In most strict products liability cases, the question of whether something is a “product” for strict products liability purposes is assumed. As noted in the Restatement [Third] of Torts, Products Liability §19, Comment a (1998), however, because no clear definition of what constitutes a “product” for products liability purposes exists, courts must make a fact-specific inquiry to determine whether something is or is not a product to which strict liability may be attached.
Recently, in Donald J. Terwilliger v. Beazer East Inc. et al., the NYS Court of Appeals examined whether coke ovens were “products” subject to products liability claims under a failure to warn or “structures” resulting from the performance of a contract for construction services. Donald R. Terwilliger died from lung cancer after working almost 30 years in the coke ovens at Bethlehem Steel in Lackawanna, New York. Terwilliger’s estate subsequently brought a strict products liability and negligence action against Honeywell International, Inc.––a successor in interest to Allied Chemical Corporation’s Wilputte Coke Oven Division––and others based on the defendants’ alleged failure to warn. The plaintiff alleged Terwilliger’s cancer death was caused by exposure to toxic emissions from the industrial coke ovens at Bethlehem Steel, which were manufactured, installed, and maintained by Honeywell’s predecessor.
Honeywell moved for summary judgment, arguing that, as a matter of law, it was not subject to strict products liability as a manufacturer because the coke ovens were not “products” that should have had a duty to warn attached. Honeywell also argued that, as a service provider, it was not subject to strict products liability because the contract under which it designed and built the coke ovens was primarily for services, not the sale of products.
In support of its motion, Honeywell cited City of Lackawanna v. State Board of Equalization & Assessment, in which the Court of Appeals held that, under NY Real Prop. Tax Law § 102(12)(f), Bethlehem’s coke ovens were taxable real property, not tax-exempt “movable machinery.” The Erie County Supreme Court, however, denied Honeywell’s motion for summary judgment, holding that the coke ovens were products that subjected Honeywell to strict liability as a products manufacturer. The court further held that, because Honeywell was in the business of selling coke ovens, the transaction in which Honeywell incidentally built the coke ovens at Bethlehem was more akin to a sale of goods.
In Matter of Eighth Jud. Dist. Asbestos Litig., the Appellate Division, Fourth Department reversed the trial court’s decision and granted Honeywell’s motion for summary judgment, holding that the coke ovens were not products for purposes of strict product liability. The Fourth Department concluded that, due to their size and immovable nature, the coke ovens constituted fixtures on real property and, as such, could not be considered products for purposes of strict products liability.
In a 4-2 ruling, the NYS Court of Appeals reversed the Appellate Division’s order, concluding Honeywell had not met its burden of showing on summary judgment that the coke ovens at issue were not products to which strict liability could be attached under a failure-to-warn theory. The court held that the Appellate Division’s reliance on City of Lackawanna was misplaced because the court’s conclusion about the nature of the coke ovens was limited in scope to the exemption from NY Real Prop. Tax Law § 12(f) and did not render them outside the realm of strict liability. The court concluded the coke ovens fell “squarely within the category of products to which liability has attached in the failure-to-warn context.”
The Terwilliger decision is significant because no bright-line distinction exists between products and structures or improvements for purposes of strict products liability. All parties involved in the commerce of products with a potential for causing injury should be aware of the impact of the decision on failure-to-warn claims. The Court of Appeals made clear that the question of whether something is a product within the context of strict products liability is inextricably intertwined with the fact-specific question of whether the defendant has a duty to warn.
If you have any questions regarding the content of this alert, please contact Shannon Howley, associate, at showley@barclaydamon.com or another member of the firm’s Torts & Products Liability Defense, Mass & Toxic Torts, or Real Property Tax & Condemnation Practice Areas.