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From Products Liability Law Daily, June 1, 2016

Pfizer not apparent manufacturer of subsidiary’s asbestos-containing cement

By John W. Scanlan, J.D.

Pfizer could not be considered an apparent manufacturer of Insulag asbestos-containing cement that had been manufactured by a Pfizer subsidiary, the Maryland Court of Special Appeals concluded in granting summary judgment to Pfizer. As a result, the family of a bricklayer who died of mesothelioma must instead bring their claims for compensation to a trust set up as part of the subsidiary’s bankruptcy (Stein v. Pfizer Inc., May 31, 2016, Krauser, P.).

A bricklayer who worked for Bethlehem Steel from 1949 to 1985 later developed mesothelioma and died in 2012. His widow and his children brought suit against a number of entities, including Pfizer Inc. Since the 1930s, Quigley, Inc. manufactured and sold Insulag, an asbestos-containing cement, and had directly supplied it to Bethlehem Steel from 1955 until 1974, when Quigley replaced it with a cement product that did not contain asbestos. Quigley became a wholly-owned subsidiary of Pfizer in 1968. The bricklayer’s family alleged that Pfizer was liable for the bricklayer’s illness and death as an apparent manufacturer of Insulag because Quigley’s invoices and marketing materials also bore Pfizer’s trademarks, and also on the basis of a 1971 Pfizer end-of-year sales report and on several filings to the U.S. Securities and Exchange Commission.

Quigley’s bankruptcy. Quigley filed for Chapter 11 bankruptcy in 2004 after more than 160,000 asbestos lawsuits had been brought against it (about 100,000 also had been brought against Pfizer). The bankruptcy court issued an order channeling all asbestos-related lawsuits against either Quigley or Pfizer to a trust set up to provide compensation for such claims. A decision by the U.S. Court of Appeals for the Second Circuit held that a claim against Pfizer was subject to the channeling injunction only when Pfizer’s alleged liability arose as a legal consequence from Pfizer’s ownership, management, or control of Quigley. An apparent manufacturing claim was not subject to this injunction because that claim did not depend in any legal sense on its ownership, management, or control.

In the present case, both the family and Pfizer filed cross-motions for summary judgment on whether Pfizer was an apparent manufacturer. The trial court considered the evidence and determined that a reasonable person could not conclude under the circumstances that Pfizer was the apparent manufacturer of the Insulag cement. The family appealed.

Apparent manufacturer doctrine. After considering the history of the apparent manufacturer doctrine, the Maryland Court of Special Appeals determined that Pfizer was not an apparent manufacturer of the cement under any of the three tests that it had identified as having been applied by various courts. A majority of the federal and state courts to have considered this issue applied an “objective test” for determining whether a reasonable consumer would have relied upon a label or marketing materials in purchasing the product. Finding that reliance should be viewed from the perspective of a reasonable purchaser in the position of the actual purchaser rather than from the perspective of an ordinary, reasonable consumer, the court determined that the family could not prove their claim because the identity of the actual manufacturer was unmistakably clear. In order to prevail under this test, they would have to show that a reasonable purchaser of refractory material in Bethlehem Steel’s position from 1968 to 1974—the period during which Pfizer owned Quigley and Quigley supplied the company with Insulag—would have relied upon Pfizer’s reputation and assurances of quality in purchasing the Insulag. However, Insulag was not a consumer product, and Bethlehem Steel was a sophisticated purchaser of Insulag and had bought it from Quigley for decades before Pfizer bought Quigley, and at all reasonable times knew that it was purchasing Insulag from Quigley, not Pfizer.

Whether reliance was viewed from the perspective of the user or the purchaser, the same result would be reached under an “actual reliance test,” under which a plaintiff must prove that it actually and reasonably relied on the trademark, reputation, or assurances of quality by the apparent manufacturer. The bricklayer made no mention of Pfizer or Insulag in his deposition testimony, and the evidence showed that Bethlehem Steel purchased Insulag from Quigley before and after Quigley’s acquisition by Pfizer without interruption.

Finally, Pfizer could not be held liable under an “enterprise liability” test for apparent manufacturer because it had not participated substantially in the design, manufacture, or distribution of Insulag. Case law applying this test had done so only to trademark licensors, and there was no trademark licensing agreement between Pfizer and Quigley. Even if there had been an agreement, Quigley had designed and manufactured Insulag decades before Pfizer bought the company. The presence of Pfizer’s name on Quigley’s invoices and promotional materials showed only that Quigley was a Pfizer subsidiary, and Pfizer was legally obligated to account for Quigley’s sales in its reports and filings to the SEC.

The case is No. 1231.

Attorneys: Bessie Demos (Law Offices of Peter G. Angelos) for Harriette Stein.

Companies: Pfizer Inc.

MainStory: TopStory SCLIssuesNews DefensesLiabilityNews AsbestosNews MarylandNews

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