Edwards v. Pepsico, Inc.

FILED
United States Court of Appeals
Tenth Circuit

UNITED STATES CO URT O F APPEALS
M arch 10, 2008
Elisabeth A. Shumaker
FO R TH E TENTH CIRCUIT Clerk of Court

SAM UEL D . ED W ARD S,

Plaintiff-Appellant,

v. No. 06-7032
(D.C. No. CIV-04-096-W )
PEPSICO , INC., a North Carolina (E.D. Okla.)
corporation; B.W . SIN CLAIR, IN C.,
a Texas corporation,

Defendants-Cross-Defendants-
Cross-Claimants-Third-
Party-Plaintiffs-Appellees,

W M . W . M EYER & SONS, IN C.,
an Illinois corporation; PEPSI-CO LA
COM PA NY, a North Carolina
corporation,

Defendants-Cross-Defendants-
Cross-Claimants-Appellees,

LO CK W OOD GREEN E EN GINEER S,
INC., a foreign corporation,

Defendant-Cross-Defendant-
Cross-Claimant-Third-
Party-Defendant-Appellee,

CONOPCO, INC., d/b/a Thomas J.
Lipton Company, a V irginia
corporation,

Defendant-Cross-Defendant-
Cross-Claimant-Third-
Party-Plaintiff,
 W H ITLOCK PA CK A G IN G
CORPORATIO N, IN C.,

Third-Party-Defendant,

and

JOH N D OE; JAN E DO E,

Defendants.

OR D ER AND JUDGM ENT *

Before M U RPH Y, PO RFILIO, and EBEL, Circuit Judges.

In this diversity action, plaintiff Samuel D. Edw ards sued several business

entities alleging they were responsible for defects in the design and manufacture

of the machine that caused a severe injury to his hand. The jury awarded actual

damages in the total amount of $1.5 million against defendants Pepsico, Inc.,

Pepsi-Cola C ompany, and B. W . Sinclair, Inc., but found in favor of defendants

W m. W . M eyer & Sons, Inc., and Lockwood Greene Engineers, Inc. On appeal,

M r. Edwards challenges the unfavorable portion of the jury verdict and the

*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent w ith Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.

-2-
district court’s entry of judgment as a matter of law on his punitive-damages

claim. W e affirm the judgment of the district court.

I. Background

M r. Edwards had three fingers severed from his dominant hand while

working on a bulk bag unloading unit (BBU) at the place of his employment,

W hitlock Packaging Corporation, Inc. (W hitlock). His lawsuit asserted that,

under Oklahoma state-law theories of manufacturers’ product liability and gross

negligence, defendants were responsible for design flaw s in the BBU and a failure

to w arn of safety concerns. 1

At trial, the jury learned about the BBU and the roles played by the various

defendants. The BBU was designed for Pepsi-Cola Company, a division of

Pepsico, Inc. (Pepsi), as part of a system for the production of ready-to-drink

beverages bottled under the Lipton Tea name. Pepsi pressed for an accelerated

manufacturing schedule because it had identified bottled tea as a lucrative

product.

The BBU holds a 1,600-pound sack of tea leaves and allows the leaves to

flow through its rotary feeder component to unload a specified weight into a large

brew basket. Lockwood Greene Engineers (LGE), a design and procurement firm,

1
W ith the consent of the parties, M r. Edwards’ case was assigned to a
United States M agistrate Judge for all purposes, including final disposition. See
28 U.S.C. § 636(c)(1). The magistrate judge conducted the jury trial in this
matter.

-3-
created the initial design and, as Pepsi’s agent, hired B. W . Sinclair, Inc. to

manufacture ten of the systems. W m. W . M eyer & Sons, Inc. (M eyer) entered

into a contract with Sinclair to supply the BBU feeder component. During the

bidding process, M eyer deleted a discharge guard for the feeder component from

the quote at the request of a Sinclair manufacturing representative. M eyer

delivered the feeders, with attached warning stickers, additional warning stickers,

and manuals warning against operating the feeder without a guard on the

discharge end and warning the user to keep hands away from the feeder. Sinclair

incorporated the feeders into the systems and delivered them to designated

facilities.

One of the ten systems was installed at Whitlock, which installed a guard

on the feeder approximately two years before M r. Edwards’ injury but removed it

because it interfered with the flow of tea. At the time of the incident,

M r. Edwards believed there was a clog in the BBU. He attempted to remedy the

problem without shutting off the power or noticing the warning signs. He knelt

down and placed his dominant hand into the unguarded discharge opening of the

feeder. The rotating vanes inside the feeder sliced off his fingers.

M r. Edwards’ experts testified that the unguarded moving blades of the

feeder were unreasonably dangerous and that defendants had cost-effective,

alternative-design options. They also stated that the existing warnings were too

small, blocked by hardw are, or in the wrong place. Plaintiff’s theory of the case

-4-
was that “speed and greed . . . controll[ed] the project rather than engineering

standards.” Aplt. Br. at 10.

Defendants put on evidence indicating that, prior to M r. Edwards’ incident,

there had been no reports of similar injuries to workers on any of the ten

manufactured systems. An experienced manufacturing manager testified that he

had never seen a guard on the discharge outlet of a BBU because there was no

expectation that an operator would be near it. In addition, they demonstrated that

M r. Edwards was aware of Whitlock’s safety rules prohibiting employees from

putting their hands into moving machines and requiring employees to shut off

power before working on equipment.

The district court denied defendants’ motions for judgment as a matter of

law on M r. Edwards’ claims for negligence and manufacturers’ product liability.

Before sending the case to the jury, however, the court dismissed the claim for

punitive damages. The court also declined to give M r. Edwards’ two proposed

instructions on the law of agency.

The jury returned a verdict against the Pepsi defendants and Sinclair, but in

favor of LGE and M eyer. The jury awarded M r. Edwards a total of $1,500,000.

In allocating fault with regard to the negligence claim, the jury found

M r. Edwards 10% negligent, Pepsi 50% negligent, Sinclair 20% negligent,

-5-
W hitlock (a non-party) 20% negligent, and LG E and M eyer 0% negligent. The

district court entered judgment on the jury verdict. 2

II. Discussion

M r. Edwards raises three issues on appeal. He asserts that: (1) the district

court should have instructed the jury on the law of agency, (2) there was sufficient

evidence to submit his punitive-damages claim to the jury, and (3) he was entitled

to judgment as a matter of law against M eyer and LGE on his manufacturers’

products liability claim. W e will address M r. Edwards’ issues in the order in

which they arose at trial.

A. Proposed Jury Instructions on Law of Agency

W e review the trial court’s refusal to give M r. Edwards’ requested

instructions for abuse of discretion. See United States v. M oran, 503 F.3d 1135,

1146 (10th Cir. 2007), petition for cert. filed (U .S. Dec. 21, 2007) (No. 07-8500).

Assessing an exercise of discretion requires a de novo determination of “whether,

as a whole, [the instructions] correctly stated the governing law and provided the

jury with an ample understanding of the issues and applicable standards.” World

Wide Ass’n of Specialty Programs v. Pure, Inc., 450 F.3d 1132, 1139 (10th Cir.

2
After entering judgment on the jury verdict, the district court ruled in favor
of Pepsi on its cross-claim against Sinclair for indemnity and contribution. This
court has affirmed the district court’s judgment requiring Sinclair to indemnify
Pepsi. Edwards v. Pepsico, Inc., No. 06-7036, 2007 W L 2962214, *1 (10th Cir.
Oct. 11, 2007).

-6-
2006) (quotation omitted). “The question of the substance of a jury instruction in

a diversity case is controlled by state law although the grant or denial of the

instruction is a matter of federal procedure.” Kieffer v. Weston Land, Inc., 90 F.3d

1496, 1500 (10th Cir. 1996).

On appeal, M r. Edwards asserts that his proposed agency instructions w ould

have made a difference in the outcome of his case: the jury may have decided

M eyer, the feeder-component supplier, was as culpable as Sinclair, the

manufacturer. He claims that a properly instructed jury could have found M eyer

liable for its sales agent’s acquiescence in Sinclair’s request to remove a guard

from the final quote or, alternatively, concluded “that M eyer was acting as an

agent of Sinclair.” Aplt. Br. at 27-28. W e reject M r. Edw ards’ contentions.

The sales agent’s employment relationship with M eyer was evident from

the testimony. The jury instructions made it plain that an “act or omission of

an . . . employee while acting within the scope of his employment is the act or

omission of the particular Defendant for whom the . . . employee worked.” A plt.

App., Vol. I at 191. Another instruction on this issue would be duplicative and

thus unnecessary. See United States v. M cKinney, 822 F.2d 946, 949 (10th Cir.

1987) (stating that “requested instructions that are . . . repetitious are correctly

refused”). Further, no evidence supports M r. Edwards’ theory of a M eyer/Sinclair

agency. A party is only entitled to an instruction on a legal doctrine if enough

-7-
evidence was presented at trial for a reasonable jury to find in favor of that party

based on the doctrine. Cf. Kieffer, 90 F.3d at 1500-01.

The instructions provided the jury with an accurate understanding of the

relevant legal standards and factual issues in the case. W e see no error and,

accordingly, no abuse of discretion in connection with the jury instructions.

And, in any event, our review of the record reveals that M r. Edwards’ proposed

instructions w ould have had no bearing on the outcome of the trial.

B. Punitive damages

The trial court granted defendants’ motion for judgment as a matter of law

and dismissed M r. Edwards’ punitive-damages claim. W e review this ruling

de novo, considering the entire record in the light most favorable to the

non-moving party. Herrera v. Lufkin Indus., Inc., 474 F.3d 675, 685 (10th Cir.

2007). Although we analyze the underlying claim under state law, “[t]he

appropriateness of a Rule 50 judgment as a matter of law is a federal procedural

question.” City of Hobbs v. Hartford Fire Ins. Co., 162 F.3d 576, 581 (10th Cir.

1998) (quotation omitted). Cf. Eck v. Parke, Davis & Co., 256 F.3d 1013, 1016

(10th Cir. 2001) (“This diversity action is governed by Oklahoma’s substantive tort

law, but we are governed by federal law in determining the propriety of the district

court’s grant of summary judgment”).

Under federal procedural rules, judgment as a matter of law is warranted

only “‘[i]f during a trial by jury a party has been fully heard on an issue and there

-8-
is no legally sufficient evidentiary basis for a reasonable jury to find for that

party.’” Herrera, 474 F.3d at 685 (quoting the version of Fed. R. Civ. P. 50(a)(1)

effective until Dec. 1, 2007). “[T]o affirm the grant of judgment as a matter of

law, this court must be certain that the evidence conclusively favors one party such

that reasonable men could not arrive at a contrary verdict. This court must construe

the evidence and inferences most favorably to the non-moving party, the Plaintiff.”

Black v. M & W Gear Co., 269 F.3d 1220, 1239 (10th Cir. 2001) (quotation and

citation omitted). Nevertheless, “the question is not whether there is literally no

evidence supporting the nonmoving party but whether there is evidence upon which

a jury could properly find for that party.” Herrera, 474 F.3d at 685 (quotation

omitted). The nonmoving party “must present more than a scintilla of evidence

supporting [his] claim.” Id.

Oklahoma substantive law provides, inter alia, that “[p]unitive damages are

awarded ‘only when the evidence plainly show s oppression, fraud, malice, or gross

negligence.’” Sims v. Great Am. Life Ins. Co., 469 F.3d 870, 893 (10th Cir. 2006)

(quoting M cLaughlin v. Nat’l Benefit Life Ins. Co., 772 P.2d 383, 386 (Okla. 1988)

(further quotation omitted)); see Okla. Stat. tit. 23, § 9.1 (permitting recovery of

punitive damages within statutory limits if a jury finds by clear and convincing

evidence that the defendant has been guilty of reckless disregard for the rights of

others or acted intentionally and with malice towards other). “Under § 9.1, for

punitive damages to be allowed there must be evidence, at a minimum, of reckless

-9-
disregard toward another’s rights from which malice and evil intent may be

inferred.” Badillo v. M id Century Ins. Co., 121 P.3d 1080, 1106 (O kla. 2005).

And “‘reckless disregard’” means that the defendant “‘was either aware, or did not

care that there was a substantial and unnecessary risk that [its] conduct would

cause serious injury to others.’” Black, 269 F.3d at 1239 (quoting Okla. U nif. Civil

Jury Instruc. 5.6, available at http://www.oscn.net/applications/oscn). “‘[T]he

conduct . . . must have been unreasonable under the circumstances, and also there

must have been a high probability that the conduct would cause serious harm to

another person.’” Id.

M r. Edwards states that the punitive damages claim should have been

presented to the jury because there was some “competent evidence” supporting

the elements of his punitive damage claim. Aplt. Br. at 15, Reply Br. at 14.

In contrast, the district court determined that M r. Edwards had “failed to

demonstrate . . . that any of the defendants were aware that the failure to place

a guard or further warnings on the bulk bag unloader would place someone in

plaintiff’s circumstances in substantial risk of serious injury.” A plt. App., Vol. III

at 1033. Further, the evidence did not “show that any of the named defendants did

not care that their actions would result in injury.” Id. In the district court’s view ,

“[t]he requisite high probability that defendant[s’] actions w ould result in injury is

simply lacking.” Id.

-10-
 Our review of the appellate record convinces us the trial court correctly

withheld the issue of punitive damages from jury consideration: the record does

not contain competent evidence from which a reasonable jury could find reckless

disregard sufficient to support an inference of evil intent and malice.

C. Judgm ent as a m atter of law against M eyer and LG E

M r. Edwards argues that he was entitled to judgment as a matter of law

against M eyer and LGE. A “particularly strict” standard is applied when the party

with the burden of proof moves for judgment as a matter of law. Weese v.

Schukman, 98 F.3d 542, 547 (10th Cir. 1996). Under these circumstances, “[t]he

evidence is tested for its overwhelming effect.” Id. (quoting Hurd v. Am. Hoist &

Derrick Co., 734 F.2d 495, 499 (10th Cir. 1984)). The movant is entitled to a

favorable ruling “only if the evidence is such that without weighing the credibility

of the witnesses the only reasonable conclusion is in his favor.” Id. (quoting Hurd,

734 F.2d at 499).

M r. Edwards asserts that, as a matter of law , M eyer and LGE should be held

strictly liable for their participation in the manufacture of the BBU. An Oklahoma

manufacturers’ product liability claim requires a plaintiff to demonstrate three

elements: (1) the product caused plaintiff’s injury; (2) a defect in the product

existing at the time it left the defendants’ possession and control; and (3) the defect

rendered the product unreasonably dangerous. Kirkland v. Gen. M otors Corp.,

521 P.2d 1353, 1363 (Okla. 1974). “The alleged defect may be the result of

-11-
a problem in the product’s design or manufacture, or it may be the result of

inadequate warnings regarding use of the product.” Wheeler v. HO Sports Inc.,

232 F.3d 754, 757 (10th Cir. 2000) (quotation omitted).

M r. Edwards’ argument against M eyer and LG E begins and ends with the

proposition that, under Oklahoma law , a manufacturers’ product liability claim

applies to manufacturers, “processors, assemblers, and all other persons who are

similarly situated in processing and distribution.” Kirkland, 521 P.2d at 1361.

There is no legal support, however, for M r. Edwards’ attempt to extend this

principle and make all defendants w ithin the chain of distribution automatically

liable for a defective product. Rather, “responsibility for the defect must still be

traced to the proper Defendant.” Id. at 1365. Thus, “which Defendant is

responsible for an alleged defect [is] determined in the trial court.” Id.

At trial, the jury was presented with competing versions of the facts relating

to the design and manufacture of the BBU. As a result, M r. Edwards was not

entitled to judgment as a matter of law. The district court correctly entered

judgment on the jury verdict in favor of M eyer and LGE.

The judgment of the district court is AFFIRMED.

Entered for the Court

David M . Ebel
Circuit Judge

-12-