New York's Highest Court Set to Clarify Years of Conflicting Precedent in Product Liability Cases

New York's highest Court has the opportunity to reaffirm its "stream of commerce" approach to product liability cases through its upcoming decision in Dummit v Crane Co. and to clarify years of conflicting precedent in New York City's Asbestos Litigation. The Court of Appeals recently heard oral argument in the case and is expected to render a decision in the coming months.

Over two decades ago, the Court set forth the circumstances under which a manufacturer or seller of a non-defective product can be held liable for another's injury-causing product when the two products are used together, through its decision in Rastelli v Goodyear Tire & Rubber Co., 79 N.Y.2d 289 (1992). According to the longstanding precedent in Rastelli, a manufacturer can only be held liable for harm caused by a third-party's product used in conjunction with the manufacturer's product when the manufacture (1) controlled the production of the defective product, (2) derived some benefit from the sale of the defective product, or (3) placed the defective product in the stream of commerce.

In Rastelli, the decedent was killed while inflating a tire manufactured by Goodyear when the tire rim made by a different company exploded. While Goodyear was aware that these rims could be used with its tires, the Court determined that Goodyear did not have a duty to warn regarding the use of these rims as it had no control over the production of the rims, derived no benefit from their sale and did not put the rims in the stream of commerce. The Court further rejected the plaintiff's arguments that Goodyear should be held liable because it was foreseeable that its tires could be used with these rims. Despite the Court's finding in Rastelli, the foreseeability argument gained momentum in subsequent cases, especially after a First Department decision in Berkowitz v. A.C.& S., Inc., 288 A.D.2d 148, 733 N.Y.S.2d 410 (2001). At issue in Berkowitz was whether the trial court properly granted summary judgment to a pump manufacturer whose pumps were covered with asbestos-containing insulation that the pump manufacturer did not supply or manufacture. The First Department affirmed the denial of summary judgment to the pump manufacturer, Worthington, and noted that it did not "necessarily appear that [the manufacturer] Worthington had no duty to warn concerning the dangers of asbestos that it neither manufactured nor installed on its pumps. While it may be technically true that its pumps could run without insulation, defendants' own witness indicated that the government provided certain specifications involving insulation, and it is at least questionable whether pumps transporting steam and hot liquids on board a ship could be operated safely without insulation, which Worthington knew would be made out of asbestos" Id. at 149.

While Berkowitz did not clearly establish that foreseeability is an issue in these cases, there have been numerous decisions that have cited to Berkowitz for support of the foreseeability argument. This has especially been true in the context of asbestos cases that have held that an equipment manufacturer has a duty to warn for every asbestos-containing product that could, arguably, have been foreseeably used with the manufacturer's product. However, several courts, including federal courts applying New York law, have agreed that Rastelli continues to be the correct statement of New York's product liability law. See Surre v Foster Wheeler LLC, 831 F. Supp. 2d 797 (S.D.N.Y 2011); Kiefer v Crane Co., 2014 WL 6778704 (S.D.N.Y. Feb 3, 2014). Now, in Dummit, after the Appellate Division unanimously rejected this "foreseeability" test, the Court of Appeals has the opportunity to pronounce the correct interpretation of Rastelli and its stream of commerce approach to product liability in New York. During oral argument, the Court appeared reluctant to pronounce any bright line rule and focused on the manufacturer's knowledge and recommendation that asbestos-containing replacement gaskets be used with its valves. As such, the question of the manufacturer's knowledge that a potentially dangerous product could be, or will be, used with its product may remain in the analysis on whether there is a duty to warn.