987 F.3d 704
7th Cir.2021Background
- Horne rented an Electric Eel Model R drain-rodding machine from Home Depot, signed a rental agreement promising the equipment would be provided “as is and in good working condition.”
- The machine showed cosmetic wear; Horne and two witnesses say the foot pedal/reverse toggle failed and a kink formed in the cable while he used it; when he tried to pull the cable out by hand it wrapped around his arm, causing severe injury and amputation of part of his right index finger.
- Home Depot lost the actual machine after counsel requested preservation; Horne alleged spoliation. Horne sued Home Depot and manufacturer Electric Eel for negligence, breach of warranty, and strict products liability.
- The district court granted summary judgment for both defendants based principally on an exculpatory clause in the rental contract; it also granted Home Depot judgment on negligence and warranty claims and dismissed the spoliation claim as derivative; it granted Electric Eel summary judgment for lack of proof of a defect traceable to the manufacturer.
- On appeal the Seventh Circuit: (1) held Horne did not waive his argument that Home Depot materially breached the “good working condition” promise, (2) vacated and remanded as to Home Depot because genuine factual disputes precluded enforcement of the exculpatory clause to bar Horne’s claims for injuries caused by that breach, (3) affirmed summary judgment for Electric Eel for lack of evidence tying a defect to the manufacturer, and (4) affirmed the quashal of the RGIS subpoena.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of exculpatory clause given alleged breach | Horne: Home Depot materially breached the promise to supply equipment in “good working condition,” so it cannot invoke the contract’s exculpatory clause | Home Depot: Horne waived breach argument; it provided the machine in the contract ("as is") and the clause is clear and enforceable | Court: Horne preserved the breach argument; factual disputes about defects and Home Depot’s substantial compliance preclude summary judgment; vacated and remanded as to Home Depot (clause cannot shield breach of core promise) |
| Public policy / unconscionability of release | Horne: Clause violates public policy / unconscionable and did not warn of risks he suffered | Home Depot: Clause is valid, bargaining positions not oppressive, injuries were foreseeable and contemplated | Court: Read narrowly (against drafter) the clause does not violate Illinois public policy so long as it does not cover breaches of the contract’s core promise; clause enforceable except for injuries resulting from breach of the “good working condition” obligation |
| Electric Eel product-liability / causation / need for expert | Horne: Machine had defects (pedal, toggle, kink); manufacturer negligent in inspection/design and product was unreasonably dangerous | Electric Eel: Assembly/test records and testimony show machine left manufacturer defect-free; Horne has no evidence tying manufacturer to injury | Court: Affirmed summary judgment for Electric Eel—Horne failed to show a defect existing at shipment or evidence excluding abnormal/intervening use; speculation and lack of proof on causation fatal |
| RGIS subpoena (quash) | Horne: RGIS inventory records were relevant and Home Depot lacked standing to quash | Home Depot: Subpoena untimely; discovery closed; motion to quash proper | Court: Affirmed district court’s quash for untimeliness; no abuse of discretion |
Key Cases Cited
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment standard)
- Jewelers Mut. Ins. Co. v. Firstar Bank Ill., 820 N.E.2d 411 (Ill. 2004) (a party cannot exculpate itself from liability for breaching a specific contractual duty forming the heart of the agreement)
- Scott & Fetzer Co. v. Montgomery Ward & Co., 493 N.E.2d 1022 (Ill. 1986) (exculpatory clauses are disfavored and strictly construed against the drafter)
- Dubey v. Public Storage, Inc., 918 N.E.2d 265 (Ill. App. 2009) (a party in material breach cannot take advantage of contract terms that benefit it)
- Thornton v. M7 Aerospace LP, 796 F.3d 757 (7th Cir. 2015) (in products liability plaintiff must offer evidence justifying an inference of probability that the product caused the injury)
- Mikolajczyk v. Ford Motor Co., 901 N.E.2d 329 (Ill. 2008) (elements of strict products liability; defect must exist when product left manufacturer)
- Salerno v. Innovative Surveillance Tech., Inc., 932 N.E.2d 101 (Ill. App. 2010) (distinguishes negligence and strict liability theories in products cases)