Issue By:  Catherine E. Golden

Richard Moran III v. Foster Wheeler Energy Corporation

Court of Appeal, Second Appellate District
(April 13, 2016)

In 2008, the California Supreme Court unanimously held that the “sophisticated user” defense applies in California to both negligence and strict liability causes of action. Under the sophisticated user defense, “a manufacturer is not liable to a sophisticated user of its product for failure to warn of a risk, harm, or danger, if the sophisticated user knew or should have known of that risk, harm, or danger.” (Johnson v. American Standard, (2008) 43 Cal.4th 56) Because sophisticated users are charged with knowing the particular product’s dangers, the failure to warn about those dangers is not the legal cause of any harm that product may cause. Since 2008, significant aspects of the sophisticated user defense have evolved based on the varying fact situation. This case considered whether the plaintiff, a salesman of asbestos-containing products, was a sophisticated user, as alleged by the defendant manufacturer.

Richard Moran worked as a salesman for Kaiser Refractories from 1968 to 1980.  His job involved sales of asbestos-containing insulation, including refractory materials which are designed to insulate metal surfaces of industrial boilers and heaters.  His clients owned or operated very large industrial facilities, such as oil refineries, foundries, cement plants and steel mills.  Mr. Moran spent 75% of his time overseeing the installation and removal of refractory from boilers at his clients’ facilities from either inside the boiler or fewer than ten feet away.  About half of the boilers were manufactured by defendant Foster Wheeler.  The boilers were massive.  A complete removal of the insulating material took a crew three days; and installation of new material took five days.  Both processes created huge amounts of asbestos- containing dust that Mr. Moran inhaled on almost a daily basis.

Mr. Moran was diagnosed with mesothelioma in 2011.  He filed suit in Los Angeles County Superior Court against manufacturers and suppliers of asbestos-containing products, including Foster Wheeler, alleging causes of action for strict liability and negligence/failure to warn.  Foster Wheeler was the sole remaining defendant at trial.

Mr. Moran testified that he considered himself “somewhat of an expert” in the processes of installing and removing refractory product in boilers and heaters.  But he was “certainly not” an expert regarding the components of refractory products or the health hazards of asbestos.  Kaiser did not reveal proprietary information about their products’ specific composition.  Therefore, Mr. Moran did not know which of the Kaiser refractory products he sold contained asbestos.  While he saw the word “asbestos” on Foster Wheeler’s manufacturing specifications and catalog, the word did not register a health concern in his mind.  Mr. Moran never observed any warnings on the new refractory products because the products were removed from their boxes prior to his involvement with any installation.  Any warnings that did exist would have been placed on the packaging materials.

Plaintiff’s industrial hygienist, John Templin, presented evidence of the pertinent industry standards, including those from OSHA, relating to the occurrence of asbestos-related illness.  He testified that by 1968, Foster Wheeler knew of the health hazards of inhaling asbestos dust and should have warned Mr. Moran.  Yet Foster Wheeler failed to provide any warnings in its specifications until several years after acquiring such knowledge, as evidenced by their own corporate representative’s testimony.  Mr. Templin also testified that many of the facilities where Mr. Moran worked on boilers did not comply with OSHA warnings and monitoring, or the facilities were so large that the required air sampling was not taken in the vicinity where Mr. Moran was working.

Foster Wheeler cross-examined Mr. Moran’s witnesses, but did not put on any witnesses of its own.  It argued that Mr. Moran must have known of the dangers of asbestos because his large industrial clients must have instituted warnings and safety precautions as required by various regulations. Foster Wheeler was granted a modified sophisticated-user jury instruction.  The jury found in favor of Foster Wheeler, concluding Mr. Moran was a sophisticated user of refractory materials and that Foster Wheeler had no duty to warn him of the danger associated with his exposure to the asbestos.  Mr. Moran appealed, asserting that the evidence was insufficient to support a finding of his sophisticated user status.

The Court of Appeal reasoned that Foster Wheeler knew or should have known of the risks of asbestos exposure as early as 1968 and did nothing to warn individuals such as Mr. Moran.  The general state of knowledge regarding asbestos at the time could not be imputed to Mr. Moran without some evidence regarding how he obtained that information.  Foster Wheeler’s argument that Mr. Moran must have known of these dangers because his industrial clients must have instituted warnings and safety precautions “falls under its own weight.”  Foster Wheeler presented no evidence regarding the knowledge of salesmen like Mr. Moran.  Thus, the only evidence of Mr. Moran’s knowledge was his own testimony.  While he could recommend products, he did not hold himself out to be an expert in those products and had no training or knowledge regarding asbestos.  Although federal regulations took effect in 1972 and Mr. Moran’s clients likely complied with them, the Court found this implication was very weak evidence of his knowledge.

John Templin’s testimony that not all of Mr. Moran’s clients could have failed to implement the federal regulations was not enough to establish the kind of specific, industry-wide knowledge sufficient to infer that those involved in the industry knew or should have known about the dangers of asbestos.  The Court found that the absence of expert testimony regarding peer group knowledge was notable even though it may not always be required to prove the sophisticated user defense.

The Court held that Foster Wheeler relied largely on negative inferences from disbelief of Mr. Moran’s testimony to prove that he was a sophisticated user, and it presented no affirmative evidence that the cancer risk from exposure to asbestos dust was so generally known in Mr. Moran’s peer group that he knew or should have known that risk.  Thus, the evidence was insufficient to support the sophisticated user defense.  The case was remanded for a new trial.

COMMENT

To prevail on the sophisticated user defense, defendants cannot merely rely upon plaintiff’s position, training or experience to infer a general state of knowledge of the hazards of asbestos.  Defendants must present affirmative evidence that the information was directly conveyed to plaintiff or his peer group. This case will be applied to other toxic tort cases as well as asbestos cases.

For a copy of the complete decision, see:

Richard Moran III v. Foster Wheeler Energy Corporation

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