The California Supreme Court has blocked an expansion of product liability law in a major decision that provides guidance for other courts facing similar questions and follows a growing trend in this area. In Barbara O’Neil, et al., v. Crane Co., et al. (#S177401; January 12, 2012) the court held that a manufacturer has no obligation to prevent harm from other manufacturers’ defective products used with its product or equipment. Even if a manufacturer could “foresee” the use of another’s defective product with its own, that manufacturer cannot be held liable in strict liability or negligence for damages caused by the other manufacturer’s defective product. 

Events Leading to the O'Neil Opinion
The case involved equipment installed in a U.S. Navy ship’s steam propulsion system. Twenty years later, Patrick O’Neil, a sailor assigned to work on/near the equipment, was exposed to asbestos dust from work performed on gaskets and packing embedded in the equipment and asbestos insulation covering the equipment. Forty years later, he developed a lethal cancer (mesothelioma) from these and other asbestos exposures. The plaintiffs sued the manufacturers of the equipment. However, there was no evidence the asbestos gaskets, packing or insulation from which he was exposed were manufactured, sold or distributed by the defendant equipment manufacturers. Over the 20 years since the initial installation, the original gaskets and packing had been replaced. The Navy, in most instances, specified asbestos replacement gaskets, packing and insulation. 

At trial, the defendant manufacturers moved for nonsuit saying they were not liable because plaintiffs did not introduce any evidence that their equipment was defective and it did not cause Mr. O’Neil’s cancer. Defendants argued that if gaskets, packing and insulation in and on their equipment were a cause of Mr. O’Neil’s cancer, the defendant equipment manufacturers were not responsible because the asbestos-containing replacement products were designed, manufactured or sold by others.

The plaintiffs countered it was “foreseeable” Mr. O’Neil would be exposed to gaskets, packing and insulation in and on the defendant manufacturers’ equipment. They argued that the equipment was originally sold with asbestos gaskets and packing; that the defendant manufacturers knew users would cover the equipment in asbestos insulation; and, that the defendant manufacturers knew that asbestos replacement gaskets and packing would be used with their equipment. The trial court did not agree with plaintiffs and granted the motions for nonsuit finding there was no evidence the equipment was defective because of the asbestos content and determined that defendants’ equipment did not contribute to the cause of the mesothelioma.

However, the California Court of Appeal reversed. It held the defendant manufacturers are liable “for dangerous products with which [their] product will necessarily be used.” (All emphases added.) The court of appeal made no distinction as to which entity was responsible for design, manufacture or distribution of the defective asbestos products from which Mr. O’Neil was exposed. The court of appeal reasoned that because the defendants’ equipment originally included defective asbestos gaskets and packing and knew that they would need to be replaced with asbestos gaskets and packing made by others, they owed a duty to warn. Moreover, the equipment itself was deemed to be defective, not only because of a failure to warn, but also because their equipment “required” asbestos packing, gaskets and insulation.

Supreme Court's Ruling and Policy Holdings
The California Supreme Court reversed the court of appeal. It found no facts in the record that supported the assertion that defendant manufacturers required asbestos replacement gaskets, packing or insulation. There was no evidence the defendant manufacturers’ equipment depended on asbestos materials to operate. The court stated: “Mere compatibility for use with such components [asbestos containing parts] is not enough to render them defective.”  The court concluded that defendants were not liable because their products were not “a legal cause” of the plaintiffs’ injury in strict liability or negligence. Moreover, defendants “had no duty to warn of risks arising from other manufacturers’ products.” (emphasis in original).

Policy
The supreme court found the court of appeal’s decision to be an unwarranted expansion of California product liability law: “(W)e have never held that these responsibilities [under California law] extend to preventing injuries by other products that might foreseeably be used in conjunction with a defendant’s product” (emphasis in original). Whether to apply strict product liability doctrine “in a new setting is largely determined by the policies underlying the doctrine...”. “’[T]he strict liability doctrine derives from judicially perceived public policy considerations and therefore should not be expanded beyond the purview of these policies.’” The court revisited its 1963 decision in Greenman v. Yuba Power Products, Inc.(1963) 59 Cal.2d 57, 63, quoting: “’The purpose of such liability is to insure that the costs of injuries resulting from defective products are borne by the manufacturers that put such products on the market…’” A year later the California Supreme Court extended the strict liability doctrine to retailers as “’an integral part of the overall producing and marketing enterprise.’” Vandermark v. Ford Motor Co. (1964) 61 Cal 2d 256, 262.

Stream of Commerce
The “marketing enterprise” or “stream of commerce” policy consideration is one of two themes at the backbone of the supreme court’s decision in O’Neil. Where product manufacturers “generally ha[ve] no 'continuing business relationship' with each other," they cannot bear responsibility for other manufacturers’ products. They “cannot be expected to exert pressure on other manufacturers to make their products safe and will not be able to share the costs of ensuring product safety with these manufacturers.” The court said it is “also unfair” to require a manufacturer to “shoulder a burden of liability” for another manufacturer’s product where it “derives no economic benefit from the sale of the product that injured the plaintiff.” A contrary rule would require manufacturers “to investigate the potential risks of all products and replacement parts that might be foreseeably used with their own products and warn about the risks.” This would “impose on manufacturers the responsibility and costs of becoming experts in the manufacturers’ product.” This, it said, is “an excessive and unrealistic burden.” Such a rule could also act “perversely” by “inundating users with excessive warnings” and, quoting New Jersey jurisprudence, “[t]o warn of all potential dangers is to warn of nothing.”

Defendant's Act or Control
An even more fundamental policy lies at the heart of this opinion: Liability is not imposed for an injury unless it was caused “by an act or instrumentality under defendant’s control.” The original asbestos gaskets and packing that defendant manufacturers sold with the equipment were gone when Mr. O’Neil was exposed to asbestos from replacement gaskets and packing manufactured by others. 

The O’Neil opinion (together with two other cases also on appeal and resolved by the O’Neil opinion) stands for the proposition that there is no legal causation for the original product manufacturer where the defective aftermarket replacement part is the source of the harm, even though:
(1) The equipment manufacturer designs the equipment for use with the defective aftermarket product (e.g., asbestos in replacement gaskets and packing);
(2) The manufacturer specifies the use of replacement parts with the same defect;
(3) The manufacturer also supplies replacement parts with the defect in question;
(4) The manufacturer knows that the purchaser of their equipment or product requires that the original equipment contain the defective component and use of the defective replacement part.

Liability Is Not Foreclosed
Likely due to the variety of economic entanglements product manufacturers may have with aftermarket manufacturers’ products, the supreme court conceived of circumstances where liability for another manufacturer’s parts could arise. The court stated in the O’Neil opinion’s opening paragraph that a manufacturer may be held liable for harm caused by another manufacturer’s product where (1) the defendant manufacturer’s own product, although not defective, “contributed substantially” to the harm, or (2) the defendant manufacturer’s (non-defective) product “participated substantially in creating a harmful combined use of the products.” The O’Neil court discusses two appellate cases where the manufacturer’s product would not have been put “into the stream of commerce” but for the manufacturer’s economically beneficial participation in the product that eventually gave rise to the harm. 

Additionally, in a footnote (Fn. 6) the court outlined a hypothetical where a “stronger argument for liability might be made.” If the product/equipment “required the use of a defective product in order to operate” (emphasis in original), the original manufacturer’s product would incorporate the defect and every replacement part would too. The defective replacement parts, though manufactured by others, “would not break the chain of causation.” However, the court warned that in these circumstances, “the policy rationales against imposing liability on a manufacturer for a defective part it did not produce or supply would remain.”

Conclusion

The California Supreme Court appears to have drawn clear rules for precluding liability where an original manufacturer’s product has left its possession or control, but an aftermarket replacement part has ensnared the original equipment manufacturer in litigation. Where the manufacturer does not control or derive direct economic benefit from the defective aftermarket product, it will not be liable. However, the opinion does not build an impregnable wall. The court specifies that an original manufacturer will be liable for another manufacturer’s parts, where the original product contributes substantially or participates in a combined product causing harm. Even under those scenarios, however, imposing liability must not run afoul of the policy rationales supporting the O’Neil opinion. 

Christopher W. Wood
Lisa L. Oberg
McKenna Long & Aldridge
San Francisco, CA
(415) 267-4000 

Plaintiff will have to wait a little while longer to collect on his colossal $322 million jury award, if he will collect at all. On July 13, 2011, the Supreme Court of Mississippi granted Union Carbide’s emergency motion to stay the proceedings. The May 4, 2011, Smith County, Mississippi jury award is believed to be one of the largest awards ever in a single-plaintiff asbestos personal injury case. 

Union Carbide’s motion was filed in conjunction with a petition to disqualify the trial judge on grounds that the judge’s father had “lived with a diagnosis of asbestosis for over 20 years and has filed not one – but two – asbestos personal injury lawsuits” against defendants whose products incorporated the very same asbestos materials at issue in the pending case. One of these personal injury cases is apparently still pending, while the judge’s father apparently “settled his asbestos claims with Petitioner UCC” in the other.  According to Union Carbide’s petition, during the jury selection phase, the trial judge agreed to strike potential jurors for cause who had the same kind of familial involvement with asbestos personal injury litigation, yet the trial judge said nothing about his own family’s involvement. Defendants did not learn of this fact until the judge made a casual off-record comment in chambers two weeks into the trial. 

The petition to disqualify alleges that under Canon 3 of the Code of Judicial Conduct, a reasonable person might doubt the trial judge’s impartiality in the case, evidenced by not only the fact that he did not notify parties of his family’s involvement with this litigation, but also by the judge’s conduct throughout the trial. For example, the judge’s demeanor was characterized as “openly hostile” to defendants’ counsel. The judge refused to change venues despite a demonstrated community bias against asbestos defendants in Smith County; and, he allegedly made a number of comments in open court throughout the trial that could have affected the jury’s consideration of the evidence. Union Carbide initially filed a motion for recusal at the trial court level, but at least 30 days later, the trial judge had yet to respond, prompting Union Carbide to seek relief from a higher court. 

The Mississippi Supreme Court’s ruling means that the whopping verdict will be on hold until the motion for recusal, or the petition for disqualification, is resolved. Time will tell whether the high court agrees with Union Carbide’s assertion that based upon the evidence described in Union Carbide’s petition, a “reasonable person knowing all of the facts and/or considering the totality of the circumstances “might” harbor doubts about the judge’s impartiality,” which Union Carbide presents as the standard for compulsory recusal. If so, the court could vacate the judgment against Union Carbide, and set-aside the pre-trial proceedings over which the judge presided, effectively granting all parties a do-over. Even if the verdict stands, it is likely that Mississippi’s statutory punitive damages cap will reduce the $300 million punitive damages award to $20 million against each defendant. 

Practitioners are well aware that given the “elephantine mass” of asbestos cases filed throughout the last half-century and around the nation, one may be hard-pressed to find jurors who have never had any connection with asbestos litigation, at least somewhere across their family tree. There is no reason to believe that the same would not be true for judges, and perhaps even more so, given the potential that a prior legal practice may have touched upon the same types of claims [a potential source of bias that has caused at least one judge in a jurisdiction with significant asbestos litigation to voluntarily recuse himself in any asbestos case if requested]. However, answering the question of “how close is too close” to asbestos litigation to warrant a jury strike for cause or otherwise should be a far different analysis than for judicial recusal, where even the appearance of impropriety is a cause for concern, especially given that litigants have virtually no ability to learn of potential sources of bias - like the kind that would warrant the striking of a juror for cause - unless it is volunteered by the trial judge. Even given such potential bias, it is not clear whether this would be sufficient in and of itself to warrant the disqualification of a trial judge, given the judge’s far different role than that of a juror, and given the expectation that judges are well able to impartially preside over cases independent of any personal experience. Mississippi’s high court may soon provide much-needed guidance regarding this question, depending upon the method the Court chooses to resolve this issue. 

The Illinois Supreme Court has issues an important new decision affecting proximate cause in Asbestos and related matters. This ruling will have significant impact in toxic tort matters. The case of Nolan v. Weil-McLain, No. 103137 (April 16, 2009) must be read by all who practice in this area.

Click here to view decision

Proximate cause is an element of all tort cases.  In asbestos cases, a recent decision by the U.S. Sixth Circuit has favorable implications for the issues of causation and take-home exposure.  See Martin v Cincinnati Gas & Elec.Co., No. 07-6485, 2009 U.S. App. LEXIS 1702 (6th Cir. Jan. 27, 2009). In that case, the plaintiff’s father had worked with underground power lines that contained asbestos during a period from 1951 to 1963.  The plaintiff, who was born in 1952, claimed exposure to asbestos carried home on work clothes his father wore home, as well as from the plaintiff’s own exposure as a welder and mechanic from 1979 to 1984.  The district court, applying Kentucky law, granted summary judgment to GM for lack of substantial factor causation when the plaintiff was a mechanic, and to CG&E and GE, the father’s employer and supplier, for a lack of duty to the plaintiff for the take-home exposure. 

As to causation, the court noted that Kentucky law requires that asbestos exposure from a defendant’s product be a substantial factor in causing the injury. The plaintiff argued that, “because mesothelioma is a progressive disease, any exposure is a substantial cause.” The Sixth Circuit rejected this argument, which has worked in many jurisdictions. The court noted, “[y]et one measure of whether an action is a substantial factor is ‘the number of other factors which contribute in producing the harm and the extent of the effect which they have in producing it.’” Id. (quoting RESTATEMENT (SECOND) OF TORTS  § 433(a)).  Also noting its earlier decision, Lindstrom v. A-C Product Liability Trust, 424 F.3d 488, 493 (6th Cir. 2005), the court observed that to hold “any exposure is a substantial cause” would render the substantial factor test “meaningless.”  Summary judgment thus was upheld on the issue of causation. 

As to take-home liability, whether CG&E and GE owed the plaintiff a duty of care under Kentucky law turned on foreseeability in light of what the defendants knew or should have known at the relevant times.  Specifically, the plaintiff had to show that each defendant “knew or should have known the danger of bystander asbestos exposure” when it provided asbestos-containing products to the defendant’s father.  In cases like this, plaintiffs’ experts rely upon published scientific papers to show that the hazards of asbestos were knowable years before the exposure in a given case, thereby making the danger foreseeable. 

The Sixth Circuit, however, framed the issue under Kentucky law more precisely, finding that Kentucky law imposes upon the defendant a duty to have “knowledge of pertinent matters . . . as a reasonable man would have.”  Id. (citing Pathways, Inc. v. Hammons, 113 S.W.3d 85, 90 (Ky. 2003) (quoting RESTATEMENT (SECOND) OF TORTS § 289(a))). This knowledge includes the “capacities of things and forces in so far as they are matters of common knowledge at the time and in the community.” Id. (quoting RESTATEMENT (SECOND) OF TORTS § 289(a)). 1

The plaintiff had no evidence that CG&E or GE had actual knowledge of the danger of take-home exposure during the relevant time periods – 1937 to 1955 when GE supplied asbestos products, 1951 to 1963 when CG&E employed plaintiff’s father. The plaintiff instead tried to prove constructive knowledge through published reports and studies. A 1911 study and subsequent ones in the 1930s only were concerned with neighbors of asbestos factories.  Plaintiff’s expert also opined that there was knowledge of the hazard in the 1950s, but he conceded “that the first studies of bystander exposure were not published until 1965.”  The court concluded that “[w]ithout any published studies or any evidence of industry knowledge of bystander exposure, there is nothing that would justify charging CG&E or GE with such knowledge during the time that Mr. Martin’s father was working with asbestos.”

Beyond the general fact that the Sixth Circuit upheld summary judgment on the issues of causation and take-home exposure, the decision is important to all jurisdictions. It suggests defendants would be well advised to use well-established tort concepts in conjunction with a careful reading of the Restatement in order to bring common sense back into the courtroom.  That approach here lead to an outright rejection of de minimis asbestos exposure as adequate evidence of causation. It also resulted in premises and supplier defendants being relieved of liability to bystanders when there was a complete lack of evidence that a reasonable person would have recognized that harm to bystanders was foreseeable at the time when the exposure occurred.

The outcome reached in Martin was aided by the amicus brief of Mark Behrens, partner at Shook, Hardy & Bacon, on behalf of the Coalition for Litigation Justice and other interested parties. The brief focused on the take-home exposure side of the case, but Mr. Behrens also has contributed to the body of arguments against de minimis exposure, namely an article he recently coauthored with William Anderson – The "Any Exposure" Theory An Unsound Basis for Asbestos Causation and Expert Testimony, 37 S.U. L. REV. 479 (2008).  It finally should be noted that the Martin decision is unpublished but citation is permitted as long as the decision is attached to the brief.  See FRAP 32.1; 6 Cir. R. 28(f).