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A Sea Change for the Bare Metal Defense or Just Choppy Waters for Maritime Manufacturers?

Earlier this fall, the Third Circuit broke from a nationwide majority when it vacated part of an Eastern District of Pennsylvania court’s summary judgment ruling that turned on the application of the “bare metal defense”. See In re: Asbestos Prod. Liab. Litig. (No. VI), 873 F.3d 232 (3d Cir. 2017). Stripped down, the bare metal defense says that a manufacturer of an asbestos-free product cannot be held liable for injuries caused by other manufacturers’ later-added asbestos-containing parts. For example, if an engine’s manufacturer ships an engine without a gasket to a buyer who adds a gasket containing asbestos, and a worker is later injured from exposure to the combined product, the engine manufacturer asserting the defense—having made only a “bare metal” device—would be off the hook. See id. at 234.

In the partially vacated decision, District Court Judge Eduardo C. Robreno, applying federal maritime law in a multi-district litigation, granted summary judgment to certain defendant-manufacturers based on a bright-line application of the bare metal defense. See id. at 235. He thus dismissed strict liability and negligence claims brought by the wives of two deceased Navy veterans who had contracted cancer after exposure to asbestos on ships. See id. at 234. As a matter of first impression on appeal, the Third Circuit held that under federal maritime law, the bare metal defense must be applied as a flexible standard, not a bright-line rule, and remanded the plaintiffs’ claims to the district court for further proceedings. Id. at 234, 240.

By way of background, the Third Circuit had already once remanded Judge Robreno’s summary judgment orders, instructing the district court to specifically address the plaintiffs’ negligence claims apart from their strict liability claims and to consider a nationwide split in authority as to whether the bare metal defense should be applied as a bright-line rule or a fact-specific standard. Id. at 235. On that remand, Judge Robreno clarified that he had applied the Sixth Circuit’s bright-line bare metal defense rule—a rule he first adopted in a 2012 decision in the same multi-district asbestos litigation, Conner v. Alfa Laval, Inc., 842 F. Supp. 2d 791 (E.D.Pa. 2012)—as the basis for judgment on both the negligence and strict liability claims. Devries v. Gen. Elec. Co., 188 F. Supp. 3d 454, 455 (E.D. Pa. 2016), aff'd in part, vacated in part, remanded sub nom. In re: Asbestos Prod. Liab. Litig. (No. VI), 873 F.3d 232 (3d Cir. 2017).

Judge Robreno also defended his decision to apply a bright-line bare metal defense on several grounds. First, he explained, a goal of maritime law is uniformity and the “majority rule,” backed by two states’ highest courts and the Sixth Circuit, favored a bright-line approach. Id. at 456-58. Second, he referred to the fundamental policy consideration in products liability law that one who neither manufactures nor distributes a harmful product should not be made to account for its liability costs. Id. at 458. Further, he explained that he had applied the defense uniformly to the plaintiffs’ strict liability and negligence claims because a rule of federal maritime law is that “a plaintiff must show evidence of (sufficient) exposure to asbestos from a defendant’s own ‘product’ in order to hold a product manufacturer liable under any theory of liability (whether strict liability of negligence).” Id. at 460-61 (citing Lindstrom v. A–C Product Liability Trust, 424 F.3d 488, 492, 496-97 (6th Cir. 2005)).

Reviewing Judge Robreno’s summary judgment rulings for the second time, the Third Circuit embarked on an analysis reminiscent of a law school torts class. First, the appeals court asked whether the bare metal defense is rooted in the idea that a manufacturer who makes an asbestos-free product has no duty to the injured party or simply no role in causation. If the defense is rooted in duty, the appeals court reasoned, then it would apply differently to negligence versus strict liability claims. But, it continued, if the defense is rooted in causation, then it applies more uniformly. In re: Asbestos Prod. Liab. Litig. (No. VI), 873 F.3d at 236-37. In classic torts class style, the appeals court settled on a third, inclusive option; the defense is rooted in foreseeability—a concept embedded in both duty and causation. Id.

The Third Circuit then acknowledged that a foreseeability-based defense might still vary in its application to negligence versus strict liability claims. Id. at The court declined to delve into the extent of that variation, however, because the plaintiffs’ briefs focused almost entirely on negligence and mentioned the dismissed strict liability claims in only a footnote. Therefore, the court held, the plaintiffs had waived all argument on their strict liability claims. Id. at 237. (For most practitioners, this is arguably the more important holding of the opinion).

With the focus on negligence, the Third Circuit addressed the trade-offs between bright-line rules and fact-specific standards: bright-line rules are predictable and efficient at the cost of depriving certain victims of compensation while fact-specific standards are unpredictable and encourage costly discovery, but better ensure that deserving plaintiffs receive their due. Viewing these trade-offs through the lens of established maritime law principles, the appeals court determined that a fact-specific standard was the clear winner. One particular maritime law principle was dispositive here: “maritime law’s special solicitude for sailors’ safety.” Id. at 239.

Adopting a fact-specific standard version of the bare metal defense, the court then set forth its application for purposes of remand and Third Circuit federal maritime law precedent:

The standard-based approach is the one we will therefore follow: foreseeability is the touchstone of the bare-metal defense; a manufacturer of a bare-metal product may be held liable for a plaintiff's injuries suffered from later-added asbestos-containing materials if the facts show the plaintiff's injuries were a reasonably foreseeable result of the manufacturer's failure to provide a reasonable and adequate warning; and although cases will necessarily be fact-specific, already-decided precedents show, for example, that a bare-metal manufacturer may be subject to liability if it reasonably could have known, at the time it placed its product into the stream of commerce, that

(1) asbestos is hazardous, and

(2) its product will be used with an asbestos-containing part, because

(a) the product was originally equipped with an asbestos containing part that could reasonably be expected to be replaced over the product's lifetime,

(b) the manufacturer specifically directed that the product be used with an asbestos-containing part, or

(c) the product required an asbestos-containing part to function properly.

Id. at 240 (footnotes omitted).

The Third Circuit’s decision marked a departure from the majority of both federal maritime and state law cases, see, e.g., Devries v. Gen. Elec. Co., 188 F. Supp. 3d at 456 n.5 (summarizing appellate precedent on the bare metal defense in nationwide asbestos cases at the time the Eastern District of Pennsylvania multi-district litigation court adopted the bright-line rule in Conner); Walls v. Ford Motor Co., 160 A.3d 1135 & n.10 (Del. 2017) (declining to address the issue but collecting state and federal district court cases applying a bright-line bare metal defense), thereby potentially opening the floodgates for claims against previously protected manufacturers. And while the Third Circuit’s analysis turned on a unique principle of federal maritime law (i.e., the protection of sailors), it seems the state law tide is turning in the same direction.

For example, in 2016, Washington’s Supreme Court walked back from its previous application of a bright-line bare metal defense (on which Judge Robreno relied when he adopted the bright-line rule in 2012 in Conner). See Macias v. Saberhagen Holdings, Inc., 175 Wash. 2d 402 (Wash. 2012) (under Washington law, manufacturer of asbestos-free product may be liable where intended use of device is what causes the asbestos exposure, under chain of distribution exception). Also in 2016, New York’s highest court rejected a bright-line bare metal defense for failure to warn claims against a manufacturer that knew the Navy would use its asbestos-free products with asbestos-based products, In re New York City Asbestos Litig., 27 N.Y.3d 765, 793-803 (N.Y. 2016) (setting forth the rule, under New York law, that “the manufacturer of a product has a duty to warn of the danger arising from the known and reasonably foreseeable use of its product in combination with a third-party product which, as a matter of design, mechanics or economic necessity, is necessary to enable the manufacturer’s product to function as intended.”), and Oregon’s intermediate appellate court held similarly, McKenzie v. A.W. Chesterson Co., 277 Or. App. 728, 750 (Or. Ct. App. 2016) (rejecting bright-line bare metal defense to strict liability and negligence claims).

Further developments are forthcoming; addressing a defendant-manufacturer’s appeal from a denied post-trial motion for judgment under the bare metal defense, the Third Circuit recently submitted certified questions to the Pennsylvania Supreme Court concenring the availability of, and the appropriate test for, the bare metal defense under Pennsylvania law. See In re: Asbestos Prod. Liab. Litig. (No. VI), 873 F.3d at 235 n.2. As the Pennsylvania Supreme Court has accepted the question, see In re: Asbestos Prod. Liab. Litig. (No. VI) Crane Co., No. 110 EM 2017 (Pa. Oct. 26, 2017), we will report back on its answers and the evolving landscape (and waters) of the bare metal defense.