Opinion ID: 746293
Heading Depth: 2
Heading Rank: 1

Heading: Defects in Labor, Material and Manufacture

Text: 21 We turn first to Thiokol's promise to deliver goods free from defects in labor, material, and manufacture. There is no question that this promise relates to the goods and was made a part of the basis of the parties' bargain. It therefore constitutes an express warranty, Cal. Com.Code § 2313, and we move directly to the final step of the analysis. We must determine whether the WESTAR VI and Palapa B-2 satellite motors suffered from defects in labor, material, or manufacture. 22 The district court concluded that the motor failures were caused by severe and extensive interply density variations. It further concluded such variations did not amount to a breach of Thiokol's warranty because, [w]here the buyer qualifies and approves product acceptance specifications, a product which satisfies all [such] specifications is not 'defective.'  The district court thus held that the interply density variations could not be considered a defect because [they] did not [violate] the product acceptance specifications qualified and approved by [McDonnell Douglas]. 23 A further inquiry is necessary, however, because Thiokol did not limit its warranty to technical compliance with the specifications set forth in the contract. Thiokol made a separate promise--that the goods would be free of defects in labor, material, and manufacture. We must then make the further inquiry of whether, under the terms of the contract, the interply density variations in the motors delivered constitute a defect in labor, material or manufacture. 24 McDonnell Douglas offers alternative definitions of the term defect. First, it contends that a defective product is one that differs from the manufacturer's intended results or from other ostensibly identical units of the same product line. Barker v. Lull Engineering Co., Inc., 20 Cal.3d 413, 429, 143 Cal.Rptr. 225, 573 P.2d 443 (1978). This argument lacks merit. While this definition of defect is firmly rooted in the law of products liability, McDonnell Douglas presented no evidence that the parties intended to incorporate this definition, and all of the social concerns regarding distribution of risk that it connotes, into their contract. In fact, all of the evidence is to the contrary. See discussion infra at 12076-79. 25 McDonnell Douglas advances a second definition of the phrase defect in labor, material, and manufacture. Relying on S.M. Wilson & Co. v. Smith Int'l, Inc., 587 F.2d 1363, 1372 (9th Cir.1978), McDonnell Douglas maintains that a defect in labor, material, or manufacture is a defect in quality. McDonnell Douglas argues that Thiokol breached its warranty by delivering motors that contained severe and extensive interply density variations, which constituted a defect in quality. 26 McDonnell Douglas' definition of the critical language finds superficial support in our case law. However, a close reading of Lombard Corp. v. Quality Aluminum Products Co., 261 F.2d 336 (6th Cir.1958), the case relied on in S.M. Wilson, demonstrates that a defect in labor, material, or manufacture is a defect or flaw in the quality of the labor, material, or manufacture of the product. See Lombard 261 F.2d at 338 (holding that there was no defect in material where [t]he steel [used] in the tie rods was of excellent quality). This definition of defect is compelled by the plain meaning of the terms selected by the parties because it gives meaning to the limiting language in labor, material, or manufacture. McDonnell Douglas' definition, to the contrary, renders the limiting language superfluous. 27 We therefore reject McDonnell Douglas' definition of a defect. We hold that, to prove a breach of Thiokol's warranty against defects in labor, material, or manufacture, McDonnell Douglas had to demonstrate that the WESTAR and Palapa satellite motors suffered from a flaw in the quality of the material used in their construction. See S.M. Wilson, 587 F.2d at 1372. McDonnell Douglas failed to do this. 28 At trial McDonnell Douglas attempted to prove that the rayon cloth provided by Union Carbide, which was used in the manufacture of Star 48 motors, was dirty and of substandard quality. The district court expressly found [n]o evidence ... that the cloth supplied by Union Carbide was defective. This conclusion is amply supported by the record and is in accord with the findings of the failure investigation committee. Additionally, there was conflicting evidence regarding the effect of dirty cloth. A NASA expert testified that, although NASA pursued the dirty cloth theory for a number of months, it eventually concluded that the condition of the cloth at the beginning of the manufacturing process had no significant effect on the strength of the carbon-carbon exit cone. 29 The record is otherwise devoid of any evidence that the failures were caused by a defect in labor, material, or manufacture of the carbon-carbon exit cones. There is, rather, substantial evidence to the contrary. The failure investigation committee concluded that [c]hanges and variations in materials or [the manufacturing] process were not a determinative cause of the failures. It also found that [e]quipment, work procedures, personnel and production and support systems were not proven to be contributory to the failures. Although the committee found that there was a shift in the quality of the exit cones, it concluded that [a] single cause of density variations has not been isolated. 30 In light of the foregoing, we conclude that McDonnell Douglas failed to demonstrate that a flaw in labor, material, or manufacture caused the interply density variations which resulted in the failures. Accordingly, the district court properly entered judgment against McDonnell Douglas on this issue. 31