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Arcelik, A.S. v. E.I. Du Pont De Nemours and Co.

United States District Court, D. Delaware

March 20, 2018

ARCELIK A.S, Plaintiff,

          John M. Seaman, ABRAMS & BAYLISS LLP, Wilmington, DE Jon C. Weingrat, Jonathan L. Greenbalt, Keith R. Palfin, SHEARMAN & STERLING, Washington DC Attorneys for Plaintiff Arcelik A.S.

          Beth Moskow-Schnoll, BALLARD SPAHR LLP, Wilmington, DE Peter L. Haviland, Scott S. Humphreys, BALLARD SPAHR LLP, Los Angeles, CA Attorneys for Defendant E.I. du Pont De Nemours and Company


          STARK, U.S. District Judge

         Plaintiff Arcelik A.§. ("Arcelik") sued Defendant E.I. du Pont de Nemours and Company ("DuPont"), seeking damages related to Arcelik's recall of its faulty clothing dryers sold to the public. (D.I. 29 at 1; D.I. 1) Pending before the Court is DuPont's renewed motion to dismiss Arcelik's amended complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim and Rule 12(b)(7) for failure to join foreign non-parties Epcos AG and/or Epcos India as necessary and indispensable parties. (D.I. 28) The Court will grant in part and deny in part DuPont's motion.

         I. BACKGROUND

         Arcelik is a Turkish company. (D.I. 1 ¶ 8) DuPont is a Delaware corporation. (D.I. 1 ¶ 9) Arcelik manufactured electric tumble dryers for drying clothes that used capacitors containing DuPont's "Zytel" product, which is a plastic resin having certain electrical insulation properties. (D.I. 1 ¶ 2-3) A number of these dryers caught fire in the homes of customers, "subjecting Arcelik to significant remediation expenses." (Id. ¶¶ 1-3) Arcelik alleges that the cause of the fires was defects in DuPont's Zytel. (Id.) Arcelik purchased the capacitors containing the allegedly defective batches of Zytel from a third-party German manufacturer, Epcos AG ("Epcos"). (Id. ¶ 16) In turn, Epcos bought those Zytel batches from DuPont and its global subsidiaries. (Id. ¶ 17)

         Arcelik initially asserted six claims against DuPont: (1) negligent misrepresentation; (2) fraudulent misrepresentation; (3) breach of implied warranty; (4) violation of the Delaware Consumer Fraud Act; (5) negligent manufacture of a defective product; and (6) tortious interference with a contract between Arcelik and Epcos AG. (See D.I. 1 ¶¶ 103-10) The Court granted DuPont's motion to dismiss Arcelik's breach of implied warranty claim with prejudice and dismissed all of the other claims without prejudice, due to Arcelik's failure to "adequately allege agency relationships between DuPont and any entities under its direction or control." (D.I. 16 at 6) The Court did "not decid[e] . .. whether or not the facts currently in Plaintiffs complaint would be sufficient to state claims if sufficient agency relationship(s) were alleged." (Id.) The Court granted Arcelik leave to file an amended complaint and directed the parties to conduct limited discovery "regarding the corporate relationships between DuPont and its subsidiaries, and regarding the involvement of the Epcos entities (Epcos AG and Epcos India)" in the events relating to the allegations in the complaint. (Id. at 2, 6)

         Arcelik filed an amended complaint, reasserting the five claims that had been dismissed without prejudice. (D.I. 19) In the amended complaint, Arcelik added allegations regarding the agency relationship between DuPont and its subsidiaries, including that DuPont's global subsidiaries, E.I. DuPont India Private Ltd. ("DuPont India") and E.I. DuPont China Holding Co. Ltd. ("DuPont China"), "acted under the direction and control of DuPont and were agents of DuPont at all relevant times." (Id. ¶ 17) Arcelik contends that Epcos bought the purportedly defective Zytel at issue from DuPont India, which acted as a sales agent for and under the control and direction of DuPont. (Id. ¶ 18) While acknowledging DuPont's representation in this litigation that the Zytel at issue was manufactured at DuPont China, Arcelik emphasizes that Zytel is still a DuPont product manufactured under the direction and control of DuPont at various manufacturing sites. (Id. ¶ 19)

         The parties then agreed that instead of conducting limited discovery along the lines of what the Court had permitted, DuPont would accept, for purposes of a further motion to dismiss, that DuPont China and DuPont India are its agents. (D.I. 27) The parties further agreed that DuPont would file a renewed motion to dismiss on the limited questions of (1) whether Epcos AG and/or Epcos India are necessary and indispensable parties whose joinder would require dismissal of Arcelik's amended complaint, and (2) assuming that DuPont's subsidiaries are agents of DuPont, whether Arcelik has stated any claim upon which relief may be granted in its amended complaint. (See id. at 3) The parties have completed briefing on DuPont's renewed motion. (See D.I. 29, 31, 34)


         A. Motion to Dismiss for Failure to State a Claim

         Evaluating a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) requires the Court to accept as true all material allegations of a complaint. See Spruill v. Gillis, 372 F.3d 218, 223 (3d Cir. 2004). "The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1420 (3d Cir. 1997) (internal quotation marks omitted). Thus, the Court may grant such a motion to dismiss only if, after "accepting all well-pleaded allegations in the complaint as true, and viewing them in the light most favorable to plaintiff, plaintiff is not entitled to relief." Maio v. Aetna, Inc., 221 F.3d 472, 481-82 (3d Cir. 2000) (internal quotation marks omitted).

         However, "[t]o survive a motion to dismiss, a civil plaintiff must allege facts that 'raise a right to relief above the speculative level on the assumption that the allegations in the complaint are true (even if doubtful in fact).'" Victaulic Co. v. Tieman, 499 F.3d 227, 234 (3d Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations and quotation marks omitted)). A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "The complaint must state enough facts to raise a reasonable expectation that discovery will reveal evidence of [each] necessary element" of a plaintiff s claim. Wilkerson v. New Media Tech. Charter Sch. Inc., 522 F.3d 315, 321 (3d Cir. 2008) (internal quotation marks omitted).

         The Court is not obligated to accept as true "bald assertions, " Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997) (internal quotation marks omitted), "unsupported conclusions and unwarranted inferences, " Schuylkill Energy Res., Inc. v. Pennsylvania Power & Light Co., 113 F.3d 405, 417 (3d Cir. 1997), or allegations that are "self-evidently false, " Nami v. Fauver, 82 F.3d 63, 69 (3d Cir. 1996).

         B. Motion to Dismiss for Failure to Join a Necessary and Indispensable Party

         Pursuant to Federal Rule of Civil Procedure 12(b)(7), a party may seek dismissal for failure to join a party under Rule 19. In deciding whether to grant such a dismissal, the Court must first determine whether the party is a necessary party under Rule 19(a). See generally Refractories Co. v. First State Ins. Co., 500 F.3d 306, 312 (3d Cir. 2007). A party is necessary if, in the absence of the party, (1) complete relief cannot be afforded to the present parties, (2) the disposition of the action would impair the party's ability to protect its own interest, or (3) any of the present parties would be subject to a substantial risk of multiple or inconsistent obligations. See Fed. R. Civ. P. 19(a). If the party is necessary under Rule 19(a), the party must be joined, if joinder is feasible. If joinder is necessary, but infeasible, the Court must then determine whether the party is "indispensable" under Rule 19(b). This inquiry requires a balancing of the interests of the plaintiff, the defendant, the absent party, the courts, and the public. See Feriozzi Co. v. Ashworks, Inc., 130 Fed.Appx. 535, 538-39 (3d Cir. 2005) (citing Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 109-11 (1968))). If an absent party is indispensable, the Court must dismiss the action. See Gen. Refractories Co., 500 F.3d at 312.

         The movant "bears the burden of showing why an absent party should be joined under Rule 19." Disabled in Action of Pa. v. Se. Pa. Transp. Auth., 635 F.3d 87, 97 (3d Cir. 2011); see also Camacho v. Major League Baseball, 297 F.R.D. 457, 461 (S.D. Cal. 2013); Cephalon, Inc. v. Watson Pharm., Inc., 629 F.Supp.2d 338, 346 (D. Del. 2009). "When making a Rule 19 determination, the Court may consider evidence outside the pleadings." Jurimex Kommerz Transit G.m.b.H. v. Case Corp., 201 F.R.D. 337, 340 (D. Del. 2001).


         A. Epcos AG And Epcos India Are Not Necessary Parties

         DuPont argues that the "Court cannot grant complete relief here without Epcos AG and Epcos India." (D.I. 29 at 6) In DuPont's view, because "Epcos India purchased Zytel as a raw material and then allegedly used it as a component part in its manufacture of electrical capacitors that its German affiliate, Epcos AG, sold to Arcelik, . . . this case implicates the raw material/component part supplier defenses, which cannot be litigated without Epcos." (Id. 6-7) (citing Cropper v. Rego Distribution Ctr., Inc., 542 F.Supp. 1142, 1156 (D. Del. 1982) ("It is well established that a manufacturer who merely supplies a component part subsequently assembled by another in a manner creating a dangerous condition is not liable to one injured thereby.")). To DuPont, the determination of whether Zytel was defective "turns, at least in part, on the purpose for which" Epcos bought Zytel, "the extent of DuPont India's involvement, if any, in Epcos's decision, as well as factual issues concerning Epcos's incorporation of [Zytel] in its manufacture of the capacitors." (Id. 6-7)

         The Court disagrees with DuPont. The raw material/component part supplier defense is not implicated where the raw material or component is itself alleged to be defective. See Apperson v. E.I. du Pont de Nemours & Co.,41 F.3d 1103, 1106 (7th Cir. 1994) ("Strict liability may extend to manufacturers of component parts for injuries caused by design or manufacturing defects in the component part itself"); Restatement (Second) of Torts ยง 402A, cmt. p (1965) ("If for example, raw coffee beans are sold to a buyer who roasts and packs them for sale to the ultimate consumer, it ...

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