Consumer Class Actions and Mass Torts : Class Action Lawyer & Attorney : J. Russell Jackson : Skadden Law Firm : Complex Class Actions : Consumer Class Actions & Mass Torts Law Blog

Yesterday the California Supreme Court released an important unanimous opinion in an asbestos case that limits a manufacturer's liability and duties to its own products -- not the products of other manufacturers.  See O'Neil v. Crane Co., 2012 WL 88533 (Cal. Jan 12, 2012).

In O'Neil, plaintiff's decedent had served on the USS Oriskany, an Essex class, steam-powered aircraft carrier, from 1965 to 1967.  He supervised enlisted men who repaired equipment in the engine and boiler rooms, and thus was exposed to airborne asbestos fibers as the workers cut into the external insulation of the pipes, valves, and gaskets to replace parts.

Two of the companies plaintiff had sued were Crane Co. and Warren Pumps Co.  Crane made valves for Navy ships according to Navy specifications (which required the use of asbestos), and Warren made Pumps for the ship's steam propulsion system according to Navy specifications.  Crane and Warren's parts were incorporated into the ship in 1943, more than 20 years before plaintiff's decedent first came aboard the ship.  It was undisputed that any asbestos-containing parts of the defendants' pumps or valves had been replaced long before 1965, and that plaintiff's decedent therefore did not encounter them.

Plaintiff sued Crane and Warren anyway, asserting at trial that they should be liable because: (1) their products originally had included some asbestos containing components, (2) it was foreseeable that the parts would wear out and be replaced with other asbestos-containing products, and (3) these repair and replacement procedures would release harmful asbestos dust.

The trial court had granted the defendants' motion for non-suit, but the California Court of Appeal had reversed, restating the strict liability rule in this way:  "A manufacturer is liable in strict liability for the dangerous components of its products, and for dangerous products with which its product will necessarily be used."

In a decision that harkens back to the fundamental precepts underlying strict liability and the whole concept of product liability, the California Supreme Court reversed.  In a series of very quotable passages, the court hewed to the notion that liability must be tied to the product that the manufacturer made, and that manufacturers have no duties to end users that arise from the use of other manufacturers' products.

With respect to strict liability claims, the court held that there could be no strict liability design claim because the alleged design defect in Crane's and Warren's products -- the inclusion of asbestos-containing gaskets -- was not a legal cause of Mr. O'Neil's injury because these asbestos-containing parts were not on the ship by the time Mr. O'Neil got there.  As for the strict liability failure to warn claim, the court held that defendants had no duty to warn of risks arising from other manufacturers' products, namely other asbestos-containing valves and insulation that the Navy used with Crane's and Warren's products.

In a section of the opinion entitled "No Liability Outside a Defective Product's Chain of Distribution," the California Supreme Court explained:

From the outset, strict products liability in California has always been premised on harm caused by deficiencies in the defendant's own product. . . .

Strict liability encompasses all injuries caused by a defective product, even those traceable to a defective component part supplied by another.  However, the reach of strict liability is not limitless.  We have never held that strict liability extends to harm from entirely distinct products that the consumer can be expected to use with, or in, the defendant's nondefective product.  Instead, we have consistently adhered to the Greenman formulation requiring proof that the plaintiff suffered injury caused by a defect in the defendant's own product.  Regardless of a defendant's position in the chain of distribution, "the basis for his liability remains that he has marketed or distributed a defective product" and that product caused the plaintiff's injury.

* * *

In this case, it is undisputed that O'Neil was exposed to no asbestos from a product made by the defendants.  Although he was exposed to potentially high levels of asbestos dust released from insulation the Navy had applied to the exterior of the pumps and valves, Crane and Warren did not manufacture or sell this external insulation.  They did not mandate or advise that it be used with their products.  O'Neil was also exposed to asbestos from the replacement gaskets and packing inside the pumps and valves.  Yet, uncontroverted evidence established that these internal components were not the original parts supplied by Crane and Warren.  They were replacement parts the Navy had purchased from other sources.

It is fundamental that the imposition of liability requires a showing that the plaintiff's injuries were caused by an act of the defendant or an instrumentality under the defendant's control.

Id. at pp. 4-5 (citations omitted).

The California Supreme Court similarly rejected any duty to warn about dangers inherent in somebody else's products:

Generally speaking, manufacturers have a duty to warn consumers about the hazards in their products.  The requirement's purpose is to inform consumers about a product's hazards and faults of which they are unaware, so that they can refrain from using the product altogether or evade the danger by careful use.  Typically, under California law, we hold manufacturers strictly liable for injuries caused by their failure to warn of dangers that were known to the scientific community at the time they manufactured and distributed their product.  However, we have never held that a manufacturer's duty to warn extends to hazards arising exclusively from other manufacturers' products.  A line of Court of Appeal cases holds instead that the duty to warn is limited to risks arising from the manufacturer's own product.

Id. at p. 6 (citations omitted).

The court proceeded to address a number of California and out-of-state authorities.  Ultimately, the court refused to adopt the plaintiff's argument, which focused exclusively on the foreseeability of the harm alone:

We reaffirm that a product manufacturer generally may not be held strictly liable for harm caused by another manufacturer's product.  The only exceptions to this rule arise when the defendant bears some direct responsibility for the harm, either because the defendant's own product contributed substantially to the harm or because the defendant participated substantially in creating a harmful combined use of the products.

. . . However, the foreseeability of harm, standing alone, is not a sufficient basis for imposing strict liability on the manufacturer of a nondefective product, or one whose arguably defective product does not actually cause harm. . . .

The question whether to apply strict liability in a new setting is largely determined by the policies underlying the doctrine.  The conclusion we reach here is most consistent with the policies the strict liability doctrine serves.  Although "an important goal of strict liability is to spread the risks and costs of injury to those most able to bear them," "it was never the intention of the drafters of the doctrine to make the manufacturer or distributor the insurer of the safety of their products.  It was never their intention to impose absolute liability." . . .  [P]roduct manufacturers "generally have no 'continuing business relationship'" with each other.  This means that a manufacturer cannot be expected to exert pressure on other manufacturers to make their products safe and will not be able to share the costs of ensuring product safety with these other manufacturers.  It is also unfair to require manufacturers of nondefective products to shoulder a burden of liability when they derived no economic benefit from the sale of the products that injured the plaintiff.

A contrary rule would . . . impose an excessive and unrealistic burden on manufacturers.  Perversely, such an expanded duty could also undermine consumer safety by inundating users with excessive warnings.  "To warn of all potential dangers would warn of nothing."

Id. at 13-14 (citations omitted).

The court also rejected the notion of imposing any duty to warn in negligence:

Assuming that a manufacturer can "reasonably be expected to foresee the risk of latent disease arising from products supplied by others that may be used with the manufacturer's product years or decades after the product leaves the manufacturer's control," we nevertheless conclude strong policy considerations counsel against imposing a duty of care on pump and valve manufacturers to prevent asbestos-related disease.

* * *

In short, expansion of the duty of care as urged here would impose an obligation to compensate on those whose products caused plaintiffs no harm.  To do so would exceed the boundaries established over decades of product liability law.  "'[S]ocial policy must at some point intervene to delimit liability' even for foreseeable injury . . . ."  The same policy considerations that militate against imposing strict liability in this situation apply with equal force in the context of negligence.

Id. at 15 (citations omitted).

The court's opinion in O'Neil is a forceful reminder that liability in this field of law must be grounded in the actual sale or distribution of a defective product that actually causes harm.  To go beyond that -- chasing some form of "foreseeability" -- leaves liability untethered to reality and allows for defendants to be saddled with liability for products and situations far outside of their control.

O'Neil, of course, involved one plaintiff.  But there are thousands of asbestos cases out there in which defendants like Crane and Warren are sued every day, despite the fact that their products did not -- and could not -- have caused the plaintiff's harm.  The sheer cost of defending these actions through pleadings, motions practice, and, ultimately, trial, is enormous.  That's why O'Neil, which sets a bright-line rule of non-liability as a matter of law, is so important.  Such defendants should now be dropped from these suits entirely, and where they are not, they should be able to move to dismiss and seek costs.

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A federal court recently issued a decision holding that a publisher is not a "seller" and thus is not liable for product liability claims brought by the purchaser of a product advertised on the publisher's website.  See Inman v. Technicolor USA, Inc., 2011 WL 5829024 (W.D. Pa. Nov. 18, 2011).  This decision reminds us of the all-important duty determination in product liability and warranty cases:   the manufacturer and seller of a product may owe duties to the product purchaser, but not others who are not in the chain of distribution of the product.  This apt reminder -- coming in a case about product sales on eBay -- is particularly useful because in other contexts, plaintiffs seeking to avoid federal diversity jurisdiction are attempting to fraudulently join companies that publish information about products as defendants in product liability cases.  But, as Inman holds, publishers are not liable in product liability or warranty because they are not sellers of the allegedly defective product and thus owe no duty to the plaintiff.

In Inman, the plaintiff bought vacuum tubes from various sellers on the on-line auction site eBay over the course of 8 years.  These tubes allegedly contained mercury, and plaintiff claimed personal injury from using them. 

Plaintiff sued various sellers and eBay in strict liability, negligence, and breach of express and implied warranties.

eBay filed a motion to dismiss.  Applying Twiqbal, the court proceeded through a three-part analysis:  first, laying out the elements of the claim, then identifying the bare allegations not entitled to a presumption of truth, and then determining whether the well-pleaded facts meet the elements of the causes of action.  2011 WL 5829024 at *3.

The court reviewed Pennsylvania law, noting that there can be no strict liability for one who is not a "seller" of a product.  The status of "seller" "depends on the relationship between the defendant, the defective product, and the chain of distribution."  The court concluded that plaintiff had failed to plead that eBay was anything approaching a seller:

[Plaintiff] has not alleged that eBay, at any time, had anything more than a fleeting connection to the allegedly defective products.  He has not alleged that eBay ever had physical possession of the products, that they were moved or stored in a facility owned by eBay, or any other facts to suggest that holding eBay responsible would incentivize safety, that eBay is the only member of the marketing chain available, or that eBay is in a better position than [plaintiff] to prevent the circulation of such defective vacuum tubes.

Id. at *6.

The court assumed, for the sake of argument, that the complaint pled a valid negligence claim.  It then analyzed the federal Communications Decency Act, which provides that :  "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider."  47 U.S.C. sec. 230(c)(1).  The court determined that the immunity provided by this section applied to eBay, which simply published on the web a site where buyers and sellers could meet to make deals.  In doing so, it relied on precedents holding that an auctioneer is not subject to liability under the CDA.  (Notably, there were similar cases in strict liability holding that auctioneers are not "sellers" of a product for the purposes of strict liability under Section 402A of the Restatement (Second) of Torts.)

As a result of its conclusions, the court dismissed the complaint, giving plaintiff an opportunity to replead.

Inman is not a groundbreaking opinion.  But it's simple application of the principle that in product liability, duties only flow from one's status as a seller makes Inman potentially useful in a variety of contexts.

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In the decision du jour, a homeowner was injured when one of his in-laws (who was providing free landscaping for the homeowner) dropped a skid loader's heavy bucket on the foot of the homeowner, who was also working on the landscaping project.  Domagala v. Rolland, 2011 WL 5061523 (Minn. Oct. 26, 2011).  There are a number of possible lessons to be learned from this case.  Never hire your in-laws to do work around your house.  Avoid yard work at all costs.  Never trust your in-laws around heavy equipment.  And you get what you pay for.

The lesson the Minnesota Supreme Court chose to teach from this case is when a duty to warn may arise and the difference between misfeasance and nonfeasance.  Although this isn't a mass tort case, it's a useful reminder on these basic tort issues.

The defendant had brought a skid loader onto the plaintiff's property to do landscaping.  It had various attachments, including a bucket that was secured to the skid loader by two pins.  When the pins were released, the bucket could be removed and switched for another attachment.  Sometimes the pins would stick because of debris.  The defendant would attempt to dislodge the debris by jiggling the controls, thereby shaking the bucket.  This presented the risk that an elevated bucket could become dislodged from the skid loader and fall to the ground.  It did -- at a time when the plaintiff was near the bucket to remove a rock.  The bucket fell on his foot, causing injuries requiring the removal of a number of toes.

At trial, the jury had been instructed that the defendant had no special relationship with the plaintiff, and thus owed him no duty to warn.  It was also instructed on Restatement (Second) of Torts section 321, which provides that a person who creates an unreasonable risk of physical harm to another must use reasonable care to prevent injury.  The jury returned a verdict finding the defendant not to have been negligent.  Plaintiff appealed, challenging the "no duty to warn" instruction.

The Minnesota Supreme Court first gave a primer on basic negligence law:

The distinction between the specific duty to warn and exercising reasonable care by giving a warning likely stems from the historical divergence of liability for misfeasance and nonfeasance.  Misfeasance is "active misconduct working positive injury to others" while nonfeasance, or nonaction, is "passive inaction or a failure to take steps to protect [others] from harm."  Inaction by a defendant -- such as a failure to warn -- constitutes negligence only when the defendant has a duty to act for the protection of others.

A duty to act with reasonable care for the protection of others arises in two instances implicated in this case.  First, echoing the principles of liability for misfeasance, general negligence law imposes a duty of reasonable care when the defendant's own conduct creates a foreseeable risk of injury to a foreseeable plaintiff.

Second, a defendant owes a duty to protect a plaintiff when action by someone other than the defendant creates a foreseeable risk of harm to the plaintiff and the defendant and the plaintiff stand in a special relationship.  In other words, although a defendant generally does not have a duty "to warn or protect others from harm caused by a third party's conduct," an exception to this rule exists when the parties are in a special relationship and the harm to the plaintiff is foreseeable.

Id. at 5 (citations omitted).

The court noted that the parties had stipulated that they were not in a special relationship.  Thus, it held, the defendant owed plaintiff no duty to warn about risks of harm created by others.  But he still owed a duty of reasonable care to prevent harm resulting from risks that he created himself.  The court noted that the exercise of that "reasonable care" could involve taking physical precautions, but it also could have involved simply warning the plaintiff of the risk and telling him to stay away from the bucket.  It was up to the jury to determine precisely how the duty of care could be reasonably discharged, but it confirmed that a warning was at least one option the jury could consider.  Accordingly, the jury instruction about there being no duty to warn was misleading.

In the course of this discussion, the court noted that many courts have refused to follow section 321 of the Restatement (Second) because it does not address policy concerns that are typically considered as part of the duty analysis.  The court expressly declined to adopt section 321, and instead relied on its standard five-factor test for determining whether a duty to exercise reasonable care exists.  See id. at *8.

In reviewing the "no duty to protect others" jury instruction, the Minnesota Supreme Court indicated that "a correct statement of the law" would read as follows:

A person generally has no duty to act for the protection of another person when the harm was created by a third party.  No duty to protect against harms created by others exists in this matter and you must not consider such a duty in your deliberation in this case.

Id. at *11 (emphasis in original).  Without the qualifying language, the court held, the instruction would contradict "a basic tenet of negligence law:  when a defendant's conduct creates a foreseeable risk of injury to another, the defendant has an affirmative duty to exercise reasonable care to avoid the injury."  Id.

The opinion in Domagala makes it plain that MInnesota law does not impose a duty to warn on people unless they have done something to affirmatively create a risk of harm, or they are in a special relationship with the plaintiff.  Its discussion of misfeasance and nonfeasance is useful, and its rejection of Restatement (Second) section 321 for lack of adequate public policy considerations is notable. 

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Matt Richtel over at the New York Times has a real interest in the subject of auto accidents associated with driving while talking on or texting with a mobile phone, having written a whole series of articles called Driven to Distraction.  A little over a year ago, he wrote an article about a case in Oklahoma where a woman's estate sued Sprint/Nextel (the wireless provider) and Samsung (the phone manufacturer) for a death caused by their customer, who ran a red light while talking on his mobile phone.  The theory of liability was that the defendants' failure to warn the distracted driver of the dangers of driving while using his mobile phone caused the accident and the decedent's death. 

The article quoted a law professor talking about how compelling the claim was.  I, however, was included in the article, throwing cold water on the claim based on the common knowledge defense.  Subsequently, I wrote a blog post detailing more defense arguments, starting with the absence of a duty.  And I quoted the excellent decision on duty in this context, Williams v. Cingular Wireless, 809 N.E.2d 473 (Ind. App. 2004).

Well guess what?  The Oklahoma trial court ultimately granted the defendants' motion to dismiss the Oklahoma lawsuit.  It was then sent by expedited appeal -- with no new briefing -- to the intermediate appellate court, which affirmed the decision on December 9, 2010.  See Estate of Doyle v. Sprint/Nextel Corp., Case No. 108,648, Slip op. (Okla. Ct. Civ. App. Dec. 9, 2010).  On February 23, 2011, the Oklahoma Supreme Court decided not to hear the appeal and directed that judgment should be entered consistent with the lower court's decision.

The Court of Civil Appeals concluded that the wireless provider and the mobile phone manufacturer owed no legal duty to the plaintiff's decedent.  She was not their customer; they had no legal or contractual relationship.  Slip op. at 4.  The court relied heavily on Williams and the policy arguments made therein, including that court's conclusion that it was not legally foreseeable that the sale of a cell phone would result in a fatal automobile accident.  Id. at 7.  Moreover, the public policy against making mobile phone providers insurers against driver inattention "'would effectively require the companies to stop selling cellular phones entirely because the companies have no way of preventing customers from using the phones while driving.'" 

It bears noting that the court's analysis was solely of a negligence cause of action, because that is what plaintiff asserted.  But as the Restatement (Third) of Products Liability recognizes, there is no real difference between strict liability failure to warn and negligent failure to warn. 

The court also discussed the complete lack of causation -- which is the flip side of the foreseeability argument -- in light of the duties imposed on drivers by Oklahoma law to "devote [their] full time and attention" to driving, "use ordinary care to prevent injury," and "exercise ordinary care in keeping a lookout consistent with the safety of other vehicles."  Slip op. at 10.  Ultimately, however, the court refused to reach the causation question because it was unnecessary in light of the court's holding no duty existed as a matter of law. 

The Court of Civil Appeals' decision in Doyle is a strong demonstration that trying to use civil legal duties to make the US a Nanny State is simply wrongheaded.  Legal duty does not extend as far as foreseeability, and where statutes impose duties on drivers to avoid inattentive driving, product sellers are entitled to expect the driver to fulfill his legal obligations.  There would be no principled end to imposing a legal duty on mobile phone companies to prevent others' inattentive driving:  McDonald's would be vulnerable for their drive-in windows, cosmetics companies for their portable make-up, and Victor Kiam -- God rest his soul -- for battery-charged razors.  Public policy weighs against such onerous rules.  Legal responsibility for inattentive driving rests with the inattentive driver, which is as it should be.

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One of the basic principles of product liability law is that where a defective product injures itself (requiring repair or replacement) or creates only economic loss and the sales transaction was governed by a contract, there is no cause of action in tort.  Instead, the remedy lies, if at all, in contract.  The reason is because where the issue is not personal injury or property damage, but merely financial loss, the parties had the ability to allocate the risk of loss between themselves in contract, and allowing recovery under a tort theory would undermine the parties' agreed-upon risk allocation.

But apparently not in the state of Washington.  See Eastwood v. Horse Harbor Foundation, Inc., 2010 WL 4351986 (Wash. Nov. 4, 2010).  

Eastwood was not a product liability case; instead, it involved a lessor's attempt to recover from the lessee for the common law tort of waste outside of the lease's provisions requiring the lessee to repair and maintain the property and return it in the same condition it was tendered at the beginning of the lease.  The intermediate appellate court, on its own, had invoked the economic loss doctrine to reverse the judgment on the common law waste theory.  So the Washington Supreme Court took review of the case.  It could have simply held that the economic loss doctrine does not apply outside of the product liability context.  But it did not.  Instead, it chose to rewrite Washington law on the economic loss doctrine.

The court explained its rejection of the term "economic loss doctrine" this way:

The term 'economic loss rule' has proved to be a misnomer.  It gives the impression that this is a rule of general application and any time there is an economic loss, there can never be recovery in tort.  This impression is too broad for two reasons.  First, it pulls too many types of injuries into its orbit.  When a contractual relationship exists between the parties, any harm arising from that relationship can be deemed an economic loss for which the law of tort never provides a remedy. . . .

Second, and most importantly, the broad application of the economic loss rule does not accord with our cases.  Economic losses are sometimes recoverable in tort, even if they arise from contractual relationships.  For instance, we recognize the torts of intentional and wrongful interference with another's contractual relations or business expectancies, wrongful discharge in violation of public policy, failure of an insurer to act in good faith, fraudulent concealment, fraudulent misrepresentation, negligent misrepresentation, breach of an agent's fiduciary duty to act in good faith, and negligent real estate appraisal.  Thus, the fact that an injury is an economic loss or the parties also have a contractual relationship is not an adequate ground, by itself, for holding that a plaintiff is limited to contract remedies.

Id. at *3-*4 (citations omitted).

The court then reasoned that the real question was whether there should be a tort duty or a party should be limited to his remedy in contract, and engaged in revisionist history to recharacterize its prior economic loss doctrine jurisprudence:

Where this court has stated that the economic loss rule applies, what we have meant is that considerations of common sense, justice, policy, and precedent in a particular set of circumstances led us to the legal conclusion that the defendant did not owe a duty.  When no independent tort duty exists, tort does not provide a remedy. 

Id. at *4.  The court proceeded to explain a number of its cases -- and the U.S. Supreme Court's decision in East River Steamship Corp. v. Transamerica Delaval, Inc., 476 U.S. 858 (1986) -- as cases examining whether tort law imposed a legal duty independent of contract, concluding that "the economic loss rule does not bar recovery in tort where the defendant's alleged misconduct implicates a tort duty that arises independently of the contract."  Id. at *8.  The court then abandoned the term "economic loss rule" altogether, in favor of the "independent duty rule."  Id.  

Of course, the problem with the rule, as explained by the court, is that one can never know until after the fact whether a cause of action in tort exists and whether the parties' contractual risk allocation will, in fact, be honored.  This is complicated even further by the court's suggestion that in nearly every case, this is going to be a jury question:

Although we find clarity in thinking of the problem in terms of an independent duty, we see potential difficulty, when a defendant has obligations under both the contract terms and an independent tort duty, in distinguishing between a harm that implicates only the contract and a harm that implicates the independent duty as well.  It is a factual question of proximate causation.  As a matter of law, the court defines the duty of care and the risks of harm falling within the duty's scope.  As a matter of fact, the jury decides whether the plaintiff's injury was withing the scope of the risks of harm, which the court has held the defendant owed a duty of care to avoid.

Id. at *8 (citations omitted).

The irony of all of this is that, by deferring to the parties' contractual risk allocation, the economic loss doctrine is supposed to create more -- not less -- predictability.  The Washington Supreme Court's new rule fosters anything but predictability.

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Yesterday's featured case involved the question of duty.  Sticking with that theme, I thought I'd bring to your attention another duty case, this time in the tort context.

One of the first lessons I learned in Torts class is the notion that foreseeability does not define the scope of the legal duty in tort.  For example, if I negligently caused an auto accident such that the highway patrol had to shut down the Long Island Expressway, it is certainly foreseeable that people in the cars behind me might miss a business meeting, fail to deliver a pizza on time, or miss their own wedding.  But tort law does not impose a duty on me to avoid those consequences for other people, even though they may result in financial loss.  Rather, tort law imposes a duty on me only to avoid negligently causing injury to a person or property.  Without personal injury or property damage, the fact that one of the drivers behind me was inconvenienced (or even financially impacted) simply does not give rise to a legal claim. 

In Sanders v. Norfolk So. Ry. Co., 2010 WL 4386881 (4th Cir. Nov. 5, 2010) (unpublished per curiam affirmance), the Fourth Circuit was squarely faced with the duty question.  (I should note that some of my colleagues were involved in this case.)  A train had derailed in a small town, causing a chlorine leak.  People within a one-mile radius were under a mandatory temporary evacuation order, and people within a two mile radius were under a temporary "shelter in place" order.  (The railroad quickly agreed to a class action settlement for those who were directly impacted.) 

But people who lived within a two-to-five mile radius of the crash site wanted a payday, too, so they filed a putative class action suit.  The defendant moved to dismiss, the trial court granted the motion, and the Fourth Circuit agreed.  The Fourth Circuit explained that:

South Carolina recognizes reasonable limitations on tort liability in negligence actions where the plaintiffs have suffered no personal injury and have no direct relationship with the tortfeasor. . . .

. . . While Appellants may have properly pled that their injuries were foreseeable, foreseeability alone may not give rise to a duty under South Carolina law. . . . 

Here, the only injuries alleged by Appellants are those directly related to their non-mandatory evacuation or temporary retreat from their homes.  While these harms may have been foreseeable by [the defendant], we agree with the district court that they are too remote to warrant a finding of legal duty.

Id. at *2 (citations omitted).

Similarly, the court affirmed the dismissal of the nuisance claims.  Dismissal of the public nuisance claim was proper because the plaintiffs had not alleged that their real or personal property was damaged by the accidental chlorine gas release.  And dismissal of the private nuisance claim was proper because the "release was a singular event and did not continuously keep them out of their homes."  Id. at *3.

Sanders is a reminder that foreseeability is not the equivalent of duty in tort law, and that the duty concept serves to cut off liability for harms that are simply too remote or attenuated from the challenged conduct.

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I never cease to be amazed by people who believe that other people owe them a duty to save them money.  I've defeated a class action premised on this theory before, and so I was gratified to come across the recent decision in Levine v. Blue Shield of California, 2010 WL 4369797 (Cal. App. -- 4th Dist. Nov. 5, 2010).

In Levine, the plaintiff brought a putative class action against a health plan.  Literally.  He was both the named plaintiff AND the counsel for the putative class.  Here's his beef:  Blue Shield didn't tell him that if he had bought a different policy, he could have saved quite a bit of money in premiums.

You see, when 40-year-old Michael Levine first bought his policy, he was single.  He bought a policy for himself, and one for each of his two dependents.  A few years later, when he married his 25-year-old wife, she submitted an application to be added to his plan.  But if they instead had bought a new policy with the young wife as the primary insured and the dependents as part of a single family plan, they could have obtained the same benefits for significantly less premiums.  Michael alleged that Blue Shield had a legal duty to tell him this, and brought causes of action for fraudulent concealment, negligent misrepresentation, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and violation of the Unfair Competition Law.

Both the trial court and the Fourth District Court of Appeal disagreed.  The appellate court noted:

[T]he Levines fail to cite any case in which a court has concluded that the covenant of good faith and fair dealing requires an insurer to disclose to the purchaser of insurance the lowest price that the insurer is willing to accept for insurance coverage.

Id. at *5.  The court relied on California Service Station etc. Ass'n v. American Home Assurance Co. (1998) 62 Cal. App. 4th 1166 to hold that the insurer has no duty to disclose pricing information to potential customers in an arm's length transaction.  In doing so, the court noted, "[W]e can conceive of no principled basis for concluding that Blue Shield owed the Levines a duty to disclose how the Levines could obtain the same health care coverage for a lower price, in view of the California Service Station court's holding that the insurer did not owe a duty to disclose the 'final negotiated price' itself."  Id. at *7.  It explained that although an insurer may have a duty to explain details about the coverage terms of a policy or how claims under it are processed, it has no duty regarding the price:

The amount of money that an insurer is willing to accept in exchange for coverage is not information that implicates the special relationship between an insurer and its insured, because it does not relate to coverage or the processing of claims.  We therefore reject the Levines' contention that the purported 'special relationship' between the Levines and Blue Shield gives rise to a duty of disclosure in this case.

Id. at 9 (citation omitted).

Because the plaintiffs could not plead a legal duty that the defendant violated, the court in Levine affirmed the trial court's dismissal of the entire case with prejudice.

Levine is an excellent reminder that parties negotiating a contract stand at arm's length and are not fiduciaries. 

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One of the first lessons that first year law students learn in torts class is that tort liability does not extend to all harms caused by a tortfeasor, and we do not owe duties to the world at large.  Indeed, if it were otherwise, we each would be insurers for harm that we may cause to others, no matter how remote or speculative the claim. 

Rather, tort law imposes concepts such as duty, foreseeability, and proximate causation to limit a tortfeasor’s ultimate liability to certain people to whom he owed a duty who suffered personal injury or property damage proximately caused by the tortfeasor's conduct.  Pure economic harm (such as lost profits) is deemed too remote and speculative to be compensable in negligence without some sort of accompanying physical injury or property damage.   Thus, a driver who causes a traffic accident is not liable to the hundreds of people stuck behind him on a closed freeway who may have missed a meeting, failed to make a delivery, or missed a concert that they had expensive tickets for.  He is liable, however, to the person who was physically injured, and to any other person whose car was damaged in the crash.

Last week the Florida Supreme Court issued an opinion that reflects a serious debate about the limiting principles of tort law.  See Curd v. Mosaic Fertilizer, LLC, 2010 WL 2400384 (Fla. June 17, 2010).  The fact that it comes from a case in which commercial fishermen were seeking damages for pollution of the ocean ensures that we will be hearing more about it in litigation over the Gulf of Mexico oil spill.

In Curd, a fertilizer manufacturer owned a phosphogypsum storage area near a tidal estuary in Florida.  The property had a wastewater storage area that was overfilled, and the dikes around the pond were narrower than they were supposed to be.  State and local authorities warned the company that the facility was in danger of a spill if there were even a few inches of tropical rain.  As predicted, rains came, the dike gave way and pollutants ultimately spilled into Tampa Bay, allegedly killing the fish that commercial fishermen relied upon for their livelihood.

The fishermen sued, asserting common law negligence and a claim under Florida Statute section 376.313, which permits people to bring a private cause of action for damages from the discharge of pollutants.  The intermediate court of appeal had held that the fishermen could not sue, as they had not suffered personal injury or property damage.  After all, they did not own the fish in the sea.

The Florida Supremes reversed.  Analyzing the plain language of the statute, they held that "damages" were not only physical injury and property damage, but also damage to the environment, including living creatures.  The statute allowed anyone to sue for such harm.  Moreover, following some earlier precedents, the court held that the liability under the statute was strict liability, and certain affirmative defenses ordinarily available at common law would be unavailable against the statutory claim.  The court reasoned that the Legislature created a remedial scheme that should be liberally construed to allow any person who could demonstrate "damage" from a discharge to bring a claim.

The court also rejected the argument that the fishermen’s claim was barred by the economic loss doctrine.  This was not a commercial transaction where warranty law could be expected to govern the parties’ expectations, the court reasoned, and the defendant was not a product manufacturer that had produced a product which injured only itself.  As such, the court held that the principles underlying the economic loss doctrine simply did not apply to the case.

As for the negligence claim, the commercial fishermen, the court noted, were not like the public at large, in that they had a license from the state to regularly harvest the fish in Tampa Bay for profit.  The court cited a series of common law decisions holding that fishermen suffered a special or unique harm – “a diminution or loss of livelihood” – which was not suffered by the public at large.  This was sufficient to form a common law duty, the court reasoned, when combined with the foreseeability of a Tampa Bay release causing harm to Tampa Bay fishermen.

Justice Ricky Polston partially dissented and partially concurred.  He agreed with the majority’s reading of the statute, including the fact that it should be liberally construed:  “If the statute is overly broad as suggested by the [court below], that is an issue for the Legislature to address.” 

But Justice Polston disagreed with the majority when it came to the common law claim for negligence.  He began by noting that the Florida Supreme Court previously had abrogated the traditional tort requirement that a plaintiff suffer a personal injury or property damage.  See Indemnity Ins. Co. v Am. Aviation, Inc., 891 So.2d 532 (Fla. 2004) (“in general, actionable conduct that frustrates economic interests should not go uncompensated solely because the harm is unaccompanied by injury to a person or other property”).  In light of this radical departure from traditional tort law, Justice Polston argued that “the function of the duty element takes on a greater role to filter out the unwarranted claims.” 

According to Justice Polston:

Commercial fishermen in Florida do not have a ‘special’ interest within the ‘zone of risk’ the majority finds [the defendant] to have created.  Rather, commercial fishermen are few among the tens of thousands of Floridians who earn their living from healthy ocean waters.  For example, in 2006, beach tourism alone contributed $24.1 billion to the state’s economy and provided 275,630 Floridians with jobs, earning them $7.7 billion. . . .

Although the majority rules that the commercial fishermen’s state licenses set them apart from the general population, if every state-licensed Floridian has a ‘special’ or ‘unique’ interest, then it seems there is endless ‘foreseeable’ liability.  Commercial fisherman are a small group among thousands of licensed Floridians who can claim economic damages from pollution of coastal waters.  For example, hotels and restaurants near the beach, seafood truck drivers, beach community realtors, and yacht salesmen are all licensed by the State to conduct commercial activities that may be negatively affected by the pollution of coastal waters.  Because the commercial fishermen have not demonstrated that [the defendant] owed a specific, unique duty to protect their purely economic interests, I would disallow common law recovery in order to avoid subjecting defendants to limitless liability to an indeterminate number of individuals conceivably injured by any negligence.

This question – what constitutes a “special interest” that would give rise to a duty over and above any so-called duty to the general public – will no doubt be hotly litigated in the wake of the Gulf of Mexico oil spill.  Notably, the Curd opinion may not have answered that question as broadly as plaintiffs may think.  As Justice Polston pointed out at the beginning of his partial concurrence, the majority deliberately limited the scope of its opinion.  Although the putative class included all persons engaged in the catch or sale of fish, the opinion is limited to commercial fishermen and “does not extend to distributors, seafood restaurants, fisheries, fish brokers, or the like who may have been affected by [the defendant’s] pollution,” Justice Polston observed.  The opinion also was limited to the depletion of marine life and did not cover the “harm to reputation as alleged in the petitioner’s complaint and mentioned by the [intermediate court of appeal].”  Thus, even in Florida, defendants still may have strong arguments regarding the limiting principles of duty, foreseeability and proximate cause. 

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You may not know it, but I'm famous!  Well, not really famous -- but I was mentioned in the New York Times yesterday.  And well, it wasn't really me, but my doppelganger.  They screwed my name up, calling me "Jackson Russell."  Nevertheless, there I was, sort of, being part of an article about a woman who has sued a mobile phone manufacturer and a mobile service provider because, according to the three-page complaint, they "failed to properly warn of the hazard of cell phone use while driving that created a reasonably foreseeable risk of an accident," allegedly resulting in an accident that killed the plaintiff's mother.  The plaintiff has sued in Oklahoma state court for compensatory and punitive damages in excess of $10 million.

My brief mention in the article was on the common knowledge defense.  It is commonly known that using a handheld mobile phone without a hands-free device increases the risk of accidents.  Manufacturers warn about it in the product literature.  Service providers post billboards about it.  Governmental authorities and public interest groups erect signs warning against it.  And most notably, it is illegal, and all licensed drivers are charged with knowledge of that law.  On this point, tort law is clear:  one has no duty to warn of a commonly known hazard.  And what sort of warning would possibly alter the behavior of the driver who insists on using a hand-held mobile phone while possessed of the common knowledge about the risks?  Simply put, there is none.

Interestingly, the Times reporter actually spoke with the driver of the truck that collided with the plaintiff's mother, who had pled guilty to negligent homicide.  The driver does not blame the mobile phone company, and is quoted as saying:  "It's our choice if we're going to talk on the cellphone while driving or walking down the street or in the office."

The article about the Oklahoma lawsuit appeared with a much larger article in the author's "Driven to Distraction" series, entitled "Promoting the Car Phone, Despite Risks."  This article reads like a plaintiff's complaint, attempting to establish "who knew what when" and pairing the history of marketing for early mobile phones called "car phones" and the scientific research about the risks of distracted driving.  It continually suggests that using hands-free devices does not eliminate the risk of using mobile phones while driving because the problem is "the distraction that comes from focusing on a conversation, not the road."  (Of course the same could be said for conversations with passengers, as well as the distraction that results from eating fast food, drinking beverages, singing along with the radio, putting on make-up or operating an electric razor while driving.)  The article mentions critics who demand "placing overt warnings on the packaging and screens of cellphones."  But in the end, drivers are charged by law with the duty to operate their vehicles responsibly and focusing on the road, regardless of the potential activity that may distract them, and regardless of whether they are "warned" to do so.

In light of the larger Times article, I thought it might be useful to offer more analysis of such claims, rather than my doppelganger's mere mention of the common knowledge doctrine.  To begin with, it would be tough for the plaintiff in a case such as this to establish a legal duty running from the phone manufacturer -- and particularly the service provider -- to someone other than their customer.  A product seller does not owe a duty to the world, and particularly where the product has functioned properly and injury has resulted only from the purchaser's misuse of the product, there can be no duty imposed on the product seller.  This is true in cases where firearm manufacturers are sued for injuries caused to third parties from criminal activity, and it presumably would be true if a plaintiff sued McDonald's for causing driver distraction by selling a billboard-advertised "extra value" meal to a driver from the "drive-thru" window.

Similarly, any duty running from the product seller to the purchaser who injures himself driving while using a hand-held mobile phone may be extinguished in many states by the illegal acts doctrine, which basically holds that a person who injures himself performing an illegal activity may not sue to recover for injuries incurred during that illegal activity.

Moreover, finding a viable cause of action will be difficult for mobile phone plaintiffs as well.  There are two basic product liability theories that could be asserted in these cases:  (1) design defect, and (2) failure to warn.  The design defect claim hardly seems plausible.  Although the "Promoting the Car Phone" article describes one engineer who suggested in the 1960s that there be a lock on the dial to prevent dialing while driving, the simple fact is that it would be difficult to posit a feasible alternative design that did not also detract from the benefits of having a mobile phone in the car.  It is recognized that mobile phones contribute to automobile safety by allowing us to report dangerous driving and accidents, obtain emergency roadside repairs, and receive directions in unfamiliar locations without consulting maps.  Indeed, there have been lawsuits against some automobile manufacturers seeking to impose liability for not having digital mobile assistance capabilities in their cars, and one Oklahoma court even refused to dismiss a cause of action against a mobile service provider who failed to provide a customer with triangulation information to help locate the customer's mother, who had disappeared on the way to the doctor and, allegedly as a result of the delay in locating her, lost the opportunity for rescue and medical attention.  See Frey v. AT&T Mobility LLC, 2008 WL 4415328 (N.D. Okla. Sept. 23, 2008).

As I previously noted, the failure to warn theory would be difficult not only because of common knowledge about the risks of using hand-held mobile phones while driving, but also because the mobile phone manufacturers already include such warnings in their product literature. 

Actual causation and proximate causation also would be extremely difficult to prove.  What kind of warning actually would change the conduct of a driver who, in this day and age, insists on using a hand-held mobile phone while driving?  And given the remoteness of the manufacturer and the service provider from the injured plaintiff -- and the intervening illegal conduct of the driver -- can there be causation as a matter of law?

The few cases to have addressed the question squarely answer the question in the negative.  For example, in Williams v. Cingular Wireless, 809 N.E.2d 473 (Ind. App. 2004), a plaintiff sued a mobile phone company for giving its customer a mobile phone that the customer was using when he collided with the plaintiff.  The court first concluded that there was no relationship between the mobile phone company and the plaintiff that would give rise to a legal duty on the company to protect the plaintiff.  Moreover, even though many states were adopting statutes that made driving while using a hand-held mobile phone illegal, the court held that there was no foreseeability:

Although we agree that it may be foreseeable that a person who is using a cellular phone while driving might be in an accident, we do not agree with the leap in logic Williams urges us to make that it is likewise foreseeable to a legally significant extent that the sale of the phone would result in an accident.  A cellular phone does not cause a driver to wreck a car.  Rather, it is the driver's inattention while using the phone that may cause an accident.  Drivers frequently use cellular phones without causing accidents, and, of course, cellular phones are used in all sorts of places other than in vehicles.  We do not conclude that there was a high degree of foreseeability that the sale of the phone would result in an accident.

 Id. at 478 (citation omitted).

The court went on to consider where public policy requires placing the responsibility for safe driving:

Simply because an action may have some degree of foreseeability does not make it sound public policy to impose a duty.  For example, many items may be used by a person while driving, thus making the person less attentive to driving.  It is foreseeable to some extent that there will be drivers who eat, apply make up, or look at a map while driving and that some of those drivers will be involved in car accidents because of the resulting distraction.  However, it would be unreasonable to find it sound public policy to impose a duty on the restaurant or cosmetic manufacturer or map designer to prevent such accidents.  It is the driver's responsibility to drive with due care.  Similarly, Cingular cannot control what people do with the phones after they purchase them.  To place a duty on Cingular to stop selling cellular phones because they might be involved in a car accident would be akin to making a car manufacturer stop selling otherwise safe cars because the car might be negligently used in such a way that it causes an accident.

. . . Ultimately, sound public policy dictates that the responsibility for negligent driving should fall on the driver.  Legislation has already been drafted to address the issue of cellular phone use while driving and to place the responsibility on the driver to refrain from doing so.  We are confident that the legislature is taking appropriate measures to protect public safety, and that is both its right and duty.

Id. at 478-79; see also Steele v. Cingular Wireless LLC, 2007 WL 2456104 (Cal. App. Aug. 30, 2007) (describing trial court's demurrer on plaintiff's claim that mobile phone provider owed a duty to plaintiff, who was injured in an accident allegedly caused by the provider's customer while talking on a mobile phone).

At the end of the day, I don't expect lawsuits against mobile phone companies for traffic-related harm to gain much traction.  The problems with duty, foreseeability, and causation are simply too great to make this a lucrative area for litigation.  The simple fact is that there are many potential distractions for drivers:  fast food, beverages, the radio, electronic billboards, and mobile phones, just to name a few.  But the legal responsibility for driving safely and avoiding dangerous distractions rests with the driver, and as a matter of public policy it simply makes no sense to impose on product manufacturers liability that would simply be passed through to their customers in the form of increased prices.

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