Facts ("SMF") with exhibits and a support Brief. (Docs. 23 & 24). Both Plaintiff and Defendant Westmin filed Briefs, Responses to American Brass' SMF and exhibits in opposition to American Brass' Summary Judgment Motion. (Docs. 31, 32, 33, 34, 35, 36, 38, 39 & 46).*fn2

As stated, on October 3, 2005, Defendant American Brass filed a Summary Judgment Motion with respect to both Plaintiff's original claims against it and with respect to Defendant Westmin's cross-claims against it. (Doc. 22). American Brass argues that the claims against it for negligence and strict liability by both Plaintiff and Westmin*fn3 are barred by the economic loss doctrine, and that the claims against it for breach of warranty should be dismissed since it did not make any express warranties, it was not the merchant of bag house dust and neither Plaintiff nor Westmin relied upon its judgment in selecting a proper product. (Doc. 22, p. 1). Both Plaintiff and Defendant Westmin have opposed American Brass' Summary Judgment Motion.

II. Motion for Summary Judgment Standard.

The court may grant a motion for summary judgment if the pleadings, depositions, answers to interrogatories, admissions on file, and any affidavits show that there is no genuine issue as to any material fact. Fed.R.Civ.P. 56(c). An issue of fact is "`genuine' only if a reasonable jury, considering the evidence presented, could find for the nonmoving party." Childers v. Joseph, 842 F.2d 689, 693-694 (3d Cir. 1988) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). The burden of proving that there is no genuine issue of material fact is initially upon the movant. Forms, Inc. v. American Standard, Inc., 546 F. Supp. 314, 320 (E.D. Pa. 1982), aff'd mem. 725 F.2d 667 (3d Cir. 1983). Upon such a showing, the burden shifts to the nonmoving party. Id. The nonmoving party is required to go beyond the pleadings and by affidavits or by "depositions, answers to interrogatories and admissions on file" designate "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e).

In determining whether an issue of material fact exists, the court must consider the evidence in the light most favorable to the nonmoving party. White v. Westinghouse Electric Company, 862 F.2d 56, 59 (3d Cir. 1988). In doing so, the court must accept the non-movant's allegations as true and resolve any conflicts in his favor. Id., quoting Gans v. Mundy, 762 F.2d 338, 340 (3d Cir. 1985), cert. denied, 474 U.S. 1010 (1985); Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976) cert. denied, 429 U.S. 1038 (1977).

III. Undisputed Material Facts

American Brass filed its SMF (Doc. 23) with exhibits, and Plaintiff as well as Defendant Westmin filed their Responses to it. (Docs. 32, 34, 36).*fn4 Plaintiff also filed its own SMF with exhibits, as well as a Supplemental SMF with exhibits (Docs. 35 & 38). The Court will consider both Plaintiff's original SMF (Doc. 35) and its supplemental SMF (Doc. 38).

At the outset, we agree with Plaintiff's assessment that there are few disputed facts in this case. (Doc. 33, p. 1). Indeed, the responses of Plaintiff and Westmin to American Brass' SMF reveal that many facts are admitted. See Doc. 23, ¶'s 1.-11., 13, 14, 15, 16, 20 (only in part by Westmin), 21, 22, 23, 24, 25, 26, 27, 28 (only in part by Westmin), 29, 30 (Plaintiff admits and Westmin denied), 31, 32 (Westmin only admits in part), 33, 34, 36. See also Doc. 32 and Doc. 36 at stated ¶'s.*fn5

Since the stated facts are not disputed, we shall not reiterate them entirely herein. We shall only discuss the relevant material facts for present purposes.

11. American Brass is in the business of manufacturing and selling brass and copper products, primarily sold in coil form. (See Peczkowski Dep., Ex. H, p. 11.). As part of the brass manufacturing process, copper and zinc are melted and poured into a mold to form a large rectangular "cake" which is then used to make sheets and coils of brass. (See Peczkowski Dep., Ex. H, p. 12.). When the copper and zinc are melted, fumes are generated which contain a large amount of zinc oxide. These fumes are collected through an exhaust system which separates out the solid portion of the fumes and collects it in large bags in the form of dust. The area in which the dust is dropped into these bags is known as the bag house. As a result, the dust is known as bag house dust. (See Bodekor Dep., Ex. K, pgs. 40-43.).

13. American Brass ships approximately 25 million pounds of finished copper and brass product per month. It ships approximately 25 thousand to 30 thousand pounds of bag house dust every six weeks. (See Peczkowski Dep., Ex. H, p. 67.).

14. In early 2000, American Brass and Westmin began discussing the possibility of American Brass selling its bag house dust to Westmin.

At that time, Westmin was purchasing bag house dust from PMX Industries, another brass manufacturer, and high purity zinc from Zinc Corporation of America and U.S. Zinc. (See Jones Dep., Ex. G, pp. 24-26.).

15. During discussions with Westmin, American Brass asked Westmin to identify its intended use of the product. Westmin indicated by letter that the bag house dust would be used in trace mineral premix for the animal feed industry. (See Letter from Roy Orban, dated March7, 2000, attached as Exhibit L.).

16. Westmin also stated that it had used a similar product from Olin Corporation for many years with very good results. (See Telecopy from Greg Jones, dated March 1, 2000, attached as Exhibit M. See also Jones Dep., Ex. G, p. 25.).

20. American Brass provided the "analytical" showing the requested metal content. (See Telefax transmittal dated February 7, 2000, attached as Exhibit N; see also Peczkowski Dep., Ex. H, p. 32.).

21. Prior to dealing with Westmin, American Brass had tested its bag house dust for metals and carbon. (See Robinson Dep., Ex. I, pp. 12-13.). Testing was performed because previous buyers asked about the zinc content of bag house dust. (See Peczkowski Dep., Ex. H, p. 25.).

22. Westmin also asked American Brass to provide a sample of its bag house dust. Westmin received this sample and sent it out for its own analysis. Westmin asked its testing lab to test the sample for zinc level and cadmium. (See Jones Dep., Ex. G, pp. 35 and 217; see also Orban Letter, Ex. L, p. 3.).

23. A screening test for the presence of dioxin could have been performed for $400 or $500. (See Jones Dep.,. Ex. G, pp. 111-112.).

24. After testing the bag house dust for zinc and cadmium, Westmin sent a letter to American Brass enclosing the results of the testing. Westmin stated in the letter that the bag house dust would be incorporated into pre-mix "depending on analyses." (Orban letter, Ex. L; see also Jones Dep. Ex. G, p. 109.).

25. Over the next two years, American Brass periodically sold truck loads of bag house dust to Westmin, originally for $.03 a pound, then for $.08 a pound, and then ultimately for $.11 a pound. (See Peczkowski Dep., Ex. H, pp. 46-49.).

26. Each and every time Westmin received a shipment of bag house dust from American Brass, Westmin set it off in a quarantined area, took a representative sample, and sent it out for testing. According to Greg Jones, this testing was done prior to the use of the bag house dust because "[w]e didn't have any idea what the analysis was going to be on that material." (Jones Dep., Ex. G, pp. 37-38.).

27. Each shipment was tested by Westmin for its zinc value. Westmin also periodically conducted a "total analysis" of the bag house dust. (Jones Dep., Ex. G, pp. 38-39.). Westmin performed the same type of test on the PMX bag house dust. (See Jones Dep., Ex. G, p. 40.).

28. Westmin performed no tests on the zinc provided by Zinc Corporation of America and U.S. Zinc because these companies gave Westmin a "guaranteed analysis" of the product. (See Jones Dep., Ex. G, p. 39.). American Brass did not give a guaranteed analysis, nor was it ever asked to do so. (See Jones Dep., Ex. G, p. 40.).

29. When testing the bag house dust, Westmin looked for a zinc percentage greater than 60-65%. If the bag house dust did not have that percentage, Westmin still used the bag house dust in its pre-mix, but only as a flow agent. (Jones Dep., Ex. G, pp. 41-42.). When using the bag house dust as a zinc additive or a flow agent, Westmin did not treat or change it before adding it to the pre-mix.

30. Westmin's president, Greg Jones, testified that Westmin did not test the bag house dust for any components other than zinc levels and heavy metals because "[a]ll we were concerned about was the zinc value, the heavy metals value." (Jones Dep., Ex. G, pp. 44-45.). (Doc. 23, ¶'s 11., 13, 14, 15, 16, 20 (only in part by Westmin), 21, 22, 23, 24, 25, 26, 27, 28 (only in part by Westmin), 29, 30 (Plaintiff admits and Westmin denied), 31, 32 (Westmin only admits in part), 33, 34, 36).*fn6

9. Once it [baghouse dust] is collected in the sack, normally American Brass will wait until a truckload is accumulated, and then American Brass would sell the material to an approved outlet that is considered a safe home for the by--product. [Doc. 35] Exhibit "A", Peczkowski deposition at page 15.

10. As such, baghouse dust is a by-product of a manufacturing or production process at American Brass. Exhibit "A," Peczkowski deposition at page 95, 185, Exhibit "C," Burghardt deposition at page 20. (Doc. 35, ¶'s 9.-10.).

Defendant American Brass avers that it does not manufacture bag house dust, while Plaintiff contends that it does. (Doc. 23, ¶ 12. & Doc. 35, ¶ 12.). Peczkowski testified that American Brass does not manufacture bag house dust; rather, it was a by-product. (Doc. 35, Ex. A, p. 185).

16. American Brass was selling baghouse dust to Big River Zinc Company before 1999. Exhibit "A," Peczkowski deposition at page 18-19.

17. Once Big River Zinc notified American Brass that they were not interested in our [baghouse dust] American Brass looked for a new outlet. Exhibit "A," Peczkowski deposition at page 186.

18. American Brass was looking for a buyer who would use the material one hundred percent in his process and not generate waste that would be landfilled and then thereby cause liability for American Brass. Exhibit "B," Robinson deposition at page 27.

19. American Brass sought an alternate outlet for baghouse dust. Exhibit "A," Peczkowski deposition at page 187.

20. American Brass was marketing baghouse dust. Exhibit "A," Peczkowski deposition at page 25, lines 19-20.

21. American Brass employee Gene F. Peczkowski was responsible for the sale of American Brass' baghouse dust resulting from the manufacturing process, based on approval from their safety group. Exhibit "A," Peczkowski deposition at page 233. (Doc. 35, ¶'s 16.-21.).

Between the years 2000-2003, American Brass would sell bag house dust every 6 weeks, but that was not the nature of its business. (Doc. 35, Ex. A, p. 189).

In January 2003, the FDA notified American Brass that dioxin had been found in the bag house dust it sold to Westmin. (Doc. 23, Ex. O, p. 8 & doc. 23, ¶ 34.).*fn7

The FDA later found dioxin in American Brass' New York facility. (Id.). It is undisputed that this was the first notification American Brass had that its bag house dust contained dioxin. (Id., p. 9 & Doc. 23, ¶ 34.), Before 2003, American Brass did not test its bag house dust for dioxin and Westmin did not request this type of testing. (Id.). As the Illinois District Court stated:

Outokumpu Brass was not internally capable of testing for dioxin in the levels indicated by the FDA tests. Peczkowski Dep., p. 83. [Doc. 23, Ex. H]. It is undisputed that, during the course of its sale of bag house dust to Westmin, Outokumpu Brass did not know its bag house dust contained dioxin, and consequently, it never warned Westmin about dioxin in the bag house dust.

When Outokumpu Brass was informed by the FDA about the dioxin in the bag house dust, Outokumpu Brass began a recall of the product. Robinson sent a letter to Jones, dated January 16, 2003, which directed Westmin to cease processing any bag house dust that originated from Outokumpu Brass and to secure the material until Outokumpu Brass could arrange for the return of the material. Robinson Dep., p. 31-32. [Doc. 23, Ex. I]. Outokumpu Brass arranged with a freight carrier to have twenty-eight super sacks and one barrel of bag house dust returned to it from Westmin's facility. Peczkowski Dep., p. 154-156. The material was returned, and Outokumpu Brass subsequently resold it to another customer. Robinson Dep., p. 33. Outokumpu Brass has not refunded Westmin for the bag house dust that was returned. Jones Dep., p. 84-85. [Doc. 23, Ex. G].

(Doc. 23, Ex. O, pp. 9-10).

Further, undisputed material facts in our case ...


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