MEMORANDUM

TO:

Teresa M. Bruce, Esq.

FROM:

872479534

DATE:

October 21, 2012

RE:

Xenia v. Daedalus: Defective elevator latch causes drilling catastrophe

This Memorandum discusses the viability of product liability claims against the

manufacturer of a defective product, given that the product was misused.

QUESTION
As Defendants Petros Drilling Corp. ("Petros") and Poseidon Incorporated ("Poseidon")
were extracting from Plaintiff Xenia Inc.'s ("Xenia's") wellbore1 some forty tons of drill string,2 a
hoisting device, manufactured by Defendant Daedalus Corporation ("Daedalus"), broke,
dropping the string, causing3 Xenia losses of $1.3 million. Xenia asserts that Daedalus's
equipment was defective.4 Daedalus counters that the use of a bottlenecked lift mechanism
with Daedalus's square-shouldered equipment was unforeseeable, and such misuse5 provides
Daedalus absolute immunity from liability. Currently, there is evidence both for and against
foreseeability. Does the misuse bar Xenia's claims against Daedalus, and expose Xenia to Rule
11 sanctions?
ANSWER
No. Petros or Poseidon misuse does not absolutely bar Xenia's claims against Daedalus and
make Xenia vulnerable to Rule 11 sanctions. To avoid Rule 11 sanctions, a claim must be

1 "Wellbore" is the hole in the ground made by the drilling equipment that would eventually
serve as a conduit to the valuable carbon dioxide gas trapped deep under the ground.
2 "Drill string" refers to all of the well-drilling equipment down the hole, primarily the drill bit and
numerous segments, of rigid, hollow tubing, called "drill pipe." One drill pipe is approximately
fifteen-feet long. The drill pipes and other downhole equipment are screwed together to form a
long, column-like formation, or "string."
3 This Memorandum assumes, as instructed, that Daedalus's defective product was a cause of
Xenia's property damage.
4 This Memorandum further assumes that Daedalus's product was defective.
5 Finally, this Memorandum assumes that Daedalus's assertions of "misuse" are valid.
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warranted by law. Colorado law warrants a plaintiff's product liability claim against the
manufacturer of a defective product, despite product misuse, if the defect was a cause of the
injury and the misuse was foreseeable. Foreseeable misuse includes when the defendant knew
of prior occasions of misuse and it includes situations when a reasonable person in the setting
of modern life, exercising common sense, would have contemplated that misuse was likely to
occur. When sufficient facts show that the misuse was foreseeable, and no competent evidence
shows the misuse was unforeseeable, the court may go as far as to deny the defendant a jury
instruction of misuse. Here, Xenia's complaint is warranted by existing law because both Xenia
and Poseidon witnesses will likely testify that misuse was a routine occurrence in the field.
Xenia is very unlikely to face Rule 11 sanctions, and may even be able to deny Daedalus a jury
instruction of misuse.
FACTS
One night last fall, Xenia's effort to extract a forty-two hundred foot segment of drilling
pipe ended in disaster. Xenia had been drilling a well, Artemis 3, in order to recover valuable
carbon dioxide gas. Xenia's drilling company, Petros, had almost reached the target depth
within the wellbore when the drill string became stuck in a difficult geologic formation. Xenia
therefore hired Poseidon, a fishing company, to retrieve the jammed drill string. On this
particular night, the "Toolpusher," the senior operator in charge of Petros drilling operations,
and Scott Anderson ("Mr. Anderson"), the senior Poseidon employee, were supervising the
retrieval operation. Either the Toolpusher, or Scott Anderson, or both, made the decision to use
a bottleneck shaped lifting mechanism, called a "lift sub," 6 in tandem with a square-shouldered
lifting mechanism called an "elevator," 7 manufactured by Daedalus. Mr. Anderson admits to

6 A "lift sub" is a relatively short, solid cylinder. Crews use lift subs as intermediaries, between
elevators and the strings they hoist, so that crewmembers do not have to open and close the
elevator each time they lift a new segment from the wellbore. The elevator remains attached to
the lift sub throughout the entire hoisting process, and the lift sub is simply screwed into each
successive segment until everything that needed to be removed has been removed.
7 An "elevator" resembles a large collar, with a hinge on one side and a latch on the other.
When a segment of drill string needs to be removed from a hole, the drilling crew places an
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being a part of the decision made by the Toolpusher. Anderson recalls a conversation with the
Toolpusher in which the Toolpusher looked in his toolbox and could only find a squareshouldered elevator, and said, "they'll work." Mr. Anderson replied, "Yeah, they will, I've done it
before." The proper matching tools were not available; to procure them would take hours or
days; each day of idleness would cost Xenia $8280. Subsequent to the decision to use the
mismatched equipment, the elevator latch broke. Forty-two hundred feet of drill string, weighing
tens of thousands of pounds, crashed to the bottom of the well. This disaster ruined the Artemis
3 wellbore and resulted in losses to Xenia of $1.3 million.
Counsel for Petros asserts that the Toolpusher had no involvement in the decision to
mismatch the equipment. He further asserts that no Petros employee has heard of a squareshouldered elevator being used with a bottlenecked lift sub, and that he would bring in experts
to corroborate his assertions. However, Joe Derrick ("Mr. Derrick"), Xenia's company
representative, states that he has seen the mismatch about twenty times during his forty years
in the industry, and that "sometimes when you're out in the field you've got to make do with what
will work." Mr. Anderson indicates that he has seen the mismatch thirty times in thirty years, and
that "it's a practice that . . . sometimes you do it." Ed Edwards, a drilling expert with over fifty
years of experience in the field, will testify on behalf of Poseidon that the mismatch is
commonplace. Mr. Edwards has seen it scores, if not hundreds of times in the field.
Other entities were aware of the potential for this mismatch. The Effective Equipment
Company catalog contains an entry for Bob Barnes "Victory" Elevators with the following
warning: "Warning: Square type elevators should never be used on TAPER TYPE PIPE. Failure
to comply with this warning could cause serious bodily harm or property damage." In Lessons
In Rotary Drilling, written by John Jones of the Oil & Gas Extension Services branch of the
University of Anywhere, Mr. Jones warns: "one popular [type of] elevator [is the] square-

elevator around the top of the string and hoists the segment out.
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shoulder type. . . Ever more popular in drilling is the bottle-necked (or tapered) drill pipe. Do not
try to substitute one for the other."
Recently, Xenia filed a complaint in the U.S. District Court for the District of Colorado
asserting product liability claims against Petros, Poseidon, and Daedalus. Daedalus responded
with a threat of sanctions under Rule 11 unless Xenia withdraws its claims. Daedalus alleges
that, under Colorado law, misuse by Petros and Poseidon is an absolute bar to any product
liability claim. Xenia believes that Daedalus's elevator was defective, and would like to pursue
its claims, but it needs to know whether Daedalus's argument has merit.
ANALYSIS
This Memorandum analyzes whether Xenia can: (I) avoid sanctions under Rule 11 for product
liability claims in which a defective product was misused, and (II) prevail with its product liability
claims despite the misuse, and even deny Daedalus a jury instruction of misuse because the
misuse was foreseeable.
I.

XENIA'S CLAIMS DO NOT INVITE SANCTIONS BECAUSE MISUSE IS

NOT A COMPLETE BAR TO XENIA'S CLAIMS AGAINST DAEDALUS
Rule 11 requires that "claims, defenses, and other legal contentions are warranted by

existing law." Fed. R. Civ. P. 11. The applicable "existing law," according to Daedalus, is
Colorado misuse law (hereinafter, the "misuse statute"):
A product liability action may not be commenced . . . against a
manufacturer . . . of a product that caused . . . property damage if .
. . the product was used in a manner or for a purpose other than
that which was intended and which could not reasonably have
been expected, and such misuse of the product was a cause of
the . . . property damage. Colo. Rev. Stat. 13-21-402.5 (2008).
Thus, the misuse statute requires (1) a misuse (2) that was unforeseeable (3) that was a cause
of property damage.
While an analysis of causation is beyond the scope of this Memorandum, the existence
of a factual dispute regarding causation can mitigate the possibility of Rule 11 sanctions. The

court in White v. Caterpillar explained that "[m]isuse . . . excuses the seller of an admittedly
defective product from liability when the misuse and not the defect caused the injury." White v.
Caterpillar, Inc., 867 P.2d 100, 107 (Colo. App. 1993) (emphasis added). However, "if misuse
and defect cause injury, misuse can constitute comparative fault which reduces recovery." Id.
(describing States v. R.D. Werner Co., 799 P.2d 427 (Colo. App.1990)) (emphasis added).
Therefore, according to White, a dispute requiring the jury to apportion fault may be a dispute
warranted by the misuse statute. Furthermore, the issues of causation and foreseeability are
closely intertwined. See Walcott v. Total Petroleum, Inc., 964 P.2d 609, 612 (Colo. App. 1998)
("foreseeability is the touchstone of proximate cause"). Consequently, application of the misuse
statute ultimately turns on whether the misuse was foreseeable.
Whether misuse is foreseeable is a question of fact. Id. at 108 (describing Uptain v.
Huntington Lab, Inc., 723 P.2d 1322 (Colo. 1986)) ("question of foreseeability of misuse is
generally jury determination"). To prevail with a product liability claim given that the product was
misused, a product liability plaintiff must provide facts that when viewed in the light most
favorable to the plaintiff show that the misuse was foreseeable. Walcott, 964 P.2d at 611 (Colo.
App. 1998) (summary judgment appropriate when, as a matter of law, based on undisputed
facts, one party could not prevail). In Walcott, the Colorado Court of Appeals affirmed the
summary judgment in favor of the defendant, holding that the plaintiff failed to raise a genuine
issue as to material facts showing the misuse was foreseeable. The court, acting as the
factfinder, found it unforeseeable that a man who was surreptitiously crouched behind a car at a
filling station was dispensing gasoline into a paper cup in preparation for a criminal assault.
Thus, to prevail with a product liability claim given that the product was misused, a product
liability plaintiff must make a stronger factual showing of foreseeability than the plaintiff in
Walcott. Furthermore, while the plaintiff in Walcott did not prevail in her claims, there is no
indication that her claims provided a basis for Rule 11 sanctions. Indeed, the procedural posture
of Walcott implies that the claim was probably not frivolous under Rule 11.
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Here, Xenia's product liability claim is warranted by the misuse statute, and meets the
factual sufficiency standard found in Walcott. First, Daedalus's defective elevator was a cause
of Xenia's injury; therefore under White and R.D. Werner, the existence of a factual dispute
regarding causation and fault helps insulate Xenia from Rule 11 sanctions. Second, assuming
Daedalus produces evidence that the misuse was unforeseeable, the misuse does not bar
Xenia's claim if Xenia can at the least produce facts that when viewed most favorably for Xenia
show that misuse was foreseeable. Finally, because Xenia's evidence of foreseeability will be
the testimony of seasoned veterans and experts in the drilling industry, Xenia's claim appears
superior, on its face, to the claim of the plaintiff in Walcott, who relied upon a presumption of
criminal purpose in attempting to show foreseeability. Xenia's claim is warranted by existing law
and will resolve to a question of fact: whether the misuse was unforeseeable.
Thus, Rule 11 sanctions are off the table if Xenia can produce sufficient evidence
showing the misuse was foreseeable.
II.

XENIA CAN PROVIDE SUFFICIENT FACTS SHOWING MISUSE WAS

FORESEEABLE AND POTENTIALLY DENY DAEDALUS A JURY
INSTRUCTION OF MISUSE
The Courts will deny manufacturers of defective products a jury instruction on misuse

when misuse is indisputably foreseeable. Stated differently, "[a]n instruction on the misuse
defense should be given only if there is sufficient evidence that the defendant could not foresee
the possibility of misuse." White v. Caterpillar, Inc., 867 P.2d 100, 107 (Colo. App. 1993). In
Walcott, the court held that "reasonabl[e] foreseeab[ility] . . . depends in part on the common
sense consideration of the risks created by various conditions and circumstances, and in part on
the policy considerations of whether a defendant's responsibility should extend to the results in
question." Walcott, 964 P.2d at 612 (citations omitted). Foreseeability includes "whatever is
likely enough in the setting in modern life that a reasonably thoughtful person would take

account of it in guiding practical conduct. HealthONE v. Rodriguez ex rel. Rodriguez, 50 P.3d

879, 889 (Colo. 2002) (citations omitted).
When a manufacturer has notice of misuse in the field, the misuse is foreseeable. See .
Armentrout v. FMC Corp., 842 P.2d 175, 188 (Colo. 1992) (en banc) ("[Defendant manufacturer]
was aware [that] numerous similar incidents had occurred prior to [the Plaintiff's] accident"). In
Armentrout, for example, the manufacturer was denied a jury instruction on misuse. Id. at 187
("the misuse in this case [was the Plaintiff's] presence within the swing radius of the
superstructure during operation of the crane"). "At trial, [Defendant manufacturer] presented
substantial evidence that [Plaintiff's] work on the HC-238A mobile crane violated generally
accepted operating procedures and was an unsafe practice." Id. at 196 (J. Erickson,
dissenting). However, six of the nine justices decided that there was "no competent evidence"
that misuse was unforeseeable, and denied the manufacturer a jury instruction of misuse. Id. at
188. Thus, the defense of misuse may not be available to the manufacturer of a defective
product unless the manufacturer can make a strong factual showing that the misuse was
unforeseeable.
In another case, the court denied a jury instruction of misuse to the manufacturer of a
defective cranial drill because the manufacturer knew of "numerous instances of improper
cleaning." Id. (citing Schmutz v. Bolles, 800 P.2d 1305, 1316-17 (Colo. 1990)). Furthermore, to
the extent that the design of the device creates a common sense risk of misuse by efficiencyoriented workers in the field, the misuse is foreseeable. Id. at 189 ("[t]he record indicates that
the crane's upper/lower design made it more efficient to clean and oil the machine while the
crane was operating").
However, if the misuse is not a common sense risk and is not evident from prior
occasions of misuse, the misuse is unforeseeable. Walcott, 964 P.2d at 612. In Walcott, a man
who was drunk or high on drugs dispensed gasoline in a paper cup to use to set a woman on
fire. Id. at 613. However, the court held the misuse was unforeseeable and found that "no
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evidence was introduced indicating that gasoline dispensed at the filling station, in a cup or
otherwise, had been used on prior occasions for intentional criminal purposes . . . [n]or was any
evidence introduced that otherwise indicated the purchaser would use the gasoline for such a
purpose." Id. at 612. In White v. Caterpillar, misuse during gasoline truck fueling was
unforeseeable because the manufacturer had never heard of a gasoline spill as large as the one
caused by White, who had left the gas pumping, onto the ground, unattended, for several
minutes. White, 867 P.2d at 108.
Here, Xenia may be able to show that the misuse was foreseeable. Common sense
indicates that two widely-available, compatible parts, namely, a square-shouldered elevator and
a bottleneck shaped lift sub, will be used together in the field if they can get the job done when
properly fitting parts are unavailable. As in Armentrout and Schmutz, policy considerations
militate in favor of holding the more knowledgeable manufacturer responsible for introducing the
defective product into commerce because the manufacturer has the capacity to contemplate the
likelihood and consequence of misuse. Policy considerations weigh against holding the worker
in the field responsible when, like the design of the crane that made it more efficient to clean
during operation of the superstructure, Daedalus's compatible shape naturally lends itself to
misuse in the field by roughnecks like the Petros Toolpusher, that only care if "they'll work," and
Mr. Derrick, who acknowledge that "when you're out in the field you've got to make do with what
will work." Unlike the reasonably thoughtful person the court measured the defendant against in
HealthONE, Daedalus did not take the misuse, a fact of modern day drill operations, into
account.
Furthermore, Daedalus should have known about the frequent misuse. Like the cranial
drill in Schmutz and the crane truck in Armentrout, there is sufficient competent evidence that
misuse was a frequent occurrence in the field. Witnesses from Xenia and Daedalus codefendant Poseidon will likely testify that they encountered this misuse in the field, a total of 50
times in 70 years of combined experience, because, as Mr. Anderson stated, "sometimes you
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just do it." In addition, expert witness Ed Edwards will testify, based on his 50 years of
experience in the field, that such misuse was "commonplace."
Daedalus may argue that they did not know of the misuse. Co-defendant Petros has
indicated that they will provide witnesses and experts to testify that such misuse, like the misuse
in Walcott and White, was unheard of in the field. However, Xenia likely has the better of this.
The fact that a co-defendant will testify to the prevalence of the misuse enhances the likelihood
that a jury will find in favor of foreseeable misuse. Furthermore, Daedalus must respond to the
evidence showing that others foresaw misuse: the Bob Barnes "Victory" Elevators catalog and
the John Jones text that foresaw the misuse.
On balance, Xenia can provide sufficient facts, when viewed in Xenia's favor, to establish
that misuse was foreseeable; furthermore, Xenia may even be able to deny Daedalus a jury
instruction of misuse.
CONCLUSION
Colorado law does not absolutely bar Xenia from bringing products liability claims
against Daedalus. The misuse statute allows claims against manufacturers of defective
products, despite product misuse, when both the misuse and the defect cause the injury.
Furthermore, a plaintiff can deny a defendant a jury instruction of misuse if the misuse was
foreseeable. Finally, Rule 11 sanctions are only permitted when a claim is not warranted by
existing law. Xenia should not face Rule 11 sanctions for its claims against Daedalus for three
reasons. First, Daedalus's elevator defect contributed to Xenia's injury and requires
apportionment of damages by a jury after a factual determination. Second, Daedalus designed
its square-shouldered product in a manner that readily lent itself to misuse in the field by
allowing interoperability with bottlenecked equipment. Finally, the misuse was probably
foreseeable based on the witness testimony and expert opinion regarding the frequency of
misuse in the field. Daedalus should have known that misuse was routine. All in all, Xenia has

good facts and good law to proceed with the claims against Daedalus without fear of violating
Rule 11.

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