Aregood v. Givaudan Flavors Corp., 17-3390

• Decision Date: 13 September 2018
• Docket Number: No. 17-3390,17-3390
• Citation: 904 F.3d 475
• Parties: Gregory AREGOOD, Jr., et al., Plaintiffs-Appellants, v. GIVAUDAN FLAVORS CORPORATION, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

904 F.3d 475

Gregory AREGOOD, Jr., et al., Plaintiffs-Appellants,

v.GIVAUDAN FLAVORS CORPORATION, et al., Defendants-Appellees.

No. 17-3390

United States Court of Appeals, Seventh Circuit.

Argued June 1, 2018

Decided September 13, 2018

Rehearing Denied October 30, 2018

Jonathan M. Soper, Attorney, Kenneth Blair McClain, Attorney, HUMPHREY, FARRINGTON & MCCLAIN, Independence, MO, Michael C. Cooley, Attorney, ALLEN WELLMAN MCNEW HARVEY, LLP, Greenfield, IN, for Plaintiffs-Appellants Gregory Aregood, Jr., Rick Arndt, Sandy Arndt, David Black, and Luther D. Cole.

Stephen J. Butler, Attorney, Kimberly Ellen Ramundo, Attorney, THOMPSON HINE LLP, Cincinnati, OH, Dennis F. Cantrell, Attorney, CANTRELL, STRENSKI & MEHRINGER, LLP, Indianapolis, IN, Karl L. Mulvaney, Attorney, BINGHAM GREENEBAUM DOLL, LLP, Indianapolis, IN, for Defendant-Appellee Givaudan Flavors Corporation.

Before Ripple, Kanne, and Brennan, Circuit Judges.

Brennan, Circuit Judge.

More than twenty current and former employees at the ConAgra microwave popcorn plant in Rensselaer, Indiana sued various manufacturers and suppliers of butter flavorings that contained the chemical diacetyl, which if inhaled can cause a respiratory disease called "popcorn lung." All defendants were dismissed except Givaudan Flavors Corporation ("Givaudan"), a long-time supplier to the plant, which faced claims under Indiana product liability law for strict liability, failure to warn, negligence, and design defect.

Givaudan moved for and eventually received summary judgment in full. The employee plaintiffs appeal, contending that the district court erred in reviewing the evidence and applying the law. Summary judgment for the flavor manufacturer Givaudan is proper on many of plaintiffs' claims, but not that Givaudan failed to warn plaintiffs that its products contained a dangerous substance. Whether an exception to that duty to warn—the sophisticated intermediary doctrine—applies to the employer ConAgra and exonerates Givaudan is a fact question, so we remand for trial on that claim.

I. Background

As we review summary judgment in favor of the movant Givaudan, we consider undisputed facts, all reasonable inferences from undisputed facts are drawn in favor of the nonmovant employees, and we view disputed evidence in the light most favorable to the employees. See Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; Weigle v. SPX Corp. , 729 F.3d 724, 730 (7th Cir. 2013).

A. Factual

The employee plaintiffs are all current or former workers at the Orville Redenbacher microwave popcorn plant in Rensselaer, Indiana. Their employer is or was ConAgra (a division of ConAgra Snack Food Group, not a party to this case). The employees worked at ConAgra when Givaudan¹ manufactured and supplied to ConAgra butter flavorings containing diacetyl, an organic additive with a buttery flavor. In the early 1990s, Givaudan began supplying these flavorings with diacetyl to ConAgra for use in its plants, and by the mid-2000s Givaudan had sold these flavorings to ConAgra for use at its Rensselaer plant.²

Exposure to diacetyl, the employees allege, resulted in their developing respiratory illnesses. When inhaled, diacetyl can cause bronchiolitis obliterans —commonly referred to as "popcorn lung"—the inflammation and obstruction of the smallest airways of the lungs. Symptoms of this disease include a dry cough, shortness of breath, wheezing, fatigue, and can lead to worse personal injuries.

In support of their claims, the employees have offered opinions of various expert witnesses. An occupational physician opined that the levels of diacetyl in the air at the Rensselaer plant when plaintiffs worked there likely caused bronchiolitis obliterans. Another doctor examined the plaintiffs and diagnosed them with flavoring-induced bronchiolitis obliterans caused by exposure to diacetyl at the Rensselaer plant. An epidemiologist and occupational physician who had reviewed the documentary and testimonial record opined Givaudan should have known that diacetyl caused lung disease, as well as that Givaudan withheld from ConAgra the health risks of its butter flavoring.

"Popcorn lung" has been an issue in the microwave popcorn industry since at least the early 2000s when bronchiolitis obliterans was discovered at a microwave popcorn plant in Missouri (not owned or operated by ConAgra). In 2001, The Wall Street Journal published an article on that outbreak, and a federal health agency began a study to try to determine its cause. After the Missouri occurrence and the national press, ConAgra inspected its Rensselaer plant and concluded that its processes and ventilation systems were different. ConAgra wrote to its Rensselaer employees about the differences between the plants, concluding that ConAgra's employees did not face the same risks as in Missouri. Still, ConAgra developed procedures for breathing tests for its employees, and also cooperated with the federal health study, including implementing the study's recommendation of ventilation improvements.

Givaudan knew about diacetyl and its harmful effects before the Missouri outbreak, the attendant publicity, and the federal health study. In the mid-1980s, Givaudan learned from its trade association that inhaling diacetyl was "harmful" and "capable of producing system toxicity." In the 1990s, three employees at Givaudan's plant in Cincinnati were diagnosed with bronchiolitis obliterans, and one died. In response, Givaudan retained an occupational physician who confirmed that the two surviving employees had contracted the disease. That physician recommended further investigation into the cause of the disease, but he was terminated. Givaudan was sued twice for claims of lung injury from diacetyl exposure.

Givaudan also responded to these diagnoses by promulgating procedures designed to reduce the risk of personal injuries from the use and handling of diacetyl. Those procedures required that "[w]henever liquid [d]iacetyl or a product where liquid [d]iacetyl is present is to be used, a respirator with chemical resistant gloves must be worn." Further, "[a]ny room containing [d]iacetyl in a liquid state must be labeled respirator required."

Givaudan likewise developed and implemented an employee protection program. To do so, Givaudan hired three physicians from the University of Cincinnati, who were required to sign confidentiality agreements. A pulmonary toxicologist testified it was "somewhat fair" to say he was unable to fully investigate the circumstances at Givaudan's plant. That doctor concluded Givaudan did not want to identify the precise nature of the problem, and did not want him to put anything in writing. An occupational physician stated he had narrowed the chemicals suspected of causing the outbreak "to a manageable list that could have been investigated," and he had offered the resources of the University of Cincinnati to conduct the study, but Givaudan did not give him the green light. Givaudan documents suggest the list of chemicals suspected as the cause of the bronchiolitis obliterans outbreak was narrowed to three, including diacetyl. One of these physicians testified that Givaudan limited the resources used to discover the cause of the outbreak, and that he was under pressure to not let employees know of any danger.

The parties dispute what information the flavor manufacturer Givaudan gave to the employees' company ConAgra about diacetyl and how it should be handled. Federal Occupational Safety and Health Administration regulations require chemical manufacturers such as Givaudan to evaluate and to classify each product sold and to provide with the product a "material safety data sheet." 29 C.F.R. § 1910.1200(g)(5) (2018). Data sheets accompanied Givaudan's shipments of butter flavoring containing diacetyl to ConAgra. Those sheets did not disclose how much (or even if) diacetyl was present in certain flavors, as Givaudan considered that information a trade secret. The data sheets did not include warnings that inhalation of fumes from butter flavorings made with diacetyl could cause permanent lung injury or bronchiolitis obliterans. While Givaudan informed ConAgra generally that inhalation of the butter flavoring could be "irritating to nose, throat, and lungs," Givaudan also stated on the sheet that the flavoring had "no known health hazards."

Givaudan supplemented the language in the material safety data sheets over the time it sold butter flavorings to ConAgra. Givaudan added that "ventilation meeting acceptable standards was recommended," but it did not say employees handling the flavoring with diacetyl should wear respirators, unless they were responding to spills or leaks. For "personal protection," the material safety data sheet stated, "respiratory protection is not normally required" in well ventilated areas, although in confined or poorly ventilated areas or if material is toxic by inhalation, "the use of approved respiratory protection is recommended."

Givaudan's material safety data sheets did not state that the flavorings were hazardous. Givaudan's toxicologist has admitted that OSHA required Givaudan, for any flavor containing more than one percent of a hazardous chemical, to list in the material safety data sheet any health hazards and to give safety instructions for that chemical. Givaudan sold ConAgra five butter flavorings which contained more than one percent diacetyl.

While diacetyl was not listed on the material safety data sheets, ConAgra was aware that Givaudan's butter flavorings contained the additive. ConAgra was not aware, however, of all the components of the butter flavorings and the levels of diacetyl they contained. ConAgra's representative testified ConAgra understood the butter flavorings bought from Givaudan were safe for its workers. ConAgra expected that "flavor companies would disclose all the hazard information that they possessed about flavors that were being provided to ConAgra," and ConAgra...