OPINION
FRYE, District Judge.
The plaintiffs, package car drivers employed by United Parcel Service, allege that they have suffered repetitive stress injuries from using hand-held computers known as delivery information acquisition devices (DIADs) in the performance of their jobs. Before the court is the motion of defendant Inforite Corp. for summary judgment (# 151); the motion of defendant Toppan Moore Co., Ltd. for summary judgment (# 152); the motions of defendants United Parcel Service General Services Co. and II Morrow, Inc. for summary judgment (# 155); and the motion of defendant Inforite Corp. to join defendants United Parcel Service General Services Co. and II Morrow, Inc.’s motion for summary judgment (# 187).
UNDISPUTED FACTS
1.
UPS Corporate Structure
The package delivery business that is commonly called “UPS” is a family of corporations. UPS America, Inc. (UPS America) is the parent corporation of numerous wholly-owned subsidiaries, including defendant United Parcel Service General Services Co. (UPSGSC), defendant II Morrow, Inc., United Parcel Service, Inc., an Ohio corporation (UPS, Inc.), and United Parcel Service, Inc., a New York corporation (UPS New York). The plaintiffs are package car drivers employed by UPS, Inc., the entity which is responsible for the ground delivery of packages in the central and western parts of the United States. UPS New York employs package car drivers who service other parts of the country. UPSGSC and UPS, Inc. share the same corporate chairman, secretary, assistant secretary, treasurer, assistant treasurer, and directors, and they share fifteen of the same vice presidents. UPS America files a consolidated federal income tax return for itself and its subsidiaries located in the United States, including II Morrow, Inc., UPS, Inc., and ÚPSGSC.
Effective January 1, 1958, UPSGSC entered into a contract with UPS America, whereby UPSGSC agreed to provide administrative and management services for numerous operating companies, including UPS, Inc. (the Service Agreement). One of the services specified in the Service Agreement for UPSGSC to perform was “[t]o assist each of said operating companies in accident prevention and safety work.” UPSGSC also agreed to supervise “the purchase of insurance of every kind and character.” The Service Agreement provides that “[y]our company [UPSGSC] will be required to perform the services described above as items (1) to (5) [including the two noted above by the court].” The Service Agreement was modified in 1970 to provide that “the fee shall be equal to five (5%) per cent of your [UPSGSC’s] actual disbursements for labor, materials and expenses required or incurred by you [UPSGSC] in the performance of said
agreement.” UPSGSC also purchases material and equipment, including trucks, uniforms, and hand held equipment, on behalf of the operating companies, including UPS, Inc. These purchases are transferred to the operating companies at cost through an intercompany clearing account.
As stated above, the Service Agreement requires UPSGSC to purchase insurance of every kind and character for the operating companies, including UPS, Inc. James Felty of UPSGSC testified as follows:
Q. And how about workers’ compensation coverage, who’s the carrier for that?
A Liberty Mutual Insurance Company.
Q. And who pays for the premium on that?
A General Services Company.
Q. And do the operating companies have workers’ compensation coverage?
A Yes, they do.
Q. And who’s the carrier for that?
A Liberty Mutual Insurance Company.
Q. Who pays the premium on that?
A General Services Company.
Q. [by a different attorney] Does General Services Company have its own workers’ compensation policy?
A General Services is covered I believe under a blanket policy that covers all the companies. I can’t speak to that specifically, though.
Q. So you don’t know whether or not General Services workers’ comp policy for its own employees is different or the same as the policy that the operating companies have for its own [sic] employees?
A I have no intimate knowledge of independent individual insurance policies. That’s not what I do.
Deposition of James Felty at 112-13. The plaintiffs obtained a declaration from Donna Knepper, an employee of the State of Wisconsin. She states that no entity called United Parcel Service General Services Company is identified as an “employer” or is listed as having workers’ compensation insurance coverage in the State of Wisconsin. Knepper included several pages of printouts of the information that the State .of Wisconsin has concerning entities related to UPS. Most pages of the printouts list UPS of America as the insured; UPS, Inc. is mentioned in only one place.
UPSGSC and UPS, Inc. keep separate books. The general tariff
is issued by UPS, Inc. and UPS New York. The National Master United Parcel Service Agreement is a collective bargaining agreement between the International Brotherhood of Teamsters and UPS, Inc. and UPS New York.
The service territory is divided into regions. UPSGSC employs people working at the regional level. Regions are divided into districts. Operating companies, including UPS, Inc., employ people working at the district level. District managers report to regional managers. At the district level, supervisors of UPS, Inc. hire the package car drivers, train them, evaluate them, and man-, age their daily concerns, such as the assignment of their routes and any grievances that they have.
2.
The Engineering Projects
In 1984, Clay Lafferty, the head of research and development for defendant UPSGSC, sent a Request for Proposal to several companies asking for proposals “to design, build, and test five prototypes of a hand-held delivery information acquisition device” (DIAD). Affidavit of Richard A. Lee, Exhibit A at 6. In February of 1986, UPSGSC contracted with defendant Infinite Corp. (Infinite) to design, build and test the prototype DIADs.
Infinite did not have a technical design engineering group; therefore, the engineering work necessary for the DIADs was to be performed by employees of the parent company of Infinite, defendant Toppan Moore Co. (Toppan Moore). Infinite is located in the United States; Toppan Moore is located in Japan. Lafferty frequently met with engineers from Toppan Moore in Japan. Infinite
sent representatives to some, but not all, of these meetings.
Toppan Moore built 50 prototype DIADs and sent them to UPSGSC in late 1987 and early 1988. UPSGSC’s engineers tested the prototypes, rewrote the software, and began field testing the prototypes in the State of New York. Changes were made to the DIADs after the field tests. In November of 1988, UPSGSC ordered the manufacture of an additional 250 prototype DIADs; they were delivered in April of 1989, and field testing continued.
UPSGSC and Infinite entered into a contract effective Septémber 28, 1989 whereby Infinite agreed to manufacture and supply DIADs to UPSGSC. Section 15.5 of that agreement states that nothing contained in the agreement creates a joint venture or a partnership between the companies.
Robert Esslinger, an employee of UPSGSC, states that Infinite did not design or engineer the DIADs, “not one stroke.” Affidavit of Richard A Lee, Exhibit C at 5. Roy Lancraft from the research and development department of UPSGSC also states that Infinite did not do any design work on the DIADs. Kiroku Kato of Infinite states that, at the relevant time, Infinite did not have any design engineers on its staff. Kato was at some of the meetings where employees of UPSGSC and of Toppan Moore discussed the design of the DIADs. Lafferty states that he and people at Infinite and Toppan Moore came to a “joint conclusion” that the DIADs should be shaped like a clipboard because the decision came out of a meeting where they were all getting together and going over the requirements. Declaration of Corrie J. Yackulie, Exhibit 5 at 134-35.
Kato of Infinite prepared the 1984 proposal in response to the request of UPSGSC and also prepared the 1986 addendum to the proposal. At least some of the decisions reflected in the proposal and its addendum, such as eliminating the shoulder strap from the design, were dictated to Kato by UPSGSC. Kato also testified that the substance of the proposal was “almost entirely” prepared by the Toppan Moore engineering group. Affidavit of Richard Lee, Exhibit I at 3. UPSGSC insisted that all of the communications between Toppan Moore and UPSGSC be routed through Infinite. Infinite took steps to reinforce the importance of this request with employees of Toppan Moore when Toppan Moore employees began to contact UPSGSC directly.
UPSGSC wrote the final product specifications in August of 1989 and contracted with Infinite to sell the DIADs to UPSGSC, which were manufactured according to the final product specifications written in August of 1989. This group of mass-produced DIADs were called DIAD IAs. The DIAD IAs were manufactured by Toppan Moore, who sold them to Infinite, who sold them to UPSGSC. During the manufacture, the sale, and the shipment of the DIAD IAs, Infinite never possessed them. The DIAD IAs passed directly from Toppan Moore to UPSGSC. Approximately 100,000 DIAD IAs were manufactured. Infinite wrote a service manual in 1990 and performed warranty repairs on the DIAD IAs without the aid of a subcontractor.
In 1990, defendant II Morrow, Inc. (II Morrow) formulated a concept for a smaller and lighter version of the DIAD. It became known as the. DIAD II.
II Morrow formulated the concept for the DIAD Vehicle Adapter (DVA) which attaches to the dashboard of a UPS package car. The DVA houses the DIAD when it is not in use and allows the DIAD to transmit delivery information to a central location using a cellular telephone modem. II Morrow designed the DVA I to be used with the DIAD IA The company developed a working prototype by January of 1992. During 1992, UPSGSC contracted with Motorola to finish the design and. to manufacture the DIAD II, and the DVA I. II Morrow developed the concept for the DVA II in connection with its preliminary design work on the DIAD II. Motorola completed the design and manufactured the DVA II.
In 1993, II Morrow modified the DIAD IA case, jit the same time, Toppan Moore produced a new DIAD IA motherboard. When a DIAD IA is upgraded with the modified case and new motherboard, it is called a DIAD IA-1.
UPSGSC and II Morrow did not sell or market the DIAD or the DVA to the general public. They were only involved in the equipment to be used by the package car drivers of UPS, Inc.
The plaintiffs allege that they sustained injuries when they used the DIAD
during the course of their employment. They allege two claims for relief: (1) negligence in the design of the DIAD and in failing to instruct users on the proper use of the DIAD and in failing to warn of possible dangers; and (2) strict product liability based on the allegation that the DIAD is unreasonably dangerous and in failing to instruct users on the proper use of the DIAD and in failing to warn of the possible dangers of the DIAD.
CONTENTIONS OF THE PARTIES
Toppan Moore and Infinite contend that all of the claims of the plaintiffs are barred by the doctrine of issue preclusion because all of the issues in the present claims were litigated and resolved in their favor in a prior lawsuit,
Neher v. II Morrow, Inc.
(W.D.Wash., CV94-1613WD). Toppan Moore and Infinite contend that the contract specifications defense precludes them from liability for any of the plaintiffs’ claims except the claims for the post-manufacture failure to warn because they manufactured the DIAD according to specifications provided by UPSGSC. Toppan Moore contends that it is not liable for the claims of the plaintiffs for post-manufacture failure to warn because it did not know of any complaints concerning the DIAD before
Neher was
filed.
The plaintiffs contend that (1) issue preclusion cannot be a defense against their claims because they were not represented in the prior litigation; (2) Toppan Moore and Inforite engaged in roles too extensive for the application of the contract specifications defense, and that that defense is contrary to the laws of the State of Oregon and the home states of the plaintiffs; and (3) Toppan Moore knew of hazards associated with the DIAD prior to the plaintiffs being injured and, thus, should have warned the plaintiffs about the risks of using the device.
UPSGSC and II Morrow contend that they did not market or place into the stream of commerce the DIAD or the DVA, and, consequently, they cannot be held strictly liable. UPSGSC contends that the claims of the plaintiffs against it are barred by the various workers’ compensation laws of the home states of the plaintiffs. II Morrow contends that it owed no duty to the plaintiffs which would support a negligence claim.
The plaintiffs contend that their claims against UPSGSC are not barred by the various workers’ compensation laws of the home states of. the plaintiffs because UPSGSC is neither a joint employer with UPS, Inc. nor the employer of the plaintiffs. The plaintiffs further contend that UPSGSC and II Morrow are both sellers of the DIAD and the DVA to other UPS corporate entities and therefore placed the products into the stream of commerce. The plaintiffs further contend that UPSGSC and II Morrow are liable because they knew that Infinite would market the DIAD as its own product, the AS 1050. The plaintiffs also argue that the involvement of II Morrow as the designer and manufacturer of the DIAD IA-1 is enough to give rise to a negligence cause of action against II Morrow. ‘'
LEGAL STANDARDS
Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c). The initial burden is on the moving party to point out the absence of any genuine issue of material fact. Once the initial burden is satisfied, the burden shifts to the opponent to demonstrate through the production of probative evidence that there remains an issue of fact to be tried.
Celotex Corp. v. Catrett, 477
U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). On a motion for summary judgment, all reasonable doubt as to the existence of a genuine issue of fact should be resolved against the moving party.
T.W. Elec. Serv. v. Pacific Elec. Contractors Ass’n,
809 F.2d 626, 630-31 (9th Cir.1987).
ANALYSIS AND RULING
1.
Choice of Law
The first question is whether the laws of the home states of the plaintiffs or the laws of the State of Oregon apply to the plaintiffs’ claims. The parties all agree that the workers’ compensation laws of the plaintiffs’ home states apply to this action. The court will apply those laws.
When the laws of more than one jurisdiction arguably apply to an issue, a federal court exercising diversity jurisdiction must apply the choice of law rules of the state in which it is located.
Klaxon Co. v. Stentor Elec. Mfg. Co.,
313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941).
Under Oregon law, the court must determine whether there is an actual conflict of law on the disputed issue; if not, Oregon law applies.
Cropp v. Interstate Distrib. Co.,
129 Or.App. 510, 515-16, 880 P.2d 464 (dissenting opinion),
rev. denied,
320 Or. 407, 887 P.2d 791 (1994). Next, the court must determine whether both states have substantial interests in having their laws applied. If not, there is no choice of law issue, and the court applies the law of the one state with substantial interests.
Dabbs v. Silver Eagle Mfg. Co.,
98 Or.App. 581, 583-84, 779 P.2d 1104,
rev. denied,
308 Or. 608, 784 P.2d 1101 (1989). If both states haye substantial interests, the Oregon Supreme Court has adopted the “most significant relationship” approach of the Restatement (Second) Conflicts of Law.
Erwin v. Thomas,
264 Or. 454, 456, 506 P.2d 494 (1973).
Concerning what the court will call product liability laws, the plaintiffs do hot agree with UPSGSC or II Morrow that there is a difference between the laws of the State of Oregon and the laws of the plaintiffs’ home states. Although some portion of those bodies of laws are not in conflict, the laws in the various states are not identical to the laws of the State of Oregon. For example, the State of Illinois has enacted a statute which limits the defendants against which a plaintiff may proceed with a strict product liability claim. The State of Oregon does not have a similar statute. In discussing a claim for common law negligence that arose in connection with a products liability action, the Illinois court held that a manufacturer has a continuing duty to warn of dangers in its product if it becomes aware of an accident after the sale takes place.
Seegers Grain Co. v. United States Steel Corp.,
218 Ill.App.3d 357, 160 Ill.Dec. 793, 792-94, 577 N.E.2d 1364, 1373-74 ,
appeal denied,
142 Ill.2d 665, 164 Ill.Dec. 928, 584 N.E.2d 140 (1991). The parties have not cited an Oregon case which applies the same law. The court finds that there is an actual conflict of law on the product liability claim.
The court also concludes that the State of Oregon has neither a substantial interest in having its product liability laws applied in this case, nor does it have the most significant relationship to the occurrence and the parties. The plaintiffs argue that the DIADs were used by hundreds of UPSGSC drivers in the State of Oregon, and that the defendants knew the DIADs would be used across the country. There may well have been numerous UPSGSC drivers in the State of Oregon who used the DIADs, but none of these drivers are before this court. None of the plaintiffs are residents of the State of Oregon, and there is no allegation that they were injured while working in the State of Oregon. Some of the defendants do not conduct business in the State of Oregon. The DIADs were not designed or manufactured in the State of Oregon. The court will apply the laws of the plaintiffs’ home states to the product liability claim.
The parties agree that there is no conflict in the negligence laws to be applied. Thus, the court will apply the negligence laws of the State of Oregon to the negligence claims.
2.
Issue Preclusion
Toppan Moore and Infinite contend that the claims of all of the plaintiffs are barred by the doctrine of issue preclusion because the issues alleged here were fully litigated and resolved in its favor in
Neher v. II Morrow, Inc.
(W.D.Wash., CV94-1613WD). The plaintiffs contend that they are not
bound by the judgment in
Neher
because they were not parties to that action and were not virtually represented by the
Neher
plaintiffs. The plaintiffs further contend that Toppan Moore has not proven that the Product Liability Act of the State of Washington is the same as the product liability laws of the home states of the plaintiffs.
Issue preclusion, also known as collateral estoppel, bars the relitigation of issues actually adjudicated in previous litigation between the same parties.
Clark v. Bear Stearns & Co.,
966 F.2d 1318, 1320 (9th Cir.1992). For issue preclusion to apply:
(1) the issue at . stake must be identical to the one alleged in the prior litigation; (2) the issue must have been actually litigated in the prior litigation; and (3) the determination of the issue in the prior litigation must have been a critical and necessary
part of the judgment in the earlier action.
Id.
A final judgment may have
res judicata
effect, even during the pendency of an appeal.
Eichman v. Fotomat Corp.,
759 F.2d 1434, 1439 (9th Cir.1985).
The plaintiffs do not contend that the issues were not actually litigated in
Neher
or that the determination of the issues in
Neher
was not a necessary part of the judgment.
Issue preclusion may also be applied against a party who is in privity with a party in the prior litigation.
Steen v. John Hancock Mut. Life Ins. Co.,
106 F.3d 904, 910 (9th Cir.1997). Likewise, issue preclusion will be applied if the current party’s interests are so similar to the interest of a party in the prior litigation that the party in the prior litigation acted there as the virtual representative for the current party.
United States v. Geophysical Corp.,
732 F.2d 693, 697 (9th Cir.1984). Virtual representation may be based on “an express or implied legal relationship that makes a party to the prior action accountable to a non-party.”
Id.
For example, in
Geophysical,
a general partner and the limited partners were foreclosed from relitigating issues litigated by the limited partnership.
Id.
The defendants argue here that the
Neher
plaintiffs are in privity with or are virtually represented by the plaintiffs here for the following reasons: (1) the plaintiffs in both actions are UPSGSC drivers or their spouses who are alleging the same claims of negligence and product liability against the same four defendants; and (2) the plaintiffs in both actions are represented by the same attorneys.
The defendants correctly point out that a legal relationship is not required for a finding of virtual representation in the Ninth Circuit as it is in some other jurisdictions.
See Collins v. E.I. Dupont de Nemours & Co.,
34 F.3d 172, 177 (3rd Cir.1994) (applying New Jersey law). A legal relationship would bolster the defendants’ argument, however. Here, there is no evidence of a legal relationship between the two sets of plaintiffs and no evidence of control by the present plaintiffs over the
Neher
plaintiffs. Courts have refused to apply issue preclusion even when a legal relationship and control exists.
See Conte v. Justice,
996 F.2d 1398, 1402-03 (2nd Cir.1993) (in automobile accident litigation, a mother was not barred from litigating an action for her personal injuries after she controlled the litigation in a prior action as the guardian of her child).
The court concludes that sharing an attorney is insufficient for this court to rule that the plaintiffs here were virtually represented by the
Neher
plaintiffs. Although attorneys were shared, other courts have not applied issue preclusion under the following circumstances: against a former employee alleging personal injury from silica exposure at work when 48 other former employees were unsuccessful in the prior litigation,
Collins,
34 F.3d at 176-79; against two sets of petroleum company plaintiffs in antitrust litigation,
Benson and Ford, Inc. v. Wanda Petroleum Co.,
833 F.2d 1172 (5th Cir.1987). The relationship between the plaintiffs here is even more distant.
Four factors are considered in determining whether the issue before the court is identical to an issue previously litigated:
(1) is there a substantial overlap between the evidence or argument to be advanced in the second proceeding and that advanced in the first?
(2) does the new evidence or argument involve the application of the same rule of law as that involved in the prior proceeding?
(3) could pretrial preparation and discovery related to the matter presented in the' first action reasonably be expected to have embraced the matter sought to be presented in the second?
(4) how closely related are the claims involved in the two proceedings?
Steen v. John Hancock Mut. Life Ins. Co.,
106 F.3d 904, 912 (9th Cir.1997).
The court has determined above that there are enough differences among the product liability laws of the various states that it will apply the laws of the plaintiffs’ home states. It follows that the rule of law applied in
Neher
(Washington law) will not be applied here.
Because the plaintiffs’ interests were not represented in
Neher,
and because the issues are not identical, the court will not apply the doctrine of issue preclusion to bar the claims against Toppan Moore and Inforite.
3.
Contract Specifications Defense
Toppan Moore and Inforite contend that they manufactured the DIAD according to the specifications provided by UPSGSC, and, consequently, the contract specifications defense defeats all of the plaintiffs’ claims except the claim of failure to warn. The defendants further contend that the contract specifications defense may be applied even if they had some involvement in the design process as long as UPSGSC knew as much or more than they did about the alleged hazards of the product. The plaintiffs contend that the contract specifications defense has been adopted by only a few jurisdictions, which include none of the plaintiffs’ home states, and that the contract specifications defense is inconsistent with the strict product liability laws, which have been adopted in the plaintiffs’ home states.
Without deciding whether the contract specifications defense survives the enactment of strict product liability laws, or whether it would be applied in the home states of the plaintiffs, the court concludes that a jury could-find that Toppan Moore and Inforite participated too much during the design phase of the DIAD project for the contract specifications defense to apply. In many of the cases cited by the defendants, the defendant manufacturer was supplied with a full specification that it built without change.
See, e.g., Garrison v. Rohm and Haas Co.,
492 F.2d 346, 348 (6th Cir.1974) (“neither [the manufacturer] nor the [subcontractor] had any part in the design of the dolly”);
Bloemer v. Art Welding Co.,
884 S.W.2d 55, 56 (Mo.App.) (defendants fabricated and installed the machine “precisely in accordance with the plans and specifications prepared” by the purchaser of the machine),
reh’g denied, transfer denied
(1994);
Austin v. Clark Equip. Co.,
48 F.3d 833, 837 (4th Cir.1995) (manufacturer not liable because purchaser of the equipment chose not to purchase optional safety devices, thus, manufacturer should not be liable for building products in accordance with the purchase order).
The defendants cite a few eases to support their contention that the contract specifications defense may apply even when the manufacturer consulted with the designer during the specification of the contract. The cases cited discuss a doctrine known as the government contract defense.
See Koutsoubos v. Boeing Vertol, Div. of Boeing Co.,
755 F.2d 352 (3rd Cir.),
cert. denied,
474 U.S. 821, 106 S.Ct. 72, 88 L.Ed.2d 59 (1985). Moreover, one of the cases,
In re Estate of Foster,
55 Wash.App. 545, 779 P.2d 272 (1989),
rev. denied,
114 Wash.2d 1004, 788 P.2d 1079 (1990), relies on a Washington statute to establish the defense. The government contract defense, however, is based on several policy considerations that are absent when the government is not involved. These include that holding government contractors hable could subvert sovereign immunity when contractors pass the cost of accidents through to the government, and that liability of government contractors might “thrust the judiciary into the making of military decisions.”
Koutsoubos,
755 F.2d at 354 (internal quotation omitted). Thus, the cases discussing the involvement of the contractor in the design of the equipment do not apply when the contract is not for government equipment. Accordingly, because of the level
of involvement of Toppan Moore and Inforite in the design of the DIAD, the court declines to apply the contract specifications defense.
4.
Punitive Damages
The plaintiffs have agreed to dismiss any claim that they may have had for punitive damages against Toppan Moore and Inforite.
5.
Post-Manufacture Failure to Warn
Within their strict product liability claims, the plaintiffs allege that the defendants are liable because they failed to warn the plaintiffs of defects in the DIAD. Toppan Moore contends that there is no evidence that it should have learned of possible dangers connected with the use of the DIADs until litigation began in
Neher
in November of 1994 and, thus, they cannot be held liable for failing to warn of dangers.
The plaintiffs point to the following evidence that the defendants should have known of the dangers connected with the use of the DIADs. The UPS drivers used the DIADs by holding the devices with both hands along the edges in pinch grips and pressing the keypads with their thumbs. The way the UPS drivers used the DIADs became known to UPSGSC and Shigeaki Sano of Toppan Moore during field tests of the devices in the State of New York in 1989. The plaintiffs’ expert, Dr. David Rempel, testified that the force required to depress the keys on the keypad of a DIAD is seven to ten times more than the force typically used on the keyboard of a conventional desktop computer. Dr. Rempel states that a substantial body of literature dating back to the 1950’s shows that frequent and forceful pinch grips, particularly when coupled with awkward wrist postures, as required to hold the DIADs, are associated with upper extremity disorders which are caused by cumulative trauma. Much of this literature was published in 1979 or later. Another expert for the plaintiffs, Dr. Robert Radwin, testified that by the mid-1980’s, it was well accepted in the industry that the design of hand tools should include consideration of ergonomic knowledge and principles, namely the physical interaction between humans, tasks and tools. On September 19,1986, Lafferty of UPSGSC sent a letter to Kato of Inforite advising Kato that the DIADs were unbalanced, and that the weight of a DIAD, then at 36 ounces, should be reduced if possible. As tested by Dr. Rempel, the DIAD IA weighed 1.7 kilograms, or approximately 59 ounces. Kato testified that, before the
Neher
case was filed, UPS drivers who came to his office in San Mateo, California said that the DIAD was a bit bulky and heavy. Kato took the comments as wishful thinking rather than serious complaints and did not pass these comments to Toppan Moore.
Plaintiff Jay Pallen is from the State of Arizona. A manufacturer or seller is only liable for failure to warn if it knew or should have known of the danger posed by the product.
Piper v. Bear Med. Sys.,
180 Ariz. 170, 883 P.2d 407, 414 (Ct.App.1993) (Arizona law),
rev. denied
(1994).
The court concludes that the plaintiffs have raised a material issue of fact as to whether Toppan Moore should have known of the alleged dangers of the DIAD prior to 1990. The motion of Toppan Moore for summary judgment against this claim is denied.
6.
Workers’ Compensation Statutes
a.
Joint Employer Doctrine
UPSGSC contends that the workers’ compensation statute of the State of Arizona, which is the home state of Jay Pallen, bars its liability because UPSGSC is a joint employer with UPS, Inc.
Under the workers’ compensation laws of the State of Arizona, an employee’s recovery against his or her employer is limited to the remedies set forth in the law. ARS § 23-1022(A). A person may be jointly employed by more than one employer. In those cases, all employers receive the benefit of workers’ compensation immunity. Under the laws of the State of Arizona, the existence of an employment relationship depends on the right to control. In order to determine whether there is a right to control requires an examination of several factors:
the duration of the employment; the method of payment; who furnishes necessary equipment; the right to hire and fire; who
bears responsibility for workmen’s compensation insurance; the extent to which the. employer may exercise control over the details of the work, and whether the work was performed in the usual and regular course of the employer’s business.
Special Fund Div./No. Ins. Section v. Industrial Comm’n of Ariz.,
172 Ariz. 319, 836 P.2d 1029, 1032-33 (Ct.App.1992).
Under the Service Agreement at issue here, UPSGSC contracted with UPS America to provide administrative and management services for UPS, Inc., the employer of the plaintiffs. The administrative and management services that UPSGSC contracted to provide for UPS, Inc. include centralized administrative functions, such as purchasing insurance, accident prevention, purchasing vehicles and other supplies, researching other equipment or techniques 'to improve efficiency and control of costs, and to investigate problems reported by the operating companies. The services do not include line management of employees, particularly the package car drivers. Although UPSGSC contends that it has the right to control the activities of the package car drivers through its regional managers, there is no evidence that this right has ever been exercised. Supervisors employed by UPS, Inc. direct the daily activities of the package car drivers. The undisputed evidence is that UPSGSC does not control the manner in which the work of the package car drivers is performed. Based on the Service Agreement, the plaintiffs have raised an issue of material fact as to whether UPSGSC has the right to control the package car drivers or the right to discharge them.
UPSGSC does not pay the plaintiffs. UPSGSC coordinates the purchase of the equipment used by the plaintiffs, including the DIADs involved in this case. UPSGSC does not retain ownership of the equipment used by the plaintiffs. It transfers ownership of the equipment used by the plaintiffs to UPS, Inc. Thus, UPSGSC acts more as a vendor than as a company which is loaning, or furnishing, the equipment to UPS, Inc.
The court concludes that there is a factual issue as to whether UPSGSC is a joint employer of Pallen. The motion of UPSGSC for summary judgment based on this argument is denied.
b.
Statute of Limitations under Arizona Law
UPSGSC, II Morrow, and Inforite contend that the statute of limitations contained in the workers’ compensation laws of the State of Arizona bars the claim of Pallen. The statute of limitations is caused by an assignment of the claim by operation of law after one year:
If the employee entitled to compensation under this chapter, or his dependents, does not- pursue his or their remedy against such other person [another not in the same • employ] by instituting an action within one year after the 'cause of action accrues, the claim against such other person shall be deemed assigned to the insurance carrier, or to the person liable for the payment thereof.
ARS § 23-1023(B). Once the assignment occurs, the employee may not file an action because the cause of action belongs solely to the assignee.
Hills v. Salt River Project Ass’n,
144 Ariz. 421, 698 P.2d 216, 221 (Ct.App.),
rev. denied,
(1985). Under the statute, the cause of action may be reassigned to the employee. No reassignment has occurred here. Thus, the date when the cause of action accrued is critical.
A cause of action accrues when the plaintiff discovers, or by the exercise of reasonable diligence should have discovered, that he or she has been injured by a particular defendant’s negligent conduct.
Lawhon v. L.B.J. Institutional Supply, Inc.,
159 Ariz. 179, 765 P.2d 1003, 1007 (Ct.App.1988),
rev. denied
(1989).
Pallen filed his initial complaint on May 26, 1995. In answers to interrogatories, Pallen states: (1) in April of 1993, he was talking to another driver about the DIAD and how his thumbs hurt; and (2) his doctor told him to use the DIAD differently. On June 30,1994, he filed a report of injury with the Industrial Commission of Arizona in which he stated that he had shooting pain in his wrist and forearms while holding the DIAD. Pallen argues that he did not know of the identity of
the particular defendants until shortly before filing the complaint.
In
A. Doe v. Miles Inc.,
190 Ariz. 173, 945 P.2d 1304 (Ct.App.),
rev. granted
(1997), twin boys who were hemophiliacs were infected with HIV contained in the blood factor concentrate that they received for treatment. The court concluded that the cause of action accrued in 1987, when the boys were diagnosed with HIV. At that time, the boys knew of their injury (HIV), knew what caused it (factor concentrate) and “knew in 1987 of the healthcare provider/defendants’ role in A.’s and B.’s hemophilia care and either knew or easily could have discovered who had produced, distributed and supplied the factor concentrates.”
Id.
at 1306. Here, Pallen knew in April of 1993 of his injury, pain in his thumbs, knew what allegedly caused it, the DIAD, and knew that he was provided with the DIAD by his employer, UPS, Inc. He should have discovered the identities of the four defendants by an investigation starting with UPS, Inc. Pallen gives no reason why he did not or could not perform this investigation. The court concludes that the cause of action accrued by April of 1993. Accordingly, the claim was assigned to the insurance carrier one year later. Pallen did not file his complaint within this year and, thus, his claim is barred. Summary judgment in favor of UPSGSC, II Morrow, and Inforite against Pallen is granted. Although Toppan Moore did not join this motion, the same analysis applies to its claim. Summary judgment in favor of Toppan Moore against Pallen is also granted.
7.
Strict Product Liability and Stream of Commerce
UPSGSC and II Morrow contend that strict product liability laws should not be applied to them because they have never put DIADs or DVAs into the stream of commerce and, thus, they are not sellers under the statute.
The State of Arizona has adopted the Restatement (Second) of Torts § 402A (1965), which states: “(1) One who sells any product in a defective condition unreasonably dangerous to the user ... is subject to liability ... if (a) the seller is engaged in the business of selling such a product....”
Sullivan v. Green Mfg. Co.,
118 Ariz. 181, 575 P.2d 811, 816 (Ct.App.1977). Arizona courts have applied strict liability to those who do not meet the technical limitations of seller and manufacturer as used in § 402A but who were involved in the chain of production or distribution.
Torres v. Goodyear Tire & Rubber Co.,
163 Ariz. 88, 786 P.2d 939, 942 (1990).
Many of the cases cited by the parties are either distinguishable factually, such as when a company designs equipment which injures its own employees, or have similar facts but analyze a different legal issue, such as the doctrine of joint employers or dual capacities. UPSGSC and UPS, Inc. are two separate corporate entities: UPS, as a generally known corporate identity, is in the business of delivering packages and not in the business of selling DIADs. The different corporations within the corporate structure have distinct functions. UPS, Inc., which employs the package car drivers, is in the business of delivering packages. UPSGSC does not deliver packages; it is in the business of providing administrative functions, including equipment such as the DIADs. II Morrow has the single administrative function of providing such equipment. Although UPSGSC is not organized as a profit center, there is an inference that DIADs are transferred from UPSGSC to UPS, Inc. These facts are sufficient for this court to find that there is a factual issue on whether UPSGSC and II Morrow put the DIADs into the stream of commerce, and they may be strictly liable under product liability laws. As a consequence, the court denies summary judgment on this basis.
8.
Negligence
II Morrow contends that it cannot be found negligent because it provided limited consulting and assembly services concerning the DIADs and the DVAs and, thus, does not owe a duty to the plaintiffs. Plaintiffs contend that II Morrow designed and manufactured the DIAD IA-1 and consequently was sufficiently involved to owe a duty to the plaintiffs.
The record before the court shows that II Morrow was involved, at least to some ex
tent, with the design and manufacture of some of the DIAD models. The court cannot determine on the record before it whether II Morrow’s involvement was so limited that it would not give rise to a duty owed to the plaintiffs. Accordingly, the motion for summary judgment against the negligence claim alleged against II Morrow is denied.
CONCLUSION
The motion of defendant Infinite Corp. for summary judgment (# 151) is denied.
The motion of defendant Toppan Moore for summary judgment (# 152) is granted in part and denied in part: the claim for punitive damages is dismissed. The claim for punitive damages is also dismissed against defendant Infinite Corp.
The motion of defendants UPSGSC and II Morrow for summary judgment (# 155) is granted.
The motion of defendant Infinite Corp. to join defendants UPSGSC and II Morrow’s motion for summary judgment (# 187) is granted, and summary judgment is granted in favor of defendant Infinite Corp. Summary judgment is also granted in favor of defendant Toppan Moore Co.
Because Jay Pallen was the only remaining plaintiff when these motions were filed, this action will be dismissed.