Date: 08-08-2018

Case Style:

Case Number: 17-1925

Judge: Shepherd

Court: United States Court of Appeals for the Eighth Circuit on appeal from the Southern District of Iowa (Polk County)

Plaintiff's Attorney: Marc Humphrey and Timm Reid

Defendant's Attorney: Scott J Beattie for USExploration Equipment Company

James T Seigfreid, Jonathan E. Benevides and Kevin M Reynolds for Navistar, Inc.

Kevin J. Kaster for Jonathan E. Benevides

Joseph A Happe and Elizabeth R. Meyer for Mobile Drill International, Inc.

Robert D Houghton and Dana L. Oxley for Central Mine Equipment Company

Description: Plaintiff Jeffery Oppedahl was injured in a gruesome accident involving a
truck-mounted drill and auger that left him 1 a quadriplegic. Oppedahl, his wife, and
his children (collectively “Plaintiffs”) sued Mobile Drill Company, Inc. (“Mobile
Drill”), the manufacturer of the drill and auger. As relevant to this appeal, the district
court2 first dismissed Plaintiffs’ strict products liability and negligence claims
involving the drill, as well as those related consortium claims. The court then granted
summary judgment to Mobile Drill on Plaintiffs’ negligent entrustment claim
involving the auger and the related consortium claims. Plaintiffs appeal. We now
affirm.
I. Background
Oppedahl was an experienced drill operator who worked for the Iowa
Department of Transportation (“IDOT”). On January 16, 2013, Oppedahl was taking
soil samples and became entangled in an unguarded rotating auger that was attached
to a truck-mounted drill. The auger Oppedahl was using was first put into operation
in 1990. IDOT later refurbished the auger and put it back into operation on or after
August 5, 1999. The auger system did not have a safety cage or safety switches,
which, according to Plaintiffs, could have prevented the accident.
On August 5, 2014, Plaintiffs filed an 11-count complaint and jury demand
against the truck manufacturer, Navistar, Inc., and, because it was initially unclear
who manufactured the auger involved in the accident, against three auger
manufacturers: Mobile Drill, USExploration Equipment Company
1An auger is a long tube with a helical steel outcropping used to drill holes,
similar to a screw or drill bit.
2The Honorable Stephanie M. Rose, United States District Judge for the
Southern District of Iowa, adopting the report and recommendations of the Honorable
Celeste F. Bremer, United States Magistrate Judge for the Southern District of Iowa.
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(“USExploration”), and Central Mine Equipment Company (“Central Mine”). The
district court granted summary judgment to Navistar and dismissed it as a defendant,
finding Iowa’s statute of repose barred Plaintiffs from bringing products liability
actions against Navistar.
USExploration later filed a motion for summary judgment, presenting both
USExploration’s and IDOT’s records that showed it only sold IDOT three-and-a-halfinch
augers, and the auger involved in the accident was a five-and-a-half-inch auger.
Plaintiffs did not resist the motion. The district court held even if Plaintiffs had
resisted the motion, there was no genuine dispute of material fact and USExploration
was entitled to judgment as a matter of law. The district court then dismissed
USExploration as a defendant.
After determining that the augers potentially involved in the accident did not
have any of the three unique manufacturing characteristics of Central Mine augers,
the parties jointly submitted a stipulation of dismissal of Central Mine as a defendant.
Thus, Mobile Drill is the only remaining defendant.
In the complaint, Plaintiffs alleged causes of action for strict products liability,
negligence related to the sale of the drill, negligence related to the sale of the auger
under an alternative liability theory , loss of spousal 3 consortium, and loss of parental
3Initially, Plaintiffs pled that enterprise liability theory applied. Enterprise
liability theory “avoids the legal causation problem that arises from an inability to
identify the manufacturer of the specific injury-causing product . . . by shifting
responsibility to the industry for causing the injury because of the concert of action
by manufacturers of such products through their trade associations or their collective
action.” Mulcahy v. Eli Lilly & Co., 386 N.W.2d 67, 72 (Iowa 1986). However,
Plaintiffs instead argued that the alternative liability theory applied, and though they
did not mention the theory in their complaint, they had alleged sufficient facts to
support a negligence claim under that theory. Alternative liability theory, unlike
enterprise liability theory, does address causation “with respect to the making or the
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consortium. Mobile Drill moved to dismiss the complaint, and the district court
dismissed Plaintiffs’ strict liability and negligence claims related to the sale of the
drill because Iowa’s statute of repose had run, barring recovery. As a result, the
district court also dismissed the related loss of consortium claims. However, the court
found that Plaintiffs had sufficiently stated a claim for negligence related to the sale
of the auger under an alternative liability theory; thus Plaintiffs’ negligence claim
involving the auger and related consortium claims remained.
Mobile Drill then moved for summary judgment on the remaining claims, and
this portion of the case was assigned to a magistrate judge to resolve. The Plaintiffs
resisted the motion and moved to amend the complaint to clarify the claims in light
of the case’s procedural history. The court granted Plaintiffs’ motion, and the
Plaintiffs amended their negligence claims to specifically allege Mobile Drill
negligently entrusted the auger to IDOT. The court considered the amended
complaint and found that Plaintiffs’ negligent entrustment claims failed as a matter
of law because they did not allege facts that would satisfy the knowledge
requirement. As a result, the district court granted summary judgment to Mobile
Drill. Plaintiffs now appeal.
providing of the [product] which brought about the injury.” Id. Under alternative
liability theory, “one of the parties must have caused the injury to plaintiff . . . [and]
the burden of proof as to which actor caused the harm shifts to the defendants because
there is uncertainty as to which of them caused the injury.” Id. The district court held
that Plaintiffs did not sufficiently allege enterprise liability, but that they did
sufficiently allege alternative liability. Thus, for ease of understanding, we refer only
to alternative liability theory in our recitation of the facts.
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II. Discussion
Plaintiffs make two broad claims on appeal. First, they argue that the district
court erred by dismissing their claims against Mobile Drill for negligence and strict
liability based on the running of the statute of repose. Second, they assert that the
district court erred in granting Mobile Drill summary judgment on their negligent
entrustment claim. We address each in turn.
A. Negligence and Strict Liability
Plaintiffs argue that the district court’s dismissal of their negligence and strict
liability claims for failure to state a claim was error because the statute of repose had
not run. They claim because IDOT completely refurbished the auger less than 15
years before Oppedahl’s injury, the time period in the statute reset. Thus, they assert,
since the refurbishment was less than 15 years before Oppedahl’s injury, the statute
of repose does not bar Plaintiffs’ claims. “We review a district court’s grant of a Rule
12(b)(6) motion to dismiss de novo.” Mo. Broadcasters Ass’n v. Lacy, 846 F.3d 295,
300 (8th Cir. 2017).
“[A] statute of repose . . . operates to prevent a cause of action from even
accruing . . . extinguish[ing] a cause of action after a fixed period of time . . . ,
regardless of when the cause of action accrued.” Estate of Ryan v. Heritage Trails
Assocs., Inc., 745 N.W.2d 724, 728-29 (Iowa 2008) (internal quotation marks
omitted). Neither the Iowa Supreme Court nor this Court has considered the question
of whether refurbishing a product resets the time period in a statute of repose.
However, the district court previously considered this issue, and it found there was
“no basis upon which to conclude the Iowa Supreme Court would create [a
refurbishment] exception.” Alley v. Johnson & Johnson, No. 1:02-CV-40043, 2004
WL 180256, at *5 (S.D. Iowa Jan. 5, 2004).
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We need not decide whether the Iowa Supreme Court would adopt a
refurbishment exception because, even if the exception applied, Plaintiffs’ claims
would still be barred. The existing case law in which courts have adopted a
refurbishment exception to statutes of repose requires that the refurbishment be
completed by the party being held accountable for the harm—i.e., to hold the original
manufacturer liable for injuries caused by a refurbished product, the product must
have actually been refurbished by the manufacturer not a third party. See Butchkosky
v. Enstrom Helicopter Corp., 855 F. Supp. 1251, 1255 (S.D. Fla. 1993) (stating that
the refurbishment exception applies “where the products at issue had been re-acquired
by the manufacturer and had been completely refurbished prior to being re-sold to
new customers” (citing Denu v. Western Gear Corp., 581 F. Supp. 7 (S.D. Ind. 1983);
Fugate v. AAA Machinery & Equip. Co., 593 F. Supp. 392 (E.D. Tenn. 1984); and
Rollins v. Cherokee Warehouses, Inc., 635 F. Supp. 136, 137 (E.D. Tenn. 1986)); see
also Miller v. Honeywell Int’l Inc., No. IP 98-1742 CMS, 2001 WL 395149, at *6
(S.D. Ind. Mar. 7, 2001) (noting two “situations under Indiana law in which the
liability of a manufacturer can be revived, and a new ten year repose period begun[:]
[f]irst, if the manufacturer supplies replacement parts for the product and the
replacement parts are the cause of the plaintiff’s injury . . . [;] [and] [s]econd, if the
manufacturer rebuilds the product, to the point of significantly extending the life of
the product and rendering it in like-new condition”); Divis v. Clarklift of Neb., Inc.,
590 N.W.2d 696, 700-01 (Neb. 1999) (finding that the original manufacturer of a
forklift was not liable and the statute of repose did not begin anew because the
original manufacturer did not conduct the refurbishment).
Here, it was IDOT, not Mobile Drill, that conducted the auger refurbishment.
We reject Plaintiffs’ argument that regardless of who conducted the refurbishment the
manufacturer should remain liable. Not only is this argument against the weight of
the case law on the topic, but it also creates the potential for unfairly holding
manufacturers liable for an unrelated third party’s faulty refurbishment of their
products. Therefore, we find that the refurbishment exception does not apply and the
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district court did not err in dismissing Plaintiffs’ negligence and strict liability
claims.4
B. Negligent Entrustment
Plaintiffs next argue that the district court erred when it granted summary
judgment to Mobile Drill on their negligent entrustment claim. We review an order
granting summary judgment de novo. Bedford v. Doe, 880 F.3d 993, 996 (8th Cir.
2018). The parties dispute which standard would apply in a negligent entrustment
case—the Restatement (Second) of Torts § 390 (1965) or the Restatement (Third) of
Torts: Physical and Emotional Harm § 19 (2010). The Iowa Supreme Court has not
expressly adopted either standard for negligent entrustment.
We believe that the Iowa Supreme Court likely would not apply negligent
entrustment against a product manufacturer when the claim relates to the sale of the
product. Assuming, however, that negligent entrustment applies, we still need not
determine which standard the Iowa Supreme Court would adopt because, under either
standard, Plaintiffs’ claims fail.
The Restatement (Second) of Torts § 390 states:
One who supplies directly or through a third person a chattel for the use
of another whom the supplier knows or has reason to know to be likely
because of his youth, inexperience, or otherwise, to use it in a manner
involving unreasonable risk of physical harm to himself and others
whom the supplier should expect to share in or be endangered by its use,
is subject to liability for physical harm resulting to them.
4Plaintiffs argue that we should certify the refurbishment question to the Iowa
Supreme Court. Because we find that even if the Iowa Supreme Court adopted a
refurbishment exception it still would not apply, we decline to certify the question.
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Comment b. to § 390 elaborates on the knowledge requirement:
[T]he supplier knows or has reason to know that such other is likely to
use [the chattel] dangerously, as where the other belongs to a class
which is notoriously incompetent to use the chattel safely, or lacks the
training and experience necessary for such use, or the supplier knows
that the other has on other occasions so acted that the supplier should
realize that the chattel is likely to be dangerously used, or that the other,
though otherwise capable of using the chattel safely, has a propensity or
fixed purpose to misuse it.
When courts apply the knowledge requirement, they focus on specific facts that
the supplier knows about the person to whom it entrusted the chattel. Compare
Pritchett v. Kimberling Cove, Inc., 568 F.2d 570, 577 (8th Cir. 1977) (finding
defendant liable for negligently entrusting a boat to a boy because it had knowledge
of the boy’s “very young age, poor school record, little training in safe operation of
the motorboats and no training whatsoever in their operation at night, and ‘very
limited’ experience”), and Collins v. Ark. Cement Co., 453 F.2d 512, 514 (8th Cir.
1972) (finding the company had reason to know that an exploding cherry bomb was
likely to cause injury when the company’s foreman was on notice “that employees
were not faithful in returning the unused cherry bombs or were using them in
horseplay around the plant”), with White v. Chrysler Corp., 364 N.W.2d 619, 624
(Mich. 1984) (finding that the corporations were not liable for negligent entrustment
because, in order for them to have knowledge of a contractor’s lack of safety
precautions, they would have to have “a duty to make themselves aware of
peculiarities of the contractor that would put them on notice of a likelihood that the
contractor would use the chattel in an unsafe manner,” which does not exist).
Plaintiffs argue that Mobile Drill had the requisite knowledge to support a
negligent entrustment claim because it was aware: (1) that it had sold augers to IDOT,
(2) that there is a weak regulatory structure for drilling activities in the United States,
and (3) that people have suffered from catastrophic injuries from auger accidents in
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the past. We agree with the district court’s finding that this is insufficient to support
a claim that Mobile Drill had knowledge that IDOT would use the auger “in a manner
involving unreasonable risk of physical harm.” Restatement (Second) of Torts § 390.
It is undisputed at this point that Mobile Drill sold IDOT the auger, but Plaintiffs
have not alleged any specific facts that would indicate IDOT had a history of
irresponsible or incompetent behavior with the use of heavy machinery. Nor have
they presented any specific evidence that Mobile Drill knew or should have known
that IDOT, due to youth, inexperience, or otherwise, would use the auger in a manner
involving unreasonable risk of physical harm to its employees. See id. § 390 and
§ 390 cmt. b. Accordingly, we find that Mobile Drill is not liable for negligent
entrustment under § 390.
The Restatement (Third) of Torts § 19 states: “The conduct of a defendant can
lack reasonable care insofar as it foreseeably combines with or permits the improper
conduct of the plaintiff or a third party.” Comment f in § 19 expands on the
foreseeability requirement:
The actor who merely loans a car to an ordinary friend for the evening
is not guilty of negligence in entrusting the car, even though there is
some abstract possibility that the friend might drive the car negligently
or recklessly in the course of the evening. Yet, in other situations, an
actor engaging in certain conduct can foresee a considerable risk, either
on account of the general prospect of other persons’ negligence during
the relevant frame of time and place, or because the actor has knowledge
of the propensities of the particular person or persons who are in a
position to act negligently.
The several illustrations in Comment e of § 19 all state that the defendant had
knowledge of specific facts about the third party that made it foreseeable the third
party would engage in improper conduct. This is similar to the case law applying a
knowledge requirement, as those cases required the plaintiffs to show that the
defendants were aware of specific facts reflecting the third party’s history of
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irresponsible or incompetent behavior. See Pritchett, 568 F.2d at 577; Collins, 453
F.2d at 514; White, 364 N.W.2d at 624. As such, we find that the analysis under
§ 390 and § 19 is the same. Plaintiffs have not presented any facts indicating that it
was foreseeable to Mobile Drill that IDOT would use the auger in an unsafe way.
Simply because there is some abstract possibility that an auger could be used
negligently or recklessly does not impose liability on Mobile Drill for selling the
auger—particularly to an entity such as IDOT, which has vast experience in the use
of heavy machinery. Therefore, we find that summary judgment in favor of Mobile
Drill on Plaintiffs’ negligent entrustment claims was appropriate.

Outcome: For the foregoing reasons, we affirm the district court’s order.

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