Webb v. Special Elec. Co., No. S209927.

CourtUnited States State Supreme Court (California)
Writing for the CourtCORRIGAN, J.
Citation63 Cal.4th 167,202 Cal.Rptr.3d 460,370 P.3d 1022
PartiesWilliam B. WEBB et al., Plaintiffs and Appellants, v. SPECIAL ELECTRIC COMPANY, INC., Defendant and Respondent.
Docket NumberNo. S209927.
Decision Date23 May 2016

63 Cal.4th 167
370 P.3d 1022
202 Cal.Rptr.3d 460

William B. WEBB et al., Plaintiffs and Appellants
v.
SPECIAL ELECTRIC COMPANY, INC., Defendant and Respondent.

No. S209927.

Supreme Court of California

May 23, 2016.


202 Cal.Rptr.3d 465

Paul & Hanley, Dean A. Hanley, Berkeley, Anthony E. Vieira, Woodland Hills; Law Office of Ted W. Pelletier and Ted W. Pelletier, Oakland, for Plaintiffs and Appellants.

Horvitz & Levy, Lisa Perrochet, Curt Cutting, Jason R. Litt, Encino; Brydon Hugo & Parker, Hugo Parker, Edward R. Hugo, James C. Parker, Jeffrey Kaufman and Josette D. Johnson, San Francisco, for Defendant and Respondent.

Shook, Hardy & Bacon, Mark A. Behrens, Christopher E. Appel and Patrick Gregory, San Francisco, for Coalition, for Litigation Justice, Inc., Chamber of Commerce of the United States of America, NFIB Small Business Legal Center and American Chemistry Council, as Amici Curiae on behalf of Defendant and Respondent.

Deborah J. La Fetra, Sacramento, for Pacific Legal Foundation, as Amicus Curiae on behalf of Defendant and Respondent.

Armstrong & Associates and William H. Armstrong, Oakland, for Elementis Chemicals Inc., as Amicus Curiae on behalf of Defendant and Respondent.

CORRIGAN, J.

370 P.3d 1027
63 Cal.4th 176

Plaintiff William Webb was injured by exposure to asbestos products and sued a raw asbestos supplier for failing to warn him about the danger. His case raises a question about the extent of a supplier's duty to warn. Specifically, when a company supplies a hazardous raw material for use in making a finished product, what is the scope of the supplier's duty to warnultimate

202 Cal.Rptr.3d 466

users of the finished product about risks related to the raw material? The answer implicates a defense known as the sophisticated intermediary doctrine.1 Although all sellers in a product's distribution chain have a duty to warn about known hazards, they may in some cases discharge that duty by relying on others to warn downstream users. (Rest.3d Torts, Products Liability, § 2, com. i, p. 30.)

When a hazardous raw material is supplied for any purpose, including the manufacture of a finished product, the supplier has a duty to warn about the

63 Cal.4th 177

material's dangers. Under the sophisticated intermediary doctrine, the supplier can discharge this duty if it conveys adequate warnings to the material's purchaser, or sells to a sufficiently sophisticated purchaser, and reasonably relies on the purchaser to convey adequate warnings to others, including those who encounter the material in a finished product. Reasonable reliance depends on many circumstances, including the degree of risk posed by the material, the likelihood the purchaser will convey warnings, and the feasibility of directly warning end users. The doctrine balances the competing policies of compensating those injured by dangerous products and encouraging conduct that can feasibly be performed.

I. BACKGROUND

During the 1970s, Special Electric Company, Inc. (Special Electric) brokered the sale of crocidolite asbestos to Johns–Manville Corporation (Johns–Manville). Crocidolite is the most toxic form of asbestos, several times more likely to cause cancer than the more common chrysotile form.2 Nevertheless, one Special Electric broker claimed crocidolite was “safer” than other forms of asbestos because he believed it did not become airborne.

Special Electric arranged for the material to be shipped directly from a mining company in South Africa to Johns–Manville plants.

370 P.3d 1028

It received a commission for the brokered sales but never took possession of the asbestos.3 Johns–Manville required

202 Cal.Rptr.3d 467

that the asbestos be shipped in bags with an OSHA warning label, stating: “Caution, contains asbestos fibers. Avoid creating dust. Breathing asbestos dust may cause serious bodily harm.” However, the general supervisor of Johns–Manville's Long Beach plant recalled that bags of crocidolite did not bear the labels until the early 1980s.

Johns–Manville was the oldest and largest manufacturer of asbestos-containing products in the country, maintaining plants across the United

63 Cal.4th 178

States and overseas. It also owned and operated a mine in Quebec that was one of the world's largest sources of chrysotile asbestos. Founded in 1858, the company once had 30,000 employees. Its numerous asbestos products included flooring, roofing, siding, cement, and pipe insulation. It also made an asbestos cement pipe known as Transite pipe. Although “Transite” was trademarked by Johns–Manville, the name became a generic term for all brands of asbestos cement pipe.

Although not asked about crocidolite specifically, plaintiffs' epidemiologist knew of no company in the United States more knowledgeable about asbestos than Johns–Manville. As early as the 1930s, it was aware of health hazards associated with exposure. It acquired the substance from many different sources and did not look to its suppliers for information about safe handling. The company had a well-established research department where the chemical characteristics of asbestos were studied. On occasion, Johns–Manville scientists would meet with Special Electric and other vendors to discuss research. By the 1950s, Johns–Manville had instituted precautions for safe handling in its facilities.

Johns–Manville's Long Beach plant manufactured Transite pipe. While the formula did not call for crocidolite asbestos, trace amounts of it could be found in the pipe because Johns–Manville recycled broken or damaged bits of other products during manufacture. Scraps could comprise up to 20 percent of the components, so long as the asbestos fiber count was kept within a prescribed range.

Johns–Manville sold Transite pipe through various distributors, including Familian Pipe & Supply. Familian, in turn, sold the pipe to Pyramid Pipe & Supply Co., where plaintiff William B. Webb worked as a warehouseman and truck driver. Between 1969 and 1979, Webb handled the product as part of his job. About 10 times a year, he made deliveries to job sites. The pipe left a dusty residue when handled but bore no warning label. Webb was not told that Transite pipe dust could cause cancer, nor was he advised to wear a respirator.

In January 2011, Webb was diagnosed with mesothelioma, a fatal cancer caused by inhalation of asbestos fibers. He and his wife, Jacqueline Webb, sued multiple defendants under strict liability and negligence theories. They ultimately went to trial against Special Electric and two other companies. At the close of plaintiffs' case, Special Electric moved for nonsuit on the failure to warn claims. Special Electric argued, in part, that it had no duty to warn a sophisticated purchaser like Johns–Manville about the health risks of asbestos. The court deferred ruling pending further briefing. After both sides rested, Special

202 Cal.Rptr.3d 468

Electric moved for a directed verdict on plaintiffs' strict liability

63 Cal.4th 179

claims. The court again deferred ruling. The jury returned a verdict finding Special Electric liable for failure to warn and negligence, but not liable for supplying a defectively designed product.4 It apportioned 49

370 P.3d 1029

percent of fault to Johns–Manville, 18 percent to Special Electric, and 33 percent to other entities.

Before judgment was entered, Special Electric requested a ruling on its nonsuit and directed verdict motions. The court determined Special Electric was not liable for failure to warn and granted the motions. Concerned that these rulings might be procedurally irregular, the court also entered judgment on the jury verdict and construed the motions as seeking judgment notwithstanding the verdict (JNOV). So characterized, the motions were granted and judgment was entered in favor of Special Electric.

A divided panel of the Court of Appeal identified both procedural and substantive error. The majority determined the JNOV ruling was impermissibly premature and lacked the required written notice. It also concluded the entry of JNOV was improper because substantial evidence demonstrated that Special Electric breached a duty to warn Johns–Manville and foreseeable downstream users like Webb about the risks of asbestos exposure. The dissenting justice argued JNOV was proper because Special Electric was entitled to rely on Johns–Manville, a sophisticated purchaser, to warn downstream users about asbestos, and plaintiffs suffered no prejudice from procedural irregularities in the ruling.5

We granted review and now affirm. Because substantial evidence supports the jury's verdict, and Special Electric did not have a complete defense as a matter of law, the entry of JNOV was...

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