Kase v. Metalclad Insulation Corp.

• Decision Date: 22 November 2016
• Docket Number: A143590
• Citation: 212 Cal.Rptr.3d 198,6 Cal.App.5th 623
• Court: California Court of Appeals Court of Appeals
• Parties: Gary KASE et al., Plaintiffs and Appellants, v. METALCLAD INSULATION CORPORATION, Defendant and Respondent.

6 Cal.App.5th 623

212 Cal.Rptr.3d 198

Gary KASE et al., Plaintiffs and Appellants,

v.METALCLAD INSULATION CORPORATION, Defendant and Respondent.

A143590

Court of Appeal, First District, Division 1, California.

Filed November 22, 2016

As Modified December 21, 2016

Certified for Partial Publication.^*

Brayton Purcell, LLP, Gary L. Brayton and Richard M. Grant, Novato, for Plaintiff and Appellant.

Dentons US LLP, Lisa Lurline Oberg, San Francisco, Felicia Y. Feng and Andrea J. Casalett, San Francisco; Morgan, Lewis & Bockius LLP, Thomas M. Peterson and Deborah E. Quick, San Francisco, for Defendant and Respondent.

Banke, J.Plaintiffs appeal from a defense summary judgment in this asbestos case arising from Gary Kase's exposure to asbestos insulation used on nuclear submarines during the early 1970's. The principal issue we must decide is whether the Navy's procurement of asbestos insulation for its nuclear submarines comes within the ambit of the government contractor defense set forth in Boyle v. United Technologies Corp. (1988) 487 U.S. 500, 108 S.Ct. 2510, 101 L.Ed.2d 442 (Boyle ). This defense has long been available, even if not always successfully proved up, in asbestos lawsuits brought against the manufacturers and suppliers of military hardware and equipment. However, defendant Metalclad Insulation Corporation (Metalclad) did not design or produce a piece of hardware or equipment that included asbestos-containing materials. Rather, as a broker, it arranged for asbestos-containing insulation to be shipped directly to the Mare Island Naval Shipyard, where workers packed it around the submarine piping it protected.

Metalclad provided the asbestos-containing insulation, called Unibestos, pursuant to and in compliance with relatively detailed performance and testing specifications. These specifications did not expressly call out for asbestos in the insulation. But according to the undisputed record evidence, the specifications could only be met by asbestos-containing insulation, and the only product on the Navy's approved list of suitable products was Unibestos. It is also undisputed that for decades the Navy studied the health hazards associated with the use of asbestos products and, despite the concerns raised by these studies, continued to require use of these products and continued to expressly approve the use of Unibestos. The Navy did not, however, participate in the development or manufacture of Unibestos and, in addition to military sales, the insulation has long been sold commercially.

In Boyle , the Supreme Court set forth the requirements of the government contractor defense. It held, among other things, that the government, itself, need not design the allegedly defective product for the defense to apply. The government may select a design, and so long as the government thoroughly reviews and makes a considered judgment call about the design, the defense can apply. (Boyle , supra , 487 U.S. at pp. 512–513, 108 S.Ct. 2510.) By way of contrast, the court explained the defense will not apply if the government procures, for example, a "stock" helicopter designated solely by the manufacturer's model number and which "happen[s]" to have the complained of defect. (Id. at p. 509, 108 S.Ct. 2510.) In such a case, said the court, the manufacturer could meet both its contractual obligation to the government and its alleged design duty under state law. There would, thus, be no " ‘significant conflict’ " between federal interests and state law, rendering the defense unavailable. (Ibid. )

The Supreme Court's limiting exemplars led the Ninth Circuit Court of Appeals to pronounce the defense inapplicable to goods "readily available, in substantially similar form, to commercial users" and, in turn, to conclude the defense was not available to the insulation manufacturers in that case. (In re Hawaii Federal Asbestos Cases (9th Cir. 1992) 960 F.2d 806, 811 (Hawaii ).) Since then, however, a number of courts including this Court (Oxford v. Foster Wheeler (2009) 177 Cal.App.4th 700, 710, 99 Cal.Rptr.3d 418 (Oxford )), have taken a more expansive view and concluded the fact a product has some commercial market does not preclude the defense. One federal court has stated there is no "off-the-shelf" limitation to its application (Miller v. Diamond Shamrock Co. (5th Cir. 2001) 275 F.3d 414, 419 (Miller )), and another has granted summary judgment on claims against Metalclad like those made by plaintiffs here (Brown v. Asbestos Defendants (E.D. Pa. Oct. 19, 2012, No. 2:10–60090–ER) 2012 WL 7761205 (Brown )). We remain of the view that the Supreme Court, in Boyle , did not limit the defense to necessarily exclude the procurement of products also sold commercially. Rather, the point the high court was making in positing a purchase of a "stock" helicopter identified by manufacturer's model number was that, where a purchase does not involve "reasonably precise specifications" bearing on the challenged design feature, the government necessarily has not made a considered evaluation of and affirmative judgment call about the design. That cannot be said, however, about the Navy's procurement of the asbestos insulation at issue here—made after years of evaluating and weighing the utility of and the health hazards associated with asbestos products and pursuant to specifications that, according to the record evidence, required an asbestos product. We therefore affirm the summary judgment as to the plaintiffs' defective design claims.

We also affirm the summary judgment on plaintiffs' failure to warn claims on the ground the evidence was insufficient to raise a triable issue as to causation.

I. FACTUAL AND PROCEDURAL BACKGROUND

Unibestos is asbestos-containing insulation that has been available for decades.

In January, 1936, the United States Navy commissioned a 30-day study to determine Unibestos's suitability for military use. The study determined Unibestos had satisfactory heat insulating properties and was light weight (which was desirable), but questions remained as to whether it had sufficient stability to meet naval needs. Accordingly, the Navy conducted a six-month, follow-on study regarding stability. It also conducted a further study establishing Unibestos's performance at high temperatures. Thereafter, the Navy used Unibestos on its vessels, and the product was subsequently ordered in accordance with Navy specifications, which specifically called for asbestos in insulation.

Early on, Unibestos was manufactured in the United States by Union Asbestos and Rubber Company (Union). One early advertisement touted Unibestos as "durable," "efficient," and "practical," and so "increasingly popular with shipbuilders" it was "being used almost exclusively in some of the finest marine construction work" of the day. A 1943 advertisement emphasized ease of installation, an "interestingly low" price, and availability in numerous lengths and thicknesses.

Pittsburgh Corning acquired Unibestos from Union in 1962. One undated Pittsburgh Corning advertisement proclaimed Unibestos was "available everywhere." An undated Pittsburgh Corning flyer stated Unibestos was ideal for "high-temperature insulation in the marine, refining, chemical, power, and petrochemical fields."

Pittsburgh Corning made no changes to the product between 1962 and 1972. There is no evidence in the record as to the percent of Unibestos sold commercially.

During that timeframe, in August 1968, Metalclad brokered a delivery of Unibestos from Pittsburgh Corning to the Navy. The purchase order called for "insulation material, pipe, thermal, tubular, molded in accordance with military specifications MIL-I-24244(SHIPS) DTD 66 AUG 22, type I, and amendment 1 DTD 68 FEB 15, and MIL-I-2781."

Specification MIL-I-2781 defined grades of insulation, each grade capable of shielding different temperatures. It specified the size and shape of compliant insulation and defined various physical requirements to be confirmed by testing: maximum density, thermal conductivity, weight loss after tumbling, modulus of rupture, and changes after soaking heat. Compliant insulation had to be "composed of heat-resisting compounds suitable for the temperature conditions and the purpose intended."

The Navy first issued specification MIL-I-2781 in 1955, and at that point, stopped expressly calling out for asbestos in insulation used to protect its equipment. However, during the 1955-1973 timeframe, the Navy viewed asbestos as an expected material in insulation products provided pursuant to the specification, and asbestos-containing products were sometimes the only products preapproved for certain grades of insulation. In fact, the list of prequalified products for certain grades of insulation attached to the version of MIL-I-2781 in effect in 1968 listed Unibestos as the only prequalified product in grade II (insulation up to 750 degrees), class c (fibrous), and in grade III (insulation up to 1,200 degrees), class f (fibrous). The August 1968 purchase order issued to Metalclad sought insulation of both "subtype 1B, fibrous-temperatures up to 750 ºF" and "subtype 1F, fibrous-temperature up to 1200ºF." The evidence is uncontradicted that subtypes 1B and 1F are the equivalents of grade II, class c and grade III, class f. Thus, Unibestos was the only prequalified product meeting the purchase order specifications.

In 1971, the Navy amended specification MIL-I-2781 to prohibit high-asbestos materials, such as Unibestos, and in 1973, amended the specification again to prohibit asbestos in any insulation.

The other specification set forth in the Metalclad purchase order, MIL-I-24244, addressed "mineral-based thermal insulation" (including piping insulation compliant with MIL-I-2781) with "special corrosion and chloride requirements." To pass muster under MIL-I-24244, insulation had to pass an additional battery of quality conformance tests.¹

Metalclad's expert in Navy ship design and construction, Dan Heflin, Jr., declared that based...