Shell Oil Co. v. Gutierrez

• Citation: 119 Ariz. 426,581 P.2d 271
• Decision Date: 09 May 1978
• Docket Number: No. 2,CA-CIV,2
• Parties: The SHELL OIL COMPANY, a Delaware Corporation, Richard B. Flint, d/b/a Flint Oil Company and Christie Oil Company, Inc., an Arizona Corporation, Appellants, v. Robert GUTIERREZ and Ramona Gutierrez, husband and wife, and Joseph E. Starrand Miriam Starr, husband and wife, Appellees. 2571.
• Court: Court of Appeals of Arizona

Page 271

581 P.2d 271

119 Ariz. 426

The SHELL OIL COMPANY, a Delaware Corporation, Richard B. Flint, d/b/a Flint Oil Company and Christie Oil Company, Inc., an Arizona Corporation, Appellants, v. Robert GUTIERREZ and Ramona Gutierrez, husband and wife, and Joseph E. Starrand Miriam Starr, husband and wife, Appellees.

No. 2 CA-CIV 2571.

Court of Appeals of Arizona, Division 2.

May 9, 1978.

Rehearing Denied June 26, 1978.

Chandler, Tullar, Udall & Redhair by D. B. Udall, Tucson, for appellant Shell Oil Co

Price, Tinney, Lindberg & Gianas by John E. Lindberg, Tucson, for appellant Flint Oil Co.

May, Dees & Barassi by Willis R. Dees, Tucson, for appellant Christie Oil Co.

Miller, Pitt & Feldman, P. C. by Robert F. Miller and Stanley G. Feldman, Tucson, for appellees.

OPINION

HATHAWAY, Judge.

This appeal by the defendants in a products liability suit is from a judgment entered against them and in favor of plaintiffs-appellees Robert and Ramona Gutierrez and Joseph E. and Miriam Starr. The jury returned a verdict for plaintiffs and assessed damages at $500,000 for Gutierrez and $1,500,000 for Starr. On April 23, 1974, Robert Gutierrez and Joseph Starr, employees at Westinghouse Electric Corporation in Tucson, Arizona, were burned and severely injured at work when a metal drum which had contained liquid xylene exploded. Appellees brought an action in tort, based on strict liability, against Shell Oil Company, manufacturer and initial distributor of the xylene; Christie Oil Company, Inc. a Shell jobber, purchaser and packager of the xylene into drums; and Richard B. Flint dba Flint Oil Company, a Shell jobber, purchaser of xylene drums from Christie and retailer to Westinghouse. All defendants appeal. Shell and Flint have filed separate briefs, while Christie has adopted Flint's arguments. During the jury deliberations, appellees entered into Gallagher-type agreements, first with Christie and then with Flint.

The evidence, viewed in a light most favorable to sustaining the verdict, is as follows. Xylene, an organic solvent, is made, shipped and used in liquid form. While the liquid is flammable if ignited, the vapor has a high potential for explosion. Shell places on the tank cars or trucks in which xylene is shipped to Christie warning labels identifying the contents as xylene, as "flammable" and directing to keep it away from hear, sparks, or flames. After delivery, the xylene is transferred to storage tanks and then packaged by Christie into 55 gallon drums. Christie attaches, usually on the top of each drum, a "FLAMMABLE LIQUID" label. The label is diamond shaped and about 4 by 4 . The letters and a picture of a shooting flame are in black against a red background.

Westinghouse's operation in Tucson involved the rewinding of electrical motors. Xylene, purchased for use as a thinner to remove varnish from these motors, was stored before use in a segregated area at the plant. When the xylene is needed, the drums are tapped so the liquid may be withdrawn. Both bung holes are knocked out and a spigot is inserted in one. The other is left open so air pressure is maintained and the liquid will flow from the barrel when the handle on the spigot is turned. The liquid is never entirely drained from a barrel. Although a point is reached where no further liquid can be obtained through the spigot, a small residue remains in the bottom of the barrel. The spigots are removed from such barrels and they are treated as "empties". The bung hole covers, removed for draining liquid, are then to be replaced, but Richard Stewart, plant manager at Westinghouse, testified that in fact they are frequently lost and not replaced. The empty drums were piled in a designated area for return when the next drums of xylene were delivered. A returnable deposit was charged on the drums.

The smaller the amount of liquid in the drum, the greater the hazard may be, there being more room for vapor. Thus "empty" drums may be considered more dangerous than full ones because of their potential for explosion. Expert testimony was given that the safest procedure for handling "empties" is to return them immediately instead of storing them. The second-best alternative is to clean them with an inactive solvent to remove the residue and to store them, with the bung holes covered away from heat and flames.

Gutierrez, a welder, was hired by Westinghouse about a week before the accident, and spent some of that time at a new plant across town. On April 23, he was asked to work on the construction of a new top for a dip tank. This work was being done in the yard of the old plant. There were several empty drums, of both the returnable and non-returnable type, in this area. Some supported a plank making a scaffolding, on which employees could stand and work on the tank. Returnable drums were generally not placed in this area, but were stored in a segregated area until they were returned. In some unexplained way, an empty xylene drum was moved from the segregated area to within a few feet of the dip tank.

Gutierrez had seen these empty drums and assumed they were being used for trash. He knew from prior work experience that empty drums such as these were used for trash barrels, platforms and scaffolding, and various other purposes. Stewart testified that it was not unusual at Westinghouse for empty drums to be so used. Hector Corrales, employed by the Tucson Fire Department in fire prevention and inspection testified that Westinghouse was about average among industrial users in its use of empty drums of "dangerous liquid" for many purposes.

Starr, a machinist, was given a broken bracket to bevel, then brought it to Gutierrez to weld. When Gutierrez began to weld, the drum which had contained xylene exploded, causing the injuries.

Examination of the drum after the accident revealed it had Shell colors, a red body and yellow on both ends. Shell was one of the two major sources from which Christie obtained drums for packaging the xylene. The word "xylene" was stencilled on the top of the drum and the "FLAMMABLE LIQUID" label supplied by Christie was also there.

A hotly debated issue at trial and on appeal was the extent of the parties' knowledge of the dangerous propensities of xylene. Christie had been marketing petroleum products for 27 years and Flint had been purchasing xylene for several years. Shell supplied multitudinous written information to them about the chemical properties of its products, including xylene, but xylene was not singled out or distinguished from other solvents. Christie and Flint were not advised on procedures for safe handling. They knew xylene was flammable and that an empty drum could explode. Yet, they did not know that drums should be returned immediately and Christie stored hundreds of them. Nor were they told to flush out the "empties". Consequently, no such warnings were passed on to Westinghouse. Shell advised Christie and Flint where to obtain labels, but not what their contents should be. Shell did not require as a condition to sale that any labels be placed on these drums, and did not follow up after sale to see what, if any, labels were actually used.

Gutierrez had not heard of xylene before the accident and had received no special instruction or warning from Stewart concerning xylene drums. Starr's contact with xylene had been limited to dispensing it from a 5-gallon drum for washing his hands. He knew it was flammable and volatile. Appellees neither saw nor looked for labels on the drums by the dip tank. They both testified at trial that if they had seen the "FLAMMABLE LIQUID" label on the drum they would not have welded in that area.

SHELL'S APPEAL

Appellees' two theories of recovery were both based on the strict liability concept of a "defective" and "unreasonably dangerous" product: (1) the product was defective because the label did not give adequate warning of the danger of explosion of vapor in a barrel drained of liquid and (2) the product was defective for failure to give adequate instructions for safe handling.

Shell argues that as a matter of law it is not liable to appellees because adequate warning to the vendee is all that can reasonably be required of the bulk manufacturer who has no control over the container in which the product is to be resold and cannot affix its own warning label. Shell contends that a manufacturer who sells its product to a distributor who then repackages it fulfills its duty to the ultimate consumer when it ascertains that the distributor to whom it sells is adequately trained and is familiar with the properties of the product and safe methods of handling it and is capable of passing on his knowledge to his customers. Shell stresses the fact that Westinghouse was an "industrial user" with knowledge of the dangers.

Under both negligence and strict liability standards manufacturers and other suppliers have a duty to users, consumers, and in some circumstances, to the general public or portions of it, to produce products with appropriate warning instructions and other safety features. 2 Restatement (Second) of Torts, Secs. 388 and 402A; Hall v. E. I. Du Pont De Nemours & Co., Inc., 345 F.Supp. 353 (E.D. N.Y. 1972). A duty to warn may be imposed on a manufacturer under strict liability principles if without a warning his product would be ". . . in a defective condition unreasonably dangerous to the user or consumer . . ." 2 Restatement (Second) of Torts, Sec. 402A. ¹

Appellees maintain that the question of duty to warn in the case of a remote supplier under Sec. 402A is to be determined under Sec. 388 ² of the Restatement which discusses the duty to warn in actions which sound in negligence. They define duty as a relationship under which one party has an obligation to conform to a standard of conduct in order to avoid injuring another. Prosser, The Law of Torts, Sec. 53 (4th ed. 1971). There is no reason, they argue, why the question of duty in avoiding...