Article by David Halm: The Future Ain’t What It Used To Be…

The Future Ain’t What It Used To Be 1- Semiconductor Manufacturer May Be Liable For Employee’s Future Child’s Birth Defects
May. 9, 2014

It seems there is just no end in sight to lawsuits against companies due to their employees’ exposure to toxic substances in the workplace. On January 27, 2014, a California appeals court decided that Applied Materials, Inc. (AMI) was not negligent for allegedly causing birth defects suffered by one of its employee’s children. The company had no legal duty to prevent an employee’s future child’s birth defects. However, the court concluded that the manufacturer can still be required to pay for the child’s damages under the “strict liability” legal theory.

This was the court’s ruling in the case of Elsheref v. Applied Materials, Inc.2 Child’s father was an employee at AMI’s semiconductor facility from 2001 to 2008. AMI provides equipment, services and software to enable the manufacture of advanced semiconductor, flat panel display and solar photovoltaic products. Father’s job duties included working with tools containing mercury and ethylene glycol, among other chemicals, as well as tools emitting ionizing radiation. While father worked at AMI, his wife conceived child.

Mother and child sued AMI, claiming that child was born with multiple heart and other defects caused by father’s exposure to toxic chemicals and processes during his employment with AMI. Before the trial, AMI won a motion resulting in dismissal of the entire lawsuit. Mother and child appealed the trial court’s decision. Unfortunately for AMI, the Court of Appeal reversed the trial court’s judgment of dismissal.

The Court of Appeal agreed that AMI had no duty to the child and therefore could not be legally negligent for the child’s birth defects before the child was even conceived. One reason was that there was no “close” connection between AMI’s conduct and the child’s birth defects. AMI had previously treated father so he could be cleared to wear a respirator at work. The connection between that conduct and child’s injuries was too attenuated. The court also considered the “overwhelming need to keep liability within reasonable bounds” noting that one of the consequences to the community of such an extension of liability is the “cost of insuring against liability of unknown but potentially massive dimension. Ultimately, such costs are borne by the consumer.” The court also found that no special relationship existed between AMI and father to require warnings to father that certain workplace chemicals posed a danger to his unborn children. Also, AMI did not undertake any measures to protect father’s reproductive health or the health and safety of his future children.

However, the Court of Appeal reversed the dismissal judgment as to child’s strict products liability claim. This claim does not require proof of a legal duty to prevent injuries including child’s birth defects. Child simply has to prove that the chemicals and processes father was exposed to during his employment with AMI were toxic and caused child’s birth defects. The court therefore concluded that child could continue with his strict products liability claim.

The court stated in its opinion regarding child’s negligence claim: “we decline to expose employers to such potentially boundless liability”. However, allowing child to proceed with his strict products liability claim creates such exposure. Potential plaintiffs who can sue manufacturers include persons who do not even exist!

How then can manufacturers and other companies whose employees work with potentially dangerous substances and processes avoid or at least minimize negative financial consequences from these lawsuits? First, there are many defenses against strict products liability claims that can be presented in a lawsuit that if proved, can result in an outright victory for the manufacturer. For example, the manufacturer can prove that the employee who was exposed to allegedly toxic substances was a “sophisticated user” who knew of the potential risks and dangers and yet continued to work at the manufacturing facility where the exposure occurred. The manufacturer can demonstrate that it provided sufficient warnings to the employee and the employee read and understood such warnings. Manufacturers can take steps to prevent exposure to toxic substances by requiring employees to wear gloves, masks, respirators and other protective gear and to participate in mandatory training to avoid such exposure. Companies should always maintain insurance and enter into indemnity and defense agreements with suppliers that will provide coverage and defense against such claims. This is not an exhaustive list of steps that manufacturers and other companies can and should take to minimize the financial danger that could result from their employees’ and non-employees’ injuries. Companies should consult with their attorneys and other consultants to determine the best way to effectively and legally address these issues.

1Yogi Berra.
2Elsheref v. Applied Materials, Inc. Case No. H038333 (6th App. Dist. Jan. 27, 2014).

David Halm is a founding shareholder of Pettit Kohn Ingrassia & Lutz PC and Managing Shareholder of the firm’s Los Angeles office. He has participated in 20 trials and arbitrations. Mr. Halm represents manufacturers and other companies in the electronics industry in matters involving toxic exposure, contract disputes, unfair competition, employment issues, trade secrets, products liability and personal injury. Mr. Halm can be reached at (310) 417-1135/dhalm@pettitkohn.com or visit the firm website at www.pettitkohn.com.

This article can also be found on the California Manufacturers & Technology Association website hereopens in a new window.