On June 28, 2016, New York’s highest court held that “the manufacturer of a product has a duty to warn of the danger arising from the known and reasonably foreseeable use of its product in combination with a third-party product which, as a matter of design, mechanics or economic necessity, is necessary to enable the manufacturer’s product to function as intended.” (Emphasis added.)

The Court of Appeals decision arose out of the appeal of two verdicts against valve manufacturer Crane Co. in cases involving work on gaskets and packing associated with its valves on steam pipe systems in the boiler rooms of Navy ships (Dummitt) and in an automotive manufacturing plant (Suttner). None of the gaskets or packing at issue were designed or manufactured by Crane Co.

The Court spent significant time considering its seminal prior decision in Rastelli v. Goodyear Tire & Rubber Co., which Crane Co. relied upon to support its position that it had no duty to warn users of its valves about asbestos hazards arising from the use of third-party products. In Rastelli, the Court held that Goodyear was not liable for failure to warn for injuries resulting from a non-defective Goodyear tire that exploded when used with a compatible but defective rim assembly designed and manufactured by a third-party. Although the Court agreed that, as stated in Rastelli, the manufacturer’s lack of control over the production of a third-party’s product militates against recognition of a duty to warn, it found that “where a manufacturer creates a product that cannot be used without another product as a result of the design of the product, the mechanics of the product or the absence of economically feasible alternative means of enabling the product to function as intended, the manufacturer has a substantial, albeit indirect, role in placing the third-party product in the stream of commerce.” In a footnote, the Court noted that mere compatibility, such as a Goodyear tire on a compatible rim, is insufficient to give rise to a duty to warn of dangers associated with the combined use of products.

Regarding the relative duties owed by the manufacturers of “durable” products (such as valves) versus “fungible” products (such as gaskets and packing), the Court stated, “where one manufacturer’s product is a durable item designed for continuous use with the other manufacturer’s fungible product, which by contrast deteriorates relatively quickly and is designed to be replaced, the manufacturer of the durable product typically is in the best position to guarantee that those who use the two products together will receive a warning; the end user is more likely to interact with the durable product over an extended period of time, and hence he or she is more likely to inspect warnings on that item or in associated documentation, than to review warnings supplied by the maker of the ‘wear item’.” The Court stated that the “durable” product manufacturer’s superior position to warn the end user is thus a factor supporting a duty to warn in a particular case. In a footnote, the Court noted that the “durable” product manufacturer’s duty “does not eliminate the obligation of the other manufacturer to provide warnings of the hazards caused by the deterioration of its product that does not result from ordinary wear and tear known to the user.”

The Court’s finding of a duty to warn was grounded not only in “mechanical necessity” of the third-party product but also “financial necessity.” The Court stated that in some circumstances, “if the evidence supports an inference that the third-party product is the only product that both enables the intended function of the manufacturer’s product and is available at a cost that is reasonably sustainable for the average individual or entity that purchases the manufacturer’s product for the use at issue, the manufacturer has a duty to warn of the perils of the economically necessary and foreseeable combined use of its product with the third-party product.” The Court noted that the federal and sister state courts “have not universally embraced this approach.”

In reaching its conclusion, the Court conducted a highly fact-intensive analysis. The Court stated that Crane Co. took “affirmative steps to integrate its valves with third-party asbestos-laden products.” Crane Co. “endorsed” the use of asbestos-containing parts in the specifications for its valves sold to the Navy, thereby “inviting” the Navy to continue using similar replacement parts. Crane Co. marketed asbestos-containing sheet material called “Cranite” that could be used to create replacement gaskets and packing for Crane Co.’s valves. In its catalogs published between 1923 and 1962, Crane Co. recommended Cranite for use in high-temperature, high-pressure steam systems, although it also noted that gaskets and packing composed of other materials were available. Sometime after Crane Co. supplied the valves at issue in Dummitt, the Navy revised its “Naval Machinery” manual, which specified asbestos-containing gaskets and packing in the relevant valves and noted that “insulation” “[wa]s essential to economic operation” of the steam system. Crane Co. was among the manufacturers identified in the manual as assisting with its revision. Crane Co. also admitted that the valves it supplied to the automotive manufacturing plant at issue in Suttner may have included asbestos-containing gaskets and packing.

The Court asserted that ultimately its “decision here adds but a note to a familiar anthem in failure-to-warn jurisprudence” and that “Rastelli and other precedents...confine liability to a manageable level.”

According to David Marshall, partner at Hawkins Parnell & Young, “The Dummitt decision reinforces New York as a challenging jurisdiction and requires defendants to creatively re-evaluate defense strategies to achieve favorable results. The underlying facts highlighted by the Court can distinguish individual cases and defendants. Defendants should evaluate the necessity of additional discovery and investigation regarding the usage of their products in the field.”

Click here to contact David for more information on the implications for your New York defense strategy.