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California Supreme Court Adopts Sophisticated Intermediary Doctrine As Defense in Failure to Warn Cases

June 01, 2016

The California Supreme Court has formally adopted the “sophisticated intermediary doctrine” as a defense in products liability cases. Under this doctrine, the supplier of a product discharges its duty to warn end users about known or knowable risks in the use of the product if the supplier (1) provides adequate warnings to the product’s immediate purchaser, or sells to a sophisticated purchaser that knows, is aware, or should be aware of the specific danger, and (2) reasonably relies on the purchaser to convey appropriate warnings to downstream users who will encounter the product. Webb v. Special Electric Co., 2016 WL 2956882 (Cal. 2016).

The sophisticated intermediary doctrine has its roots in the Restatement Second of Torts § 388, comment n, and the Restatement Third of Torts, Products Liability § 2, comment i. It is an affirmative defense in failure to warn cases sounding in either strict liability or negligence. To establish the defense, the supplier defendant must prove that it either adequately warned the intermediary or knew the intermediary knew or should have known of the specific hazard, and that it reasonably relied on the intermediary to transmit the warnings.

In most cases, a warning to the intermediary will be necessary. However, because sophistication obviates the need for warnings because a sophisticated purchaser already knows or reasonably should know the relevant risks, warnings are not required if the intermediary was so sophisticated that it actually knew or reasonably should have known about the potential harm.

Sophistication alone is not enough. It must also be reasonable for the supplier to rely on the purchaser to warn others who will foreseeably encounter the hazardous product. Whether a supplier’s reliance is reasonable is determined using a three factor test that weighs the gravity of the risks posed by the product, the likelihood that the intermediary will convey the warning to the end user, and the feasibility and effectiveness of warning directly the end user.

An important limitation is that a supplier who knows or should know of a substantial risk that the intermediary might inadequately or fail to warn, or that the warnings might not reach the end user, cannot ignore those facts in reliance on the doctrine.

The most readily apparent application of the sophisticated intermediary doctrine is in cases involving the bulk supply of raw materials. In such cases, the supplier manufacturer has no way to identify the ultimate end users of the product or to communicate with those users. Such products are often delivered in tank trucks, box cars, shipping containers, or large industrial drums and then repackaged, reformulated, or integrated into another product by the intermediary. Even if the raw material supplier could label the product with warnings, it is unlikely that any warning will reach the end user. As the California Supreme Court observed, in such circumstances, “a raw material supplier can often do little more than furnish the manufacturer with appropriate warnings and rely on the manufacturer to pass them along.” Direct warnings to the end user are simply infeasible.

There are no Arkansas cases adopting or interpreting the sophisticated intermediary doctrine.

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