CA Case to Decide Whether the Duty to Warn Covers Hazards Posed By Products of Others

Product liability law typically places liability for injuries upon a manufacturer or seller that exercises control over the product at issue, profits from its sale, or has developed a duty to the injured party. In essence, the law recognizes that the public expects reputable sellers to stand behind their goods. But what about products made by third parties, such as replacement internal parts or external parts that are attached to a product post-sale? The California Supreme Court is considering a case where the question is whether a duty to warn may be imposed on the manufacturer or seller of one product for hazards associated with products that are manufactured and sold by third parties. The issue, which arises in the context of asbestos litigation, could have significantly broader liability and policy implications.

A Radical Expansion of Tort Law

Traditional product liability principles generally do not hold a manufacturer or seller responsible for harm from the products of third parties. After all, the basis of strict liability is that a seller, by marketing its product, undertakes a special responsibility toward consumers who may be injured by it. A defendant that manufactures or sells a product is in the best position to know the dangerous aspects of its product. Tying liability to the injury-producing product recognizes that manufacturers cannot be expected to determine dangers associated with products that they did not manufacture or sell and do not have an opportunity to inspect. In addition, the law recognizes that those who market a product ought bear the burden of accidental injuries because they are in a position to internalize such costs in the price of the product and may obtain liability insurance against loss.

Similar reasoning applies in negligence claims, where the plaintiff must establish the existence of a duty owed directly to the injured person. Some plaintiffs' lawyers argue that it is appropriate to impose liability on a manufacturer for failure to warn about the risks of asbestos-containing replacement internal parts or external parts made by others on the theory that it was foreseeable to the manufacturer that these parts could be used with its product. Foreseeability of harm alone, however, is not sufficient to create a tort duty. As the California Supreme Court explained in Thing v. La Chusa, 771 P.2d 814, 830 (Cal. 1989), “there are clear judicial days on which a court can foresee forever and thus determine liability but none on which the foresight alone provides a socially and judicially acceptable limit on recovery of damages for [an] injury.” For this reason, courts look to various public policy considerations to establish if a duty exists, e.g., whether the connection between the defendant's conduct and the injury is direct or attenuated, and whether the defendant profited from the conduct.

Courts generally recognize only a few situations where manufacturers may be liable for harms caused by others' products, such as where a component part maker substantially participated in the integration of its product into the design of a finished product, or two otherwise safe products combine to create a new, synergistic hazard. Courts must draw a reasonable line, and this line has been in place throughout the common law.

An Attempt to Expand the Law

Since asbestos litigation emerged over three decades ago, lawyers who bring such claims have continually sought out new defendants or raised new theories of liability. An emerging theory promoted by some plaintiffs' counsel is that makers of nondefective products, such as pumps or valves, should be held liable for harms allegedly caused by asbestos-containing replacement parts manufactured or sold by third parties (i.e., replacement internal gaskets or packing or replacement external flange gaskets) or asbestos-containing external thermal insulation manufactured and sold by third parties and attached post-sale, e.g., by the U.S. Navy.

It is easy to see what is suddenly driving this novel theory: Most major manufacturers of asbestos-containing products have filed for bankruptcy, and the Navy enjoys sovereign immunity. As a substitute, plaintiffs' lawyers have sought to impose liability on solvent manufacturers for harms caused by products they never made, sold, installed, or profited from. The implications of this theory should be of concern to any company that manufactures or sells products.

Two appellate decisions in Washington State accepted the radical new third-party duty-to-warn theory proposed by asbestos plaintiffs' lawyers, but the momentum the rulings created was short-lived. In 2008, the state's highest court rejected component maker liability for failure to warn of asbestos-related hazards in products made by others. In Simonetta v. Viad Corp., 197 P.3d 127 (Wash. 2008), the Washington Supreme Court held that a manufacturer may not be held liable in common law negligence or strict liability actions for failure to warn of the dangers of asbestos exposure resulting from another manufacturer's insulation applied to its products after sale of the products to the Navy. There, the court ruled that an evaporator manufacturer was only responsible for the “chain of distribution” of its product and that the addition of asbestos-containing insulation manufactured by another company represented a separate chain of distribution. In a companion case, Braaten v. Saberhagen Holdings, 198 P.3d 493 (Wash. 2008), the court rejected failure-to-warn claims against pump and valve manufacturers relating to replacement packing and replacement gaskets made by others. In both instances, the court rejected plaintiffs' claims that the foreseeability of harm gave rise to a duty owed.

Facing defeat in Washington, plaintiffs' lawyers then tried to export their novel theory to California, where it was also rejected by four out of the five intermediate appellate courts that considered the issue. See Taylor v. Elliott Turbomachinery Co., Inc., 171 Cal. App. 4th 564 (1st Dist. 2009), review denied (Cal. June 10, 2009); Hall v. Warren Pumps, LLC, 2010 WL 528489 (Cal. App. 2d Dist. Div. 2 Feb. 16, 2010) (unpublished), review granted (May 12, 2010); Merrill v. Leslie Controls, Inc., 179 Cal. App. 4th 262 (2d Dist. Div. 3 2009), review granted and opinion superseded, 224 P.3d 919 (Cal. 2010); Walton v. William Powell Co., 183 Cal. App. 4th 1470 (2d Dist. Div. 4), review granted and opinion superseded, 232 P.3d 1201 (Cal. 2010).

Other courts around the country have rejected similar claims. For example, the U.S. Court of Appeals for the Sixth Circuit has found that a pump manufacturer could not have caused a merchant seaman's illness from exposure to insulation used on the pumps or the replacement gaskets that were supplied by third parties. See Lindstrom v. A-C Prod. Liab. Trust, 424 F.3d 488 (6th Cir. 2005). Federal and state courts have also found that vehicle manufacturers are liable only for defective components incorporated into their own finished products; they have no duty to warn of dangers involved in replacement parts made by others. See, e.g., Ford Motor Co. v. Wood, 703 A.2d 1315 (Md. Ct. Spec. App.), cert. denied, 709 A.2d 139 (Md. 1998), abrogated on other grounds, John Crane, Inc. v. Scribner, 800 A.2d 727 (Md. 2002); Baughman v. General Motors Corp., 780 F.2d 1131, 1132-33 (4th Cir. 1986). Recently, Pennsylvania and Maine courts firmly adhered to traditional principles of liability, holding that a manufacturer cannot be held liable for a product it neither manufactured nor supplied. See, e.g., Schaffner v. Aesys Tech., LLC, 2010 WL 6052750, at *5-6 (Pa. Super. Jan. 21, 2010); Rumery v. Garlock Sealing Tech., Inc., 2009 WL 1747857, at *6 (Me. Super. Ct. Cumberland County Apr. 24, 2009).

In one California appellate district, however, the plaintiffs' theory found support. See O'Neil v. Crane Co., 177 Cal. App. 4th 1019 (2d Dist. Div. 5), review granted and opinion superseded, 223 P3d 1 (Cal. 2009). The court ruled that a plaintiff who served aboard an aircraft carrier could sue those that supplied the ship with pumps and valves because it was foreseeable that those products would be used with replacement parts or external parts supplied by others that contained asbestos. At press time, the O'Neil case was pending before the California Supreme Court.

Implications of O'Neil

If the California Supreme Court adopts the plaintiffs' novel theory in O'Neil, the case could breathe new life into this discredited theory of liability. Such a rule would affect all product manufacturers and have adverse, far-reaching public policy implications.

Most directly, imposing liability on manufacturers for products made by others would worsen asbestos litigation and invite a flood of new cases. Hundreds of companies made products that arguably were used in the vicinity of asbestos insulation, which in earlier years was ubiquitous in industry and buildings. Many of these companies may have never manufactured a product containing asbestos (e.g., manufacturers of steel pipe and pipe hangers; makers of nuts, bolts, washers, wire, and other fasteners of pipe systems; makers of any equipment attached to and using the pipe system; and paint manufacturers), but they could nonetheless be held liable under such a theory.

The effects of accepting such a theory extend well beyond asbestos litigation. In the real world of product design and usage, virtually every product is connected in some manner with many others in ways that could conceivably be anticipated if courts were willing to extend foresight far enough. Such a duty rule would require every product supplier to warn of the foreseeable dangers of numerous other manufacturers' products that might be used in conjunction with or near their own. For example, makers of bread or jam would be required to warn of peanut allergies, as a peanut butter and jelly sandwich is a foreseeable use of their products. Door or drywall manufacturers could be held liable for failure to warn about the dangers of lead paint made by others and applied to their products post-sale. The only limit on such an expansive legal requirement would be the imagination of creative plaintiffs' lawyers.

If a manufacturer's duty were defined by foreseeable uses of other products, the chain of warnings and liability would be so endless, so unpredictable, and so speculative as to be worthless. No rational manufacturer could operate under such a system. Manufacturers also cannot be expected to have R&D facilities to identify potential dangers with respect to all products that may be used in conjunction with or in the vicinity of their own products. Consumer safety could be undermined by the potential for over-warning (the “Boy Who Cried Wolf” problem) and through conflicting information that may be provided by manufacturers of different components and by makers of finished products.

Conclusion

In sum, none of the policies supporting product liability support imposing liability on those who did not market or sell the product that allegedly caused a plaintiff's injury and that derived no income from the sale of those parts. The California Supreme Court in O'Neil should adhere to traditional principles, adopt the reasoning of the Washington Supreme Court and the majority of California appellate courts, and reject the plaintiffs' third-party duty-to-warn theory.

Malcolm Myers is Vice President ' Asbestos Issues for Resolute Management, Inc., Philadelphia. Messrs. Behrens and Silverman are attorneys in the Washington, DC-based Public Policy Group of Shook, Hardy & Bacon L.L.P.

Product liability law typically places liability for injuries upon a manufacturer or seller that exercises control over the product at issue, profits from its sale, or has developed a duty to the injured party. In essence, the law recognizes that the public expects reputable sellers to stand behind their goods. But what about products made by third parties, such as replacement internal parts or external parts that are attached to a product post-sale? The California Supreme Court is considering a case where the question is whether a duty to warn may be imposed on the manufacturer or seller of one product for hazards associated with products that are manufactured and sold by third parties. The issue, which arises in the context of asbestos litigation, could have significantly broader liability and policy implications.

A Radical Expansion of Tort Law

Traditional product liability principles generally do not hold a manufacturer or seller responsible for harm from the products of third parties. After all, the basis of strict liability is that a seller, by marketing its product, undertakes a special responsibility toward consumers who may be injured by it. A defendant that manufactures or sells a product is in the best position to know the dangerous aspects of its product. Tying liability to the injury-producing product recognizes that manufacturers cannot be expected to determine dangers associated with products that they did not manufacture or sell and do not have an opportunity to inspect. In addition, the law recognizes that those who market a product ought bear the burden of accidental injuries because they are in a position to internalize such costs in the price of the product and may obtain liability insurance against loss.

Similar reasoning applies in negligence claims, where the plaintiff must establish the existence of a duty owed directly to the injured person. Some plaintiffs' lawyers argue that it is appropriate to impose liability on a manufacturer for failure to warn about the risks of asbestos-containing replacement internal parts or external parts made by others on the theory that it was foreseeable to the manufacturer that these parts could be used with its product. Foreseeability of harm alone, however, is not sufficient to create a tort duty. As the California Supreme Court explained in Thing v. La Chusa , 771 P.2d 814, 830 (Cal. 1989), “there are clear judicial days on which a court can foresee forever and thus determine liability but none on which the foresight alone provides a socially and judicially acceptable limit on recovery of damages for [an] injury.” For this reason, courts look to various public policy considerations to establish if a duty exists, e.g. , whether the connection between the defendant's conduct and the injury is direct or attenuated, and whether the defendant profited from the conduct.

Courts generally recognize only a few situations where manufacturers may be liable for harms caused by others' products, such as where a component part maker substantially participated in the integration of its product into the design of a finished product, or two otherwise safe products combine to create a new, synergistic hazard. Courts must draw a reasonable line, and this line has been in place throughout the common law.

An Attempt to Expand the Law

Since asbestos litigation emerged over three decades ago, lawyers who bring such claims have continually sought out new defendants or raised new theories of liability. An emerging theory promoted by some plaintiffs' counsel is that makers of nondefective products, such as pumps or valves, should be held liable for harms allegedly caused by asbestos-containing replacement parts manufactured or sold by third parties (i.e., replacement internal gaskets or packing or replacement external flange gaskets) or asbestos-containing external thermal insulation manufactured and sold by third parties and attached post-sale, e.g., by the U.S. Navy.

It is easy to see what is suddenly driving this novel theory: Most major manufacturers of asbestos-containing products have filed for bankruptcy, and the Navy enjoys sovereign immunity. As a substitute, plaintiffs' lawyers have sought to impose liability on solvent manufacturers for harms caused by products they never made, sold, installed, or profited from. The implications of this theory should be of concern to any company that manufactures or sells products.

Two appellate decisions in Washington State accepted the radical new third-party duty-to-warn theory proposed by asbestos plaintiffs' lawyers, but the momentum the rulings created was short-lived. In 2008, the state's highest court rejected component maker liability for failure to warn of asbestos-related hazards in products made by others. In Simonetta v. Viad Corp. , 197 P.3d 127 (Wash. 2008), the Washington Supreme Court held that a manufacturer may not be held liable in common law negligence or strict liability actions for failure to warn of the dangers of asbestos exposure resulting from another manufacturer's insulation applied to its products after sale of the products to the Navy. There, the court ruled that an evaporator manufacturer was only responsible for the “chain of distribution” of its product and that the addition of asbestos-containing insulation manufactured by another company represented a separate chain of distribution. In a companion case, Braaten v. Saberhagen Holdings , 198 P.3d 493 (Wash. 2008), the court rejected failure-to-warn claims against pump and valve manufacturers relating to replacement packing and replacement gaskets made by others. In both instances, the court rejected plaintiffs' claims that the foreseeability of harm gave rise to a duty owed.

Facing defeat in Washington, plaintiffs' lawyers then tried to export their novel theory to California, where it was also rejected by four out of the five intermediate appellate courts that considered the issue. See Taylor v. Elliott Turbomachinery Co., Inc. , 171 Cal. App. 4th 564 (1st Dist. 2009), review denied (Cal. June 10, 2009); Hall v. Warren Pumps, LLC, 2010 WL 528489 (Cal. App. 2d Dist. Div. 2 Feb. 16, 2010) (unpublished), review granted (May 12, 2010); Merrill v. Leslie Controls, Inc. , 179 Cal. App. 4th 262 (2d Dist. Div. 3 2009), review granted and opinion superseded, 224 P.3d 919 (Cal. 2010); Walton v. William Powell Co. , 183 Cal. App. 4th 1470 (2d Dist. Div. 4), review granted and opinion superseded, 232 P.3d 1201 (Cal. 2010).

Other courts around the country have rejected similar claims. For example, the U.S. Court of Appeals for the Sixth Circuit has found that a pump manufacturer could not have caused a merchant seaman's illness from exposure to insulation used on the pumps or the replacement gaskets that were supplied by third parties. See Lindstrom v. A-C Prod. Liab. Trust , 424 F.3d 488 (6th Cir. 2005). Federal and state courts have also found that vehicle manufacturers are liable only for defective components incorporated into their own finished products; they have no duty to warn of dangers involved in replacement parts made by others. See, e.g., Ford Motor Co. v. Wood , 703 A.2d 1315 (Md. Ct. Spec. App.), cert. denied, 709 A.2d 139 (Md. 1998), abrogated on other grounds, John Crane, Inc. v. Scribner , 800 A.2d 727 (Md. 2002); Baughman v. General Motors Corp. , 780 F.2d 1131, 1132-33 (4th Cir. 1986). Recently, Pennsylvania and Maine courts firmly adhered to traditional principles of liability, holding that a manufacturer cannot be held liable for a product it neither manufactured nor supplied. See, e.g., Schaffner v. Aesys Tech., LLC, 2010 WL 6052750, at *5-6 (Pa. Super. Jan. 21, 2010); Rumery v. Garlock Sealing Tech., Inc., 2009 WL 1747857, at *6 (Me. Super. Ct. Cumberland County Apr. 24, 2009).

In one California appellate district, however, the plaintiffs' theory found support. See O'Neil v. Crane Co ., 177 Cal. App. 4th 1019 (2d Dist. Div. 5), review granted and opinion superseded, 223 P3d 1 (Cal. 2009). The court ruled that a plaintiff who served aboard an aircraft carrier could sue those that supplied the ship with pumps and valves because it was foreseeable that those products would be used with replacement parts or external parts supplied by others that contained asbestos. At press time, the O'Neil case was pending before the California Supreme Court.

Implications of O'Neil

If the California Supreme Court adopts the plaintiffs' novel theory in O'Neil, the case could breathe new life into this discredited theory of liability. Such a rule would affect all product manufacturers and have adverse, far-reaching public policy implications.

Most directly, imposing liability on manufacturers for products made by others would worsen asbestos litigation and invite a flood of new cases. Hundreds of companies made products that arguably were used in the vicinity of asbestos insulation, which in earlier years was ubiquitous in industry and buildings. Many of these companies may have never manufactured a product containing asbestos (e.g., manufacturers of steel pipe and pipe hangers; makers of nuts, bolts, washers, wire, and other fasteners of pipe systems; makers of any equipment attached to and using the pipe system; and paint manufacturers), but they could nonetheless be held liable under such a theory.

The effects of accepting such a theory extend well beyond asbestos litigation. In the real world of product design and usage, virtually every product is connected in some manner with many others in ways that could conceivably be anticipated if courts were willing to extend foresight far enough. Such a duty rule would require every product supplier to warn of the foreseeable dangers of numerous other manufacturers' products that might be used in conjunction with or near their own. For example, makers of bread or jam would be required to warn of peanut allergies, as a peanut butter and jelly sandwich is a foreseeable use of their products. Door or drywall manufacturers could be held liable for failure to warn about the dangers of lead paint made by others and applied to their products post-sale. The only limit on such an expansive legal requirement would be the imagination of creative plaintiffs' lawyers.

If a manufacturer's duty were defined by foreseeable uses of other products, the chain of warnings and liability would be so endless, so unpredictable, and so speculative as to be worthless. No rational manufacturer could operate under such a system. Manufacturers also cannot be expected to have R&D facilities to identify potential dangers with respect to all products that may be used in conjunction with or in the vicinity of their own products. Consumer safety could be undermined by the potential for over-warning (the “Boy Who Cried Wolf” problem) and through conflicting information that may be provided by manufacturers of different components and by makers of finished products.

Conclusion

In sum, none of the policies supporting product liability support imposing liability on those who did not market or sell the product that allegedly caused a plaintiff's injury and that derived no income from the sale of those parts. The California Supreme Court in O'Neil should adhere to traditional principles, adopt the reasoning of the Washington Supreme Court and the majority of California appellate courts, and reject the plaintiffs' third-party duty-to-warn theory.

Malcolm Myers is Vice President ' Asbestos Issues for Resolute Management, Inc., Philadelphia. Messrs. Behrens and Silverman are attorneys in the Washington, DC-based Public Policy Group of Shook, Hardy & Bacon L.L.P.