Weekly Law Resume - The Sophisticated User Defense Does Not Automatically Apply to an Employee of a Sophisticated Employer

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Anne Pfeifer v. John Crane, Inc.
Court of Appeal, Second Appellate District, Division Four (October 29, 2013)

JCI appealed from a judgment awarding plaintiffs William and Anne Pfeifer over $21 million dollars in personal injury damages. Plaintiffs alleged that Pfeifer’s mesothelioma was caused by occupational exposure to JCI asbestos-containing products from his work with JCI gaskets and packing during his tenure in the Navy from 1963 to 1970 and while he was a civilian employee repairing boilers from 1971 to 1982. Plaintiffs sued JCI for negligence, strict liability and loss of consortium.

JCI’s corporate representative testified that between 1931 and 1985, JCI sold asbestos-containing gaskets and packing but did not conduct research into whether its products were hazardous. In 1981, JCI created a gasket safety data sheet for distribution to its employees which stated that over exposure to asbestos caused asbestosis and cancer. Customers only received a copy upon request. In 1983, JCI first began placing warnings on its products regarding the hazards of asbestos.

JCI attempted to submit an instruction on the “sophisticated user” defense, stating that JCI was not liable for its failure to warn Pfeifer regarding the hazards of asbestos because the Navy had greater knowledge of those hazards than JCI. The trial court rejected JCI’s instructions and directed a verdict on the defense barring the application of the proposed sophisticated user defense. At the end of the trial, the jury returned a special verdict in favor of the Pfeifers on their claims for negligence, strict liability and loss of consortium for over $21 million dollars in damages. JCI appealed from the judgment on several grounds, including that the trial court erred in both rejecting JCI’s proffered instructions regarding its “sophisticated user” defense, and directing a verdict on the defense.

The Court of Appeal affirmed. There are two types of “sophisticated user” defenses as noted in section 388 of the Restatement Second of Torts (“section 388”). The first defense is known as the “sophisticated user defense” and is detailed in comment k to section 388, which notes that the supplier’s duty to warn arises only when the supplier has no reason to expect that the user of the product will realize the danger involved. The second defense is known as the “sophisticated intermediary defense” and is reflected in comment n to section 388 which states that when the supplier provides items to a third party who will pass them to the user, the supplier may in some cases discharge its duty to warn the user by informing the third party of the item’s dangers.

It was undisputed that JCI provided no warnings to the Navy during Pfeifer’s tenure from 1963 to 1970. Therefore, the Court of Appeal limited its analysis to the “sophisticated user” defense as detailed in comment k to section 388 and the California Supreme Court case, Johnson v. American Standard, Inc. (2008) 43 Cal.4th 56. In Johnson, the Supreme Court held that a manufacturer is not liable to a sophisticated user of its product for failure to warn of a risk, harm, or danger, if the sophisticated user knew or should have known of the risk, harm or danger. Under the sophisticated user defense, the relevant inquiry is “whether the plaintiff knew, or should have known, of the particular risk of harm from the product giving rise to the injury.”

JCI’s proposed jury instructions were properly rejected by the trial court because they incorrectly stated that employees of a sophisticated user are, by virtue of their employment, deemed to be sophisticated users. However, the California Supreme Court in Johnson determined that under the “sophisticated user” defense the inquiry focuses on whether the plaintiff knew, or should have known, of the particular risk of harm from the product giving rise to the injury. The critical issue is the knowledge of the employee (or their potential knowledge) rather than the intermediary employer’s sophistication.

The Court of Appeal further held that “…to avoid liability, there must be some basis for the supplier to believe that the ultimate user knows, or should know, of the item’s hazards. In view of this requirement, the intermediary’s sophistication is not, as a matter of law, sufficient to avert liability; there must be sufficient reason for believing that the intermediary’s sophistication is likely to operate to protect the user, or that the user is likely to discovery the hazards in some other manner.” The mere fact that the user is an employee or servant of the sophisticated intermediary is not a sufficient reason, as a matter of law, to infer that the employer will protect the employee.

Here, there was no evidence that JCI had any reason to believe the Navy would issue warnings to Pfeifer regarding JCI’s products while he served in the Navy, or that it was then “readily known and apparent” to the Navy that the amounts of dust released from JCI’s products were hazardous. The evidence did not support JCI’s inference that the Navy would warn or otherwise protect Pfeifer from the dangers of its products or that Pfeifer would realize the dangers of JCI products

COMMENT
The success of the sophisticated user defense depends on whether this is sufficient evidence that an end user of a product either knew or should have known of the hazards of working with the product. This evidentiary requirement applies even if a product user is the employee of an arguably sophisticated intermediary employer.

For a copy of the complete decision see:

http://www.courts.ca.gov/opinions/documents/B232315.PDF