Special Electric’s Judgment Notwithstanding the Verdict Overturned on Appeal Despite Sale of Raw Asbestos Was to Sophisticated User Johns Manville

Plaintiff William Webb brought a claim against multiple defendants for his alleged development of mesothelioma as a result of his occupational exposure to crocidolite while working for Pyramid Pipe as a warehouseman and truck driver.

A supplier of raw asbestos, defendant Special Electric, was found liable for failure to warn and negligence. Special Electric supplied the Johns Manville Corporation with raw crocidolite asbestos to be used in the manufacturer of multiple Johns Manville products. The court noted that Johns Manville was a vast manufacturer with knowledge of the risks involving exposure to asbestos as early as the 1930’s. Special Electric requested the court rule on its nonsuit and directed verdict motions prior to entry of judgment. The court granted Special Electric’s motions and judgment in favor of Special Electric was entered. The plaintiff appealed.

On appeal, the Court of Appeals recognized procedural and substantive errors. Further, the Court of Appeals noted that the judgment was improper because the evidence indicated that Special Electric had breached its duty to warn ”downstream users” about the hazards of asbestos.

The Supreme Court of California undertook a lengthy analysis of failure to warn and the defense of sophisticated user doctrine. Although a product may not a have a warning with respect to its known risks, many defenses exist to defeat failure to warn including the sophisticated user doctrine and the components parts rule. The bulk supplier doctrine is a subset of the components parts rule according to the court. The sophisticated intermediary doctrine may permit a supplier defendant to “discharge its duty to warn” when it provides warnings to the sophisticated buyer or relies on the sophisticated buyer to warn the ultimate end user of the dangers. The court continued its analysis and recognized three types of product defects 1) manufacturing defects 2) design defects and 3) warning defects. The court was concerned with the warning issue for this case. As for the warning issue, the claims are founded in negligence and strict liability according to the court.

Defenses to failure to warn claims include the sophisticated user doctrine. Relying on the decision in the Johnson case, the court stated that a warning need not be given to a sophisticated user because his knowledge is the same as notice of the risk. Another defense includes the components parts doctrine where a manufacturer cannot be expected to monitor the components within a product. Finally, the court recognized the bulk supplier doctrine which is a subset of the components parts doctrine. The bulk supplier doctrine deals with raw material being integrated into a finished product. Relying on the restatement of torts, liability should be attributed to the fabricator rather than the supplier in some instances.

Yet another defense is the sophisticated intermediary doctrine which states that the supplier has a duty to warn the manufacturer but not necessarily a duty to warn the end user of the finished product since it would be impracticable to warn all end users of a raw product. The court adopted the sophisticated intermediary doctrine as stated in the restatement of torts. Accordingly, a suppler “may discharge its duty to warn end users about known or knowable risks in the use of its products if 1) provides and adequate warning to the product’s immediate purchaser, or sells to a sophisticated purchaser that it knows is aware or should be aware of the specific danger, and 2) reasonably relies on the purchaser to convey appropriate warnings to downstream users who will encounter the products.” The court noted that the sophisticated user doctrine is an affirmative defense which the supplier bears the burden. Many facets of whether it’s reasonable for the supplier to rely on the intermediary exist. These factors include, the weight of the risk, the likelihood the intermediary will pass on the warning, and whether it’s practical for the supplier to warn the end user directly.

The court applied the above test to the facts of the instant case and found that Judgment could not stand. In particular, Special Electric failed to present the issue to the jury but instead submitted it in its motions. Although Special Electric argued that it had no duty to warn a sophisticated user like Johns Manville, it did not “show that it actually or reasonably relied upon Johns Manville to warn end users.” Further, the court was troubled by the lack of evidence that Special Electric had in fact regularly warned Johns Manville about the risks associated with its raw asbestos.

A dissenting opinion agreed with the court that jury verdict should have been against Special Electric. However, the dissent disagreed with the holding that a supplier of hazardous materials may satisfy its duty to warn ends users by relying on the “should have known” standard for the intermediary.

Read the full decision here.