IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
June 9, 2008
No. 04-20777 Charles R. Fulbruge III
Clerk
KATHY N. BURDEN, ET AL.,
Plaintiffs
v.
JOHNSON & JOHNSON MEDICAL, ET AL.,
Defendants
ANSELL HEALTHCARE PRODUCTS INC, formerly known as Ansell Inc,
formerly known as Ansell Perry Inc.; BECTON DICKINSON & CO
Defendants - Cross-Defendants - Appellees
OWENS & MINOR MEDICAL INC; OWENS & MINOR INC
Defendants - Cross-Claimants - Appellants
Appeal from the United States District Court
for the Southern District of Texas
Before HIGGINBOTHAM, WIENER, and DENNIS, Circuit Judges.
DENNIS, Circuit Judge:
In this products liability suit, we certified to the Texas Supreme Court a
question regarding manufacturers’ duties to defend and indemnify distributors.
The Texas Supreme Court has now answered the question, and we resolve the
remaining issues on appeal. For the following reasons, we AFFIRM in part,
No. 04-20777
VACATE in part, and REMAND this case to the district court.
BACKGROUND
On January 21, 2000, Kathy Burden, a dental hygienist, and members of
her family filed a products liability action in Texas state court, naming as
defendants the present appellants, appellees, and over thirty other entities. The
Plaintiffs alleged that Burden was injured by latex gloves manufactured and
sold by the named defendants. Appellants Owens & Minor, Inc. and Owens &
Minor Medical, Inc. (collectively, “Owens”) were sued as distributors. Appellees
Ansell Healthcare Products Inc. (“Ansell”) and Becton, Dickinson, and Company
(“BD”) were sued as manufacturers of the allegedly defective gloves. On March
6, 2000, Owens sent letters to several of the defendant manufacturers requesting
that those manufacturers indemnify Owens pursuant to Texas Civil Practice and
Remedies §82.002, which requires a manufacturer to “indemnify and hold
harmless a seller against loss arising out of a products liability action” excepting
losses proven to have been caused by the seller. For reasons that are disputed
by the parties, Owens was ultimately defended by its own outside counsel.
The case was removed to the United States District Court for the Southern
District of Texas on May 3, 2000. It was subsequently transferred to the United
States District Court for the Eastern District of Pennsylvania as part of the
multidistrict litigation entitled, In re: Latex Glove Products Liability Litigation.
At some point during the proceedings, Owens filed cross-claims for indemnity
against several manufacturers in the case. Eventually, the Plaintiffs voluntarily
dismissed their claims against Owens because they were unable to show that
Owens had sold any of the latex gloves that allegedly injured Burden. All other
defendants were dismissed for the same or similar reasons. There was never a
finding that any party was negligent or caused the Plaintiffs’ alleged injuries.
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No. 04-20777
However, once the multidistrict litigation proceedings were complete and the
instant case was remanded to the Southern District of Texas, Owens pursued
the cross-claims for indemnity that it had brought against four of the
manufacturers, seeking to recover the costs it had incurred in Burden. Owens
subsequently settled with two of the manufacturers, leaving claims for
indemnity against only Ansell and BD.
In response to Owens’s cross-claim, BD and Ansell both moved for
summary judgment on the adequacy of their offers to indemnify Owens. BD
argued that it had properly offered to defend and indemnify Owens for claims
arising out of the sale of BD latex gloves. Likewise, Ansell maintained that it
had appropriately offered to defend and indemnify Owens for claims related to
Owens’s alleged sale of Ansell latex gloves. Owens claimed that the offers made
by Ansell and BD were for a “partial limited defense” with conditions, rather
than the sort of full defense and indemnity allegedly required by §82.002. The
District Court rejected many of the arguments presented by the manufacturers,
yet ultimately granted BD’s and Ansell’s motions for summary judgment,
holding that both manufacturers had offered to defend and indemnify Owens to
the satisfaction of their duties under §82.002. In so doing, the District Court
terminated the entire case.
Owens brings this appeal, arguing that the District Court erroneously
granted summary judgement in favor of Ansell and BD. According to Owens, the
District Court improperly concluded that a limited defense was all that was
required under §82.002 and that by defending themselves the manufacturers
had adequately defended Owens. Owens requested that the question on this
issue be certified to the Texas Supreme Court. Owens also argued that the
District Court erred in construing in favor of Ansell and BD allegedly disputed
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facts regarding the letters exchanged between the parties. Ansell and BD
respond that Owens has misinterpreted the District Court’s ruling. According
to Ansell and BD, the District Court correctly held that Ansell and BD fulfilled
their indemnification obligation because §82.002 only requires a manufacturer
to indemnify a distributor for claims related to the sale of that manufacturer’s
product. Further, Ansell and BD claim that the District Court did not
impermissibly grant summary judgment based upon disputed facts, but rather
correctly drew conclusions of law based upon the undisputed facts presented in
the letters. The parties have stipulated that Owens is an innocent seller and that
BD and Ansell are manufacturers of the latex gloves at issue in this appeal.
In our previous opinion in this case, Burden v. Johnson & Johnson
Medical, we agreed with Owens on the first issue and decided to certify the
following question to the Texas Supreme Court:
When a distributor sued in a products liability action seeks
indemnification from less than all of the manufacturers implicated
in the case, does a manufacturer fulfill its obligation under Texas
Civil Practice and Remedies §82.002 by offering indemnification and
defense for only the portion of the distributor's defense concerning
the sale or alleged sale of that specific manufacturer’s product, or
must the manufacturer indemnify and defend the distributor
against all claims and then seek contribution from the remaining
manufacturers.
447 F.3d 371, 375 (5th Cir. 2006). On March 28, 2008, the Texas Supreme Court
answered the certified question in Owens & Minor v. Ansell Healthcare Prods.,
Inc., --- S.W.3d ---, 2008 WL 821035 (Tex. Mar. 28, 2008) (published). The Texas
Supreme Court concluded that “the product manufacturers satisfy their
statutory duty [under section 82.002] to the seller by offering to indemnify and
defend it only for any costs associated with their own products.” Id. at *7.
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We now proceed to resolve the remaining issues on appeal after receiving
this guidance from the Texas Supreme Court.
ANALYSIS
Owens’s argument that the manufacturers’ offer to indemnify and defend
the seller only for costs associated with their own products does not satisfy
section 82.002 is now foreclosed by the Texas Supreme Court’s decision. The
district court therefore reached the correct result as dictated by the Texas
Supreme Court in concluding that a manufacturer’s offer to indemnify and
defend the seller for costs associated with their own products satisfies its section
82.002 obligation.
Apart from this first argument, Owens also presents a separate argument
that the district court made an erroneous factual finding when it concluded that
the manufacturers, BD and Ansell, actually made an offer to indemnify and
defend Owens for costs associated with their own products. The district court,
on summary judgment, construed a series of letters between the manufacturers
and the seller as constituting the manufacturers’ offer to indemnify and defend
and the seller’s rejection of that offer. The district court concluded that “[a] fair
reading of the letters shows that the manufacturers were willing to defend
Owens until it was proven that Burden did not use their gloves.”
“This court reviews a district court’s grant of summary judgment de novo,
applying the same standards as the trial court.” Jenkins v. Cleco Power, LLC,
487 F.3d 309, 313 (5th Cir. 2007). “Summary judgment is proper if the evidence
shows that there is no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law.” Id. “The Court views all
evidence in the light most favorable to the non-moving party and draws all
reasonable inferences in that party's favor.” Id. at 313-14.
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A. Summary Judgment For Ansell was Proper
In a letter to Owens’s counsel on March 24, 2000, responding to Owens’s
query as to whether Ansell was willing to defend Owens in pending litigation,
Ansell, through its counsel, specifically refers to the Burden case, and notes that:
As I have stated, Ansell is committed to defending any claims
related to its products provided that we can agree upon an
appropriate method whereby Ansell Healthcare Products, Inc. only
defends its natural rubber latex gloves in this litigation.
The letter also states:
While Ansell is committed to defending any claims relating to its latex
gloves in accordance with its contractual obligations, Ansell cannot defend
Owens & Minor, Inc. with respect to distribution of other manufacturer’s
natural rubber latex gloves.
After unequivocally promising Owens a full defense of claims relating to its own
latex gloves in the Burden litigation, Ansell’s counsel suggested as “prudent” to
wait to see if any agreement is reached by pending negotiations. Ansell’s counsel
was merely suggesting this course of action:
We therefore suggest that we defer any further discussions between
our respective clients until such time as there is some direction from
the manufacturers’ and distributors’ group as to whether a
resolution can be arrived at regarding the distributors’ tender of
defense.
(emphasis added). Ansell’s counsel finishes the letter stating, “[i]f you do not
agree with this course of action, please call me so that we can discuss this matter
further.” Ansell’s offer to defend is fully consistent with the statutory obligation
under section 82.002 as construed by the recent Texas Supreme Court decision.
Owens, 2008 WL 821035, at *7 (“[T]he product manufacturers satisfy their
statutory duty [under section 82.002] to the seller by offering to indemnify and
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No. 04-20777
defend it only for any costs associated with their own products.”). Ansell needed
only to offer a defense of claims, as it did, relating to its own products.
Furthermore, Ansell clearly did not condition its defense of claims on the
outcome of the pending negotiations but only suggested that they defer further
discussions about the defense until pending negotiations reach some result.
Ansell also signaled its willingness to discuss and reconsider this suggestion.
Owens never responded to this letter and never asked Ansell to follow up with
its unequivocal offer to defend the claims. We find no ambiguity that Ansell
plainly offered to defend Owens in the Burden suit satisfying its statutory
obligation; the offer to defend was never accepted. We must accept the letter’s
plain meaning. Cf. Valmont Energy Steel, Inc. v. Commercial Union Ins. Co.,
359 F.3d 770, 773 (5th Cir. 2004) (“If the court finds no ambiguity, the court's
duty is to enforce the policy according to its plain meaning.”). Owens’s erroneous
interpretation of the letters does not by itself create any ambiguity. See Forbau
v. Aetna Life Ins. Co., 876 S.W.2d 132, 134 (Tex. 1994); Valmont, 359 F.3d at 774
(“Courts can only consider the parties’ interpretation of a contract if the court
first determines a contract to be ambiguous.”). Under the plain language of the
letters, we must rule in favor of Ansell; therefore, there is no genuine issue of
material fact and summary judgment was appropriate in favor of Ansell.
B. Summary Judgement For BD was Improper
Owens does raise a genuine issue of material fact as to BD’s alleged offer
to defend Owens in the Burden suit. It is undisputed that BD, unlike Ansell,
never responded to Owens’s query concerning BD’s defense of claims in the
Burden suit. BD instead suggests it provided Owens a standing offer to defend
its own products in all claims against its latex gloves in several letters before the
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Burden suit was actually filed. Reading the letters in favor of the non-movant
Owens, it is not clear that the letters constituted an offer to defend or indemnify
in the Burden case. Even assuming BD’s interpretation of the letters, it is not
clear that BD extended any valid offer to defend Owens in satisfaction of its
statutory obligation. BD concedes that Owens rejected the terms and conditions
of BD’s standing offer in late 1999 and that Owens had insisted that any defense
and indemnity agreement with BD cover all latex gloves sold by Owens and not
just BD’s latex gloves.
In January 2000, Burden filed her suit against Owens and BD. In March
2000, Owens sent a letter to BD requesting the manufacturers to defend against
the Burden claims. In the letter, Owens stated:
Owens &Minor has been sued in [Burden] based on product liability
claims that your product injured the plaintiff. As Owens & Minor
did not manufacture or play any role whatsoever in the
manufacturing of your company’s product, we ask that you accept
this defense.
In its appellate brief, BD interprets this Owens letter as “represent[ing] that
each manufacturer had a duty to defend Owens & Minor for its own gloves in the
Burden case.” Appellee BD’s Brief, at 9 (emphasis added). BD thus reads the
letter to suggest that Owens may have changed course and is now only
requesting each manufacturer to defend claims against its own gloves in the
Burden case. Yet, BD never responded to the letter and assumed Owens would
reject BD’s offer of a defense in this new case. However, given Owens’s possible
change in position, BD was arguably incorrect in assuming that Owens would
reject another offer to defend. Moreover, this assumption does not vitiate BD’s
statutory obligation to offer to defend the claims. The previous “standing” offer
to defend in a previous case was rejected. “[U]nder Texas law, once an offer is
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rejected, the general rule is that the offer is thereby terminated, and
consequently it cannot be accepted.” Harris v. Mickel, 15 F.3d 428, 431 (5th Cir.
1994). It is therefore entirely plausible that (1) Owens solicited for a defense
under terms different from the past; (2) BD’s past offer, once rejected, can not
constitute a standing offer because it cannot be accepted; and, therefore, (3) BD
did not offer to defend claims as required by section 82.002 and/or improperly
assumed Owens would reject any new offers in the Burden case. Given this
possible interpretation of events based on the existing record, there remains an
issue of material fact as to whether an offer was provided in satisfaction of
section 82.002; thus, summary judgment for BD was improper.1 We vacate the
district court’s summary judgment for BD and remand the case to the district
court to determine if BD offered to defend Owens in the Burden suit in
satisfaction of its statutory obligations and for further proceedings.
C. We Do Not Reach Owens’s Contentions as to Costs and Fees
Finally, Owens contends the district court erred in finding that its
attorney’s fees in the Burden case are unnecessary. The district court found that
Owens’s “fees and costs were unnecessary because the manufacturers’ offers of
defense were adequate.” Since we conclude in accord with the district court that
Ansell is not liable to defend Owens, we do not need reach the issue of fees and
costs, since Ansell’s offer of a defense by Owens was adequate and therefore
satisfied any duty under section 82.002. Owens, 2008 WL 821035, at *7 (“[T]he
product manufacturers satisfy their statutory duty [under section 82.002] to the
1
We do not rely nor cite to the Bateman materials found in the appellate record
excerpts and brief. We have also decided to remand the question of whether BD offered to
defend its claims in the Burden case to the district court. Therefore, the motions to strike
the references to the Bateman materials are mooted.
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No. 04-20777
seller by offering to indemnify and defend it only for any costs associated with
their own products.”). Since we are vacating the district court’s summary
judgment for BD and remanding the case to the district court for further
proceedings to determine if BD also satisfied its duties under section 82.002, we
also do not need to reach the fees and costs issue at this time with regards to BD.
CONCLUSION
Accordingly, we now AFFIRM the district court’s summary judgment for
Ansell and VACATE the district court’s summary judgment for BD. We
REMAND this case to the district court for further proceedings consistent with
this opinion.
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