NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT ______________

No. 22-2634 ______________

ARCELIK A.S., Appellant

v.

EI DUPONT DE NEMOURS & CO ______________

On Appeal from a Decision of the United States District Court for the District of Delaware (D.C. No. 1-15-cv-00961) District Judge: The Honorable Timothy B. Dyk* ______________

Argued May 18, 2023 ______________

Before: CHAGARES, Chief Judge, GREENAWAY, JR., and PHIPPS, Circuit Judges.

(Opinion Filed: June 7, 2023) ______________

OPINION** ______________

* Sitting by designation from the United States Court of Appeals for the Federal Circuit. ** This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent. Christopher F. Cannataro April M. Ferraro John M. Seaman [ARGUED] Abrams & Bayliss 20 Montchanin Road Suite 200 Wilmington, DE 19807

Christopher M. Ryan Shearman & Sterling 401 9th Street NW Suite 800 Washington, DC 20004

Attorneys for Appellant

Brandon R. Harper John A. Sensing [ARGUED] Potter Anderson & Corroon 1313 N Market Street Hercules Plaza, 6th Floor P.O. Box 951 Wilmington, DE 19801

Attorneys for Appellee

GREENAWAY, JR. Circuit Judge.

Arcelik A.S. (Arcelik) appeals the District Court’s grant of summary judgment to

E.I. DuPont de Nemours and Company (DuPont) on two claims: negligent manufacture

and violation of the Delaware Consumer Fraud Act (DCFA), Del. Code Ann. tit. 6 §§

2511–2527. After examining the appeal, we will affirm the District Court’s decision to

grant summary judgment on those claims.

2 I. BACKGROUND

Factual Background

Arcelik, a Turkish company producing household appliances, sells its products

under various brands in over 100 countries. One of Arcelik’s products is electric tumble

dryers for drying clothes. In late 2012, Arcelik started receiving complaints from

customers about its dryers catching fire. As a result, the company issued a voluntary

recall in Europe, offering to replace or repair the affected dryers and compensate

customers for any property damage caused by the fires. Arcelik claims that it faced

significant costs and damages as a result.

Multiple independent investigations revealed that the fires were due to a defect in

a flame-resistant material contained in a plastic product called “Zytel FR50,” which was

used in electrical capacitors inside the dryers. The flame-resistant material had higher-

than-normal levels of certain substances, which caused the dryers to overheat and catch

fire when exposed to high temperatures and humidity.

Defendant DuPont says that it did not manufacture or sell the defective lot of Zytel

FR50 (“the defective Zytel”). Instead, various other companies contributed to its

production and distribution. A Chinese company, Shandong Brother, produced the flame-

resistant material, which contained certain contaminants that lessened its heat-resistant

properties. Shandong Brother then sold it to DuPont China, a subsidiary of DuPont.

DuPont China then used this material to make the defective Zytel plastic at its plant in

Shenzhen, China. The defective Zytel was later sold to DuPont India, another DuPont

subsidiary, which then sold it to a separate company, EPCOS India.

3 Either EPCOS India or a related German company, EPCOS AG, used the

defective Zytel to make electrical capacitors that were sold to Arcelik. The defective

Zytel was used to create a protective top disc for the capacitors, sealing them and

providing a shield between certain components. EPCOS AG, following a 2009 contract

with Arcelik, sold electrical capacitors containing the defective Zytel to Arcelik. These

capacitors were then integrated into Arcelik’s dryers.

Procedural History

In 2015, Arcelik sued DuPont, the Delaware-based parent company of DuPont

China and DuPont India, seeking damages tied to dryer fires caused by the defective

Zytel, asserting claims under Delaware common law and the DCFA.

DuPont moved to dismiss the case, and the District Court obliged, dismissing five

of Arcelik’s six claims without prejudice, citing a failure to allege sufficient evidence of

agency relationships between DuPont and its subsidiaries. Arcelik then filed an amended

complaint with additional allegations and reasserted its claims. DuPont moved to dismiss

once more, but the District Court granted only a partial dismissal. Ultimately, Arcelik

was left with four claims: negligent manufacture, negligent misrepresentation, violation

of the DCFA, and tortious interference with a contract.

After discovery, DuPont sought summary judgment on all four remaining claims,

which the District Court granted.

4 II. JURISDICTION

The District Court had federal question jurisdiction pursuant to

.

The District Court issued a final order granting DuPont’s motion for summary judgment,

which Arcelik timely appealed.1 We therefore have jurisdiction pursuant to

.

III. STANDARD OF REVIEW

This appeal emerges from the District Court’s grant of summary judgment. We

review a grant of summary judgment de novo. Cranbury Brick Yard, LLC v. United

States,

(3d Cir. 2019). We may affirm the District Court’s decision “on

any grounds supported by the record, even if the court did not rely on those grounds.”

MRL Dev. I, LLC v. Whitecap Inv. Corp.,

(3d Cir. 2016) (internal

quotation marks and citations omitted).

Summary judgment is appropriate when, construing the evidence in the light most

favorable to the nonmoving party, “there is no genuine dispute as to any material fact and

the movant is entitled to judgment as a matter of law.” Sec’y U.S. Dep’t of Lab. v.

Kwasny,

(3d Cir. 2017) (quoting Fed. R. Civ. P. 56(a)).

IV. DISCUSSION

Arcelik raises two issues on appeal. First, Arcelik argues that the District Court

erred in granting summary judgment on Arcelik’s negligent manufacture claim because,

viewing the facts in the light most favorable to Arcelik, (i) DuPont directly manufactured

1 On appeal, Arcelik contests the grant of summary judgment on only two claims: negligent manufacture and violation of the DCFA. 5 the defective Zytel or (ii) DuPont China acted as DuPont’s agent in manufacturing the

defective Zytel. Second, Arcelik argues that the District Court erred in granting summary

judgment on Arcelik’s DCFA claim because it (i) introduced an unwarranted “duty to

speak” requirement and incorrectly concluded that no reasonable juror could find that

DuPont’s conduct generated such a duty, (ii) incorrectly concluded that Arcelik

“conceded” that its DCFA and negligent misrepresentation claims “rise and fall”

together, and (iii) introduced an unwarranted requirement that Arcelik and DuPont have a

“direct business or fiduciary relationship.” We find each of these arguments lacking and

will affirm the order below.

A. Negligent Manufacture Claim

To make a negligent manufacture claim under Delaware law, a plaintiff must show

that the defendant is responsible for the manufacture of the defective product. See Nacci

v. Volkswagen of Am.,

, 619–20 (Del. Super. Ct. 1974) (“[A] manufacturer

may be liable to those whom he should expect to be endangered by the probable use of

the product.” (citing Restatement (Second) of Torts § 395 cmt. i (Am. L. Inst. 1965))).

This can be done by showing that the defendant either (i) directly manufactured the

product or (ii) manufactured the product through an agent. Because Arcelik has failed to

create a genuine dispute as to either theory of liability, we will affirm the District Court’s

grant of summary judgment on this claim.

6 i. DuPont did not directly manufacture the defective Zytel.2

Arcelik has failed to present evidence that DuPont was involved in the actual

manufacture of the defective Zytel.3 When the District Court asked Arcelik “[w]here is

your evidence that [DuPont] controls the actual manufacture [of the defective Zytel]?”

Arcelik responded “[there is] nothing in the record about the actual manufacture of Zytel

[by DuPont], broadly.” App. 5786. Nor could Arcelik point to any evidence that DuPont

2 DuPont has argued that Arcelik forfeited any argument that DuPont directly manufactured the defective Zytel. Not so. DuPont’s error comes in its claim that Arcelik first raised this argument in its opposition to summary judgment. Had the argument been raised that late, it may well have been waived. In re Bestwall LLC,

, 242 (3d Cir. 2022) (“As a court of review, we generally decline to consider arguments that were not first presented to the court whose ruling is before us.”); see also Miranda-Rivera v. Toledo-Dávila,

(1st Cir. 2016) (“Plaintiffs may not raise new and unadvertised theories of liability for the first time in opposition to a motion for summary judgment.” (internal quotation marks and citations omitted)). But this argument was raised far earlier. In Arcelik’s Amended Complaint, under the heading “Claim Four Negligent Manufacture of a Defective Product” Arcelik alleges that “DuPont is engaged in the business of manufacturing, selling, or otherwise distributing Zytel, both directly and through global subsidiaries.” App. 106 (emphasis added). This made clear that Arcelik was alleging “direct” manufacture in addition to advancing its agency theory. As such, the argument was not waived, and we will consider it. 3 Existing precedent leaves unanswered what minimum amount of conduct by a parent company can constitute “manufacture.” Arcelik draws our attention to two cases outside our Circuit that suggest the bar falls below total control, requiring only that the Defendant was “involved in” or “participated in” the manufacture of the product. Gregus v. Stryker, No. C 11-00404 RS,

, at *2 (N.D. Cal. Apr. 20, 2012); Standing v. Watson Pharms., Inc., No. CV09-0527 DOC(ANx),

, at *7 (C.D. Cal. Mar. 26, 2009)). It is worth noting that both cases diverge significantly from the present one. In Gregus, the record revealed that over a sixteen-year period, all of the relevant products’ FDA registrations were made in the parent corporation’s name.

, at *2. And in Standing, the relevant product labels stated: “Manufactured by: [Defendant’s Name], [City and State of Defendant’s business].”

, at *7. No similar evidence exists in this case linking DuPont itself to the manufacture of the defective Zytel. Ultimately, we need not opine on the precise boundaries of what constitutes “manufacture” to find that the record here is insufficient under any standard. 7 was involved in the day-to-day manufacture of Zytel FR50. See App. 5785–86 (The

Court: “But where is the evidence that DuPont controlled the day-to-day manufacture of

this product?” Counsel for Arcelik: “It does not. [DuPont], itself, is not making those

decisions.”).4

Arcelik’s alternative theory, that DuPont essentially manufactured the defective

Zytel because (a) it controlled the quality control process for manufacturing Zytel FR50

generally and (b) control of quality control is tantamount to manufacturing fails because

it is not supported by the record or the law.

As the District Court correctly noted, all Arcelik can point to is that DuPont “set

the standard for the flame retardant,” “signed off on the qualification of the third-party

supplier,” “required that the supplier provide certificates of analysis with each shipment

showing compliance with the specification [of qualities for raw materials],” and

“investigated problems that arose.” App. 11 (citing App. 3803–05, 3374–75, 3459).

These actions, without more, fall short of the direct manufacturing claims that

have survived summary judgment. See supra note 3. Arcelik provides no authority, and

we have found none, showing that such limited involvement makes DuPont the overall

manufacturer of the defective Zytel.

ii. DuPont China is not DuPont’s Agent.

4 In its brief, Arcelik argues that this quote refers to DuPont China, not DuPont, and thus only stands for the proposition that DuPont China does not control the day-to-day operations of manufacturing Zytel FR50 at its factories. Arcelik’s Br. at 36–37. Even if this is true, Arcelik nonetheless points to no evidence that DuPont was directly involved in the manufacture of the defective Zytel. 8 1. Agency Standard

As a general principle, parent corporations are not liable for the actions of a

subsidiary. See United States v. Bestfoods,

(1998). There are, however,

two, limited exceptions to this general rule, only one of which is relevant here: agency

liability.5 Id.; see also Phx. Can. Oil Co. v. Texaco, Inc.,

, 1476–77 (3d Cir.

1988) (articulating the two standards). Under this exception, “one corporation—

completely independent of a second corporation—may assume the role of the second

corporation’s agent during one or more specific transactions.” Phx. Can., 842 F.2d at

1477.

This agency relationship does not create blanket liability for all conduct of the

agent—an agency relationship may exist for one subset of actions but not another.

Instead, a plaintiff must show that the agency relationship is “relevant to the plaintiff’s

[specific] claim of wrongdoing.” Id. Our analysis, thus, must focus on whether DuPont

China acted as an agent of DuPont in the “specific transactions” in question: the

manufacture of the defective Zytel. Id.

To determine whether an entity is an “agent,” we look to both Delaware agency

law and the general common law, which are “consistent.” Id. at 1477 n.4. While the exact

form may vary, an agency relationship always involves two entities (a “principal” and an

“agent”) “manifest[ing] assent” to one another that the agent shall act (1) “on the

5 The other exception, referred to alternatively as “piercing the corporate veil” or the “alter ego” theory, requires “total domination” of the subsidiary such that it is “merely a shadow of the parent.” Phx. Can. Oil Co. v. Texaco, Inc.,

, 1476–77 (3d Cir. 1988). Arcelik has not advanced this theory, and we need not address it. 9 principal’s behalf” and (2) “subject to the principal’s control.” Metro Storage Int’l LLC v.

Harron,

, 843 n.14 (Del. Ch. 2022) (quoting Restatement (Third) of Agency

§ 1.01 (Am. L. Inst. 2006)); see also Jack Eckerd Corp. v. Dart Grp. Corp.,

(D. Del. 1985) (“The ‘touchstone’ of the agency relationship is the principal’s

right to control the agent.” (quoting Gov’t of V.I. v. Richards,

(3d Cir.

1980) (citing Restatement (Second) of Agency § 14 (Am. L. Inst. 1958)))).

2. Application

Arcelik has presented no evidence that DuPont controlled DuPont China in

manufacturing the defective Zytel or that DuPont China acted on DuPont’s behalf in

doing so. As such, the District Court correctly granted summary judgment on this theory.

What evidence Arcelik does cite falls broadly into six categories: DuPont setting

global quality control standards for Zytel FR50, DuPont employees collaborating with

employees of DuPont China, a general sense amongst DuPont executives that DuPont

and its subsidiaries operate as a collective, global network, Dupont marketing all Zytel

products (including those produced by subsidiaries like DuPont China) under the

universal moniker “DuPont,” DuPont qualifying and approving the suppliers used by

DuPont China to manufacture the defective Zytel, and DuPont leading the response to

customers and the public regarding the defective Zytel.

But none of these facts evidence DuPont’s control over the manufacture of the

defective Zytel or DuPont China’s authority to act on DuPont’s behalf. Collaborating

across legal entities, informally seeing subsidiaries as part of a parent company’s global

network, and using a common moniker on products is exactly what one expects from a

10 parent-subsidiary relationship—a relationship that does not generally generate liability

for the parent. Bestfoods,

; Martinez v. E.I. DuPont Nemours & Co., Inc.,

, 15–16 (Del. Super. Ct. 2012) (citing Pauley Petroleum, Inc. v. Cont’l Oil Co.,

(Del. 1968)). And while setting minimum quality standards,

approving suppliers, and leading incident response shows an interest in the Zytel FR50

brand, we find no support for the contention that such limited involvement—looking at

the actions individually or collectively—constitutes control.

Nor has Arcelik presented evidence that DuPont China manufactured the defective

Zytel at DuPont’s behest—either under DuPont’s direction to fulfill obligations to third

parties or with its imprimatur to enter into such agreements on DuPont’s behalf. See

generally App. 5793 (The Court: “Wait. But does it have the authority to alter the legal

relations between the defendant and someone else?” Mr. Seaman for Arcelik: “I don’t

know that. I haven’t thought of it that.”); id. at 5794 (The Court: “But I mean is there any

evidence that DuPont China is altering the legal relationships of the defendant with

anybody else?” Mr. Seaman: “I don’t think there’s any evidence that DuPont China is

doing much of anything on this record. All the evidence is as to what DuPont, itself, the

defendant, has done. We don’t have any testimony from any DuPont China entities.”).

Finding no evidence of control or authority, we will affirm the District Court’s

grant of summary judgment on Arcelik’s negligent manufacture claim.

B. DCFA Claim

Section 2512 of the DCFA provides that “[t]he purpose of this subchapter shall be

to protect consumers and legitimate business enterprises from unfair or deceptive

11 merchandising practices in the conduct of any trade of commerce in part or wholly within

[the state of Delaware].” Theis v. Viewsonic Corp., No. 12-1569-RGA,

, at *2 (D. Del. Apr. 16, 2013) (first alteration in original). To state a claim under

the DCFA, “a plaintiff must, at a minimum, allege with the required particularity that the

defendant negligently omitted or concealed a material fact, and that the defendant

‘intended that others rely on the omission or concealment.’” Eames v. Nationwide Mut.

Ins. Co., No. 04–1324–JJF–LPS,

, at *13 (D. Del. Sept. 30, 2008),

aff’d,

(3d Cir. 2009) (quoting Stephenson v. Capano Dev. Inc.,

(Del. 1983)).

Arcelik argues that DuPont is liable under the DCFA because DuPont omitted

material information from its marketing materials and other communications concerning

DuPont’s deficient quality-control process for Zytel FR50. Namely, Arcelik alleges that

“DuPont concealed by omission from its direct and indirect customers that it lacked the

quality-control process to detect ionic contamination.” Arcelik’s Br. at 56. The District

Court rejected that argument and held that Arcelik did not properly make out a DCFA

claim because Arcelik failed to provide proof that there was an omission in the face of a

duty to speak. We agree.

Arcelik raises three arguments in response, each of which fails.

First, Arcelik contends the District Court erred by importing a “duty to speak” into

the DCFA. This is not the case. That a failure to reveal information only generates

liability in the presence of a duty to speak is common sense. Without such a requirement,

the DCFA would create unbounded liability for words unspoken and actors uninvolved in

12 the manufacturing process. The law is much more sensible than that, requiring only that a

company reveal specific information when—through some relationship, agreement,

representation, or principle of law—it has a duty to do so.

As the District Court properly noted, we can look to the Delaware common law’s

discussion of negligent misrepresentation to instruct us in this arena. While there are

differences between the common law and the DCFA, Teamsters Loc. 237 Welfare Fund

v. AstraZeneca Pharms. LP,

(Del. 2016) (discussing these

differences), none of these distinctions are relevant here. The District Court was correct

to interpret the DCFA “in light of established common law definitions and concepts of

fraud and deceit.”

(quoting Stephenson,

).

Under the common law, plaintiffs must show “a particular duty to provide

accurate information.” H-M Wexford LLC v. Encorp, Inc.,

, 147 n.44 (Del.

Ch. 2003). That same principle applies here. Accordingly, the District Court was correct:

under the DCFA—just as with the common law—omitting a material fact must occur “in

the face of a duty to speak.” Nicolet, Inc. v. Nutt,

(Del. 1987).

On this record, no reasonable juror could conclude that DuPont possessed such a

duty. DuPont did not represent that all Zytel FR50, produced by all actors on the globe,

would be safe. Nor did it represent that the specific, defective batches produced by

DuPont China would be safe. Neither DuPont’s general actions (creating general

informational materials and promulgating quality standards for Zytel FR50) nor specific

actions (approving suppliers for DuPont China or learning of and investigating defects in

specific batches of DuPont China’s products) generate such a duty.

13 Second, Arcelik argues that the District Court made an incorrect factual finding:

that Arcelik’s counsel conceded that Arcelik’s negligent misrepresentation and the DCFA

claims rise and fall together. Arcelik is correct in one sense: the District Court

misattributed the statement in question, and Arcelik did not concede this point. Yet, this

error does not generate the force Arcelik believes it does. Concession or not, the District

Court’s legal conclusion—that the claims rise and fall together under these

circumstances—is correct.

Under Delaware law, negligent misrepresentation and DCFA claims generally rise

and fall together because “[i]f a plaintiff cannot at least prove the existence of a negligent

misrepresentation, the plaintiff cannot make out a claim under the DCFA.” Washington v.

William H. Porter, Inc., No. N17C-01-170 EMD,

, at *5 (Del. Super.

Ct. July 20, 2017). “Although there are material distinctions in the standards required to

prove the two claims,”6 as the District Court correctly explained, “both require proof that

there was an omission in the face of a duty to speak.” App. 17. Because Arcelik has failed

to present proof that DuPont had a duty to speak, the claims do rise and fall together.

6 The District Court explained the difference between the two claims well: “The statute [] depart[s] from the common law in the following ways: (1) ‘a negligent misrepresentation is sufficient to violate the statute,’ (2) a violation of the statute ‘is committed regardless of actual reliance by the plaintiff,’ and (3) the plaintiff need not show ‘intent [by the defendant] to induce action or inaction by the plaintiff.’” Eames v. Nationwide Mut. Ins. Co.,

(D. Del. 2006) (quoting Stephenson v. Capano Dev., Inc.,

(Del. Super. Ct. 1983)). Only the latter two differences distinguish the statute from common law negligent misrepresentation. App. 17. n.14 (alterations in original). 14 Third, Arcelik argues that the District Court manufactured an unprecedented

DCFA requirement: that claims may only be asserted if the buyer has a direct relationship

with the seller. Here again, Arcelik is correct in one respect: the District Court incorrectly

suggested that a “direct business or fiduciary relationship between DuPont and Arcelik”

was necessary. App. 19. While a direct relationship may be sufficient to establish a duty

to speak, it is not necessary. The DCFA creates a cause of action for “any victim of a

violation,” not just those in direct relation to the violator. Del. Code Ann. tit. 6 § 2525(a).

But the District Court did not end its analysis there, going on to write that Arcelik

had also failed to produce evidence showing a partial disclosure by DuPont, which could

also trigger “a duty to disclose its purportedly lacking quality control processes.” Id. That

independent basis is enough for us to affirm.7 See MRL Dev. I, LLC,

(We

may affirm a district court’s decision “on any grounds supported by the record, even if

the court did not rely on those grounds” (internal quotation marks and citations omitted)).

V. CONCLUSION

The District Court correctly granted summary judgment in favor of DuPont.

Arcelik failed to prove that DuPont or its agent manufactured the defective Zytel or that

DuPont made any misstatements or omissions in the face of a duty to speak. Accordingly,

we will affirm the District Court’s grant of summary judgment to DuPont.

7 Arcelik infuses its second argument with the claim that the District Court violated the law-of-the-case doctrine by stating that there must be a direct relationship between seller and victim to make a DCFA claim. Even if such a violation occurred, we are free to review and affirm on any grounds supported by the record. See MRL Dev. I, LLC,

. 15