The Oregon Court of Appeals has held in a case of first impression that the “bare metal” defense is not applicable under Oregon law. McKenzie v. A.W. Chesterton Co., 277 Or App 728 (2016). Under this defense, which courts in many other states have applied, a manufacturer whose product does not contain asbestos (i.e., is “bare metal”) is not liable for harms caused by asbestos-containing replacement parts supplied by others. By bucking the national trend, it is likely that the ruling will increase the number of asbestos cases filed in Oregon. The decision is based on Oregon statute, which may limit its applicability to Oregon, but it is also based on the Restatement, which may make it influential elsewhere as well.

Background

Paul McKenzie served on WWII-era aircraft carriers as a fireman and boilerman in the course of a 20-year naval career that ended in 1972. He changed packing, internal gaskets, and external insulation in and around pumps manufactured and sold to the U.S. Navy by defendant Warren Pumps when the carriers were built. Warren had shipped original asbestos-containing gaskets, packing, and insulation with some pumps as “a complete package,” but these had all been replaced by the time Mr. McKenzie served on these vessels. The trial court granted Warren’s summary judgment motion based on Plaintiff’s failure to offer evidence that Warren had manufactured or supplied to the Navy the replacement products to which Plaintiff claims her husband had been exposed.

The Court’s Analysis

The Oregon Court of Appeals reversed based on the Oregon strict liability statute, ORS 30.920, and in particular two provisions of that statute: (1) that strict liability applies if “[t]he product is expected to and does reach the user or consumer without substantial change in the condition in which it is sold or leased[;]” and (2) that the statute “shall be construed in accordance” with Comments a through m of the Restatement (Second) of Torts, sec. 402A (1965). Plaintiff argued that Warren reasonably knew that the replacement products would contain asbestos, because that is what the Navy required, and that therefore the pumps were not substantially changed between their delivery to the Navy and Mr. McKenzie’s service decades later. The court rejected Warren’s argument that the relevant “unreasonably dangerous products” for purposes of ORS 30.920 were the asbestos-containing replacement products of others to which Mr. McKenzie had actually been exposed, and held that a jury could conclude that Warren should have reasonably known that the pumps were expected to and did reach users like Mr. McKenzie without substantial change in the condition in which they were sold even though the replacement asbestos-containing gaskets, packing, and external insulation that Mr. McKenzie encountered were manufactured and supplied by others. The court relied in part on Restatement comment (d), which recognized the expected replacement of component parts through wear and tear.

McKenzie expressly declined to follow decisions from other states, including the supreme courts of neighboring Washington State (Simonetta v. Viad Corp., 165 Wash.2d 341, 197 P.3d 127 (2008), and Braaten v. Saberhagen Holdings, 165 Wash.2d 373, 198 P.3d 493 (2008)) and California (O’Neil v. Crane Co., 53 Cal.4th 335, 266 P.3d 987 (2012)), which applied the “bare metal” defense to exonerate equipment defendants from liability. McKenzie concluded that Oregon precedent was inconsistent with the “bare metal” defense, and that the opinions from other states “appear to derive the bare-metal defense either from a limitation on a manufacturer’s or seller’s duty to warn that is contrary to the comments in section 402A of the Restatement or else based upon the jurisdiction’s own common law, developed without regard to the comments to section 402A which may be consistent with their respective common law but were not with Oregon statutes.”

The Court of Appeals similarly reversed Warren’s summary judgment on Plaintiff’s negligence claim. As with the strict liability claim, the court rejected Warren’s argument that it was the asbestos dust from replacement parts which had allegedly harmed decedent – not any asbestos from products it had originally supplied with the pumps – and that any failure to warn about asbestos-containing products originally supplied with its pump was therefore not the “but for” cause of Mr. McKenzie’s asbestos-related condition. McKenzie ruled that negligence in Oregon is based on foreseeability, and noted that Warren failed to establish that its failure to warn about asbestos in replacement parts did not play a part in Mr. McKenzie’s injury. Because the Navy required the use of asbestos-containing gaskets, packing, and external insulation in or on its pumps, a jury could find it to have been foreseeable that replacement component parts would contain asbestos, thereby triggering a duty to warn.

Likely Effects of This Opinion

There is clearly the potential under McKenzie for more equipment claims in Oregon that might otherwise be brought elsewhere. For example, craftsmen working in southern Washington State often also work on jobs in northern Oregon. McKenzie also makes summary judgment less likely (perhaps even unlikely) in cases with no product identification issues – for example, once a plaintiff shows evidence of asbestos exposure while working with a defendant’s product, it now seems to make no difference whether the asbestos was in the defendant’s product or a product manufactured or supplied by someone else.

That said, the scope of the decision may still be limited. A primary focus of the opinion was the foreseeability based on Navy regulations that replacement gaskets, packing, and external insulation would also contain asbestos. Such foreseeability may not be as clear in private industry, without such government regulations or MilSpecs. Further, Oregon currently has a cap on non-economic damages of $500,000 in wrongful death cases, which has historically limited the number of cases generally brought in Oregon to those with no alternative jurisdiction. The Legislature has considered increasing that limit to $1.5 million, which would make the cap less of a hindrance, but has taken no such action to date.