Oregon Case Law Update: Products Liability: When Can a Manufacturer be Liable for Another Manufacturer’s Parts?
From the Desk of Jeff Eberhard: In this products liability case, the court was tasked with determining whether a manufacturer’s pumps were in substantially the same condition as when they were sold after asbestos-containing components manufactured by others were routinely replaced.
Claims Pointer: The Oregon Court of Appeals held that summary judgment was inappropriate where Plaintiff presented evidence that Defendant’s pumps were in substantially the same condition as they were when sold despite the fact the asbestos-containing components sold by Defendant had long been replaced by the time of Plaintiff’s exposure. The case is a reminder to manufacturers of their duty to warn consumers of possible dangers presented by their products, and that their duty may extend to the components that were manufactured by others and expected to be replaced over the life of the product.
McKenzie v. A.W. Chesterson Co., 277 Or App 728 (2016).
In the 1940s, Defendant Warren Pumps, LLC (“Warren Pumps”), designed and sold various pumps to the Navy. These pumps were installed on the USS Boxer and the USS Hancock, the aircraft carriers on which Paul McKenzie (“McKenzie”) served during his naval career. Warren Pumps’ sales records indicated some of the pumps originally had asbestos-containing gaskets, packing, or external insulation material. Notably, Warren Pumps did not manufacture those items, instead purchasing them from third parties, and they were replaced regularly. Warren Pumps manufactured the pumps and sold them with gaskets, packing, or insulation as complete packages. The pumps were designed according to the Navy’s specifications and approved by the Navy. Warren Pumps did not supply warnings with respect to the hazards of asbestos with any of the pumps it sold to the Navy.
Both ships had undergone overhauls by the time McKenzie served on them, and it was undisputed that McKenzie was not exposed to asbestos from gaskets, packing, or insulation supplied by Warren Pumps. Almost forty years after his retirement from the Navy, McKenzie was diagnosed with mesothelioma.
McKenzie initiated an action against Warren Pumps and numerous other manufacturers and distributors who he alleged manufactured, sold, or distributed asbestos-containing products at job sites where he worked. In a strict product liability claim against Warren Pumps, he alleged Warren Pumps’ products were unreasonably dangerous and defective because they caused pulmonary disease and/or cancer if inhaled, they continued to release asbestos fibers into the atmosphere once installed, and Warren Pumps did not provide sufficient warnings of the harm caused by exposure to asbestos-containing products or adequately notify the public of its products’ dangerous propensities. Warren Pumps moved for summary judgment, arguing McKenzie could not prove McKenzie worked around the original gaskets, packing, or insulation that came with Warren Pumps’ pumps or any onboard spare gaskets and packing Warren Pumps may have supplied to the Navy. The trial court agreed, and granted summary judgment. McKenzie appealed.
Under Oregon law, the seller of a product is strictly liable for damage caused by a product which is unreasonably dangerous and is expected to, and does, reach the user without substantial change in the condition in which it was sold. A seller may be required to give an adequate warning of the product’s danger to a consumer when the seller has knowledge or should have knowledge of the danger. Sellers of products have a duty to provide adequate warnings about nonobvious risks of injury associated with the use of their products when they know, or reasonably should know, of those risks of injury.
McKenzie argued that the unreasonably dangerous products relevant to liability were the asbestos-containing pumps Warren Pumps manufactured and sold to the Navy in the 1940s, and that it did not matter whether he encountered replacement gaskets, packing, and insulation; rather, the salient issue was whether the pumps were substantially the same when McKenzie used them as when Warren Pumps originally sold them to the Navy. McKenzie further asserted Warren Pumps was required to notify users of dangers because the record contained evidence that the pumps were substantially in their time-of-sale condition when McKenzie worked around them and Warren Pumps knew about the continuing risk of exposure to asbestos-containing parts.
Warren Pumps countered by arguing that the relevant unreasonably dangerous products were not its pumps but the gaskets, packing, and insulation that contained asbestos. According to Warren Pumps, the only possible cause of McKenzie’s injury was the asbestos-containing products used with the pumps that others had manufactured and sold to the Navy, so a pump manufacturer could not be held strictly liable (this is the so-called “bare-metal defense”).
For purposes of summary judgment, the Court of Appeals agreed with McKenzie that the products at issue in the case were the pumps as delivered to the Navy. The court noted the record contained evidence that Warren Pumps sold pumps with asbestos-containing parts, not bare metal. Additionally, ORS 30.920(1) permitted McKenzie’s theory that the products at issue were Warren Pumps’ pumps as sold to the Navy and that those products were unreasonably dangerous by virtue of Warren Pumps’ failure to warn regarding hazards of using the pumps.
The court took into account evidence in the record that Warren Pumps’ pumps were expected to reach users such as McKenzie in the original condition sold. While Warren Pumps pointed out there was no evidence their pumps required the use of asbestos-containing internal replacement parts to operate, McKenzie had presented evidence that Warren Pumps had every reason to know that the Navy would continue to use such parts in and on the pumps Warren Pumps supplied. In sum, McKenzie’s evidence was sufficient to defeat summary judgment on the theory that the pumps McKenzie encountered were in substantially the same condition as when Warren Pumps sold them and Warren Pumps expected that replacement gaskets, packing, and insulation would likely contain asbestos. Accordingly, summary judgment was inappropriate, and the case was reversed and remanded.
View full opinion at: http://www.publications.ojd.state.or.us/docs/A145735.pdf
Case updates are intended to inform our clients and others about legal matters of current interest. They are not intended as legal advice. Readers should not act upon the information contained in this article without seeking professional counsel.
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