Products Liability – Raw Material Supplier – Consumer Expectations Test

by Low, Ball & Lynch
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David Johnson, et al. v. United States Steel Corporation

Court of Appeal, First District
(September 1, 2015)

In a products liability case, a plaintiff may seek recovery on theories of both negligence and strict liability.  Strict products liability was originally applied to manufacturers of consumer goods but has been extended to retailers, distributors, suppliers and other entities in the chain of distribution of a product that causes harm to a person or to property other than the product itself.  A “product” is broadly defined to include any “tangible personal property distributed commercially for use or consumption.”  (Rest.3d Torts, Products Liability, § 19, subd. (a).)  This case considered the question of whether a supplier of raw material used in the manufacture of another product can be held liable for design defect under the Consumer Expectation test.

In 2013, plaintiff David Johnson (“Johnson”) sued U.S. Steel and others after being diagnosed with acute myeloid leukemia.  He claimed his cancer was caused by benzene in paints, solvents or other products to which he was exposed while working as an auto mechanic in the 1970s and 1990s.  Among those products was Liquid Wrench, which he used “almost daily” to loosen rusted machine components.  He claimed the solvent would “get all over” him when he was working under cars.  He recalled a skull and cross bones symbol on the container, identifying it as the “raffinate-based” formula.  Liquid Wrench was formulated by Radiator Specialty Company (RSC), and one formulation contained coal raffinate, a byproduct of steel production that U.S. Steel supplied to RSC.  U.S. Steel did not dispute selling that the raffinate it sold to RSC between 1960 and 1978 contained benzene, but it presented evidence that RSC also sold a petroleum-based formulation of Liquid Wrench during that time and currently, that Liquid Wrench does not contain benzene.

U.S. Steel moved for summary judgment, claiming the evidence was insufficient to show Johnson was exposed to raffinate-formula Liquid Wrench.  U.S. Steel alternately sought summary adjudication of the negligence and product liability causes of action to the extent they were based on a failure to warn.  U.S. Steel argued it was a bulk supplier of a raw material and any duty to warn of the material’s health hazards was discharged when it provided adequate warnings to RSC.  The trial court held there was a triable issue of fact as to Johnson’s exposure to raffinate-based Liquid Wrench but U.S. Steel satisfied its duty to warn of health hazards when it provided warnings to RSC. In its reply brief, U.S. Steel argued for the first time that it was entitled to summary judgment because it was a “bulk supplier” of a raw material that was added to other ingredients, packaged and sold by an intermediary.  The court received supplemental briefing on the issue.  Johnson argued that U.S. Steel may be liable because the raffinate it sold was defective in design when it left U.S. Steel’s factory.  U.S. Steel argued that raffinate and the benzene it contained was not defective, as it could be safely used with proper handling.  The trial court granted summary judgment, holding “the potentially hazardous nature of a substance does not equate to an inherent defect.”

Johnson appealed.  The Appellate Court noted that strict liability is not absolute liability.  (Anderson v. Owens-Corning Fiberglas Corp. (1991) 53 Cal.3d 987, 994.)  A manufacturer is not an insurer against all injuries that may result from the use of its product; it is liable for injuries caused by a product defect.  (Ibid.)  In California, a product is defective in design if it fails to meet ordinary consumer expectations as to safety or the design is not as safe as it should be. Product sellers are responsible for defects existing in the product when it leaves the seller’s control and is placed on the market.  Thus, the seller of a completed product is strictly liable for any defect in the completed product, regardless of the “source” of the defect; “a manufacturer of a completed product cannot escape liability by tracing the defect to a component part supplied by another.”  (Vandermark v. Ford Motor Co. (1964) 61 Cal.2d 256, 261.)  But the seller of a component part is strictly liable only for defects in the component part it sold.  (Jimenez v. Superior Court, supra, 29 Cal.4th at p. 480.)

The Court then analyzed the Component Parts Doctrine, which provides that component parts manufacturers are not liable for injuries caused by the finished product unless the component itself was defective and caused harm. Thus, it reasoned that U.S. Steel bore no responsibility for damages caused by Liquid Wrench if the raffinate was not itself defective when delivered to RSC for incorporation into the finished product, but U.S. Steel was liable if the raffinate was defective and its defect caused Johnson’s injuries.  Resolution of this issue turned on the reasonable expectations of the consumer.  Applying the Consumer Expectations test, the Court emphasized that the product in question here was not benzene, but raffinate.  It was raffinate that was claimed to be defective.  None of the previous cases the Court analyzed had determined whether the coal-based raffinate sold by U.S. Steel was a defective product.  While raffinate may be a substance with which ordinary consumers were unfamiliar and had no expectations concerning its properties or effects, if the evidence showed its incorporation into Liquid Wrench or any finished product caused that product to be less safe than ordinary consumers would expect, the raffinate would be shown to contain a design defect under the Consumer Expectations test.

As the moving party for summary judgment, it was U.S. Steel’s burden to present evidence negating the existence of a design defect in the raffinate.  It failed to do so, and the burden of presenting contrary evidence never shifted to Johnson.  Thus, summary judgment was inappropriate, and the judgment was reversed.

Comment

The supplier of a raw material used in another product can be held liable for design defect under the Consumer Expectations test only if the raw material is itself inherently defective. Here, the raffinate U.S. Steel supplied to RSC that was used in Liquid Wrench contained benzene, which has been identified as a possible cause of myeloid leukemia.  Johnson provided evidence (recalling the skull-and-crossbones on the can) that he was exposed to raffinate-containing Liquid Wrench, and U.S. Steel failed to produce evidence that its raffinate was not defective under the Consumer Expectations test.

For a copy of the complete decision, see: Johnson v. United States Steel Corporation

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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