Gottschall v. Crane ( 2014 )


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  • Filed 10/8/14 Certified for publication 10/22/14 (order attached)
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    FIRST APPELLATE DISTRICT
    DIVISION TWO
    KIMBRA GOTTSCHALL et al.,
    Plaintiffs and Appellants,
    A136516
    v.
    CRANE CO.,                                                      (San Francisco County
    Super. Ct. No. CGC-10-275486)
    Defendant and Respondent.
    The heirs and family of decedent Robert Gottschall sued Crane Co. in the San
    Francisco Superior Court because of Robert’s death from mesothelioma, allegedly
    inflicted on him during his work in shipyards and similar places. Crane moved for
    summary judgment on the basis that a Pennsylvania federal court’s summary judgment in
    favor of another manufacturer—a judgment based on application of the “sophisticated
    user” doctrine—was collateral estoppel of the San Francisco action. The San Francisco
    court agreed, and granted summary judgment for Crane. We reverse, holding that the
    federal court’s resolution of this issue was wrong under California law, and thus
    collateral estoppel does not apply.
    BACKGROUND
    On February 5, 2010, Robert Gottschall filed a complaint in San Francisco
    Superior Court against Crane and 17 of the original 18 defendants, all of which had
    allegedly caused him to develop an “asbestos-related disease” because of the products
    those defendants produced, and to which he was exposed by his work from 1957 to 1989
    in a variety of shipyards and other similar facilities. Gottschall died, and on August 13,
    1
    2010, the superior court entered an order substituting his eldest daughter, Kimbra
    Gottschall, as the personal representative of his estate and his four other children
    (collectively, appellants). Appellants then filed a first amended complaint against 17 of
    the original 18 defendants, including Crane.
    On November 10, 2010, appellants filed a wrongful death and survival action in
    the United States District Court for the Northern District of California against six
    defendants that had not been named in the superior court action. Shortly thereafter, that
    action was transferred to the United States District Court for the Eastern District of
    Pennsylvania, which had been designated as the “MDL court,” i.e., the court to handle
    multi-district litigation.
    In both of these actions, i.e., the San Francisco Superior Court action and the
    action transferred to the Pennsylvania federal court, appellants made essentially the same
    assertions: their father, Robert Gottschall, had been exposed to asbestos-containing
    products while doing work at various shipyards on U.S. Navy vessels. And appellants’
    claims in the federal action sounded in negligence and strict liability under California
    law, claims similar to those made in the San Francisco action.
    On December 8, 2011, the Pennsylvania federal court granted summary judgment
    to defendant General Dynamics Corp., a defendant which had been sued because it had
    supplied the U.S. Navy vessels with asbestos-containing materials. The Pennsylvania
    federal court held that under California law the Navy was a “sophisticated user” of
    asbestos-containing material, and therefore appellants’ claims against General Dynamics
    failed. The Pennsylvania federal court set forth the issue, and its resolution, this way:
    “General Dynamics asserts that it is entitled to summary judgment on the basis of
    the sophisticated user defense because the Navy was a sophisticated user. In asserting
    this defense, it cites to [Johnson v. American Standard, Inc. (2008) 
    43 Cal.4th 56
    (Johnson)], and relies upon the affidavits of Admiral Roger B. Horne, Jr., and Admiral
    David P. Sargent, Jr., to establish that the Navy had knowledge of asbestos hazards at the
    time of Decedent’s alleged exposure such that it was a sophisticated user.
    2
    “In response, Plaintiffs assert that General Dynamics is not entitled to summary
    judgment on grounds of the sophisticated user defense because (1) General Dynamics has
    not adduced evidence that Decedent was a sophisticated user, (2) General Dynamics is
    really arguing for a ‘sophisticated intermediary defense’ (which is not recognized by
    California law), since Decedent merely worked on Navy ships as a (presumably)
    unsophisticated worker, and (3) any policy determination to expand California law to
    provide a defense under the facts and circumstances (i) is not properly carried out by an
    MDL court and (ii) involves a fact-specific determination properly handled by a jury and,
    thus, precluding summary judgment. Plaintiffs attempt to distinguish Johnson by noting
    that the plaintiff in Johnson was a certified technician clearly shown to be a sophisticated
    user, whereas Defendant General Dynamics has provided no evidence that Decedent was
    sophisticated but instead argues that the Navy was sophisticated. [¶] . . . [¶]
    “Decedent’s alleged exposure occurred during the time period 1952 through the
    late 1980s. The affidavit of Admiral Horne indicates that the Navy had state-of-the-art
    knowledge regarding asbestos hazards, that it had at least some knowledge of the hazards
    of asbestos by 1950 and that, by early 1971, it had taken affirmative steps to implement a
    detailed and comprehensive plan for controlling asbestos hazards. . . . Instead, Plaintiffs
    assert that Defendant has adduced no evidence that Decedent was a sophisticated user
    and that the Navy’s sophistication is irrelevant because the Navy was an ‘intermediary’
    and California does not recognize a ‘sophisticated intermediary user’ defense. Plaintiffs’
    argument fails because of the Johnson court’s explicit approval of the reasoning of the
    federal court in In re Related Asbestos Cases[. Johnson, 
    supra,]
     
    43 Cal.4th at
    69–70.”
    On February 29, 2012, Crane filed a motion for summary judgment in the San
    Francisco Superior Court. Relying on the Pennsylvania federal court’s decision, Crane
    contended that it, too, had supplied asbestos-containing products to the U.S. Navy, and
    because of the Pennsylvania federal court decision and its application of the
    “sophisticated user” doctrine, appellants were collaterally estopped from relitigating the
    issue in the San Francisco Superior Court.
    3
    On June 7, 2012, the superior court granted Crane’s motion for summary
    judgment, from which appellants filed a timely appeal.
    DISCUSSION
    The parties agree that whether or not the doctrine of collateral estoppel applies is a
    question of law we review de novo. (See Jenkins v. County of Riverside (2006)
    
    138 Cal.App.4th 593
    , 618 (Jenkins); Roos v. Red (2005) 
    130 Cal.App.4th 870
    , 878.)
    “Under California law, collateral estoppel applies only when each of the following
    conditions are met: ‘First, the issue sought to be precluded from relitigation must be
    identical to that decided in a former proceeding. Second, this issue must have been
    actually litigated in the former proceeding. Third, it must have been necessarily decided
    in the former proceeding. Fourth, the decision in the former proceeding must be final and
    on the merits. Finally, the party against whom preclusion is sought must be the same as,
    or in privity with, the party to the former proceeding.’ [Citation.] The party asserting
    collateral estoppel bears the burden of establishing these requirements.” (American
    Continental Ins. Co. v. American Casualty Co. (2001) 
    86 Cal.App.4th 929
    , 943
    (American Continental); to the same effect, see Jenkins, supra, 138 Cal.App.4th at
    p. 617; and Silver v. Los Angeles County Metropolitan Transportation Authority (2000)
    
    79 Cal.App.4th 338
    , 357 (Silver).) Appellants contend that the doctrine of collateral
    estoppel does not apply here. We agree, as Crane cannot make the requisite showing
    here.
    Jenkins is persuasive. There, the fundamental issue was whether Jenkins was a
    temporary employee. Following a tortuous federal court proceeding, the Ninth Circuit
    Court of Appeals ruled for Jenkins on that fundamental issue. By contrast, the trial court
    in Jenkins’s state court action ruled for the County, and Jenkins appealed. The Court of
    Appeal affirmed, in the course of which it rejected Jenkins’s claim that the Ninth Circuit
    ruling was collateral estoppel, holding as follows:
    4
    “3. Collateral Estoppel Does Not Apply Here
    “Even though the issue decided by the Ninth Circuit—whether plaintiff was a
    temporary or a regular employee—is the same in both cases, the federal decision on this
    question is not binding on this court.
    “It is questionable whether the doctrine of collateral estoppel applies to pure
    questions of law. (People v. Conley (2004) 
    116 Cal.App.4th 566
    , 571; see also In re
    Pedro C. (1989) 
    215 Cal.App.3d 174
    , 181.) The issue here—interpretation of the salary
    ordinance—was one of law. (Regents of University of California v. Superior Court
    (1999) 
    20 Cal.4th 509
    , 531.) ‘We have also recognized that public policy considerations
    may warrant an exception to the claim preclusion aspect of res judicata, at least where the
    issue is a question of law rather than of fact. [Citations.]’ (People v. Barragan (2004)
    
    32 Cal.4th 236
    , 256.) [¶] We believe the Ninth Circuit’s construction of California law is
    wrong.” (Jenkins, supra, 138 Cal.App.4th at pp. 621–622.) After going on to explain
    why, the Court of Appeal concluded as follows: “For this reason, we conclude that the
    doctrine of collateral estoppel should not be applied here to preclude litigation of the
    proper interpretation of the County’s salary ordinance.” (Id. at p. 622.)
    American Continental made this same point, in the following language:
    “Certainly, the doctrine of collateral estoppel cannot be utilized to bind a California
    litigant to a principle of law adopted in the prior foreign court litigation which is contrary
    to the law of California; nor can it be utilized to preclude a party from litigating a novel
    issue of law in California, merely because that party had failed to persuade the courts of
    another state on the legal wisdom of its position. This is particularly true where, as here,
    it appears that the foreign court based its decision, at least in part, on its interpretation of
    California authority.” (American Continental, supra, 86 Cal.App.4th at p. 945,
    fn. omitted.)
    The Pennsylvania federal court clearly understood that California law was
    controlling, specifically stating that it “will apply California law in deciding General
    Dynamic Corp.’s Motion for Summary Judgment.” But its application of California law
    5
    was wrong, as any reading of the evolution of California’s sophisticated user defense
    demonstrates.
    Our Supreme Court first endorsed the doctrine of “sophisticated user” in 2008,
    holding in essence that users of products that could be seen as potentially dangerous
    cannot hold the producers of those products liable if those users were clearly
    knowledgeable about the product being used and its potential danger. It was in Johnson,
    
    supra,
     
    43 Cal.4th 56
    , where a unanimous court held as follows:
    “The sophisticated user defense exempts manufacturers from their typical
    obligation to provide product users with warnings about the products’ potential hazards.
    [Citation.] The defense is considered an exception to the manufacturer’s general duty to
    warn consumers, and therefore, in most jurisdictions, if successfully argued, acts as an
    affirmative defense to negate the manufacturer’s duty to warn. [Citation.]
    “Under the sophisticated user defense, sophisticated users need not be warned
    about dangers of which they are already aware or should be aware. [Citation.] Because
    these sophisticated users are charged with knowing the particular product’s dangers, the
    failure to warn about those dangers is not the legal cause of any harm that product may
    cause. [Citation.] The rationale supporting the defense is that ‘the failure to provide
    warnings about risks already known to a sophisticated purchaser usually is not a
    proximate cause of harm resulting from those risks suffered by the buyer’s employees or
    downstream purchasers.’ (Ibid.) This is because the user’s knowledge of the dangers is
    the equivalent of prior notice. [Citation.]
    “As we explain further below, the sophisticated user defense evolved out of the
    Restatement Second of Torts, section 388 (section 388) and the obvious danger rule, an
    accepted principle and defense in California. [Citations.] In addition . . . the defense
    applies equally to strict liability and negligent failure to warn cases. The duty to warn is
    measured by what is generally known or should have been known to the class of
    sophisticated users, rather than by the individual plaintiff’s subjective knowledge.
    [Citation.]” (Johnson, supra, 43 Cal.4th at pp. 65–66.)
    6
    Johnson was an action by a trained and certified heating, ventilation, and air
    condition (HVAC) technician who sued a manufacturer of air conditioning equipment,
    based on the manufacturer’s failure to warn of the potential hazards of exposure to R-22,
    a hydrochlorofluorocarbon refrigerant. The manufacturer presented undisputed
    evidence—including from both side’s experts—that HVAC technicians could reasonably
    be expected to know of the hazard. In short, the danger created by exposing refrigerant to
    high heat and flame was well known within the community of HVAC technicians to
    which plaintiff belonged. (Johnson, 
    supra,
     43 Cal.4th at pp. 63,64, & 75.) That was the
    evidence that caused Johnson to lose: he was a sophisticated user.
    There is no such evidence here. And Johnson, the only authority on which the
    Pennsylvania federal court relied, has no application to the facts here, as illustrated by
    Stewart v. Union Carbide Corp. (2010) 
    190 Cal.App.4th 23
    , 28–30 (Stewart); and
    Pfeifer v. John Crane, Inc. (2013) 
    220 Cal.App.4th 1270
    , 1290-1298 (Pfeifer).
    Stewart—a case heavily relied on by appellants and not even mentioned in
    respondent’s brief—arose out of a multi-million dollar judgment in favor of a former
    plumber who had contracted mesothelioma after working on many construction projects
    near drywallers who regularly used a joint compound supplied to the drywallers by
    appellant Union Carbide that contained asbestos. (Stewart, supra, 190 Cal.App.4th at
    pp. 25–26.) On appeal, Union Carbide argued that the trial court had erred in not
    instructing the jury that, pursuant to Johnson, “ ‘the sale of a raw material to a
    sophisticated intermediary purchaser who knew or should have known of the risks of that
    raw material cannot be the legal cause of any harm the raw material may cause.’ ” (Id. at
    p. 28.) The Court of Appeal disagreed, holding as follows: “Johnson did not impute an
    intermediary’s knowledge to the plaintiff, or charge him with any knowledge except that
    which had been made available to him through his training and which, by reason of his
    profession and certification, he should have had. In contrast, Union Carbide’s proposed
    instruction is not based on the theory that Larry Stewart had the opportunity to acquire
    any knowledge of the dangers of asbestos, let alone the obligation to do so. Instead, it
    contends that its customers, Hamilton and USG, knew or should have known (from
    7
    public sources) of the dangers of asbestos, and that its duty to warn Stewart is measured
    by the knowledge Hamilton and USG should have had. It is apparent that such a theory
    has nothing to do with Johnson. [¶] . . . [¶]
    “Union Carbide cites authority involving the liability of a supplier to an employee
    of a sophisticated purchaser who is the employer. The employer-employee relationship is
    different than the relationship between a sophisticated user intermediary and an unknown
    number of nonemployees who may at some point work with the sophisticated purchaser’s
    product.
    “We note, too, that although Union Carbide alludes to the sophisticated
    intermediary doctrine, that doctrine, where it applies at all, applies only if a manufacturer
    provided adequate warnings to the intermediary. [Citations.] Union Carbide did not seek
    an instruction under that theory, but instead argued that it was entitled to rely on
    intermediaries to acquire their own knowledge and to provide their own warnings. We
    see no basis in law for such an instruction. Union Carbide gave no warning and could not
    therefore rely upon the intermediary, even if sophisticated, to pass on or give warnings.
    If both Union Carbide and the sophisticated intermediary failed to give warnings, that
    should not absolve Union Carbide of responsibility.” (Stewart, supra, 190 Cal.App.4th at
    pp. 28–30.)
    In short, the Stewart court concluded that Johnson did not impute an
    intermediary’s knowledge to the plaintiff, or charge him with any knowledge except that
    which had been made available to him through his training and which, by reason of his
    profession and certification, he should have had. Crane produced no such evidence here.
    Just last year the Pfeifer court made this even clearer when it affirmed a
    substantial damage award to husband and wife plaintiffs—who, not incidentally, had
    sued Crane. Plaintiffs William and Anne Pfeifer sued Crane, Inc. (referred to as JCI in
    the court’s opinion), alleging that William’s mesothelioma was caused by his work with
    JCI gaskets and packing during his tenure in the Navy from 1963 to 1970, and while he
    was a civilian employee repairing boilers from 1971 to 1982. At trial, JCI’s corporate
    representative testified that in 1981 JCI created a gasket safety data sheet for distribution
    8
    to its employees which stated that overt exposure to asbestos caused asbestosis and
    cancer. Customers only received a copy upon request. In 1983, JCI first began placing
    warnings on its products regarding the hazards of asbestos. (Pfeifer, supra,
    220 Cal.App.4th at p. 1282.)
    JCI submitted a proposed instruction on the “sophisticated user” defense, stating
    that JCI was not liable for its failure to warn William regarding the hazards of asbestos
    because the Navy had greater knowledge of those hazards than JCI. The trial court
    rejected the instruction and directed a verdict barring the application of the proposed
    sophisticated user defense. The jury returned special verdicts in favor of the Pfeifers for
    more than $21 million dollars. JCI appealed on several grounds, including that the trial
    court erred in both rejecting JCI’s instructions regarding its “sophisticated user” defense,
    and directing a verdict on the defense. (Pfeifer, supra, 220 Cal.App.4th at
    pp. 1283-1284, & 1292.)
    Rejecting that argument, the Court of Appeal noted that the Supreme Court’s
    opinion in Johnson did not involve a “sophisticated user intermediary,” and thus, as
    Stewart had noted, “the Supreme Court did not expressly authorize the imputation of an
    intermediate sophistication to the ultimate user [citing Stewart]. Furthermore, an
    examination of Johnson establishes that the court recognized the issue now before us, but
    did not decide it.” (Pfeifer, supra, 220 Cal.App.4th at p. 1295.) On the following page,
    the Pfeifer court reiterated that our Supreme Court had “declined to decide whether a
    plaintiff’s employment or servant relationship with a sophisticated intermediary user
    necessarily shields the defendants from liability.” (Id. at p. 1296) Pfeifer then directly
    addressed that issue, holding as follows:
    “We therefore turn to that issue. In our view, to the extent Johnson provides
    guidance on the issue, it impliedly repudiates JCI’s contention. As noted above . . . the
    Supreme Court concluded that “ ‘under the sophisticated user defense, the inquiry
    focuses on whether the plaintiff knew, or should have known, of the particular risk of
    harm from the product giving rise to the injury.’ ” (Johnson, supra, 43 Cal.4th at p. 71,
    9
    italics added.) Thus, in actions by employees or servants, the critical issue concerns their
    knowledge (or potential knowledge), rather than an intermediary’s sophistication.
    “This conclusion flows directly from [Restatement Second of Torts] section 388
    itself. Under section 388, a supplier of a dangerous item to users ‘directly or through a
    third person’ is subject to liability for a failure to warn, when the supplier ‘has no reason
    to believe that those for whose use the [item] is supplied will realize its dangerous
    condition.’ Accordingly, to avoid liability, there must be some basis for the supplier to
    believe that the ultimate user knows, or should know, of the item’s hazards. In view of
    this requirement, the intermediary’s sophistication is not, as matter of law, sufficient to
    avert liability; there must be a sufficient reason for believing that the intermediary’s
    sophistication is likely to operate to protect the user, or that the user is likely to discover
    the hazards in some other manner. The fact that the user is an employee or servant of the
    sophisticated intermediary cannot plausibly be regarded as a sufficient reason, as a matter
    of law, to infer that the latter will protect the former. We therefore reject JCI’s
    contention that an intermediary’s sophistication invariably shields suppliers from liability
    to the intermediary’s employees or servants.” (Pfeifer, supra, 220 Cal.App.4th at
    pp. 1296–1297, fn. omitted.)
    The Pfeifer court then concluded its rejection of JCI’s argument, stating that “The
    trial court thus properly declined to give JCI’s proposed instructions, as they erroneously
    stated that employees of a sophisticated user are, by virtue of their employment, deemed
    to be sophisticated users.” (Pfeifer, supra, 220 Cal.App.4th at pp. 1297-1298.)
    As Johnson, Stewart, and Pfeifer demonstrate, 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.
    An additional reason to reject application of collateral estoppel against appellants
    here is that it would work an injustice. As Witkin describes it, “Application of the
    doctrine of collateral estoppel to questions of law is largely recognized by dicta. Most of
    the cases apply the sweeping exception declared in the first Restatement that ‘in any
    10
    event it is not conclusive if injustice would result.’ (See Louis Stores v. Department of
    Alcoholic Beverage Control (1962) 
    57 Cal.2d 749
    , 757; Chern v. Bank of America (1976)
    
    15 Cal.3d 866
    , 872; Bleeck v. State Bd. Of Optometry (1971) 
    18 Cal.App.3d 415
    , 430;
    9 Cal. Western L.Rev. 115 [avoiding collateral estoppel in multiple party tort litigation].)
    [¶] The Second Restatement of Judgments, § 28(2) states a similar exception: ‘to avoid
    inequitable administration of the laws.’ (See Rest. 2d Judgments, § 28, Comment c;
    Rutherford v. California (1987) 
    188 Cal.App.3d 1267
    , 1282.)” (7 Witkin, Cal. Procedure
    (5th ed. 2008) Judgment, § 443, p. 1097.)
    One last observation is apt: this was not, as Crane contends in the first section of
    its brief, a case involving a “split” cause of action. Although Crane suggests that “this
    case involves issue, and not claim, preclusion,” it contends the action involves the
    “splitting” of a cause of action, because appellants sought relief from some defendants
    in the Pennsylvania federal court and from others in this action in California state court.
    We disagree. As noted at the beginning of our opinion, while this action and the federal
    court action both involved the decedent’s death from mesothelioma, the actions were
    brought against different producers of asbestos-containing materials, with different
    defendants involved in the two actions. That is not a splitting cause of action. Again,
    Witkin is apt: “If the defendants are both jointly and severally liable, joinder is not
    mandatory but permissive, and the plaintiff, although he or she has but one cause of
    action, may sue one defendant first and another later. Despite the theoretical incongruity,
    the plaintiff is not barred in the second action because the defense of res judicata is
    available only when both the cause of action and the parties are the same.” (4 Witkin,
    supra, Pleading, § 65, p. 124, italics added; see also 7 Witkin, Cal. Procedure, supra,
    Judgment, § 452.)
    DISPOSITION
    The judgment is reversed and the case remanded to the trial court with instructions
    11
    to vacate its order granting summary judgment for Crane and enter an order denying
    Crane’s motion for summary judgment.
    _________________________
    Richman, J.
    We concur:
    _________________________
    Kline, P.J.
    _________________________
    Brick, J.*
    *
    Judge of the Alameda County Superior Court, assigned by the Chief Justice pursuant to
    article VI, section 6 of the California Constitution.
    12
    Filed 10/22/14
    CERTIFIED FOR PUBLICATION
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    FIRST APPELLATE DISTRICT
    DIVISION TWO
    KIMBRA GOTTSCHALL et al.,
    Plaintiffs and Appellants,
    A136516
    v.
    CRANE CO.,                                         (San Francisco City & County
    Super. Ct. No. CGC-10-275486)
    Defendant and Respondent.
    THE COURT:
    The opinion in the above-entitled matter filed on October 8, 2014, was not
    certified for publication in the Official Reports. For good cause appearing and pursuant
    to California Rules of Court, rule 8.1105, the opinion in the above-entitled matter is
    ordered certified for publication in the Official Reports.
    Dated: ______________                             ___________________________
    Kline, P.J.
    1
    Trial Court:                                  Superior Court of San Francisco City and
    County
    Trial Judge:                                  Honorable Teri L. Jackson
    Attorney for Plaintiffs and Appellants:       Brayton Purcell, Alan R. Brayton, Lloyd F.
    LeRoy, Richard M. Grant
    Attorneys for Defendant and Respondent:       K & L Gates, Michele C. Barnes,
    Daniel W. Fox, Michael J. Ross
    2
    

Document Info

Docket Number: A136516

Filed Date: 10/22/2014

Precedential Status: Precedential

Modified Date: 10/30/2014