McIndoe v. Huntington Ingalls Inc.

• Decision Date: 31 March 2016
• Docket Number: Nos. 13–56762,13–56764.,s. 13–56762
• Citation: 817 F.3d 1170
• Parties: Carol McINDOE, as Wrongful Death Heir, and as Successor–in–Interest to James McIndoe, Deceased; Lorraine McIndoe; Pauline McIndoe, as Legal Heirs of James McIndoe, Deceased, Plaintiffs–Appellants, v. HUNTINGTON INGALLS INCORPORATED, fka Northrop Grumman Shipbuilding, Inc., Defendant, and Bath Iron Works Corporation, Defendant–Appellee. Carol McIndoe, as Wrongful Death Heir, and as Successor–in–Interest to James McIndoe, Deceased; Lorraine McIndoe; Pauline McIndoe, as Legal Heirs of James McIndoe, Deceased, Plaintiffs–Appellants, v. Huntington Ingalls Incorporated, fka Northrop Grumman Shipbuilding, Inc., Defendant–Appellee, and Bath Iron Works Corporation, Defendant.
• Court: U.S. Court of Appeals — Ninth Circuit

817 F.3d 1170

Carol McINDOE, as Wrongful Death Heir, and as Successor–in–Interest to James McIndoe, Deceased; Lorraine McIndoe; Pauline McIndoe, as Legal Heirs of James McIndoe, Deceased, Plaintiffs–Appellants,

v.HUNTINGTON INGALLS INCORPORATED, fka Northrop Grumman Shipbuilding, Inc., Defendant,andBath Iron Works Corporation, Defendant–Appellee.

Carol McIndoe, as Wrongful Death Heir, and as Successor–in–Interest to James McIndoe, Deceased; Lorraine McIndoe; Pauline McIndoe, as Legal Heirs of James McIndoe, Deceased, Plaintiffs–Appellants,

v.Huntington Ingalls Incorporated, fka Northrop Grumman Shipbuilding, Inc., Defendant–Appellee,andBath Iron Works Corporation, Defendant.

Nos. 13–56762

13–56764.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Aug. 31, 2015.

Filed March 31, 2016.

Richard M. Grant, Brayton Purcell LLP, Novato, CA, argued the cause and filed the briefs for the plaintiffs-appellants. With him on the briefs was Lloyd F. LeRoy, Brayton Purcell LLP, Novato, CA.

Daniel J. Kelly, Tucker Ellis LLP, San Francisco, CA, argued the cause and filed the brief for defendant-appellee Huntington Ingalls Incorporated.

Edward R. Hugo, Hugo Parker, LLP, San Francisco, CA, argued the cause and filed the brief for defendant-appellee Bath Iron Works Corporation. With him on the brief were James C. Parker and Charles S. Park, Hugo Parker, LLP, San Francisco, CA.

Before: ALEX KOZINSKI, DIARMUID F. O'SCANNLAIN, and JAY S. BYBEE, Circuit Judges.

OPINION

O'SCANNLAIN

, Circuit Judge:

We must decide whether two naval warships are "products" for the purposes of strict products liability and whether a genuine issue of fact exists as to whether asbestos-containing materials originally installed upon such ships caused a decedent's injuries.

I

In the 1960s, James McIndoe served aboard two U.S. Naval ships which contained pipe insulation made from asbestos. From 1961–1963, he served aboard the USS Coral Sea, an aircraft carrier built by a predecessor in interest to Huntington Ingalls Inc. (Huntington) and commissioned in 1947. From 1966–1967, he served aboard the USS Worden, a guided missile cruiser built by Bath Iron Works Corporation (Bath) and commissioned in 1963. Aboard each ship, McIndoe was allegedly present during maintenance work involving the removal of pipe insulation that caused asbestos fibers to float in the air he breathed.

On September 27, 2011, McIndoe died from complications related to mesothelioma

, a form of cancer closely associated with asbestos exposure. Plaintiffs–Appellants are McIndoe's legal heirs, who filed suit in California state court against Bath and Huntington,¹ arguing that McIndoe's exposure to asbestos-containing materials aboard their ships contributed to his death. McIndoe's heirs raised design, manufacture, and failure-to-warn claims based on theories of both strict products liability and general negligence. The case was removed to federal district court under 28 U.S.C. § 1442(a)(1), where Bath and Huntington each moved for summary judgment. The district court granted both motions on the grounds that the ships were not products for purposes of strict liability and that the heirs could not establish a genuine issue of material fact regarding whether the shipbuilders were responsible for installing any asbestos-containing insulation that caused McIndoe's injuries. McIndoe's heirs timely appealed, and these cases have been consolidated before our court.

II

We review de novo a district court's grant of summary judgment, and, "viewing the evidence in the light most favorable to the nonmoving party, [determine] whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law." Colwell v. Bannister, 763 F.3d 1060, 1065 (9th Cir.2014)

(internal quotation marks omitted). "[T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." R.W. Beck & Assocs. v. City & Borough of Sitka, 27 F.3d 1475, 1480 n. 4 (9th Cir.1994) (internal quotation marks omitted). "Arguments based on conjecture or speculation are insufficient...." Id.

Federal maritime law—"an amalgam of traditional common-law rules, modifications of those rules, and newly created rules"—governs this case. E. River S.S. Corp. v. Transamerica Delaval Inc., 476 U.S. 858, 865, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986)

; see Wallis v. Princess Cruises, Inc., 306 F.3d 827, 840 (9th Cir.2002) (federal maritime law applies to torts that occur on navigable water and bear a substantial relationship to traditional maritime activity).

III

McIndoe's heirs first argue that Bath and Huntington should be held strictly liable for defects in materials originally installed on the ships they built. The Supreme Court has recognized that federal maritime law incorporates actions for products liability, including those that sound in strict liability. E. River S.S. Corp., 476 U.S. at 865, 106 S.Ct. 2295

. The question whether a naval warship is to be considered a "product" in this context, however, appears to be one of first impression for the federal courts of appeals.

When analyzing products-liability claims under maritime law, we look to the Restatement of Torts (the "Restatement")—particularly the most recent Third Restatement—for guidance. Oswalt v. Resolute Indus., Inc., 642 F.3d 856, 860 (9th Cir.2011)

; see also Saratoga Fishing Co. v. J.M. Martinac & Co., 520 U.S. 875, 879, 117 S.Ct. 1783, 138 L.Ed.2d 76 (1997) (citing both Second and Third Restatements in evaluating maritime products-liability action). The Third Restatement defines a "product" subject to strict liability as "tangible personal property distributed commercially for use or consumption." Restatement (Third) of Torts: Prods. Liab. § 19(a) (Am. Law Inst.1998) (emphasis added). "[O]nly when the complained-of injury was allegedly caused by a defect in something within this ... definition of ‘product’ should the defendant manufacturer or seller be strictly liable for the harm caused." Id. § 19 reporter's note, cmt. a. Injuries caused by other items are actionable only "under negligence, misrepresentation, or some other liability theory." Id.

By these terms, the Restatement would exclude warships that were never "distributed commercially" from the realm of strict products liability. This makes sense. The general aim of strict liability is to "plac[e] responsibility on the ... party most able to prevent harm" caused by dangerous products and thus to incentivize proper "design and quality control" of such products.

All Alaskan Seafoods, Inc. v. Raychem Corp., 197 F.3d 992, 995 (9th Cir.1999)

(citing Third Restatement). Therefore, "strict liability should be imposed on the party best able to protect persons from hazardous equipment." E. River S.S. Corp., 476 U.S. at 866, 106 S.Ct. 2295. These goals would be advanced little by imposing liability on the builder of a custom-ordered naval ship. As evidence submitted in this case suggests, a ship built under government contract² may not even be designed by the builder but instead by the government itself or another outside professional. Further, the shipbuilder does not manufacture—and has little ability to control the quality of—the many thousands of component parts installed on each ship, let alone to account in its pricing for the virtually unlimited liability that would flow from a rule holding it strictly liable for their dangers. We do not believe that federal maritime law—the primary goal of which is to protect and to promote the "smooth flow of maritime commerce," Foremost Ins. Co. v. Richardson, 457 U.S. 668, 674–76, 102 S.Ct. 2654, 73 L.Ed.2d 300 (1982) —would countenance such a sweeping grant of liability. See generally Mack v. Gen. Elec. Co., 896 F.Supp.2d 333, 344–46 (E.D.Pa.2012) (discussing principles of strict liability and maritime law).

We therefore agree with the district court that McIndoe's heirs cannot sustain an action for strict products liability premised upon the notion that the warships in question are themselves "products" under maritime law.³ Accordingly, the heirs may prevail only under a theory of negligence.

IV

We turn to the heirs' general negligence claims. To prevail on such claims, they must demonstrate, among other things, that McIndoe's injuries were caused by exposure to asbestos that was attributable to the shipbuilders' conduct. To do so, McIndoe's heirs must be able to show both that he was actually exposed to asbestos-containing materials that were installed by the shipbuilders and that such exposure was a substantial contributing factor in causing his injuries. Lindstrom v. A–C Prod. Liab. Tr., 424 F.3d 488, 492 (6th Cir.2005)

. We examine each requirement in turn.

A

First, McIndoe's heirs must show that he was exposed to asbestos from materials that Bath or Huntington installed aboard the Coral Sea and Worden. The heirs do not claim that the shipbuilders were responsible for replacing or maintaining such insulation after the ships were commissioned. Therefore, they must show exposure to asbestos from materials that were originally installed aboard the ships. The heirs seek to demonstrate McIndoe's asbestos exposure through the first-hand observations of two lay witnesses and, based on these observations, the opinion of one purported expert.

Regarding the USS Coral Sea (built by Huntington and commissioned in 1947), McIndoe's heirs offered a declaration of Brian Tench, who boarded the ship as an ensign in 1961 and spent significant time with McIndoe in engineering spaces of the ship. Tench testified that there were insulated steam pipes throughout the engineering spaces in which he worked with McIndoe; that "[b]ased on his training and experience," he knew such insulation contained asbestos;⁴ that, he saw McIndoe in the area of others removing asbestos-containing insulation...