Monsanto Co. v. Reed

Decision Date24 April 1997
Docket Number95-SC-561-DG,Nos. 95-SC-549-D,s. 95-SC-549-D
Citation950 S.W.2d 811
PartiesProd.Liab.Rep. (CCH) P 14,982 MONSANTO COMPANY, Appellant, v. William REED, et al., Appellees. WESTINGHOUSE ELECTRIC CORPORATION, Appellant, v. MONSANTO COMPANY, et al., Appellees.
CourtUnited States State Supreme Court — District of Kentucky

Charles S. Cassis, Stephen R. Schmidt, Brown, Todd & Heyburn, Louisville, Arvin Maskin, Konrad L. Cailteux, Weil, Gotshal & Manges, New York City, for Westinghouse Electric Corporation.

Gregory L. Monge, W. Mitchell Hall, Jr., Ashland, John W. Vardaman, Jr., Williams & Connolly, Washington, D.C., for Monsanto Corporation.

Robert E. Reeves, Todd E. Leatherman, Robert G. Friedman, Reeves & Graddy, Lexington, David S. McCrea, McCrea & McCrea, Bloomington, IN, Lawrence R. Webster, Pikeville, for Appellees.

LAMBERT, Justice.

Appellees in this products liability action (plaintiffs in the trial court) are thirty seven (37) persons who claim to have been injured by exposure to polychlorinated biphenyls (PCBs). The exposure is alleged to have occurred in the course of appellees' employment as salvagers at Libby Iron and Metal Company (Libby).

Monsanto Company (Monsanto) was the sole manufacturer of PCBs, a chemical used in some electrical transformers and in capacitors. PCBs were banned by an Act of Congress in 1979. Monsanto had sold PCBs to Westinghouse Electric Corporation (Westinghouse), which used them in the manufacture of power distribution transformers and capacitors. Westinghouse manufactured two types of transformers, one containing PCBs and the other containing mineral oil. All of the transformers contained copper coils immersed in a dielectric fluid (composed of either PCBs or mineral oil) and sealed with an outer steel shell. After these devices were assembled, some were sold by Westinghouse to Kentucky Power Company, which after the useful life of the equipment, shipped the sealed and intact devices to Libby for salvage. With respect to the PCB-containing devices, appellees' central contentions are that the mineral oil transformers sent to the Libby site had been contaminated with PCBs at Westinghouse, and that the relatively small number of capacitors shipped to Libby were heavily laden with PCBs.

During the salvage process, employees of Libby dismantled the sealed transformers to facilitate recovery of the copper coils located inside. It is alleged that they also came into contact with the dielectric fluid in the capacitors. In addition to the claims of exposure during the process of recovering the copper from the transformers, appellees also claim to have been injuriously exposed when they burned the fluids from the transformers and capacitors for heat during the winter months and when they used the flames for cooking. Appellees allege that this contact, in addition to other incidental contact with the fluid in the transformers and capacitors resulted in physical injuries.

Five (5) Libby employees were selected as "bellwether" plaintiffs for the first trial of this case. In their suit, wherein damages were sought from both Monsanto and Westinghouse, the Pike Circuit Court granted summary judgment and held that a provision of the Product Liability Act (PLA), KRS 411.320, barred recovery on grounds that the dismantling of the transformers and capacitors constituted an unauthorized alteration or modification of the product. No appeal was taken and the judgment became final.

The remaining thirty seven (37) plaintiffs, appellees herein, chose to proceed with their actions under only a theory of common law negligence. The Pike Circuit Court again granted summary judgment, and held that Section 388 of the Second Restatement of Torts, recognized as authoritative in Lloyd v. Lloyd, Ky., 479 S.W.2d 623 (1972), barred recovery. Restatement (Second) of Torts Section 388 (titled Chattel Known to be Dangerous for Intended Use ). The Court of Appeals reversed the trial court and held that Section 388 did not apply because salvage of the transformers and capacitors was foreseeable and therefore a duty of care was upon Monsanto and Westinghouse for protection of appellees. The court also held that the Product Liability Act, KRS 411.300 et seq., did not apply to claims based on common law negligence, reasoning that Section 54 of the Constitution of Kentucky prevents the General Assembly from limiting such actions. In addition, the Court of Appeals recognized as a new intentional tort "spoliation of evidence," and remanded the case to the trial court to allow appellees to amend their complaint to seek damages under that theory of recovery. The Court of Appeals also mandated that discovery be reopened to permit appellees to seek evidence in support of their contentions that Monsanto and Westinghouse had intentionally destroyed relevant documents.

The first matter to be addressed is the applicability of Section 388 of the Second Restatement of Torts, as follows:

Chattel Known To Be Dangerous For Intended Use

One who supplies directly or through a third person a chattel for another to use is subject to liability to those whom the supplier should expect to use the chattel with the consent of the other or to be endangered by its probable use, for physical harm caused by the use of the chattel in the manner for which and by a person for whose use it is supplied, if the supplier

a) knows or has reason to know that the chattel is or is likely to be dangerous for the use for which it is supplied, and

b) has no reason to believe that those for whose use the chattel is supplied will realize its dangerous condition, and

c) fails to exercise reasonable care to inform them of its dangerous condition or of the facts which make it likely to be dangerous.

This Section describes the circumstances under which the supplier of a dangerous chattel may be held liable and provides that suppliers of such chattels cannot be held liable in tort unless the chattel is used both in a manner for which it was supplied, and by a person for whose use it was supplied. The trial court was correct in stating that the chattels at issue in this action were "not supplied to be used as junk, but for power transmission," and were "not supplied to be used by the plaintiffs [appellees herein], only the third parties [Kentucky Power] in their business." This line of reasoning appears in Lloyd v. Lloyd, Ky., 479 S.W.2d 623 (1972), where the Court was unambiguous in its view that for Section 388 to apply, the defendant must have supplied the product for the purpose for which the plaintiff was using it when the injury occurred.

The point we wish to make clear in this connection is that it is of no particular significance whether Bob had been using the mower as a guest on the premises or as a borrower at some other place, so long as it had been provided to him for the use to which he was putting it when he was injured.

Id. at 625. For purposes of our analysis in this case, Section 388 limits the suppliers' liability to foreseeable users of the chattel or foreseeable bystanders.

In the case at bar, the chattels were not being used in a manner intended nor foreseeable. In many jurisdictions which have considered this issue, courts have declined to find a duty of care running from the supplier of the goods to salvage yard workers who allege injury during the scrapping and dismantling of chattels. See High v. Westinghouse Electric Corporation, 610 So.2d 1259 (Fla.1992); Richmond, Fredericksburg & Potomac R. Co. v. Davis Industries, 787 F.Supp. 572 (E.D.Va.1992); Wingett v. Teledyne Industries, Inc., 479 N.E.2d 51 (Ind.1985); and Johnson v. Murph Metals, 562 F.Supp. 246 (N.D.Tex.1983). In a case virtually identical to this one, the United States District Court for the Western District of Pennsylvania analyzed similar cases from numerous jurisdictions and stated [T]hese decisions do provide a persuasive basis for concluding, as a matter of law, that the dismantling and processing of junk electrical components was not a reasonably foreseeable use of GE's product, and the Court so finds. Accordingly, the allegations of injury as a result of the dismantling and processing of junk electrical components will be dismissed.

Kalik v. Allis-Chalmers, 658 F.Supp. 631, 635-36 (W.D.Pa.1987).

It has long been the law of this Commonwealth that a manufacturer is not liable when the injuries result from the mutilation or alteration of the chattel. Such intervening conduct severs any causal connection between the product and the injury. Collins Company v. Rowe, Ky., 428 S.W.2d 194 (1968). The Product Liability Act (PLA), KRS 411.300 et seq. codifies this and precludes imposition of liability on a manufacturer in cases where the product has not been used in its original, unaltered and unmodified condition.

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