Opposition Brief — TIC United Corp. v. Patton

Supreme Coart, U.S.

7 swe DD

co MAY 14 1996

No. 95-1707

CLERK

In The

Supreme Court of the United States

October Term, 1995

¢

TIC UNITED CORP.,

Petitioner,

VS.

RYAN M. PATTON, and KATHY PATTON STRUNK,

Respondents.

¢

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Tenth Circuit

S

RESPONDENTS’ BRIEF IN OPPOSITION

-

Gary D. McCaALtisTer*

BRENDA L. HEAD

Davis, UNREIN, HUMMER &

Buck, L.L.P.

Commerce Bank Building

100 S.E. 9th St., 3rd Floor

P. O. Box 3575

Topeka, Kansas 66601-3575

(913) 354-1100

Counsel for Respondents

*Counsel of Record

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

TABLE OF CONTENTS

Page

pr OB ee me hs 8 ly ||. Se ii

JURISDICTION AND STATUTES INVOLVED....... 1

CORRECTION OF MISSTATEMENTS IN THE PETI-

EE a ci iba lA N eer swEA ehh heise weds toon 1

REASONS FOR DENYING THE WRIT............. 4

I. THE QUESTION PRESENTED DOES NOT

PRESENT A COMPELLING REASON OR

BROAD CONSTITUTIONAL ISSUE OF GEN-

ERAL SIGNIFICANCE THAT NEEDS TO BE

ADDRESSED OR DEVELOPED BY THIS

CRA a oa Fe CLS 4E bo 84 KaO ey HE ed Cid 0. «os eine 4

II. PETITIONER WAS REASONABLY AFFORDED

NOTICE ITS CONDUCT MIGHT LEAD TO A

POST-SALE DUTY TO WARN AND THAT AN

AWARD OF PUNITIVE DAMAGES MIGHT BE

IMPOSED UNDER KANSAS LAW FOR PETI-

TIONER’S WANTON CONDUCT ............ 6

A. Kansas Law Clearly Recognized A Post-

Sale Duty to Warn Prior to This Case... 10

B. The Court of Appeals Correctly Relied

Upon Applicable Precedent to Find Notice

oe ae a ee ee ee 15

C. The Court of Appeals Correctly Deter-

mined that Prior Kansas Law Imposed a

Post-Sale Duty to Warn Upon TIC....... 16

He wet 8” ee ears. Vere ae Pee yee 19

TABLE OF AUTHORITIES

Page '

i

CASES

Boute v. City of Columbia, 378 U.S. 347, 84 S.Ct.

1697 (1964) . 6.345 55% es eae eect eens 4

Comstock v. Great Lakes Distributing Co., 209 Kan.

305, 496 Pad 1508 CVE? hock sinks ee es 17

Gee v. Tenneco, Inc., 615 F.2d 857 (9th Cir. 1980)..... 18

Johnson v. American Cyanamid Co., 239 Kan. 279,

718 F.2d 13539 (19GG) ococksusysdclocd cexveegp eet cs 11

Johnson v. Colt Industries Operating Corp., 797 F.2d

1590. (300s Civ.. TSRG). is coe evar eos 11, 14

Landgraf v. USI Film Prod., __U.S.__, 114 S.Ct. |

BABS (U9DR) orice cs cose oie adhe dak Seen ee eS 6

Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 111

SAN. TGR CISPR. 6 casino es eh ia een Bs ie 4, 16

Patton v. Hutchinson Wil-Rich Manufacturing Com-

pany, 253 Kan. 741, 861 P.2d 1299 (1993)...... passim

|

Patton v. TIC United Corp., 859 F. Supp. 509 (D. |

Bt. WOOD ok oie cis sobs were eee 16

Southwest Forest Indus., Inc. v. Sutton, 868 F.2d 352

(20th Cie, 2008 665th iS Ge ren ghee eeeeceee 15, 16

Southwestern Tel. & Tel. Co. v. Danaher, 238 U.S.

452, 3 SAA BOG CHG is aecnsscnsse ae eens 4

State ex rel. Stephan v. GAF Corp., 242 Kan. 152, 747

P20 1526 967) 6.66 cvdveiiend pune eeerrans ahy dO

Stratton v. Garvey Int'l, Inc., 9 Kan. App. 2d 254,

G76 Pad 1290 (POG. o2 .aiac keene ae passim

eT Na a erence ev eier ere

lil

TABLE OF AUTHORITIES —- Continued

Page

TXO Prod. Corp. v. Alliance Resources Corp., 509

Fee ee Ett ee fe. | 4 16

Waits v. Frito-Lay, Inc., 978 F.2d 1093 (9th Cir. Cal.,

is i cas es ige sane ERMA SIS VS 40) 5

Wooderson v. Ortho Pharmaceutical Corp., 235 Kan.

387, 681 P.2d 1038, cert. denied, 469 U.S. 965, 105

Ne ee ica as be-u seas siz. 2

CONSTITUTIONAL PROVISIONS

Fifth Amendment to the United States Constitu-

a Ae a re te A ee ee ey oes 1

Fourteenth Amendment to the United States Con-

ne ee ia eek ee ee hha Re ]

STATUTES AND RULES

ON | re ree 10

SU, SE. a 3

RESPONDENTS’ BRIEF IN OPPOSITION

Respondents request the Court deny the petition for

writ of certiorari seeking review of an opinion of the

United States Court of Appeals for the Tenth Circuit

reported at 77 F.3d 1235 (10th Cir. 1996). For convenience,

Respondents will refer to the opinions of the Tenth Cir-

cuit, the United States District for the District of Kansas

and the Supreme Court of Kansas by referring to the

pages designated in the appendix to Petitioner’s brief.

(A-1-73) For clarification purposes and identity of the

parties, please note the Petitioner herein was the defen-

dant Hutchinson Wil-Rich Manufacturing Company in

the Kansas Supreme Court case and a subsequent merger

resulted in substitution of the parties.

+

JURISDICTION AND STATUTES INVOLVED

Jurisdiction is proper for this appeal. Respondents

acknowledge the Fifth and Fourteenth Amendments to

the United States Constitution are being asserted by the

Petitioner.

¢

CORRECTION OF MISSTATEMENTS

IN THE PETITION

The Petitioner did not simply “purchase some of the

manufacturer’s assets and/or assume its obligations and

liabilities”; it purchased all of the assets, good will and

identity of the product line of Wil-Rich cultivators,

retained key personnel from the original manufacturer, in

particular John Kehrwald, Vice President of Engineering

and General Manager, who has been employed by all

corporate entities involved with this model cultivator,

and received financial and other benefits from the exten-

sive and long established dealer organization of Wil-Rich

dealers.

The suggestion on page 3 of the Petition that the

Kansas Supreme Court on certified questions “announced

for the first time” a “post-sale duty to warn” ultimate

consumers of a defect that was unforeseen at the time of

sale is not an appropriate statement of the process or the

holding of that court. This decision, while described by

the Supreme Court as a “first impression product liability

case” (A-47), noted that while the relationship between

the Petitioner and the Respondents was distinguishable

from well settled and established cases, those cases did

not signal “rejection of a post-sale duty to warn.” (A-61)

The interlocutory Supreme Court decision simply fol-

lowed an established trend in its decisions to extend

duties of reasonable care to the circumstances in this case

and discussed the steps a manufacturer must take to

locate its customers for product warnings as well as

whether there was a recognized post-sale duty to retrofit

and recall agricultural equipment. (A-15, A-48)

The Petitioner is uncandid in the way it describes the

legal successor liability claims with regard to the various

corporate entities that were originally defendants. (See

Petition at 3, 4) The Petitioner flatly misstates the record

and the express findings of the trial court and the Tenth

Circuit when it suggests the “Stratton theory disap-

peared” by the end of the trial and that this “product line

successor” theory of liability was essentially waived by

the Respondents. (See Petition at 4) This assertion is

eal

incorrect considering the express rejection of the Peti-

tioner’s arguments on this precise point by the Tenth

Circuit (A-7), when in fact it is the Petitioner that has

been found to have waived its right to complain about

the failure to submit Stratton issues to the jury. (A-7, 8)

The Stratton v. Garvey Int'l, Inc., 9 Kan. App. 2d 254, 676

P.2d 1290 (1984) theory of liability has been asserted in

this case from the beginning to the end. (A-8) The trial

court and defense trial counsel knew this, the Tenth Cir-

cuit recognized this and this Honorable Court will as well

from a reading of all three of the underlying opinions

contained in the Petitioner’s Appendix.

It is noteworthy the award of the punitive damages

in this case was rendered by a trial judge, not a jury,

following strict statutory standards and considerations

codified in a “tort reform” era statute, K.S.A. 60-3702,

adopted by the Kansas legislature which eliminated the

right for a jury to award such damages and placing a

limitation on the amount of punitive damages that can be

recovered. The amount of the punitive damage award

was slightly less than the compensatory damages

awarded by the jury and paid by the Petitioner. (A-30-36)

oa

REASONS FOR DENYING THE WRIT

THE QUESTION PRESENTED DOES NOT PRESENT A

COMPELLING REASON OR BROAD CONSTITU-

TIONAL ISSUE OF GENERAL SIGNIFICANCE THAT

NEEDS TO BE ADDRESSED OR DEVELOPED BY

THIS COURT

Petitioner argues in points I and III the question

presented is one of constitutional significance and one

which needs further analysis and development by this

Honorable Court. This is not the case considering the

treatment of the due process requirements by the courts

below. The Tenth Circuit, and for that matter, the trial

court recognized the fundamental importance of the

notice component of the Due Process Clause in the con-

text of passing upon the award of punitive damages in

this case. Had this court done otherwise, then Petitioner

might have a bonafide argument. The underlying courts

did not and the Petitioner does not.

This case involves neither the civil equivalent of an

ex post facto law or the retroactive imposition of punitive

damages as Petitioner argues. The question as presented

to this court incorrectly presupposes the non-existence of

a duty, diverting the focus away from the real issue of

whether due process was violated. This case presents a

well reasoned analysis, based upon established precedent

from recent and older decisions, TXO Prod. Corp. v. Alli-

ance Resources Corp., 509 U.S. 443, 113 S.Ct. 2711 (1993);

Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 111 S.Ct. 1032

(1991); Bouie v. City of Columbia, 378 U.S. 347, 84 S.Ct. 1697

(1964); and Southwestern Tel. & Tel. Co. v. Danaher, 238 U.S.

482, 35 S.Ct. 886 (1915), that the notice component of the

Due Process Clause is satisfied if prior law fairly indi-

cated that a punitive damage award might be imposed if

egregious conduct occurred. Judge Lungstrum discussed

the standards that were applied at the trial level, found

“egregious” conduct existed and held this standard was

satisfied by the jury’s finding of wanton conduct. In fact,

the trial court specifically agreed with the jury’s finding

of wanton conduct. (A-29-30, 32-36)

The Tenth Circuit carefully analyzed the existing

authority and proceeded, without difficulty, to fashion a

two part test in deciding the Petitioner's due process

rights were not violated. The Tenth Circuit made specific

factual and legal findings in its analysis and found Peti-

tioner did have sufficient notice that its conduct might be

found to be tortious under established Kansas law and

Petitioner did have notice punitive damages might be

awarded in Kansas for wanton and reck!»ssly indifferent

conduct. (A-15-16)

The existing Supreme Court precedent is neither con-

fusing or in need of further development with regard to

the importance of the notice element of the Due Process

Clause when punitive damages are imposed. This court

recently denied the Petition in Waits v. Frito-Lay, Inc., 978

F.2d 1093 (9th Cir. Cal., 1992), cert. denied, 506 U.S. 1080,

113 S.Ct. 1047 (1993) which made a similar “lack of

notice” due process argument. In Waits, the Ninth Circuit,

while noting punitive damages are generally unavailable

when an issue is one of first impression or where a right

has not been clearly established, held the law was clearly

established and the defendants consciously disregarded

the rights of others by their conduct.

As previously noted by the Tenth Circuit, Petitioner’s

continued reliance on Landgraf v. USI Film Prod., __ U.S.

___, 114 S.Ct. 1483 (1994) is misplaced. (A-13) The case at

bar does not involve a retroactive imposition of punitive

damages, but rather a logical extension of the duty of

reasonable care in a product liability post-sale warnings

context. The fact the Petitioner regrettably chose to

engage in wanton conduct by totally failing to take any

corrective action in the face of repeated and unam-

biguous field service history evidencing similar cata-

strophic injury and fatality scenarios is what gave rise to

what was a most predictable award of punitive damages.

Il.

PETITIONER WAS REASONABLY AFFORDED

NOTICE ITS CONDUCT MIGHT LEAD TO A POST-

SALE DUTY TO WARN AND THAT AN AWARD OF

PUNITIVE DAMAGES MIGHT BE IMPOSED UNDER

KANSAS LAW FOR PETITIONER’S WANTON CON-

DUCT

In order to evaluate the arguments presented by the

Petitioner in Section II of its Petition, the court needs to

be provided with an additional factual summary to see

the established trend and clarity of Kansas law on the

points about which Petitioner complains. After reviewing

the relevant facts and Kansas cases, this court will reason-

ably come to one of two conclusions: (1) the Petitioner

was either guilty of wanton and recklessly indifferent

conduct in failing to provide a post-sale warning relative

to the latent hazards presented by the cultivator wings

falling without warning under circumstances of hydraulic

or other mechanical failure which were unknown to the

operator (which was found by the jury, trial court and the

Tenth Circuit) or (2) Petitioner was oblivious to what was

transpiring in Kansas product liability law while doing

business in the state of Kansas as a farm product manu-

facturer for three years in advance of Ryan Patton’s

injury.

Petitioner purchased all of the assets, the good will

and identity of the Wil-Rich farm equipment division,

product line and established dealer distribution organiza-

tion from Lear Siegler Diversified Holding Corp. in

August, 1987. With this acquisition came all of the inci-

dents of this manufacturing operation including individ-

ual engineers and decisionmakers that had been

originally employed by Wil-Rich, Inc., the original manu-

facturer and seller of the cultivator in this case in 1977.'

1 John Kehrwald is the Vice-President of Engineering and

General Manager of the Wil-Rich manufacturing facility in

Wahpeton, North Dakota. Mr. Kehrwald was originally

employed by Wil-Rich, Inc. in 1976. He has been the decision-

maker for all engineering and safety issues including the

decision not to issue any post-sale warnings concerning the Wil-

Rich ninety degree wing field cultivators since the date the

Patton cultivator was first sold; throughout the ownership of

the Wahpeton manufacturing facility by all Lear Siegler entities

which ended in August, 1987, the date of Ryan Patton’s injury,

April 21, 1990, and until the present time under Petitioner’s

ownership which began in August, 1987. Mr. Kehrwald is the

one common denominator over time that resulted in the jury

and all courts reviewing the facts of this case to find there was a

lack of reasonable care and wanton conduct due to Petitioner's

failure to take any action with regard to post-sale warnings

given the considerable adverse field service history actually

known to Mr. Kehrwald, other management and the owner of

the Petitioner.

Beginning in the mid to late 1980's, field experience

involving the Wil-Rich ninety degree wing field cultivator

disclosed that repeated and similar catastrophic injuries

and fatalities were occurring. These incidents involved

unknown or unrecognized hydraulic or mechanical fail-

ure in the linkage holding the wing in the ninety degree

upright position while it was secured by a lock pin. In

order for the operator to remove the wing lock pin to

lower the wing before operating the cultivator, the loca-

tion of the lock pin bracket required the operator to stand

directly under the wing. Once the pin was removed in

these situations, the wing would fall without warning

and either significantly injure or kill the unsuspecting

operator who had performed this same routine hundreds

of times before without incident. The wing is so heavy

and falls so quickly that an operator cannot run or move

fast enough once the wing begins to fall to avoid being

crushed or impaled by the wing and cultivator shovels. It

is the combination of this scenario and the location of the

wing lock pin which defines the latent defect in the

cultivator that became known after the point of sale and

which gives rise to the need for the post-sale warning.

Mr. Kehrwald became personally aware of each of the

six injury and fatality accidents that occurred before Ryan

Patton was rendered paraplegic by such a similar occur-

rence.2 Mr. Kehrwald participated in decisions not to

2 The other accidents preceding the Patton injury and the

date Mr. Kehrwald became aware of them are as follows:

Brinkman (9/29/83); Raitz (7/25/86); Langenfeld (9/2/86);

Lipetsky (10/86); John (2/11/88); and Sedler (7/19/89). Mr.

Kehrwald investigated all occurrences known to the Petitioner.

provide warning labels or instructions on cultivators

manufactured and sold in the 1970’s and made the deci-

sion on behalf of the Petitioner not to provide any post-

sale warnings or instructions for cultivators in the field.

No corrective actions of any kind occurred until after the

jury rendered its verdict in this case finding Petitioner’s

failure to act as wanton conduct.

Substantial evidence in this case was introduced

regarding the existence, function and the day-to-day

operation of the extensive Wil-Rich dealer organization.

In particular, the Respondents introduced abundant evi-

dence on the particular Wil-Rich dealer that sold and

serviced the Patton cultivator since 1977 and about the

continual and close contacts between the Wil-Rich manu-

facturing facility in Wahpeton, North Dakota, the local

dealer and their customers including the Pattons. The

local dealer knew precisely where the Pattons and their

Wil-Rich equipment were located. The local dealer also

knew the names, locations and the models of Wil-Rich

equipment that was owned and operated by numerous

other farmers who testified at trial. The dealer was shown

to be able, with relative ease, to contact these individuals

with any necessary safety related information.

Who was in a better position under the facts of this

case to have warned the innocent users of this equipment

if not the Petitioner who acquired and retained the prod-

uct name identity, the manufacturing facility, the com-

pany personnel, the established dealer organization, the

ongoing day-to-day operation of its business and the

same decisionmakers? The jury and reviewing courts

must have asked themselves this same question and

arrived at the same conclusion, namely, the Petitioner is

10

liable for its negligent and wanton conduct and the corre-

sponding compensatory and punitive damage awards.%

A.

Petitioner argues the Federal Court's use of the certi-

fication process to the Kansas Supreme Court in this

diversity product liability action indicates Kansas cases

did not recognize a post-sale duty to warn. Therefore,

Petitioner argues it was denied sufficient notice that its

conduct by doing nothing with regard to product warn-

ings might expose it to liability under Kansas negligence

law or to punitive damages if its continued omissions

were judged to be wanton or recklessly indifferent under

the circumstances. At first blush, this argument appears

to have merit. Upon critical analysis, however, and utiliz-

ing the actual record in this case as well as the reported

decisions which belie the Petitioner’s stated position, the

argument withers and raises a more troubling question as

to good faith advocacy of this position by Petitioner

given the underlying record.

3 The Kansas Supreme Court also recognized this reality

when it discussed the post-sale duty to warn in the context of

arguments made by the Petitioner under K.S.A. 60-3307, a

statute relating to the inadmissibility of evidence under the

Kansas Product Liability Act. The Kansas Supreme Court stated:

“If we were to accept Hutchinson Wil-Rich’s view of 60-3307, we

would endorse a situation where a manufacturer’s knowledge

of frequently occurring life-threatening, post-sale hazards in a

product free of known hazards at the point of sale would render

evidence of those hazards inadmissible when the manufacturer

has made no attempt to warn of the hazard.” (A-68)

11

The handling of this issue under pre-existing Kansas

common law, first by the trial court and later by the Tenth

Circuit in affirming the trial court’s ruling on the Peti-

tioner’s due process argument challenging the punitive

damage award, is made simple and compels the denial of

this petition.

Kansas courts have decided a number of cases dating

back to 1984 that would “fairly indicate” to anyone read-

ing them that post-sale duties to warn existed in Kansas

product liability law, albeit these cases involved ethical

drugs, roofing materials and handguns. A reading of

these same cases, excepting Stratton, “fairly indicated”

punitive damages might be imposed in response to

egregiously tortious conduct. Johnson v. Colt Industries

Operating Corp., 797 F.2d 1530 (10th Cir. 1986); State ex rel.

Stephan v. GAF Corp., 242 Kan. 152, 747 P.2d 1326 (1987);

Johnson v. American Cyanamid Co., 239 Kan. 279, 718 P.2d

1318 (1986); Wooderson v. Ortho Pharmaceutical Corp., 235

Kan. 387, 681 P.2d 1038, cert. denied, 469 U.S. 965, 105 S.Ct.

365 (1984) and Stratton v. Garvey Int'l, Inc., 9 Kan. App. 2d

254, 676 P.2d 1290 (1984).

In Wooderson, the Kansas Supreme Court outlined

what was required in order to discharge known duties of

reasonable care with regard to pre and post-sale warnings

to doctors prescribing ethical drugs. Wooderson, 235 Kan.

at 399-409. Why is this case important in terms of provid-

ing notice of potential tort and punitive damage liability?

The court found the drug manufacturer to be an expert

(one that possesses superior or technical knowledge of

the product) because it had the benefit of technical

knowledge as well as the scientific and adverse reaction

data related to the drugs involved on an ongoing basis.

12

Isn’t this analogous to a farm equipment manufacturer

receiving adverse field service history of similar injury

and fatality accidents on an ongoing basis while possess-

ing all of the technical knowledge regarding the engineer-

ing design of its field cultivator? The drug manufacturer

was held to have a “continuous duty” to keep abreast of

developments touching upon the manufacturer’s product

and to notify those affected by adverse reactions discov-

ered from the use of the product. See Wooderson, 235 Kan.

at 400. While it might be suggested an ethical drug manu-

facturer is in a different situation with regard to staying

abreast of the scientific literature and adverse reactions

data due to the regulatory process involving ethical

drugs, it does not take a quantum leap to see the predict-

able outcome of a scenario where the principles of rea-

sonable care transcend different products and industries

when critical safety information is known by a manufac-

turer who is apprised of field service history about its

product and it fails to provide this information to those

individuals who are exposed to life threatening hazards

that are either unknown or unappreciated by them. Obvi-

ously, the farm equipment manufacturer, like the drug

manufacturer, is in a position of having superior technical

and field service knowledge as compared to the dealer

and end user. It is, in part, this disparity in perspective

and knowledge that initially brought about the “continu-

ing” or “post-sale” duties to exist with regard to the

providing of safety information concerning products.

Wooderson also provided a comprehensive review of

the state of Kansas law with regard to the types of con-

duct that might give rise to the imposition of punitive

damages in all contexts, not just those involving ethical

13

drugs. Wooderson, 235 Kan. at 415-416. It is not even

arguable that Petitioner could read this decision and not

come away with a clear understanding that punitive

damages might loom on the Kansas horizon upon a total

failure to act with regard to providing post-sale warnings

concerning critical safety information when numerous

users of its product had met with the same catastrophic

fate under similar circumstances. The Petitioner knew

what was necessary to discharge its responsibilities in

this case and regrettably it chose not to act.

If for some reason the Petitioner misunderstood the

teachings of Wooderson, then it certainly must have

become better informed just four months after it acquired

the assets of the Wil-Rich Division and began doing busi-

ness in Kansas in August, 1987. In December, 1987 State

ex rel. Stephan v. GAF Corp., 242 Kan. 152, 747 P.2d 1326

(1987) was decided by the Kansas Supreme Court. GAF

was primarily a fraudulent concealment case involving

another type of product and industry, roofing materials.

This case is clear as to what might be the result when a

manufacturer fails to provide prompt warnings with

regard to a product hazard that becomes known to the

manufacturer after the product has been put on the mar-

ket and it is known that repeated failure and causal injury

is occurring in the field. The state of the law in Kansas

could not have been misunderstood or misinterpreted by

any reasonably informed manufacturer. One who might

choose to do nothing with regard to providing necessary

warnings was on notice it most probably would be sub-

jected to tort liability for its negligence and to punitive

damages for its wanton conduct.

14

Another product liability case in Kansas involving

another type of product gave rise to a punitive damage

award in the relevant time frame. Johnson v. Colt Industries

Operating Corp., 797 F.2d 1530 (10th Cir. 1986). In Johnson,

a punitive damage award was affirmed by the Tenth

Circuit. This case involved a handgun. The court dis-

cussed in detail the state of Kansas law concerning the

type of tortious conduct that would give rise to a trier of

fact being permitted to consider a punitive damage

award. Id. at 1536.

If any doubt remained as to whether a succeeding

purchaser of another’s assets might be liable for failing to

warn of a defect in a predecessor’s product once the

defect came to the successor’s attention, such doubt was

resolved under Kansas law by the 1984 decision in Strat-

ton v. Garvey Int'l, Inc., 9 Kan. App. 2d 254, 676 P.2d 1290

(1984). This case will be discussed in more detail in

Argument C, infra, but would any reasonable engineering

manager have difficulty answering the question as to

what his or her duty is with regard to warning about

defects in his or her predecessor’s product if the manager

knows of the defective condition of the product and there

is a relationship existing between the successor entity and

the customers of the predecessor entity? The answer is

clearly no under the analysis provided by the court in

Stratton, Id. beginning at 258.

Petitioner persists in mischaracterizing the Kansas

Supreme Court's decision in Patton v. Hutchinson Wil-Rich

Manufacturing Company, 253 Kan. 741, 861 P.2d 1299

(1993) (Patton I) in an attempt to create the illusion there

has been a retroactive application of a duty, which ulti-

mately resulted in the imposition of punitive damages.

15

Judge Lungstrum rejected this precise argument when he

addressed this point in his decision. (A-28-30)

This same argument was later presented to the Tenth

Circuit. The Tenth Circuit began its analysis de novo

(A-12) and utilized precedent from this court and estab-

lished Kansas case law. The Circuit Court noted:

“While Patton I does state that the certified

questions presented issues of first impression,

861 P.2d at 1303, the questions involved the

steps a manufacturer must take to locate its

customers and whether Kansas recognized post-

sale duties to retrofit or recall dangerous prod-

ucts. Id. at 1303-04. The opinion noted that there

was “no statutory limitation nor . . . precedential

authority” suggesting that Kansas would reject

a manufacturer’s post-sale duty to warn. Id. at

1311. When TIC decided to forego any warning

program regarding defects in the Wil-Rich culti-

vator, it cannot state that its acts, based on the

principles of Kansas common law, represented

“no departure from any prescribed or known

standard of care.” Danaher, 238 U.S. at 490.

(A-15-16)

It is inappropriate for Petitioner to persist in this

specious argument. The Petition should be denied.

Petitioner suggests the Tenth Circuit, and by implica-

tion the trial court, relied upon inapplicable precedent in

arriving at an erroneous decision on the due process

issue. The analysis employed by the Tenth Circuit, reject-

ing Petitioner’s arguments with regard to Southwest Forest

Indus., Inc. v. Sutton, 868 F.2d 352 (10th Cir. 1989) is hardly

16

subject to criticism since the Court acknowledged the

cases addressed by Judge Lungstrum in Patton v. TIC

United Corp., 859 F. Supp. 509, 512 (D. Kan. 1994), (Patton

II), and also found Southwest Forest instructive on how to

determine whether Kansas common law duties were

fairly indicated in the state’s case law even though South-

west Forest was acknowledged to not address notice

under the Due Process Clause. (A-15) The Tenth Circuit

then utilized the very cases from this court the Petitioner

is relying upon, TXO Prod. Corp. v. Alliance Resources

Corp., 509 U.S. 443, 113 S.Ct. 2711 (1993) and Pacific Mut.

Life Ins. Co. v. Haslip, 499 U.S. 1, 111 S.Ct. 1032 (1991), to

conduct its evaluation under a two-part test to determine

if the award of punitive damages against Petitioner

offended due process. Petitioner’s Due Process rights

were not violated.

The decision of the Tenth Circuit was well reasoned

and sound on this issue. The Petition should be denied.

of

Petitioner’s final argument regarding the correct

interpretation that should be given to Stratton v. Garvey

Int'l, Inc., 9 Kan App. 2d 254, 676 P.2d 1290 (1984) is

without merit. First, Stratton involved an analysis of

whether an independent duty can exist for a successor

corporation to warn about defects in a predecessor’s

product. Stratton involved a situation where liability was

being sought to be imposed for the predecessor’s lia-

bilities, when under the traditional corporate law theory

of liability, such liability would not exist. Second,

Respondents never contended at trial Petitioner was a

17

“legal corporate successor” to the original manufacturer,

Wil-Rich, Inc. Respondents always contended Petitioner

was liable under the Stratton theory of liability since it

was a successor entity that purchased the assets of the

Wahpeton, North Dakota manufacturing facility (Wil-

Rich Division), and assumed liabilities and debts related

to those assets by its agreement with the transferor,

because Petitioner did not have a sufficient nexus to

make it a “legal successor” in order to enforce liability

under Comstock v. Great Lakes Distributing Co., 209 Kan.

306, 496 P.2d 1308 (1972). Nonetheless, Respondents suc-

cessfully asserted and proved the “product line suc-

cessor” theory at trial to the satisfaction of the judge and

jury by meeting the burden of proof required by Stratton,

9 Kan. App. 2d at 258.

Petitioner ignores the specific holding of the Tenth

Circuit, the abundant record contradicting its “abandon-

ment” argument,‘ and the admissions of Petitioner’s trial

counsel acknowledging Respondents’ assertion of lia-

bility under Stratton® when it contends Respondents

abandoned the Stratton theory of liability prior to verdict.

(See Petition at 16). The Tenth Circuit expressly found

Petitioner waived its objections to the way the trial court

addressed and presented Stratton issues in its rulings and

4 This record is summarized at pp. 10-13 of Appellees’ Brief

filed with the Tenth Circuit and the record evidence is contained

in Aplee. Supp. App. at 1-4, 5, 17-18, 40-42, 95-98, 163-165,

423-462, 465-470, 476-478, 473-484, 493-501, 505-509, 551-552,

634, 694-704, Aplt. App. at 55-62 and TT 1236 and 1228. Also see

f.n. 2 at p. 11 of Appellees’ Brief.

5 Aplee. Supp. App. at 496-500.

18

with the jury. (A-7, 8) No further comment on this point is

deserved.

The argument made by Petitioner that there is a

significant distinction between the duty imposed by

Stratton and the duty imposed by Patton I, and, therefore,

Petitioner should be relieved from the punitive damage

award in this case is also misplaced. Stratton anticipates

warnings may be required of a successor entity when it

learns of defects in its predecessor’s product. This discov-

ery may not necessarily be as of the time of sale since in

Stratton the successor entity did not manufacture or con-

struct man-lift devices and “recently discovered” defects

may result in the imposition of a duty to warn. Stratton, 9

Kan. App. 2d at 256, 258 (1984), citing Gee v. Tenneco, Inc.,

615 F.2d 857, 866 (9th Cir. 1980). Stratton contemplated

and recognized a duty to warn after the point of sale.

It is almost unimaginable the Petitioner argues at this

point in this case that its conduct cannot be the subject of

punitive damage liability since all conduct must be evalu-

ated as to what was known and foreseeable at the time

the product was sold. The Supreme Court of Kansas in

Patton v. Hutchinson Wil-Rich Manufacturing Company, 253

Kan. 741, 861 P.2d 1299 (1993), logically extended the

general common law of Kansas, which had long required

a manufacturer to exercise reasonable care, to a specific

factual situation which had not previously been consid-

ered by the Kansas Supreme Court. The notions of rea-

sonable care require one to act or refrain from acting

when it is reasonable to do so under the circumstances.

This is true under established case law regardless if it

occurs before or after the sale of a product. The decision

19

to not take action can rise above mere actionable negli-

gence to wanton or recklessly indifferent conduct when

one is compelled to act for safety reasons once it is

learned repetitive and similar injuries and deaths are

occurring due to a latent hazard discovered in a product.

Petitioner took not only an unreasonable but, indeed, an

unacceptable risk with the lives and well being of its

customers. This was done with total indifference to estab-

lished rules of tort and punitive damage liability. The jury

and reviewing courts have found this to be unacceptable

conduct on the part of the Petitioner as should this Hon-

orable Court. The Petitioner has failed to articulate any

compelling reasons for granting certiorari and the Peti-

tion should be denied.

CONCLUSION

For the above and foregoing reasons, the writ of

certiorari should be denied.

Respectfully submitted,

Davis, Unrein, Hummer &

Buck, L.L.P.

Gary D. McCa uster

Brenpa L. Heap

Commerce Bank Building

100 S.E. 9th St., 3rd Floor

P. O. Box 3575

Topeka, Kansas 66601-3575

Telephone: (913) 354-1100

Counsel for Respondents