July 20, 2009

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By Mark A. Kinzie 

When is a component manufacturer liable for unsafe or defective products?

Component parts in the U.S. include everything from raw materials and bulk products to smaller products intended for integration into other, larger assemblies that become the final product sold to the user.  Generally, component part manufacturers are liable when the component itself is defective or when the component manufacturer substantially participates in the integration of the component into the design of another product.  See Restatement (Third) of Torts: Product Liability (1998) §5 at p130.  Where the final product fails but the failure is not directly attributable to a component because that component was not defective in its design, manufacturing, or warning, the component manufacturer may escape liability under those circumstances.  Id.; see Sepulveda-Esquivel v. Central Machine Works, Inc., 84 P.3d 895, 899 (Wash.App. 2004).  This is a simple rule—the component manufacturer is not liable unless its component is defective.  However, its correct application varies depending on the individual product.  

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Substantial participation in the integration of the component may take the form of component seller being invited to participate in the design or modification of a component to fit the buyer’s needs or the buyer may rely on the manufacturing processes, skill, technique, and resources of the component manufacturer to obtain a product that best serves the unique requirements of the final product.  Substantial participation rests on the degree of reliance by the final product manufacturer on the component manufacturer to make or recommend a component upon which the final product has a special dependence for its use, fit, function, or purpose.  Restatement (Third) at §5, p135-36.  For these reasons, mere integration of a component into another product does not shield the component manufacturer from liability.  Id. at § 5, p133; see Toshiba Intern. Corp. v. Henry, 1252 S.W.3d 774, 779) (Tex.App. 2004).   

For example, a component manufacturer of a valve may substantially participate in the design of a valve so that it can be integrated into a particular type of tank.  Where the tank fails because of its defective steel siding, the component manufacturer may not liable because the defect is unrelated to the valve or the overall incorporation of the valve into the final product.  Where the tank fails because it did not control the volume allowed in the tank, which failed because of defective steel siding, the component manufacturer may be liable or may share liability with the final product manufacturer.  For this reason, even in circumstances involving a substantial integration, the defect must have a causal connection to the component product.   See Restatement (Third) at §5, pgs 132-36. 

Further, the component manufacturer of a swimming pool liner, which does not contain depth markers, may be liable along with the manufacturer of the final product where the pool user dives into the pool, sustains an injury, and claims that the depth markers would have warned him against diving into shallow water.  Here, the component manufacturer did nothing to integrate the pool liner into the design of the final swimming pool product but is liable based upon a defect in the pool liner itself.  Id.   

In some circumstances, the absence of a substantial participation in the integration of the component into the final product may shield the component manufacturer from liability.  Ultimately, component manufacturers are liable for unsafe and defective products that they design, manufacture, or for which they fail to warn, that are the cause of plaintiff’s injuries or damages.  This may require the component manufacturer to provide warnings and instructions with components or intended use statements that identify the component’s known foreseeable use or its unfinished condition. 

When must a component manufacturer provide a warning?

The foreseeable use of the component may require a warning associated solely with that component.  Component part manufacturers that make incomplete products face a variety of challenges because their components may be put to different uses depending on how they are integrated into and how they function within the final products.  Generally, where the component manufacturer of an incomplete product cannot foresee the use of the final product, the component manufacturer does not have a legal duty to foresee special features related to the final product, including alarms, guards, and safety devices.   

Even so, component manufacturers must consider the specific uses of their component products and communicate those uses to their purchasers. These uses will change depending on the final product, some of which are genuinely unforeseen by the component manufacturer.  Others are genuinely within the foreseeable use of the component manufacturer, especially where the component manufacturer exercised control over product specifications, provided a unique skill, technique, or resources to the final product manufacturer, or otherwise participated in the integration of the component into the final product.  A foreseeable use conference will identify both the foreseeable use and the foreseeable misuse of a manufacturer’s component parts, upon which reliable decisions about warnings and instructions may be made.  Reasonable, foreseeable uses and misuses identified in that conference will require the component manufacturer to provide warnings and instructions.   

Do Intended Use Statements protect the component manufacturer?

Where no warning is required, the component manufacturer best communicates about the product and best protects itself by capturing the status of the unfinished, non-integrated product through an intended use statement attached to and made contemporaneous with the product when it is sold.  For example, intended use statements are often used by and are given heightened application in products manufactured under military specifications and under special safety considerations and regulatory authority, such as medical device and limited-life aircraft component parts.  In this way, anyone deciding whether the status of a component product was incomplete, unfinished, or integrated would have available that data given to the purchaser at the time when the product was sold.   

An intended use statement provides this communication.  It states that the product is a component; is to be integrated into a larger, undesignated, final product; is incomplete in its current form; and requires completion in specific, identified phases, such as polishing, attachment, coating, marking, assembly, or other finishing.  Further, as discussed above, warnings and instructions may be required with the component depending on its foreseeable use in addition to the intended use statement as the intended use statement will not supplant the purpose or usefulness of the warning. 

Mark Kinzie is a principal at Averture, which is a law firm with its exclusive focus in product safety, product recalls, and regulatory compliance.  Their lawyers have experience in consumer products, sporting goods, medical devices, industrial products, and have technical backgrounds in manufacturing, pharmacy, and biochemistry. Contact him at (314) 862-7873, mark.kinzie@averture.net.