Raw Material Suppliers Not Liable for Worker Injuries

A California appeals court ruled last week that several raw material suppliers could not be held liable for injuries allegedly sustained by a worker as a result of using their raw materials. See John Maxton v. Western States Metals, et al., No. B227000 (Cal. Ct. App., 2d Dist., 2/1/12).

Plaintiff alleged he sustained personal injuries as a result of working with metal products manufactured by defendants and supplied to Maxton‘s employer. The metal products were essentially raw materials that could be used in innumerable ways. The products at issue consisted of steel and aluminum ingots, sheets, rolls, tubes and the like. Plaintiff alleged he
worked with and around each of these metal products in cutting, grinding, sandblasting, welding, brazing, and other activities. This allegedly resulted in the generation and release of toxicologically significant amounts of toxic airborne fumes and dusts. As a direct result of this exposure, Maxton claimed he developed lung disease. 

Generally, suppliers of raw materials to manufacturers cannot be liable for negligence, or under a strict products liability theory, to the manufacturers‘ employees who sustain personal injuries as a result of using the raw materials in the manufacturing process. Only in extraordinary circumstances —such as when the raw materials are contaminated, the supplier exercises substantial control of the manufacturing process, or the supplier provides inherently dangerous raw materials— can suppliers be held liable. So the first issue was whether such circumstances existed here.

A few courts have imposed liability on suppliers of raw asbestos materials under negligence and strict liability causes of action.  The second issue was whether asbestos is unique in that it is inherently dangerous, and thus whether the holdings of those asbestos cases would be extended here.

Defendants mounted two kinds of challenges to the complaint. Some defendants filed demurrers; others filed motions for judgment on the pleadings. The trial court sustained the demurrers and granted the motions.  Plaintiff appealed.

The court of appeals noted that the component parts doctrine is set forth in section 5 of the Restatement Third of Torts, Products Liability, which provides:
―One engaged in the business of selling or otherwise distributing product components who sells or distributes a component is subject to liability for harm to persons or property caused by a product into which the component is integrated if:
―(a) the component is defective in itself, and the defect causes the harm; or
―(b)(1) the seller or distributor of the component substantially participates in the integration of the component into the design of the product; and (2) the integration of the component causes the product to be defective, and  (3) the defect in the product causes harm.

Product components include raw materials, bulk products, and other constituent products sold for integration into other products. The metal products at issue here were clearly raw materials because they could be used in innumerable ways, and they were not sold directly to consumers in the market place. Rather, they were sold to plaintiff‘s employer for the purpose of using them to manufacture other products. The metal products in this case were closer to raw materials like kerosene than they were to more developed components of finished products, such as airbags in cars, because they can be used in innumerable ways.

Under California law, component and raw material suppliers are not liable to ultimate consumers when the goods or material they supply are not inherently dangerous, they sell goods or material in bulk to a sophisticated buyer, the material is substantially changed during the manufacturing process, and the supplier has a limited role in developing and designing the end product. When these factors exist, the social cost of imposing a duty to the ultimate consumers far exceeds any additional protection provided to consumers. The rationale for not imposing liability on a supplier of product components is a matter of equity and public policy. Such suppliers ordinarily do not participate in developing the product components into finished products for consumers. Imposing liability on suppliers of product components would force them to scrutinize the buyer-manufacturer‘s manufacturing process and end-products in order reduce their exposure to lawsuits. This would require many suppliers to retain experts in a huge variety of areas, especially if the product components are versatile raw materials. Courts generally do not impose this onerous burden on suppliers of product components because the buyer- manufacturer is in a better position to ensure safety.

Although the complaint stated the legal conclusion that the metal products were inherently hazardous, the facts alleged indicated otherwise. Maxton was not injured by simply handling the metal itself, or even the final product containing the metal. Instead, Maxton was injured as a result of the manufacturing process, which altered the form and risks of the products. 

As for the contention that the metal products involved here were analogous to asbestos, the court disagreed. Asbestos itself is dangerous when handled in any form even if it is unchanged by the manufacturer. Indeed, asbestos is dangerous when it leaves the supplier‘s control. By contrast, the metal products in this case were not dangerous when they left defendants‘ control. They only became allegedly dangerous because of the manufacturing process controlled by the employer. (Nothing in the complaint indicated that defendants played any role whatsoever in developing or designing the end products.) 

The court of appeals declined to impose the social cost, meaning the practical burdens that liability would place on defendants as suppliers of the ubiquitous metal products involved in this case. Defendants would be required to assess the risks of using their metal products to manufacture other products. In order to make such assessments, defendants would need to retain experts on the countless ways their customers used their metal products. Defendants would also be placed in the untenable position of second-guessing their customers whenever they received information regarding potential safety problems. Courts generally do not impose this onerous burden on suppliers of product components because the buyer-manufacturers are in a better position to guarantee the safety of the manufacturing process and the end product.

Dismissal affirmed. 

 

Federal Court Upholds "Bare-Metal" Defense

A federal court last week became the latest to refuse to hold a defendant liable for injuries allegedly caused by asbestos-containing parts manufactured by others but used with the defendant's products. See Conner v. Alfa Laval Inc., No. MDL-875 (E.D. Pa.  2/1/12).

The issue arose in the consolidated asbestos products liability multidistrict litigation pending in the U.S. District Court for the Eastern District of Pennsylvania. Defendants moved for summary judgment on the ground that they were not liable for injuries caused by asbestos products, such as insulation, gaskets, and packing, that were incorporated into their products or used as replacement parts, but which they did not manufacture or distribute.

As the asbestos litigation has evolved, and the major manufacturing defendants have declared bankruptcy, the litigation has moved away from the manufacturers of asbestos to new types of defendants, including premises owners, and even those that manufactured so-called “bare-metal” products that contained or were later encapsulated in asbestos made by others. Litigants often refer to the defense raised in this case as the “bare-metal defense,” but it is more properly understood, as the court explained, as a challenge to a plaintiff’s prima facie case to prove duty or causation.

Here, the court considered the availability and scope of the so-called “bare-metal” defense under maritime law.

Plaintiffs alleged they developed mesothelioma as a result of exposure to defendants products while working on vessels operated by the U.S. Navy. One alleged he was exposed to asbestos products used with turbines while he served in the U.S. Navy from 1962 to 1971 aboard the U.S.S. Yorktown. (This was the 2d Yorktown;  under construction as Bon Homme Richard, this new Essex-class carrier was renamed Yorktown in honor of  the carrier sunk at the epic Battle of Midway  in June, 1942. Much of the Academy Award-winning documentary "The Fighting Lady" was filmed aboard the Yorktown.)

Another alleged he was exposed to asbestos aboard the U.S.S. Pollux and U.S.S. Delta, through products like turbines, pumps, boilers, and valves that used and, in some cases, were originally distributed with, asbestos-containing insulation, packing, gaskets, and other products.
The third alleged he was exposed to asbestos used with products while serving as a boiler tender in the U.S. Navy from 1959 to 1976 aboard various naval vessels.

Plaintiffs did not, however, proffer evidence that defendants manufactured or distributed the particular asbestos components or replacement parts to which they were allegedly exposed. Instead, they argued that defendants were liable for all the intended and foreseeable uses of asbestos parts in connection with their original products.

In determining whether defendant manufacturers were liable under maritime law for injuries caused by asbestos parts used with their products, whether in strict liability or negligence, a plaintiff must establish causation with respect to each defendant manufacturer. See Lindstrom v. A-C Prod. Liab. Trust, 424 F.3d 488, 492 (6th Cir. 2005). A plaintiff generally establishes causation under maritime law by showing (1) that the plaintiff was exposed to the defendant’s product and (2) that the product was a substantial factor in causing the plaintiff’s injury, said the court.

Plaintiffs raised two arguments to hold manufacturers liable for harm caused by asbestos products they did not manufacture or distribute. First, plaintiffs argued that under the integrated-products doctrine the “products” at issue were really defendants’ products together with the asbestos-containing components and replacement parts supplied by third parties.  Second, plaintiffs argued that defendants had a duty to warn of the hazards posed by the foreseeable uses of their products.

The court rejected both arguments. The first was not consistent with the law under the component parts doctrine. Even if the court were to accept that defendants were component-part manufacturers, a component-part manufacturer is not liable for injuries caused by the finished product into which the component is incorporated unless the component itself was defective at the time it left the manufacturer.  The defective product here was the asbestos insulation, not the pumps and valves to which it was applied after defendants’ manufacture and delivery.  Also, as a matter of law, defendants did not owe a duty to warn under maritime law of the hazards posed by products they did not manufacture or distribute.

The court cited with approval the view of other courts that the overwhelming case law does not support extending strict liability for failure to warn to those outside the chain of distribution of a product. Products liability has always been premised on harm caused by deficiencies in the defendant’s own product. Moreover, a manufacturer does not have an obligation to warn of the dangers of another manufacturer’s product.  The law does not impose a duty to warn about dangers arising entirely from another manufacturer’s product, even if it is foreseeable that the products will be used together.  Any expansion of the duty of care as urged here would impose an obligation to compensate on those whose products caused the plaintiffs no harm. To do so would exceed the boundaries established over decades of product liability law.  And it would also be unfair to require manufacturers of non-defective products to shoulder a burden of liability when they derived no economic benefit from the sale of the products that injured the plaintiff.

Having held as a matter of law that a manufacturer is not liable for harm caused by the asbestos products that it did not manufacture or distribute, the court concluded that plaintiffs failed to raise a genuine issue of material fact as to whether any of the defendants manufactured or distributed the asbestos products that caused the alleged injuries.

The decision puts the court in the company of others, like O'Neil v. Crane Co., Cal., No. S177401 (Cal. 1/12/12), which have declined to extend liability for asbestos-related injury to makers of products used with asbestos insulation, gaskets, and packing.