Opinion ID: 435124
Heading Depth: 1
Heading Rank: 4

Heading: The Adequacy of Caterpillar's Warnings

Text: 31 Having found that the shipowners and crew have a legally redressable claim, we must next address Caterpillar's contention that the service letters sent to its dealers were adequate to satisfy its duty to warn. Caterpillar concedes that we must find the district court's finding that Caterpillar was negligent in its warnings to be clearly erroneous in order to reverse. Fed.R.Civ.P. 52(a). 32 We agree with the district court that the dangers created by the faulty sun gear and piston wrist pins to the engine, vessel and crew were of a significant magnitude to give rise to a duty to warn. See, Jones, 519 F.2d at 1335; Todd Shipyards Corp. v. Turbine Service, Inc., 467 F.Supp. 1257, 1286-87 (E.D.La.1978); Schwartz, The Post-Sale Duty to Warn: Two Unfortunate Forks in the Road to a Reasonable Doctrine, 58 N.Y.U.L.Rev. 892, 895 (1983). Caterpillar thus had a duty to undertake reasonable efforts to warn of the defects. 33 Caterpillar does not dispute that it had a duty to warn, but contends that it discharged this duty when it sent the service letters to Burford identifying the problem and describing the corrective actions needed to be taken. Caterpillar places special emphasis on the fact that Burford was still in possession of the engine at the time the service letters were received. 34 The district court found that the service letters to Burford did not satisfy Caterpillar's duty to warn because it was foreseeable that Burford would not take corrective measures; 13 the court found, therefore, that Caterpillar's duty to warn of the problems extended beyond the mere sending of a letter to its dealer. We agree with the district court that, on the facts presented, the warning was inadequate. 35 What constitutes a reasonable warning depends on the facts of the case, including the likelihood and gravity of the potential harm. Schwartz, 58 N.Y.U.L.Rev. at 896. Here, the district court found that Caterpillar knew that the sun gear would fail within the first two hundred hours of operation and thus would pose a danger that the vessel would become disabled at sea. The likelihood and gravity of the harm was therefore great and required a commensurate amount of effort on Caterpillar's part to warn of the imminent problems. Butler v. Sonneborn Sons, Inc., 296 F.2d 623 (2d Cir.1961); cf. Todd Shipyards, 467 F.Supp. at 1286-87. Likewise, Caterpillar was aware that the piston wrist pins were in need of attention and had a corresponding duty to implement an effective warning. 36 Although Caterpillar relies heavily on the fact that Burford was in possession of the engine, we find that this circumstance actually works against Caterpillar's position. As Caterpillar's brief points out, because Burford was an authorized Caterpillar dealer and repair facility, Caterpillar engaged in extensive schooling and supervision of Burford's operation. According to the testimony of one of Caterpillar's regional managers, Caterpillar's local service representatives had a strong responsibility to make sure the local dealer is executing all of the things we want them to execute. The adequacy of Caterpillar's warning thus must be judged within the context of its relationship with Burford as an authorized dealer and its enhanced ability to ensure that the warnings were received and acted upon by Burford. Cf. Bell Helicopter Company v. Bradshaw, 594 S.W.2d 519 (Tex.Civ.App.1979). 37 When all these factors are considered together, it becomes evident that the district court properly concluded that Caterpillar did not satisfy its duty to warn. Caterpillar knew that the sun gear would fail and that a great danger would be posed to the vessel and crew. Furthermore, because the engine was in its dealer's possession, Caterpillar easily could have followed up its service letter with further communication to ensure that the warning was received and that the dealer realized it was imperative that the defects be corrected. 14 Under these circumstances, we agree with the district court that a single form letter to its dealers concerning each defect did not constitute a reasonable effort to warn that a potentially dangerous engine was in need of repair before installation aboard a seagoing vessel. 38 Finally, we note that the Ninth Circuit came to a similar conclusion under analogous facts in Pan-Alaska Fisheries, Inc. v. Marine Construction & Design Company, 565 F.2d 1129 (9th Cir.1977). The Pan-Alaska court held that merely sending a single warning note to its dealer of defective fuel filters did not insulate the manufacturer from liability where the defect posed a significant danger. Although Pan Alaska was decided under strict liability principles, we find that its underlying rationale--that the adequacy of a warning must be judged against the created dangers--to be persuasive here in concluding that Caterpillar's service letter did not fulfill its duty to warn or inform of the potential dangers.