Daily Blast May 24, 2016

The California Supreme Court issued an opinion in Webb v. Special Electric Company (May 23, 2016, S209927) __ Cal.4th __ analyzing the scope of the supplier’s duty to warn ultimate users of the finished product about risks related to raw material. The court formally adopted the sophisticated intermediary defense as expressed in the Restatement. The court stated that under the sophisticated intermediary doctrine, a supplier may discharge its duty to warn end users about known or knowable risks in the use of its product if it: (1) provides adequate warnings 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 product. (Slip opn., pp. 15-16.)

The plaintiff contracted Mesothelioma from exposure to asbestos-containing piping sold through distributors by Johns Manville Corporation. (Slip opn., p. 4.) Special Electric supplied crocidolite asbestos to Johns Manville. Crocidolite is the most toxic form of asbestos. Nevertheless, Special Electric claimed crocidolite was safer than other forms of asbestos. (Id. at pp. 2-3.) The plaintiff and his wife sued multiple defendants, including Special Electric, under strict liability and negligence theories. (Id. at pp. 3-4.) During trial, Special Electric moved for nonsuit and directed verdict on the failure to warn claims, arguing that it had no duty to warn a sophisticated intermediary such as Johns-Manville, “the oldest and largest manufacturer of asbestos-containing products in the country,” about the health risks of asbestos exposure. (Ibid.) The trial court deferred ruling on Special Electric’s motions and the jury found Special Electric liable for failure to warn. (Id. at p. 5.) Before entering judgment, the court granted Special Electric’s nonsuit and directed verdict motions, construing them as a JNOV. (Ibid.)

The Court of Appeal reversed, holding that the JNOV ruling was “impermissibly premature and lacked the required written notice.” (Slip Opn. p. 5.) Furthermore, the Court of Appeal held that substantial evidence demonstrated that Special Electric breached a duty to warn Johns-Manville and other foreseeable users of its product. (Ibid.)

The Supreme Court affirmed the Court of Appeal’s reversal. The court reasoned that an intermediary’s sophistication does not in itself discharge a seller’s duty to warn. (Slip opn., p. 18.) In addition, the defendant must reasonably rely on the sophisticated intermediary to warn foreseeable downstream users of the hazardous product. (Ibid.) The court held that despite Johns-Manville’s expertise regarding asbestos, there was no evidence to suggest that it knew about the acute risks posed by the crocidolite asbestos sold by Special Electric. (Id. at p. 23.) Furthermore, there was no evidence to support an inference that Special Electric actually relied on Johns-Manville to warn foreseeable end users of its product–particularly since there was evidence suggesting that Johns-Manville had failed to warn its own employees about the dangers of asbestos exposure. (Id. at p. 24.)

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