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A promotional company that personalizes products shouldn’t be considered the manufacturer of a defective charger that caused a fire, the Court of Appeals of Indiana ruled in affirming a lower court’s decision.
The case began with a home fire in Crawfordsville in 2018. At the time, the homeowners were insured by Erie Insurance, which tendered benefits of more than $248,000 for property damage.
The insurance company then filed a subrogation lawsuit in 2019 against Myron Corporation, alleging the New Jersey promotional products company manufactured and sold a power bank charger that was defective and caused the fire.
Erie advanced two claims. One was for negligence, contending Myron failed to warn, inspect or test the charger. The other was a claim under the Indiana Product Liability Act, contending Myron was strictly liable pursuant to the domestic distributor exception.
Myron purchases products from suppliers and resells them with personalized elements such as a business name and logo.
Myron denied it manufactured the charger and instead named China-based Shenzhen C-Star Electric Technology Company as the manufacturer. During discovery, Myron clarified it purchased the power bank chargers from NINGBO C-Star Import & Export, also located in China.
Erie did not amend its complaint to add Shenzhen or NINGBO.
Erie asked the Montgomery Superior Court for an order to consider Myron the manufacturer under Indiana Code § 34-20-1-4 of the IPLA. Erie designated an affidavit by a senior subrogation specialist with the company, who said no records could be found of Shenzhen being registered to do business in Indiana.
Myron contended Erie failed to establish the trial court was unable to obtain personal jurisdiction over Shenzhen or that Myron was Shenzhen’s principal distributor or seller of the power bank chargers. Myron also filed a motion to dismiss Erie Insurance’s strict liability claim based on Indiana Trial Rule 12(B)(6).
In response, Erie said even though Myron wasn’t the manufacturer of the charger, it was still a seller of the product. The insurance company also said Myron had not contradicted the affidavit elaborating on the difficulties in obtaining service on Shenzhen.
Myron responded with an affidavit by Steve Kjekstad, the company’s vice president of supply chain, who said Myron purchased the power bank charger from NINGBO, which appeared to have purchased the charger from the manufacturer, Shenzhen.
The Montgomery Superior Court granted Erie’s motion to strike certain statements from Kjekstad’s affidavit but denied Erie’s motion to declare Myron as the manufacturer of the charger. The court also granted Myron’s motion to dismiss Erie’s strict liability claim.
A jury returned a verdict in favor of Myron on the remaining negligence claim.
On appeal, the Court of Appeals said both parties agree that in dismissing Erie’s strict liability claim, the trial court considered evidence outside the pleading, so Myron’s motion to dismiss should be converted to a motion for summary judgment.
According to the Court of Appeals, in order to be exempt from the IPLA’s application, Myron must “merely” personalize the product to remain characterized as a seller and not the manufacturer. The court consulted Merriam-Webster to define “mere” as “nothing more.”
That definition “appears to imply that the only act a seller can make to the product to remain within the limited parameters of being defined a seller pursuant to the IPLA and not be considered to fall within the perceived liability-laden status of a manufacturer, is placing a private label on the product,” the opinion says, concluding Myron appears to fit that description at first glance.
But the Court of Appeals also ruled the limiting statute must be read in conjunction with the more expansive definition of seller under I.C. 34-20-2-4, which Erie relied on. That law says if a court is unable to hold jurisdiction over a particular manufacturer, then the “manufacturer’s principal distributor or seller over whom a court may hold jurisdiction is considered the manufacturer of the product.”
The opinion says a combined reading of the two sections indicates Myron’s status as seller “may morph into the statutory manufacturer’s status by virtue of doing more than ‘merely’ placing a private label on a product.”
“A high volume of sale or import of a product may quantitatively be acknowledged as doing more than ‘merely’ personalizing a product,” the opinion says. “As such, the ‘principal distributor or seller’ of the product who ‘places a private label on a product’ can be considered a manufacturer under the IPLA.”
But the Court of Appeals ruled Erie failed to bring evidence from which the trial court could infer it would be unable to hold jurisdiction over the manufacturer, Shenzhen.
“It appears that Erie Insurance did nothing other than to unilaterally decide that simply because Shenzhen is based in China, no Indiana trial court could exercise personal jurisdiction,” the opinion says in determining summary judgment in favor of Myron on the strict liability claim was appropriate.
Judge Patricia Riley wrote the opinion. Chief Judge Robert Altice and Judge Rudolph Pyle concurred.
The case is Erie Insurance Exchange v. Myron Corporation, 22A-CT-2699.
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