2009 was a tumultuous year for asbestos litigation in California, confounded by inconsistent rulings regarding a manufacturer’s duty to warn about third party products. Two of three courts ruled in favor of manufacturers while the third voiced a strong dissent and ruled in opposition to manufacturers, leaving California product liability law in a state of uncertainty. More importantly, despite the 2-1 advantage favoring equipment manufacturers, it seems that future cases will be subject to interpretation and may hinge on the trial court’s perception of a manufacturer’s direct and implied knowledge about whether their products will be used in conjunction with asbestos containing third party products.
Taylor – The Defense Reaches a Peak
In February of this year, the California Appellate Court of the First District handed down the landmark decision of Taylor v. Elliott Turbomachinery Co., Inc., (1st Dist.) (2009). In Taylor, decedent was a former fireman and machinist mate who served aboard the USS Hornet from 1964 to 1967. Plaintiffs sued Leslie Controls (“Leslie”), a valve manufacturer, who supplied valves used in the steam propulsion system on the USS Hornet in the 1940s. Plaintiffs claimed that Leslie was liable for decedent’s asbestos exposures from three categories of products: (1) insulation attached to the pipes and the steam propulsion system, (2) flange gaskets attached to the exterior flanges on each side of the valve, and (3) internal valve replacement parts that were encased within the valves. Plaintiffs alleged that these products released dust during repairs which decedent then inhaled causing him injury. Leslie did not manufacture the insulation, flange gaskets, or the internal valve replacement parts. There was also undisputed evidence that all of the original gaskets and packing supplied with the valves had been replaced by the time decedent began working aboard the USS Hornet. Thus, the trial court granted Leslie’s motion for summary judgment holding that Leslie owed no duty to warn about the hazards associated with the products it neither manufactured or supplied. Plaintiffs appealed.
The Taylor court noted that under failure to warn principles, a hazard arises from the use and operation of a particular product, and therefore gives rise to a duty to warn only if that product creates or contributes to the danger against which a warning is sought. Thus, the Court held that Leslie owed no duty to warn with respect to the insulation and flange gaskets because the use and operation of Leslie’s valves did not create or constitute the danger posed by those products. Rather, the danger was posed solely by the characteristics of the insulation and flange gaskets themselves, which were already dangerous on their own. Moreover, mere foreseeability of exposure to such products does not give rise to a duty to warn where there is potential contact with a hazard posed solely by products made by others. To require manufacturers to do so would impose a virtually unlimited duty to warn whenever it was foreseeable that the intended use of a manufacturer’s product will bring an end user into contact with a hazard created solely by the product of another. The Court also noted that Leslie did not have a duty to warn with respect to those products under the Component Parts Doctrine. The Component Parts Doctrine holds that a manufacturer of a component part is not liable for injuries caused by the finished product unless the component itself was defective when it left the manufacturer, or the component manufacturer substantially participated in the production of the final product. As Leslie did not participate in the integration of its valves into the design of the steam propulsion system, which were manufactured to the Navy’s exacting specifications, it did not give rise to a duty to warn.
The Taylor court also held that Leslie owed no duty to warn with respect to internal valves replacement parts that were manufactured and supplied by others but used in Leslie’s valves. Although manufacturers do have a duty to warn with respect to the components integrated into its finished products, even if it did not manufacture all of the components itself, this duty does not extend to replacement parts manufactured by others, purchased separately, and installed by others in the manufacturer’s product.
O’Neil – Plunging Downward
On September 18, 2009, in direct conflict with the Taylor decision, the California Appellate Court of the Second District reversed a nonsuit judgment granted to Crane Co.("Crane") and Warren Pumps ("Warren") in O’Neil v. Crane Co. (2nd Dist.) (2009). Similar to Taylor, plaintiffs in O’Neil also alleged that decedent was exposed to asbestos fibers released from the packing and insulation that was replaced or removed from Crane valves and Warren pumps during the ordinary course of maintenance while serving aboard the USS Oriskany from 1965 to 1966. In making their ruling, the O’Neil Court found that Crane and Warren were not exempt from liability under the Component Parts Doctrine for several reasons. First, unlike manufacturers that make fungible products designed to be incorporated into other products without any control over the design of the finished product, Crane and Warren designed and manufactured their products to be used with asbestos insulation and packing which had to be removed during routine repair and maintenance. Further, unlike the manufacturers in component part cases who had no interaction with the user of the finished product, and thus, no ability to warn, Crane and Warren had the ability to warn users of their products through the manuals they supplied with their products. The O’Neil court further disagreed with the Taylor court’s finding that the entire steam propulsion system of an aircraft carrier is a “finished product” as used in the context of the component parts defense. Such a broad definition would require defendants to be involved in the design of the entire propulsion system or of the ship itself and stretches the defense too far. More importantly, the O’Neil court found that the component parts defense did not apply because the products were designed to be used with asbestos-containing insulation and packing which would become dangerous during the ordinary and foreseeable use of the products; thus, the design was defective.
Moreover, the O’Neil court disagreed with Crane and Warren’s contention that it cannot be liable in strict liability for an injury caused by a product it did not manufacture or supply unless it incorporated a defective product into a product which it later sold. Rather, the O’Neil court found that strict liability extends to an injury caused by foreseeable use and misuse of its product and for defective components made by others that are later incorporated into their products. The Court reasoned that Crane and Warren incorporated asbestos-containing products into their own products and knew that those products would need to be replaced with the same kind of products over time. The injury was caused by the operation of their products with replacement parts that had the same dangerous propensities as the original parts. The Crane and Warren products were defective because they required asbestos packing and insulation, and because they offered no appropriate warnings.
The O’Neil court also criticized the Taylor court for misinterpreting the decision of Tellez-Cordova v. Campbell-Hausfeld/Scott Feizger Co. (2004) on which it relied on to reach its conclusion that Mr. Taylor’s injuries were caused not by any action of Leslie’s products, but rather by the release of asbestos from products produced by others. In Tellez-Cordova, the court held that manufacturers of power tools used for grinding and sanding metals had a duty to warn of the hazards associated with breathing the metallic dust created by the use of their tools. The O’Neil court clarified that Tellez-Cordova stood for the proposition that the defendant’s products, although harmless without the attachments, was harmful when used as intended. The fact that the respirable dust emanated from the attachments, not the tools, was irrelevant because the use of the defendant’s own product created the harm. Thus, O’Neil court ruled against Crane and Warren because they incorporated asbestos into their products and decedent’s injury was caused by the operation of those products.
Merrill – Back On Top
One week later, on September 25, 2009, the California Appellate Court of the Second District upheld Taylor and reached the opposite conclusion of O’Neil in the case of Merrill v. Leslie Controls (5th Dist.)(2009). Merrill involved a plaintiff who alleged asbestos exposure against equipment manufacturers while serving aboard different vessels in the Navy from 1959 to 1979. Plaintiff worked primarily in the engine rooms and his duties included removal and replacement of asbestos containing gaskets, packing, and insulation from various types of equipment. The trial court denied Leslie Control’s motion for summary judgment. At trial, the jury found against Leslie for strict liability and negligence and Leslie appealed the trial court’s denial for a judgment notwithstanding the verdict and for a new trial. On appeal, the Merrill court reversed the judgment.
Following the Taylor rationale, the Merrill Court determined that Leslie was not liable in strict liability for failure to warn about hazards posed by asbestos-containing products that they did not manufacture, supply or place in the chain of distribution as there was no evidence that Leslie distributed any of the asbestos containing flange gaskets or the insulation that attached to the exterior of the Leslie valves. Leslie was also not liable under the components parts doctrine because there was no evidence that plaintiff removed any of gaskets and packing that Leslie originally supplied with the valve, nor was there any evidence that Leslie supplied the new gasket or packing that plaintiff then installed. Thus, plaintiff was unable to show that the defects in the component parts caused his injury. Further, where Leslie valves did not cause the injury, Leslie had no duty to warn of defects in another manufacturer’s products, even if those products were used in association with its valves. The fact that use of asbestos-containing materials with Leslie valves was foreseeable, and that Leslie anticipated the use of such materials with its valves did not alter this conclusion.
The Merrill court also extended the Taylor court ruling to apply to design defects where plaintiff was unable to show that he was exposed to asbestos from a product manufactured, supplied, distributed, or placed in the chain of commerce by Leslie. However, the Merrill court did not provide any reasoning to support its conclusion. The Merrill court also determined that Leslie was not liable for negligent failure to warn because it did not owe plaintiff a legal duty of care. The Merrill court felt that plaintiff’s exposure to asbestos-containing materials occurred many years after Leslie first delivered new valves to the Navy; thus, the foreseeability of such harm arising from the failure to warn was less certain given the lengthy time that elapsed between Leslie’s delivery of the valves and plaintiff’s much later exposure.
What Now? Waiting in Suspense
Although the Merrill court’s ruling validated Taylor, equipment manufacturers should refrain from interpreting this ruling as a final and sweeping judgment of a manufacturer’s liability for third party products. The decision as written in Merrill is a bit troubling because it relied heavily on the Taylor court’s decision to support its ruling, however, it provided facts that support the reasoning reached in O’Neil. For example, the O’Neil court found that the components parts doctrine did not apply because the defendants in that case designed and manufactured their products to be used with asbestos insulation and packing which had to be removed during routine repair and maintenance. Further, the defendants in O’Neil had the ability to warn users of their products through the manuals they supplied with their products. In the Merrill case, the evidence showed that Leslie manufactured the valves, including the internal packing and gaskets, according to military specifications, which required the use of asbestos. Moreover, Leslie supplied purchasers of the valves with technical manuals containing instructions on repairing and maintaining the valves.
The O’Neil court also found the defendants in its case strictly liable because they incorporated asbestos-containing products into their products and knew that those products would need to be replaced with the same kind of products over time. The O’Neil court found that the products were defective because they required asbestos packing and insulation, and because they offered no appropriate warnings. Evidence in the Merrill case showed that Leslie understood from the 1940’s through the 1970’s, that asbestos packing material would have to be removed during maintenance of a piece of equipment, or that additional packing would be added. As early as 1962, Leslie also knew that amosite asbestos insulation was applied to and removed from Leslie valves. Nonetheless, they instructed purchasers of its valves to “[I]nsulate all pipe before and after reducing valve to minimize condensation.” Leslie did not provide warnings about the dangers of asbestos.
Despite the Merrill court’s favorable conclusion, it provided no insight as to whether it ruled the way it did because it failed to consider the O’Neil court’s perspective or because it just simply disagreed with O’Neil and found the evidence in their case immaterial to a manufacturer’s liability. The Merrill court made no reference to the O’Neil case and instead, used Taylor as precedence to limit a manufacturer’s liability. Without an outright dissent of the O’Neil case, trial courts are still left with the freedom to interpret the law to their own liking. Thus, future rulings will likely be based on which arguments the trial courts find more persuasive.
As equipment manufacturers go into 2010, they can only wonder what standards trial judges will apply in future cases as Taylor, O’Neil and Merrill created expressly conflicting authority regarding liability for after applied and supplied parts in the State of California. A resolution, however, lies in the near future as the California Supreme Court has granted review to O’Neil and the following issue: Can the manufacturer of valves and fittings installed on Navy ships, and designed to be used with asbestos packing, gaskets, and insulation, rely on the “component parts” defense or related theories to preclude strict liability for asbestosis injuries years later suffered by seamen on those ships? Thus, defendants and plaintiffs alike wait, with bated breath, and hope that the Supreme Court will rule in their favor.
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