In Air & Liquid Sys. Corp. et al., v. DeVries et al., No. 17-1104 (March 19, 2019) the United States Supreme Court recently ruled that under federal maritime law, product manufacturers are liable for asbestos-containing materials they did not make, distribute or install but were needed for their equipment to function.
This 6-3 decision came out of a maritime case involving Navy veterans who worked on US Navy ships where a third-party added asbestos insulation to pumps, turbines, and blowers. Plaintiffs claimed that the underlying injuries were caused by equipment that the defendants manufactured and sold to the Navy in a “bare-metal” state. Although, equipment would not function properly without the application of asbestos, the manufacturers did not themselves apply the asbestos, leaving it to the Navy or its agents to do so themselves. Historically, courts have conveyed sovereign immunity to the Navy from this type of liability and most if not all of the asbestos manufacturers responsible for the asbestos insulation are bankrupt today. Consequently, plaintiffs’ only potential recovery can be from the manufacturers of the equipment to which the Navy applied the asbestos.
In most cases, the “bare-metal” equipment provided to the Navy ships did not contain any asbestos materials, that were manufactured and later installed by different companies. Speaking for the majority, Justice Brett Kavanaugh opined that “this maritime tort case raises a question about the scope of a manufacturer’s duty to warn.” Justice Kavanaugh went on to explain that a product manufacturer has a duty to warn when (1) its product requires incorporation of a part; (2) the manufacturer knows or has reason to know that the integrated product is likely to be dangerous for its intended uses; and (3) the manufacturer has no reason to believe the product’s users will realize that danger.
The Supreme Court also concluded that in determining whether a duty to warn exists, the jury should consider whether a product “required” incorporation of a part where (1) a manufacturer directs that the part be incorporated; (2) a manufacturer itself makes the product with a part that the manufacturer knows will require replacement with a similar part; or (3) a product would be useless without the part.
Although the Supreme Court chose not to adopt the manufacturers’ “bare-metal” test, it did not entirely adopt the Third Circuit’s “foreseeability” test. Instead, the Supreme Court adopted a third approach, which allows for a foreseeability analysis in the event that the manufacturer required the incorporation of an asbestos-containing component part that made the integrated product dangerous for its intended users.
Justices Gorsuch, Thomas and Alito, dissented, opining that the standard set out in the majority opinion has no basis in common law, which “has long taught that a manufacturer has no duty to warn or instruct about another manufacturer’s products, though those products might be used in connection with the manufacturer’s own products.”
In what was viewed as the silver-lining of the decision by the dissenting Justices, the majority expressly stated that its opinion is not intended to govern state law claims and is limited to maritime context.
As a result of this decision, we may see a resurgence of maritime and Navy asbestos claims. While the Supreme Court chose not adopt the manufacturers’ “bare-metal” defense, it did not close the door on the defense entirely. Although it may no longer be the “absolute” defense it had previously been, the decision highlights the importance of other defenses available to manufacturers. Given that the first “prong” of the Court’s test is that the bare-metal product “requires incorporation of [an asbestos] part,” it will be paramount that plaintiffs show that the product “required” incorporation of that part to function. Certainly, a “bare metal” product that could have multiple applications – only some of which may require the use of asbestos – may still be entitled to claim the “bare-metal defense under DeVries.
Importantly, the Court’s decision highlights the liability of a manufacturer for an “integrated product” made dangerous as a direct result of asbestos-containing products selected and installed by the Navy pursuant to military specifications. The federal government contractor defense extends the federal government’s immunity from suits to contractors who provide equipment to the government under government-provided specifications. The government contractor defense ensures that the government can dictate precisely what it requires for any purpose and that the contractor will not be held accountable for the government’s specifications. However, the government contractor defense was not before the Court in DeVries.
Significantly, the Court’s holding was expressly dependent upon the fact that the manufacturer “has no reason to believe that the product’s users will realize that danger.” Consequently, it is likely that the sophisticated user and sophisticated intermediary defenses will become more important in jurisdictions that have recognized these defenses. These defenses relieve a manufacturer of the duty to warn an ultimate consumer or user of a known hazard where there is an intermediary with knowledge of the risks.
By Claire Huynh