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CONTAINER MFG. v. CIBA-GEIGY CORP.

November 3, 1994

CONTAINER MANUFACTURING INC., and J. THOMAS JENNINGS, Plaintiff,
v.
CIBA-GEIGY CORPORATION, Defendant.



The opinion of the court was delivered by: ALFRED J. LECHNER, JR.

 LECHNER, District Judge

 This action was commenced by plaintiffs, Container Manufacturing, Inc. ("CMI") and J. Thomas Jennings ("J.T. Jennings") (collectively, the "Plaintiffs"), against CIBA-GEIGY Corp. ("CIBA") by the filing of a complaint on 24 March 1994. On 30 March 1994 Plaintiffs filed an Amended Complaint (the "Amended Complaint"). Jurisdiction appears to be appropriate pursuant to 28 U.S.C. § 1332.

 CIBA filed an answer to the Amended Complaint on 17 May 1994. Thereafter, a status conference took place on 21 June 1994 (the "21 June Status Conference"). At the 21 June Status Conference, the parties discussed the filing of dispositive motions. In particular, it was pointed out that before CIBA filed a motion pursuant to Federal Rule of Civil Procedure 12(b)(6), counsel to CIBA should write to counsel to Plaintiffs to put counsel on notice as to the areas of the Amended Complaint contended to be deficient. At that point the Plaintiffs would be given an opportunity to amend the Amended Complaint. Thereafter CIBA would be permitted to continue with a Rule 12(b)(6) motion. See transcript of the 21 June Status Conference, dated 21 June 1994 at 23 (the "21 June Status Conf. Tr.") As well, the possibility of a Rule 56 motion was addressed and, in particular, the concept of a Rule 56(f) affidavit was discussed with regard to opposition to a Rule 56 motion. Id. at 22.

 On 12 August 1994 an order was entered denying without prejudice a Rule 12(b)(6) motion for failure to follow Rule 12N, Appendix N of the Rules Governing the United States District Court for the District of New Jersey (the "Local Rules").

 The motion by CIBA for summary judgment addresses all claims asserted by J.T. Jennings in the Amended Complaint and the negligence claim of the Plaintiffs contained in count one ("Count One") of the Amended Complaint. *fn1" For the reasons set forth below, summary judgment is granted as to all claims asserted by J.T. Jennings and as to Count One of the Amended Complaint.

 Facts2

 A. The Parties

 CMI is a corporation organized under the laws of the state of New Jersey. *fn3" Amended Complaint, P 1. CMI manufactures plastic containers based on various proprietary technologies and patented designs. Id. J.T. Jennings is a New Jersey resident and is the founder, president and fifty percent shareholder of CMI. Id., P 2; Affidavit of J.T. Jennings, attached to Appendix of Plaintiffs as Exhibit A, P 1.

 CIBA is a corporation organized under the laws of the state of New York, with its principal corporate offices located in New York. Id., P 3. CIBA is qualified to do business in New Jersey. Id.

 B. Background

 CMI manufactures plastic containers for various chemical markets. Id., P 5. CMI develops barrier technology and container designs for use primarily in the agricultural, lawn care and pet care industries. Id., P 6. Among the containers manufactured by CMI are those known as Nyalene. Id., P 8. Nyalene is manufactured exclusively by CMI and is also its registered trademark. Id., P 19. In or about November 1987, CMI's Nyalene container met the standards for Underwriter Laboratory, Inc. for storage of flammable and combustible liquids. Id., P 10.

 1. The Study

 In December 1988, the United States Environmental Protection Agency (the "EPA") issued a registration standard for a pesticide called Diazinon which included a special storage stability study pursuant to the Federal Insecticide Fungicide and Rodenticide Act, 7 U.S.C. § 131, et seq., on certain formulations of Diazinon in commercial containers (the "Study"). Amended Complaint, P 15. CIBA conducted the Study and advised the EPA that it would use five commercially available containers identified as glass, tin plate, carbon steel, fluorinated high density polyethylene and Nyalene. Id., P 16.

 By letter, dated 11 February 1993 (the "11 February 1993 Letter"), CIBA reported to the EPA that according to the Study, Nyalene containers "exhibited softening and discoloration," were "tacky to touch," and would not, therefore, recommend Nyalene containers for the storage of Diazinon. Amended Complaint, P 20. CIBA did not use Nyalene containers in the Study, but instead incorrectly attributed to Nyalene the poor performance of another product, which it thought was Nyalene. Id., PP 17-18.

 On or about 2 March 1993 the CIBA Regulatory Affairs Manager ("CIBA's Manager") spoke with Robert Jennings ("R. Jennings"), Vice President of Sales and Marketing of CMI, regarding Nyalene. Id., P 26. During this conversation CIBA's Manager never informed R. Jennings about the Study, the 11 February 1993 Letter, that CIBA had advised the EPA that a product it identified as Nyalene performed poorly in the Study or that CIBA was recommending that Nyalene containers not be used. Id.

 R. Jennings received a telephone call on 2 April 1993, from a CIBA employee who wanted specifications for a Nyalene container that he contended had been shipped to CIBA in 1988. Id., P 27. R. Jennings informed the CIBA employee that CMI had no record of any shipment of Nyalene containers to CIBA in 1988. Id. Additionally, R. Jennings explained that it would be impossible to provide specifications due to the large number of potential formulations of different Nyalene containers. Id. Three days later, the same CIBA employee telephoned R. Jennings and the two had the same conversation as they had during the previous call. Id., P 27.

 Aware that Nyalene was a registered trademark of CMI, that it was exclusively manufactured by CMI and that the containers used in the Study had not been purchased or received from CMI, CIBA did not inform the EPA of its error until November 1993. Id., P 31.

 2. The Prohibition Notice

 On or about 22 August 1993, the EPA issued a "Prohibition on Packaging Diazinon Emulsifiable Concentrate (EC) in Nyalene Containers" to "All Registrants with Pesticide Products ["Registrants"] Containing Diazinon" (the "Prohibition Notice") Id., P 33. The Prohibition Notice prohibited storage of certain Diazinon products in Nyalene containers and also required Registrants to include on their product labels a warning not to package certain formulations of Diazinon in Nyalene containers. Id. The EPA reissued the Prohibition Notice on or about 16 October 1993. Id., P 37. In total, approximately 130 companies, engaged in manufacturing of Diazinon and other chemicals in the agricultural, lawn care and pet care industries received the Prohibition Notice. *fn4" Id.

 3. The Rescission Notice

 After a demand by CMI, on or about 10 November 1993, CIBA submitted a letter to the EPA explaining it had not used Nyalene containers in the Study and requesting the EPA rescind the Prohibition Notice. Id., P 44. On or about 18 November 1993, the EPA issued a notice: "Rescission of Prohibition on Packaging Diazinon Emulsifiable Concentrate (EC) Products in Nyalene Containers" (the "Rescission Notice"). Id., P 45. The Rescission Notice advised the 130 companies that had received the Prohibition Notice of CIBA's acknowledged misidentification of the poorly performing plastic containers as ...


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