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The Third Circuit Strips Some of the Protections of the “Bare-Metal Defense”

Posted in Asbestos Litigation, Maritime Law, Products Liability

Imagine this scenario:  Company X manufactures a “bare-metal” product. After the product is sold, the buyer adds defective asbestos-containing insulation manufactured by Company Y to the product, which is sold for its proper function. Unfortunately, an end-user is then injured by the insulation manufactured by Company Y.  The “bare-metal defense” suggests that the bare-metal manufacturer, Company X, would not be liable for this injury.  In practice, the intuitive logic of the bare-metal defense is not always followed.  Thus, the short answer to the question of the bare-metal manufacturer’s liability is, “it depends.”

Some courts apply a bright-line rule, holding that a bare-metal product manufacturer is never liable for asbestos-related injuries, while other courts assess the foreseeability that hazardous asbestos materials would be added to the manufacturer’s bare-metal product. The Supreme Court has not yet addressed this issue, and neither had the United States Court of Appeals for the Third Circuit, until October 3, 2017, in In re:  Asbestos Products Liability Litigation (No. VI).

 

What is the “Bare-metal Defense”?

In simplest terms, the “bare-metal defense” contends that equipment manufacturers are not liable for the potential hazards of asbestos-related injuries, when the source of the asbestos exposure comes from aftermarket replacement component parts or insulation that the equipment manufacturer neither manufactured nor placed into the stream of commerce. Some courts have applied the defense when considering causation, concluding that the bare-metal manufacturer was not the proximate cause of an asbestos-related injury.  Others courts have analyzed similar issues when evaluating whether a bare-metal manufacturer had a duty to act with reasonable care with respect to reasonably foreseeable asbestos-related risks. Although slightly different, both analyses hinge upon foreseeability.

The Third Circuit addressed the application of the “bare-metal defense,” and in particular, whether to use a bright-line rule or a fact-specific standard, in a maritime negligence claim.

 

The Third Circuit’s Decision in In re: Asbestos Products Liability Litigation (No. VI)

            Two widows of former Navy servicemen alleged that their husbands were exposed to asbestos from insulation and other components that were added onto engines, pumps, boilers, and other equipment manufactured by defendants. Many of the defendants made their products “bare-metal” and without any asbestos-containing insulation, which was later added. These same defendants asserted the “bare-metal defense” and were granted summary judgment by the Eastern District of Pennsylvania, because they shipped their products without asbestos-containing insulation and therefore could not be liable for asbestos-related injuries.

Both widows appealed the summary judgment to the Third Circuit. In tackling this issue, the Court reviewed the four main tenets of maritime law:

  • Maritime law is deeply concerned with the protection of sailors;
  • Maritime law is built on “traditions of simplicity and practicality;”
  • Maritime law has a “fundamental interest” in “the protection of maritime commerce;” and
  • Maritime law seeks out “uniform rules to govern conduct and liability.”

The Third Circuit found only the first tenet to be dispositive of the “bare-metal defense,” and stated that none of the other tenets weigh heavily in either direction. Maritime law has deep concern for the safety of sailors due to a “special solicitude for the welfare of those men who undertook to venture upon hazardous and unpredictable sea voyages.” Moragne v. States Marine Lines, Inc., 398 U.S. 375, 387 (1970). Thus, maritime law is often far more lenient towards sailors than is common law. Courts have stated that maritime law prefers to “give [rather] than to withhold the remedy” whenever “established and inflexible rules” do not require otherwise. Id.

The Court concluded that this guiding principle calls for a fact-based standard, as opposed to a bright-line rule, which will offer a greater number of sailors an opportunity to receive compensation for their alleged injuries. The Court therefore applied the following standard:  A manufacturer of a bare-metal product may be held liable for injuries suffered from later-added asbestos-containing materials, if the injuries were a reasonably foreseeable consequence of the manufacturer’s failure to provide a reasonable and adequate warning. In making this factual determination, important factors to consider are whether the bare-metal manufacturer reasonably could have known, at the time it placed its product into the stream of commerce, that

  • asbestos is hazardous, and
  • its product will be used with an asbestos-containing part, because
  • the product was originally equipped with an asbestos containing part that could reasonably be expected to be replaced over the product’s lifetime,
  • the manufacturer specifically directed that the product be used with an asbestos-containing part, or
  • the product required an asbestos-containing part to function properly.

 

The Decision’s Impact

            Within the Third Circuit, bare-metal manufacturers should no longer expect claims against them to be dismissed under a “bare-metal defense,” unless they can show that they could not reasonably have known that harmful asbestos parts would be added to their products.  A potential defense would prove:

  • the bare-metal manufacturer did not originally equip the product with any asbestos-containing parts;
  • the bare-metal manufacturer did not specifically direct that the product be used with an asbestos-containing part; and
  • the product could have been used properly without an asbestos-containing part.

At least until the Supreme Court provides its own guidance, the Third Circuit’s decision may also be viewed as persuasive by courts in other jurisdictions.