The Appellate Strategist : Appellate Lawyers & Attorneys for Updates on Trial Consultations, Amicus Briefs & Punitive Damage Awards

The Supreme Court of Washington recently decided the case of Macias v. Saberhagen Holdings, Inc. – a decision that flows against the trend of courts ruling that manufacturers of non-asbestos containing products cannot be held liable simply because their products were used in conjunction with or in the vicinity of asbestos products manufactured by third parties.

In Macias, plaintiff Leo Macias was allegedly exposed to asbestos dust while working as a toolkeeper in a shipyard.  One of his duties had been to clean and maintain respirators that other workers wore to filter out dangerous contaminants. Mr. Macias later developed mesothelioma.

In a 5-4 decision authored by Chief Justice Barbara Madsen, the Court concluded that the defendant manufacturers of the respirators owed a duty to warn Mr. Macias of the hazards of asbestos. But just four years ago, this same Court announced in Braaten v. Saberhagen Holdings, Inc. and Simonetta v. Viad Corp. that manufacturers have no duty to warn of the dangers inherent in products they do not manufacture, sell, or supply.  The cases of Braaten and Simonetta are in line with decisions from other jurisdictions.  (See e.g. O’Neil v. Crane Co. (2012) 53 Cal.4th 335; Lindstrom v. A-C Product Liability Trust (6th Cir. 2005) 424 F.3d 488; Ford Motor Co. v. Wood (1998) 119 Md. App. 1; Baughman v. General Motors Corp. (4th Cir. 1986) 780 F.2d 1131; Acoba v. General Tire, Inc. (1999) 92 Haw. 1; Rastelli v. Goodyear Tire & Rubber Co. (1992) 79 N.Y.2d 289;  Faddish v. Buffalo Pumps, Inc. (S.D. Fla. Aug. 2, 2012) 2012 U.S. Dist. LEXIS 108055.)

Interestingly, Chief Justice Madsen authored the majority opinion in Braaten.  Another of the Justices “switching sides” in Macias to find potential liability on the part of the defendants was Justice Mary Fairhurst, who had previously voted with the majority in Braaten and Simonetta.  Justice James Johnson, who had voted with the majority in Braaten and Simonetta, penned Macias’s dissent.

The Macias majority concluded that “Simonetta and Braaten do not control the present case because the duty at issue is to warn of the danger of asbestos exposure inherent in the use and maintenance of the defendant manufacturers’’ own products, the respirators.”  Specifically, the Court reasoned that the plaintiffs’ claims “are fundamentally different from those in Simonetta and Braaten because here the focus of the claims is on the respirator itself[:] it failed to include adequate warnings and instructions regarding the safe use, handling, maintenance, and cleaning of the respirator.”  The plaintiffs’ claims “rest squarely on the respirator product in and of itself, and specifically on the inadequate warnings and instructions of the respirator product, without reference to any other manufacturer’s products.”

The Court noted that the defendant manufacturers in Simonetta and Braaten were outside the chain of distribution of the harmful asbestos products; the defendants’ products did not require the use of asbestos, were not specifically designed to be used with asbestos, by their very nature did not necessarily involve exposure to asbestos, and “only happened to be insulated by asbestos products because the Navy chose to insulate the equipment on its ships with asbestos products.”  In contrast, the Court reasoned that the respirators were specifically designed and intended to filter contaminants from the air, including asbestos. And, integral to reuse, the respirators had to be safely cleaned.  The majority distinguished the respirators from other tools such as hammers and tarps – which were used around the shipyards and similarly returned for cleaning – that came into contact with hazardous asbestos by happenstance: “the respirators come into contact with asbestos because that is what they are designed to do.”

Thus, according to the majority, the defendants in Macias were in the chain of distribution of the products that posed the risk to the plaintiff’s asbestos exposure – the respirators. It did not matter, said the majority, that the respirator manufacturers were not in the chain of distribution of products containing asbestos when manufactured.  The majority concluded: “[t]his case comes within the general rule that a manufacturer in the chain of distribution is subject to liability for failure to warn of the hazards associated with use of its own products.”

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It is not uncommon for a deposition witness testifying regarding critical events to make somewhat inconsistent statements under direct- and cross-examination.  For decades California trial courts have denied summary judgment motions on the ground that such inconsistencies create triable issues of fact that must be resolved by juries.  The lower courts cite two California Supreme Court opinions, Clemmer v. Hartford Insurance Co., 22 Cal.3d 865 (1978) and Reid v. Google, Inc., 50 Cal.4th 512 (2010), for the principle that "the task of disambiguating ambiguous utterances is for trial, not for summary judgment."

In Davis v. Foster Wheeler Energy Corp., __Cal.App.4^th__, 2012 WL 1435016 (2012) [pdf], the California Court of Appeal was asked to reverse a summary judgment entered against the heirs of a refinery worker who had died of asbestos-related disease and in favor of the manufacturer of an industrial boiler that had been insulated with asbestos.  A witness who had worked with the decedent testified under examination by plaintiffs’ counsel that he had witnessed (while working nearby the decedent) the manufacturer’s employees remove asbestos insulation from pipes attached to the boiler, creating dust that was inhaled by the decedent.  Later in the deposition, while being examined by defense counsel, the witness said the opposite; only insulators hired by the refinery had applied and removed asbestos.  He denied having any knowledge that anyone associated with the manufacturer had ever applied or removed asbestos.  The trial judge, having reviewed the testimony of another percipient witness that corroborated the deponent’s second version of the relevant events, granted summary judgment for the manufacturer:  “[N]o reasonable jury considering this opposing testimony would conclude that the [Foster Wheeler] workers are the workers who removed the asbestos insulation around the Foster Wheeler boilers.”

On appeal plaintiffs argued that Clemmer and Reid required reversal.  The Court of Appeal, affirming, disagreed:  “In this case, the testimony is not ambiguous, but is contradictory, and the issue is . . . whether with [the witness’s] internally contradictory testimony plaintiffs established the existence of a triable issue of fact, and on de novo review [citation] we agree with the trial court that it did not.”

Under Davis counsel need not shy away from bringing a summary judgment motion even where there are internal inconsistencies in the testimony, especially where the testimony favorable to the client is consistent with the weight of other evidence submitted for the trial court’s evaluation.

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The California Supreme Court heard oral argument in O’Neil v. Crane Co. The Court’s decision will likely define an important area of strict products liability law in California – specifically, it will expand or limit the duty of product manufacturers to warn about the hazards of replacement parts made by others that are subsequently incorporated by the purchaser into the manufacturer’s original product. 

O’Neil arises out of the plaintiff’s exposure to asbestos-containing gaskets and packing materials used in and around the defendants’ valves and pumps, which were incorporated by the Navy into the steam propulsion system aboard the USS Oriskany, where the plaintiff served while he was enlisted. Though the pumps and valves delivered to the Navy originally incorporated asbestos-containing gaskets and packing, all parties agreed that by the time plaintiff served aboard the Oriskany, the original asbestos packing and gaskets had been removed and replaced with packing and gaskets manufactured by third parties. Nevertheless, the plaintiff argued the pump and valve manufacturers had a duty to warn him regarding the hazards of asbestos.  

Prior to O’Neil this legal issue had been addressed by the California Court of Appeal, most notably in Taylor v. Elliot Turbomachinery Co., Inc. (2009) 171 Cal. App. 4th 564. There, the First Appellate District noted, on facts indistinguishable from the present case, that the plaintiff’s injury did not come from the defendants’ equipment itself, but instead was released from products made or supplied by other manufacturers, though used in conjunction with the defendants’ equipment. Thus, the defendant manufacturers were not part of the chain of distribution of the injury-causing product, which was actually the asbestos-containing insulation. The court held that California law did not recognize a duty to warn of defects in another manufacturer's product.  The Second District Court of Appeal below in O’Neil rejected the reasoning of Taylor, and instead ruled that a manufacturer is strictly liable for dangerous products with which its product will necessarily be used. The Supreme Court granted certiorari in O’Neil to resolve the conflict between the O’Neil and Taylor decisions.

At oral argument, one of the Justices’ primary concerns appeared to be factual in nature: What exactly was meant by the parties’ contention that the Navy “specified” or “required” the use of asbestos-containing insulation? As phrased by Chief Justice Cantil-Sakauye, did the Navy “say the magic word, ‘asbestos’” in its specifications to the defendants, or did the Navy merely promulgate performance specifications and the defendant manufacturers independently determined that asbestos-containing insulation was the best (or even only) material suitable to meet those requirements?  

Another significant concern of the Court appeared to be whether the pumps and valves were capable of functioning without the asbestos-containing components. In other words, was asbestos required for the pumps and valves to function properly, or was asbestos merely required by the dictates of the steam propulsion system, and not the design of the valves or pumps themselves. The Court seemed troubled settling on the proposition that the pumps and valves could be deemed defectively designed if the pumps and valves were “asbestos neutral,” and could function just as well in other systems utilizing non-asbestos containing materials. 

Ultimately this latter point may be where the court draws the line, assigning a duty to warn about replacement parts made by others only if the replacement part is identical to the original hazardous part, and the replacement part is essential to the function of the defendant’s product. The Court will issue its opinion within 90 days. 

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The California Supreme Court, in O'Neil v. Crane Co., No. S177401, is considering the liability of an equipment manufacturer under these circumstances:  The manufacturer sells a product pursuant to the buyer's specifications (say, a valve or pump) that is accompanied by an allegedly defective part (say, an asbestos-containing gasket) made by another, which is incorporated into a much larger and highly complex installation of machinery (say, the propulsion system for a Navy war vessel) designed by the buyer.  Over decades, the gasket is replaced many times during scheduled maintenance.  Eventually a replacement gasket, produced by an unknown third-party supplier, releases asbestos dust that causes injury.  May the original equipment manufacturer be found liable?
 
The first California Court of Appeal decision to address this question was issued by the First Appellate District (Division 1).  Taylor v. Elliott Turbomachinery Co., 171 Cal.App.4th 564 (2009). Taylor found the manufacturer was not liable because:

• it was not in the chain of distribution of the defective part, and received no profit or other economic benefit from the sale of the part;
• a manufacturer is not liable for an injury caused by a component part supplied by another unless the manufacturer's product caused or created the risk of harm, and
• a manufacturer is not liable where it simply produces a product pursuant to the specifications of a buyer who intends to incorporate it into a buyer-designed product unless the manufacturer's part itself caused the injury, which was not the case in Taylor.

The California Supreme Court declined  review.
 
Seven months after Taylor was decided, the Second District (Division 5) of the Court of Appeal handed down O'Neil v. Crane Co., 99 Cal.Rptr.3d 533 (2009).  O'Neil expressly rejected the holding and analysis of Taylor under analytically indistinguishable facts, concluding that the original product manufacturer may be liable on the theory that the pumps and valves were designed to be used in conjunction with asbestos-containing parts, and the foreseeable use of the product required maintenance which included periodic replacement and disturbance of parts containing asbestos.  If this foreseeable use caused injury, the court found, the manufacturer may be liable for that injury under established California law.  The Supreme Court granted the manufacturer's petition for review.
 
Shortly after O'Neil was decided, and before the Supreme Court granted review, another division (Division 3) of the Second District, in a published opinion, followed Taylor and ignored O'Neil in Merrill v. Leslie Controls, 101 Cal.Rptr.3d 614 (2009).  The Supreme Court issued a "grant and hold" in Merrill (that is, the court granted review and deferred briefing until O'Neil is decided).  Three months later, Division 2 of the Second District decided Hall v. Warren Pumps LLC, 2010 WL 528489 (unpublished) (2010), which also followed the reasoning and holding of Taylor.  A petition for review of Hall is pending, and undoubtedly the Supreme Court will issue a grant and hold in that matter as well.
 
Now yet another division of the Court of Appeal (Second District, Division 4) has expressed its views on the issue.  In a published opinion (Walton v. The William Powell Co., __ Cal.App.4th __, 2010 WL 1612209) the court explicitly adopted the analysis, conclusions, and holdings of Taylor while declining to address O'Neil or its reasoning in light of the Supreme Court's grant of review.  That the court decided to publish its views while breaking no ground not covered by Merrill suggests that is strongly wished its voice to be clearly heard while the Supreme Court is considering the question.  The Supreme Court will unquestionably issue a grant and hold in Walton; however, for those keeping score the number of justices voting for the Taylor view now stands at twelve, while there are three who support O'Neil.  The votes of the justices who will put the issue to rest is expected in the first half of 2011.

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Terry McCann was an Oklahoma resident in the 1950s. He claimed he was exposed to asbestos from a Foster Wheeler generator at a refinery in Tulsa in 1957. After his alleged exposure, he moved to California in 1975. He was diagnosed with mesothelioma in 2005. He filed suit against Foster Wheeler in California state court.

Oklahoma has a 10-year statute of repose applicable to McCann's claim, which would bar McCann's lawsuit had he filed it in Oklahoma. However, McCann's suit was timely if measured by California's statute of limitations.

Foster Wheeler sought summary judgment, arguing that the timeliness of the action should be governed by Oklahoma law, rather than California law, and that under Oklahoma law McCann's cause of action against Foster Wheeler was barred by Oklahoma's statue of repose. The trial court agreed, finding that Oklahoma law governed the action, and McCann's claims were barred. The Court of Appeal reversed, concluding that McCann's residence in California at the time of his diagnosis trumped Oklahoma's interest in limiting liability embodied by its statute of repose.

The California Supreme Court disagreed: California's interest in affording a remedy to a current resident was insufficient to justify the choice of forum law over the law of another much more significantly involved jurisdiction.

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