§ 700.010 Definitions; Word Usage.
§ 700.030 Installation of Toilet Facilities Required.
§ 700.040 Private Sewage Disposal Systems.
§ 700.050 Installation and Connection Requirements.
§ 700.070 Damaging or Tampering With Sewage Works.
§ 700.080 Inspection and Maintenance.
§ 700.090 Enforcement; Violations and Penalties.
§ 700.110 Definitions; Word Usage.
§ 700.120 Use of Funds; Accounts; Balances Carried Over.
§ 700.130 User Charges and Surcharges.
§ 700.140 Billing; Late Payment.
§ 700.150 Review and Revision of Rates; Notification.
Section 700.010 Definitions; Word Usage.
Section 700.030 Installation of Toilet Facilities Required.
Section 700.040 Private Sewage Disposal Systems.
Section 700.050 Installation and Connection Requirements.
Section 700.070 Damaging or Tampering With Sewage Works.
Section 700.080 Inspection and Maintenance.
Section 700.090 Enforcement; Violations and Penalties.
Section 700.110 Definitions; Word Usage.
Section 700.120 Use of Funds; Accounts; Balances Carried Over.
Section 700.130 User Charges and Surcharges.
Section 700.140 Billing; Late Payment.
Section 700.150 Review and Revision of Rates; Notification.
The quantity of oxygen utilized in the biochemical oxidation of organic matter under standard laboratory procedure in five (5) days at twenty degrees Celsius (20° C.), expressed in milligrams per liter.
That part of the lowest horizontal piping of a drainage system which receives the discharge from soil, waste, and other drainage pipes inside the walls of the building and conveys it to the inner face of the building wall.
Solid wastes from the domestic and commercial preparation, cooking and dispensing of food, and from the handling, storage and sale of produce.
The liquid wastes from industrial manufacturing processes, trade, or business as distinct from sanitary sewage.
Any outlet into a watercourse, pond, ditch, lake or other body of surface or groundwater.
Any individual, firm, company, association, society, corporation, or group.
The wastes from the preparation, cooking and dispensing of food that have been shredded to such a degree that all particles will be carried freely under the flow conditions normally prevailing in public sewers, with no particle greater than one-half (1/2) inch (1.27 centimeters) in any dimension.
A sewer in which all owners of abutting properties have equal rights, and is controlled by public authority.
A combination of the water-carried wastes from residences, business buildings, institutions, and industrial establishments, together with such ground, surface, and storm waters as may be present.
All facilities for collection, pumping, treating and disposing of sewage.
Any discharge of water, sewage, or industrial waste which in concentration of any given constituent or in quantity of flow exceeds for any period of duration longer than fifteen (15) minutes more than five (5) times the average twenty-four-hour concentration or flows during normal operation.
A sewer which carries storm and surface waters and drainage, and unpolluted cooling water, but excludes sewage and industrial wastes.
Solids that either float on the surface of, or are in suspension in water, sewage, or other liquids, and which are removable by laboratory filtering.
It shall be unlawful for any person to place, deposit, or permit to be deposited in any unsanitary manner on public or private property within the Village of Indian Point Jakes Creek Trail project, any human or animal excrement, garbage, or other objectionable waste.
It shall be unlawful to discharge to any natural outlet within the Village of Indian Point Jakes Creek Trail project, any sewage or other polluted waters, except where suitable treatment has been provided in accordance with subsequent provisions of this Article.
The owner of all houses, buildings, or properties used for human employment, recreation, or other purposes, situated within the Jakes Creek Trail project and abutting on any street, alley, or right-of-way in which there is now located or may in the future be located a public sanitary or combined sewer of the Village, is hereby required at his expense to install suitable toilet facilities therein, and to connect such facilities directly with the proper public sewer in accordance with the provisions of this Article, within sixty (60) days after date of official notice to do so, provided that said public sewer is within one hundred (100) feet (30.5 meters) of the property line.
Where a public sanitary or combined sewer is not available under the provisions of Section 705.030, the building sewer shall be connected to a private sewage disposal system complying with the provisions of this Article.
Before commencement of construction of a private sewage disposal system, the owner shall first comply with all the relevant provisions of the Rules and Regulations of the Village and obtain a construction permit signed by the Village. The application for such permit shall be made on a form furnished by the Village, which the applicant shall supplement by any plans, specifications, and other information as are required by the Village. A permit and inspection fee shall be paid to the Village as set forth in the Rules and Regulations.
A permit for a private sewage disposal system shall not become effective until the installation is completed to the satisfaction of the Village. The Village shall be allowed to inspect the work at any stage of construction and, in any event, the applicant for the permit shall notify the Village when the work is ready for final inspection, and before any underground portions are covered.
The type, capabilities, location, and layout of a private sewage disposal system shall comply with all recommendations of the Department of Public Health of the State of Missouri and the Rules and Regulations of the Village. No permit shall be issued for any private sewage disposal system employing subsurface soil absorption facilities where the area of the lot is less than forty thousand (40,000) square feet. No septic tank or cesspool shall be permitted to discharge to any natural outlet.
At such time as a public sewer becomes available to a property served by a private sewage disposal system, as provided in Section 705.030, a direct connection shall be made to the public sewer in compliance with this Article, unless said property is exempted from connecting pursuant to the Rules and Regulations of the Village, and any septic tanks, cesspools, and similar private sewage disposal facilities shall be abandoned and filled with suitable material.
The owner shall operate and maintain the private sewage disposal facilities in a sanitary manner at all times and shall comply with all relevant provisions of the Rules and Regulations of the Village at no expense to the Village.
This Article shall only apply in the event that a person whose property is not included in the first phase of the Jakes Creek Trail project desires to connect his property to the Jakes Creek Trail wastewater system.
No unauthorized person shall uncover, make any connections with or opening into, use, alter, or disturb any public sewer or appurtenance thereof without first obtaining a written permit from the Village.
There shall be two (2) classes of connection permits: (a) for residential and commercial service; and (b) for service to establishments producing industrial wastes. In either case, the owner or his agent shall make application on a special form furnished by the Village. The permit application shall be supplemented by any plans, specifications, or other information considered pertinent in the judgment of the Village. A permit and inspection fee of one hundred twenty-five dollars ($125.00) for a residential or commercial building sewer permit and one hundred twenty-five dollars ($125.00) for an industrial building sewer permit shall be paid to the Village at the time the application is filed.
All costs and expenses incident to the installation and connection of the collection system shall be borne by the owner. The owner shall indemnify the Village from any loss or damage that may directly or indirectly be occasioned by the installation of the collection system.
A separate and independent collection system shall be provided for every building; except where one building stands at the rear of another on an interior lot and no private sewer is available or can be constructed to the rear building through an adjoining alley, courtyard, or driveway, the collection system from the front building may be extended to the rear building and the whole considered as one collection system.
Old collection systems or parts of collection systems, such as septic tanks, may be used in connection with new buildings only when they are found, on examination and test by the Village, to meet all requirements of this Article and the Rules and Regulations.
The size, slope, alignment, materials of construction of a collection system, and the methods to be used in excavating, placing of the pipe, jointing, testing and backfilling the trench, shall all conform to the requirements of the building and plumbing code or other applicable rules and regulations of the Village. In the absence of code provisions in amplification thereof, the materials and procedures set forth in appropriate specifications of the Jakes Creek Trail engineering plans and specifications shall apply.
The applicant for the connection permit shall notify the Village when the collection system is ready for inspection and connection to the public sewer. The connection shall be made under the supervision of the Village or its representative.
All excavations for collection system installation shall be adequately guarded with barricades and lights so as to protect the public from hazard. Streets, sidewalks, parkways, and other public property disturbed in the course of the work shall be restored in a manner satisfactory to the Village.
No person shall discharge any storm water, surface water, groundwater, roof runoff, subsurface drainage, including interior and exterior foundation drains, other sources of surface runoff or groundwater, uncontaminated cooling water, or unpolluted industrial process waters to any sanitary sewer.
Stormwater and all other unpolluted drainage shall be discharged to such sewers as are specifically designated as combined sewers or storm sewers, or to a natural outlet approved by the Village. Industrial cooling water or unpolluted process waters may be discharged on approval of the Village, to a storm sewer, combined sewer, or natural outlet.
Any waters or wastes containing toxic or poisonous solids, liquids, or gases in sufficient quantity, either singly or by interaction with other wastes, to injure or interfere with any sewage treatment process, constitute a hazard in the receiving waters of the sewage treatment plant, including but not limited to cyanides in excess of two (2) mg/l as CN in the wastes as discharged to the public sewer.
Any waters or wastes having a pH lower than five and five tenths (5.5), or having any other corrosive property capable of causing damage or hazard to structures, equipment, and personnel of the sewage works.
Solid or viscous substances in quantities or of such size capable of causing obstruction to the flow in sewers, or other interference with the proper operation of the sewage works such as, but not limited to, ashes, cinders, sand, mud, straw, shavings, metal, glass, rags, feathers, tar, plastics, wood, unground garbage, whole blood, paunch manure, hair and fleshing, entrails and paper dishes, cups, mild containers, etc., either whole or ground by garbage grinders.
Any liquid or vapor having a temperature higher than one-hundred-fifty degrees Fahrenheit (150° F.) and sixty-five degree Celsius (65° C.).
Any water or wastes containing fats, wax, grease or oils, whether emulsified or not, in excess of one hundred (100) mg/l or containing substances which may solidify or become viscous at temperatures between thirty-two degrees (32° F.) and one-hundred-fifty degrees Fahrenheit (150° F.) and zero degree and sixty-five degrees Celsius (0° and 65° C.).
Any garbage that has not been properly shredded. The installation and operation of any garbage grinder equipped with a motor of three-quarter (3/4) horsepower (0.76 hp metric) or greater shall be subject to the review and approval of the Village.
Any waters or wastes containing strong acid, iron, pickling wastes or concentrated plating solutions, whether neutralized or not.
Any waters or wastes containing iron, chromium, copper, zinc, and similar objectionable or toxic substances; or wastes exerting an excessive chlorine requirement, to such degree that any such material received in the composite sewage at the sewage treatment works exceeds the limits established by the Village for such materials.
Any waters or wastes containing phenols or other taste- or odor-producing substances, in such concentrations exceeding limits which may be established by the Village as necessary, after treatment of the composite sewage, to meet the requirements of State, Federal or other public agencies of jurisdiction for such discharge to the receiving waters.
Any radioactive wastes or isotopes of such half-life or concentration as may exceed limits established by the Village in compliance with applicable State or Federal regulations.
Unusual concentrations of inert suspended solids (such as, but not limited to, Fullers earth, lime slurries, and lime residues) or of dissolved solids (such as, but not limited to, sodium chloride or sodium sulfate).
Unusual BOD, chemical oxygen demand, or chlorine requirements in such quantities as to constitute a significant load on the sewage treatment works.
Unusual volumes of flow or concentration of wastes constituting "slugs" as defined herein.
Waters or wastes containing substances which are not amenable to treatment or reduction by the sewage treatment processes employed, or are amenable to treatment only to such degree that the sewage treatment plant effluent cannot meet the requirements of the other agencies having jurisdiction over discharge to the receiving waters.
Any waters or wastes having: (a) a five-day BOD greater than three hundred (300) parts per million by weight; (b) containing more than three hundred fifty (350) parts per million by weight of suspended solids; or (c) having an average daily flow greater than two percent (2%) of the average sewage flow of the Jakes Creek Trail wastewater treatment system, shall be subject to the review of the Village. Where necessary, in the opinion of the Village, the owner shall provide, at his expense, such preliminary treatment as may be necessary to: (a) reduce the biochemical oxygen demand to three hundred (300) parts per million by weight; (2) reduce the suspended solids to three hundred fifty (350) parts per million by weight; or (3) control the quantities and rates of discharge of such waters or wastes. Plans, specifications, and any other pertinent information relating to proposed preliminary treatment facilities shall be submitted for the approval of the Village and no construction of such facilities shall be commenced until said approvals are obtained in writing.
Rejection, Control Or Pretreatment Of Certain Waters Or Wastes.
Require payment to cover the added cost of handling and treating the wastes not covered by existing taxes or sewer charges under the provisions of Subsection (J).
If the Village permits the pretreatment or equalization of waste flows, the design and installation of the plants and equipment shall be subject to the review and approval of the Village, and subject to the requirements of all applicable codes, ordinances and laws.
Grease, oil, and sand interceptors shall be provided when, in the opinion of the Village, they are necessary for the proper handling of liquid wastes, sand, or other harmful ingredients, except that such interceptors shall not be required for private living quarters or dwelling units. All interceptors shall be of a type and capacity approved by the Village, and shall be located as to be readily and easily accessible for cleaning and inspection.
When required by the Village, the owner of any property serviced by a building sewer carrying industrial wastes shall install such necessary meters and other appurtenances in the collection system to facilitate observation, sampling, and measurement of the wastes.
No statement contained in this Article shall be construed as preventing any special agreement or arrangement between the Village and any industrial concern whereby an industrial waste of unusual strength or character may be accepted by the Village for treatment, subject to payment therefor, by the industrial concern.
No unauthorized person shall maliciously, willfully, or negligently break, damage, destroy, uncover, deface, or tamper with any structure, appurtenance, or equipment which is part of the sewage works. Any person violating this provision shall be subject to immediate arrest under charge of disorderly conduct.
The Village and its duly authorized employees, bearing proper credentials and identification, shall be permitted to enter all properties for the purposes of inspection, observation, measurement, sampling, and testing in accordance with the provisions of this Article. The Village or its representatives shall have no authority to inquire into any processes including metallurgical, chemical, oil, refining, ceramic, paper, or other industries beyond that point having a direct bearing on the kind and source of discharge to the sewers or waterways or facilities for waste treatment.
While performing the necessary work on private properties referred to in Subsection (A) above, the Village or its duly authorized employees shall observe all safety rules applicable to the premises established by the company, and the company shall be held harmless for injury or death to the Village employees, and the Village shall indemnify the company against loss or damage to its property by Village employees and against liability claims and demands for personal injury or property damage asserted against the company and growing out of the gauging and sampling operation, except as such may be caused by negligence or failure of the company to maintain safe conditions as required in Section 705.060(H).
The Village and its duly authorized employees, bearing proper credentials and identification, shall be permitted to enter all private properties through which the Village holds a duly negotiated easement for the purposes of, but not limited to, inspection, observation, measurement, sampling, repair, and maintenance of any portion of the sewage works lying within said easement. All entry and subsequent work, if any, on said easement, shall be done in full accordance with the terms of the duly negotiated easement pertaining to the private property involved.
Any person found to be violating any provision of this Article except Section 705.070 shall be served by the Village with written notice stating the nature of the violation and providing a reasonable time limit for the satisfactory correction thereof. The offender shall, within the period of time stated in such notice, permanently cease all violations.
Any person who shall continue any violation beyond the time limit provided for in Section 700.090(A), shall be guilty of an ordinance violation, and on conviction thereof shall be fined in the amount not exceeding five hundred dollars ($500.00) for each violation. Each twenty-four-hour period in which any such violation shall continue shall be deemed a separate offense.
Any person violating any of the provisions of this Article shall become liable to the Village for any expense, loss, or damage occasioned the Village by reason of such violation.
It is determined and declared to be necessary and conducive to the protection of the public health, safety, welfare, and convenience of the Village of Indian Point to have the Board of Trustees collect charges from all users who contribute wastewater to the Village of Indian Point's Jake Creek Trail treatment works. The proceeds of such charges so derived will be used for the purpose of operating, maintaining, and retiring the debt for said public wastewater treatment works.
The quantity of oxygen utilized in the biochemical oxidation of organic matter under standard laboratory procedure in five (5) days at twenty degrees Celsius (20° C.), expressed in milligrams per liter (mg/l).
Wastewater that has a BOD concentration of not more than 287 mg/l and a suspended solids concentration of not more than 185 mg/l.
All expenditures during the useful life of the treatment works for materials, labor, utilities, and other items which are necessary for managing and maintaining the treatment works to achieve the capacity and performance for which such works were designed and constructed.
Expenditures for obtaining and installing equipment, accessories, or appurtenances which are necessary during the useful life of the treatment works to maintain the capacity and performance for which such works were designed and constructed. The term "operation and maintenance" includes replacement.
Any contributor to the Village of Indian Point treatment works whose lot, parcel of real estate, or building is used for domestic dwelling purposes only.
The solids that either float on the surface of or are in suspension in water, sewage, or other liquids and which are removable by laboratory filtering.
Any devices and systems for the storage, treatment, recycling, and reclamation of municipal wastewater, domestic wastewater, or liquid industrial wastes. These include interceptor sewers, outfall sewers, sewage collection systems, individual systems, pumping, power, and other equipment and their appurtenances; extensions, improvements, remodeling, additions, and alterations thereof; elements essential to provide a reliable recycled supply, such as standby treatment units and clear well facilities; and any works, including site acquisition of land that will be an integral part of the treatment process or is used for ultimate disposal of residues resulting from such treatment, including land for composting sludge, temporary storage of such compost, and land used for storage of treated wastewater in land treatment systems before land application; or any other method or system for preventing, abating, reducing, storing, treating, separating, or disposing of municipal waste or industrial waste, including waste in combined stormwater and sanitary sewer systems.
The estimated period during which the treatment works will be operated.
That portion of the total wastewater service charge which is levied in a proportional and adequate manner for the cost of operation, maintenance, and replacement of the wastewater treatment works.
A water volume measuring and recording device, furnished and/or installed by the Village or furnished and/or installed by a user and approved by the Village.
The goal of the user charge system shall generate adequate annual revenues to pay the costs of annual operation and maintenance, including replacement, and costs associated with debt retirement of capital associated with financing the collection tanks, lines, and pumps and treatment works which is determined by the Village's Board of Trustees. That portion of the user charge which is designated for operation and maintenance including replacement of the treatment works shall be established by this Article.
The Operation and Maintenance Account shall be an account designated for the specific purpose of defraying operation and maintenance costs excluding replacement of the treatment works. Deposits in the Operation and Maintenance Account shall be made monthly from the operation and maintenance revenue to total an annual amount of fifty-three thousand eight hundred forty-four dollars and thirty-two cents ($53,844.32). The Board of Trustees may, to the extent available, use unrestricted revenues of the Village to subsidize the user charge to fund this annual amount.
The Replacement Account shall be an account designed for the purpose of ensuring replacement needs over the useful life of the treatment works. Deposits in the Replacement Account shall be made monthly from the replacement revenue to total an annual amount of three thousand two hundred fifty-four dollars and ninety cents ($3,254.90). (See Appendix B for calculation.) The Board of Trustees may, to the extent available, use unrestricted revenues of the Village to subsidize the user charge to fund this annual amount.
Fiscal year-end balances in the Operation and Maintenance Account and the Replacement Account shall be carried over to the same accounts in each subsequent fiscal year, and shall be used for no other purposes than those designated for these accounts. Monies which have been transferred from other sources to meet temporary shortages in the Operation, Maintenance, and Replacement Fund shall be returned to their respective accounts upon appropriate adjustment of the user charge rates for operation, maintenance, and replacement. The user charge rate(s) shall be adjusted such that the transferred monies will be returned to their respective accounts within the fiscal year following the fiscal year in which the monies were borrowed.
The Village shall charge and collect the User Charge for the use of the services rendered by the Jake's Creek Trail sanitary sewer system from the owners or occupants of each residence, building or structure which is connected with the sanitary sewer systems of the Village or which discharges sanitary sewage, industrial wastes, water or other liquids, either directly or indirectly, into the sanitary sewer system of the Village. In addition, each user shall pay White River Electric Cooperative directly for all electricity required to operate any component of the collection system on their property.
Residential users shall be charged and shall pay forty-two dollars ($42.00) per connection per month.
For months October through December, fifty percent (50%) of the base rate per month.
The base rate for the Altenhoff Restaurant shall be sixty dollars and thirty-four cents ($60.34) per month.
Commercial users with water meters shall be charged twenty-four dollars and ten cents ($24.10) per one thousand (1,000) gallons of water usage per month. If any commercial user with water meters also meters its water use for irrigation, swimming pools, and outdoor hydrants, the metered water for these uses that do not result in water entering the Village's wastewater collection and treatment system shall not be included in the user charge.
(Reference is made to Appendix A to this ordinance, which is on file in the Village offices.) The minimum charge per month shall be eighteen dollars and forty cents ($18.40) for residential contributors. For light commercial / resort contributor units, the minimum charge per month shall be based on the person capacity of each resort unit as outlined in Appendix D. In addition, each contributor (residential or light commercial / resort) shall pay a user charge for operation and maintenance, including replacement, of three dollars and twenty-four cents ($3.24) per one thousand (1,000) gallons of wastewater, as determined in the preceding Section.
Any user which discharges any toxic pollutants which cause an increase in the cost of managing the effluent or the sludge from the Jakes Creek Trail treatment works, or any user which discharges any substance which singly or by interaction with other substances causes identifiable increases in the cost of operation, maintenance, or replacement of the treatment works, shall pay for such increased costs. The charge to each user shall be as determined by the responsible plant operating personnel and approved by the Village.
The user charge rates established in this Article apply to all users of the Village of Indian Point's Jakes Creek Trail treatment works, regardless of the user's location.
All users shall be billed monthly. Billings for each month shall be made within thirty (30) days after the end of that month. Payments are due within fifteen (15) days of when billings are made. Any payment not received within thirty (30) days after the billing is made shall be delinquent.
A late payment penalty of ten percent (10%) of the user charge bill will be added to each delinquent bill for each thirty (30) days of delinquency. When any bill is thirty (30) days in default, rendition of water and/or sewer service to such premises shall be discontinued until such bill is paid, following due notice and due process.
The Board of Trustees of the Village of Indian Point shall review the user charge system at least annually and revise user charge rates as necessary to ensure that the system generates adequate revenues to pay the costs of operation and maintenance including replacement and that the system continues to provide for the proportional distribution of operation and maintenance including replacement costs among users and user classes.
The Board of Trustees will notify each user at least annually, in conjunction with a regular bill, of the rate being charged for operation and maintenance including replacement of the treatment works.
The owner of record agrees to transfer ownership of said tank to the Village of Indian Point and fully executes an easement in a form to be established by the Village, said easement which allows permanent access to the components of the collection system located on the real property in question.
Payments To The Village For Tanks. For those users which have not paid the Village for the tanks for collecting solids from their wastewater, each user is responsible for paying the remaining balance of the one thousand six hundred dollars ($1,600.00) purchase price at the rate of forty-four dollars and forty-four cents ($44.44) per month until the remaining balance has been paid, with the first payment due on April 1, 2012. If any user becomes sixty (60) days delinquent, the entire unpaid balance will accelerate and the Village may use any lawful means to collect the amounts due, with costs and attorney fees.
For all residential and commercial structures which are structurally complete and inhabited by March 15, 2005, and which are otherwise required to connect to the project wastewater treatment system, the Village will pay for the additional costs necessary to connect the structure to the wastewater collection system, except the installation of the septic tank pursuant to Subsection (B) above. Said additional costs include but are not limited to the effluent pump and its installation and the installation of the service line from the septic tank to the main collection line. The user will be required to pay for the electricity needed to operate the effluent pump, and the Village install a separate electric meter at its own cost and said monthly bill for electricity will be added to the monthly user charge.
The owner of record agrees to transfer ownership of said effluent tank to the Village of Indian Point and fully executes an easement in a form to be established by the Village, said easement which allows permanent access to the components of the collection system located on the real property in question.


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BOARD OF PUBLIC UTILITY COM'RS v. NEW YORK TELEPHONE CO.
A public utility company, which by excessive depreciation charges in the past has created a reserve depreciation account greater than required to adequately maintain its property, cannot be compelled to apply a part of the property or money represented by such reserve to overcome deficits in present or future earnings, and to sustain rates which otherwise could nt be sustained.
The just compensation, safeguarded to a utility by Const. U. S. Amend. 14, is a reasonable return on the value of the property used at the time it is used for public service.
Constitutional protection against confiscation does not depend on source of money used to purchase property, it being enough that it is used to render service.
The is an appeal from a decree of the District Court-three judges sitting; section 266, Judicial Code (Comp. St. 1243)-which granted a temporary injunction restraining the enforcement of certain telephone rates.
The effect of the order is to require that, if total operating expenses deducted from revenues leaves less than a reasonable return in 1925 or a subsequent year, there shall be deducted from the expense of depreciation in that year, and added to the net earnings, a sum sufficient to make up the deficiency; then, by appropriate book entries, the resulting shortage in depreciation expense is to be made good out of the balance in the reserve account built up in prior years.
On the application for a temporary injunction, the company attacked the findings of the board as to rate [271 U.S. 23, 28] of return, property value, and expense of depreciation, and it contended that the charges on account of depreciation in earlier years were not excessive, and that in any event the company could not be compelled to make up deficits in future net earnings out of the depreciation reserves accumulated in the past.
The record shows that the rates in effect prior to the temporary injunction were not sufficient to produce revenue enough to pay necessary operating expenses and a just rate of return on the value of the property. There is printed in the margin1 a statement made by the board and included in its decision, giving a comparison of re- [271 U.S. 23, 29] sults of operation in 1924 under these rates as found by the board and as estimated by the company. And, in opposition to the motion for the temporary injunction, the board submitted an affidavit containing a statement2 [271 U.S. 23, 30] which set forth in detail the estimated results for 1925 based on the same rates. The affidavit shows net additions to the company's property in New Jersey in 1924, amounting to more than $13,000,000, and the board calculates the return on $88,417,448 as the reasonable value of the property. The calculation is made on three bases: (1) Depreciation taken at the company's figure, $4,128,000; (2) depreciation as found by the board, $3,314,716; and (3) depreciation allowed by the board's order, $683, 430. The effect of the order is to deduct $2,631,286 from operating expenses found by the board properly chargeable for depreciation in 1925. This deduction is made at the expense of the property of the company paid for out of depreciation reserves built up in prior years, and it has the same effect on net earnings as would the addition of the same amount of revenue received for service. On the basis of the company's estimate of depreciation expense, the return is 4.12 per cent.; on the board's estimate it is 4.93 per cent.; and by increasing net earnings $2,631,286, as directed by the order, it is made 7.53 per cent. It is conceded that, unless, as directed by the board, depreciation expense is reduced below what the board itsel found necessary and net earnings are correspondingly increased, the rates cannot be sustained against attack on the ground that they are unreasonably low and confiscatory. Appellants do not contend that the rate of return from the intrastate business is or will be higher than that resulting from the company's business as a whole in New Jersey; and the record supports the claim of the company that the intrastate business or that covered by the exchange rates complained of is not relatively more profitable than the other business of the company.
It may be assumed, as found by the board, that in prior years the company charged excessive amounts to depreciation expense and so created in the reserve account [271 U.S. 23, 31] balances greater than required adequately to maintain the property. It remains to be considered whether the company may be compelled to apply any part of the property or money represented by such balances to overcome deficits in present or future earnings and to sustain rates which otherwise could not be sustained.
The just compensation safeguarded to the utility by the Fourteenth Amendment is a reasonable return on the value of the property used at the time that it is being used for the public service, and rates not sufficient to yield that return are confiscatory. Willcox v. Consolidated Gas Co., 29 S. Ct. 192, 212 U.S. 19, 41 , 48 S. L. R. A. (N. S .) 1134, 15 Ann. Cas. 1034; Bluefield Co. v. Public Service Commission, 43 S. Ct. 675, 262 U.S. 679 , 692. Constitutional protection against confiscation does not depend on the source of the money used to purchase the property. It is enough that it is used to render the service. San Joaquin Co. v. Stanislaus County, 34 S. Ct. 652, 233 U.S. 454 , 459; Gaslight Co. v. Cedar Rapids, 120 N. W. 966, 144 Iowa, 426, 434, 48 L. R. A. (N. S.) 1025, 138 Am. St. Rep. 299, affirmed 32 S. Ct. 389, 223 U.S. 655 ; Consolidated Gas Co. v. New York (C. C.) 157 F. 849, 858, affirmed 29 S. Ct. 192, 212 U.S. 19 , 48 L. R. A. (N. S.) 1134, 15 Ann.Cas. 1034; Ames v. Union Pacific Railway Co. (C. C.) 64 F. 165, 176. The customers are entitled to demand service and the company must comply. The company is entitled to just compensation and, to have the service, the customers must pay for it. The relation between the company and its customers is not that of partners, agent and principal, or trustee and beneficiary. Cf. Fall River Gas Works v. Gas & Electric Light Com'rs, 102 N. E. 475, 214 Mass. 529, 538. The revenue paid by the customers for service belongs to the company. The amount, if any, remaining after paying taxes and operating expenses including the expense of depreciation is the company's compensation for the use of its property. If there is no return, or if the amount is less than a reasonable return, the company must bear the loss. Past losses cannot be used to enhance the value of the property or to support a claim that rates for the future are confiscatory. Galveston Electric Co. v. Galveston, 42 S. Ct. 351, [271 U.S. 23, 32] 258 U.S. 388 , 395; Georgia Ry. v. R. R. Comm., 43 S. Ct. 680, 262 U.S. 625 , 632. And the law does not require the company to give up for the benefit of future subscribers any part of its accumulations from past operations. Profits of the past cannot be used to sustain confiscatory rates for the future. Newton v. Consolidated Gas Co., 42 S. Ct. 264, 258 U.S. 165 , 175; Galveston Electric Co. v. Galveston, supra, 396 (42 S. Ct. 351); Monroe Gaslight & Fuel Co. v. Michigan Public Utilities Commission (D. C.) 292 F. 139, 147; City of Minneapolis v. Rand (C. C. A.) 285 F. 818, 823; Georgia Ry. & Power Co. v. Railroad Commission (D. C.) 278 F. 242, 247, affirmed 43 S. Ct. 680, 262 U.S. 625 ; Chicago Rys. Co. v. Illinois Commerce Commission ( D. C.) 277 F. 970, 980; Garden City v. Telephone Co., 236 F. 693, 696, 150 C. C. A. 25.
Customers pay for service, not for the property used to render it. Their payments are not contributions to depreciation or other operating expenses or to capital of the company. By paying bills for service they do not acquire any interest, legal or equitable, in the property used for their convenience or in the funds of the company. Property paid for out of moneys received for service belongs to the company just as does that purchased out of proceeds of its bonds and stock. It is conceded that the exchange rates complained of are not sufficient to yield a just return after paying taxes and operating expenses, including a proper allowance for current depreciation. The property or money of the company represented by the credit balance in the reserve for depreciation cannot be used to make up the deficiency.
Mr. Justice STONE took no part in the consideration of this case.
[ Footnote 1 ] Results under Present Rates-Estimated for the Year 1924.
[ Footnote * ] Include a certain portion of depreciation for right of way from clearing accounts.
Omits concessions ($102,000) and interest during construction ($160, 727) aggregating $262,727 in Exhibit C-34.
[ Footnote 2 ] Estimated Rate of Return During Year 1925 under Present Rate Schedule.
[ Footnote * ] Allowing a return of 6 per cent. on value of property depreciation and amortization expense will be $2,163,471.

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The recent case of Amalgamated Bank v. Yahoo!, Inc., C.A. No. 10774-VCL (Del. Ch. Feb. 2, 2016) offers useful guidance to those interested in the ever evolving law governing Section 220 books and record requests in Delaware.
In brief, the case involves a Section 220 request made by Yahoo investors seeking information about the hiring and firing of its z9now ex) Chief Operating Officer Henrique de Castro. Soon after taking over as CEO, Marissa Mayer received an email from Mr. de Castro who was then at Google as President of Media, Mobile, and Platforms. de Castro invited Mayer to dinner. During dinner, de Castro expressed interest in serving as Mayer‘s number two executive at Yahoo. Mayer liked the idea, and she and de Castro began discussing his compensation package.
The process by which the eventual hiring and firing of Mr. de Castro moved from that initial meeting to its ultimate conclusion of termination of de Castro’s employment and payment of a nearly $60 million severance package was the subject of the Section 220 request. Amalgamated contended that it had a legally recognized purpose for exploring these matters, namely the ―investigation of potential mismanagement, including mismanagement in connection with the payment of compensation to a corporation‘s officers and directors.
Amalgamated Bank makes it clear that if plaintiffs can point to other uses of the information requested Abbvie will not preclude their request. As long as plaintiffs do not limit “the potential uses of the fruits of its investigation” the request may still be proper. “The Delaware Supreme Court has stated that [s]tockholders may use information about corporate mismanagement, waste or wrongdoing in several ways. For example, they may institute derivative litigation; seek an audience with the board of directors to discuss proposed reform or, failing in that, they may prepare a stockholder resolution for the next annual meeting, or mount a proxy fight to elect directors. Seinfeld, 909 A.2d at 119-20 (quotation marks and alterations omitted); accord Saito v. McKesson HBOC, Inc., 806 A.2d 113, 117 (Del. 2002). Exculpation is not an impediment to the potential use of information obtained pursuant to Section 220 for taking action other than filing a lawsuit.
2. Inspection Rights are not limited to paper records but include electronically stored records.
Yahoo argued that electronic documents are beyond the scope of Section 220, because the statute does not mention ―electronically stored information. The Court disagreed, noting that “[s]tockholder inspection rights in Delaware date from the turn of the twentieth century, when the courts recognized them under the common law. See, e.g., State ex rel. De Julvecourt v. Pan-Am. Co., 61 A. 398 (Del. Super. 1904), aff’d, 63 A. 1118 (Del. 1904). In that era and for a long time afterwards, courts logically focused on paper documents, but times have changed” and citing numerous cases where electronic records have been required to be produced in response to a Section 220 request.
Section 220(c) of the DGCL gives broad discretion to the Court of Chancery to condition a books and records inspection . . . .United Techs. Corp. v. Treppel, 109 A.3d 553, 557-58 (Del. 2014). By statute, the Court of Chancery ―may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other or further relief as the Court may deem just and proper.‖ 8 Del. C. § 220(c). ―The ability to limit the use of information gathered from an inspection . . . has long been recognized as within the Court of Chancery‘s discretion. United Techs., 109 A.3d at 558. This court has used conditions as part of its effort to ―maintain a proper balance between the rights of shareholders to obtain information based upon credible allegations of corporation mismanagement and the rights of directors to manage the business of the corporation without undue interference from stockholders. Seinfeld v. Verizon Commc’ns, Inc., 909 A.2d 117, 122 (Del. 2006).
Here, incorporation by reference would prevent cherry picking by Amalgamated and thereby protect Yahoo’s legitimate interest in the fairness of use of the produced books and records.


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High-performance electric machines, such as motors in electric vehicles or generators in wind turbines, require rare earth elements, particularly Neodymium (Nd) and Dysprosium (Dy) for the electric machines’ magnetic components. In wind generators, the need for rare earths is quite large (a generator in a wind turbine contains approximately 100 kg of rare earth materials for every MW of rated power) and is still growing, as both the total amount of installed wind capacity and the average size of each individual wind turbine continue to increase. Price fluctuations over the past decade have shown that rare earth materials are sensitive to supply disruptions, and alternative technologies to mitigate or eliminate the dependence of this energy technology on critical rare earth materials would offer risk mitigation for the continued growth of wind power against potential market risks in the future.
Using high-temperature superconductor (HTS) magnets in wind turbines could dramatically reduce the rare earth requirement compared with traditional permanent magnet (PM) generators (from ~100 kg of Nd and Dy MW in a PM generator to ~100 grams of rare earths per MW in an HTS generator). In addition, HTS generators offer better performance and lower weight for large turbines (see Fig. 1) with corresponding lower operational and capital costs. However, historically the highest performance commercially available HTS wire (Rare earth Element Barium Copper Oxide – (RE)BCO) ranged in cost from $200/kA-m upwards. To be competitive with PM generators, the cost of the HTS conductor must be reduced ~4x, which in turn requires a dramatic increase in the critical current (Ic, the maximum current that a superconductor can sustain). Advances in materials design and fabrication techniques make it possible to address this challenge by engineering specific defects, known as flux pinning centers, into HTS wires.
Figure 1. Comparison of overall drivetrain mass for permanent magnet (PM) geared, PM direct drive, and HTS (designed by AMSC) turbines.
ARPA-E funded two teams in the Rare Earth Alternatives in Critical Technologies (REACT) program to develop advanced HTS magnet wire with high critical current: Brookhaven National Lab (teamed with AMSC) and University of Houston (teamed with SuperPower). The teams took different technical approaches to modifying HTS wire composition and structure to address this challenge.
Both teams worked with (RE)BCO wire, which is manufactured commercially by epitaxial deposition of thin films (typically ~1 mm thick) onto buffered substrates on nickel alloy, or steel tape (see Fig. 2 for illustration). In magnet applications, the critical current in (RE)BCO films can be improved by introducing defects into the thin film, creating flux pinning centers that align and pin magnetic field lines (see Fig. 2 for illustration). The fundamental challenge in improving Ic in (RE)BCO for magnet applications is engineering these flux pinning centers to provide the optimal size, concentration, and distribution for the wire in operating conditions, which for HTS generators range from 1-3 T magnetic fields and 30-50 K temperatures.
The BNL/AMSC team combined two approaches to engineeing flux pinning centers for AMSC’s (RE)BCO wire. The first approach leveraged nanoscale derivative phases and defects formed during the growth of AMSC’s metal organic deposited (MOD) (RE)BCO film. The team identified the optimal concentration of these defects for flux pinning at targeted operating conditions, and altered the design of the growth conditions to consistently produce this microstructure. The new process doubled the critical current. The second approach introduced additional defects through bombardment with high-energy ions. The team optimized the ion bombardment conditions and once again doubled the critical current. The ion beam treatment was performed at ion fluxes that are compatible with manufacturing rates on a moving tape. By the completion of the program, the team had demonstrated critical current of >1600 A at 10mm of wire width, for the operating conditions of AMSC’s HTS machine design. This represents a >4x improvement over the 400 A/cm width at program start.
The UH/SuperPower team built upon SuperPower’s chemical vapor deposition (CVD) approach to epitaxial growth of (RE)BCO to introduce flux pinning centers in the form of BaZrO3 nanocolumns. The team tuned the CVD process to produce Zr-doped (RE)BCO films for maximum Ic at the operating conditions of the team’s HTS generator design. YBCO doped with 25% BaZrO3 produced the best performance, with BaZrO3 nanocolumns of 5 nm with an average spacing of 15-20 nm, yielding Ic levels greater than 3x over baseline performance prior to the project. The team also developed process improvements to enable the deposition of thicker films without degradation of crystal quality or discontinuities in the BaZrO3 nanocolumns. With the combination of increased flux pinning centers in BaZrO3 nanocolumns and high-quality films through the improved process conditions, the team achieved >4x improvement in Ic at production thickness, resulting in a record critical current density for flux-pinning HTS material. The UH team further demonstrated a critical current of 3900 A with greater thickness through enhanced deposition control. This is a >6x improvement over their 600 A rating at program start for their standard 12 mm width wire.
Figure 2. Configuration of (RE)BCO HTS wire (courtesy SuperPower Inc.), (inset: Illustration of flux pinning centers in form of nanocolumns in (RE)BCO film).
AMSC has successfully implemented many of the innovations developed in the ARPA-E REACT program into their mainline commercial production, with AMSC completing the upgrades to production line equipment to allow the routine formation of the optimized flux pinning microstructure. The upgrades have resulted in 2x improvement in Ic over pre-program wire.
In March 2016, AMSC formed a strategic partnership with BASF to reduce manufacturing costs of HTS wire. This joint program will couple AMSC’s HTS wire technology know-how with BASF’s chemical processing expertise to develop a potentially low-cost manufacturing process at BASF. Success of this program and the involvement of BASF are expected to accelerate acceptance of HTS wire in both cable and coil based HTS applications.
SuperPower has successfully implemented many of the innovations developed in the ARPA-E REACT program into their mainline commercial production as well, with SuperPower implementing 15% doping with BaZrO3 in their magnet wire production. The upgrades have resulted in 2x improvement in Ic over pre-program wire. SuperPower has continued to improve their wire and plans another 50% improvement based on REACT technology by 2017.
Commercial wire from AMSC and SuperPower with ARPA-E technology has been purchased by early adopters including the U.S. Navy (for developmental systems in ship degaussing and protection systems), developers of scientific equipment (such as CERN, Lawrence Berkeley National Lab, and other builders of advanced accelerators) and a variety of other customers around the world.
The demonstration of significantly improved HTS wire properties has removed a significant technical barrier to the development of HTS generators. However, there are still challenges in reliability, maintenance, and lifetime of HTS electric machines. A successful demonstration of a large-scale HTS motor or generator would have far-reaching consequences throughout the energy sector – enabling far higher power ratings for wind turbines of 10 MW; improving efficiency of electric machines such as industrial motors or power plant generators by 2-3%; and potentially even enabling hybrid-electric passenger aircraft.
Martin W. Rupich, Srivatsan Sathyamurthy, Steven Fleshler, Qiang Li, Vyacheslav Solovyov, Toshinori Ozaki, Ulrich Welp, Wai-Kwong Kwok, Maxime Leroux, Alexei E. Koshelev, Dean J. Miller, Karen Kihlstrom, Leonardo Civale, Serena Eley, and Asghar Kayani, “Engineered Pinning Landscapes for Enhanced 2G Coil Wire”, IEEE Trans. on Appl. Supercond. 26 (2016) 6601904.
S Fleshler, K DeMoranville, J Gannon Jr, X Li, E Podtburg, M W Rupich, S Sathyamurthy, C L H Thieme, D Tucker and L Whitman, “Development Status of AMSC Amperium® Wire”, J. Phys: Conf. Series 507, (2014) 022005.
Vyacheslav F. Solovyov, Li-jun Wu, Martin W. Rupich, Srivatsan Sathyamurthy, Xiaoping Li, Qiang Li, “Two-stage epitaxial growth of vertically-aligned SnO2 nano-rods on (001) ceria”, Journal of Crystal Growth, (2014), 107–111.
M. W. Rupich, X. Li, S. Sathyamurthy, C. L. H. Thieme, K. DeMoranville, J. Gannon, S. Fleshler, “Second Generation Wire Development at AMSC”, IEEE Trans. on Appl. Supercond. 23 (2013) 6601205.
Vyacheslav F. Solovyov, Qiang Li, Martin Rupich, Srivatsan Sathyamurthy and Xiaoping Li, “New Pinning Strategies for Second-Generation Wires”, IEEE Trans. on Appl. Supercond. 23, (2013) 6600905.
V. Selvamanickam, M. Heydari Gharahcheshmeh, A. Xu, Y. Zhang and E. Galstyan, “Requirements to achieve high in-field critical current density at 30 K in heavily-doped (Gd,Y)Ba2Cu3Ox superconductor tapes”, Supercond. Sci. Technol. 28, 104003 (2015).
A. Xu, L. Delgado, M. Heydari Gharahcheshmeh, N. Khatri, Y. Liu, V. Selvamanickam, “Strong correlation between Jc(T, H || c) and Jc(77 K, 3 T || c) in Zr-added (Gd,Y)BaCuO coated conductors at temperatures from 77 down to 20 K and fields up to 9 T” Supercond. Sci. Technol. 28, (2015) 082001.
V. Selvamanickam, M. Heydari Gharacheshmeh, A. Xu, Y. Zhang and E. Galstyan, “Critical current density above 15 MA/cm2 at 30 K, 3 T in 2.2 µm thick heavily-doped (Gd,Y)Ba2Cu3Ox superconductor tapes”, Supercond. Sci. Technol. 28, (2015) 072002.
V. Selvamanickam, M. Heydari Gharahcheshmeh, A. Xu, E. Galstyan, L. Delgado and C. Cantoni, “High critical currents in heavily doped (Gd,Y)Ba2Cu3Ox superconductor tapes” Appl. Phys. Lett. 106, 032601 (2015).
E. Galstyan, M. Heydari Gharacheshmeh, L. Delgado, A. Xu, G. Majkic, and V. Selvamanickam, “Microstructure Characteristics of High Lift Factor MOCVD REBCO Coated Conductors with High Zr Content” IEEE Trans. Appl. Supercond. 25, 6954395 (2015).
A. Xu, N. Khatri, Y. Liu, G. Majkic, V. Selvamanickam, D. Abraimov, J. Jaroszynski and D. Larbalestier, “Broad temperature pinning study of 15 mol.% Zr-added (Gd, Y)-Ba-Cu-O MOCVD coated conductors”, IEEE Trans. Appl. Supercond. 25, 6603105 (2015).
V. Selvamanickam, A. Xu, Y. Liu, N. D. Khatri, C. Lei, Y. Chen, E. Galstyanand G. Majkic, “Correlation between in-field critical currents in Zr-added (Gd,Y)Ba2Cu3Ox superconducting tapes at 30 K and 77 K” Supercond. Sci. Technol. 27, 055010 (2014).
V. Selvamanickam, Y. Yao, Y. Chen, T. Shi, Y. Liu, N. D. Khatri, J. Liu, C. Lei, E. Galtsyan and G. Majkic, “Low-temperature, High Magnetic Field Critical Current Characteristics of Zr-added (Gd,Y)Ba2Cu3Ox superconducting tapes”, Supercond. Sci. Technol. 25, 125013 (2012).
 Martin W. Rupich, “Performance of AMSC’s 2G wire and R&D improvements”, HTS4Fusion Conductor Workshop, Pieve S. Stefano, Italy, Sept 11 – 12, 2015.
 “Analysis of future prices and markets for high temperature superconductors”, J. Mulholland, T. Sheahen and B. McConnell, June 2003, ORNL, U.S. Department of Energy. See Table 3, page 15.

matches: V. V. V. V. V. V. V. V.


On September 11, 2018, Cozen O’Connor’s Product Liability Prevention and Defense (“PLPD”) blog provided a quick reference guide that manufacturers can consult to MAN UP on defenses when hit with a claim under Chapter 82 in Texas. Hayden; Don’t Find Yourself a MAN DOWN: Manufacturers Can MAN UP With Defenses to the Texas Products Liability Act (2018) (last visited October 8, 2018) (“Man Up”). This posting serves as a sequel to Man Up by shifting the discussion to the seven exceptions that may hold a seller liable and relieve the manufacturer of some or all liability (“Man Down”). Although Man Down will focus on exceptions to a seller’s presumed innocence that may find sellers a MAN DOWN, Man Down is applicable to manufacturers as well given that under Texas law, all manufacturers are also sellers. Gen. Motors Corp. v. Hudiburg Chevrolet, Inc., 199 S.W.3d 249, 256 (Tex. 2006) (holding all manufacturers are also sellers, but not all sellers are manufacturers).
In Man Up, we explained that Chapter 82 of the Texas Civil Practice and Remedies Code was created to heighten the duties of manufacturers in a products liability action. The effect of this heightened burden acts a shield to sellers who can seek protection under Chapter 82 unless one of seven exceptions is established. Tex. Civ. Prac. & Rem. Code § 82.003(a). Notably, for manufacturers, it is the plaintiff bringing a products liability claim against a non-manufacturing seller who has the burden to establish an exception to the seller’s statutory protection. See id. § 82.003(a); In re Atlas Tubular, LP, 296 S.W.3d 363, 365 (Tex. App.—Corpus Christi 2009, orig. proceeding). Below is an outline to the seven exceptions to Chapter 82 that manufacturers should be familiar with that may cause sellers’ presumed innocence to be pierced such that sellers may find themselves a MAN DOWN.
A seller’s protection from liability under Chapter 82 can be pierced if the plaintiff can prove that the seller altered or modified the product and the plaintiff’s harm resulted from that alteration or modification. Tex. Civ. Prac. & Rem. Code § 82.003(a)(2).
In Howard v. Lowe’s Home Centers, LLC, 306 F.Supp.3d 951 (W.D. Tex. 2018), Howard sued Lowe’s to recover damages arising out of, among other things, a broken Whirlpool refrigerator. Id. at 954. Howard bought the refrigerator from Lowe’s that Lowe’s sold, delivered, and installed. Id. Howard filed a products liability action against Lowe’s, alleging that the broken refrigerator caused a variety of personal injuries and property damage: Howard lost money on spoiled food; her replacement cooler leaked water, damaging personal property; an unspecified event involving the fridge caused a shoulder injury that limited her ability to work; her elderly mother fell near the fridge and injured her head; and Howard experienced mental anguish related to these injuries and losses. Id.
Lowe’s filed a motion for summary judgment on Howard’s Subchapter 82.003(a)(2) claims. Id. at 957. In response, Howard claimed that “any of Lowe’s handling [of the product] could have made the malfunctions exist.” Id. The court noted that “Howard’s conjectural phrasing underscores the fact that she cannot trace the refrigerator’s defects to any alteration or modification made by Lowe’s,” further noting that “Howard speculates that the refrigerator’s malfunction ‘could only have been caused’ while the unit was in Lowe’s possession or control, ignoring the possibility that it was defective when Whirlpool delivered it to Lowe’s.” Id. Lowe’s denied that it altered or modified the unit. Id. The court held that not only did Howard have no evidence that Lowe’s altered or modified the unit, Howard did not even allege that Lowe’s did so. Id. Accordingly, the court held there was no material factual dispute about whether Section 82.003(a)(2) applies and granted summary judgment in favor of Lowe’s. Id. at 958-59.
In Kirby v. Smith & Nephew, Inc., Cause No. 3:15-CV-2543-L, 2017 WL 661373 at *7 (Feb. 17, 2017), the plaintiff alleged detailed factual allegations in her lawsuit that the seller changed the design of the product by removing a metal liner and other parts from the approved system and then distributing them for profit in an unapproved, illegal combination along with other component parts of the manufacturer. Id. The plaintiff further made specific allegations that she suffered harm as a result of the seller’s actions. Id. Based on the allegations in the plaintiff’s petition, the court concluded that the plaintiffs alleged a plausible claim for recovery against the seller under the Texas Product Liability Act. Id. The court further held that since there was a reasonable basis to predict that the plaintiff could recover against the seller under Subchapter 82.003(a)(2), the plaintiff’s petition was sufficient under the federal pleading standard to state a claim.
Both manufacturers and sellers should realize that as long as a plaintiff alleges a plausible claim for recovery with sufficient detail, Texas courts will allow allegations under the exception in Subchapter 82.003(a)(2) to survive a motion to dismiss. If allegations under Subchapter 82.003(a)(2) survive a motion to dismiss, manufacturers should drill down on what the seller’s involvement was in modifying or altering its product as a way to apportion liability to sellers. Sellers should proceed with caution in participating in altering or modifying a product—they may find themselves a MAN DOWN if the plaintiff can prove its damages resulted from the seller’s alteration.
In Man Up, we explained that for a component-product manufacturer to be subject to a duty to indemnify a seller in a products liability suit, the claimant’s pleadings must include an allegation of a defect in the component itself, not merely a defect in the seller’s product of which the component was part. See Man Up (citing General Motors Corp. v. Hudiburg Chevrolet, Inc., 199 S.W.3d 249 (Tex. 2006); R.H. Tamlyn & Sons, L.P. v. Scholl Forest Industries, Inc., 208 S.W.3d 85 (Tex. App.—Houston 14th Dist. 2006, no pet.)). By contrast, if the plaintiff’s pleadings allege defects due to a component unrelated to the manufacturer’s product or only to the product as a whole, a component-product manufacturer does not have a statutory duty to indemnify a seller for losses. See Man Up (citing Hudiburg Chevrolet, Inc., 199 S.W.3d at 249; Seelin Medical, Inc. v. Invacare Corp., 203 S.W.3d 867 (Tex. App.—Eastland 2006, pet. denied)).
Therefore, if a plaintiff not only alleges that a component part is defective, but can also allege and prove that the seller installed the product, or had the product installed, on another product and the plaintiff’s harm resulted from the product’s installation onto the assembled product, a seller will be found liable for damages under Chapter 82. Tex. Civ. Prac. & Rem. Code § 82.003(a)(3).
In Transcontinental Ins. Co. v. Briggs Equipment Trust, 321 S.W.3d 685, 701 (Tex. App.—Houston [14th Dist.] 2010, no pet.), the Congregation Beth Yeshurun (the “Congregation”) wished to replace lightbulbs in its sanctuary. Because the lightbulbs were approximately forty feet from the floor, a lift was needed. Briggs Equipment Trust (“Briggs”) rented to the Congregation a Genie AWP 40 hydraulic lift with personnel platform (the “Lift”) as well as a “Super Straddle.” Id. The Super Straddle is a frame-like base device on which the Lift can be mounted, enabling the Lift to be used in locations where the floor is sloped or where there are objects fixed to the floor, such as seats. Id. Genie Industries, Inc. (“Genie”) manufactured the Lift and Super Straddle. Id.
Briggs filed a motion for summary judgment asserting it was an innocent seller under Chapter 82 and that the exceptions alleged by the plaintiffs under Chapter 82.003(a)(3)-(6) did not apply. The trial court granted Briggs’ motion for summary judgment and the plaintiffs appealed.
The Houston Court of Appeals noted that Briggs’ summary judgment evidence showed that the day before the accident, two men from Briggs arrived at the Congregation’s sanctuary and installed the Lift inside the Congregation’s building, equipping the Lift with the Super Straddle. The evidence further included a statement that according to Congregation employees, the Lift and Super Straddle were delivered to the Congregation and assembled by Briggs. Id. at 702. When the Lift was attached to the Super Straddle, the product became defective due to the lack of an electrical interlock system incorporated on the Genie Super Straddle unit to work in combination with the interlock system on the Lift that would prevent the operation of the Lift (raising the mast and personnel platform) without all four outriggers properly installed in the Super Straddle base.
The appellate court concluded that there were genuine fact issues as to whether Briggs installed the product (or had the product installed) on another product and the harm resulted from the product’s installation onto the assembled product. Therefore, the appellate court held the trial court erred in granting a dispositive motion under Texas Civil Practice and Remedies Code Subchapter 82.003(a)(3). Sellers should take heed that they may find themselves a MAN DOWN if fact issues exist surrounding who assembled a product under Texas Civil Practice and Remedies Code Chapter 82.003(a)(3). In contrast, sellers can man up with the defense that if they merely assembled a pre-fabricated product according to the manufacturer’s instructions, they cannot be liable to a claimant. Dennis v. Giles Group, Inc., Cause No. No. 04-07-00280-CV, 2008 WL 183062 at * 5 (January 23, 2008) (citing Tex. Civ. Prac. & Rem. Code § 82.002(d))(stating the legislature “could not have intended for a seller who merely assembled the product to be liable to an injured party as a manufacturer but not be liable to a downstream seller for indemnity as a manufacturer.”).
If a seller actually had notice of a defect to the product at the time the seller supplied the product and the plaintiff’s harm resulted from the known defect, the seller cannot maintain its presumed innocence under Chapter 82. Tex. Civ. Prac. & Rem. Code § 82.003(a)(6)(A)-(B). Brewer v. Porsche Cars North America, Inc., No. 3:04CV2343M, 2005 WL 292417, at *2 (N.D. Tex. Feb. 7, 2005) (“[The p]laintiffs plainly allege that both [the d]efendants possessed actual knowledge of a defect in the Porsche 911 at the time such vehicles were leased to [the p]laintiffs, and that the defect is the cause of their damages. Consequently, the facts pled in [the p]laintiffs’ [p]etition satisfy the exception to a sellers’ immunity found in Tex. Civ. Prac. & Rem. Code § 82.003(a)(6).”).
Although sellers may be liable if the manufacturer is not subject to the jurisdiction of the court under Chapter 82.003(a)(7)(A)-(B), discussed herein, non-manufacturing sellers’ immunity also creates separate jurisdictional issues under Subchapter 82.003(a)(6) that may defeat diversity. The United States District Court for the Western District of Texas has held that inclusion of a non-manufacturing seller defeated removal when the plaintiff asserted one of the indemnity exceptions. See Shields v. Bridgestone Firestone N. Am. Tire, LLC, 502 F. Supp. 2d 497, 501-02 (W.D. Tex. 2005) (finding remand necessary when the plaintiff pled all of the elements needed for a Chapter 82.003 exception against the non-manufacturing seller). The United States District Court for the Eastern District of Texas, however, has reached a different conclusion. In Lott v. Dutchmen Mfg., Inc., 422 F. Supp. 2d 750, 753-54 (E.D. Tex. 2006), the court went beyond the pleadings to find improper joinder when the evidence showed that a non-diverse, non-manufacturing seller did not know about an alleged defect. These competing decisions demonstrate that for a manufacturer in a products liability action, the addition of a non-manufacturing seller may prevent removal. When a plaintiff fails to properly plead an exception to the indemnity provision, however, a manufacturer can man up by utilizing the non-manufacturing sellers’ indemnity obligations and exceptions under Subchapter 82.003(a)(6) to their jurisdictional advantage.
Although as demonstrated in Shields and Lott, a plaintiffs’ pleadings may be sufficient to put a seller on notice that the plaintiff will seek to apply the exceptions of Subchapter 82.003(a)(6), at trial, the language of Subchapter 82.003(a)(6) clearly requires actual knowledge of the defect on the part of the seller. Reynolds v. Ford Motor Co., No. Civ.A.5:04CV085C, 2004 WL 2870079, at *3 (N.D. Tex. Dec.13, 2004); McDonald v. Ford Motor Co. and Gullo Ford Mercury, Inc., No. H041537 (S.D. Tex. July 12, 2004). Sellers can avoid being a MAN DOWN by holding plaintiffs to their burden of proof to show the seller had actual notice of the defect.
A manufacturing-defect claim alleges that the finished product deviated, in terms of its construction or quality, from the specifications or planned output in a manner that rendered the product unreasonably dangerous. Ford Motor Co. v. Ledesma, 242 S.W.3d 32, 41–42 (Tex. 2007) (citing Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 434 (Tex. 1997)). A design-defect claim alleges that there was a safer alternative design that in reasonable probability “would have prevented or significantly reduced the risk of the claimant’s personal injury, property damage, or death without substantially impairing the product’s utility.” Tex. Civ. Prac. & Rem. Code § 82.005; Cooper Tire & Rubber Co. v. Mendez, 204 S.W.3d 797, 807 (Tex. 2006). Designers, beware: if a seller also participates in the design of the product, the seller may find himself a MAN DOWN without protection under Chapter 82, provided the plaintiff can prove same. Tex. Civ. Prac. & Rem. Code § 82.003(a)(1).
In Gonzalez v. Reed-Joseph Intern. Co., Cause No. 4:11–cv–01094, 2013 WL 1578475 at *8 (S.D. Tex. April 11, 2013), the plaintiff argued in its complaint that the seller participated in the design of the product and was therefore exempt from immunity under Subchapter 82.003(a)(1). The court pointed out that the plaintiff, however, did not plead Subchapter 82.003(a)(1) with any specificity, but simply recited that all the defendants participated in or various defendants were responsible for the design of the product. The United States District Court for the Southern District of Texas held that the plaintiff failed to plead his claims with “facial plausibility” because his complaint included only “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements …” insufficient to withstand allegations that the seller participated in the design of the product. Id. Gonzalez should be a reminder that sellers can avoid being a MAN DOWN by showing the allegations under Subchapter 82.003 asserted by a plaintiff must be more than general, broad allegations that lack specificity for plaintiff’s complaint to stand.
If a seller makes an incorrect overture about an aspect of the product, the plaintiff relies on the overture in obtaining or using the product, and if the aspect of the product had been as represented, the plaintiff would not have been harmed by the product or would not have suffered the same degree of harm, a seller may find himself a man down. Tex. Civ. Prac. & Rem. Code 82.003(a)(5)(A)-(D). In Briggs, 321 S.W.3d at 702, Briggs introduced summary judgment evidence that a Briggs employee assembled the Lift and told Congregation employees that it was “okay” not to use the outriggers. The Houston Court of Appeals again held that there were genuine fact issues as to the application Subchapter 82.003(a)(5)(A)-(D). Specifically, the court noted that fact issues existed as to whether Briggs made an incorrect overture about the Lift, whether the plaintiff relied on the incorrect overture, and whether if the aspect of the Lift had been as represented, the plaintiff would not have been harmed by the Lift or would not have suffered the same degree of harm. Therefore, the appellate court held that trial court erred in granting the motion for summary judgment under Subchapter 82.003(a)(5). Sellers may wind up a MAN DOWN in proving exceptions apply under Chapter Subchapter 82.003(a)(5) if disputed issues of material fact exist.
If a seller exercises substantial control over the content of a warning or instruction that accompanies the product, the warning or instruction is inadequate, and the plaintiff’s harm results from the inadequacy of the warning or instruction, a seller will be found liable under Chapter 82. Tex. Civ. Prac. & Rem. Code § 82.003(a)(4)(A)-(C). Briggs, 321 S.W.3d at 702. According to a report in Briggs’ summary-judgment evidence, a Briggs employee assembled the Lift without the outriggers installed; the Lift was not supposed to operate, but the Lift did operate without the outriggers being installed; and the Briggs employee “felt comfortable with this” and said that it was “okay” not to use the outriggers. Id. For the third time, the Houston Court of Appeals held that under the applicable standard of review, genuine fact issues existed sufficient to defeat summary judgment as to whether Briggs exercised substantial control over the content of a warning or instruction that accompanied the Lift; whether Briggs’ warning or instruction was inadequate; and whether the plaintiff’s harm resulted from the inadequacy of Briggs’ warning or instruction. Thus, Briggs’ motion for summary judgment was overturned due to genuine issues of material fact arising under Subchapter 82.003(a)(4)(A)-(C).
Non-manufacturing sellers may find themselves liable under Chapter 82 if they sell a product of a manufacturer who is insolvent or if the manufacturer is not subject to the jurisdiction of the court. Tex. Civ. Prac. & Rem. Code § 82.003(a)(7)(A)-(B).
Sellers can avoid finding themselves a man down when a manufacturer is insolvent if the plaintiffs do not plead and prove with specificity the claimed insolvency of the manufacturer. In Hannover, the court held that summary judgment evidence identifying only the distributor or owner of the product’s trademark as insolvent was insufficient to find that the manufacturer was also insolvent. Internat’l Ins. Co. of Hannover SE v. Wal-Mart, Cause No. 13-17-00349-CV, 2018 WL 3655567 at *3-4 (August 2, 2018).
Sellers should also realize that their immunity may be waived if the manufacturer is not subject to the jurisdiction of the trial court. Fields v. Klatt Hardware & Lumber, Inc., 374 S.W.3d 543, 546 (Tex. App.—San Antonio 2008, pet. denied).
In Fields, a purchaser who was injured when a drain cleaner splashed onto her hands and arms brought a products liability action against the seller and manufacturer. Id. at 544. The manufacturer never answered or appeared. Id. As discussed generally herein, Chapter 82.003 of the Texas Civil Practice and Remedies Code provides that a nonmanufacturing seller of a defective product is generally not liable for harm caused by that product. Tex. Civ. Prac. & Rem. Code § 82.003(a) (West 2011). When the product’s manufacturer is not subject to the jurisdiction of the court, however, Subchapter 82.003(a)(7)(B) permits the plaintiff to proceed against a nonmanufacturing seller. Id. at 545 (citing Tex. Civ. Prac. & Rem. Code § 82.003(a)(7)(B)).
Fields sought to prove that because she had served the non-resident manufacturer and the manufacturer failed to answer or otherwise make an appearance in the time required by law, it was conclusively presumed for the purposes of Subchapter (a)(7)(B) that the manufacturer was not subject to the jurisdiction of the court.
The trial court agreed with Fields. The law in Texas, however, goes one step further: if the seller, Klatt, can secure personal jurisdiction over the manufacturer in the action, the presumption in favor of the claimant disappears. Id. at 547.
“Securing personal jurisdiction” includes proper service and evidence of minimum contacts sufficient to subject the manufacturer to the jurisdiction of the court. Id. at 548. In its traditional motion for summary judgment, Klatt sought to establish that the manufacturer was subject to the jurisdiction of the court. To establish that the manufacturer was subject to the trial court’s jurisdiction, Klatt (1) asserted it had served the manufacturer, (2) offered an affidavit averring the manufacturer’s minimum contacts with Klatt in Texas, (3) insisted that there were no genuine issues of material fact, and (4) contended that summary judgment was proper because it had secured personal jurisdiction over the manufacturer.
The trial court concluded that Klatt was immune from liability under Texas Civil Practice and Remedies Code Chapter 82.003 and granted the Klatt’s traditional motion for summary judgment. Id. at 549. The court of appeals affirmed, holding that under Chapter 82.003 of the Civil Practice and Remedies Code, a nonmanufacturing seller can secure personal jurisdiction over a nonresident manufacturer where the seller proves that (1) the manufacturer has been properly served according to the requirements of the applicable laws, including treaty requirements, and (2) the manufacturer established minimum contacts with Texas sufficient to satisfy federal and state constitutional due process requirements. Id. at 549. Sellers can avoid being a MAN DOWN by securing personal jurisdiction over a manufacturer when a claimant does not do so.