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Zepik v. Tidewater Midwest Inc.

decided: September 12, 1988.

RONALD ZEPIK, PLAINTIFF-APPELLANT,
v.
TIDEWATER MIDWEST, INC., ET AL., DEFENDANTS-APPELLEES



Appeal from the United States District Court for the Northern District of Indiana, South Bend Division. No. 85 C 291-Robert L. Miller, Judge.

Harlington Wood, Jr. and Richard D. Cudahy, Circuit Judges, and Thomas E. Fairchild, Senior Circuit Judges.

Author: Cudahy

CUDAHY, Circuit Judge.

Ronald Zepik was injured while diving into an in-ground swimming pool at the home of some friends. He brought suit in federal court against four manufacturers of swimming pool components and a pool supply company raising claims based on the Consumer Products Safety Act ("CPSA") and on a variety of pendent state law theories, including strict liability, negligence, willful and wanton misconduct and breach of express and implied warranties. Zepik's complaint based subject matter jurisdiction solely on the federal question raised by the CPSA claim.

The district court dismissed the suit against the supplier and granted summary judgment on all counts in favor of the component manufacturers; Zepik appealed. We affirm the district court's rejection of the CPSA claim and remand the state claims for the district court to determine whether federal jurisdiction of the pendent claims exists under United Mine Workers v. Gibbs, 383 U.S. 715, 16 L. Ed. 2d 218, 86 S. Ct. 1130 (1966).

I.

We summarize the relevant facts with all disputed issues resolved in Zepik's favor. On June 20, 1983, Ronald Zepik dove into a backyard swimming pool at the home of his friends, the Davises, and struck his head on the bottom. The accident left him a quadriplegic. In May 1985, Zepik brought suit against five companies that had manufactured or sold components incorporated in the Davises' pool. Claims against Ceeco Pool & Supply, Inc. (later known as Tidewater Midwest, Inc.) were dismissed with prejudice and that company plays no part in this appeal. Another company, Loren's Pool and Supply, Inc. ("Loren's"), sold materials used in constructing the pool, excavated the hole and provided technical assistance. The remaining three were identified by Zepik as component manufacturers: Frost Company ("Frost") manufactured the ladder; Pleasure Industries, Inc. ("Pleasure") manufactured the pipes and published a construction manual consulted during construction; Polynesian, Inc. ("Polynesian") made the wall panels and coping tile. The complaint alleged that defendants were liable, under various state law theories, for failing to warn of the danger of diving into shallow water, for failing to ensure that a safe way of entering the water would be available and for providing misleading assurances, express and implied, that diving into shallow water was safe. Count VII of the complaint, the basis for subject matter jurisdiction in the district court, invoked section 23(a) of the CPSA, 15 U.S.C. § 2072(a) (1982), which provides a private right of action for "any person" injured "by reason of any knowing (including willful) violation of a consumer product safety rule, or any other rule or order issued by the Commission."*fn1 Zepik claimed that the defendants had knowingly violated rules that require manufacturers, distributors and retailers to report product defects capable of creating "substantial product hazards." See 16 C.F.R. Part 1115 (1988).

The district court ruled in favor of the defendant-appellees in two separate decisions. On April 28, 1986, the district court granted summary judgment to Pleasure in Zepik v. Ceeco Pool & Supply, Inc., 637 F. Supp. 444 (N.D. Ind. 1986) (" Zepik I "). Although the district court rejected Pleasure's contention that the CPSA's private right of action does not extend to reporting violations, it ruled for Pleasure on this count on the ground that the reporting requirements do not require a manufacturer of pipes or a publisher of construction manuals to report defects in completed pools. Id. at 451. This disposition of the sole federal claim should have prompted the district court to consider whether dismissal of the state claims was required under the general principle that "if the federal claims are dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims should be dismissed as well." Gibbs, 383 U.S. at 726. Instead, the district court went on to consider the merits of the state law claims and to grant summary judgment to Pleasure across the board.

On November 12, 1987, the district court issued a memorandum and order disposing of Zepik's claims against the remaining three defendants. Zepik v. Ceeco Pool & Supply, Inc., 118 F.R.D. 455 (N.D. Ind. 1987) (" Zepik II "). The court granted a motion by Loren's to dismiss the CPSA count, having been persuaded by Drake v. Honeywell, Inc., 797 F.2d 603 (8th Cir. 1986), a decision handed down after Zepik I had been decided, that section 23(a) of the CPSA did not afford a private right of action for reporting violations. 118 F.R.D. at 458-59. The court further found that "no independent basis existed for this court's continued jurisdiction over the remaining pendent state claims" against Loren's and, citing two of this circuit's decisions under Gibbs, dismissed those claims as well. Id. at 459. This analysis, however, was not applied to Frost and Polynesian. These defendants, whose situations closely resembled Pleasure's, presumably saw a sure bet in moving for summary judgment on the strength of Zepik I and declined to raise arguments for dismissal based on Drake and Gibbs. The district court, "reluctant to dispose of the claims against those defendants on the basis of an argument they ha[d] not addressed," granted summary judgment for Frost and Polynesian on the CPSA and state law counts for reasons almost identical to those recited in Zepik I. See Zepik II, 118 F.R.D. at 459-65. As in the earlier order, the district court did not consider whether subject matter jurisdiction over the state law counts against Frost and Polynesian should survive the dismissal of the federal claim.

II.

A.

Zepik maintains that his private right of action against the defendants for their violations of reporting regulations issued under the CPSA derives from the plain meaning of the statute. Section 23(a) authorizes suits for damages, costs and legal fees in federal court by anyone injured "by reason of any knowing (including willful) violation of a consumer product safety rule, or any other rule or order issued by the Commission." Section 15(b) of the CPSA, 15 U.S.C. § 2064(b) (1982), requires manufacturers, distributors and retailers of consumer products to inform the Commission immediately when they obtain any information suggesting that a product they make or distribute "contains a defect which could create a substantial product hazard." Part 1115 of the Commission's regulations, 16 C.F.R. Part 1115 (1988), sets forth the Commission's interpretation of the Act's reporting requirements. The complaint alleges that the defendants were aware that severe injuries had resulted from dives into shallow pools but failed to file the required reports, thereby violating the reporting regulations and incurring liability to victims of diving accidents, such as Zepik, injured "by reason of" the reporting violations.

Several district courts and a state Supreme Court have held that section 23(a) authorizes private actions based on violations of reporting requirements. See Hughes v. Segal Enters., Inc., 627 F. Supp. 1231 (WD Ark. 1986); Drake v. Lochinvar Water Heater, Inc., 618 F. Supp. 549 (D. Minn. 1985), rev'd sub nom. Drake v. Honeywell, Inc., 797 F.2d 603 (8th Cir. 1986); Wilson v. Robertshaw Controls Co., 600 F. Supp. 671 (N.D. Ind. 1985); Payne v. A.O. Smith Corp., 578 F. Supp. 733 (S.D. Ohio 1983); Young v. Robertshaw Controls Co., 560 F. Supp. 288 (N.D.N.Y. 1983); Butcher v. Robertshaw Controls Co., 550 F. Supp. 692 (D. Md. 1981); Swenson v. Emerson Elec. Co., 374 N.W.2d 690 (Minn. 1985), cert. denied, 476 U.S. 1130, 106 S. Ct. 1998, 90 L. Ed. 2d 678 (1986). Butcher, the first case in this line, set forth the basic "plain meaning" analysis on which the others have relied. Butcher focused on section 23(a)'s statement that knowing violation of "a consumer product safety rule or any other rule or order" gives rise to a private cause of action. In view of this broad language, Butcher rejected an argument that section 23(a) applies only to consumer product safety rules, 560 F. Supp. at 698-99, and subsequent cases rejected arguments that section 23(a) refers to legislative but not interpretive rules. Wilson, 600 F. Supp. at 674-75; Young, 560 F. Supp. at 292 n.8. Butcher also rejected the defendant's contention that failure to distinguish between legislative and interpretive rules under section 23(a) would produce an outcome that Congress could not possibly have intended -- admission to federal court for any product liability plaintiff able to raise a colorable claim that a defendant had knowingly violated interpretive rules implementing the CPSA's broad reporting obligation. Butcher did not dispute that this construction of section 23(a) could expand federal jurisdiction over product liability cases, but observed that this expansion might be "precisely the result intended by Congress." 550 F. Supp. at 700.

When the district court decided Zepik I, the Butcher line of cases was opposed only by Morris v. Coleco Industries, 587 F. Supp. 8 (E.D. Va. 1984), and Kahn v. Sears, Roebuck & Co., 607 F. Supp. 957 (N.D. Ga. 1985). Morris did not address whether 23(a)'s reference to "any other rule" included interpretive rules since the plaintiff in that case apparently alleged a violation of the statutory reporting requirement rather than the Part 1115 regulations interpreting that requirement. Morris held that the plaintiff's cause of action under the CPSA failed both because the alleged violation concerned the statute itself rather than a Commission rule or order and because the court found it "illogical . . . that Congress would have supposed that a failure to disclose a mishap to the Commission might proximately cause an injury." 587 F. Supp. at 9-10. Kahn, in which the plaintiff did allege a violation of the Part 1115 regulations, summarily determined that Part 1115 contained only interpretive rules, indistinguishable from the statute itself. This move placed Kahn on all fours with Morris, which ...


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