By Susan Engstrom
Workers in a microwave popcorn packaging facility could pursue a claim alleging that a manufacturer of butter flavoring failed to warn them that its product contained diacetyl, exposure to which caused them to develop a respiratory disease called "popcorn lung," the U.S. Court of Appeals for the Seventh Circuit ruled, finding that fact issues existed as to whether the sophisticated intermediary doctrine applied to defeat the claim. However, the workers’ common law negligence claim against the company was preempted by the Indiana Product Liability Act, and their design defect claim failed for lack of sufficient expert evidence. Thus, the manufacturer was entitled to summary judgment on those claims (Aregood v. Givaudan Flavors Corp., September 13, 2018, Brennan, M.).
The plaintiffs worked in various capacities at a ConAgra microwave popcorn plant in Indiana. They alleged that their exposure to diacetyl-containing butter flavors, which were manufactured and sold to ConAgra by Givaudan Flavors Corporation, caused them to develop respiratory injuries. The workers asserted four substantive claims: (1) strict liability for providing a defective product; (2) failure to warn as to the propensity of butter flavoring to cause severe respiratory disease; (3) common law negligence; and (4) defective product design. The district court granted summary judgment to Givaudan on the workers’ claims for strict liability, negligence, and failure to warn [see Products Liability Law Daily’s June 2, 2017 analysis], and subsequently granted summary judgment to the company on the design defect claim. The workers appealed.
Failure to warn. The workers alleged that as a result of Givaudan’s failure to adequately instruct and warn of the dangers of diacetyl, the company’s butter flavorings were defective and unreasonably dangerous when put to their reasonably anticipated use. According to the workers, the material safety data sheets that accompanied Givaudan’s shipments of the butter flavoring to ConAgra did not disclose how much (or even if) diacetyl was present and failed to include warnings that inhalation of fumes from butter flavorings containing diacetyl could cause permanent lung injury, or bronchiolitis obliterans. Givaudan asserted that it had reasonably relied on ConAgra, the workers’ sophisticated and knowledgeable employer, to warn its employees of any dangers associated with Givaudan’s butter flavorings.
Under Indiana law, a manufacturer has a duty to warn reasonably foreseeable users of latent dangers inherent in a product’s use. Although this duty is usually non-delegable, Indiana has established an exception to this general rule: the sophisticated intermediary doctrine. The doctrine is applicable if: (1) the product is sold to an intermediary with knowledge or sophistication equal to that of the manufacturer; (2) the manufacturer adequately warns this intermediary; and (3) the manufacturer can reasonably rely on the intermediary to warn the ultimate consumer.
The district court had concluded that the sophisticated intermediary doctrine applied to defeat the workers’ failure to warn claim because: (1) Givaudan had not discovered any connection between respiratory problems at its flavoring plant and diacetyl in the 1990s; and (2) ConAgra knew as much if not more than Givaudan about the danger of butter flavorings. With respect to the first reason, however, the appellate panel determined that the district court failed to properly account for evidence showing occurrences of bronchiolitis obliterans at Givaudan’s own plant, the resulting injuries to Givaudan’s employees, the company’s investigation of the outbreak, and the development and implementation of an employee protection program at the flavoring plant related to the outbreak.
As for the district court’s second reason, the record revealed factual disputes and discrepancies between what Givaudan knew and what ConAgra knew. For example, Givaudan had received information from its trade association about diacetyl’s harmful effects, and an investigation listed diacetyl as one of the suspected causes of Givaudan’s bronchiolitis obliterans outbreak, which had sickened two employees and led to the death of another. From these facts, a jury could conclude that Givaudan knew more than ConAgra about diacetyl and its harmful effects. Another discrepancy existed as to the extent of the companies’ knowledge regarding when employees should, or need not, use a respirator when handling diacetyl or products containing diacetyl.
Viewing the evidence in favor of the ConAgra workers, the Seventh Circuit concluded that the sophisticated intermediary doctrine did not fit. ConAgra was not bound by the same regulations as Givaudan, as an employer can rely on the material safety data sheets provided by the manufacturer. ConAgra relied on the warnings and safe handling instructions on those sheets, and Givaudan knew this. Givaudan did not inform ConAgra of the possibility that diacetyl could have been the source of the bronchiolitis obliterans outbreak among Givaudan’s employees. Because a reasonable jury could conclude that Givaudan failed to discharge its duty to warn ConAgra’s workers of the dangers of diacetyl, summary judgment should not have been granted on the workers’ failure to warn claim.
Common law negligence. However, the appellate panel agreed with the district court that the workers’ common law negligence claim against Givaudan was subsumed by the Indiana Product Liability Act (IPLA), which applies to all claims "brought by a user or consumer." Because ConAgra incorporated the butter flavorings into its microwave popcorn, it was the first consuming entity, and not a "middle man" as the workers argued. Thus, ConAgra was a user or consumer within the meaning of the IPLA, as were its employees.
Design defect. Finally, the workers argued that Givaudan’s butter flavorings were designed defectively because they contained diacetyl. The workers referred to testimony by their expert witness, who opined that butter flavorings containing diacetyl caused the lung disease from which they suffered. They also referred to Givaudan’s expert witness, who testified to the availability and use of diacetyl-free butter flavors since before Givaudan supplied products to ConAgra. According to the appeals court, however, none of this evidence showed that Givaudan’s butter flavorings were defective. The workers merely offered conclusory factual assertions without explanation or supporting data. No expert testimony was provided on the costs or benefits of a diacetyl-free butter flavor or on an alternative, cost-effective butter flavoring design that would have prevented bronchiolitis obliterans. In fact, the workers admitted that many diacetyl substitutes have been linked to lung disease. Thus, their design defect claim failed, and the district court did not err in granting summary judgment to Givaudan on that claim.
The case is No. 17-3390.
Attorneys: Jonathan M. Soper (Humphrey, Farrington & McClain, PC) for Gregory Aregood, Jr. Stephen J. Butler (Thompson Hine LLP) and Dennis F. Cantrell (Cantrell, Strenski & Mehringer, LLP) for Givaudan Flavors Corp.
Companies: Givaudan Flavors Corp.; J. Manheimer, Inc.
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