BOOCHEVER, Circuit Judge:
This appeal involves disputes between the defendant and third-party defendants in a products liability suit arising out of an alleged failure to provide adequate warnings. Technical Research Company (TRC), the original defendant in the products liability suit, appeals the district court's dismissal of Ashland Chemical Company, Columbia Paint Company, and Custom Furniture and Cabinets, Inc., third-party defendants, and appeals summary judgment in favor of Eastman Chemical Products, Inc., another third-party defendant. Eastman also challenges the dismissal of the other third-party defendants. We deny Ashland's and Columbia's appellate motions to dismiss because the unique circumstances of this case compel us to excuse Eastman's failure to file a formal notice of appeal. Since TRC filed a third-party complaint only against Eastman, however, it lacks standing to appeal the dismissals of the other third-party defendants and we grant those defendants' motions to dismiss as to TRC's appeal.
On the merits of the appeal, we find that summary judgment in favor of Eastman on TRC's claims was inappropriate because factual issues pertaining to the adequacy of Eastman's warnings remain to be decided. We also find that the district court erred in dismissing Eastman's third-party complaints against Ashland, Columbia, and Custom with prejudice. We therefore reverse and remand to the district court in order to determine the adequacy of Eastman's warnings.
In 1976, Thomas Bryant and his wife filed a products liability suit against TRC in Idaho state court. Bryant claims that he was exposed to a dangerous chemical in one of TRC's products during 1973 and 1974, and consequently contracted peripheral neuropathy.
The chain of distribution of the MBK and the lacquer thinner was as follows:
Bryant became ill in 1974. In 1975, his condition was diagnosed as neuropathy and traced to MBK exposure. After a long period of recovery, Bryant returned to work in 1977. Bryant's initial lawsuit was brought only against TRC. He claimed that the warnings TRC provided with T-6 were inadequate; therefore the product was defective. He sought damages of $557,000. TRC brought a third-party complaint for contribution and indemnity against the MBK manufacturer, Eastman. Eastman removed the case to Idaho federal district court based on diversity jurisdiction. 28 U.S.C. §§ 1332, 1441.
In federal court, Eastman brought third-party complaints against its distributor, Ashland, and the retailer, Columbia. After extensive discovery, Eastman brought a similar complaint against the employer, Custom. The plaintiff Bryant filed an amended complaint naming Eastman, Ashland, Columbia and TRC as direct defendants. Significantly, TRC never filed complaints against Ashland, Columbia or Custom. These three defendants were only in the lawsuit because of Eastman's third-party complaints and Bryant's amended complaint.
The parties filed several motions for summary judgment, dismissal, and judgment on the pleadings. Eastman, TRC and Columbia submitted affidavits regarding their knowledge of the link between MBK and neuropathy, and the extent of the instructions and warnings provided with the product. In support of its motion for summary judgment, Ashland filed a copy of its answers to TRC's interrogatories. These documents indicate disagreement over the extent and specificity of Eastman's warnings.
On June 14, 1979, the district court granted summary judgment to Eastman on TRC's third-party complaint. The court found that Eastman had provided an adequate warning to Ashland as a matter of law, and was not required to provide warnings to other members in the chain of distribution. The other defendants named in Eastman's third-party complaint, Ashland, Columbia and Custom, were dismissed because they were brought into the lawsuit
TRC filed a notice of appeal on August 8, 1979.
I. ASHLAND'S AND COLUMBIA'S MOTIONS TO DISMISS THE APPEAL
After TRC filed this appeal, Ashland and Columbia filed motions to dismiss. On March 3, 1980, a motions panel of the court referred the issue to this panel. We must first determine whether Eastman's failure to file a timely notice of appeal requires dismissal of Ashland and Columbia. We must also decide whether TRC has standing to appeal the district court judgments in favor of Ashland and Columbia.
The unique posture of this case raises difficult questions of appellate procedure and jurisdiction. In substance, Bryant is attempting to recover from any or all of the parties in the chain of distribution, with the exception of his employer, Custom.
Eastman's opposition to the motions to dismiss raises a difficult issue. The Federal Rules provide for protective or cross-appeals within 14 days of the first notice of appeal. Fed.R.App.P. 4(a)(3). It is clear that Eastman was not precluded from filing a notice of appeal even if the district court judgment can be characterized as entirely favorable. As this court has stated, "[t]he risk that [the cross-appellants] might become aggrieved upon reversal on the direct appeal is sufficient." Hilton v. Mumaw, 522 F.2d 588, 603 (9th Cir. 1975). Although Eastman initially had no reason to appeal the judgments dismissing Ashland, Columbia, and Custom, because Eastman had received a favorable judgment, TRC's appeal raised the possibility of reversal. Thus Eastman was put on notice that it might be brought back into the lawsuit.
Although an initial notice of appeal is mandatory and jurisdictional,
Eastman apparently believed that TRC's notice of appeal was sufficient to bring all parties before this court. It seeks to tag onto TRC's notice of appeal, although TRC itself did not have standing to appeal. Eastman has clearly evidenced an intent to appeal through its participation, filing motions to dismiss TRC's appeal and actively opposing Ashland's and Columbia's motions. See Rabin, 570 F.2d at 866. Eastman now requests that we exercise our discretionary power to retain all parties in the lawsuit if we remand the case, in order to insure an equitable resolution at trial. We do not condone Eastman's failure to file a protective appeal. Nevertheless, for several reasons we are compelled to deny Ashland's and Columbia's motions to dismiss Eastman's protective appeal. To do otherwise would be to rely on form at the expense of substance.
Trial on the underlying question of liability for Bryant's injuries would be partially frustrated if Ashland and Columbia were not participants. As we discuss later in this opinion, the central issues the jury may have to face on remand are the adequacy of Eastman's warnings to Ashland, the adequacy of Ashland's warnings to Columbia and others in the chain of distribution, and the duty Eastman owes beyond its immediate vendee, Ashland. Adversary representation of Ashland and Columbia are important for a complete and equitable determination of liability.
This factor alone, however, would not persuade us to relieve Eastman from its failure to file a notice of appeal. We are also concerned that Eastman may have believed that an appeal was not necessary, given the language in the district court's memorandum decision. The court found that third party plaintiff Eastman was entitled to summary judgment, "[a]ccordingly, Eastman's third party complaint against Ashland, Columbia Paint and Custom Furniture is appropriately dismissed." This suggests that summary judgment in favor of Eastman rendered the third-party complaint moot; there is no indication that the district court ever considered the merits of Eastman's indemnity and contribution claims against the third-party defendants. In its initial order, the district court merely stated that Eastman's complaint was dismissed. In its amended order issued two weeks later, however, the court dismissed Eastman's complaint with prejudice. If the basis for the dismissal was that the third-party complaint was moot after summary judgment for Eastman, dismissal with prejudice was error, because in the event of reversal of the summary judgment in favor of Eastman the dismissal with prejudice contemplated a decision on the merits of Eastman's claims. Federal courts are without power to determine the merits of moot claims. DeFunis v. Odegaard, 416 U.S. 312, 316, 94 S.Ct. 1704, 1705, 40 L.Ed.2d 164 (1974). It is conceivable that the district court reevaluated the case and considered the merits of Eastman's indemnity claim between issuing the memorandum and the amended order, but we have no way of determining this from the record on appeal.
Finally, we note that the interlocutory nature of this appeal provides some justification for Eastman's failure to file a notice of appeal. The district court certified an interlocutory appeal, finding no "just reason for delay." Fed.R.Civ.P. 54(b), see note 3 supra. The scope of this certification,
We must emphasize the narrow scope of our holding. It will be the unusual case where an appellee that fails to file a notice of appeal can challenge unfavorable aspects of a judgment. The unique circumstances of this case, however, justify the exercise of our discretionary power to allow Eastman to tag onto TRC's timely notice of appeal.
TRC's notice of appeal presents a more straightforward issue. To have standing to appeal, a party must be "aggrieved by the district court order." United States v. State of Washington, Department of Fisheries, 573 F.2d 1117, 1118 (9th Cir. 1978). See United States v. 5.96 Acres of Land, 593 F.2d 884, 887 (9th Cir. 1979). A party may only appeal to protect its "own interests," not those of any other party. Libby, McNeill & Libby v. City National Bank, 592 F.2d 504, 511-12 (9th Cir. 1978). In this case, TRC has no direct action against Ashland or Columbia. Therefore, TRC does not have a recognizable legal interest in whether Eastman can obtain contribution from either of them. TRC has not alleged that Eastman is insolvent; but even if Eastman could not satisfy its obligations, TRC's recourse was to bring complaints directly against the other defendants at trial. Having failed to do so, it is not in a position to appeal the dismissal of the lawsuit against the defendants. Accordingly we grant Ashland's and Columbia's motions to dismiss the appeal filed against them by TRC.
Since we find it necessary to reverse the district court's grant of summary judgment to Eastman against TRC, the dismissal of Eastman's third-party claims against Ashland, Columbia, and Custom is likewise reversed.
II. SUMMARY JUDGMENT FOR EASTMAN
A. The Applicable Law
This case was removed to the Idaho federal court based on diversity of citizenship. Therefore the district court was required to apply Idaho's substantive law of products liability in ruling on Eastman's motion for summary judgment against TRC. Wirth v. Clark Equipment Co., 457 F.2d 1262, 1264 (9th Cir.), cert. denied, 409 U.S. 876, 93 S.Ct. 127, 34 L.Ed.2d 129 (1972) (Oregon products liability law applies in diversity case).
Idaho applies strict products liability, adopting the approach in the Restatement (Second) of Torts § 402A (1965).
Failure to warn results in liability only in situations where the danger is not obvious to the user, and the manufacturer had reason to believe that the danger might result from a foreseeable use of the product. Mico Mobile Sales & Leasing, Inc. v. Skyline Corp., 97 Idaho 408, 546 P.2d 54, 60 (1975). On this appeal, the adequacy of TRC's warnings are not in issue; we must determine whether the district court correctly concluded that Eastman's warnings were adequate as a matter of law.
In granting summary judgment for Eastman, the district court found that:
Summary judgment was proper only if there were no genuine issues of material fact and Eastman was entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Schlette v. Burdick, 633 F.2d 920, 922 (9th Cir. 1980). The evidence in Eastman's affidavits must "clearly show" that it was entitled to judgment, and TRC's documentary opposition will be sufficient to preclude summary judgment if it supports TRC's inferences, "even if it is not highly convincing or persuasive." Bieghler v. Kleppe, 633 F.2d 531, 533 (9th Cir. 1980).
B. Eastman's Warning to Ashland
After a careful review of the record, we conclude that summary judgment in favor of Eastman was inappropriate. The record indicates that there are disputed issues of material fact regarding the adequacy of Eastman's warnings to Ashland. Although Ashland has acknowledged awareness of MBK dangers, Eastman is not absolved from any duty it had to notify Ashland of additional MBK dangers as it became aware of them. Moreover, any acknowledgment on Ashland's part does not
Specifically, TRC points to several unresolved issues regarding Eastman's warnings to Ashland. It is not disputed that Eastman always provided its customers with warnings and handling instructions for MBK.
The adequacy of a warning under products liability is a question of fact to be left to the jury. Dougherty v. Hooker Chemical Corp., 540 F.2d 174, 178 (3d Cir. 1976) (Pennsylvania law, interpreting §§ 388 and 402A of the Restatement); Anderson v. Heron Engineering Co., Colo., 604 P.2d 674, 679 (1979). See Farmer v. International Harvester Co., 97 Idaho 742, 553 P.2d 1306, 1312-13 (1976) (defective nature of product under Restatement § 402A is question of fact).
C. Eastman's Duty to Warn Others in the Chain of Distribution
Since trial will be required, we find it advisable to address another issue. The district judge concluded that as a bulk manufacturer, Eastman's only duty was to warn its immediate vendee. Thus the court ignored the factual disputes regarding the extent of the warning TRC and others in the chain of distribution received.
In examining interpretations of section 402A from other jurisdictions, we note that except in the specific relationships discussed below, the adequacy of a bulk manufacturer's warning to those other than its immediate vendee is usually held to be a jury question. The proposition that a bulk manufacturer has a duty to warn only its immediate vendee, however, draws some support from a Kansas case interpreting the negligence provision of the Restatement, section 388. Jones v. Hittle Service, Inc., 219 Kan. 627, 549 P.2d 1383, 1394 (1976). In Jones, a propane gas manufacturer and its distributor
Id. Even the Jones court, however, recognized some duty to insure that the purchaser is capable of passing the warning on to others in the distribution chain.
A similar approach has also been adopted in cases holding that a bulk manufacturer can rely on an employer-purchaser to pass on warnings to employees, Younger v. Dow Corning Corp., 202 Kan. 674, 451 P.2d 177, 184 (1969), and can rely on a doctor-purchaser to pass on prescription warnings to patients, Terhune v. A. H. Robins Co., 90 Wn.2d 9, 577 P.2d 975, 977-79 (1978). The rationale behind these cases is that the manufacturer is justified in relying on the employer or doctor to pass on its warnings. The prescribing physician acts as a "learned intermediary" who is expected to exercise professional judgment on the patient's behalf. Terhune, 577 P.2d at 978. The employer has complete control over the working environment, and there is little a manufacturer can do to enforce compliance with suggested precautionary measures. Younger, 451 P.2d at 184.
In contrast, a recent Arizona case, in a factual situation quite similar to the instant case, holds that a bulk seller or manufacturer is not relieved from its duty to warn later purchasers merely because it warned the immediate seller. Shell Oil Co. v. Gutierrez, 119 Ariz. 426, 581 P.2d 271 (App.1978). Shell Oil was sued after one of its products ignited, injuring a welder. The Shell chemical had been repackaged by an intermediate purchaser, and Shell argued that it was not liable as a matter of law because "adequate warning to the vendee is all that can reasonably be required of the bulk manufacturer who has no control over the container." Id., 581 P.2d at 277. The court rejected this argument and affirmed a verdict against Shell, finding that the adequacy of a warning is a question for the trier of fact, and a manufacturer's warning to its intermediary is only one factor for the jury to consider. Id. 581 P.2d at 277-79. See Hohlenkamp v. Rheem Manufacturing Co., 123 Ariz. 535, 601 P.2d 299, 301 (App.1979) (summary judgment inappropriate because expert testimony presented material issue whether failure to warn was unreasonably dangerous).
Other courts have recognized that a warning to the immediate purchaser does not necessarily discharge a manufacturer's duty. In a case involving the distribution of polio vaccine, this court held that the manufacturer has a responsibility to see that its warnings reach the consumer, "either by giving warning itself or by obligating the purchaser to give warning." Davis v. Wyeth Laboratories Inc., 399 F.2d 121, 131 (9th Cir. 1968) (Montana law, interpreting § 402A of the Restatement). A Washington court recently held that manufacturer's duty to warn is non-delegable. The court found that it was a jury question whether an employer's failure to pass on the manufacturer's warnings rendered the
The recent cases evaluating a manufacturer's duty to warn indicate that there should be no absolute rules; the adequacy of a warning is a question of fact to be decided on a case by case basis. In some situations, such as where a drug manufacturer provides warning to a prescribing physician, a court could find that an adequate warning to the immediate vendee was sufficient. In most cases, however, the jury should determine the reasonableness and adequacy of the warnings provided under the unique circumstances of each case. Upon remand the trial judge should determine whether, in evaluating Eastman's conduct, the jury should consider if the warnings given adequately indicated to those in the chain of distribution the scope and nature of the risk inherent in MBK. If the jury does consider this issue, it should do so in light of Eastman's knowledge of the dangers and the feasibility of issuing more extensive or complete warnings. See Shell Oil Co. v. Gutierrez, 119 Ariz. 426, 581 P.2d 271, 278-79 (App.1978); Robinson v. Williamsen Idaho Equipment Co., 94 Idaho 819, 498 P.2d 1292, 1299-1300 (1972); Little v. PPG Industries, Inc., 92 Wn.2d 118, 594 P.2d 911, 914-15 (1979).
We note the liberal approach that the Idaho Supreme Court has taken in Section 402A actions.
We deny Ashland's and Columbia's motions to dismiss Eastman's appeal, because Eastman has evidenced an intent to appeal, and the unique circumstances of this case warrant full participation of all the defendants and third-party defendants. TRC does not have standing to appeal, however, and we grant Ashland's and Columbia's motions to dismiss as to TRC. On the merits of this case, we find that summary judgment in favor of Eastman was inappropriate. First, there are material issues of fact regarding the adequacy of Eastman's warning to Ashland. Second, we believe that the trial court should reconsider its ruling that a bulk manufacturer is insulated from liability beyond its immediate vendee as a matter of Idaho law. The court should determine whether the adequacy of the manufacturer's warning as to others in the chain of supply presents a jury question. Because we reverse the summary judgment in favor of Eastman, we reverse the district court dismissal of Eastman's third-party complaints against Ashland, Columbia and Custom and direct the district court to consider the merits of those claims on remand.
REVERSED AND REMANDED.
Eastman Chemical Products (MBK manufacturer)
Ashland Chemical Company (distributor)
Technical Research Company (T-6 manufacturer)
Columbia Paint Company (wholesaler-retailer)
Custom Furniture and Cabinet Company (employer)
Thomas Bryant (employee)
Comment j. to § 402A provides in part:
It is not clear whether this warning is identical to that provided by Eastman; the quoted warning apparently was provided by TRC. TRC contends that the warnings Eastman provided did not reflect the dangers from skin contact or the link between MBK and neuropathy.
TRC points out that the letter downplays the importance of the connection between MBK and neuropathy. Additionally, TRC has been unable to determine whether Eastman knew of the possible connection before the Ohio outbreak. While it is not disputed that Ashland received a copy of the Dubberly letter, TRC denies ever having received the letter. The affidavits of Fulton (offered by Eastman) and Daley (offered by TRC) are in conflict on this issue. See note 11 infra.
TRC offered Daley's affidavit in opposition to Eastman's summary judgment motion. Daley did not recall the conversation with Fulton, denied ever receiving the Dubberly letter, and denied that any TRC employer ever had an employee diagnosed or even suspected of contracting an MBK-related disease.
These two affidavits alone indicate that there are material issues in dispute regarding the extent and adequacy of the notice provided by Eastman and received by TRC. The specific points of dispute reflect the broader issue that should be decided by the jury, namely whether Eastman fulfilled its obligation to warn MBK purchasers and users of the risks associated with the product.
By contrast, a manufacturer may have greater financial and informational resources than its distributor, and thus be in a better position to directly contact vendees farther down the chain of distribution. The better rule is that a manufacturer is "liable for failure to adequately warn other persons who might be foreseeably subjected to danger," not just the immediate vendee. 2 L.Frumer & M.Friedman, Products Liability § 8.03, at 176-80 (1975).
Model Uniform Product Liability Act § 104(C)(2), reprinted in 44 Fed.Reg. 62714, 62721 (1979).