Gray v. Badger Mining Corp.

• Decision Date: 15 July 2003
• Docket Number: No. C4-02-2052.,C4-02-2052.
• Parties: Lawrence B. GRAY, Respondent, v. BADGER MINING CORPORATION, individually and as successor-in-interest to the C.A. Chier Sand Company, Appellant, Carpenter Brothers, Inc., et al., Defendants.
• Court: Minnesota Court of Appeals

664 N.W.2d 881

Lawrence B. GRAY, Respondent, v. BADGER MINING CORPORATION, individually and as successor-in-interest to the C.A. Chier Sand Company, Appellant, Carpenter Brothers, Inc., et al., Defendants.

No. C4-02-2052.

Court of Appeals of Minnesota.

July 15, 2003.

Michael S. Polk, Michael R. Strom, Sieben, Polk, LaVerdiere & Hawn, P.A., Hastings, MN, for respondent.

Robert E. Diehl, Cynthia R. Bartell, Minneapolis, MN; and Cathy R. Gordon, pro hac vice, Dickie, McCamey & Chilcote, P.C., Pittsburgh, PA, for appellant.

Considered and decided by SHUMAKER, Presiding Judge, SCHUMACHER, Judge, and HALBROOKS, Judge.

OPINION

GORDON W. SHUMAKER, Judge.

Respondent Lawrence Gray developed silicosis and sued appellant Badger Mining Corporation and various other defendants in this personal-injury action. He claimed that the defendants were negligent and strictly liable for failing to warn him of the dangers of breathing silica dust, and that the defendants breached warranties of merchantability and fitness for intended purpose. After the district court denied the defendants' motions for summary judgment, all defendants settled with Gray, except Badger.

Badger renewed its motion for summary judgment on the legal issue that it had no duty to warn Gray. After the district court denied Badger's motion, Badger and Gray agreed to forego a trial on the disputed factual issues and stipulated to certain facts and to entry of judgment against Badger. But Badger also denied liability and preserved its right to appeal the legal issue of whether it had a duty to warn Gray. The parties thus agreed that if this court concluded that Badger had a duty to warn Gray, Badger's liability would remain at the judgment amount, but if Badger had no duty to warn, Badger's liability would be limited to a lesser amount. Badger filed this appeal after the entry of final judgment.

FACTS

For over four decades, respondent Lawrence Gray worked in a foundry where he was exposed to silica sand. He ultimately contracted silicosis. For part of Gray's work history, appellant Badger Mining Corporation supplied silica sand to the foundry.

Gray sued Badger, among others, alleging that Badger failed to warn of the dangers of inhaling silica. Badger contended in its defense that it had no duty to warn Gray of such dangers because Gray's employer was a sophisticated buyer of silica sand and was in the best position to warn and to protect its employees.

Badger twice moved for summary judgment on the issue of duty to warn. The district court denied the motions. Badger and Gray then stipulated to the entry of judgment against Badger and agreed that Badger would thereby preserve the duty-to-warn issue for appeal. The parties further stipulated that they would forego a trial on the facts and that if Gray prevails on appeal he will receive the stipulated judgment amount of $75,000, but if Badger prevails, Gray will accept $17,500 in satisfaction of the judgment.

In this unique procedural posture, and despite the likelihood of the existence of genuine issues of material fact, Badger appeals from the stipulated judgment and asks this court to decide whether Badger had a legal duty to warn Gray about potential hazards of inhaling silica.

Many significant facts are undisputed. Gray worked in various capacities at the Smith Foundry from 1951 to 1998. In the 1950s and 60s, he was exposed to silica dust, created when the foundry recycled sand. In those days, the foundry had no fans or exhaust systems to reduce the quantity of dust particles in the air, and employees did not have dust masks available for their protection. When protective masks became available in the early 1970s, Gray sometimes wore them. He wore masks continuously from 1993 until his retirement in 1998.

Badger was a supplier of sand in bulk to the foundry. Unquestionably, Badger supplied sand beginning in 1992, but there is evidence in the record that Badger shipped sand to the foundry before 1981. Prior to 1981, suppliers of silica sand provided no warnings of inhalation hazards. For shipments beginning in 1992, Badger gave safety warnings on invoices, bills of lading, and Material Safety Data Sheets (MSDS).

The MSDS identified silica as a hazardous ingredient in sand; noted permissible exposure limits; disclosed that silicosis is a health hazard from exposure to silica sand; described respirators to be used; and outlined precautions for safe handling and use of silica sand.

For over 100 years, the foundry industry has been aware of some dangers from the inhalation of silica. The American Foundrymen's Society (AFS) was formed to educate workers about foundry processes, and later the AFS provided information about the prevalence of silicosis among foundry workers. The Smith Foundry has been a member of the AFS since the 1940s. Smith's current president knew in the early 1960s that inhaling silica dust can be harmful. In the 1970s, Smith began receiving warnings from sand suppliers other than Badger about the dangers of exposure to silica dust. During the 1970s, it was common knowledge in the foundry industry that silica dust could pose a health risk, and, because of this knowledge, Smith began to offer to its foundry workers respiratory protective devices. In the 1980s, Smith's safety director worked with a consultant to help bring the foundry into compliance with OSHA standards as to silica exposure.

At all times material to the issue on appeal, sand suppliers, foundry owners and workers, and governmental regulatory agencies recognized that the inhalation of silica could cause silicosis.

ISSUE

Did the district court err in concluding that, as a matter of law, appellant Badger Mining Company had a duty to warn respondent of the hazards of inhaling silica dust particles?

ANALYSIS

This appeal from a stipulated judgment raises only a question of law, which we review de novo. Moundson v. Bitzan, 588 N.W.2d 169, 171 (Minn.App.1999). The district court held, among other things, that Badger had a duty to warn Gray of health hazards from exposure to silica. Badger contends that the court erred in that ruling because Badger was entitled to rely on Smith Foundry, a sophisticated purchaser of silica sand, to deliver appropriate safety warnings to Smith's employees. Additionally, Badger argues that it was not in a position as a bulk supplier of sand reasonably to warn Smith's foundry workers of silica dangers.

Courts determine as a matter of law whether there exists a duty to warn of a danger in a product. Germann v. F.L. Smithe Mach. Co., 395 N.W.2d 922, 924 (Minn.1986). In general, there is no duty to warn as to a danger of which the product's users knew or should have known. Harmon Contract Glazing, Inc. v. Libby-Owens-Ford Co., 493 N.W.2d 146, 151 (Minn.App.1992), review denied (Minn. Feb. 12, 1993). If a legal duty to warn is found to exist, ordinarily the trier of fact resolves the factual issues of the adequacy of the warning, breach of the duty, and causation. Balder v. Haley, 399 N.W.2d 77, 81 (Minn.1987). However, here, because of the parties' stipulation, the answer to the question of whether a duty to warn existed is dispositive of the case, for the parties have stipulated not to try the usual factual issues.

In Minnesota, the duty of suppliers of goods to warn users of dangers in those goods is determined under the Restatement (Second) of Torts § 388 (1965). The supreme court recognized this duty in Mikel v. Aaker, 256 Minn. 500, 504-05, 99 N.W.2d 76, 79-80 (1959). One who supplies goods directly or through a third person to an ultimate user is liable to the ultimate user for injury from a hazard associated with the goods if the supplier "has no reason to believe that those for whose use the [goods are] supplied will realize [the] dangerous condition [of the goods]" and if the supplier fails to warn of the hazard. Restatement (Second) of Torts § 388(b), (c). When the ultimate user, or an intermediary through whom the goods are supplied to the end user, knows or should know of the danger of the goods, the supplier is relieved of its duty to warn. Strong v. E.I. DuPont de Nemours & Co., Inc., 667 F.2d 682, 686 (8th Cir.1981). This exception to the duty to warn is commonly called the "sophisticated user" doctrine. Bergfeld v. Unimin Corp., 226 F.Supp.2d 970, 977 (N.D.Iowa 2002). The exception is also known as the "learned intermediary" defense. Todalen v. U.S. Chem. Co., 424 N.W.2d 73, 79 (Minn.App.1988),review denied (Minn. June 29, 1998), overruled on other grounds by Tyroll v. Private Label Chems., Inc., 505 N.W.2d 54 (Minn.1993)

. When one supplies a dangerous product to an end user through an intermediary, the exception shifts liability for harm from the supplier to the intermediary or the end user if either is a sophisticated user. Smith v. Walter C. Best, Inc., 927 F.2d 736, 739 (3rd Cir.1990).

The first application of the sophisticated-purchaser exception to reach the Minnesota Supreme Court was Mulder v. Parke Davis & Co., 288 Minn. 332, 181 N.W.2d 882 (1970). That was a wrongful-death action in which a physician prescribed a drug manufacturer's medicine that caused a patient to die. Id. at 333-34, 181 N.W.2d at 884. One claim in the lawsuit was that the manufacturer failed to give an adequate warning about the drug's usage and danger. Id. at 334, 181 N.W.2d at 884. As to that claim, the supreme court held that

where the only issue is failure to communicate a warning, the manufacturer is not liable if the doctor was fully aware of the facts which were the subject of the warning.

Id. at 335-36, 181 N.W.2d at 885 (citation omitted).

The exception was applied to an industrial injury in Todalen, 424 N.W.2d at 73. In Todalen, an employee used a dangerous chemical improperly and was injured. Id. at 75-76. The supplier, U.S. Chemical Co., had shipped the chemical in drums with warning labels that did not contain a caution regarding certain hazards of the chemical, but had...