A California appellate court has refused to apply the sophisticated user doctrine to bar the claims of the family of a career U.S. Navy shipyard worker who worked with asbestos-containing equipment at Navy shipyards between 1957 and 1989. In Gottschall v. Crane Co., No. A136516 (First Appellate District, October 8, 2014), the First District reasserted the view that the sophisticated user defense under California law, is limited to situations where the end-user/plaintiff is knowledgeable does not apply where it is the purchaser/employer that is “sophisticated.”

The issue in Gottschall came up in a roundabout manner. The plaintiff filed two wrongful death cases: one in San Francisco Superior Court, which named the defendant and appellee Crane Co., and one in the U.S. District Court for the Northern District of California, naming six different defendants. While Crane Co. continued to litigate in San Francisco, the federal case was subsequently transferred to the Eastern District of Pennsylvania, which was assigned to handle multidistrict asbestos litigation. On December 8, 2011, the MDL (Robreno, J.) granted a summary judgment motion filed by defendant General Dynamics Corp., holding that the U.S. Navy was a sophisticated user under California law, and therefore the plaintiffs could not maintain a claim.

Crane Co. filed its own summary judgment motion in San Francisco Superior Court predicated on this ruling, and arguing that the doctrine of collateral estoppel compelled the same result. The court agreed, applied collateral estoppel and granted the motion.

The Court of Appeal reversed. First, it refused to apply the doctrine of collateral estoppel, finding that the sophisticated user issue was a “pure question of law,” and cited Jenkins v. County of Riverside (2006) 138 Cal.App.4th 593, 618 for the premise that collateral estoppel should not be applied in a way that prevents a California court from making a “proper interpretation” of its own law. Then, in a stunning rebuke of the federal court, the Court of Appeal found that the MDL court’s “application of California law was wrong, as any reading of the evolution of California’s sophisticated user defense demonstrates.”

Gottschall distinguished the seminal case of Johnson v. American Standard, Inc. (2008)43 Cal.4th 56, on the ground that the case involved a certified HVAC technician whose training and experience made him a sophisticated user, capable of understanding the hazards of the products with which he worked. Then, the Court of Appeal relied on Stewart v. Union Carbide Corp. (2010) 190 Cal.App.4th 23 (2010) and Pfeifer v. John Crane, Inc. (2013) 220 Cal.App.4th 1270, both of which turned on the sophistication of the user – the individual using the products – and not the employer. Thus, the First District stated plainly that “the Pennsylvania federal court was wrong in ruling as it did. Necessarily, the San Francisco Superior Court was wrong in holding that appellants were collaterally estopped by the Pennsylvania federal court’s decision.”

Though Johnson was initially received with much fanfare by the defense bar, Gottschall is only the latest in a string of decisions significantly limiting Johnson’s application. While Gottschall classifies this as an “evolution of California’s sophisticated user defense,” the reality may be that the appellate courts, not the MDL, are the “sophisticated misusers” of Johnson’s holding.

Though Johnson did decide the issue of the application of the defense to a specific HVAC contractor, the decision makes clear that the point of the doctrine is to protect the manufacturer from the need to warn a sophisticated purchaser, and cites with approval Fierro v. International Harvester Co. (1982) 127 Cal.App.3d 862 and In re Related Asbestos Cases (N.D.Cal. 1982) 543 F.Supp. 1142, 1151. Indeed, in In Re Asbestos, the court noted that “the Navy, as an employer, was aware of the dangers of asbestos as were defendants and that the Navy nonetheless misused the products, thereby absolving defendants of liability for failure to warn the Navy’s employees of the product dangers” (emphasis added). The Supreme Court may yet get involved to clarify its application of Johnson.