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April 2013

Gordon & Rees Expands Reach of Sophisticated User Defense to Sophisticated Purchasers

Gordon & Rees partner Deborah Smith and associate Kathryn LaFevers of San Francisco persuaded the court overseeing asbestos multidistrict litigation to extend the “sophisticated user” product liability defense. This same court, along with others, had previously applied the defense to hold that there is no duty to warn where the injured plaintiff was already aware of a product’s potential risks. On March 26, Gordon & Rees won rulings expanding the defense to reject liability where it is the purchaser of a defendant’s products, plaintiff’s employer, that is shown to be aware of the risks. Given that a plaintiff’s employer is likelier to have knowledge of many risks than rank-and-file employees, this victory could help the defense in many other product liability cases.

The case, Donlon v. AC and S, Inc., was brought by the heirs of a Navy aircraft mechanic claiming that he had been exposed to asbestos from aircraft components. The mechanic had worked on aircraft while stationed at land-based naval facilities, so maritime law did not apply. Smith and LaFevers won summary judgment motions arguing the sophisticated user defense on behalf of two manufacturers of aircraft components.

California adopted the sophisticated user defense in Johnson v. American Standard, 43 Cal. 4th 56 (2008), a case that involved a plaintiff who was highly trained and knowledgeable about the specific risk. California courts since Johnson have been unwilling to extend the reach of the sophisticated user defense to absolve product manufacturers and suppliers from liability solely by a showing that the plaintiff’s employer or purchaser of the product was the sophisticated user (as opposed to the end-user). Stewart v. Union Carbide Corp., 190 Cal. App. 4th 23, 27-29 (2010); Rollin v. Foster Wheeler, LLC, 2012 Cal.App. Unpub. Lexis 579, p. 9. (2012); cf. Webb v. Special Electric Co., Inc., 214 Cal. App. 4th 595 (2013). Thus, the asbestos MDL court arguably took California law further than California courts have gone, but it did so based on close reading of Johnson.

The MDL court applied California law in Donlon and held that the Johnson court’s approval of the reasoning in In re Related Asbestos Cases, 543 F.Supp. 1142 (N.D. Cal. 1982), which did not “even consider[] the level of sophistication of the individual plaintiff,” demonstrated that a showing of the individual plaintiff’s level of sophistication or knowledge was not necessary. If the Navy was knowledgeable of the hazards of asbestos, then the plaintiff, a member of the U.S. Navy, “could reasonably be expected to know of the hazard.” Johnson, 43 Cal. 4th at 74.

The MDL has recently and consistently come out on the opposite side of the issue in cases where the alleged exposure took place aboard a U.S. Navy vessel while that vessel was at sea. e.g. Mack v. General Electric Co. MDL-875, No. 2:10-CV-78940-ER (E.D. Pa. October 3, 2012). The court in Mack applied maritime law because the exposures occurred on board ship, but held that a manufacturer or supplier must demonstrate “that the ultimate end-user (i.e., the plaintiff or person injured by the product – as opposed to the person or entity to whom the product was sold or supplied (e.g., an intermediary such as the Navy or an employer)) was a ‘sophisticated’ user of the product.” Mack at p. 16-17.

The MDL court’s ruling in Donlon marks the first time since its decision in Gottschall v. General Electric Co., MDL 875, No. 2:11-CV-60035-ER (E.D. Pa. December 8, 2011) that the court demonstrated its willingness to continue to extend the sophisticated user defense under California law to absolve product manufacturers of liability. Gordon & Rees’s victory means that more defendants may be able to escape liability where it is shown that their customers were aware of risks posed by a particular product.

Kathryn J. LaFevers