New Jersey Supreme Court Finds Liability Possible For Replacement Parts Supplied By Others If Original Product Contained Asbestos Components

Arthur Whelan was a plumber and infrequent auto mechanic. Decades before developing mesothelioma, Whelan alleges that he worked on numerous boilers that had asbestos components such as steam traps, fireboxes, steam valves and jacket liners. He also conducted a handful of brake jobs on Ford vehicles that involved asbestos parts. Whelan did not know whether the asbestos components in these products were original components, replacement components by the original manufacturer or replacement components by a different manufacturer. Nevertheless, Whelan sued the original manufacturers, alleging that they had a duty to warn product users of the dangers of the asbestos-containing product as initially manufactured and as asbestos-containing replacement parts were incorporated into the product.

A divided New Jersey Supreme Court held in Whelan v. Armstrong Inc. that manufacturers may be found liable for asbestos-containing replacement components that they did not build or distribute, because “it is fair for them to bear such responsibility when they profit from the parts extending the life of their original products.”

The opinion provides a four-part test for holding manufacturers and distributors strictly liable for the failure to warn about the dangers of their products’ asbestos-containing components:

  • First, a plaintiff must prove that asbestos-containing components were included in the original products;
  • Second, those components were integral to the product and necessary for it to function;
  • Third, routine maintenance required replacing those parts with similar asbestos-containing components; and
  • Fourth, exposure to the initial components or replacement parts was a substantial factor in causing or exacerbating the plaintiff’s disease.

In reaching this decision, the court speculated that requiring the original manufacturer to provide warnings for the anticipated replacement parts of the product would not place a burden on the manufacturer. Justice Albin noted that imposing a duty to warn about asbestos-containing replacement parts, no matter who built them, “adds hardly any further burden or cost to the product manufacturers, who already have a duty to warn of the dangers of the original asbestos-containing components.”

The court ruled that the manufacturer must provide warnings given the foreseeability that third parties would be the source of asbestos-containing replacement components. “Warnings on defendants’ products would have provided a reliable form of protection for the ultimate user,” so “[t]he lack of warnings rendered the products defective.”

The decision is consistent with the recent maritime common law failure to warn case decided by the Supreme Court. In Air & Liquid Systems Corp. v. DeVries, 873 F. 3d 232 (2019), the Supreme Court found that in the maritime tort context, a product manufacturer has a duty to warn when (i) its product requires incorporation of a part, (ii) the manufacturer knows or has reason to know that the integrated product is likely to be dangerous for its intended uses, and (iii) the manufacturer has no reason to believe that the product’s users will realize that danger. On the other hand, California and Washington, among other jurisdictions, generally restrict liability to those in the chain of commerce of the injury-producing product.

Oregon Court of Appeals Decision Upends Asbestos Litigation for Equipment Manufacturers, and Perhaps Others

The Oregon Court of Appeals has held in a case of first impression that the “bare metal” defense is not applicable under Oregon law. McKenzie v. A.W. Chesterton Co., 277 Or App 728 (2016). Under this defense, which courts in many other states have applied, a manufacturer whose product does not contain asbestos (i.e., is “bare metal”) is not liable for harms caused by asbestos-containing replacement parts supplied by others. By bucking the national trend, it is likely that the ruling will increase the number of asbestos cases filed in Oregon. The decision is based on Oregon statute, which may limit its applicability to Oregon, but it is also based on the Restatement, which may make it influential elsewhere as well.

Background

5-19Paul McKenzie served on WWII-era aircraft carriers as a fireman and boilerman in the course of a 20-year naval career that ended in 1972. He changed packing, internal gaskets, and external insulation in and around pumps manufactured and sold to the U.S. Navy by defendant Warren Pumps when the carriers were built. Warren had shipped original asbestos-containing gaskets, packing, and insulation with some pumps as “a complete package,” but these had all been replaced by the time Mr. McKenzie served on these vessels. The trial court granted Warren’s summary judgment motion based on Plaintiff’s failure to offer evidence that Warren had manufactured or supplied to the Navy the replacement products to which Plaintiff claims her husband had been exposed.

The Court’s Analysis

The Oregon Court of Appeals reversed based on the Oregon strict liability statute, ORS 30.920, and in particular two provisions of that statute: (1) that strict liability applies if “[t]he product is expected to and does reach the user or consumer without substantial change in the condition in which it is sold or leased[;]” and (2) that the statute “shall be construed in accordance” with Comments a through m of the Restatement (Second) of Torts, sec. 402A (1965). Plaintiff argued that Warren reasonably knew that the replacement products would contain asbestos, because that is what the Navy required, and that therefore the pumps were not substantially changed between their delivery to the Navy and Mr. McKenzie’s service decades later. The court rejected Warren’s argument that the relevant “unreasonably dangerous products” for purposes of ORS 30.920 were the asbestos-containing replacement products of others to which Mr. McKenzie had actually been exposed, and held that a jury could conclude that Warren should have reasonably known that the pumps were expected to and did reach users like Mr. McKenzie without substantial change in the condition in which they were sold even though the replacement asbestos-containing gaskets, packing, and external insulation that Mr. McKenzie encountered were manufactured and supplied by others. The court relied in part on Restatement comment (d), which recognized the expected replacement of component parts through wear and tear.

McKenzie expressly declined to follow decisions from other states, including the supreme courts of neighboring Washington State (Simonetta v. Viad Corp., 165 Wash.2d 341, 197 P.3d 127 (2008), and Braaten v. Saberhagen Holdings, 165 Wash.2d 373, 198 P.3d 493 (2008)) and California (O’Neil v. Crane Co., 53 Cal.4th 335, 266 P.3d 987 (2012)), which applied the “bare metal” defense to exonerate equipment defendants from liability. McKenzie concluded that Oregon precedent was inconsistent with the “bare metal” defense, and that the opinions from other states “appear to derive the bare-metal defense either from a limitation on a manufacturer’s or seller’s duty to warn that is contrary to the comments in section 402A of the Restatement or else based upon the jurisdiction’s own common law, developed without regard to the comments to section 402A which may be consistent with their respective common law but were not with Oregon statutes.”

The Court of Appeals similarly reversed Warren’s summary judgment on Plaintiff’s negligence claim. As with the strict liability claim, the court rejected Warren’s argument that it was the asbestos dust from replacement parts which had allegedly harmed decedent – not any asbestos from products it had originally supplied with the pumps – and that any failure to warn about asbestos-containing products originally supplied with its pump was therefore not the “but for” cause of Mr. McKenzie’s asbestos-related condition. McKenzie ruled that negligence in Oregon is based on foreseeability, and noted that Warren failed to establish that its failure to warn about asbestos in replacement parts did not play a part in Mr. McKenzie’s injury. Because the Navy required the use of asbestos-containing gaskets, packing, and external insulation in or on its pumps, a jury could find it to have been foreseeable that replacement component parts would contain asbestos, thereby triggering a duty to warn.

Likely Effects of This Opinion

There is clearly the potential under McKenzie for more equipment claims in Oregon that might otherwise be brought elsewhere. For example, craftsmen working in southern Washington State often also work on jobs in northern Oregon. McKenzie also makes summary judgment less likely (perhaps even unlikely) in cases with no product identification issues – for example, once a plaintiff shows evidence of asbestos exposure while working with a defendant’s product, it now seems to make no difference whether the asbestos was in the defendant’s product or a product manufactured or supplied by someone else.

That said, the scope of the decision may still be limited. A primary focus of the opinion was the foreseeability based on Navy regulations that replacement gaskets, packing, and external insulation would also contain asbestos. Such foreseeability may not be as clear in private industry, without such government regulations or MilSpecs. Further, Oregon currently has a cap on non-economic damages of $500,000 in wrongful death cases, which has historically limited the number of cases generally brought in Oregon to those with no alternative jurisdiction. The Legislature has considered increasing that limit to $1.5 million, which would make the cap less of a hindrance, but has taken no such action to date.

N.B: Although Gordon & Rees represents Warren Pumps as local counsel in certain jurisdictions, this post is the opinion of the author and is not intended to constitute or represent the opinions or positions of Warren Pumps with respect to this matter.

Bare Metal Defense Applied For First Time In Yet Another Jurisdiction: Wyoming

In an order issued on October 9, 2015, the U.S. District Court for the District of Wyoming determined that under Wyoming law, equipment manufacturers can employ the “bare metal defense” against strict liability causes of action. In essence, plaintiffs now cannot argue that defendants are strictly liable for insulation or any replacement parts that they did not provide. However, defendants remain strictly liable for original components, and plaintiffs can argue that defendants were negligent for failing to warn about replacement parts provided by others.

Judge Alan Johnson analyzed in detail the “bare metal defense” and noted this was an issue of first impression for the courts in Wyoming. Although he did not accept defendants’ argument “that a majority of the courts” that have looked at this issue have adopted the defense, Judge Johnson went on to rely upon the Schwartz v. Abex decision by Judge Robreno in 2015 for guidance on how to decide the issue. Doing a similar analysis, Judge Johnson concluded that Wyoming would adopt the bare metal defense, at least in regards to strict liability. He noted that to do otherwise “would allow foreseeability alone to be sufficient to create [a] strict liability claim and impose an almost absolute liability for all manufacturers that sell products with replaceable components.”

Judge Johnson also concluded that under Wyoming law, strict liability and negligence are treated separately and that under a negligence analysis the plaintiffs could still recover if they can demonstrate that:

1. Defendant knew that its product would be used with an asbestos-containing component part,

2. Defendant knew that asbestos was hazardous, and

3. Defendant failed to provide an adequate and reasonable warning.

The order then, however, goes on to say:

Accordingly, the Court finds that it will not grant summary judgment on Plaintiff’s negligence claim against Goulds regarding parts that Goulds manufactured or supplied or those that Goulds did not manufacture or supply but it specified, required or were necessary to the operation of its pumps. (emphasis added).

This final clause seems to add more prerequisites in addition to Nos. 1-3 above, and would certainly allow defendants to make additional arguments responsive to negligence claims. For example, one could argue that none of the equipment “required” asbestos to the extent that the equipment could work with non-asbestos materials. And certainly language in catalogs or sales materials that may be a “requirement” or “specification” in the eyes of plaintiff counsel is likely to be construed differently by defense counsel.

On balance, if this ruling is followed by other courts in Wyoming, it will make plaintiffs’ cases a little harder in Wyoming, but leaves a number of viable causes of action and theories.