California High Court Limits Product Liability in Unusual Asbestos Case
By Bethany Leigh Rabe, Litigation News Associate Editor – February 24, 2012

With a recent decision on manufacturers’ liability, the California Supreme Court has taken steps to rein in strict liability actions. Section leaders predict the closely watched decision will have broad implications.

In O’Neil v. Crane Co. [PDF], the California Supreme Court addressed the limits of product liability. The court held that a product manufacturer generally cannot be held liable in strict liability for harm caused by another manufacturer’s product. The court noted exceptions for circumstances where a defendant’s product “contributed substantially to the harm,” or the defendant “participated substantially in creating a harmful combined use of the products.”

Not the Typical Asbestos Case
At first glance, O’Neil looks like a typical asbestos case: The family of a deceased Naval officer exposed to asbestos on a Navy warship sued manufacturers of certain asbestos-containing products for wrongful death. They advanced design defect and failure to warn theories of strict liability.

The twist was that the defendants, a pump manufacturer and a valve manufacturer, “never manufactured or sold any of the asbestos-containing materials to which plaintiffs’ decedent was exposed.” Instead, the toxic dust came from asbestos-containing replacement parts manufactured by other entities and from insulation added to the products by the Navy.

The plaintiffs argued that the pumps and valves “were defective because they included and were used with asbestos-containing parts.” Plaintiffs also urged the court to find that defendants should have warned users about the health consequences of breathing asbestos dust from products used in connection with their products. Following the close of evidence, the trial court entered a non-suit (similar to a directed verdict) in favor of defendants.

Reversal then Reversal on Appeal
In a strongly worded opinion, the Court of Appeal reversed [PDF]. The appellate court called the plaintiffs’ argument a “perfectly acceptable theory,” likening a product that becomes dangerous during foreseeable routine maintenance to “a car which only exploded when the oil was changed or the tires rotated.”

In a unanimous decision, the California Supreme Court reversed the Court of Appeal and rejected the plaintiffs’ theories. The court held that (1) the products did not require asbestos to function, and thus were not defectively designed, and (2) the manufacturers could not be expected to warn of dangers of other manufacturers’ products used in connection with their products.

Policy Considerations Define Limits of Liability for Component Products
The court based much of its reasoning on public policy, noting that “[r]ecognizing plaintiffs’ claims would represent an unprecedented expansion of strict products liability.” It pointed out the potential “absurd results” of such a ruling, suggesting that imposing liability on a defendant for products that it did not manufacture, sell, or supply could force “match manufacturers to warn about the dangers of igniting dynamite.”

This decision was the court saying “enough is enough,” explains Lori B. Leskin, New York, cochair of the ABA Section of Litigation’s Products Liability Committee. Leskin observes that any other result would have permitted “almost limitless” liability for manufacturers.

“The policy of strict liability is to place the burden of liability on the party that can bear the risk most appropriately, but it has to have its limits,” offers Rudy R. Perrino, Los Angeles, cochair of the Section of Litigation’s Mass Torts Litigation Committee. “Here,” says Perrino, “you have asbestos-containing component parts that aren’t necessarily required for operation of the product. Liability has to end at that point unless the asbestos-containing products are required for proper operation of the product.”

New Strategies for Plaintiffs and Defendants
O’Neil will likely not be the last word on this issue. In a footnote, the court acknowledged that a “stronger argument for liability might be made in the case of a product that required the use of a defective part in order to operate” or where a product manufacturer “specified or required the use of a defective replacement part.”

This statement will invite future lawsuits based upon these theories, according to Leskin. “I definitely think we’re going to see more litigation on this issue in California,” she says. Because the policy considerations would be the same, Leskin believes that the results in those cases would likely be the same as well.

The court also hinted at defense considerations for future lawsuits. The court emphasized that in designing their products, the defendants were required to comply with the Navy’s specifications. This raises the question of whether an end-user specifications defense would be successful in future litigation.

“I think the court was concerned in this case about the political question doctrine,” adds Perino, who doubts an end‑user specification defense would be successful. “That defense was not at issue in O’Neil and probably will have very little application outside of the asbestos context.

“I think the court probably created some confusion in its decision by focusing so much on the fact that the Navy had specified asbestos-containing products,” he states. “As a result, the Supreme Court will likely be confronted with the more limited question of whether specification by the end user is dispositive of liability, and I think the answer—outside of cases involving the U.S. government—is going to be ‘no,’” he concludes.

Broader Implications?
While this case impacts how plaintiffs and defendants approach asbestos litigation involving component products, it may reach farther. “This decision and this issue have the potential for broader implications in the product liability context in many different areas,” suggests Perrino.

“There was a lot of interest, not just in the asbestos world, but also in the broader products world where products are manufactured using component parts, each of which might be dangerous or [which] might be replaced with a potentially dangerous product,” continues Perrino. He notes, for example, that some have postulated that O’Neil will affect the Conte v. Wyeth foreseeability doctrine in the drug manufacturer context.

Keywords: California Supreme Court, product liability, asbestos, strict liability

 
Related Resources
Judge Rejects SEC's Position on Citigroup Consent Judgment
Attempted Release of Sanctions Liability by Law Firm Spells Trouble