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Oregon Court Of Appeals:  Manufacturers Are Liable For Asbestos-Containing Replacement Parts Sold By Others

In McKenzie v. A.W. Chesterton Company, et al., 277 Or. App. 728, 2016 App. LEXIS 484 (2016), the Court of Appeals of Oregon reversed summary judgment in favor of defendant Warren Pumps, LLC on the basis that Oregon’s product liability statute extends a manufacturer’s liability to replacement parts when they are substantially the same as those originally sold with the manufacturer’s product. The court held it was sufficient that the pumps supplied by the defendant were in substantially the same condition when the plaintiff was exposed as when the pumps were originally sold. In McKenzie, the plaintiff testified that he worked on or around Warren pumps while serving in the U.S. Navy. He testified that he replaced packing and internal gaskets and removed external insulation on Warren pumps on board the USS Boxer between 1954 and 1959, and on board the USS Hancock between 1968 and 1970. Both aircraft carriers went into service in 1944. It was undisputed that the plaintiff was not exposed to gaskets, packing, or insulation supplied by Warren. Warren was granted summary judgment by the trial court on the basis of its theory that, even if plaintiff could prove that he had been exposed to asbestos through the replacement items, he failed to adduce sufficient evidence that the defendant had manufactured or supplied those items to the Navy.

On appeal, the plaintiff argued that the unreasonably dangerous “products” for purposes of Oregon’s strict product liability statute, ORS 30.920, were the asbestos-containing pumps that Warren manufactured and sold the Navy in the 1940s and defendant could be held liable because the pumps were in substantially the same condition when he was exposed to them as when defendant sold them to the Navy. The Oregon court held that it was foreseeable that seamen would be exposed to asbestos through replacement gaskets, packing, and insulation used with defendant’s pumps so defendant could be held liable even though defendant had not manufactured or sold the replacements. Therefore, it did not matter whether the plaintiff encountered replacement gaskets, packing, and insulation sold by other manufacturers. The salient issue was whether the pumps were substantially the same as when the defendant originally sold them to the Navy (i.e., they still contained or utilized asbestos-containing components). In support of that argument, the plaintiff relied heavily on the Restatement (Second) of Torts section 402(A) (1965) and the comments to that section, which Oregon courts have adopted.   

The Court of Appeals agreed and held that “the products in this case are the pumps as delivered to the Navy.” The court cited three reasons for that conclusion. First, the court found that “common sense tells us that the pumps were what [Warren] sold to the Navy, and the gaskets and packing were included within that product.” Second, the terms of ORS 30.920(1) permitted the plaintiff’s theory of strict product liability. Tracking the language of the statute, the pumps were “unreasonably dangerous” by virtue of defendant’s alleged failure to warn and the pumps were expected to and did reach users like the plaintiff without “substantial change” in the condition in which they were sold. 

Third, the court concluded that comment (d) to section 402A of the Restatement supported its interpretation of ORS 30.920(1). Comment (d) provides that strict liability “extends to any product sold in the condition, or substantially the same condition, in which it is expected to reach the ultimate user,” such as “an automobile, *** an airplane, *** a power tool[.]”  The court explained that the examples in comment (d) support the idea that a seller may be held strictly liable for a product that is dangerous when sold, even if component parts will, through wear and tear from use or regular maintenance, be later replaced. 

In deciding that a manufacturer may be held liable for asbestos-containing replacement parts sold by others, the Oregon Court of Appeals discounted contrary opinions by the Supreme Courts of both Washington and California, and joined a minority of courts nationwide that have imposed liability outside the “chain of distribution.”  As a result, the holding dramatically increases the scope of liability for product manufacturers sued under Oregon law.  

 

[About the Author: Marc Carlton is a partner in the Portland office and is a member of the Toxic Tort & Environmental Litigation, Products Liability, and Transportation Practices.]

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