Opinion ID: 1481786
Heading Depth: 1
Heading Rank: 3

Heading: Porter's Duty to Warn

Text: Porter was formed in 1928 by four former employees of Johns-Manville for the purpose of installing insulation, principally around industrial pipes. Porter never manufactured asbestos products. [8] It purchased them from manufacturers, mostly Johns-Manville, and, Porter, through its employees, installed those products as a subcontractor at the Fairfield Shipyard and elsewhere. In the Balbos case, Porter unsuccessfully moved for judgment at the close of all evidence, asserting a lack of proof that Porter, prior to 1944, knew about the health hazards of asbestos fibers. Porter argues here that the Court of Special Appeals applied an incorrect standard when it reviewed the sufficiency of the evidence. The issue is whether Balbos was required to prove that Porter knew about the danger or had reason to know of it, as Porter contends, or whether Porter should have known of it, the standard that Porter says was applied erroneously by the Court of Special Appeals. Related to that issue is whether a nonmanufacturing supplier has a duty to inspect or test a product. See Restatement (Second) of Torts § 402 (1965); Annotation, Seller's Duty to Test or Inspect as Affecting His Liability for Product-Caused Injury, 6 A.L.R.3d 12 (1966) ( Seller's Duty ); cf. Md.Code (1974, 1989 Repl.Vol.), § 5-311 of the Courts and Judicial Proceedings Article (sealed container defense). Porter emphasizes the approach currently taken by the Restatement, under which manufacturers and nonmanufacturing suppliers of products are held to different standards of knowing whether their products are dangerous or defective. In order to hold a retailer or other nonmanufacturing supplier liable on a negligence theory, a plaintiff must prove that the supplier knew or had reason to know of the danger of the product. See Restatement (Second) of Torts §§ 388(a), 399, 401 & comment a, 402; Foremost-McKesson Corp. v. Allied Chem. Co., 140 Ariz. 108, 680 P.2d 818, 823 (Ct.App. 1983); Fernandes v. Union Book-binding Co., 400 Mass. 27, 507 N.E.2d 728, 732 (1987). [9] A manufacturer, on the other hand, may be held liable when it should recognize that the product creates an unreasonable risk of physical harm. See supra Part II; Restatement (Second) of Torts § 395 & comment e. In the Restatement, reason to know and should know are terms of art: (1) The words `reason to know' are used throughout the Restatement of this Subject to denote the fact that the actor has information from which a person of reasonable intelligence or of the superior intelligence of the actor would infer that the fact in question exists, or that such person would govern his conduct upon the assumption that such fact exists. (2) The words `should know' are used throughout the Restatement of this Subject to denote the fact that a person of reasonable prudence and intelligence or of the superior intelligence of the actor would ascertain the fact in question in the performance of his duty to another, or would govern his conduct upon the assumption that such fact exists. Id. § 12; see also id. § 401 comment a, § 402 comments d & e. There is no direct evidence that Porter knew of the danger of asbestos prior to 1944. Rather, Balbos relies on circumstantial evidence. Balbos submits that the purchases by Porter of asbestos from manufacturers support an inference that Porter had the same knowledge as manufacturers. Dr. Castleman testified that one issue of Asbestos magazine in 1930 contained an advertisement for Johns-Manville, a happy birthday wish to the president of Reid Hayden, a wholly owned subsidiary of Porter, and a notation referring to the U.S. Bureau of Labor Statistics' interest in pulmonary asbestosis. Dr. Castleman also testified that some general-knowledge encyclopedias included notes on asbestosis as early as 1939 or 1940. The Court of Special Appeals reviewed this evidence and held that [a] jury ... could reasonably infer that Porter Hayden could have discovered this information about the hazards of asbestos `by utilizing the peculiar opportunity and competence which [it] has or should have as a dealer in' asbestos-containing products. Balbos, 84 Md. App. at 51, 578 A.2d at 248 (emphasis added) (quoting Woolley v. Uebelhor, 239 Md. 318, 325, 211 A.2d 302, 306 (1965)). In Zenobia we held that a supplier-installer such as Porter is held to a should have known standard when the action is based on the principles of strict liability under § 402A of the Restatement. 325 Md. at 443 n. 11, 601 A.2d at 644 n. 11. We left open the question of whether the supplier-installer's standard would be different when the action is based on a negligent failure to warn. Id. We now hold that, as to a supplier-installer, it is not. In Woolley, 239 Md. 318, 211 A.2d 302, a car dealer claimed that it should not be liable for an accident allegedly caused by brake failure, because the master cylinder was defective when the dealer acquired the car. This Court stated that a vendor, like a manufacturer, is subject to liability if, although ignorant of the dangerous character or condition, he could have by the exercise of reasonable care discovered it by utilizing the peculiar opportunity and competence which he has or should have as a dealer in such chattels. Id. at 325, 211 A.2d at 306 (citing Restatement of Torts § 402). This Court, however, affirmed a directed verdict for the car dealer because a reasonable inspection by a competent dealer would not have revealed the defect. Id. A similar issue arose in Frericks v. General Motors Corp., 274 Md. 288, 336 A.2d 118 (1975), appeal after remand, 278 Md. 304, 363 A.2d 460 (1976), an automobile crash case involving allegations of negligent design of the roof supports and of the seat locking mechanism. The retail-seller car dealer was joined as a defendant. We cited Woolley for the above-quoted proposition. Id. at 304-05, 336 A.2d at 128. But we also said that [d]ealers cannot be expected to duplicate the engineering and planning resources available to giant automobile manufacturers for the purpose of ascertaining that every model of car they sell is designed without negligence. Id. at 305, 336 A.2d at 128. Because it cannot be presumed from the mere existence of the defective design that the dealer had or should have had the requisite knowledge and because there were no specific allegations that the dealer did so, we affirmed a dismissal on the face of the pleadings of the negligence count against the car dealer. Id. at 305-06, 336 A.2d at 128. Neither Woolley nor Frericks, under the should know standard for retailers in products liability actions based on negligence, found any breach of a duty to test or inspect. Woolley cited the first Restatement's version of § 402. [10] The drafters of the Second Restatement deleted the should know standard of the original Restatement, and adopted the following rule: A seller of a chattel manufactured by a third person, who neither knows nor has reason to know that it is, or is likely to be, dangerous, is not liable in an action for negligence for harm caused by the dangerous character or condition of the chattel because of his failure to discover the danger by an inspection or test of the chattel before selling it. Restatement (Second) of Torts § 402 (1965). The change was made because the cases did not support the earlier statement. The Reporter's notes for the Second Restatement comment that: The cases hold that there is no duty to inspect, except in the types of situations covered in original § 401. The doubt about whether there is a duty which is created by original § 402 should be dispelled by a clear statement that no duty exists. At the time these Sections were originally drafted, no decision of any Court of last resort in England or America had ever held that a vendor had a duty to inspect chattels before selling them. Restatement (Second) of Torts § 402, app. at 458 (1965); see also 5 F. Harper, F. James & O. Gray, The Law of Torts § 28.29, at 556-58 & nn.8 & 9 (1986) (Harper & James) (criticizing Second Restatement for taking this position but acknowledging that it was well-supported by case law). The rationale of Frericks is consistent with that underlying the current form of § 402. This Court looked to the Second Restatement's version of § 402 in Telak v. Maszczenski, 248 Md. 476, 237 A.2d 434 (1968). In that case the plaintiff was seriously injured when he struck his head on the bottom of a seven-foot-deep, backyard swimming pool after diving from the diving board. We affirmed a directed verdict for the retail seller who neither manufactured nor installed the pool. The opinion recognized the Second Restatement's distinction between reason to know and should know. Id. at 485, 237 A.2d at 439. The Court applied that distinction to the retail seller when the plaintiff sought negligence liability under §§ 388 and 399 of the Restatement. Moreover, the opinion quoted the newer version of § 402, but found it inapplicable under the facts of that case. Id. at 487, 237 A.2d at 440. Telak and § 402 of the Second Restatement state the common law of Maryland: when a seller or other nonmanufacturing supplier is nothing more than a conduit between a manufacturer and a customer, the retailer ordinarily has no duty in negligence to discover the defects or dangers of a particular product. See State ex rel. Bohon v. Feldstein, 207 Md. 20, 31-34, 113 A.2d 100, 104-06 (1955) (allegation that landlord should have known of improper installation of water heater insufficient to state cause of action); State ex rel. Bond v. Consolidated Gas, Elec. Light & Power Co., 146 Md. 390, 398, 126 A. 105, 108 (1924) (no tort duty owed to third party by retailer of auxiliary gas stove, sold in same condition as received, that leaked carbon monoxide); Flaccomio v. Eysink, 129 Md. 367, 374, 381, 100 A. 510, 513, 515 (1916) (neither liquor wholesaler nor saloonkeeper liable to purchaser of whiskey who was blinded because whiskey contained wood alcohol rather than grain alcohol); Seller's Duty, 6 A.L.R.3d at 17; 2 L. Frumer & M. Friedman, Products Liability § 6:03[1][a] (1991); Harper & James, supra, § 28.29, at 556-57. Absent statutory modification, a conduit supplier is held to the reason to know standard of §§ 12, 388(a) and 401 of the Second Restatement. The nonmanufacturing supplier, however, may do something more than merely act as a conduit of goods, and those additional acts may impose a higher standard of care upon the supplier. See Kaplan v. Stein, 198 Md. 414, 421-22, 84 A.2d 81, 84-85 (1951) (car dealer had duty to inspect used car that it loaned to customer who had returned purchased car for repair); Seller's Duty, supra, §§ 8, 10, 11; Harper & James, supra, § 28.29, at 559. In this case, Porter was not merely a conduit of goods. Porter not only supplied asbestos products to the shipyards, its employees also installed those products, and that installation created danger to other workers. In many cases retailer-installers have been held to a duty to inspect or test a product, although the standard of care is not necessarily as high as that imposed on a manufacturer. 2 Frumer & Friedman, supra, § 6.03[4], at 6-48, 6-54; see Harper & James, supra, § 28.29, at 557 (arguing for a rule that would hold sellers to a duty of discovering defects that could be revealed by inspection, as opposed to mechanical testing); Seller's Duty, supra, § 8. It appears that in most of those cases, however, the retailer-installer has been negligent in the installation itself. See 2 Frumer & Friedman, supra, at 6.03[4] & n. 63. Balbos did not argue, and the evidence does not suggest, that Porter's installation was negligent in that it departed in some way from the intentions of the manufacturer. Nor does Balbos argue that Porter had a duty to inspect or test the product. Balbos does submit, however, that Porter had a duty to discover that the product was dangerous by reading literature that was available at the time. Here, Porter's installation activity, in addition to selling products manufactured by others, is analogous to the service department activities of automobile dealers, whose alleged negligence in products liability cases we have analyzed under a should have known standard. That standard considers what reasonably should have been discovered in light of the supplier's peculiar opportunity and competence as a dealer in the particular type of chattel. There was sufficient evidence here to allow a jury to find a duty on Porter to warn in 1942-1944. Porter was formed by former employees of Johns-Manville, a company that dealt almost exclusively in asbestos products. Porter installed or otherwise supplied asbestos products acquired almost exclusively from Johns-Manville. By 1947 Porter had offices in several of the mid-Atlantic states. Obviously asbestos was critical to Porter's business, and it is reasonable to infer that many Porter laborers were directly exposed to asbestos virtually every work day. It is an historical fact that, by Chapter 465 of the Acts of 1939, asbestosis was made compensable as an occupational disease under the Maryland workers' compensation act, so long as the injured employee had been involved in [a]ny process or occupation involving an exposure to or direct contact with asbestos dust. Md.Code (1939), Art. 101, § 34. Reasonable care under all of those circumstances would require Porter to make some effort to keep abreast of the literature on asbestos. Porter cannot escape that duty because it employed no physicians, nurses, or industrial hygienists on its staff. Further, there was sufficient evidence from which the jury could have found that a reasonable familiarity with the product would have included awareness of the dangers. Dr. Castleman testified that by 1942 there were many articles about asbestosis within the public domain. To be sure, some of those articles were in obscure publications, and we do not mean to imply that Porter had a duty to discover information presented, for example, in a German medical journal. But Castleman's testimony reflects that there was information available in nonobscure publications, such as the Encyclopedia Americana of 1939 or 1940, sufficient to put an installer-supplier on notice of the danger. Hence Balbos met his burden of proving that Porter had a duty to warn.