author: NEWCOMER, District Judge.

text:
    The EAGLE’S EYE, INC. v. AMBLER FASHION SHOP, INC.
    Civ. A. No. 84-5162.
    United States District Court, E.D. Pennsylvania.
    April 19, 1985.

      Edward F. Mannino, Dilworth, Paxson, Kalish & Kauffman, Philadelphia, Pa., for plaintiff.
    Arnold Ira Kalman, Philadelphia, Pa., for defendant.
   MEMORANDUM

NEWCOMER, District Judge.

Presently before me is defendant Ambler Fashion Shop, Inc.’s motion to dismiss, pursuant to F.R.C.P. 12(b)(6), the claims of The Eagle’s Eye for trademark infringement, unfair competition, misappropriation and commercial disparagement. For the reasons discussed below defendant’s motion will be granted as to plaintiff’s misappropriation of right of publicity claim (Amended Complaint, Count VII) and will be denied as to all other claims.

I. Eagle’s Eye and Beagle’s Eye

Plaintiff Eagle’s Eye is a manufacturer, distributor and retailer of men’s, women’s, and children’s clothing. Plaintiff’s registered trademark, “the eagle’s eye,” is displayed on its garments, in its stores and in its advertising. The mark consists of the profile of an eagle’s head beneath which lies the phrase “the eagle’s eye.” Plaintiff’s mark was accepted for trademark registration on July 12, 1983 and has been in use since November 2, 1977.

In addition to its retail operations, plaintiff has conducted periodic warehouse sales over the past five (5) years. Plaintiff trumpets these sales through advertisements both mailed to existing customers and displayed in the Philadelphia Inquirer. These advertisements include the phrase “The Eagle Has Landed,” a map highlighting plaintiff's Conshohocken, Pennsylvania warehouse location, and directions to reach the warehouse from various points in the Philadelphia area. Of particular interest in this litigation is plaintiff’s warehouse sale that was advertised and conducted from September 13, 1984 through September 24, 1984.

Defendant Ambler Fashion Shop is a clothier which sells various brands of sportswear manufactured by others through its Ambler, Pennsylvania retail store. Plaintiff's complaint stems from a sale conducted by defendant between September 4, 1984 and September 11, 1984. Defendant heralded this sale by running advertisements in various newspapers, including the Philadelphia Inquirer. Defendant’s advertisements contained the phrases “The Beagle Has Landed” and “Ambler Fashion Shop’s Beagle’s Eye Sale.” Also included in the advertisement was a caricature of a beagle and a map with directions pinpointing defendant’s locations.

Plaintiff, contending that defendant’s advertisements infringed its “eagle’s eye” trademark, requested that defendant cease and desist from using the name “Beagle’s Eye” in its business activities. In response, defendant apparently agreed to stop using the “Beagle’s Eye” in future advertisements, but refused to compensate plaintiff for harm allegedly suffered or to undertake corrective advertising. Plaintiff’s displeasure with defendant’s response is evidenced by the initiation of this litigation.

Plaintiff's amended complaint alleges eight causes of action:

(1) federal trademark infringement under 15 U.S.C. § 1114(1) and § 1125;

(2) federal unfair competition under 15 U.S.C. § 1114 and § 1125;

(3) unfair competition under the common law;

(4) trade name infringement under Pennsylvania Law;

(5) unfair competition under Pennsylvania law, 54 Pa.C.S.A. § 1123;

(6) misappropriation of property rights under Pennsylvania common law;

(7) misappropriation of right of publicity under Pennsylvania;

(8) commercial disparagement under Pennsylvania law.

II. Federal Claims for Trademark Infringement and Unfair Competition.

The Lanham Act, 15 U.S.C. § 1114(l)(a), authorizes a civil action to remedy any unauthorized use of a federally registered mark that “is likely to cause confusion, or cause mistake, or to deceive.” Unregistered words or symbols that act to identify source are protected under 15 U.S.C. § 1125(a), which proscribes any “false designation of origin or any false description or representation” in connection with the sale of goods or services. An element common to both Lanham Act or common law trademark infringement and unfair competition is “likelihood of confusion.” As recently stated by the Second Circuit Court of Appeals, “[i]t is well settled that the crucial issue in an action for trademark infringement or unfair competition is whether there is any likelihood that an appreciable number of ordinarily prudent purchasers are likely to be mislead, or indeed simply confused, as to the source of the goods in question.” Universal City Studios Inc. v. Nintendo Co., Ltd., 746 F.2d 112, 115 (2d Cir.1984). See also Surgical Supply Service, Inc. v. Adler, 321 F.2d 536, 539 (3d Cir.1963); 2 J.T. McCarthy, Trademarks and Unfair Competition, § 23:1 at 42-43 (2d Ed.1984). Several factors must be evaluated to determine whether a likelihood of confusion exists: (1) the strength of the plaintiffs mark; (2) the similarity of the marks; (3) the similarity of the products sold; (4) the marketing and retailing channels used; (5) the defendant’s intent in adopting the mark; (6) the sophistication of the buyers; and (7) actual confusion. See Universal City Studios, Inc. v. Nintendo Co., Ltd., 746 F.2d 112, 116 (2d Cir.1984); AMF, Inc. v. Steekcraft Boats, 599 F.2d 341, 348 (9th Cir.1979).

In the case at bar, defendant rests its entitlement to Rule 12(b)(6) dismissal on its assertion that plaintiff has “not set forth any facts in the Amended Complaint which would permit a conclusion to be drawn that likelihood of confusion could possibly exist.” (Defendant’s Supplemental Memorandum at 7). Stated more succinctly, defendant argues that “a beagle simply cannot be confused for an eagle by anyone.” (Defendant’s Supplemental Memorandum at 3). Despite its appealing simplicity, this argument must be rejected for the reasons detailed below.

Initially, I note that in a Rule 12(b)(6) motion, the plaintiff is afforded the safeguards of having all of its allegations taken as true and all favorable inferences drawn. Mortensen v. First Federal Savings and Loan Ass’n, 549 F.2d 884, 891 (3d Cir.1977). Moreover, a motion to dismiss cannot be granted “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed. 80 (1957). Against this procedural background, and buttressing it, lies the rule that generally speaking likelihood of confusion is a question of fact. Universal City Studios, Inc. v. Ninento Co., Ltd., 746 F.2d 112, 116 (2d Cir.1984); 2 McCarthy, Trademarks and Unfair Competition, § 23:22 at 107, § 32:37 at 745 (2d ed. 1984). It must be tested by the consumer’s state of mind when faced with the individual marks, and not by the court’s side-by-side comparison of the marks. 2 J.T. McCarthy, Trademarks and Unfair Competition, § 23:17 at 95-96, § 23:26 at 122 (2d ed. 1984). Most importantly, the plaintiff is not required to prove the likelihood of confusion at the pleading stage.

In response to the foregoing legal standards, the defendant argues that courts retain important authority to monitor the outer limits of similarity within which a factfinder is permitted to make a factual determination whether there is a likelihood of confusion as to source. Universal City Studios, Inc. v. Nintendo Co., Ltd., 746 F.2d 112, 116 (2d Cir.1984). Summary dismissal pursuant to Rule 12(b)(6) is proper, contends Ambler Fashion Shop, where on the face of the complaint there are insufficient facts alleged to permit a conclusion to be drawn that customers are likely to be confused.

While the foregoing assertions by the defendant may reflect valid propositions of law, it is evident that they have no application to the facts at bar. This is perhaps best illustrated by contrasting the instant case to one relied on by the defendant, Toho Co., Ltd. v. Sears, Roebuck and Co., 645 F.2d 788 (9th Cir.1981). In Toho, the plaintiff sued Sears, Roebuck and Co. for allegedly improper use by Sears of a likeness of Toho’s movie character, Godzilla. Sears sold garbage bags in boxes which designated the bags as a Sears product, but which also displayed the word “Bagzilla,” depicted a “comic, helpful, personified reptilian creature,” and carried the legend “Monstrously Strong Bags.” The Toko court found 12(b)(6) dismissal proper chiefly because the goods were unrelated as a matter of law (garbage bags as opposed to literary works and toys). The court also found the parties used different marketing channels. Toho Co., Ltd. v. Sears, Roebuck and Co., 645 F.2d 788, 790-791 (9th Cir.1981).

Thus, Toho presented a situation markedly different from that at bar. Here, both parties are engaged in the sale of related goods (clothing) and both utilized newspaper advertisements to market their products. While small dogs and large birds are rather obviously distinguishable in the minds of consumers, the similarity in sound between “eagle’s eye” and “beagle’s eye,” when coupled with the other similarities between the parties’ products and advertisement campaigns outlined above, could cause a factfinder to conclude that a likelihood of confusion exists.

Thus, although plaintiff’s claim is rather tenuous in my view, the question presented must be resolved by a jury. Dismissal pursuant to Rule 12(b)(6) is appropriate in only the most extreme trademark infringement and unfair competition eases, such as where the goods are unrelated as a matter of law. Such a case is not presented here.

III. State Claims for Trade Name Infringement and Unfair Competition

Plaintiff, in Count IV of its amended complaint, alleges trade name infringement “in violation of the applicable [Pennsylvania] common law.” The crucial element of federal statutory trademark infringement, likelihood of confusion, is also the test of common law trade name infringement. 2 J.T. McCarthy, Trademarks and Unfair Competition, § 28:1 at 42 (2d ed. 1984). Thus, the preceding discussion on likelihood of confusion wholly pertains to plaintiff’s state/common law infringement claim. Accordingly, defendant’s motion to dismiss plaintiff’s common law trade name infringement claim will be denied.

In Count V of its amended complaint, plaintiff asserts a claim for unfair competition under Pennsylvania law. Specifically, plaintiff alleges that defendant’s conduct violated the Pennsylvania Trademark Law, 54 Pa.C.S.A. § 1123, in that “such conduct has caused the likelihood of confusion or misunderstanding as to sources, sponsorship, affiliation, connection or association of defendant’s products and services with those of the Eagle Eye.” I note that § 1123 of the Pennsylvania Trademark Law is patterned after § 11 of the Model State Trademark Bill, which is in turn based on the Federal Trademark Act (Lan-ham Act). Plaintiff’s state statutory claim under Pa.C.S.A. § 1123 is therefore coextensive with its claims under the Lanham Act. The likelihood of confusion standard, as interpreted by federal case law, is the appropriate test for determining a violation under 54 Pa.C.S.A. § 1123. See 2 J.T. McCarthy, Trademarks and Unfair Competition, § 22:3 at 27-28 (2d ed. 1984). Thus, my earlier discussion on the likelihood of confusion issue applies here as well, the upshot being that Count V of plaintiff’s amended complaint must survive defendant’s Rule 12(b)(6) motion to dismiss.

IV. Claim for Misappropriation of Property Rights

Considerable portions of both parties’ memoranda are devoted to a discussion of the legal standard governing plaintiff’s claim for misappropriation of property rights (Amended Complaint, Count VI). The defendant asserts that “the courts refuse to prevent the appropriation of trademarks in the absence of a showing of confusion ... There can be no such thing as ‘misappropriation’ of another’s trademark irrespective of likelihood of confusion.” (Defendant’s Memorandum at 21). Plaintiff, in response, contends that “misappropriation is a viable and independent cause of action under trademark law, and exists notwithstanding the more immediate consequence of confusion of goods or business.” (Defendant’s Brief in Opposition to Plaintiff’s Motion to Dismiss at 16). In short, then, the parties harbor totally divergent views as to the legal standard governing plaintiff’s misappropriation of property rights claim.

Since I have already concluded that plaintiff has adequately alleged likelihood of confusion (see Parts II and III), I need not resolve the aforementioned controversy for purposes of this motion. Considerations of judicial economy and fairness, however, prompt me to offer an assessment of the correct standard to be applied to plaintiff’s misappropriation of property rights claim. Accordingly, I conclude that the misappropriation standard advanced by the defendant is the proper one to be applied in a trademark case. As stated by one leading trademark commentator:

The misappropriation doctrine is a state law, judge-made offshoot of the general law of unfair competition. It is usually invoked by a plaintiff who has what he considers a valuable commercial ‘thing’ which he sees another has appropriated at little cost. The problem is that plaintiff’s item or thing ... is not protected either (1) by federal patent or copyright legislation or (2) by ... trademark infringement. ... The misappropriation doctrine cannot be used in ordinary trademark infringement as a shortcut around the trademark laws’ standards of protection.... One cannot dispense with the carefully constructed requirements for trademark protection by blithely claiming that defendant misappropriated some symbol of plaintiff.... The courts have recognized that if plaintiff has failed under classic trademark ownership and infringement, then plaintiff cannot claim that defendant has ‘misappropriated’ the labor in creating the ‘trademark’. 1. J.T. McCarthy, Trademarks and Unfair Competition § 10:23 at 391, § 10:34 at 429-430 (2d ed. 1984).

Moreover the Third Circuit Court of Appeals recently described the doctrine of misappropriation as applying “to a variety of situations in which the courts have sensed that one party was dealing ‘unfairly’ with another, but which were not covered by the three established statutory systems protecting intellectual property: copyright, patent, and trademark deception as to origin.” United States Golf Ass’n v. St. Andrews Systems, 749 F.2d 1028, 1034-1035 (3d Cir.1984).

Based on the foregoing quotations, it might be argued that the misappropriation doctrine has absolutely no place in a case bottomed on trademark infringement. My own reading of the doctrine, however, convinces me that the better view is to allow plaintiff to proceed with its misappropriation of property rights claim, conditioned on a showing of likelihood of confusion. I am skeptical, though, of the added benefit a successful misappropriation of property rights claim will yield over and above the remedy afforded by a successful trademark infringement and/or unfair competition claim.

From a review of plaintiff’s memo-randa and the cases cited therein, it appears that the Eagle’s Eye has equated misappropriation with the doctrine of dilution, the latter not having been specifically plead, thus blurring the distinct features of these two theories. While both misappropriation and dilution are state law offshoots of the general law of unfair competition, the dilution doctrine grants protection to trademarks beyond that provided by the classic likelihood of confusion test. The rationale behind the dilution doctrine is that:

the gradual diminution or whittling away of the value of a trademark, resulting from use by another, constitutes an invasion of the senior user’s property right and good will in his mark and gives rise to an independent wrong. The wrong is dependent neither upon a showing of competitive relationship, nor that the goods are related, nor of a likelihood of confusion.

2 J.T. McCarthy, Trademarks and Unfair Competition, § 24:13 at 213 (2d ed. 1984).

Dilution is a creature of state statute. In Pennsylvania, the dilution doctrine is codified at 54 Pa.C.S.A. § 1124; this statute tracks the language of the Model State Trademark Bill, § 12 and reads:

Likelihood of injury to business reputation or of dilution of the distinctive quali- . ty of a mark registered under this chapter, or a mark valid at common law, or a trade name valid at common law, shall be a ground for injunctive relief notwithstanding the absence of competition between the parties or the absence of confusion as to the source of goods or services.

In sum, then, defendant's motion to dismiss plaintiffs misappropriation of property rights claim will be denied. Plaintiff has now been apprised of the proper legal standard governing this particular misappropriation claim, and of the important difference between dilution and misappropriation. I must emphasize that I express no opinion as to whether plaintiff has alleged facts to support a cause of action under Pennsylvania’s dilution statute. Moreover, the foregoing summary discussion is by no means an exhaustive review of the parameters of the dilution doctrine.

V. Claim for Misappropriation of Right of Publicity

Plaintiff asserts a claim for misappropriation of the right of publicity in Count VÍI of its amended complaint. Defendant’s motion to dismiss this claim pursuant to Rule 12(b)(6) will be granted for the reasons specified below.

This tort is derived from the appropriation branch of the right to privacy. Bi-Rite Enterprises, Inc. v. Button Master, 555 F.Supp. 1188, 1198 (S.D.N.Y.1983). The right protects against commercial loss caused by appropriation of an individual’s personality for commercial exploitation. 1 J.T. McCarthy, Trademarks and Unfair Competition § 10:21 at 375 (2d ed. 1984). Right of publicity grants a person an exclusive right to control the commercial value of his name and likeness and to prevent others from exploiting that value without permission. Bi-Rite Enterprises, Inc. v. Button Masters, 555 F.Supp. 1188, 1198 (S.D.N.U.1983). The United States Supreme Court has recognized that the right of publicity is an “entirely different tort” than traditional invasion of privacy. See Zacchini v. Scripps-Howard Broadcasting Co., 433 U.S. 562, 97 S.Ct. 2849, 53 L.Ed.2d 965 (1977). Pennsylvania has recognized the right of publicity in an action by the golfer Ben Hogan, Hogan v. A.S. Barnes and Co., 114 U.S.P.Q. 314 (Philadelphia County Court of Common Pleas 1957). See Gee v. CBS, Inc., 471 F.Supp. 600, 662 (E.D.Pa.1979).

Based on the foregoing principles, it is clear that the right of publicity inures to an individual who seeks to protect and control the commercial value of his name or likeness. This is to be distinguished from the facts at bar, in which a right of publicity is alleged to inhere in a corporate trademark. Although two courts have recently recognized a group’s right of publicity (e.g. rock music groups), plaintiff cites no cases, nor has my research revealed any, which extend the right of publicity doctrine to trademarks. See Winterland Concessions Co. v. Sileo, 528 F.Supp. 1201, 1213 (N.D.Ill.1982); Bi-Rite Enterprises, Inc. v. Button Master, 555 F.Supp. 1188, 1199 (S.D.N.Y.1983). I am not convinced that such an extension is warranted on the facts here presented, and thus will grant defendant’s motion to dismiss plaintiff’s claim for misappropriation of right of publicity.

VI. State Claim for Commercial Disparagement

Plaintiff, in Count VIII of its amended complaint, alleges that defendant’s activities and conduct constitute commercial disparagement of its goods and services. Although this issue presents a close call, I will deny defendant’s motion to dismiss this claim pursuant to Rule 12(b)(6).

A disparaging statement is one which the publisher intends to be understood, or which the recipient reasonably should understand, as tending “to cast doubt upon the quality of another’s land, chattels or intangible things.” Restatement (Second) of Torts, § 629 (1977); Zerpol Corp. v. DMP Corp., 561 F.Supp. 404, 408 (E.D.Pa.1983). As outlined by Chief Judge Luongo in Zerpol, the publication of a disparaging statement concerning the product of another is actionable where (1) the statement is false; (2) the publisher either intends the publication to cause pecuniary loss or reasonably should recognize that publication will result in pecuniary loss; (3) pecuniary loss does in fact result; and (4) the publisher either knows that the statement is false or acts in reckless disregard of its truth or falsity. Zerpol Corp. v. DMP Corp., 561 F.Supp. 404, 409 (E.D.Pa.1983); Restatement (Second) of Torts, § 623A (1977); W. Prosser, The Law of Torts, 919-922 (4th ed. 1971).

With the aforementioned legal standards in mind, I now turn to the merits of defendant’s motion to dismiss. Defendant raises a two-pronged attack against plaintiff’s disparagement claim. First, defendant argues that The Eagle’s Eye’s allegations are insufficient as a matter of law because nowhere in the allegations is Eagle’s Eye identified, either directly or indirectly. Similarly, defendant contends that its advertisement contains no direct or indirect reference to Eagle’s Eye or its clothing. The crux of defendant’s first argument, then, is that its advertisement does not identify Eagle’s Eye to the degree necessary to state a claim for commercial disparagement. This “identification” argument has appeal, but I must reject it for the following reasons.

Initially, I note that plaintiffs commercial disparagement claim does not automatically fall simply because defendant’s advertisement makes no mention of plaintiff or its products. Rather, the test to be applied is whether the disparaging communication may reasonably be understood as referring to the plaintiff or its branded apparel. Zerpol Corp. v. DMP Corp., 561 F.Supp. 404, 410 (E.D.Pa.1983) (and cases cited therein). I must thus apply this test in light of the well settled principle that a Rule 12(b)(6) plaintiff is afforded the safeguard of having all of its allegations taken as true and all inferences favorable to the plaintiff will be drawn. Mortensen v. First Federal Savings and Loan Ass’n, 549 F.2d 884, 891 (3d Cir.1977). Turning to the amended complaint and exhibits at bar, I cannot conclude as a matter of law that defendant’s advertisement cannot be reasonably interpreted as concerning The Eagle’s Eye or its products. Although I express no opinion as to the ultimate success of plaintiff’s claim, both the timing of the advertisement and its caricature-like content might reasonably be said to refer to The Eagle’s Eye. Moreover, the allegations contained in plaintiff’s amended complaint satisfy the “notice” pleading requirements of F.R.Civ.P. 8.

The second prong of defendant’s attack concerns the existence of actual disparagement. Specifically the defendant claims that nowhere in its advertisement is there any derogatory or unwholesome or even unfavorable comment on plaintiff’s products. Again, I cannot conclude as a matter of law that the advertisement cannot reasonably be interpreted as disparaging plaintiff’s warehouse sale or its branded apparel. Without rendering judgment on the merits, I note that a fact-finder could possibly conclude that the references in defendant’s advertisement to “clean, pleasant surroundings,” “not a warehouse,” and “no seconds” disparaged plaintiff’s sale and/or its products.

In sum, The Eagle’s Eye has properly alleged a commercial disparagement claim under federal pleading requirements. Its claim is not so far-fetched as to be amenable to summary dismissal pursuant to F.R. Civ.P. 12(b)(6). It has not escaped my attention, however, that plaintiffs commercial disparagement claim is somewhat inconsistent with its unfair competition and trademark infringement claims. As previously discussed, unfair competition and trademark infringement are predicated on a likelihood of consumer confusion. Potential customers are confused as to the origin of the goods they are purchasing. If successfully applied to the facts at bar, this standard would yield the conclusion that consumers purchased clothing at Ambler Fashion Shop under the false belief that they were buying Eagle’s Eye apparel. This stands in stark contrast to the situation presented by plaintiff’s commercial disparagement claim, which is predicated upon the advertisement reader’s ability to correctly discern the identities of the two parties and realize that one is disparaging the products of the other.

IV. Conclusion

Defendant’s motion to dismiss pursuant to F.R.Civ.P. 12(b)(6) is granted as to plaintiff’s misappropriation of right of publicity claim (Amended Complaint, Count VII) and is denied as to all other claims (Amended Complaint, Counts I through VI; Count VIII).

      . Plaintiffs claim for misappropriation of right of the publicity (Amended Complaint, Count VII) will be considered in Part V of the opinion.

      . McCarthy cautions that extending the right of publicity to trademarks could result in an extension of the misappropriation doctrine to trademarks, thus granting an absolute property right ant! circumventing the likelihood of confusion standard. See 2 J.T. McCarthy, Trademark and Unfair Competition, § 10:34 at 430 f.n. 16 (2d ed.1984).


source: Caselaw Access Project

author: GORDON, Senior District Judge.

license: Public Domain

text:
    L.C. WILLIAMS OIL CO., INC., Plaintiff, v. EXXON CORP., Defendant.
    No. C-84-622-D.
    United States District Court, M.D. North Carolina, Durham Division.
    April 19, 1985.

      Noel L. Allen, Raleigh, N.C., and Edward S. Holmes, Pittsboro, N.C., for plaintiff.
    John T. Allred and Julia V. Jones, Charlotte, N.C., and Robert L. Norris and Rene J. Mouledoux, Houston, Tex., for defendant.
   MEMORANDUM OPINION

GORDON, Senior District Judge.

This matter is before the Court on a motion by the defendant Exxon Corp. (Exxon) for partial summary judgment as to the plaintiff L.C. Williams Co.’s (Williams) wrongful franchise termination claim under the Petroleum Marketing Practices Act, 15 U.S.C. § 2801, et seq. (PMPA).

For the reasons set forth below, the Court will grant Exxon’s motion for partial summary judgment and thereby render moot Williams’ prayer for a preliminary injunction. The Court also concludes that, contrary to the defendant’s assertion, the PMPA does not preempt the plaintiff’s North Carolina unfair trade practices claims. These state claims will be retained under this Court’s diversity jurisdiction for later adjudication.

FACTS

Construing the facts “in the light most favorable to the party opposing the motion,” Charbonnages de France v. Smith, 597 F.2d 406, 414 (4th Cir.1979) quoting U.S. v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962), the Court finds first that the plaintiff L.C. Williams Oil Co. is a North Carolina corporation based in Pittsboro, North Carolina which distributes petroleum products to numerous retail outlets in central and eastern North Carolina. Defendant Exxon Corp. is a New Jersey corporation with its principal place of business in New York which supplies petroleum fuel and other products in North Carolina. Williams and Exxon, on May 13,1981 and February 4,1984, entered into “Distributor Agreements” under which Exxon was to provide specified amounts of its brand of automobile fuel to Williams which then distributed the fuel to retailers. The 1984 agreement replaced the earlier one. Before the execution of at least the first agreement, Exxon’s representative explained and provided copies of Exxon’s “deidentification guidelines” to the plaintiff’s president, Mr. L.C. Williams, Jr. (Mr. Williams) (Deft.’s pretrial Exhibit B— W.F. Gaskins affidavit). These guidelines were to be followed in the event that Williams started selling any brand in addition to Exxon in the Exxon branded retail stations.

Sometime in 1982, while preparing to expand its distribution network, Williams received a verbal agreement from John A. Hagerty (Hagerty), Exxon’s Raleigh, North Carolina District Manager, that “Exxon would provide [Williams] as much Exxon gasoline as was necessary to accomodate the proposed expansion.” (L.C. Williams, Jr. affidavit, p. 1). From 1981 through 1984 Williams did actively pursue and establish numerous new accounts and ultimately increased its retail outlets from 12 in 1981 to 50 in 1984. In turn, Exxon provided Williams with steadily increasing amounts of gasoline and, from 1981 through 1984, allowed Williams to purchase quantities in excess of its contractually allocated allotments.

The “Product Schedules” which were incorporated by reference into and referred to numerous times in the Distributor Agreements specified that the “source” of Williams’ annual quantity would be Exxon’s Greensboro terminal. Indeed, despite several verbal and written requests by Williams to allow it to utilize Exxon’s Selma, North Carolina distribution terminal so as to more economically service its growing retailer network, Exxon consistently refused Williams’ requests and cited supply problems at Selma as its rationale.

On May 11, 1983, after Hagerty again refused to allow Williams to use the Selma terminal, Williams notified Exxon by letter that it regretfully would have to start purchasing and distributing another brand of gasoline in addition to Exxon. This practice is known in the industry as “double branding” and is lawful so long as the appropriate brand names and trademarks are displayed for each gasoline dispenser.

Exxon responded to Williams’ letter by again citing its “limitation in supplying current and future demands in eastern North Carolina from our Selma terminal.” (Ptf’s pre-trial Exhibit 7 — 5/20/83 letter from W.R. Carter (Carter), retail sales manager for Exxon’s Southern Region, to Mr. Williams).

Following next in chronological order— though not necessarily causally linked to Williams’ double branding decision — is Carter’s 9/1/83 intra-office memo to W.N. Menefee (Menefee), another Exxon manager. This memo read, in pertinent part:

In the recent reorganization, I believe you picked up L.C. Williams Oil Co. in Pittsboro, N.C.
The attached memo will be of interest as background... Based on his interest in developing stores in Raleigh and Greensboro markets, we need to look closely at designating Williams as a ‘no-growth’ distributor.

Attached to this intra-office memo were Williams’ 5/11/83 letter and Carter’s 5/20/83 reply letter. In handwriting on the intra-office memo, Menefee noted:

... let’s take action necessary to designate Williams as ‘no-growth’ if that is appropriate.

The term “no-growth” apparently originates in Exxon’s “Distributor Business Strategies” under which it serves major metropolitan or “A-l” markets by encour-ag[ing] growth through direct served dealer operations [while] minimiz[ing] existing A-l market [branded] distributor growth. (Ptf’s pre-trial Exhibit 8, p. 220, 227). Williams, as a wholesale distributor of Exxon products, constituted a “branded distributor” which Exxon utilized to serve the less densely populated “C” markets.

As the plaintiff admits, “on November 11, 1983, based upon a report from a competitor of plaintiff, Exxon initiated an investigation and subsequently determined that plaintiff had obtained petroleum from a non-Exxon source and deposited it at an Exxon-branded” retailer. (Ptf’s brief p. 5). This “investigation” consisted of taking samples of gas from the suspect retailer’s tanks. The sample analysis revealed both Exxon and non-Exxon petroleum in the fuel.

Following the investigation, on February 29, 1984, several Exxon representatives met with Mr. Williams to discuss their discovery. Mr. Williams admitted at that time that he had purchased non-Exxon gasoline and knowingly provided it to his retail outlets to be sold under the Exxon name. (Mr. Williams’ deposition at p. 95 & 170, Bailey & Gaskins’ affidavits). Mr. Williams admitted to not notifying his retailers nor the public that non-Exxon gasoline was being sold until soon after this February 29, 1984 meeting. Even after this meeting, Williams performed the proper deidentification of retail stations at only two of its forty-one total outlets and also has admitted that some dealers were not ever informed that Williams had sold them non-Exxon products. (Mr. Williams’ deposition at pp. 171 & 120). In fact, even after the franchise termination notice, plaintiff admits to having furnished non-Exxon fuel to stations branded as Exxon outlets. (Mr. Williams deposition at pp. 85, 94, 95 & 132).

At Williams’ request, Exxon extended the termination date until July 1, 1984 to allow Williams to appeal the decision through Exxon’s Headquarters Distributor Relations Committee in Houston, Texas.

Williams exhausted Exxon’s appellate options before this date and, on June 29, 1984, filed this action in the Chatham County Superior Court, from which it was removed to this Court.

CONTENTIONS OF THE PARTIES

Plaintiff Williams, while admitting that it did “distribute non-Exxon gasoline to Exxon branded distributors,” explains that this was an “unwillful mistake” and one made with “no intention to mislead, defraud, or otherwise violate the law or its distributorship agreement with Exxon.” (Ptf’s Brief p. 30). Instead, Williams contends that Exxon’s numerous “unlawful actions, [including] breach of fiduciary duty, secret territorial schemes, retaliatory classifications designed to destroy or diminish a lawful business, civil entrapment and arbitrary and discriminatory termination” forced Williams to commit the misbranding mistake and should serve to defeat the partial summary judgment motion. (Ptf’s Brief p. 31).

Conversely, Exxon argues in support of its motion that “plaintiff’s misbranding ... constituted several clear and distinct grounds for termination under the .PMPA” (Deft’s Brief p. 30) and that the myriad allegations by Williams are merely “feeble attempts to fan the flames and create issues of fact.” (Deft’s Reply Brief p. 9).

DISCUSSION

Jurisdiction

Into this rather heated rhetorical skirmish steps this Court and, as a first threshold matter, notes that, as the parties agreed, it has jurisdiction under the PMPA, 15 U.S.C. § 2805(a) and 28 U.S.C. § 1331 (federal question) and § 1332 (diversity of citizenship).

Preemption of State Unfair Trade Practices Law

The second threshold issue presented— whether the PMPA preempts North Carolina’s unfair trade practices law as embodied in N.C. Gen. Stat. §§ 75rl.l, 25-1-102(3), and the common law — requires considerably greater attention. Exxon asserts that Williams’ state law claims are “inapplicable to the termination issue” (Deft’s Brief p. 13) because the PMPA preempts all statutory and common law claims. In response, Williams argues that Exxon’s conduct which gave rise to the unfair trade claims, “while ultimately culminating in termination ... [of Williams’ franchise] are independent of the scope of the PMPA.” (Ptf’s Brief p. 27). The Court’s inquiry into the proper parameters of the preemption issue, as spawned by the supremacy clause of the U.S. Constitution, Art. VI, cl. 2, and Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1,211 (1824), is simplified by Congress’ enunciation of its legislative intent in § 106 of the PMPA, 15 U.S.C. § 2806(a). This provision reads, in pertinent part:

To the extent that any provision of this subchapter applies to the termination ... [or nonrenewal] of any franchise relationship, no State ... may adopt, enforce, or continue in effect any provision of any law or regulation with respect to termination [or to the nonrenewal] of any such franchise relationship unless such provision of such law or regulation is the same as the applicable provision of this subchapter.

Thus, the Court’s crucial determination is whether the state law speaks to termination or nonrenewal of a franchise relationship under the PMPA and, if so, whether the pertinent state provision is “the same as” the federal statute. See generally Siecko v. Amerada Hess Corp., 569 F.Supp. 768, 772-73 (E.D.Pa.1983); Meyer v. Amerada Hess Corp., 541 F.Supp. 321, 332 (D.N.J.1982); Lyons v. Mobile Oil Corp., 526 F.Supp. 961, 962 (D.Conn.1981) (all summarily preempting state franchise laws).

The North Carolina statute primarily placed at issue by Exxon’s preemption claim, N.C. Gen. - Stat. § 75-1.1(a) (1981), simply but broadly provides that: “Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful.” Plaintiff Williams also alleges violations by Exxon of the common law duty of good faith and of N.C. Gen. Stat. § 25-1-102(3), North Carolina’s UCC provision which dictates that “the obligations of good faith, diligence, reasonableness and care prescribed by this chapter may not be disclaimed by agreement.” So, it is apparent that the allegedly offensive state laws do not speak directly to “the termination ... or nonrenewal of a franchise” but instead apply broadly to “all business activities, however denominated.” N.C.Gen. Stat. § 75-1.1(b) (1981) (defining “commerce” as used in § 75-l.l(a)).

Indeed, the alleged unfair trade practices which Williams proffers as being independent of the PMPA arise from more general “business activities” rather than specifically from the termination of a franchise. For example, the plaintiff alleges a secret territorial allocation engendered by Exxon’s consistent refusal to allow Williams access to the Selma, North Carolina distribution terminal. Williams also emphasizes Exxon’s horizontal restraint of competition in allegedly designating Williams as a “no-growth” distributor.

In deciding a preemption question, the Court is ever mindful of the fact that “the exercise of federal supremacy is not lightly to be presumed.” Tousley v. North American Van Lines Co., 752 F.2d 96, 101 (4th Cir.1985) quoting Schwartz v. Texas, 344 U.S. 199, 203, 73 S.Ct. 232, 235, 97 L.Ed. 231 (1952). The Court also agrees that “Congress carefully tailored the preemptive effect of the PMPA, and [it] would betray its purpose by reaching unnecessarily to find conflict with state law.” Exxon Corp. v. Ga. Assn. of Petroleum Retailers, 484 F.Supp. 1008, 1018 (N.D.Ga.1979) aff'd sub nom. Exxon Corp. v. Busbee, 644 F.2d 1030 (5th Cir.1981) cert. denied, 454 U.S. 932, 102 S.Ct. 430, 70 L.Ed.2d 239 (1981) (hereinafter cited as Exxon Corp.); see also Lasko v. Consumers Petroleum of Connecticut, Inc., 547 F.Supp. 211 (1981).

Consistent with the duty of restraint imposed upon it by a preemption question and in recognition of the several state unfair trade claims which, although perhaps possessing more than a “fortuitous application”, have little more than an “attenuated” relationship to this lawsuit over termination of a franchise, Exxon Corp., 484 F.Supp. at 1018, this Court concludes that the PMPA, 15 U.S.C. § 2806(a), does not preempt N.C.Gen.Stat. §§ 75-1.1, 25-1-102(3) nor the common law duty of good faith dealing as they arise in this litigation.

Termination of Williams’ Franchise

The Distributor Agreement executed by these litigants on May 13, 1981 was by its terms effective until March 31, 1984. Thus, it governs Williams’ Fall, 1983 mis-branding acts which allegedly allow a lawful franchise termination by Exxon. The operative provisions of the Agreement read:

13. TRADEMARK: Buyer is permitted to display Seller’s trademarks solely to designate the origin of said products and Buyer agrees that petroleum products of others will not be sold by Buyer under any trade name, trademark, brand name, label, insignia, symbol, or imprint owned by Seller or used by Seller in its business....

The “Termination” paragraph of the Agreement also contains the standard proviso that

(a) This Agreement shall terminate:
(b)(v) if Buyer [Williams] defaults in any of its obligations under this Agreement.

Under a traditional contract law analysis, these terms would, with the facts at bar, seem quite sufficient to allow Williams’ termination. However, because the contractual relationship between Exxon and Williams constitutes a “franchise” under § 2801(1)(A) of the PMPA, the traditional analysis must also assimilate the federal statute.

As the defendant admits, the PMPA “was designed by Congress to establish ‘protection for franchisees from arbitrary or discriminatory termination or non-renewal of their franchises.’ ” (Deft.’s Brief p. 9 and quoting S.Rep. No. 731, 95th Cong., 2d Sess. 15 (1978) reprinted in [1978] U.S. Code Cong. & Ad.News 873, 924). However, defendant also urges and this Court recognizes — as did Congress — that this “subject area required recognition of the legitimate needs of a franchisor to be able to terminate a franchise or not renew a franchise relationship based on certain actions of the franchisee_” (Id. at 877).

Toward the goal of more clearly delineating which “certain actions” may properly trigger termination, the PMPA first requires the continuation of a franchise “except as provided in subsection (b)” of § 2802. This subsection specifies the permissible reasons, and requisite procedure to follow, for franchise termination. Under § 2802(b)(1)(A), a franchisor must first meet Section 2804’s written, ninety day, certified mail or personal delivery termination notice requirement. Williams has acquiesced to the conclusion that Exxon’s March 5, 1984 letter satisfies all the notification requirements. See 15 U.S.C. §§ 2802(b)(2)(C) and 2804(a).

In addition to adequate notice, Section 2802(b)(1) requires that the termination be premised on a basis specified in § 2802(b)(2). The operative ground on which the Court will uphold the termination in this case is § 2802(b)(2)(C) which provides, in pertinent part:

(b)(2) ... the following are grounds for termination of a franchise...:
(c)The occurrence of an event which is relevant to the franchise relationship and as a result of which termination of the franchise ... is reasonable_

In a further effort to establish “a set of rules [which would] clearly define the rights and obligations of the parties to a franchise relationship in the crucial area of termination of a franchise”, 1978 U.S.Code Cong. & Ad.News at 877, Congress provided specific examples of “an event which is relevant to the franchise ... and as a result of which termination ... is reasonable.” The crucial example for the case at bar is found in § 2802(c)(10) which, in effect, proscribes “willful adulteration, mislabeling or misbranding of motor fuels or other trademark violations by the franchisee.” (emphasis added).

This specification of misbranding as a relevant event upon which a reasonable termination can be based is expressly reiterated in the “Trademarks” paragraph of both of Williams’ Distributor Agreements. In fact, the Agreements effectively duplicate § 2802(c)(10) by providing that “... it being understood and agreed that a breach of any provision of this section 13 is an event which is relevant to the franchise relationship ... and as a result of which termination of the ... relationship is reasonable.”

Both the Exxon-Williams Agreement and the PMPA expressly authorize termination of Williams’ franchise for the specific misbranding to which Williams’ admits. At this stage, the only lingering issue is the willfulness vel non of Williams’ misbranding. In essence, following Haynes v. Exxon Co., 512 F.Supp. 543, 544 (1981) quoting Gilderhus v. Amoco Oil Co., 1980-81 Trade Cas. (CCH) 1163,648 (D.Minn.1980), the Court concludes that the “willful” requirement of § 2802(e)(10) contemplates “a conscious, intentional, deliberate and voluntary act, and that the provision does not require ‘proof of bad motive, nor does evidence of good faith negate the willfulness of an act covered by said provision.’ ” It is also concluded that Williams’ misbranding was willful within this definition. See also H.R.H. Service Station, Inc. v. Exxon Corp., 591 F.Supp. 25 (1983). Plaintiff has admitted to consciously and deliberately selling non-Exxon gas without deidentifying the pertinent Exxon-branded stations and, under the now relatively well-developed law, this conduct is “willful.” Mr. Williams’ good faith or ignorance of his franchisee responsibilities is irrelevant to this determination. Exxon has fulfilled its burden under § 2805(c) of proving willfulness.

In opposition to the termination and the motion now at issue, the plaintiff argues at length that, inter alia, Mr. Williams had not read the Agreement and was “not aware of any contractual prohibition against misbranding.” (Pltf.’s brief at 13). Since it has been a well settled “general rule” for almost a century that “one who signs a contract is presumed to know its contents ...” Ellis v. Mullen, 34 N.C.App. 367, 369 238 S.E.2d 187, 189 (1977) the Court will give this argument the consideration it merits and summarily dismiss it. See generally Dellinger v. Gillespie, 118 N.C. 737, 24 S.E. 538 (1896) through Biesecker v. Biesecker, 62 N.C.App. 282, 302 S.E.2d 826 (1983).

The Court also deems it unnecessary to consider the fiduciary duty proposition and the various other “defenses” to the termination action proffered by the plaintiff. While it is conceivable that some of the arguments may have some relevance to the state unfair trade practices claims, the plaintiff’s signing without knowledge defense and “civil entrapment” theory at least approach the “frivolous” sort of action for which the PMPA’s § 2805(d)(3) authorizes the imposition of “attorney and expert witness fees” against the franchisee. However, the Court will not exercise its discretion to tax these costs at this time.

The Court will utilize its discretion to also conclude that, having found the termination of Williams’ franchise lawful under the Agreement and the PMPA because of Williams’ misbranding, it need not reach nor consider the merits of the three remaining grounds posited by Exxon as justifications for the termination.

SUMMARY

Having construed all the facts in the light most favorable to the plaintiff L.C. Williams Oil Co. and yet still determined that there exists no “genuine issue as to any material fact,” the Court concludes that the defendant Exxon Corp. is “entitled to [partial summary] judgment as a matter of law” as to the franchise termination issue. F.R.Civ.P. 56(c). Accordingly, the defendant’s motion is granted and Williams’ original prayer for a preliminary injunction under the PMPA, 15 U.S.C. § 2805(b)(2), is rendered moot. The Court further concludes that the PMPA does not preempt the plaintiff’s unfair trade practices claims under N.C. Gen. Stat. §§ 75-1.1, 25-1-102(3), and the common law duty of good faith. These state law claims shall be retained on this Court’s docket under its diversity jurisdiction for a subsequent disposition.

      .The actual gas volumes purchased by Williams were: (rounded to the nearest hundred gallons)
      Contract Year Volume in Gallons
      1980-1981 2,499,300
      1981-1982 3,466,200
      1982-1983 4,292,300
      1983-1984 4,728,000
      The actual amounts purchased in excess of the contract’s annual quantity were:
      1981-1982 967,200
      1982-1983 1,793,000
      1983-1984 2,229,000

      . The determination of this causal relationship is not necessary to the disposition of the motion at issue and can be more appropriately explored and decided in a subsequent adjudication.

      . Exxon, as might be expected, challenges vehemently Williams’ perjorative use of "no-growth" and supports its position by emphasizing that, contrary to the "Distributor Business Strategies" ("minimize existing A-l market distributor growth ... by maintaining such distributor's contracts at current contract volumes”), Exxon annually increased Williams' actual allocations.

      . The identical language quoted here from paragraph 13 of the 1981 Agreement is also contained in paragraph 11 of the 1984 Agreement.


author: HAMILTON, District Judge.

text:
    Ronnie K. BAUGHMAN, Plaintiff, v. GENERAL MOTORS CORPORATION, Defendant.
    Civ. A. No. 3:84-1520-15.
    United States District Court, D. South Carolina, Columbia Division.
    May 7, 1985.

      George A. Kastanes, Frederick A. Gertz, Columbia, S.C., for plaintiff.
    Stephen G. Morrison, Richard H. Willis, Stanford E. Lacy, Columbia, S.C., for defendant.
   ORDER

HAMILTON, District Judge.

The present case is a products liability . action arising out of the explosive separation of a multi-piece wheel rim assembly. Jurisdiction is founded upon 28 U.S.C. § 1332. The matter is presently before the court upon motion of the defendant, General Motors Corporation (hereinafter “G.M.”), for summary judgment. Rule 56, Federal Rules of Civil Procedure.

At the time the facts relevant to the present cause of action occurred, the plaintiff was employed as a tire mechanic at Newton Truck Rentals, Inc. (hereinafter “Newton”). On May 25,1981, plaintiff was engaged in changing a worn tire off of a 1979 G.M.C. truck, vehicle identification number T17DD9Y586462. Plaintiff removed the left outside wheel from the truck, disassembled the tire, rim and side ring, and then inflated the wheel assembly in a safety cage located in Newton’s shop. Once the tire was inflated, the plaintiff rolled the wheel assembly out of the cage and as he began to place it back on the truck, an explosive separation occurred, causing plaintiffs injuries.

The plaintiff has identified the type of rim which exploded as a CR-2 rim assembly. The CR-2 rim assembly is a multi-piece rim consisting of a rim base and single side ring. The side ring has a split in its circumference, giving the ring sufficient flex to be buttoned into the groove on the rim base. The split side ring has an approximate one-half inch “toe” that fits under the bead of the tire, and a properly assembled and aligned side ring is held in place on the rim base by the air pressure in the tire. The CR type rim assemblies were neither designed nor manufactured by G.M. CR type rim assemblies were designed in 1964 by the Firestone Tire and Rubber Company, and have been manufactured by both Firestone and the Goodyear Tire and Rubber Company under a license from Firestone.

Although G.M. does not manufacture CR type multi-piece rims, it does incorporate this type of rim assembly into many of the trucks it manufactures. G.M. normally utilizes a CR-3 rim assembly on its trucks. A CR-3 rim assembly is similar in configuration to the CR-2, and utilizes the same rim base. The CR-3 rim assembly, however, utilizes a side ring assembly consisting of two pieces, a split lock ring and continuous side ring. The only use by G.M. of the CR-2 rim assembly occurred during a materials shortage in 1974. Because Firestone was unable to supply a sufficient number of CR-3 rim assemblies in time to meet G.M.’s production schedule that year, G.M. purchased a limited number of CR-2 assemblies from Firestone and incorporated them into three hundred (300) to three hundred and thirty-five (335) 1975 model year G.M.C. and Chevrolet trucks. The plaintiff does not dispute that this was the only use by G.M. of the CR-2 rim assembly.

Although plaintiff can identify the type of rim assembly (CR-2) which exploded and caused his injuries, he cannot identify the actual accident rim which exploded. While various witnesses to the accident have speculated as to what happened to the accident rim assembly, none can identify the present location of the rim assembly and it is thus unavailable for inspection. Furthermore, plaintiff cannot establish that G.M. placed the actual accident rim assembly into the stream of commerce. It was Newton’s regular business practice to remove the rear tires from its newly purchased trucks and substitute retreads in their place. This substitution normally involved changing the entire wheel assembly since Newton kept completed and inflated wheel assemblies on hand for use in its operations. The rim which exploded was clearly not original equipment on the 1979 model year truck that plaintiff was working on, since G.M. used a limited number of CR-2 rims only on its 1975 model year trucks. Furthermore, G.M. specifically recommended against the use of “used” wheel rims. Although there is no evidence to suggest that the accident rim was used equipment, this would tend to show that the accident rim was not placed in the stream of commerce by G.M. G.M. only sold CR-2 rims in 1974 to 1975, so use of a CR-2 rim sold by G.M. would necessarily have been use of a used product. Accordingly, plaintiff cannot establish that the accident rim was placed into the stream of commerce by G.M.

The defendant’s motion for summary judgment is based upon the plaintiff’s inability to show that it sold the accident-causing rim or placed such rim into the stream of commerce. G.M. asserts that a prerequisite to liability under any potential theory of recovery is that the defendant must have placed the allegedly defective component into the stream of commerce, either as original equipment or as a recommended replacement part. G.M. contends that since it had no hand in the eventual placement of the accident rim assembly into the stream of commerce, plaintiff’s action must fail as a matter of law.

Since it is undisputed that G.M. did not design nor manufacture the CR-2 rim, plaintiff’s theory of liability against G.M. must of necessity be predicated upon the theory of assembler’s liability. Under this doctrine, a manufacturer/assembler who incorporates a defective component part into his finished product and places the finished product into the stream of commerce is liable in tort to one injured as a result of a defect in the component part. The rule imposing liability upon an assembler applies notwithstanding the fact that the manufacturer/assembler did not manufacture the component part. See Ford Motor Co. v. Mathis, 322 F.2d 267 (5th Cir.1963); Vandermark v. Ford Motor Co., 61 Cal.2d 256, 37 Cal.Rptr. 896, 391 P.2d 168 (1964); Comstock v. General Motors, 358 Mich. 163, 99 N.W.2d 627 (1959); Goldberg v. Kollsman Instrument Corp., 12 N.Y.2d 432, 240 N.Y.S.2d 592, 191 N.E.2d 81 (1963); MacPherson v. Buick Motor Co., 217 N.Y. 382, 111 N.E. 1050 (1916); Abee v. Stone Mountain Memorial Association, 169 Ga.App. 167, 312 S.E.2d 142 (1983); Nelson v. Coleman Co., 249 S.C. 652, 155 S.E.2d 917 (1967). See generally, 63 Am. Jur.2d Products Liability § 180 et seq. (1984); 2 L. Frumer & M. Friedman, Products Liability § 16A[4][b][i] (1984); W. Kimble & R. Lesher, Products Liability § 34 (1979); Annot: 3 A.L.R.3d 1016 (1965).

The rationale for holding the assembler responsible for the failure of a component which it did not design has been stated in terms of both strict liability and negligence. Under a negligence analysis, courts at first were willing to impose liability on the manufacturer/assembler of a finished product due to the manufacturer’s/assembler’s duty to test or inspect those components for defects. See Nelson v. Coleman Co., 249 S.C. 652, 155 S.E.2d 917 (1967); 63 Am.Jur.2d Products Liability § 182 (1984); Annot: 3 A.L.R.3d 1016, at § 3 (1965). Through further refinement in the courts, the law has evolved to the rule that the assembler of a finished product is responsible for the failure of a component part if the assembler has held out the finished product as its own, and for purposes of liability in negligence, the assembler will be considered as the manufacturer of the component parts included in the finished product. See, e.g., Ford Motor Co. v. Mathis, 322 F.2d 267 (5th Cir.1963); Boeing Airplane Co. v. Brown, 291 F.2d 310 (9th Cir.1961); Favors v. Firestone Tire & Rubber Co., 309 So.2d 69 (Fla.Dist.Ct.App.1975); Market v. Spencer, 5 App.Div.2d 400, 171 N.Y.S.2d 770 (1958).

Under the doctrine of strict liability in tort, courts have not focused upon the issue of whether an assembler manufactured a defective component part, but the focus has been upon whether or not the assembler has sold the defective component part and thus placed it in the stream of commerce. S.C.Code Ann. § 15-73-10 (Law. Co-op.1976) imposes liability upon one who sells a product in a defective condition unreasonably dangerous to the consumer or his property. The justification for this imposition of liability is that the public has a right to expect that a reputable seller will stand behind its goods, and the burden of accidental injuries is properly placed upon those who market the defective component. Restatement (Second) of Torts § 402(A) comments c, e (1965). The imposition of liability upon assemblers has also been justified on the ground that the assembler’s position in the marketing chain allows it to exert pressure on the manufacturer of the component part to enhance the safety of its product. See Hammond v. North American Investments, 97 Ill.2d 195, 73 Ill.Dec. 350, 454 N.E.2d 210 (1983).

Any theory of assembler liability, however, requires that the assembler actually sell or otherwise place the defective product on the market. It is a fundamental principle of the law of products liability that a product manufacturer is not an insurer of its product, and a plaintiff may recover against a manufacturer only upon a showing that the product was in a defective condition unreasonably dangerous at the time it left the manufacturer’s control. As a necessary corollary, the plaintiff must be capable of showing that the defendant either manufactured, sold or exercised control over the defective product.

It is elementary that in any action claiming injury from a product, the plaintiff must show causal connection between the defendant manufacturer and that product. The defendant manufacturer must be identified with the specific instrumentality that allegedly caused the injury, and this is the law of both North and South Carolina. Gantt v. Columbia Coca-Cola Bottling Co., 193 S.C. 51, 7 S.E.2d 641 (1940); Elledge v. Pepsi Cola Bottling Co., 252 N.C. 337, 113 S.E.2d 435 (1960)_ Proof connecting the defendant with the instrumentality of the alleged defect is necessary regardless of the theory upon which plaintiff relies. See, e.g., Paul v. Hardware Mutual Ins. Co., 254 So.2d 690 (La.Ct.App.1971); Nigro v. Coca-Cola Bottling, Inc., 49 Wash.2d 625, 305 P.2d 426 (1957).

Ryan v. Eli Lilly & Co., 514 F.Supp. 1004, 1006-07 (D.S.C.1981). The plaintiff herein is unable to prove that G.M. either manufactured or sold the CR-2 rim which exploded and caused his injury. Having failed to show that G.M. placed the allegedly defective rim into the stream of commerce, the plaintiff cannot show that G.M. is responsible for his injuries and cannot establish causation in fact. W. Prosser, Handbook of the Law of Torts § 41 (1971).

Regardless of the theory which liability is predicated upon, whether negligence, breach of warranty, strict liability in tort, or other grounds, it is obvious that to hold a producer, manufacturer, or seller liable for injury caused by a particular product, there must first be proof that the defendant produced, manufactured, sold, or was in some way responsible for the product ....

Annot: 51 A.L.R.3d 1344,1349 (1973) (cited with approval in Ryan v. Eli Lilly & Co., supra).

Where, as here, the defendant manufacturer did not incorporate the defective component part into its finished product, the rationale for imposing liability is no longer present. The manufacturer has not had an opportunity to test, evaluate and inspect the component, it has derived no benefit from its sale, and it has in no way represented to the public that the component part is its own. Although the court can locate no South Carolina authority directly addressing the liability of a manufacturer for a component part supplied by a third party, there is a substantial body of law from other jurisdictions which would indicate that summary judgment is appropriate in this case.

In Cousineau v. Ford Motor Co., 140 Mich.App. 19, 363 N.W.2d 721 (1985), the plaintiffs decedent was killed while he was repairing a truck tire. Since plaintiff could not identify the rim which fatally injured her decedent, she sued six wheel manufacturers and two truck manufacturers, alleging alternative liability and concert of action products liability theories. Most of the defendants moved for summary judgment on the ground that plaintiff could neither identify the manufacturer nor seller of the explosive rim. The court granted summary judgment, and the Michigan Court of Appeals affirmed. In discussing the alleged liability of the defendant truck manufacturers, the court held:

As to the vehicle manufacturers, plaintiffs claim of alternative liability is insufficient as well. Trucks are not generic products posing identification difficulties. Plaintiff admits she cannot identify the particular vehicle which was equipped with the subject wheel assembly. In addition, she cannot prove that the wheel was used as original equipment on any of the trucks at decedent’s work place. The defendant vehicle manufacturers are not in the business of making three-piece rims. Though a vehicle manufacturer may be held liable for damages caused by defective component parts supplied by another entity, Cornstock v. General Motors Corp., 358 Mich. 163, 99 N.W.2d 627 (1959), this duty has not yet been extended to component parts added to a vehicle subsequent to distribution. Assuming the existence of a defect, plaintiff must “trace that defect into the hands” of the defendant. Caldwell v. Fox, 394 Mich. 401, 410, 231 N.W.2d 46 (1975). “[T]he threshold requirement of any products liability action is identification of the injury-causing product and its manufacturer.” Abel [v. Eli Lilly and Company ], 418 Mich. [311] 324, 343 N.W.2d 164 [(1984)]. Failure of a component not supplied by the manufacturer does not give rise to liability on the manufacturer’s part. Antcliff v. State Employees Credit Union, 95 Mich.App. 224, 231-233, 290 N.W.2d 420 (1980), aff'd 414 Mich. 624, 327 N.W.2d 814 (1982).

Id. at 30-31, 363 N.W.2d at 727-28 (emphasis added). Just as in Cousineau, the plaintiff herein cannot identify the accident rim as having been sold by G.M., and G.M. neither designed nor manufactured CR-type rims. Accordingly, plaintiff cannot trace the defect into the hands of G.M. and thus cannot prove liability on its part.

Another recent Michigan decision is factually similar to the present case. In Spencer v. Ford Motor Co., 141 Mich.App. 356, 367 N.W.2d 393 (1985), a multi-piece rim and tire assembly exploded in plaintiff’s face as he attempted to repair it, causing personal injury. The plaintiff was unable to locate the exact rim which caused his injury, and admitted that the accident rim was not the original equipment supplied with the Ford truck. The plaintiff, however, contended that the truck itself was defective since the vehicle could accommodate a dangerous rim. The Michigan Court of Appeals affirmed the grant of summary judgment in favor of Ford. The court, quoting the aforementioned language of the Cousineau opinion, reaffirmed the principles underlying Cousi-neau and held that “plaintiff’s contention that Ford should be liable for a wheel rim component added subsequent to distribution of the Ford vehicle has no support in our case law.” 141 Mich.App. at 361, 367 N.W.2d 393. The court further rejected the plaintiff’s contention that the truck was defective because the wheel housing could accept a defective rim.

[F]inding a vehicle defective or a vehicle manufacturer liable simply because the vehicle could accommodate dangerous or defective replacement components manufactured by another would have far-reaching undesirable results. For example, car manufacturers would be liable every time a defective tire blew up because a defective tire fit the vehicle.

Id. Although the aforementioned decisions are not controlling precedent in this jurisdiction, the well-reasoned Spencer and Cousineau opinions are factually similar to the present case and the court finds the reasoning therein to be highly persuasive.

Courts in other jurisdictions have reached the same conclusion as the Michigan courts. The Supreme Court of Minnesota, in an early products liability case, Hardware Mutual Casualty Co. v. Chrysler Corp., 274 Minn. 87, 142 N.W.2d 728 (1966), was confronted with the failure of a component part of an automobile’s power steering assembly resulting in loss of steering control and a subsequent accident. Plaintiff’s theory was that the collision was caused by Chrysler’s negligence in equipping the Chrysler automobile with a defective power steering assembly, the failure of a component part of which caused the accident. The trial resulted in a verdict for the plaintiff, and Chrysler appealed on the ground that the “sector shaft”, the allegedly defective part, did not appear to be a Chrysler component. After reviewing the record, the Minnesota Supreme Court found that the evidence did not support a finding that the sector shaft was part of the Chrysler vehicle at the time it left Chrysler’s hands. As stated by the court:

But if the housing which encased the sector shaft at the time of the accident was not in existence when the car left Chrysler’s hands, can we say that the assembly was not altered in the interval? And if the alteration involved resulted in the replacement of the housing, what basis do we have, save conjecture, for deciding that the sector shaft was not also replaced? And if replaced, how can we hold Chrysler liable when the source of replacement parts for the Gemmer-Manuafactured Steering Assembly might or might not have been Chrysler? We have examined the record and briefs with care and find no answers to these questions.

142 N.W.2d at 737 (emphasis added). As such, the court remanded the case for further factual findings on the issue of whether the sector shaft had been supplied by Chrysler. In the case at bar, unlike the Chrysler case, the plaintiff clearly cannot establish that the allegedly defective CR-2 rim assembly which caused his injury was ever sold by G.M., and it is clear that the allegedly defective rim was not the original equipment on the 1979 G.M.C. truck.

In Riggins v. Ford Motor Co., 596 F.Supp. 1379 (E.D.La.1984), the plaintiff was injured when his hand became ensnared in the hydraulic presser of a garbage truck. Defendant Ford designed only the cab and chassis of the truck, and a subsequent manufacturer affixed the trash compactor to the chassis. The court held that Ford could not be held liable in a products liability action for plaintiff’s injuries allegedly caused by the product of another manufacturer, which was placed on the cab and chassis by someone other than Ford. Similarly, in the present case, there is no evidence that G.M. sold the injury-causing component, the wheel assembly, and thus G.M. cannot be held responsible for a defect in the component.

Although plaintiff admittedly cannot identify the exploding wheel assembly as a G.M. product, he has attempted to assert that the overall design of the truck, which clearly was a G.M. product, was defectively designed because it was sold with CR-3 rims. Plaintiff asserts that the CR-3 rim assembly is defective in the same manner as the CR-2 rim assembly which caused his injury, and since G.M. designed the truck and sold it with a CR-3 rim, its defective design renders it liable. This argument must fail as a matter of law, since it does not address the fact that the real, efficient and legal cause of plaintiff’s injury was the explosion of a CR-2 rim assembly. No matter how similar in design to the CR-2 type, a CR-3 rim simply did not explode and cause plaintiff’s injury. Since this alleged design defect was not the cause in fact of plaintiff's injury, plaintiff’s contention must fail.

In his brief and on oral argument, plaintiff contends that the G.M.C. truck is defective in that it can accept only rims of the dangerous multi-piece variety. Plaintiff asserts that since the truck’s wheel housing will accept dangerous rims, the truck is defectively designed. As in Spencer, this assertion is not supported by the facts of this case. At the hearing on this motion, G.M. presented evidence that the wheel housing could accept single piece rims as well as multi-piece rim assemblies. It is abundantly clear that plaintiff’s injury was caused by an exploding rim, not by the housing assembly on the truck. Since plaintiff cannot establish that the injury-causing rim was supplied by G.M., he cannot recover in this action.

Plaintiff finally argues that the G.M.C. truck was defective because G.M. failed to adequately warn of the dangers associated with multi-piece rims. Since the exploding accident rim was a replacement component part and not original equipment, plaintiff implicitly argues that a manufacturer of a vehicle has a duty to test all possible replacement parts made by any manufacturer to determine their safety, and it must warn against use of certain replacement parts. Just as in Spencer, supra, this court is of the opinion that the common law duty to warn does not extend to component parts not incorporated by the vehicle manufacturer.

Academically, it may be argued that all products are defective because they can be made more safe. However, it does not automatically follow that the products are deemed “unreasonably dangerous.” In the final analysis, we have another of the law’s balancing acts and numerous factors must be considered, including the usefulness and desirability of the product, the cost involved for added safety, the likelihood and potential seriousness of the injury, and the obviousness of the danger.

Claytor v. General Motors Corp., 277 S.C. 259, 265, 286 S.E.2d 129, 132 (1982). If the law were to impose such a duty, the burden upon a manufacturer would be excessive. While a manufacturer can fairly be charged with testing and warning of dangers it decides to incorporate into its product, it cannot be charged with testing and warning against any of a myriad of replacement parts supplied by any of numerous manufacturers; this duty to warn must properly fall upon the manufacturer of the replacement component part. Since G.M. could not properly be charged under the law with the duty to warn against replacement component parts, plaintiff’s failure to warn theory of liability cannot prevail.

Even were this court to find that G.M. had a duty to warn, it cannot be said that the failure to do so proximately caused plaintiff’s injury. Plaintiff herein was a knowledgeable user of multi-piece rim assemblies, being an experienced tire repairman. Plaintiff stated at his deposition that he had seen and read literature describing safety procedures for mounting various types of multi-piece rim assemblies and had been engaged in the business as a tire mechanic for over two and one-half years. Indeed, when inflating the accident wheel assembly, plaintiff kept the assembly in an inflation cage to prevent injuries from an explosion during inflation. (Plaintiff’s deposition at 43). Since plaintiff knew of the explosive danger associated with multipiece rims, the failure to warn him of their propensity to separate was not the proximate cause of his accident, as a warning would not have altered plaintiff’s conduct. “Implicit, therefore, in the duty to warn is the requirement that the user be ignorant of the dangers warned against, [citations omitted.] Thus, it is generally held that there is no duty to warn when the danger or potential danger ... is actually known to the injured person.” Hagans v. Oliver Machinery Co., 576 F.2d 97, 102 (5th Cir.1978). See also, Hagan v. EZ Manufacturing Co., 674 F.2d 1047 (5th Cir.1982); Sowles v. Urschel Laboratories, Inc., 595 F.2d 1361 (8th Cir.1979); 63 Am.Jur.2d Products Liability § 545 (1984). Since plaintiff was aware of the explosive nature of multi-piece rims, the failure of G.M. to warn of their explosive propensity was not the proximate cause of plaintiff’s injuries.

Plaintiff contends that, while he was aware that multi-piece rim assemblies could explode in an inflation cage during inflation, he was not aware that wheel assemblies could explode once the tire was inflated. Plaintiffs deposition, however, clearly indicates otherwise. Plaintiff knew that a multi-piece rim could separate at some time other than in the inflation process (Plaintiff’s deposition at 31). Prior to the accident, plaintiff had seen a television documentary explaining that the rims could separate. Plaintiff stated, “Oh, I’ve seen it before I, you know, this here happened. I thought about it a lot of times when I changed tires, you know, but its one of them things where, you know, it ain’t going to happen to me. That's what I figured.” (Plaintiff’s deposition at 103). Since plaintiff was aware of the danger, the defendant’s failure to warn could not be the proximate cause of plaintiff’s accident. Shanklin v. Allis-Chalmers Manufacturing Co., 383 F.2d 819 (4th Cir.1967).

Although products liability actions are ordinarily not susceptible of summary adjudication, this court may properly grant summary judgment where the material facts are not in dispute and a party is entitled to judgment as a matter of law. Because plaintiff cannot show that the defendant exercised dominion over the allegedly defective rim, defendant may not be held liable under any tort theory. If the defect is not present at the time a product leaves the control of the manufacturer, but is later introduced into the product by another, the manufacturer may not be held liable under the theory of strict products liability. Grover Hill Grain Co. v. Baughman-Oster, Inc., 728 F.2d 784 (6th Cir.1984); Keet v. Service Machine Co., 472 F.2d 138 (6th Cir.1972); Kellar v. Inductotherm Corp., 498 F.Supp. 172 (E.D.Tenn.1978).

While [strict liability in tort] is meant to require manufacturers and sellers to bear much of the responsibility and cost of injuries to consumers resulting from their defective products, it is not meant to impose upon each manufacturer and seller an absolute liability as insurer for all injuries to consumers, regardless of the relation of plaintiff’s injuries to the particular defendant’s product.

Southwire Co. v. Beloit Eastern Corp., 370 F.Supp. 842, 848 (E.D.Pa.1974). Since plaintiff cannot show that G.M. placed any product into the stream of commerce which caused him injury, he cannot recover in strict tort. Furthermore, it is well established in South Carolina that the failure to make out a prima facie case in strict tort liability likewise constitutes a failure to make out a case under the same facts arising in negligence or warranty. Claytor v. General Motors Corp., 277 S.C. 259, 286 S.E.2d 129 (1982). For the foregoing reasons and based upon the cited authorities,

IT IS ORDERED that the defendant's motion for summary judgment be, and the same hereby is, granted. Rule 56, Federal Rules of Civil Procedure.

      . The truck in question in this litigation was purchased new by Newton Truck Sales, Inc. Newton Truck Sales, Inc., and plaintiffs employer, Newton Truck Rentals, Inc., are affiliated corporations and the court will refer to both as “Newton" in this order.

      . The rim in question was a multipiece rim. When the court refers to a “wheel assembly," it means the rim base, side ring and tire. When the court refers to a "rim assembly,” it is denoting the rim base and side ring.

      . The Spencer case was not available to the parties at the time this case was argued. Spencer was decided on March 18, 1985, and this court heard arguments on March 5, 1985.