Johnson v. U.S. Steel Corp.

• Citation: 192 Cal.Rptr.3d 158,240 Cal.App.4th 22
• Decision Date: 01 September 2015
• Docket Number: A142485
• Court: California Court of Appeals
• Parties: David JOHNSON et al., Plaintiffs and Appellants, v. UNITED STATES STEEL CORPORATION, Defendant and Respondent.

240 Cal.App.4th 22

192 Cal.Rptr.3d 158

David JOHNSON et al., Plaintiffs and Appellants

v.UNITED STATES STEEL CORPORATION, Defendant and Respondent.

A142485

Court of Appeal, First District, Division 3, California.

Filed September 1, 2015

Rehearing Denied September 22, 2015

Review Denied December 9, 2015

Counsel for Plaintiffs and Appellants: Kazan, McClain, Satterley & Greenwood, Ted W. Pelletier, and Michael T. Stewart, Oakland.

Counsel for Defendant and Respondent: Hogan Lovells U.S. LLP, Barry J. Thompson, David W. Skaar, Los Angeles, and Catherine E. Stetson, The Cairone Law Firm PLLC, Matt Cairone.

Opinion

POLLAK, Acting P.J.Plaintiffs David and Laura Johnson filed a products liability action against suppliers, manufacturers and retailers of various paints, adhesives, lubricants, solvents, and other products containing benzene. They contend that David's chronic exposure as an auto mechanic to benzene-containing products led him to develop acute myeloid leukemia (AML). Among the defendants is United States Steel Corporation (U.S. Steel), which supplied a fabricator with a benzene-containing coal residue called “raffinate” that was once the principal ingredient in the fabrication of Liquid Wrench, a solvent for loosening rusted bolts and machine parts.

In somewhat unorthodox proceedings, the trial court granted summary judgment to U.S. Steel, finding insufficient evidence to support causes of action for negligence and strict products liability under a design defect theory. The finding rests on the so-called “component parts doctrine” (or, as in this case, the “bulk supplier defense”), under which “the manufacturer of a component part is not liable for injuries caused by the finished product into which the component has been incorporated unless the component itself was defective and caused harm.” (O'Neil v. Crane Co. (2012) 53 Cal.4th 335, 355, 135 Cal.Rptr.3d 288, 266 P.3d 987.) Distinguishing cases that have held raw asbestos to be inherently defective and to contain a design defect under the consumer expectations test, the court held that raffinate is not inherently defective so that U.S. Steel could not be liable under a design defect theory.

We agree with the trial court that the supplier of a raw material used in the manufacture of another product can be held liable for a design defect under the consumer expectations test only if the raw material is itself inherently defective. However, summary judgment was granted erroneously because the record does not contain evidence negating the existence of a design defect under this test of the coal raffinate produced and sold by U.S. Steel.

Statement of Facts¹

Benzene was first discovered and isolated from coal tar in the 1800's but, today, is derived mostly from petroleum. (U.S. Dept. of Health & Human Services, Agency for Toxic Substance and Disease Registry, Toxicological Profile for Benzene (Aug. 2007) p. 2, currently available online at the agency's Web site < http://www.atsdr.cdc.gov/toxprofiles/tp3.pdf> [as of Sept. 1, 2015] (Benzene Profile).)² It is a colorless liquid with a sweet odor that is widely used in the United States in the manufacture of lubricants, plastic, rubber, and pesticides. (Benzine, Profile, supra , at pp. 1-2.) It “ranks in the top 20 in production volume for chemicals produced in the United States.” (Id. at p. 2.)

“Benzene is commonly found in the environment,” mostly from industrial processes. (Benzene Profile, supra, at p. 2.) “Everyone is exposed to a small amount of benzene every day.... The major sources of benzene exposure are tobacco smoke, automobile service stations, exhaust from motor vehicles, and industrial emissions. Vapors (or gases) from products that contain benzene, such as glues, paints, furniture wax, and detergents, can also be a source of exposure.” (Id. at p. 3.) “Individuals employed in industries that make or use benzene may be exposed to the highest levels of benzene.” (Id. at p. 4.) Benzene is a carcinogen. (Id. at p. 6.) Long-term exposure can cause leukemia, AML in particular. (Ibid. )

U.S. Steel manufactures steel, which is an alloy of iron and carbon. The company converts coal to coke for use in steel production. A byproduct of the coking process is light oil, from which U.S. Steel extracts benzene, toluene and xylene. U.S. Steel sells these chemicals for industrial use. Raffinate is what remains of the light oil and its constituent chemicals after most of these “more saleable” chemical compounds are extracted. “Raffinate” is a chemistry term, defined as “a liquid product resulting from extraction of a liquid with a solvent” or “the less soluble residue that remains after extraction (as in refining lubricating oil).” (Webster's 3d New Internat. Dict. (2002) p. 1874.) U.S. Steel extracts the benzene, toluene and xylene capable of being distilled from the light oil but some of these chemicals remain in the raffinate.

From 1960 to 1978, U.S. Steel sold its raffinate to Radiator Specialty Company (Radiator). Raffinate was less expensive than the refined chemical compounds of benzene, toluene and xylene. Radiator purchased U.S. Steel's raffinate in bulk, in 10,000– and 20,000–gallon railroad tank cars. The total amount of raffinate purchased by Radiator is unstated but a Radiator executive estimates the amount to be “hundreds of thousands of pounds.”

Radiator is a “formulator;” it does not manufacture or refine chemicals itself. Radiator formulates Liquid Wrench, which it markets as a “penetrating oil” or liquid solvent for loosening rusted bolts and machine parts. Radiator introduced Liquid Wrench in 1941. In the period from 1960 to 1978, Radiator sold at least two different formulations of Liquid Wrench. One formulation of Liquid Wrench contained as its principal ingredient raffinate that was supplied solely by U.S. Steel. Raffinate comprised “about 89 or 90 percent” of the raffinate-based Liquid Wrench. Another formulation of Liquid Wrench contains petroleum distillates. Radiator markets its petroleum-based product as “deodorized” Liquid Wrench. The raffinate-based formula was withdrawn from the market in 1978 but the petroleum-based product continues to be sold today. Radiator distributes its Liquid Wrench formulations nationwide and internationally to hardware stores, auto parts stores, and other retail outlets.

In 1960, Congress enacted the Federal Hazardous Substances Act (FHSA) to “ ‘ “provide nationally uniform requirements for adequate cautionary labeling of packages of hazardous substances which are sold in interstate commerce and are intended or suitable for household use.” ’ ” (People ex rel. Lungren v. Cotter & Co. (1997) 53 Cal.App.4th 1373, 1387, 62 Cal.Rptr.2d 368, italics omitted; see 15 U.S.C.S. § 1261 et seq. ) In response to the new labeling requirements, Radiator hired chemist consultants to test Liquid Wrench for toxicity. Chemical tests found the raffinate supplied by U.S. Steel to contain various amounts of benzene, ranging from 1 to 14 percent. Radiator asked U.S. Steel to detail the chemical composition of raffinate. In 1963, a manager in U.S. Steel's coal chemical sales division wrote to Radiator, stating that the company did “not have positive control over the composition of this material since it is derived from an extraction process.” The U.S. Steel manager estimated the composition of raffinate to be benzene (5 percent minimum), toluene and xylene (25 percent minimum) and aliphatics and cycloparaffins (70 percent maximum). At the time, U.S. Steel knew benzene to be “one of the most toxic industrial poisons. When inhaled, it acts principally on the nerve tissue and the blood forming organs,” “especially the bone marrow and blood vessels.”

Radiator placed warning labels on Liquid Wrench. The label on the petroleum-based product said “contains Petroleum Distillate” and the label on the raffinate-based product said “contains benzol,” another term for benzene. Both labels cautioned users to avoid prolonged breathing of vapors and stated the products were “harmful or fatal if swallowed.” The raffinate-based Liquid Wrench label contained additional warnings, including a skull and crossbones symbol and the word “poison.” No Liquid Wrench product label or advertisement warned that the product was carcinogenic or could cause cancer.

David Johnson testified he first used Liquid Wrench around 1968 when, at age 10, he began helping his stepfather with auto repairs. In 1971, he became a “shop kid” at a local service station, where he helped disassemble and clean auto engines, among other tasks. He used Liquid Wrench “almost daily” to loosen bolts. He applied the solvent “liberally” to saturate the bolts and surrounding area. Johnson sometimes applied Liquid Wrench while working under a car and the solvent ran down his arm into his armpit; it would “get all over” him. Johnson continued to use Liquid Wrench in subsequent employment from 1972 through 1979, as a service station attendant and mechanic. While working at a salvage yard in 1975, he used one or two bottles of Liquid Wrench a day. He testified, with equivocation, that there was a skull and cross bones symbol on the Liquid Wrench container he used at a work site, which identifies it as the raffinate-based formula.³ Johnson left automotive mechanical work in 1980. In 1994, Johnson returned to work as a mechanic and continued in that occupation until 2012, when he was diagnosed with AML.

Procedural History

In February 2013, Johnson and his wife filed an action against U.S. Steel, Radiator, and numerous other defendants alleging Johnson's personal injury from chronic exposure to benzene-containing products. The operative first amended complaint states four cause of action: negligence, strict products liability (design defect and failure to warn), fraudulent concealment, and loss of consortium.

U.S. Steel filed a motion for summary judgment or, in the alternative, summary adjudication. U.S. Steel claimed the evidence was insufficient to show Johnson was...