Last week, the United States Supreme Court issued an opinion that will keep many equipment manufacturers on board as defendants in maritime asbestos litigation. Further, it may lead to a reversal of the California Supreme Court’s holding that these defendants had no liability for parts manufactured by a third party that were included in their equipment.

In Air and Liquid Systems Corp. et al. v. DeVries,[1] the high court held that, in the maritime tort context, a product manufacturer has a duty to warn when its product requires incorporation of a part and the manufacturer knows or has reason to know that the integrated product is likely to be dangerous for its intended uses. Under that approach, the manufacturer would be liable even when the manufacturer does not itself incorporate the required part into the product.

This ruling is contrary to, and may lead to the elimination of, the “bare-metal” defense that has been available in California to manufacturers of pumps, valves, turbines and other maritime equipment in asbestos litigation since 2012. The “bare metal” defense is generally looked to by manufacturers who made and sold metal products, to which asbestos-containing materials were later added by some other entity. In this simple form, the defense is straight-forward: The manufacturer is not liable because it did not make, sell or distribute the asbestos-containing component that the claimant is alleging caused injuries.

In an opinion authored by Justice Brett Kavanaugh, in which Justices John Roberts, Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan joined, the court reversed prior grants of summary judgment to manufacturers of pumps, blowers and turbines for three Navy ships. This equipment re­quired asbestos insulation or asbestos parts in order to function as intended.

The plaintiffs were two U.S. Navy veterans who served on these vessels, developed cancer and later died. After reversal of these summary judgments by the Third Circuit, the Supreme Court affirmed the Third Circuit’s reversal, albeit while disavowing the “foreseeability” standard used by the Court of Appeals.

In discussing the standards used by lower courts, the Supreme Court stated that the “foreseeability standard” went too far in imposing liability upon manufacturers for every conceivable later use of their product, while the “bare-metal defense” did not go far enough. The holding establishes a three-part rule for the imposition of a duty to warn on equipment manufacturers in the mari­time tort context:

A product manufacturer has a duty to warn when

(i) its product requires incorporation of a part,

(ii) the manufacturer knows or has reason to know that the integrated product is likely to be dangerous for its intended uses, and

(iii) the manufacturer has no reason to believe that the product’s users will realize that danger.

This rule is contrary to the standard for liability in failure to warn cases in California as set forth by the California Supreme Court in O’Neil v. Crane Co.[2] As a result, many equipment manufacturers who had been excluded from inclusion in maritime asbestos cases will likely find themselves again as viable defendants in California asbestos litigation.

It appears from the text of the opinion that the high court does not intend for the application of this rule outside of the maritime context. In fact, the opinion’s first sentence states: “In maritime tort cases, we act as a common-law court, subject to any controlling statutes enacted by Congress. ... This maritime tort case raises a question about the scope of a manufacturer’s duty to warn.”

However, the court did state that their rule applies in certain nonmaritime situations, including when: (1) a manufacturer directs that the part be incorporated; (2) a manufacturer itself makes the product with a part that the manufacturer knows will require replacement with a similar part; or (3) a product would be useless without the part.

The court noted that, in all of those situations, other courts have said that the product in effect requires the part in order for the integrated product to function as intended. The court agreed, and ruled that this maritime tort rule encompasses those situations, so long as the manufacturer knows or has reason to know that the integrated product is likely to be dangerous for its intended uses, and the manufacturer has no reason to believe that the product’s users will realize that danger.

Justice Neil Gorsuch, along with Justices Clarence Thomas and Samuel Alito, issued a dissent echoing the rationale of the California Supreme Court in the O’Neil case. The dissent, quoting O’Neil, stated: “In the words of the California Supreme Court, consumer welfare is not well-served by requiring manufacturers to warn about the dangerous propensities of products they do not design, make, or sell.”

The dissent also criticized the holding as establishing a duty retrospectively, and creating confusion and uncertainty. The dissenters advocated the application common law that established that a manufacturer has no duty to warn of another manufacturer’s products, even if those are used in conjunction with its product. Rather, the manufacturer has a duty to warn based upon the characteristics of its own product.

The dissent further noted that nothing in the court’s opinion compels courts operating outside the maritime context to apply the test announced herein. In other tort cases, courts remain free to use the “more sensible and historically proven common law rule.”

The effect that this opinion has on nonmaritime-based asbestos litigation remains to be seen. On its face, the DeVries opinion is limited to cases involving maritime exposures, such as naval vessels and shipyard worksites, and imposes liability for failure to warn claims only. There does not seem to be a duty articulated for design defect claims.

The immediate impact could be a resurgence of filings against manufacturers of pumps, valves, steam traps, turbines and other equipment that required the use of asbestos-containing gaskets, packing and insulation in a maritime environment. Cases against equipment manufacturers involving machinist mates and boiler tenders in World War II-era naval vessels where such equipment was present and frequently disturbed have been thrown a lifeline, particularly in California. These cases had been sunk by the California Supreme Court’s O’Neil ruling in 2012.
 

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[1] Air and Liquid Systems Corp. et al v. DeVries , 586 U.S. ____ (2019) (No. 17–1104), argued Oct. 10, 2018, decided March 19, 2019

[2] O’Neil v. Crane Co. , 53 Cal. 4th 335 (2012).