Kennedy v. Guess, Inc.

Attorney for Appellant Attorney for Appellee
Frederick R. Hovde Jeffrey R. Mitchell
Hovde Law Firm Yarling & Robinson
Indianapolis, Indiana Indianapolis, Indiana

Additional Appearance On
Behalf
Of Appellee:
Seth M. Lahn
Indiana University School of
Law
Bloomington, Indiana
________________________________________________________________________

In the
Indiana Supreme Court
_________________________________

No. 29S02-0211-CV-594

Richard Kennedy and,
Kaye Kennedy
Appellant (Plaintiffs below),

v.

Guess, Inc.; Callanen International,
Inc.; Interasian Resources, Ltd. and Interasia
Bag manufacturers, Ltd.

Appellee (Defendants below).

_________________________________

Appeal from the Hamilton Circuit Court, No. 29C01-9810-CT-829
The Honorable Judith S. Profitt, Judge
_________________________________

On Petition to Transfer from the Indiana Court of Appeals, No. 29A02-0110-
CV-674
_________________________________

April 21, 2004

SHEPARD, Chief Justice.

We consider here for the first time certain strict liability
provisions in the Indiana Product Liability Act that render some
distributors liable as though they had manufactured the product. The case
arises from motions for summary judgment the trial court granted for two
corporate defendants involved in distribution of an allegedly defective
designer umbrella. We conclude the defendants did not establish that they
were entitled to judgment.

On a second question of first impression, we hold that those who
license their trademarks for use on products that cause injury may have
negligence liability proportionate to their role in the product’s design,
manufacturing, and distribution.

Facts and Procedural History

Kaye Kennedy purchased a “Guess” watch at a Lazarus Department Store
in Indianapolis on November 22, 1996. As a gift for purchasing the watch,
she received a free umbrella also bearing the “Guess” logo. On May 22,
1998, Kaye’s husband Richard took the umbrella to work, where a co-worker
swung it from the handle. The umbrella’s shaft separated from the handle
and struck Richard in the nose and sinus, causing injury.

As amended, the Kennedys’ complaint sought damages against Guess,
Inc., Callanen International, Inc. (formerly known as Watches CGI, Inc.),
Interasia Bag Manufacturers, Ltd., and Interasian Resources, Ltd. The
complaint asserted both negligence and strict liability.

Interasia Bag, a Hong Kong corporation, manufactured the umbrella.
Interasian Resources, located in New York, is a domestic affiliate of
Interasia Bag. Callanen, a Connecticut corporation, is licensed by Guess
to market products bearing the Guess logo, including the watch and umbrella
at issue. Callanen and Guess filed cross-claims against Interasia Bag and
Interasian Resources. The Kennedys attempted service of process on
Interasia Bag, but were unsuccessful.

Callanen and Guess moved for summary judgment, which the trial court
granted. The Court of Appeals reversed. Kennedy v. Guess, 765 N.E.2d
213(Ind. Ct. App. 2002).

We granted transfer to address: (1) how the burden of establishing the
absence of any genuine issue of material fact operates with respect to a
statutory provision treating the “principal distributor or seller” as a
manufacturer, and (2) whether § 400 of the Restatement (Second) of Torts
imposes a duty on Callanen and Guess akin to that of a manufacturer.

Standard of Review. Summary judgment should be granted only if the
evidence authorized by Indiana Trial Rule 56(C) shows that there is no
genuine issue of material fact and the moving party deserves judgment as a
matter of law. Ind. T.R. 56(C). We view the facts and reasonable
inferences drawn from those facts in the light most favorable to the non-
moving party. Wright v. Carter, 622 N.E.2d 170, 171 (Ind. 1993).

On appeal from summary judgment, the reviewing court faces the same
issues that were before the trial court and analyzes them the same way,
although the trial court's decision is "clothed with a presumption of
validity." Id. While the non-movant bears the burden of demonstrating
that the grant of summary judgment was erroneous, we carefully assess the
trial court's decision to ensure that the non-movant was not wrongly denied
his or her day in court. Id.

I. Strict Liability Claim

Indiana’s Product Liability Act (the “Act”) governs all actions
brought by a user or consumer against a manufacturer or seller for the
physical harm caused by a product. Ind. Code § 34-20-2-1, et. seq.
(1999).[1] It provides in pertinent part that:
a person who sells, leases, or otherwise puts into the stream of
commerce any product in a defective condition unreasonably
dangerous to any user or consumer or to the user’s or consumer’s
property is subject to liability for physical harm caused by
that product to the user or consumer if:
1) that user or consumer is in the class of persons that the
seller should reasonably foresee as being subject to the harm
caused by the defective condition;
2) the seller is engaged in the business of selling the product;
and
3) the product is expected to and does reach the user or
consumer without substantial alteration in the condition in
which the product is sold by the person sought to be held
liable under this article.

Ind. Code § 34-20-2-1 (1999). Actions for strict liability in tort are
restricted to manufacturers of defective products. Indeed, the statute
states the restriction rather bluntly.
A product liability action based on the doctrine of strict
liability in tort may not be commenced or maintained against a
seller of a product that is alleged to contain or possess a
defective condition unreasonably dangerous to the user or
consumer unless the seller is a manufacturer of the product or
of the part of the product alleged to be defective.

Ind. Code § 34-20-2-3 (1999). The Kennedys’ strict liability claim
against Callanen and Guess alleges the umbrella was unreasonably dangerous
and defective because “the design, manufacture, and assembly” of the
umbrella caused its shaft to separate from the handle during foreseeable
use.

Callanen and Guess moved for summary judgment alleging that they were
not “manufacturers” of the umbrellas and thus were entitled to summary
judgment. To support their contention that they are not “manufacturers” of
the umbrella or the principal distributor or seller, Callanen and Guess
each submitted in affidavits from managerial employees to show that none of
the factual predicates for the statutory exceptions under which a seller
can be deemed a “manufacturer” were met.[2]

The affiants also stated that neither Guess nor Callanen has any
ownership interest in Interasia Bag, the actual manufacturer, or its
affiliate, Interasian Resources. They added that neither Guess nor
Callanen is owned in whole or significant part by Interasia Bag or
Interasian Resources.

This evidence was adequate to satisfy Guess and Callanen’s burden of
proving their contention that they are not “manufacturers” of the umbrella
as defined by the Act,[3] and would, if unrebutted, have warranted summary
judgment under Indiana Code § 34-20-2-3.

In response to the motion of Callanen and Guess, the Kennedys replied
that they were entitled to hold the movants in the lawsuit by virtue of a
provision in the Act that imposes liability through treating certain
parties as though they were manufacturers:
If a court is unable to hold jurisdiction over a particular
manufacturer of a product or a part of a product alleged to be
defective, then that manufacturer’s principal distributor or
seller over whom a court may hold jurisdiction shall be
considered, for the purposes of this chapter, the manufacturer
of the product.
Ind. Code § 34-20-2-4 (1999) (we’ll call it the “domestic distributor”
exception.)

Thus, the Act may extend to Guess and Callanen only if two conditions
are met: (1) Callanen and Guess must be Interasia Bag’s principal
distributor or seller over whom the court can hold jurisdiction; and (2)
the court must be unable to hold jurisdiction over Interasia Bag, the
actual manufacturer. The Kennedys supplied certain evidence in support of
their contention that Guess and Callanen fit within this section.

A. Jurisdiction over Interasian Bag. The Kennedys attempted service
on the manufacturer of the bag, Interasia Bag, at an address in Hong Kong,
but were unsuccessful. They received an “affirmation of non-service”
indicating that there was no corporation named Interasia Bag Manufacturers
Ltd. at the address provided by the Kennedys and therefore service was not
effected. Designating this evidence, the Kennedys claimed that Interasia
Bag is “no longer in business and is not subject to the jurisdiction of
this court leaving Guess and Callanen as principal distributor or seller.”
(Appellant’s App. at 66.)

The Kennedys also point to the affidavits designated by Callanen and
Guess to support that there is no basis for an Indiana court to exercise
personal jurisdiction over Interasia Bag. They say there is no evidence
that Interasia Bag had any contacts with Indiana or had any knowledge that
its umbrellas were to be sold in Indiana. They state that Callanen ordered
the umbrellas from its Connecticut office through Interasia Bag’s affiliate
Interasian Resources (located in New York) and made payment for the
umbrellas from its Connecticut office. The umbrellas themselves were
shipped from Hong Kong to Callanen’s Connecticut office.

Based on the above, the Kennedys argue that the umbrellas randomly
found their way into Indiana through the marketing promotions of Callanen
and Guess and such is not a sufficient basis for exercising jurisdiction
under Indiana Trial Rule 4.4(A). (Appellant’s App. at 69, citing North
Texas Steel v. Donnelly & Sons, 679 N.E.2d 513 (Ind. Ct. App. 1997) (mere
knowledge that a product is to be sold and used in a state held
insufficient to subject manufacturer to jurisdiction).)

While this evidence is not especially impressive, it was potent
enough to demonstrate a genuine issue of material fact on the question
whether Callanen and Guess are manufacturers under the domestic distributor
exception of Section 4. Callanen and Guess are manufacturers under the
domestic distributor exception of Section 4. Summary judgment for Callanen
and Guess on this point was therefore inappropriate.

In rebuttal, Callanen and Guess have argued that the lack of service
on Interasia Bag resulted from less than diligent effort by the Kennedys.
They say the Kennedys did not make any effort to determine whether
Interasia had moved to another location in the half decade since the
umbrellas were made for Callanen.

The Kennedys attempted service using a payment address found in a
memo Callanen and Guess produced during discovery. Callanen and Guess
observe that the memorandum was dated August 1996 and contend that more
recent documents dated January 1998 reflected a different address for
Interasia Bag. They argue that the Kennedys made no effort to investigate
whether they could serve Interasia Bag at the more recent address.

The existence of another possible address is not enough by itself to
rebut the inference that jurisdiction could not be obtained. The general
rule, of course, is that doubts must be resolved against the moving party.
See Indiana University Medical Center, Riley Hospital for Children v.
Logan, 728 N.E.2d 855 (Ind. 2000). Callanen and Guess are always entitled
to prove that the second address is in fact the correct and actual address
for Interasia Bag. But because the general burden of proof falls on
Callanen and Guess as movants under Trial Rule 56 there must be some
additional evidence supporting their claim that the second address was a
viable means to serve process on Interasia Bag.

Of course, Section 4 domestic distributor exception does not turn
solely on whether a plaintiff achieves service of process, though the
ability or inability to get service is certainly relevant. Rather, the
legislature has chosen to permit liability of a domestic distributor or
seller when the “court is unable to hold jurisdiction” over the actual
manufacturer. See, e.g., Bond v. E.I. DuPont, 868 P.2d 1114 (Colo. Ct.
App. 1993). Whether a court can “hold jurisdiction” is obviously a mixed
question of fact and law.

In the end it was for the moving party to establish that there were
no material issues of fact and that they were entitled to judgment as a
matter of law. On the record as far as it got developed here, they did not
carry the day.

B. Principal Distributor or Seller. To impose liability on a non-
manufacturer, the claimant must also demonstrate that the defendant is a
“principal distributor or seller.”

The code tells us what a “seller” is when it says that “for purposes
of Indiana Code § 34-20, [“a seller”] means a person engaged in the
business of selling or leasing a product for resale, use or consumption.”
Ind. Code § 34-6-2-136 (1999). The code does not tell us what a
“principal” means or what a “distributor” is.

Black’s Law Dictionary defines “principal” as chief; leading; most
important or considerable; primary; original. Blacks Law Dictionary 1210
(7th Edition 1999). “Distributor” is defined as “any individual,
partnership, corporation, association, or other legal relationship which
stands between the manufacturer and the retail seller in purchases,
consignments, or contracts for sale of consumer goods; a wholesaler.”
Black’s Law Dictionary 475-76 (6th Edition 1990).

We agree with the Kennedys that based on the language in Indiana Code
§ 34-20-2-4, it seems clear the legislature’s object was to provide a
remedy for Indiana consumers who are injured by defective products
manufactured by an overseas entity over which Indiana courts have no
jurisdiction. Achieving this objective would hardly require imposing
liability on all distributors, and the language chosen by the General
Assembly creating an exception to the general policy against liability
seems consistent with that fact. Ind. Code § 34-20 (“that manufacturer’s
principal distributor or seller”).

In responding to the motion for summary judgment, the Kennedys
designated as a material fact that the umbrella bore only a “Guess” logo.
They also presented invoices produced by Callanen regarding its orders from
Interasia Bag. These documents demonstrate that in August 1996 Callanen
ordered and paid for 1,500 tri-fold umbrellas, amounting to $5625. In
September 1996, Callanen purchased an additional 15,000 tri-fold umbrellas
and 3,000 Guess tri-fold umbrellas all at a cost of $56,250. The evidence
reveals that in 1996 Callanen purchased more than 93,000 umbrellas from
Interasia Bag.

Between April and September of 1996, Callanen purchased other items
from Interasia Bag, such as rafts, binders, bags, umbrellas, agendas and
coolers. The value of items Callanen bought from Interasia Bag during this
six-month period was about $235,000. All the documented purchases thus
totaled nearly $617,000.

The volume of business established from the above evidence
sufficiently establishes a genuine issue of material fact as to whether
Callanen is a “principal distributor.” Such evidence, however, does not
create a factual issue as to whether Guess may be deemed a “principal
distributor.” It satisfies the second condition as to Callanen but not as
to Guess.

Where Guess is concerned, the designated information shows that Guess
is not a distributor or seller of any sort, principal or otherwise. Guess
neither ordered nor received the umbrellas at issue. It was never in
possession of any of the umbrellas nor did it manufacture, supply,
distribute, assemble, design, or sell them. Rather, Guess simply licensed
its name to Callanen for placement on various products. There is no issue
of fact disputing Guess’ contention that it is not a “principal distributor
or seller.” Summary judgment in favor of Guess on this issue was proper.

Callanen, on the other hand, was not entitled to summary judgment on
this issue. Kennedy’s evidence provided an inference that Callanen is the
principal distributor, so Callanen was required to rebut the inference. To
do so, Callanen relied solely on the designated affidavits, which contained
a plain statement indicating that Callanen is not a principal distributor
or seller.

A simple statement that “Callanen is not a principal distributor or
seller” is not sufficient. There must be some additional evidence showing
why Callanen cannot be deemed a principal distributor. Accordingly, we
conclude that Callanen did not demonstrate an absence of a genuine issue of
material fact, and summary judgment on this issue as to Callanen was not
warranted.

II. § 400 Negligence Claim

We first note that § 400 of the Restatement (Second) of Torts applies
only to the Kennedys’ negligence claim and not to their strict liability
claim. This is in accord with comment b to § 400, which refers to sections
dealing primarily with negligence (§§ 394-98) and with the decision in
Dudley where the Court of Appeals interpreted section 400 and explained the
rationale supporting this provision’s adoption in terms of “negligence.”
See Dudley Sports Co. v. Schmitt, 151 Ind. App. 217, 279 N.E.2d 266, 273
(1972).

To prevail in a negligence action, the claimant must establish: (1)
a duty, (2) a breach of that duty, and (3) injury resulting from that
breach. Bamberger & Feibleman v. Indianapolis Power & Light Co., 665
N.E.2d 933 (Ind. Ct. App. 1996). Ordinarily, summary judgment is
inappropriate in negligence cases. Dillman v. Great Dane Trailers, Inc.,
649 N.E.2d 665 (Ind. Ct. App. 1995). Issues of duty, however, are
questions of law for the court and may be appropriate for disposition by
summary judgment. Holt v. Quality Motor Sales, Inc., 776 N.E.2d 361 (Ind.
Ct. App. 2002).

Citing Dudley Sports, the Kennedys argue that Guess and/or Callanen
owe them a duty because Guess and/or Callanen can be considered “apparent
manufacturers” of the umbrella under § 400. Section 400 provides, “One who
puts out as his own product a chattel manufactured by another is subject to
the same liability as though he were its manufacturer.”[4] Restatement
(Second) of Torts § 400 (1965).

The court in Dudley Sports employed § 400 to hold a vendor liable for
the negligence of the manufacturer where the vendor placed its name on the
product and gave no indication of who was the actual manufacturer. The
Dudley court reasoned:
When a vendor puts his name exclusively on a product, in no way
indicating that it is the product of another, the public is
induced to believe that the vendor was the manufacturer of the
product. This belief causes the public to rely upon the skill
of the vendor. When products are held out in this manner, the
ultimate purchaser has no available means of ascertaining who is
the true manufacturer. By this act of concealment, the vendor
vouches for the product and assumes the manufacturer’s
responsibility as his own.

Dudley Sports, 279 N.E.2d at 273. A similar conclusion was reached in
Lucas v. Dorsey Corp., 609 N.E.2d 1191 (Ind. Ct. App. 1993). This case
represents our first occasion to explore the liability of trademark
licensors.

The Court of Appeals reversed summary judgment on this claim finding
that “a question of fact remains as to whether Guess or Callanen or both
exercised the requisite degree of involvement in the stream of commerce to
be considered an apparent manufacturer.” Guess, 765 N.E.2d at 222. We
think this does not hold true with respect to Callanen.

Callanen argues that Dudley Sports and § 400 are inapplicable to it
because, as the undisputed record shows, Callanen’s name is not on the
umbrella and it in no way held itself out as the umbrella’s manufacturer.
(Appellees’ Pet. for Transfer at 14.)

Whether a “holding out” has occurred should be judged from the
viewpoint of the purchasing public, examining whether the public has been
induced to believe that the vendor was the actual manufacturer of the
product. See Hebel v. Sherman Equipment, 442 N.E.2d 199 (Ill. 1982).
There is nothing to suggest that the Kennedys were induced to believe
Callanen was the manufacturer of the umbrella in question. The only name
on the umbrella was “Guess”; the name “Callanen” was nowhere to be found.

To support their claim that Callanen held itself out as the
umbrella’s manufacturer, the Kennedys rely heavily on the fact that
Callanen and Guess had a trademark licensing agreement which gave Callanen
the right to distribute products bearing the Guess name. Such evidence
does not suggest Callanen held itself out as the manufacturer. From the
consumer’s perspective, Callanen had nothing to do with the manufacture of
the umbrella. There is no reference to Callanen that would lead a
reasonable purchaser to believe that it was the manufacturer of the
umbrella.

That Callanen was permitted to use the Guess name is by itself
insufficient to hold it liable as an “apparent manufacturer” under the
Dudley Sports rule. Callanen did not design, manufacture, assemble, or
test the umbrella. Any involvement Callanen had with the umbrella occurred
after it was designed and manufactured. While Callanen did purchase the
umbrellas for distribution, it received the umbrellas already packaged for
distribution from Interasia Bag. (Appellant’s App. at 94.) Generally,
Callanen did not even open the packaging unless it was going to send less
than ten umbrellas to a particular store. Id.

Callanen presented sufficient evidence to demonstrate that it did not
hold itself out as a manufacturer. The burden thus shifted to the Kennedys
to demonstrate otherwise, and they have failed to carry their burden. The
trial court was correct to grant Callanen summary judgment on the
negligence claim.

We reach a different conclusion as to whether Guess could be
considered an “apparent manufacturer.”

Some jurisdictions impose liability on trademark licensors without
any additional involvement in the stream of commerce. See, e.g., Carter v.
Joseph Bancroft & Sons Co., 360 F. Supp. 1103 (E.D. Pa. 1973); Connelly v.
Uniroyal, Inc., 389 N.E.2d 155 (Ill. 1979). Guess argues that merely
licensing the use of its trademark is insufficient to hold it liable under
§ 400 and that something more should be required. (Appellee’s Br. at 18-
20; Appellant’s App. at 11-13.) Guess relies on Chief Justice Peters’
observation for the Connecticut Supreme Court that although “a non-
manufacturer may under certain circumstances be held liable in the same
manner as a manufacturer or seller of a defective product . . . most cases
impose liability [under section 400] only after finding that the licensor
had a significant role in the chain of distribution.” Burkett v. Petrol
Plus of Naugatuck, Inc., 579 A.2d 26, 33-34 (Conn. 1990).

Justice Peters explained that in jurisdictions where “additional
involvement” is required, various factors determine whether there is
sufficient involvement in the stream of commerce such that an entity is an
“apparent manufacturer.” Id. at 33-35. Some factors courts examine to
make this determination are the licensor’s right of control over the
product design, the fees received for the use of the trademark, the
prominence of the trademark, supply of components, participation in
advertisement and the degree of economic benefit to be gained from the
licensing agreement. Id.

In the Petrol Plus case, General Motors had licensed the use of its
trademarked Dextron II transmission fluid. The fluid was actually
manufactured by other companies, subject to GM testing, and eventually sold
to Burkert by Petrol Plus. The Connecticut court held that General Motors
was not an entity that “put out” the product since “GM was in no way
involved with the sale, leave, gift or loan of the defective automatic
transmission fluid.” Id. at 33. This distinguished GM’s role from that
played by Armour & Co., which the Connecticut high court had earlier held
to be an apparent manufacturer of a can of corned beef labeled “Armour
Veribest Products” from “Armour and Company, Foreign Distributors.”
Burkert v. Armour & Co., 161 A.2d 385 (Conn. 1932). The can had been
placed in American commerce by Armour & Co., an Illinois corporation, which
had obtained it from an Argentine Company named “Frigoritico Armour de la
Plata,” which had purchased it from an Argentine packing corporation, and
so on. Id. at 391.

Indiana’s Dudley Sports decision bears some of the characteristics of
Armour. Dudley Sports put its own name on a baseball pitching machine
manufactured by someone else and acted as the exclusive distributor of the
device. Dudley Sports, 279 N.E.2d at 271.

The present case is more like Petrol Plus. Like General Motors,
Guess exercised some control over the product itself (like approving
placement of the logo) but did not play any role as seller, manufacturer or
distributor.

It might well be plausible to assess whether a trademark licensor is,
as the Restatement puts it, “subject to the same liability as though he
were [the product] manufacturer,” by pouring over the licensor’s level of
involvement in the manufacture or distribution of the product. On the
other hand, such an approach creates a regime in which liability is binary
(either the same as the manufacturer or altogether non-existent) based on
the examination of commercial activity that is anything but.

As Chief Justice Peters pointed out in Petrol Plus, trademark
licensors have a duty under the Lanham Act to take reasonable measures to
detect and prevent misleading or deceptive uses of the trademark. Petrol
Plus, 579 A.2d at 32. They are thus likely to take some ongoing role in
the products bearing their mark lest they risk loss of the right associated
with ownership of it.

A common law product liability system that, when it encounters
muscular supervision by a licensor, imposes liability identical to that of
the manufacturer, however, pushes the trademark holder in the opposition
direction. It encourages the licensor to play as minor a role as possible
in overseeing the design and manufacturing of products bearing the mark in
order to preserve the “Sergeant Schultz” defense.[5] This is hardly in the
best interest of consumers.

Thus, we conclude that Indiana common law should treat trademark
licensors as having responsibility for defective products placed in the
stream of commerce bearing their marks, but only so much of the liability
for those defects as their relative role in the larger scheme of design,
advertising, manufacturing, and distribution warrants. Consumers rightly
expect that products bearing logos like “Guess” have been subject to some
oversight by those who put their name on the product, but those same
consumers can well imagine that in modern commerce the products they buy
may have actually been manufactured by someone else.

The process of sorting out comparative fault in such settings can
well be left to juries. Summary judgment for Guess on the negligence claim
was inappropriate.

Conclusion

Genuine issues of material fact exist as to whether Callanen can be
deemed a manufacturer under the “principal distributor or seller” exception
and also as to whether Guess can be held liable under the “apparent
manufacturer” theory, thus precluding summary judgment. Therefore, we
affirm in part and reverse in part, as indicated above.

Sullivan and Rucker, JJ., concur.
Dickson, J., concurs in result without separate opinion.
Boehm, J., concurs in result with separate opinion in which Dickson, J.,
joins.
Boehm, J., concurring in result.

As I see it, disposition of this appeal is governed by the basic rules
of summary judgment practice. The plaintiffs plead in their complaint that
they were injured in Indiana by a defective umbrella. They plead negligent
design and manufacture in Count I and strict liability in Count II. Both
counts are governed by the Indiana Product Liability Act. Ind. Code § 34-
20-1-1 (1998). The plaintiffs allege that Guess (the licensor of the
trademark) and Callanen (the distributor) are liable for a defect in a
product manufactured by Interasia. To get summary judgment, these
defendants must establish by uncontroverted evidence that plaintiffs have
no claim.

Both Guess and Callanen establish by undisputed evidence that they had
no role in the design or manufacture of the umbrella. For the reasons the
majority gives, I agree that Guess may be liable as an “apparent
manufacturer” but Callanen is entitled to summary judgment on the
negligence claim. And, as the majority holds, summary judgment as to Guess
is proper on the strict liability claim. Guess established by undisputed
evidence that its sole relationship to the product is as trademark
licensor. It is therefore neither a manufacturer nor a principal
distributor and has no strict liability under the Product Liability Act.
The plaintiffs designated no evidence that controverted the facts relevant
to Guess’s motion, so Guess is entitled to summary judgment.

I agree with the result, but not the reasoning, as to Callanen’s
motion for summary judgment on the strict liability claim. Callanen
established that it was not the manufacturer of the umbrella, but
designated no evidence establishing that it is not the “principal
distributor” of a product manufactured by a manufacturer who cannot be
haled into court in Indiana. Because plaintiffs’ complaint pleads that
Callanen is strictly liable for the defect, I think that allegation is
sufficient under notice pleading to claim that Callanen is either a
manufacturer or a “principal distributor.” Under Trial Rule 56 it is
Callanen’s burden to establish neither is the case, which it could do by
showing that 1) it is not a distributor, or 2) somebody else is Interasia’s
principal distributor, or 3) that Interasia is susceptible to suit in
Indiana. Whatever “principal distributor” means, any of these facts would
negate Callanen’s status as a person liable under the Product Liability
Act. But Callanen’s motion and designated evidence established none of
these. The only reference in the designated evidence to Callanen’s status
as a “principal distributor” is the bald assertion in an affidavit by a
Callanen executive that “Callanen is not the principal seller or
distributor for Interasian Bag Manufacturers, LTD.” As the majority holds,
this is a legal conclusion, not an assertion of facts. As such it is
insufficient to support summary judgment. Meyer v. Marine Builders, Inc.,
797 N.E.2d 760, 768 (Ind. Ct. App. 2003). So Callanen’s motion should be
denied on that ground, and there is no need to consider the materials the
plaintiff submitted in opposition to the motion.

I also do not believe the plaintiffs’ efforts to serve Interasia are
relevant to Callanen’s liability under the Product Liability Act. Callanen
is liable, if at all, as a “principal distributor” of a product from a
manufacturer over whom Indiana is “unable to hold jurisdiction.”
Plaintiffs’ failure to effect service of process at the address it used for
Interasia relates to service of process, not to whether Interasia is
subject to personal jurisdiction in Indiana. For all we know from the
record cited by the majority, Interasia operates a major manufacturing
facility in Indiana, and certainly could be sued in this state, but moved
its headquarters in Hong Kong to a new address. As the majority points
out, the purpose of distributor liability is to provide someone who is
responsible for a defective product shipped into Indiana if its
manufacturer is beyond the reach of the courts of this State. Lack of
personal jurisdiction over the manufacturer, not defective service, is the
test whether the manufacturer can be sued in Indiana. Defective service of
process is curable, but only if the manufacturer is not subject to the
jurisdiction of Indiana courts is this state “unable to hold jurisdiction.”
For that reason as well, I do not subscribe to the majority’s methodology
of resolving Callanen’s motion.

Dickson, J., joins.

-----------------------
[1] As adopted in 1978, the Act covered claims in tort under the theories
of negligence and strict liability. Progressive Ins. Co. v. General Motors
Corp., 749 N.E.2d 484, 486 n.2 (Ind. 2001) (citing Ind. Code § 33-1-1.5-1
(1983)). In 1983, it was amended to apply to strict liability actions
only. Id. In 1995, the legislature reversed course. Id. It is now
codified at Title 34, Article 20 of the Indiana Code, and both negligence
and strict liability claims are cognizable under the Act.
[2] Callanen submitted an affidavit of a fifteen-year brand manager at
Guess Watches U.S.A., a division of Callanen, who was responsible for the
gift umbrella promotion. Guess submitted an affidavit of its director of
product licensing.

[3] The Kennedys do not contend that either Guess or Callanen is the actual
manufacturer. Guess, 765 N.E.2d at 218. Indeed, it appears undisputed
that Interasia Bag is the actual manufacturer of the umbrellas. Id. at
216, 218.
[4] Comment (a) to § 400 defines “one who puts out a chattel” as “anyone
who supplies it to others for their own use or for the use of third
persons, either by sale or lease or by gift of loan.”
[5] In Indiana Dept. of State Revenue v. Safayan, 654 N.E.2d 270, 274 (Ind.
1995) we explained the “Sergeant Schultz” defense:
The Sergeant Schultz defense refers, of course, to the refrain
of the character by that name in the television comedy, Hogan’s
Heroes. Sergeant Schultz was assigned the unenviable task of
guarding Colonel Hogan and his men in a German prisoner of war
camp during World War II. Each week, despite the best efforts
of the camp’s commandant, Colonel Klink, the ‘prisoners’ would
successfully conduct espionage operations from inside the
prison. And each week, the lovable, if incompetent, sergeant
would stumble upon some clue to Hogan’s activities. Instead of
pursuing these leads, however, Schultz would simply declare, “I
know n-o-t-h-i-n-g, n-o-t-h-i-n-g.” Cf. Ortho Pharmaceutical
Corp. v. Sona Distributors, Inc., 663 F. Supp. 64, 66 (S.D. Fla.
1987) (rejecting Sergeant Schultz defense to fraudulent
misrepresentation claim).