Taylor v. Monsanto Co.

• Decision Date: 05 August 1998
• Docket Number: No. 97-2469,97-2469
• Citation: 150 F.3d 806
• Parties: 28 Envtl. L. Rep. 21,561, Prod.Liab.Rep. (CCH) P 15,314 Johnnie B. TAYLOR, et al., Plaintiffs-Appellants, v. MONSANTO CO., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 806

150 F.3d 806

28 Envtl. L. Rep. 21,561, Prod.Liab.Rep. (CCH) P 15,314

Johnnie B. TAYLOR, et al., Plaintiffs-Appellants, v. MONSANTO CO., Defendant-Appellee.

No. 97-2469.

United States Court of Appeals Seventh Circuit.

Argued Dec. 5, 1997.

Decided Aug. 5, 1998.

David S. McCrea (argued), McCrea & McCrea, Bloomington, IN, for Plaintiffs-Appellants.

Michael R. Fruehwald and Michael Rosiello (argued), Barnes & Thornburg, Indianapolis, IN, for Defendant-Appellee.

Before EASTERBROOK, DIANE P. WOOD, and EVANS, Circuit Judges.

DIANE P. WOOD, Circuit Judge.

At least to the outside observer, some cases appear to be unevenly balanced clashes between a titan of industry and a hapless individual. This case is not one of them. Instead, the central question before us is whether the Monsanto Company, one of the country's largest manufacturers of chemicals, lulled the Westinghouse Electric Company, a major user of those chemicals, into the erroneous view that polychlorinated biphenyls (PCBs) were safe for human health. The question arises in a case brought by several employees of Westinghouse, who are now trying to recover for various health problems from Monsanto. The district court concluded that Monsanto breached no duty to Westinghouse's employees, because Westinghouse itself was a knowledgeable and sophisticated bulk purchaser of Monsanto's products. The court further concluded that Monsanto reasonably relied on Westinghouse itself to warn its employees of the dangers associated with PCBs, and that Monsanto's warnings to Westinghouse were adequate. We agree, and affirm the judgment of the district court.

I

From their development in the late 1920s until their severe restriction in 1977 by the federal government, see 15 U.S.C. § 2605(e)(2)(A), PCBs were produced in the United States exclusively by Monsanto under the trade names "Aroclor" and "Therminol." During much of this time, Monsanto sold substantial quantities of PCB-laden fluids to Westinghouse, which used them either as a dielectric in power transformers it manufactured at its plant in Bloomington, Indiana, or as a heat transfer fluid in the "Vapotherm" transformer repair machine at its Muncie, Indiana plant. The deleterious human health and environmental effects of PCBs have been well-documented and require little additional explanation here. PCB exposure has been linked to a variety of ailments from relatively minor chloracne to acute toxicity. (It bears noting that this case does not involve any claims concerning the more notorious polychlorinated dibenzo furans or dibenzo-p-dioxins, which contaminated some PCBs.)

In June 1991, nine former Westinghouse employees (and seven of their wives) sued Westinghouse and Monsanto in federal court under the diversity jurisdiction, alleging a variety of state law claims related to PCB exposure. Their amended complaint alleged battery, fraud in the inducement, fraudulent misrepresentation, restitution, conspiracy, and tortious failure-to-warn. The claims against Westinghouse dropped out of the case after the Indiana Supreme Court, responding to a question certified by the U.S. District Court for the Southern District of Indiana, answered it adversely to the plaintiffs. See Baker v. Westinghouse Elec. Corp., 637 N.E.2d 1271 (Ind.1994). Jurisdiction is proper in the federal court, because all the plaintiffs are Indiana citizens, and Monsanto is a Delaware corporation with its principal place of business in St. Louis, Missouri. After voluntarily withdrawing a few of their theories, the plaintiffs continued their case against Monsanto. In August 1996, the plaintiffs John Taylor, Richard Sluder, and his wife Deittra Sluder filed for partial summary judgment on several of their claims against Monsanto, which in turn responded with a cross-motion for the same on the plaintiffs' remaining claims. The district court denied the plaintiffs' motion, granted Monsanto's, and eventually entered a Rule 54(b) final judgment. The plaintiffs have appealed only their tortious failure-to-warn claim.

II

Under Indiana law, there is no doctrinal distinction between the negligent and strict liability failure-to-warn actions. See Natural Gas Odorizing, Inc. v. Downs, 685 N.E.2d 155, 163 n. 11 (Ind.Ct.App.1997). In both cases, a manufacturer has a duty to warn those persons it should reasonably foresee would be likely to use its product or who are likely to come into contact with a latent danger inherent in the product's use. See id. at 162. Although this duty to warn the ultimate consumer is sometimes described as "non-delegable," see, e.g., id. at 163, the Indiana Appellate Court has clearly recognized the "sophisticated intermediary" defense, which holds that there is no duty to warn an ultimate user when the product is sold to a "knowledgeable or sophisticated intermediary" whom the manufacturer has adequately warned. Id. at 163 n. 10. Cf. Downs v. Panhandle Eastern Pipeline Co., 694 N.E.2d 1198, 1208-09 (Ind.Ct.App.1998) (variant of doctrine for "bulk suppliers"). Delegation of the duty to warn makes particular sense where the manufacturer cannot control how the intermediary will use the product, cf. Hoffman v. E.W. Bliss Co., 448 N.E.2d 277, 286 (Ind.1983), and where the form of the product does not easily lend itself to direct labeling. Cf. York v. Union Carbide Corp., 586 N.E.2d 861, 869 (Ind.Ct.App.1992). In order for the exception to apply, however, the intermediary must have knowledge or sophistication equal to that of the manufacturer, and the manufacturer must be able to rely reasonably on the intermediary to warn the ultimate consumer. Natural Gas Odorizing, 685 N.E.2d at 164.

In the present case, the district court granted Monsanto's cross-motion for summary judgment on the plaintiffs' failure-to-warn claim, finding that the only reasonable conclusion from the evidence presented was that Westinghouse was a sophisticated intermediary to whom Monsanto had given adequate warnings about PCBs. On appeal, the plaintiffs challenge the district court's conclusions about Westinghouse's level of sophistication and the adequacy of Monsanto's warnings, both of which are ordinarily questions of fact. Cf. Panhandle Eastern Pipeline Co., 694 N.E.2d 1198, 1209-10 (sophistication of third-party); Natural Gas Odorizing, 685 N.E.2d at 164 (adequacy of warning given to third-party). Other than these purely factual points, the plaintiffs' appeal raises no questions of law. Thus, on this de novo review from summary judgment, we may affirm if we find that there are no genuine issues of material fact regarding the district court's conclusions. Life Ins. Co. of North America v. Von Valtier, 116 F.3d 279, 283 (7th Cir.1997).

A. Was Westinghouse a "Sophisticated Intermediary"?

The record at summary judgment is replete with uncontroverted evidence that Westinghouse was highly sophisticated about PCBs. Westinghouse gave Monsanto individualized specifications for the dielectric fluids to be produced, and Monsanto delivered the PCBs in large quantities by railroad car, tank truck, and 55-gallon drum. Westinghouse had used PCBs for over 40 years and had developed vast in-house medical, engineering, and environmental expertise about the chemicals. For example, by as early as 1953 Westinghouse had prepared its own Material Safety Data Sheets and Safe Practice Data Sheets for PCB-laden fluids. In fact, Westinghouse's in-house knowledge about PCBs was so sophisticated that the company participated in federal and industry task forces and working committees on PCBs. Perhaps recognizing the futility of trying to portray Westinghouse as a babe in the woods on general matters related to PCBs, the plaintiffs argue that while Westinghouse may have been expert about the environmental consequences of PCBs, the company was unsophisticated and ignorant about the human health and employee safety hazards relating to those toxics.

As a threshold matter, we question the plaintiffs' attempt to fine-tune the "sophisticated intermediary" doctrine to make it require Westinghouse to have specific expertise on human health and employee safety issues related to PCBs. While there is often no easy way to select the particular "level of abstraction" that governs an analysis, cf. Nash v. CBS, Inc., 899 F.2d 1537, 1540-41 (7th Cir.1990) (copyright context), Indiana courts have in...