Graham v. BOSTROM SEATING, INC.

JUSTICE WELCH, dissenting:

I respectfully disagree with the majority’s finding that the record presents a genuine issue of material fact about whether CS was in the chain of distribution for the sale of the truck at issue. In my opinion there is no genuine issue of material fact on this question and CS is entitled to a summary judgment as a matter of law. Accordingly, I dissent.

In my opinion, the exhibits attached to CS’s motion for a summary judgment are more than sufficient to meet CS’s initial burden on a motion for a summary judgment. The majority posits that the invoices, which show a “sale” of the truck by CS to CT, are sufficient alone to create a question of material fact about whether CS participated in the chain of distribution. Perhaps alone they are sufficient to create a question of fact, but when viewed in conjunction with Brown’s affidavit, there is no genuine issue of material fact.

The affidavit of Clarence Brown recites that Brown had been an employee of CS for nearly 60 years and vice president and general co-manager for more than 20 years. The affidavit recites that CS is primarily an automobile and light truck dealer which sells and services new and used Chrysler and Dodge automobiles and trucks. CS had never maintained an inventory of car-transport trucks and had never been an authorized distributor or repair center for those trucks. CS had never advertised any such truck for sale, nor had it ever made any representations of the quality or soundness of those trucks to any person or entity. CS had never been in the business of manufacturing or selling to the public those trucks or their seats. CS had never delivered, inspected, prepared, serviced, or taken delivery of or possession of any such truck and had never altered, modified, changed, or adjusted any such truck. CS never received documents or paperwork directly from the truck manufacturer regarding the purchase, sale, or lease of any such truck. Instead, that paperwork was sent by and to CT, which then forwarded the paperwork to CS. CS’s only involvement with the purchase, sale, or lease of any such truck was limited to handling routine transactional tasks such as turning out the required documents for the transfer or acquisition of Illinois title, mailing or delivering those documents to appropriate recipients, handling the transfer of funds from the trailer purchaser to the manufacturer, and assigning certificates of origin to the truck purchaser. CS never selected, ordered, or played any part in selecting or ordering models, features, or options. Those tasks were handled by CT. CS never negotiated or played any part in negotiating any conditions, terms, or provisions of the purchase of any truck. Those tasks were performed by CT. CS never determined the terms, conditions, or provisions of the sale or lease of any such truck. Those tasks were performed by CT. CS never exercised control over the design or manufacture of any such truck, nor did CS provide any instructions or warnings regarding any alleged defects in any such truck.

Although CS was reimbursed by CT for any payments made and costs incurred as a result of performing title work and other routine transactional tasks, CS had never made or derived any profits, brokerage fees, commissions, or other benefits from buying, selling, or distributing any such truck or from providing services that facilitated the buying, selling, or distributing of any such truck. CS had no control or involvement in the manufacture or design of any such truck. CS never exercised any control over any such truck and never held any state title to any such truck. CS only held certificates of origin.

The majority next finds a question of fact regarding whether CS is “engaged in the business” of selling vehicle-hauler trucks within the meaning of section 402A of the Restatement (Second) of Torts, despite Brown’s affidavit to the contrary. There is no evidence in the record that CS is engaged in the business of selling vehicle-hauling trucks. There is evidence only that CS acts as a “paper shuffler” to assist CT in its purchases of such trucks, that it does this as a convenience to CT and incidentally to its business of selling cars and light trucks, and that it is not engaged in the business of selling or distributing vehicle-hauling trucks.

Again, despite Brown’s uncontradicted affidavit, the majority finds a material question of fact regarding whether CS could exert pressure on the manufacturer to enhance the safety of the trucks because there was evidence that CS was a necessary and mandatory party to complete the transaction. The majority posits that this question is relevant to determine whether CS was in the chain of distribution for the sale of the truck and what influences CS could exert on the manufacturer in purchasing the truck.

I do not agree that evidence that CS might have been required to complete the purchase for CT raises a genuine issue of material fact about whether CS could exert influence on the manufacturer and was therefore in the distributive chain. Could CS have volunteered to do so? Perhaps, but it did not because it was not in the business of selling vehicle-hauling trucks. CS merely acted as a “go-between” or facilitator between CT and the manufacturer. Regardless of whether CS was a necessary party to the purchase of the truck, it remains true that CS could exert no influence on the manufacturer where CS never selected, ordered, or played any part in selecting or ordering models, features, or options, never negotiated or played any part in negotiating any conditions, terms, or provisions of the purchase of any truck, never selected, ordered, or played any part in selecting or ordering models, features, or options, never negotiated or played any part in negotiating any conditions, terms, or provisions of the purchase of any truck, never determined the terms, conditions, or provisions of the sale or lease of any such truck, never exercised control over the design or manufacture of any such truck, never provided any instructions or warnings regarding any alleged defects in any such truck, and never had control or involvement in the manufacture or design of any such truck.

The majority also finds that there exists a genuine question of fact about whether CS profited or benefited from the sale of the truck or was working for a party that would ultimately profit from the sale. There is no evidence in the record of any profit being made by CS on the sale of the truck. The majority states, “CS’s benefit could have been having its automobile inventory delivered to it at cost, rather than having to pay another vehicle-hauler company to deliver its inventory to it.” 398 Ill. App. 3d at 312. There is no evidence to support this claim despite the majority’s effort to create such an inference.

The only evidence pertaining to profit in the record is that stockholders of a holding company which owned CS and CT profited more if there were no “intercompany profits being made on exchanges of products.” The majority asserts that this creates a question of fact about whether CS was “working for a party that would ultimately profit from the sale.” 398 Ill. App. 3d at 312. But any benefit or profit inuring to the holding company would not be the result of the “sale” of the truck by CS to CT, but a result of the lack of “intercompany profits being made on exchanges of products.” This is not the kind of profit which is evidence that CS is in the distributive chain. Nor is it the kind of profit contemplated by Alvarez v. Koby Machinery Co., 163 Ill. App. 3d 711, 716 (1987), the case cited by the majority, which referred to the liability of a sales representative working for a party that would ultimately profit from the sale. There is no evidence that CS was acting as a sales representative for the holding company or any other entity. There is no evidence that CS made any profit on the sale of the truck. Accordingly, I would find that there is no genuine issue of fact about whether CS profited, either directly or indirectly, from the sale of the truck and was therefore in the distributive chain.

Finally, I would find that CS was entitled to a judgment as a matter of law. In Hammond v. North American Asbestos Corp., 97 Ill. 2d 195, 206 (1983), the supreme court held, “In a products liability action, all persons in the distributive chain are liable for injuries resulting from a defective product, including suppliers, distributors, wholesalers!,] and retailers.” The court held that the imposition of liability upon these parties is justified on the ground that their position in the marketing process enables them to exert pressure on the manufacturer to enhance the safety of the product. Hammond, 97 Ill. 2d at 206 .

In Bittler v. White & Co., 203 Ill. App. 3d 26, 29-30 (1990), it was held, “Even parties who are not within the actual chain of distribution, but who play an integral role in the marketing enterprise of an allegedly defective product and participate in the profits derived from placing the product into the stream of commerce, are held hable under the doctrine of strict liability.” Bittler pointed out that one of the public policy rationales which justifies imposing strict liability on manufacturers, as well as sellers, suppliers, wholesalers, distributors, and even lessors, is based on the fact that these entities, as parts of the chain of distribution, are involved in and reap a profit from the placement of the allegedly defective product into the stream of commerce. 203 Ill. App. 3d at 29 . Bittler held that the imposition of strict liability hinges on whether the party in question has any participatory connection for its personal profit or other benefit with the injury-producing product and with the enterprise that created consumer demand for and reliance upon the product. 203 Ill. App. 3d at 30 .

In Alvarez, 163 Ill. App. 3d at 714 , the court held that one of the underlying reasons for imposing strict liability is to ensure that losses are borne by those who created the risk and subsequently reaped a profit from marketing an allegedly defective product.

In Hammond, the defendant from whom the plaintiff sought to recover in strict liability was a wholly owned subsidiary of the manufacturer of the defective product, asbestos. Its annual reports to the Secretary of State listed its business as the manufacture and sale of asbestos. The defendant had been incorporated to be a contact point in North America for the manufacturer’s customers, and while making only a few direct sales of asbestos, it primarily functioned as a message relay center between the manufacturer and its customers. The defendant received a 2½% commission on all sales in North America. The defendant never had physical possession of any asbestos sold by the manufacturer.

On appeal from a jury verdict for the plaintiff, the defendant argued that it was not a seller but that it acted merely as a broker by merely facilitating and servicing its parent corporation’s contracts for the sale of asbestos. The supreme court concluded that the jury could have concluded that the defendant’s role in marketing the asbestos was sufficient to support strict liability. Hammond, 97 Ill. 2d at 206 .

In Bittler, the plaintiffs appealed from a summary judgment in favor of the defendant on their strict liability claim. The defendant was the exclusive sales representative in its territory for the manufacturer of an Ultravac machine. The defendant moved for a summary judgment on the ground that it was not in the “chain of distribution” for the product because it did not design, manufacture, or gain possession of the product.

The appellate court reversed the grant of a summary judgment, rejecting the defendant’s argument that it merely acted as a liaison between the manufacturer and the purchaser and that its role in the sales transaction was tangential, placing it outside the chain of distribution. The appellate court found that the defendant was bound by its exclusive sales representative contract to promote the sale of the products and, through this relationship, derived an economic benefit in the form of a commission on all the sales made within its territory. Accordingly, the court held that the defendant’s “participatory connection” with the allegedly defective product was sufficient to make it subject to strict liability. Bittler, 203 Ill. App. 3d at 30 .

However, in Alvarez, 163 Ill. App. 3d at 714-16 , the appellate court affirmed a summary judgment in favor of the defendant because it did not make a profit from the sale of the allegedly defective machine, was not working as a sales representative for any party that would ultimately profit from the sale, and did not supply or have any connection with the defective machinery.

In that case, the defendant simply told a prospective purchaser about a piece of used machinery that was for sale by another company, and the defendant inspected the gearbox of the machine for the prospective purchaser. The defendant received no compensation for inspecting the gearbox, although the prospective purchaser did pay its expenses. The defendant did not make any recommendations for modification of the machine and did not participate in the negotiations for the sale, and the entire transaction took place between the purchaser and the seller. The defendant received no compensation in connection with the sale. The defendant did not participate in the design of or in fact design, prepare, manufacture, advertise, or offer to sell the machine in question or act as a manufacturer’s representative for the machine in question. Accordingly, the court found that the defendant’s conduct could not be characterized as placing the machine into the chain of distribution, and thus the defendant could not be held strictly liable for any defect in the product. Alvarez, 163 Ill. App. 3d at 713-14 .

In Rivera v. Mahogony Corp., 145 Ill. App. 3d 213 (1986), the circuit court entered a summary judgment in favor of the defendant in the plaintiffs products liability action. The circuit court found that the defendant was a “financial” lessor and consequently not in the distributive chain of the product. The court ruled that the lease was primarily a financial transaction where money was provided by one who was not in the business of selling or placing products into the stream of commerce to a lessee, who was a borrower, to enable him to purchase the product. Rivera, 145 Ill. App. 3d at 214 . The appellate court affirmed.

In that case, the evidence showed that the defendant was in the business of financing the acquisition of equipment by entering into arrangements with its customers which were styled as leases. The defendant was not in the business of selling the type of machine purchased, nor did it have any knowledge or experience concerning the manufacture, sale, or distribution of those machines. The injured plaintiffs employer selected the particular machine and obtained both a price quotation and an offer of sale from the manufacturer. The purchase was financed through an arrangement with the defendant whereby the defendant purchased the machine and leased it to the plaintiffs employer, who also had an option to purchase the machine when the lease expired. The machine was shipped directly to the plaintiffs employer, and the defendant never had possession or control of it. At the end of the lease term, the plaintiffs employer exercised its option to purchase the machine. Rivera, 145 Ill. App. 3d at 214-15 .

The appellate court distinguished “commercial” lessors, who are in the business of leasing equipment and have been held to be in the original chain of distribution because they reap a profit from placing the product into the stream of commerce (see Crowe v. Public Building Comm’n, 74 Ill. 2d 10, 15 (1978)), from “financial” lessors such as the defendant in the case before it. Rivera, 145 Ill. App. 3d at 215-16 . The court held that in the case of a “financial” lessor, the public policy considerations supporting the imposition of strict liability would not be furthered by subjecting the lessor to strict liability. Rivera, 145 Ill. App. 3d at 217 . The defendant was in no position to exert pressure on the manufacturer to enhance the safety of the product, nor did the defendant take any part in the marketing or production of the product. Rivera, 145 Ill. App. 3d at 217-18 . Finally, any profit the defendant reaped derived from having placed its money, and not the defective product, into the stream of commerce. Rivera, 145 Ill. App. 3d at 218 . Accordingly, the appellate court affirmed the circuit court’s conclusion that the defendant was not strictly liable in tort.

I find the facts of the case at bar to be more similar to those of Alvarez and Rivera than to those of Hammond and Bittler. Unlike the defendants in Hammond and Bittler, the defendant in the case at bar reaped no profit from the sale and distribution of the car-transport truck. In my opinion, the evidence is undisputed that although CS was reimbursed for its expenses in performing services for CT, it did not make any profit off the sale of the car-transport truck to CT.

Unlike the defendants in Hammond and Bittler, who were authorized sales agents for the manufacturers, the defendant in the case at bar, who neither represented the manufacturer nor had any role in ordering the truck in question, had no ability to exert pressure on the manufacturer to enhance the safety of the product. The defendant in the case at bar had no input into the production or marketing of the car-transport truck. The evidence is undisputed that CS did not play any part in selecting or ordering the truck or any of its features or options. CS never corresponded directly with the manufacturer regarding the sale and purchase of the truck; all that correspondence was conducted by CT.

Further, unlike the defendants in Hammond and Bittler, the defendant in the case at bar was not involved in promoting, marketing, or creating consumer demand for the allegedly defective product. As sales representatives for the manufacturers, the defendants in Hammond and Bittler played an integral role in the marketing enterprise that created consumer demand for the allegedly defective products.

The facts of the case at bar are similar to those in Alvarez and Rivera. Like the defendants in Alvarez and Rivera, the defendant did not play any role in promoting, marketing, or creating consumer demand for the allegedly defective product.

Like the defendant in Alvarez, the defendant in the case at bar did not make a profit from the sale of the car-transport truck and did not work as a sales representative for any party who ultimately profited from the sale. The defendant did not participate in the negotiations for the sale, and the entire transaction took place between the purchaser and the seller. The defendant did not participate in the design of or in fact design, prepare, manufacture, advertise, or offer to sell the truck in question or act as the manufacturer’s representative for the truck in question.

Like the defendant in Rivera, the defendant in the case at bar was not in the business of selling the car-transport trucks, nor did it have any knowledge or experience concerning the manufacture, sale, or distribution of those trucks. The truck was delivered directly to CT, and CS never took possession or control of the truck in question.

Because CS is not in the chain of distribution, the public policy reasons for imposing strict liability in tort — the ability to exert pressure on the manufacturer to enhance the safety of the product and the reaping of a profit from the placement of the allegedly defective product into the stream of commerce — simply do not apply in the case at bar. Because I believe there is no genuine question of material fact and that CS is entitled to a judgment as a matter of law, I would have affirmed the summary judgment in favor of the defendant.