LEGAL CORNER

Component Manufacturer Not Liable Where Product was not Defective and It Did not Design the System in which its Product was a Component

By Gerard Panaro, Howe & Hutton, WSTDA Legal Counsel

Ranger Conveying & Supply Co. v. Davis, 2007 WL 2129265, involved a case in which the manufacturer of a conveyor belt which was part of a system for moving bales of raw material to be converted into paper was sued by an employee of a paper company who was injured on the conveyor belt. It was a “component parts” case and the Court of Appeals of Texas reversed a $1.6 million judgment against the company that manufactured the conveyor belt on the grounds that it did not owe any duty to either the injured employee or the company using its conveyor system. The appellate court concluded that the manufacturer, Ranger Conveying & Supply Co., had no duty to warn because there was no design defect in the conveyor itself, which was what Ranger was hired to design, produce, and install; and (2) the conveyor was part of the larger system that Ranger was not hired to work on. (Pasadena Paper contracted with Ranger to design, manufacture, build, and install conveyors.)

The plaintiff worked for a paper company lifting bales. A 580-pound bale of paper pulp fell from a truck owned by the company (Pasadena Paper Co.) onto the employee’s arm, pinning his had to a spike on the conveyor manufactured by Ranger.

In this case, the manufacturer did not place warning labels on the conveyor system telling workers to avoid the area at the interface of the conveyor and clamp truck due to the falling hazard, nor did it provide Pasadena Paper with instructions or warnings that employees should be kept away from that area. Additionally, Ranger did not provide Pasadena Paper with an operator's manual. The manufacturer’s own employee who sold the conveyor to Pasadena Paper acknowledged that he did not provide any safety documents or safety sheets with the conveyor, even though he occasionally provided those documents to people who were going to be using conveyors sold by Ranger. Ranger was not asked to provide, and did not provide, any information or training to the workers who were going to be working on the conveyor system.

The plaintiff had an expert witness who specialized in safety engineering and who testified that the problem with the conveyor was that there was a possibility that a bale could slip and fall at the interface between the clamp truck and the conveyor. He said this was a problem with the way the conveyor was designed. He said it was a foreseeable hazard that a load might fall or might slip in the interfacing between the forklift and the conveyor. The plaintiff’s expert testified that the conveyor did not meet the standards for conveyors set forth in the American Society of Mechanical Engineers (ASME) and Occupational Safety and Health Administration (OSHA) regulations.

The manufacturer’s own expert witness testified that the conveyor produced by Ranger was “a standard conveyor” that had been used for many years. He explained that Ranger did not have the expertise to advise a paper company how to use a clamp truck or how to deliver a product onto the conveyor belt. He said that Ranger did not agree to provide extraneous safety features that were not actually part of the conveyor. He also specifically testified that there was no agreement for Ranger to install a bale guard.

The paper company acknowledged that it was responsible for training employees to use the conveyor. One of its own employees, however, testified that employees were not warned about the danger of falling bales near the conveyors. The plaintiff himself said that he received “no training whatsoever” on how to operate the conveyors. There was also evidence in the trial that after Ranger installed the conveyor, but before the plaintiff’s accident, Pasadena Paper made additions and changes to the Ranger conveyor system.

The plaintiff sued Ranger for negligence and strict products liability, alleging both a design defect and a marketing defect. (“Marketing defect” was defined in the jury instructions as “a failure to give adequate warnings of the Ranger Conveying equipment's dangers that were known or by the application of reasonably developed human skill and foresight should have been known, or a failure to give adequate instructions to avoid such dangers, which failure rendered the conveyor unreasonably dangerous as marketed.”

The jury instructions also defined “ ‘[a]dequate’ warnings and instructions” as “warnings and instructions given in a form that could reasonably be expected to catch the attention of a reasonably prudent person in the circumstances of the conveyor's use; and the content of the warnings and instructions must be comprehensible to the average user and must convey a fair indication of the nature and extent of the danger and how to avoid it to the mind of a reasonably prudent person.”

Ranger’s defense was that it owed no duty to the employee or to the paper company to “formulate facility policies.” Ranger argued that the hazard arose from the paper company’s operations and not from any risk inherent in its product. The product – the conveyor – operated the way it was supposed to.

In this case, the conveyor was a “component” of the entire system. In products liability cases where the manufacturer’s product is a component of a larger system, for a plaintiff to recover s/he must prove three things: (1) the defendant placed a product into the stream of commerce; (2) the product was in a defective or unreasonably dangerous condition; and (3) there was a causal connection between that condition and the plaintiff's injuries or damages.

With respect to the second element – defective or dangerous -- a product may be unreasonably dangerous due to a defect in its manufacture (manufacturing defect) or design (design defect), or because of a failure to provide adequate warnings or instructions (marketing defect). A marketing defect is proven when the evidence shows that a defendant fails to warn of a product's potential dangers, when warnings are required, and that the lack of adequate warnings or instructions renders an otherwise adequate product unreasonably dangerous.

The elements of a marketing defect cause of action are (1) a risk of harm must exist that is inherent in the product or that may arise from the intended or reasonably anticipated use of the product, (2) the supplier of the product knows or reasonably should foresee the risk of harm at the time the product is marketed, (3) the product has a marketing defect, (4) the lack of instructions or warnings renders the product unreasonably dangerous to the ultimate user or consumer of the product, and (5) the failure to warn or instruct causes the user's injury.

However, and this was a key to this case, a component part manufacturer who does not participate in the integration of the component into the final system or product is not liable for defects in the final system or product if the component itself is not defective. A component part manufacturer that supplies a product in accordance with a purchaser's specifications is free from strict liability if the component part itself is not defective. For a duty to warn to be imposed on a component-part manufacturer or seller, it must have actively participated in the integration process. In this case, the court of appeals held, as a component part manufacturer, Ranger had no duty to warn of dangers unless (1) the component itself was defective or (2) it actively participated in the integration of the component into the final system.

After trial, the jury found that there was no design defect in Ranger’s conveyor. As a component part manufacturer, the court said, Ranger had no duty to warn of dangers of a non-defective component. In a footnote, the court added that although the conveyor itself had sharp spikes emanating from it, because these were open and obvious, Ranger had no duty to warn about them.

The plaintiff argued that Ranger was liable for failure to warn of the dangers at the interface area because Ranger “knew or should have known of the danger posed by bales stacked at the end of the spiked conveyor.” The court rejected the argument, however, holding that Ranger had no duty to warn of the interface area because that was a hazard that arose from Pasadena Paper's practice of utilizing a clamp truck to lift more bales than could be supported by the clamps of the truck and not from the conveyor that operated the way it was intended to operate.

In sum, the court said:

We conclude that Ranger had no duty to warn of the larger system because no evidence shows that it actively participated in the integration process. Ranger had no duty to warn of the dangers at the interface area because the conveyor was a component of the larger bale-handling system; the jury did not find a defect in the conveyor itself; and Ranger did not actively design or participate in the integration of the conveyor into the larger system that included the loading of bales with a clamp truck. Further, Ranger did not design the “interface.” Thus, the evidence is legally insufficient to support the jury's finding of a marketing defect. As the jury found no design defect in the product and no negligence on behalf of Ranger, no liability theory supports the verdict.

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