Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 83-C-4724 -- James B. Moran, Judge.
Before WOOD, COFFEY, Circuit Judges, and NOLAND, Chief District Judge.*fn*
First National Bank of Dwight (First National), as guardian for Jeramie Aimone, brought this action against Regent Sports Corporation (Regent) alleging that Regent was liable under the Federal Hazardous Substances Act, 14 U.S.C. § 1261 et seq., as amended, for the serious injuries sustained by Jeramie Aimone. First National also alleges that Regent was liable for Jeramie's injuries under theories of strict tort liability, implied warranty of merchantability, and negligence. The district court granted Regent's motion for summary judgment on the federal claim under 14 U.S.C. § 1261 et seq., and on the strict liability claim, as well as the implied warranty and negligence claims. First National appeals from the district court's granting of summary judgment. We affirm in part and reverse in part.
On July 2, 1982, Joanne Farmer went to a Walgreen's Company store and purchased a set of "Slider Jarts" manufactured by the Regent Sports Corporation (Regent) for her daughter, Paula Bradford. Paul reimbursed her mother for the "Jarts." "Slider Jarts" are used in a lawn dart game in which players toss the "Jarts," or lawn darts, into a ring placed on the ground some distance from the players. On July 4, 1982, Paula and her husband hosted a picnic at their home which was attended by George and Mary Ann Aimone and their son Jeramie, two and one-half years of age. During the picnic, some children took out the "Slider Jarts" and began playing with them. Cindy Jo Harp, Joann Farmer's eight-year old granddaughter, threw one of the "Jarts" into the air. On its descent to the ground, the lawn dart struck Jeramie in the head, entered his skull, causing permanent brain damage. Jeramie through his guardian, First National, and parents filed suit against Walgreen's Company, Regent Sports Corporation, Paul Bradford and her husband. On appeal, we are concerned only with the claims against Regent.
Jeramie Aimone initially appeals the summary judgment granted by the district court to Regent on Count III of his complaint. Jeramie brought Count III under 15 U.S.C. § 2072(a)*fn1, alleging that Regent introduced a product into interstate commerce in violation of the regulations promulgated by the Consumer Product Safety Commission, specifically 16 C.F.R. § 1500.18(a)(4).*fn2 The Consumer Product Safety Commission has the authority to issue these regulations under 15 U.S.C. § 1261 (1982).
The district court may grant a summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions of file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. Pro. 56(c). The party moving for a summary judgment carries the burden of establishing that no genuine issue as to any material fact exists and that the movant is entitled to summary judgment as a matter of law. See Goldstick v. ICM Realty, 788 F.2d 456, 458 (7th Cir. 1986).
Pursuant to 16 C.F.R. § 1500.3(b)(4)(i)(D),*fn3 all products determined by the Consumer Product Safety Commission to present mechanical hazards to children are categorized as "hazardous substances" and are banned from interstate commerce under 16 C.F.R. § 1500.3(b)(15)(i).*fn4 Under 16 C.F.R. § 1500.18(a)(4), lawn darts such as "Slider Jarts" are classified as mechanical hazards and are consequently banned from interstate commerce because they are unsuitable for children.*fn5 While lawn darts cannot be sold for use by children, they may be marketed under 16 C.F.R. § 1500.86(a)(3)(i)(ii)(iii) as a game of skill for adults.*fn6
Regent repeats the argument it made before the district court now on appeal that, despite the fact that the "Slider Jarts" may have been improperly resold by Walgreen's, Regent's "product satisfied all the requirements for which it [Regent] could be held responsible and, therefore, that it [Regent] did not commit a 'knowing (including willful)' violation of the regulation as required by section 2072." 601 F. Supp. 507, 513 (1985). Lawn darts cannot be sold in toy stores or store departments dealing predominantly in toys and other children's articles. See 16 C.F.R. § 1500.86(a)(3)(iii). Regent's invoices to retailers selling "Slider Jarts" state "Not to be sold in toy or children's departments." 601 F. Supp. at 513. In the catalogs distributed by Regent, the description of the lawn dart game clearly set forth: "Not a toy. (Not to be sold in toy departments)." Regent also has clearly imprinted on the outside of its shipping cartons: "Not to be sold in toy departments." Id. Federal regulations not only prohibit the sale of lawn darts in toy stores or toy departments but also in "store departments dealing predominantly in toys and other children's articles." 16 C.F.R. § 1500.86(a)(3)(iii). By specifically stating that "Slider Jarts" are not to be sold in toy stores, Regent does not exclude the possibility that the "Slider Jarts" may be sold in store departments dealing primarily in "other children's articles." In its Answer to Interrogatories, Regent did admit selling its Jarts to sporting goods stores. A question arises as to whether sporting goods fall into the category of "other children's articles." In a House Report treating 15 U.S.C. § 1261, the statute which grants authority to the Consumer Product Safety Commission to ban dangerous items, a House Committee stated that the phrase "other articles intended for the use of children" used in 15 U.S.C. § 1261 included:
"games; dolls, stuffed animals, and other toys; swings, slides, seesaws, and other playground equipment; sleds, toboggans, bicycles, tricycles, and other recreational equipment; infants' carriages and strollers; slatted, netted, or lidded cribs and other nursery equipment; children's furniture; science and construction kits; children's footwear; and sports equipment."
H.R. Rep., 91-389, 91st Cong., 1st Sess. 9 (1969), reprinted in U.S. Code Cong. & Admin. News 1969, p. 1236. Given the similarity between the phrase used in 15 U.S.C. § 1261 and the regulation promulgated by the Consumer Product Safety Commission, 16 C.F.R. § 1500.86(3)(iii), it is obvious that sporting goods are "other children's articles" under 16 C.F.R. § 1500.86(3)(iii). In this case, the "Slider Jart" that injured Jeramie was sold in the "sporting goods" section of a Walgreen's Company store. Thus, a question of fact exists as to whether Regent knowingly violated 16 C.F.R. § 1500.86(3)(iii) in marketing their "Slider Jarts" as sporting goods.
To be liable under 15 U.S.C. § 2072(a), Regent must have knowingly violated 16 C.F.R. § 1500.86(a)(3). The district court stated:
"It is clear that Regent took a number of precautions in distributing the lawn darts, whether or not the darts were improperly retailed by Walgreen's. It made it clear in its catalog, invoices and cartons, that the darts were not to be sold with toys. It purposely determined not to sell the product to toy stores. Walgreen's, to which it did sell, deals primarily in drugs, cosmetics and adult items. In addition, Regent delivered the product not to individual stores but to Walgreen's warehouses."
601 F. Supp. at 513-14. While Regent did take precautions in distributing its lawn darts, its marketing practices may have resulted in "Slider Jarts" being sold in violation of 16 C.F.R. § 1500.86(3)(iii). In his motion for reconsideration, Jeramie presented evidence that Regent sold its "Slider Jarts" as part of a "5-Game Combination" package which also included badminton, volleyball, backyard tennis, and rubber horseshoe games, all games frequently played by children. The sale of lawn darts with children's articles violates 16 C.F.R. § 1500.86(3)(iii). Although the lawn dart that injured the plaintiff in this case did not come from a "5-Game Combination" package, such packaging is evidence that Regent conceivably may have indirectly violated 16 C.F.R. § 1500.86(3)(iii) by promoting the sale of lawn darts as athletic equipment suitable for the use of children.
Appellant also points out that Regent's instruction sheet included in the box with the Jart game detailing the use of the "Slider Jarts" may have violated 16 C.F.R. § ...