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Hiatt v. Western Plastics, Inc.

Court of Appeals of Illinois, Second District

December 29, 2014

MICHAEL HIATT, Plaintiff-Appellant,

Appeal from the Circuit Court of Du Page County. No. 11-L-306. Honorable Dorothy French Mallen, Judge, Presiding.

Reversed and remanded.

ZENOFF, JUSTICE delivered the judgment of the court, with opinion. Justice Spence concurred in the judgment and opinion. Justice Burke dissented, with opinion.



[¶1] Plaintiff, Michael Hiatt, was an employee of Western Plastics, Inc. (Western), which uses extruding machines to produce plastic sheets. The machines heat plastic pellets into a putty form and then push the material through metal rollers to create plastic sheets of desired thicknesses. On October 15, 2007, while cleaning one machine's spinning rollers, plaintiff's arms were crushed between the rollers and had to be amputated. Plaintiff sued Western and other defendants, all but one of which either have been dismissed or have entered into settlement agreements with plaintiff. The only remaining defendant, Illinois Tool Works, Inc. (ITW), operated one of its divisions next door to Western and sold products that Western produced. Plaintiff alleged that ITW was liable to him because it either (1) was engaged in a joint venture with Western, (2) retained control over Western, giving rise to a duty of care, or (3) had actual or constructive knowledge that the extruding machine was unreasonably dangerous. The trial court entered summary judgment in ITW's favor, finding that it was not engaged in a joint venture with Western and owed no duty of care to plaintiff. For the following reasons, we reverse and remand.


[¶3] Count IV of plaintiff's sixth amended complaint alleged as follows. ITW and Western were engaged in a joint venture to manufacture and sell plastic products. They shared profits and losses and exercised joint control and management of the manufacturing process, and they both contributed money, resources, equipment, and employees to the venture. ITW controlled the manner in which Western manufactured its products, including the pace and speed of the extruding machines. ITW knew that the extruding machine that injured plaintiff was unreasonably dangerous in that it lacked a proper emergency stopping mechanism and other safety devices. ITW was negligent individually and as a joint venturer with Western, in that it allowed plaintiff to work on an unreasonably dangerous machine, failed to provide adequate warnings and instructions, failed to provide adequate safety devices, and failed to identify and correct safety hazards. ITW's acts or omissions proximately caused plaintiff's injuries.

[¶4] ITW moved for summary judgment on count IV, contending that there was no genuine issue of material fact as to whether it was engaged in a joint venture with Western, retained control over the manufacturing process, or knew that the extruding machine that injured plaintiff was unreasonably dangerous. Rather than recite ITW's and plaintiff's arguments in support of and in opposition to summary judgment, which in essence are the same arguments they make on appeal, we summarize the deposition testimony and documentary evidence.

[¶5] A. Don Edelstein's Deposition

[¶6] Don Edelstein testified as follows. He had been part owner of Western since 1977, when he and three other individuals started the company. Originally, Edelstein worked as a machine operator at Western. In 1986 or 1987, his primary responsibility became machine maintenance, which remained his responsibility at the time of plaintiff's accident.

[¶7] In 1999, Western built its third extruding machine, which was the machine that injured plaintiff. The machine was a clone of Western's other extruding machines. Western purchased the components for the machine from various entities, and Edelstein assembled the components, hiring an electrician and a welder for some of the work. At Edelstein's direction, the electrician, Leonard Hofkamp, installed an emergency stop cord on the machine exactly as the stop cords were installed on Western's other machines. Edelstein estimated that 95% of the plastic that Western produced on its third extruding machine was for ITW. However, ITW played no role in the design or construction of the machine. Other than plaintiff's, no injuries had occurred on the machine.

[¶8] ITW was Western's biggest customer. At the time of the accident, ITW accounted for 70% to 80% of Western's business. Although ITW was headquartered elsewhere, it had a facility next door to Western, in the same building. ITW and Western were separated by a wall and shared a loading dock. Edelstein believed that ITW moved into the building to reduce shipping costs, because most of the material that it sold came from Western.

[¶9] A written manufacturing agreement governed the relationship between Western and ITW. Broadly speaking, Western's intent upon entering into the agreement was to sell more products and increase profits. Western did not have written agreements with any of its other customers.

[¶10] ITW supplied to Western the plastic pellets used to produce ITW's products. The pellets used a proprietary formula that ITW owned. In addition, ITW supplied some of the pallets used to ship its products and the labels to be placed on its products. The manufacturing agreement contained a formula for setting the price at which Western would sell products to ITW, based on the number of pounds of product manufactured. For customers other than ITW, Western supplied the raw material and the pallets. The price of products for customers other than ITW was based on the number of plastic sheets produced, not on weight.

[¶11] Edelstein testified that ITW owned electronic monitoring devices that were installed on two of Western's extruding machines. The devices measured the thickness of the plastic sheets as they were produced. The devices were capable of controlling the speed of the machines. When an extruding machine was set to " manual," the machine operator controlled the speed. When an extruding machine was set to " automatic," the monitoring device controlled the speed. When Western manufactured material for ITW, the machines were set to automatic. Although the monitoring devices were capable of controlling a machine's speed, ITW was unable to control the speed from its office. Instead, based on information that ITW provided, Western had programmed tolerances into the monitoring devices. The devices regulated each machine's speed to ensure that it produced material within the tolerances. For each roll of plastic produced, the monitoring devices also relayed the tolerances to ITW, which received a printout of the information. A wire from the devices ran through the wall into ITW's office. ITW incurred the expense of purchasing, installing, and maintaining the devices.

[¶12] Upon further questioning, Edelstein clarified that there were two major components of each extruding machine--the portion " where the plastic is extruded" and the " downstream" portion, which contained the rollers that injured plaintiff. The monitoring devices were installed on and controlled the speed of the downstream portion of the machines. The speed of that portion affected the thickness of the plastic sheets being produced.

[¶13] The monitoring device on the machine that injured plaintiff was not " activated" at the time of the accident, because the downstream portion of the machine had been separated from the extruder portion and plaintiff was standing between the two sections, cleaning the rollers on the downstream portion. When the two portions of the machine were separated, no material could move through the machine, and the monitoring device could not control the speed of the machine.

[¶14] None of Western's other customers had monitoring devices installed on its machines like ITW did. However, like ITW, Western's other customers provided specifications for the thickness of the plastic sheets and rolls that they ordered.

[¶15] Edelstein testified that Richard Pedersen worked as a " broker" for ITW and would enter Western on a daily basis to pick up completed orders. Pedersen did not have keys to Western. In addition to picking up completed orders, Pedersen helped with scheduling ITW's orders. Pedersen would create a schedule based on the thickness of the materials to be produced. The schedule ensured that Western did not " lose production," as Western could produce products with the same thickness at the same time. Other than Pedersen, ITW employees occasionally came to Western for other reasons, for instance, if there was a quality issue that needed to be addressed. This happened " maybe a half a dozen times over the years," possibly more.

[¶16] B. Chris Benson's Deposition

[¶17] Chris Benson testified as follows. He began working for ITW in 1986 in its Fastex division, which was located in Des Plaines, Illinois. In 1996, the Formex product line became part of the Fastex division. Formex is a flame-retardant polypropylene electrical insulation that is used in various electrical components. In 2000 or 2001, the Formex line was split off from the Fastex division and became a separate division of ITW. At that time, the Formex division moved into the space next to Western in Addison, Illinois. Western manufactured the Formex products.

[¶18] Benson was responsible for, among other things, ordering raw material and issuing purchase orders to Western. When Benson issued a purchase order to Western, he identified the products he was ordering by part number and specified a quantity. The manufacturing agreement between ITW and Western contained the specifications for each product. The specifications consisted of a desired thickness, the acceptable tolerances, and the acceptable quality. Tolerances referred to the acceptable range above and below the specified thickness. Quality was measured by counting the number of defects in a given roll of plastic sheet. Purchase orders were issued to Western approximately twice per month.

[¶19] Benson testified that, between 2001 and 2007, he entered Western " [m]aybe a couple times a year." He did not have a key to Western. He would go there if there was a question about manufacturing or quality. For example, if Western wanted ITW's approval for a certain " surface appearance" of a product, Benson would go to Western to view the product.

[¶20] Benson testified that Pedersen was an independent salesperson who introduced ITW to Western in approximately 1992. In 2000, Pedersen began working as an independent contractor for ITW, handling shipping and quality control. In that role, Pedersen worked 40 hours per week. He had a desk and a phone in ITW's office. His duties included delivering ITW's purchase orders to Western, helping Western determine a production schedule for ITW's orders, and picking up the finished products from Western using a forklift. He transported the finished products to ITW's warehouse, where they would be loaded onto trucks and shipped to customers. When Pedersen did these tasks, he was acting on ITW's behalf.

[¶21] When asked about which costs ITW was responsible for with respect to products that Western manufactured for ITW, Benson testified that ITW purchased the raw material, the labels, and approximately 10% of the pallets used to ship the finished products. ITW supplied a portion of the pallets because they were of a size that Western did not have available. In addition, on two or three occasions, ITW contributed funds toward refinishing the rollers on the extruding machines used to produce ITW's products. The refinished rollers ensured that ITW products had a consistent thickness. On one occasion, ITW incurred the cost of new rollers.

[¶22] Benson testified that Western was not the only company manufacturing products for ITW's Formex division. A company called Film Tech produced a thin-gauge plastic for ITW that Western was not capable of producing. However, between 2001 and 2007, Western produced approximately 95% of the products that ITW's Formex division sold.

[¶23] Addressing the manufacturing agreement between ITW and Western, Benson testified that it was entered into " to explain the way we would carry on our business dealings with each other." When asked how many times ITW had instructed Western to make changes to the manufacturing process, as the agreement authorized it to do, Benson testified, " Rarely, if it all." However, Benson testified that ITW " frequently" exercised its right under the agreement to inspect the finished products at Western prior to receipt, which it did through Pedersen. Benson explained that, if Pedersen observed a defect in a sheet of plastic coming out of an extruding machine, Pedersen had " the right to tell the operator something need[ed] to be done." It then fell within the operator's discretion to remediate the problem. Benson estimated that this happened " rarely," which meant " [m]aybe monthly."

[¶24] Benson testified that the monitoring devices were installed on Western's extruding machines " [p]rimarily for data acquisition for quality control purposes." Benson clarified that there were two types of monitors. The monitors attached to the machines constantly monitored the thickness of the plastic being manufactured. These monitors controlled the speed of each machine to ensure that the plastic was being produced at the proper thickness. The monitor in ITW's office, which was connected to the monitors on the machines, solely acquired data. For each roll of plastic produced, the monitor in ITW's office acquired the roll number, the part number, the length of the roll, the thickness of the plastic, and the date and time of production. No one monitored the data as it was received; it was stored for record-keeping purposes. Explaining the benefit of the monitors, Benson testified that ITW received a consistent product, which increased ITW's sales and which, by virtue of ITW's agreement with Western, increased Western's sales.

[¶25] C. Lawrence Lezon's Deposition

[¶26] Lawrence Lezon testified that he worked for ITW from 1986 to 2006 and was the general manager of the Formex division. The Formex division moved into the space next to Western in 1999 or 2000 because it needed an office and a warehouse. The advantage of locating next door to Western was that ITW did not have to truck the finished products to a different location.

[¶27] Lezon testified that Pedersen was not an ITW employee but that he had an office in ITW's facility. Pedersen acted as a " one-person shipping department" for ITW. He also acted " as the go-between" for ITW and Western and delivered orders to Western.

[¶28] Lezon recalled that Pedersen introduced him to Ray Howard at Western prior to 1993. Lezon knew Pedersen because Pedersen had worked for one of ITW's suppliers. However, that supplier was not producing ITW's products to its specifications. Pedersen left that supplier and became an independent sales representative. Pedersen told Lezon that he thought Western was capable of manufacturing ITW's products, and he and Lezon toured Western's facility. In 1993, Lezon and Howard negotiated the manufacturing agreement, using attorneys. Lezon would go to Western " maybe once a month," usually for " smoozing [ sic ]" with Howard.

[¶29] Lezon testified that ITW requested that the monitoring devices be installed on Western's machines because ITW was receiving complaints from its customers regarding thickness variations within each roll of plastic. ITW had customers around the world, so it was expensive for orders to be returned. The devices ensured that the products had a consistent thickness.

[¶30] D. Pedersen's Deposition

[¶31] Pedersen testified that he held a variety of positions in the plastics industry prior to 1989, at which time he became an independent salesperson. His company was called Quest Sales and Marketing, and Pedersen was its only employee. Through his company, Pedersen matched up customers with plastics manufacturers. Western was the only customer Pedersen and his company had remaining. He never had a written agreement with Western, but he did receive a sales commission from Western based on the number of pounds of product produced.

[¶32] Pedersen had been familiar with ITW since 1988. In 1990 or 1991, he began looking for a custom extruder capable of producing material for ITW. He met Howard at Western and then introduced him to ITW. Once Western began manufacturing ITW's products, Pedersen's role was " the representative go-between between the two companies." He would communicate ITW's production needs to Western, get " those to Western *** so that they could set up the production," and then transport the finished products back to ITW. He also performed quality control by checking samples from each roll of plastic for proper thickness and for imperfections. He shipped the finished products to customers from ITW's facility.

[¶33] Pedersen had acted as the " go-between" since 1991, and ITW paid him as an independent contractor. Pedersen had an office at ITW, with a computer and a phone. He did not pay rent or a phone bill. He was present at ITW five days per week from 7 a.m. to 3:30 p.m.

[¶34] Pedersen was in Western's facility on a daily basis. He did not have a key and usually would enter through the loading dock that ITW and Western shared. When he found imperfections in a finished product, he would voice his concerns to someone at Western, who would then remediate the problem. Depending on what the problem was, Western might have to stop an extruding machine or adjust the machine. However, Western would determine what was necessary to correct the problem. Pedersen would not direct Western to shut down a machine. In the past, Pedersen had entered specifications into ITW's monitoring devices. He did so only if a Western employee " had problems" with a device.

[¶35] Pedersen had witnessed Western's employees cleaning the extruding machines. He knew that they would clean the rollers with a solvent while the rollers were slowly turning. Pedersen was not familiar enough with the machines to know what safety devices were available to stop a machine if someone was injured during the cleaning process. He stayed away from the machines as much as he could because they scared him. During his time working in the plastics industry, he had " seen too many people get hurt."

[¶36] Pedersen testified that, on a number of occasions over the years, ITW had agreed to incur the cost of overtime hours for Western workers when ITW had large orders that needed to be completed. In those situations, Western would send ITW an invoice for the extra cost.

[¶37] E. Lauren Lavalle's Deposition

[¶38] Lauren Lavalle testified that she had worked as a secretary at Western since 1980. Her responsibilities included accounts receivable, accounts payable, and office duties. She saw Pedersen on a daily basis, when he brought her ITW's orders. When he delivered orders, he would give her labels in the order in which he wanted the products produced. Lavelle would then create a production sheet, which was given to the machine operators. The production sheet allowed the operators to produce the products without having to make time-consuming changes to the machines. Lavalle had seen Benson approximately 10 times in 20 years. Other than ITW, which was " by far" Western's largest customer, Western had approximately 8 to 10 customers.

[¶39] F. Robert Cobb's Deposition

[¶40] Robert Cobb testified that he had been a machine operator at Western since 1985. He saw Benson only " [o]nce in a great while" but he saw Pedersen every day. Pedersen was " there just like another employee." Pedersen placed orders for ITW and gave the orders to Lavalle, not directly to Cobb. The orders sometimes changed two or three times per day, and Cobb would have to adjust the size or the gauge of the plastic he was producing. When he changed the product he was producing, he would select the code for that product in ITW's monitor attached to the machine. No one from ITW operated the monitors.

[¶41] Cobb testified that the Formex product left buildup on the rollers that had to be cleaned off on a daily basis. To clean the rollers, Cobb would use a rag to wipe them down while they were spinning. When product was not running through the machine, Cobb would slow down the rollers and reverse their direction before cleaning them. When product was running through the machine, Cobb would clean them from the opposite side. Other than plaintiff's, Cobb was not aware of any serious workplace injuries at Western. Cobb had not received any training when he started ...

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