Seventh Circuit Finds the Duty to Warn Can Extend to Packaging Manufactured by Another Company

01 August 2023 Manufacturing Industry Advisor Blog
Author(s): Gregory N. Heinen

Can a company be found liable for failure to warn about hazards of another company’s product used in packaging for its own product?  What about when the company wasn’t warned that packaging could contain anything potentially hazardous? According to the Seventh Circuit Court of Appeals in Johnson v. Edward Orton, Jr. Ceramic Foundation, 71 F.4th 601 (7th Cir. 2023), the answer to both questions may be yes. There, the Court applied a heightened duty to warn standard to find the defendant product manufacturer potentially liable for failing to warn, even though it had not manufactured the potentially hazardous materials at issue.

The Seventh Circuit Reverses Summary Judgment for the Defendant on Failure to Warn

In Johnson, the defendant, a manufacturer, and seller of pyrometric cones used for ceramics, shipped its cones using packaging material including a mineral called vermiculite. Starting in 1975, the cone manufacturer purchased its packaging material from a separate company, which had allegedly extracted the vermiculite from mining sites that could also contain asbestos. It appears the cone manufacturer was not told the mineral could contain asbestos until 1981 – more than five years later after initially shipping products to the plaintiff – when the packaging company provided a Material Safety Data Sheet noting the vermiculite “contained less than 0.1% by weight of asbestos.” Id. at 606. It’s not clear whether even at that time, there was any specific warning provided about the potential hazards of asbestos.

Decades later, the cone manufacturer was sued by the plaintiff, acting as a representative of her husband’s estate after he passed away due to mesothelioma, potentially caused by exposure to asbestos. The decedent, a ceramics teacher, frequently used the manufacturer’s cones and had testified that the packaging material would “always create some dust,” which would regularly be “in [his] face.” Id.

The District Court granted the defendant’s motion for summary judgment on the claim of failure to warn. But the Seventh Circuit, applying Illinois law, reversed, and found the cone manufacturer potentially liable for failure to warn, though it did not mine or create the material and did not expressly know the contents of the packaging materials until years later.

The Seventh Circuit made clear that a manufacturer has a duty to warn when the manufacturer either (1) actually knows of a reasonable risk of harm relating to the product, or (2) reasonably should know of a reasonable risk of harm relating to the product. The Court held that duty to warn, whether rooted in strict liability or negligence, is considered in light of the “present state of human knowledge” at the time of the alleged failure to warn. Id. at 615. And even a manufacturer who does not create the product or incorporate it as a component, but instead uses it as packaging, is still held to this heightened standard.

The Court Finds That “Present State of Human Knowledge” in 1975 Provided “Constructive Knowledge” of Potential Asbestos Hazards

The Seventh Circuit first considered whether the cone manufacturer had a duty to warn through actual knowledge. The court determined that only after the manufacturer received the Material Safety Data Sheet, which specifically listed asbestos, did it have actual knowledge such that a duty to warn was present. So far, so good.

But the Court went on to consider whether the manufacturer nonetheless possessed constructive knowledge of hazards sufficient to establish a duty to warn. The Court warned that manufacturers are held to an expert degree of knowledge and should exhaust all available resources to stay abreast of any scientific developments related to their product – even when the developments relate to a product that accompanies it. At the time the manufacturer distributed the cones, multiple articles were publicly available detailing the packaging company’s vermiculite mining operations, including the presence of asbestos. There was no evidence the cone manufacturer was aware of these articles (and certainly couldn’t find them online, as early as 1963). Nevertheless, based on their mere existence, the court reasoned that the cone manufacturer reasonably should have known of the potential exposure to asbestos based on the present state of human knowledge at that time.

Ultimately, this constructive knowledge gave the cone manufacturer a potential affirmative duty to warn consumers, despite not receiving a direct warning of the potential hazards until years later, and despite the “present state of human knowledge” dating as far back as 1975, when asbestos-related litigation was in its infancy.

Key Takeaways from the Seventh Circuit’s Decision

Johnson provides at least two key takeaways regarding potential liability for failing to warn consumers.

First, a company could be found liable for failure to warn with regard to a product it does not manufacture and does not incorporate into its product. The duty to warn may encompass all materials that may come with the product when it reaches consumers.

Second, the knowledge standard for the duty to warn cases, at least under Illinois law, is the same whether in negligence or strict liability:  if the manufacturer knows or reasonably should know of the harm, there is an affirmative duty to warn. In Johnson, the manufacturer was held to a high standard of care requiring an “expert” degree of knowledge that, in effect, requires manufacturers to warn of all dangers understood by the “present state of human knowledge.” Id.

Best Practices for Manufacturers to Protect Against Duty to Warn Claims

Johnson is a good reminder to product manufacturers to be sure to consider potential risks inherent in all material aspects of any product being delivered to consumers – including packaging and other elements that are not part of the product itself. This will likely entail requesting information from any companies whose products will accompany the manufacturer’s products to the consumer, including technical information like material safety data sheets, whether such a product is a component of the manufacturer’s product or not.

Product manufacturers should also retain experienced counsel to advise them on the relevant standard of care in the jurisdictions in which they operate, with particular attention to states like Illinois that have a heightened, expert-level standard of care. Effective and up-to-date compliance programs are also key, to monitoring new developments relating to any products or materials being incorporated into the manufacturer’s products.

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