Green Plains Otter Tail, LLC v. Pro-Environmental, Inc. ( 2020 )

United States Court of Appeals
For the Eighth Circuit
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No. 18-3357
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Green Plains Otter Tail, LLC
lllllllllllllllllllllPlaintiff - Appellant
v.
Pro-Environmental, Inc.
lllllllllllllllllllllDefendant - Appellee
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Appeal from United States District Court
for the District of Minnesota
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Submitted: November 12, 2019
Filed: March 20, 2020
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Before COLLOTON, WOLLMAN, and BENTON, Circuit Judges.
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BENTON, Circuit Judge.
Green Plains Otter Tail, LLC owns and operates an ethanol production facility.
In 2014, an explosion and fire extensively damaged it. Green Plains sued Pro-
Environmental, Inc. for negligence and products liability, alleging defective design
and failure to adequately instruct and warn users. The district court granted summary
judgment to PEI. Green Plains appeals. Having jurisdiction under 28 U.S.C. § 1291,
this court affirms in part, reverses in part, and remands.
I.
Green Plains produces ethanol in Fergus Falls, Minnesota. Producing ethanol
makes pollutants. These pollutants are burned off in a regenerative thermal oxidizer
(RTO). Dampers control the flow of vapors in and out of the RTO’s chambers.
These dampers are powered by a hydraulic pump unit (HPU). In an emergency, the
RTO should (1) close to keep unprocessed vapors out and (2) release the vapors
already inside into the atmosphere. Both functions require hydraulic pressure (1) to
close the input damper, and (2) to open the release damper.
The HPU has an accumulator that supplies hydraulic fluid for the RTO’s
regular cycles. If a hydraulic pump within the HPU fails, the accumulator should
force its fluid back into the system, moving the dampers to safe positions. In order
to operate, the accumulator must be recharged with nitrogen.
The HPU’s hydraulic pump is connected to the other parts of the HPU by
couplings. In 2014, a coupling failed, causing a loss of hydraulic pressure to the
HPU. Several alarms sounded. Green Plains’s staff discovered that the dampers did
not move to safe positions. An hour later, an explosion damaged the RTO, other
equipment, and buildings.
The RTO’s dampers could move to safe positions only if the accumulator was
sufficiently precharged. Post-explosion investigations showed almost no precharge
of the HPU’s accumulator. The HPU manual that PEI gave Green Plains said:
The accumulator is precharged at time of commissioning to
a predetermined pressure with inert nitrogen. A charging
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and gauging assembly should periodically be attached to
the accumulator charge port to check the accumulator
precharge, and should be recharged as needed using only
dry, inert nitrogen. These operations should be performed
with the system off, and all hydraulic pressure relieved
from the system.
The manual added: “It is suggested that a check be made a week after installation,
and thereafter once a month.” A label on the HPU unit warned, in all capital letters,
that failure to follow directions can cause malfunctions leading to death, personal
injury, and property damage. The label directed users to a website with instructions.
Green Plains never checked the level of precharge, or recharged the nitrogen, during
the six years between the RTO’s commissioning and the explosion, nor did Green
Plains keep on-site the parts to check the precharge.
Green Plains sued PEI in 2016, alleging negligence and products liability for
defective design of the RTO, and inadequate warnings of the importance of the
accumulator. The district court granted summary judgment to PEI, ruling that Green
Plains’s lack of maintenance was a superseding cause negating PEI’s liability for any
design defect, and that the design was not unreasonably dangerous. The court also
granted summary judgment on Green Plains’s failure-to-warn claim, stressing the
absence of evidence in the record that employees read the warnings in the manuals.
Green Plains Otter Tail, LLC v. Pro-Environmental, Inc., 349 F. Supp. 3d 768, 780
(D. Minn. 2018).
Minnesota law governs this diversity action. Lamoureux v. MPSC, Inc., 849
F.3d 737, 739 (8th Cir. 2017). This court reviews de novo the grant of summary
judgment. Thompson v. Hirano Tecseed Co., Ltd., 456 F.3d 805, 808 (8th Cir.
2006). Summary judgment is proper if there are no genuine issues of material fact
and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(c). “Where the record taken as a whole could not lead a rational trier of fact to
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find for the nonmoving party, there is no genuine issue for trial.” Torgerson v. City
of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc), citing Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
II.
Under Minnesota law, a products liability claim for defective design requires:
(1) the product was in a defective condition unreasonably dangerous for its intended
use; (2) the defect existed when it left the manufacturer’s control; and (3) the defect
was the proximate cause of the injury sustained. Adams v. Toyota Motor Corp., 867
F.3d 903, 916-17 (8th Cir. 2017), citing Bilotta v. Kelley Co., 346 N.W.2d 616, 623
n.3 (Minn. 1984). A manufacturer has a duty to design its product to avoid an
unreasonable risk of harm when the product is used as intended or in an unintended
yet reasonably foreseeable manner. Id. at 621. “Whether a product is defective is
generally a question of fact; only where reasonable minds cannot differ does the
question become one of law.” Thompson, 456 F.3d at 809 (applying Minnesota law).
“Minnesota merges negligence and strict liability claims into a single products
liability theory, which employs a reasonable-care balancing test to determine whether
a product is defective.” Id. “To determine whether there is enough evidence to
submit the claim to a jury, the court must balance the ‘the likelihood of harm, and the
gravity of harm if it happens, against the burden of the precaution which would be
effective to avoid the harm.’” Young v. Pollock Eng’g Grp., Inc., 428 F.3d 786, 789
(8th Cir. 2005), citing Bilotta, 346 N.W.2d at 621.
“An important factor in this balancing test is the availability of a feasible, safer
alternative design.” Id. To demonstrate that the product is unreasonably dangerous,
“the plaintiff ordinarily has the burden of showing the existence of an alternative
design that was safer.” Kallio v. Ford Motor Co., 407 N.W.2d 92, 96 (Minn. 1987).
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If the manufacturer presents evidence to dispute the product is unreasonably
dangerous “the trier of fact will resolve the ‘unreasonably dangerous’ issue.” Id.Green Plains insists that the RTO’s design was defective and unreasonably
dangerous, emphasizing that the dampers use hydraulic pressure for movement, while
other potential designs, like compressed air or weighted dampers, could move the
dampers without a precharged accumulator. Green Plains introduced evidence of the
existence of alternative designs that are safer.
Green Plains points to deposition testimony of the owner of a company that
designs ethanol production plants, where dampers move by compressed air, not
hydraulics. According to him, in a compressed-air system, dampers have an
automatic fail position and can fail “open” with a loss of pressure. Green Plains also
points to the testimony of its chief boiler engineer that after the explosion, Green
Plains added weights to the dampers so that if the hydraulics failed, employees could
manually open the dampers.
PEI counters that the RTO design was consistent with industry standards, and
that Green Plains’s expert never tested the alternative designs. The district court
ruled, “PEI’s design struck an acceptable balance among competing factors and was
not unreasonably dangerous.” Green Plains, 349 F. Supp. 3d at 775-76.
While a manufacturer’s compliance with industry standards can be evidence
of a reasonable design, it “is not conclusive proof on the question of whether a
manufacturer exercised reasonable care.” Zimprich v. Stratford Homes, Inc., 453
N.W.2d 557, 560 (Minn. App. 1990), citing Schmidt v. Beninga, 173 N.W.2d 401,
408 (Minn. 1970). Here, Green Plains’s experts did not need to test the alternatives
to prove their feasibility, because they were successfully in use. See Young, 428 F.3d
at 790. “Credibility determinations, the weighing of the evidence, and the drawing
of legitimate inferences from the facts are jury functions, not those of a judge.”
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Torgerson, 643 F.3d at 1042, citing Reeves v. Sanderson Plumbing Prods., Inc., 530
U.S. 133, 150 (2000). In Minnesota, “the jury ultimately decides whether the
[product is] unreasonably dangerous.” Young, 428 F.3d at 791.
Because reasonable minds could differ about whether the RTO was defective,
Green Plains submitted sufficient evidence of a defective design to survive summary
judgment.
III.
It is undisputed that if the accumulator had been recharged, the explosion
would not have happened. PEI argues that the lack of recharging is a superseding
cause that cuts off liability for any alleged defect. The district court was
“unconvinced that any alleged defect was the proximate cause of the fire and
explosion.” Green Plains, 349 F. Supp. 3d at 776. It ruled that “Green Plains’ own
lack of maintenance was a superseding cause that broke any causal connection
between an alleged design defect and the fire and explosion.” Id.
Proximate cause is generally a question of fact for the jury. Lubbers v.
Anderson, 539 N.W.2d 398, 402 (Minn. 1995). However, “where reasonable minds
can arrive at only one conclusion, proximate cause is a question of law.” Id. In a
proximate-cause analysis, Minnesota courts look to whether an injury “follows in an
unbroken sequence, without an intervening efficient cause, from the original
negligent act.” DeLuna v. Mower Cty., 936 F.3d 711, 717 (8th Cir. 2019), citing
Dellwo v. Pearson, 107 N.W.2d 859, 861 (Minn. 1961). A superseding event breaks
the chain of causation and “prevents the original negligent actor from being liable for
the final injury.” Wartnick v. Moss & Barnett, 490 N.W.2d 108, 113 (Minn. 1992).
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An intervening act is a superseding cause if four elements are met:
(1) its harmful effects must have occurred after the original
negligence; (2) it must not have been brought about by the
original negligence; (3) it must have actively worked to
bring about a result which would not otherwise have
followed from the original negligence; and (4) it must not
have been reasonably foreseeable by the original
wrongdoer.
Canada ex rel. Landy v. McCarthy, 567 N.W.2d 496, 507 (Minn. 1997). “A
defendant is liable, despite an intervening cause, if the cause is foreseeable.” Bilotta,
346 N.W.2d at 625. An injury is not reasonably foreseeable as a matter of law when
the undisputed facts, considered together, establish that the connection between
defendant’s conduct and the plaintiff’s injury was too attenuated. Montemayor v.
Sebright Prods., Inc., 898 N.W.2d 623, 629 (Minn. 2017). “[C]omparative
negligence does not automatically foreclose [the manufacturer’s] potential liability
for defective design and warnings. Rather, if reasonable minds could disagree as to
whether [the purchaser’s] negligence was reasonably foreseeable to [the
manufacturer], summary judgment must be denied.” Id. at 632.
The Supreme Court of Minnesota approves submitting to the jury a wide range
of superseding causes, including removing a detachable safety device, not heeding
the manufacturer’s warnings against unclogging a machine with the power connected,
and violating occupational safety regulations. Id. at 630-31, citing Germann v. F.L.
Smithe Mach. Co., 395 N.W.2d 922, 925 (Minn. 1986); Bilotta, 346 N.W.2d at 625;
Parks v. Allis-Chalmers Corp., 289 N.W.2d 456, 458-59 (Minn. 1979). This court,
applying Minnesota law, upheld a jury verdict because the manufacturer could
reasonably foresee the failure to pass along a machine’s operating manual, and the
unfamiliarity of a trainer with the machine’s operating manual. See Bursch v.
Beardsley & Piper, 971 F.2d 108, 112 (8th Cir. 1992). This court held: “As to
machine maintenance, [the manufacturer] reasonably could have foreseen that [users]
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would not maintain the machine in the strict manner recommended in the operating
manual.” Id.PEI argues, as the district court ruled, that never recharging the accumulator
was a superseding cause because “it is unforeseeable that Green Plains would fail to
maintain its equipment.” Green Plains, 349 F. Supp. 3d at 776. True, Green Plains
did no maintenance on the accumulator despite the manual’s suggestion to check the
accumulator a week after installation and thereafter once a month. But, in order to
check the level of precharge in the accumulator, the machine had to be powered off,
fluid drained, and a charging and gauging assembly attached. Reasonable minds
could disagree whether PEI could foresee that a company would view the “suggested”
maintenance as mandatory, or would ignore it due to the effort required. See Parks,
289 N.W.2d at 459 (“The jury could find that defendant knew, or in the exercise of
reasonable care should have known, that some users would leave the power
connected while unclogging because that would furnish mechanical assistance, saving
time and effort.”), approved in Montemayor, 898 N.W.2d at 630.
Under Minnesota law, PEI was not entitled to summary judgment on proximate
causation.
IV.
Green Plains argues that PEI did not adequately warn that a failure to recharge
could cause an explosion. A failure-to-warn claim requires that: (1) PEI had a duty
to warn; (2) PEI breached that duty by providing an inadequate warning; and (3)
PEI’s inadequate warning caused Green Plains’s damages. See Kapps v. Biosense
Webster, Inc., 813 F. Supp. 2d 1128, 1155 (D. Minn. 2011), citing Balder v. Haley,
399 N.W.2d 77, 81 (Minn. 1987). “[A] supplier has a duty to warn end users of a
dangerous product if it is reasonably foreseeable that an injury could occur in its use.”
Gray v. Badger Mining Corp., 676 N.W.2d 268, 274 (Minn. 2004). This duty
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extends to “all reasonably foreseeable users.” Hauenstein v. Loctite Corp., 347
N.W.2d 272, 275 (Minn. 1984). Whether a duty exists “is a legal issue for court
resolution.” Germann, 395 N.W.2d at 924.
Here, PEI had a duty to warn Green Plains, a foreseeable user, of the dangers
of the RTO failing and exploding. The issues are whether the warnings were
adequate, and if inadequate, whether they caused the explosion.
“To be legally adequate, a warning should (1) attract the attention of those that
the product could harm; (2) explain the mechanism and mode of injury; and (3)
provide instructions on ways to safely use the product to avoid injury.” Glorvigen
v. Cirrus Design Corp., 816 N.W.2d 572, 582 (Minn. 2012). “In any theory of
products liability, the plaintiff must show a causal link between the alleged defect and
the injury.” Rients v. Int’l Harvester Co., 346 N.W.2d 359, 362 (Minn. App. 1984).
Here, PEI gave Green Plains an RTO manual. It specifically warns, “Periodic
cleaning and maintenance of equipment is required. Failure to do so may cause the
equipment to malfunction with the potential for fire and explosion hazards.” The
“Maintenance” section of the manual also warns, with a cartoon “bomb” icon:
PERIODIC CLEANING AND MAINTENANCE OF
EQUIPMENT IS REQUIRED. FAILURE TO
UNDERTAKE SUCH ACTION MAY CAUSE
EQUIPMENT DAMAGE, IMPROPER FUNCTION, OR
THE CREATION OF AN EXPLOSIVE HAZARD.
PEI also gave Green Plains an HPU manual. It has instructions on the
maintenance of the accumulator, including how to check the precharge. This manual
warns:
It is imperative that personnel involved in the installation,
service, and operation of the power unit be familiar with
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how the equipment is to be used. They should be aware of
the limitations of the system and its component parts; and
have knowledge of good hydraulic practices in terms of
safety, installation, and maintenance.
Green Plains argues that these warnings are inadequate because they do not
give adequate instruction for safe use, explain the injury from a failure to maintain
equipment, or provide instructions how to safely use the accumulator. Green Plains
asserts it did not know the importance of recharging the accumulator and that the
consequences were not sufficiently apparent.
To the contrary, a warning label on the accumulator, under an all capital letters
“WARNING!”, says: “Failure to read and follow these directions can cause rapidly
discharging gas and/or hydraulic fluid which can result in death, personal injury and
property damage.” The label directs the reader to instructions in the product catalog
or on a website. The website, with detailed instructions, instructs readers to check the
accumulator once per month. Also on the label is an instruction to “follow the above
mentioned bulletin for all servicing, including precharging and maintenance.”
There must be a causal relationship between the failure to warn and the injury.
Balder, 399 N.W.2d at 81-82 (finding no causation as a matter of law when a mother
and son disregarded verbal warnings and “[t]here is no reason to believe that a
warning label would have done anything more to impress [him] or his mother”). See
also Hauenstein, 347 N.W.2d at 276 (if the injured plaintiff would not have acted any
differently had there been warning, manufacturer’s failure to warn is not cause of
injury).
“Absent a reading of the warning, there is no causal link between the alleged
defect and the injury.” J&W Enters., Inc. v. Econ. Sales, Inc., 486 N.W.2d 179, 181
(Minn. App. 1992). “[A]n issue as to the adequacy of a warning necessarily
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presupposes that the operator has read the warning.” Johnson v. Niagara Mach. &
Tool Works, 666 F.2d 1223, 1225 (8th Cir. 1981) (applying Minnesota law).
The Chief Boiler Engineer at Green Plains testified he glanced through the
manuals, but did not read them cover to cover. He testified he understood the role of
the accumulator and knew that the accumulator’s precharge needed to be checked.
He also acknowledged he was not aware that the HPU manual discusses checking the
accumulator precharge. The warning label on the accumulator specifically says to
follow instructions for precharging and maintenance. Additional warnings would not
have changed the behavior of Green Plains.
The district court properly granted summary judgment on the failure-to-warn
claim.
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The judgment as to failure-to-warn is affirmed. The judgment as to defective-
design is reversed, and the case remanded for further proceedings consistent with this
opinion.
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