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Gray v. Badger Mining Corp.

March 18, 2004

LAWRENCE B. GRAY, APPELLANT,
v.
BADGER MINING CORPORATION, INDIVIDUALLY AND AS SUCCESSOR-IN-INTEREST TO THE C.A. CHIER SAND COMPANY, RESPONDENT,
CARPENTER BROTHERS, INC., ET AL., DEFENDANTS.



Court of Appeals

SYLLABUS BY THE COURT

1. The supplier of a product has a duty to warn the user of any foreseeable dangers associated with the product's intended use.

2. The learned intermediary defense to a product supplier's duty to warn was developed for the special circumstances of pharmaceutical suppliers and, on this record, will not be extended to the employer/employee relationship in an industrial environment.

3. Where genuine issues of material fact exist with respect to whether an employee is a sophisticated end user or his employer is a sophisticated intermediary, and whether the bulk supplier's warning to the employer was adequate, the employee's duty to warn claim cannot be decided on summary judgment.

4. The raw material/component part supplier defense to a product supplier's duty to warn does not apply to the duty to warn of the dangers associated with the use of the raw material apart from the finished product.

Reversed.

The opinion of the court was delivered by: Hanson, Justice.

Heard, considered, and decided by the court en banc.

OPINION

This appeal focuses on the district court's denial of a motion for summary judgment brought by a supplier of silica to dismiss the products liability claim of an injured foundry worker. The issue is whether the raw materials supplier, respondent Badger Mining Corp. (Badger Mining), breached a duty to warn the worker, appellant Lawrence B. Gray (Gray), of hazards associated with the use of silica in foundry processes. The court of appeals reversed the district court, holding that because Gray's employer, Smith Foundry, was a sophisticated purchaser and Badger Mining was a bulk supplier, Badger Mining had no duty to warn Gray of the dangers of silica dust. Because we conclude that there are genuine issues of material fact with respect to the sophistication of Gray and Smith Foundry and the adequacy of the warnings and instructions given by Badger Mining to Smith Foundry, we reverse the court of appeals.

Gray worked at Smith Foundry from 1951 until 1998, with the exception of a 2-year period in which he served in the infantry in Korea. Smith Foundry uses sand to create molds in which metal objects are cast. There is evidence that Badger Mining supplied sand*fn1 to Smith Foundry prior to 1981, and then again beginning in 1992. All of the sand was delivered by Badger Mining in bulk by pneumatic trucks.

Gray brought a products liability action against Badger Mining and other suppliers that manufactured and sold sand to Smith Foundry. Gray alleged that his repeated exposure to silica dust caused silicosis of the lungs. Gray's claims were based on negligence and strict liability for failure to warn and on breach of warranties of merchantability and fitness for the intended purpose.

Gray provided evidence that Badger Mining knew of special hazards involved in using sand for foundry processes. During the phase of the process where the sand mold is knocked off of the casting, the sand is pulverized to small sub-micron sized particles of dust. Gray points to several documents and to testimony of Badger Mining employees to show that Badger Mining had knowledge that conventional disposable respirators were ineffective to protect workers against the inhalation of sub-micron sized particles.

Badger Mining's Vice President and a member of its Health and Safety Committee, Timothy Wuest, was familiar with the 1992 recommendation of the National Industrial Sand Association that disposable respirators were "not recommended for routine use where exposure to respirable crystalline silica dust may occur." Wuest acknowledged that Badger Mining's safety director, Richard Chier, had conducted independent research in the early to mid 1980s and had determined that disposable respirators could not be used for an extended period of time because they did not provide a good seal. According to Wuest, Chier's conclusions caused Badger Mining to decide that disposable respirators would not be used by its own employees.

Richard Chier testified that, when customers asked, he recommended they use a double cartridge half-mask respirator. Badger Mining's Quality and Technical Assistance Director, Larry Beuthin, testified that he was familiar with the silica hazards of the foundry industry and that he would not use a disposable respirator for an extended period because it does not provide a good seal—"If you hold your hand over the paper mask while you're in there, you get a good seal. But if you're going to work with your hands, you do not get a good, tight seal around the edges of those fiber, paper masks."

The parties offered differing views of the adequacy of the warnings and safety instructions that Badger Mining provided to Smith Foundry. Gray provided evidence that Badger Mining did not provide warnings or safety instructions with shipments made prior to 1981. When Badger Mining renewed its sales to Smith Foundry in 1992, its shipments were accompanied by warnings and safety instructions printed on a Material Safety Data Sheet ("MSDS") that was supplied pursuant to federal regulations known as the "Hazard Communication Standards." See 29 C.F.R. § 1910.1200 (2003). Although Wuest testified that the instructions on Badger Mining's MSDS specifically said that disposable respirators were not approved, the MSDS actually stated:

CONTAINS FREE SILICA, AVOID BREATHING DUST FROM THIS PRODUCT. PROLONGED EXPOSURE MAY CAUSE DELAYED LUNG INJURY (SILICOSIS). EXCESSIVE INHALATION OF DUST MAY RESULT IN RESPIRATORY DISEASE, INCLUDING SILICOSIS, PNEUMOCONIOSIS, AND OTHER PULMONARY FIBROSIS. THE INTERNATIONAL AGENCY FOR RESEARCH ON CANCER (IARC) HAS EVALUATED IN VOLUME 42, MONOGRAPHS ON THE EVALUATION OF THE CARCINOGENICITY RISK OF CHEMICALS TO HUMANS, SILICA AND SOME SILICATES (1987), THAT THERE IS "SUFFICIENT EVIDENCE FOR THE CARCINOGENICITY OF CRYSTALLINE SILICA TO EXPERIMENTAL ANIMALS" AND "LIMITED EVIDENCE" WITH RESPECT TO HUMANS.

The MSDS also instructed that, for "protective equipment," purchasers should "use NIOSH or MSHA approved dust respirators." Gray argues that this warning and the accompanying instructions were inadequate because disposable respirators are among the National Institute for Occupational Health and Safety (NIOSH) and Mine Safety and Health Administration (MSHA) approved respirators.

The parties also offered differing views of the level of knowledge possessed by Gray and Smith Foundry of the hazards of silica dust. Gray argues that Smith Foundry possessed only a general knowledge of the hazards of silica and lacked the special knowledge possessed by Badger Mining, that disposable respirators were ineffective. Gray also contends that he personally was unaware of the extent of the danger associated with breathing silica dust. Gray testified that he believed that he was protected by the disposable respirators provided by Smith Foundry.

Badger Mining argues that Gray had long been concerned with the dangers of breathing silica dust. Badger Mining also argues that Smith Foundry was aware of the dangers of silica through its involvement with the American Foundry Association (AFS) and the occupational health information it received from other industry bodies and from government agencies. Badger Mining argues that Smith Foundry's awareness of the dangers of silica dust is proven by the preventative actions it took, such as installing a dust collection system; monitoring air quality to ensure safe levels; providing respirators to its employees since the 1960s; and requiring yearly chest x-rays since the 1950s. Badger Mining also argues that Smith Foundry relied on 3M to provide respiratory protection and had the air quality of the work place monitored by its insurance companies.

Each defendant filed a motion for summary judgment. Badger Mining's motion was on the grounds that it owed no duty to warn Gray because it sold raw material to a sophisticated purchaser. The district court denied all motions. Prior to trial, Gray settled with all defendants except Badger Mining. After the district court denied Badger Mining's renewed summary judgment motion, the parties stipulated to the entry of judgment for Gray that would be either $17,500 or $75,000, depending on the outcome of this appeal. To enable Badger Mining to appeal the legal issues presented by its motion for summary judgment, the stipulation provided in part:

2. The judgment entered pursuant to this stipulation is intended to allow appellate resolution of legal issues. The judgment is not based upon an adjudication on the merits and shall have no collateral estoppel effect;

3. Defendant Badger Mining Corp.'s rights to appeal the trial court's denial of its motion for summary judgment are preserved as part of this agreement. Nothing herein is intended to waive, impair, or limit the rights of defendant Badger Mining Corp. to appeal, it being the intention of the parties to facilitate the appellate review without the need for further litigation;*fn2

The court of appeals reversed the district court. Gray v. Badger Mining Corp., 664 N.W.2d 881, 887 (Minn. App. 2003). The court of appeals stated:

We find persuasive the reasoning in cases in the Eighth Circuit and other jurisdictions that have ruled on the applicability of the sophisticated-purchaser defense when a foundry employee who developed silicosis sued a silica sand supplier for failing to warn either the purchaser or employee. These industry-specific cases provide us with persuasive reasoning to support the legal conclusion that a bulk supplier of ...


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