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.