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California Court of Appeal Holds Intermediary’s Sophistication Not Sufficient, as a Matter of Law, to Avoid Supplier’s Liability for Injury to Product User




by:
Mary Ellen Gambino
Wilson Elser Moskowitz Edelman & Dicker LLP - San Francisco Office

 
November 11, 2013

Previously published on November 7, 2013

On October 29, 2013, the California Court of Appeal affirmed as proper a trial court’s refusal to give defendant John Crane, Inc.’s (Crane’s) requested jury instruction on the “sophisticated user” defense. In Anne Pfeifer, et al. v. John Crane, Inc., California Court of Appeal, Second District, Div. Four, 2013 S.O.S. B232315 (Los Angeles County Super. Ct., No. BC416536), the Court held that when a manufacturer provides hazardous products to a “sophisticated” intermediary, that “intermediary’s sophistication” is not sufficient, as a matter of law, to excuse the manufacturer’s liability for injury to the employee user of the product.

Factual and Procedural Background
Defendant Crane was a manufacturer of packing and gasket products, among other products. It sold asbestos-containing packing and gaskets to the U.S. Navy and to the U.S. government.

From 1963 to 1971, William Pfeifer (Pfeifer) served in the Navy as an apprentice fireman and boiler tender. After leaving the Navy, Pfeifer worked for the U.S. government as a boiler technician until 1982. In 2009, he was diagnosed with pleural mesothelioma. Pfeifer claimed exposure to asbestos from Crane products throughout his career.

Plaintiffs brought an action for negligence, strict liability and loss of consortium. After a  jury award in favor of plaintiffs, Crane appealed the judgment on several grounds, including the jury’s allocations with respect to comparative fault, the award of punitive damages and the trial court’s rejection of Crane’s proffered instruction on its “sophisticated user” defense. According to the opinion, Crane requested a jury instruction that stated, “employees of a sophisticated user are deemed to be sophisticated users.”

The Court of Appeal found that sufficient evidence supported the jury's findings of comparative fault and punitive damages against Crane. With respect to the “sophisticated user” issue, the Court held that when a manufacturer provides hazardous products to a “sophisticated” intermediary for use by the intermediary’s employees, the manufacturer-supplier is subject to liability for failure to warn the employees of the hazards, “absent some basis for the manufacturer to believe the ultimate users know or should know of the hazards.”

“Sophisticated User” Defense
On appeal, Crane argued that it was not liable for its failure to warn Pfeifer regarding the hazards of asbestos while he served in the Navy because the Navy had greater knowledge of those hazards than Crane had. In response, the Court reviewed the history of the “sophisticated user” defense and noted that the term has been applied to at least two potentially overlapping defenses, both based on section 388 of the Restatement Second of Torts:

  • The basis for the first defense can be found in comment k to section 388, which states that the supplier’s duty to warn arises only when the supplier “has no reason to expect that [the item’s user] will ... realize the danger involved” (Rest.2d Torts, § 388, com. k., pp. 306-307).
  • The basis for the second defense is reflected in comment n to section 388, which states that when the supplier provides items to a third party that will pass them to the user, the supplier may in some circumstances discharge its duty to warn the user by informing the third party of the item’s dangers (Rest.2d Torts, § 388, com. n., pp. 307-310).

The Court went on to analyze the California Supreme Court case of Johnson v. American Standard, Inc. (2008) 43 Cal. 4th 56, 66. It noted that although the Johnson case held that the sophisticated user defense, as reflected in comment k to section 338, was applicable in California, the Johnson court focused the inquiry on whether the plaintiff knew or should have known of the particular risk of harm from the product that caused the injury. The Johnson case specifically did not address the question of “sophisticated intermediary.”
 
Another case the Court analyzed, Stewart v. Union Carbide Corp. (2010) 190 Cal.App.4th 23, 33, addressed the “sophisticated intermediary” defense, which is reflected in comment n to section 388. In Stewart, a plumber asserted claims against a supplier of raw asbestos. At trial, the court refused the supplier’s request for instructions on a “sophisticated user” defense on the theory that the manufacturers of the products that used the supplier’s raw asbestos were aware of the hazards. In affirming the ruling, the appellate court concluded there was no evidence to support any type of “sophisticated user” instruction. The Stewart court said that Johnson “did not impute an intermediary’s knowledge to the plaintiff, or charge him with any knowledge except that which had been made available to him through his training and which, by reason of his profession and certification, he should have had.” The Court further determined that the “sophisticated intermediary” defense was inapplicable because the defendant had provided no warnings to the intermediary manufacturers.

Because it was undisputed in the Pfeifer case that Crane did not provide any warnings to the Navy (or presumably to the U.S. government), the Court held that the trial court properly declined to give Crane’s proposed instruction, which erroneously stated that employees of a sophisticated user are by virtue of their employment deemed to be sophisticated users.

The Court further held that there was insufficient evidence to support any legally correct version of the sophisticated user defense. The evidence at trial established only that:

  • By the 1960s, medical researchers agreed that asbestos caused cancer
  • Crane issued no warnings regarding its products while Pfeifer served in the Navy from 1963 to 1971
  • Pfeifer had no training or knowledge regarding the dangers of asbestos
  • The Navy had a medical staff with access to research on asbestos
  • Studies of Navy workers in the 1940s, 1960s and 1970s disclosed some hazards from asbestos dust
  • In the early 1970s, the Navy began an asbestos abatement program aimed at containing dust from asbestos insulation.

Although the evidence might show that the Navy was a negligent sophisticated intermediary, it did not support a reasonable inference by Crane that the Navy would warn or otherwise protect Pfeifer from the hazards of the Crane product. The Court was especially swayed in plaintiffs’ favor by this absence of any evidence that Crane had reason to believe the Navy would issue warnings to Pfeifer regarding Crane’s products, or that it was at the time “readily known and apparent” to the Navy that the Crane products were hazardous.

Analysis
While the decision may be discouraging to defendants who sell products to sophisticated users, it does not completely close the door to the viability of the “sophisticated intermediary” defense. The Pfeifer court says it is not enough for a supplier defendant to simply show the plaintiff was an employee of a sophisticated intermediary to avoid liability. The supplier must also show it had sufficient reason for believing the ultimate user knew or should have known of the hazards.

However, the Court acknowledged the appropriateness of this defense even in the absence of a showing that warnings were issued to the intermediary. The Court stated that “suppliers may provide the additional required showing in many ways,” e.g., by offering evidence that it reasonably believed that the intermediary would warn the users, that the employees knew or should have known of the dangers in view of their experience and training, or that the specific dangers were so “readily known and apparent” to the intermediary that it would be expected to protect its employees.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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