In Webb v. Special Electric Co., Inc, et al. (Cal. Sup. Ct., Santa Clarita Cty., Case No. BC436063; Appeals No. S209927), the California Supreme Court officially adopted the "sophisticated intermediary doctrine" as an available affirmative defense in products liability cases. This doctrine may serve as a severance of liability for producers and suppliers of harmful products who distribute to "sophisticated" persons who in turn distribute to downstream users. While this express adoption will undoubtedly serve as a boon to many potential defendants seeking to avoid, or quickly escape, the crosshairs of burdensome lawsuits, the California Supreme Court was quick to narrow the applicability of the doctrine. Notwithstanding these qualifiers, the mere availability of the sophisticated intermediary doctrine will certainly be a welcome tool in the fight against onerous Plaintiffs' litigation.
In Webb, plaintiffs William and Jaqueline Webb sought damages related to William Webb's affliction with mesothelioma; which was contended to be a product of his occupational exposure to asbestos while working for Pyramid Pipe & Supply (Pyramid). While employed at Pyramid, Mr. Webb regularly handled transite pipes manufactured by Johns-Manville which contained crocidolite asbestos supplied by Special Electric Co., Inc. At trial, Special Electric moved for nonsuit on plaintiffs' failure-to-warn claims contending that it could not be liable because Johns-Manville was a sophisticated user of its product and Special Electric packaged its asbestos with warnings regarding the hazards of the product. The jury ultimately found for Plaintiffs awarding them over $5 million, Special Electric was allocated 18 percent liability.
After the verdict, the trial court heard arguments on the nonsuit motion raised by Special Electric at trial. The trial court granted the motion noting that Special Electric had no duty to warn Johns-Manville of the dangers of asbestos, and entered judgment accordingly. Plaintiffs appealed to California's 2nd Circuit which overturned the trial court's order on the motion finding that the ruling to discharge Special Electric's duty to Webb was not supported by the record.
The California Supreme Court accepted review and formally ruled that the sophisticated intermediary doctrine applies in California. Under the rule, a supplier may discharge its duty to warn end users about known or knowable risks in the use of its product if it: (1) provides adequate warnings to the product's immediate purchaser, or sells to a sophisticated purchaser that it knows is aware or should be aware of the specific danger, and (2) reasonably relies on the purchaser to convey appropriate warnings to downstream users who will encounter the product. However, the court also stated that the supplier bears the burden of proving that it adequately warned the intermediary or knew that the intermediary was aware or should have been aware of the specific hazard, and reasonably relied on the intermediary to transmit the warnings.
In applying this standard to the facts of Webb, the Court determined that the evidence did not support a finding that Special Electric discharged its duty. The Court noted that no evidence established that Johns-Manville knew about the particularly acute risks posed by the crocidolite asbestos supplied by Special Electric. This is significant because the Court is essentially stating that mere knowledge of the general harmful effects of asbestos is not sufficient to determine that the intermediary was aware or should have been aware of the specific hazard of a particular product under the meaning of the rule. Therefore, in most instances the supplier is likely still required to provide some form of warning to the intermediary of the specific harmful risks associated with its product in order to successfully invoke this affirmative defense.
The Webb marks the first time that the California Supreme Court has expressly recognized the availability of sophisticated intermediary doctrine despite its theoretical existence stemming from its inclusion in the Restatement Second of Torts back in 1965.[i] Notwithstanding the nuances of the rule, the express adoption of the sophisticated intermediary doctrine will certainly come as a relief to many suppliers, particularly those who supply raw materials in bulk. With an adequate warning to the intermediary and a reasonable belief that the intermediary will pass along the warning to downstream users, these suppliers will have greater bargaining power to seek early release from litigation or may even avoid being named to a suit altogether.