Missed opportunity: California Supreme Court refuses to hear “adjacent liability” case

October 01, 2015 | By DEBORAH LA FETRA

Yesterday, the California Supreme Court denied the petition for review in Sherman v. Hennessy Industries, in which the California Court of Appeal held that the manufacturer of a safe product can be liable for injuries caused by unsafe products used with the safe product.  PLF had urged the Court to accept the case.

The court below held that an “arcing machine”—essentially a highly calibrated saw used to customize brake linings—is liable for injuries caused by asbestos dust released by certain brake linings even though the machine itself contains no asbestos.  The Supreme Court’s refusal to heard the case lets stand the lower court’s broad exception to the general rule announced in O’Neil v. Crane Co., that “California law does not impose a duty to warn about dangers arising entirely from another manufacturer’s product, even if it is foreseeable that the products will be used together.”  The rule in California now allows plaintiffs to target manufacturers of safe machines if the machines are sold to businesses likely to use them on products containing asbestos, thus receiving an “indirect economic benefit” from the asbestos-containing products.

This decision is yet another hit on California’s economy.  Manufacturers of safe products, outside the chain of commerce of the injury-producing product, are now required to absorb the costs of injuries caused by other companies – only because those other companies were long-ago sued into bankruptcy.  This end-run around O’Neil will undoubtedly generate more litigation, which means that the California Supreme Court has not heard the last on this subject and may yet have an opportunity to decide whether the state really wants to impose tort liability based on an indirect economic benefit.