Port Auths. of NY & NJ v. Arcadian Corp. ( 1999 )

Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit
8-18-1999
Port Auths. of NY & NJ v. Arcadian Corp.
Precedential or Non-Precedential:
Docket 98-5045
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Filed August 18, 1999
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 98-5045
PORT AUTHORITY OF NEW YORK AND NEW JERSEY,
Appellant
v.
ARCADIAN CORP;
DYNO NOBEL INC, f/k/a
*Ireco Incorporated;
HYDRO AGRI NORTH AMERICA, INC.
(*Amended per clerk's
order of 2/20/98)
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil Action No. 96-cv-01635)
District Judge: Honorable William G. Bassler
Argued September 17, 1998
Before: ROTH and STAPLEON,
Circuit Judges HOEVELER,1 District Judge
(Opinion Filed: August 18, 1999)
_________________________________________________________________
1. Honorable William M. Hoeveler, United States District Court Judge for
the Southern District of Florida, sitting by designation.
William B. McGuire, Esquire
(Argued)
Marianne Espinosa Murphy, Esquire
George G. Campion, Esquire
Tompkins, McGuire & Wachenfeld
100 Mulberry Street, Gateway Four
Newark, NJ 07102
Samuel J. Pace, Jr., Esquire
(Argued)
Leslie M. Cyr, Esquire
Dugan, Brinkmann, Maginnis &
Pace
1880 John F. Kennedy Boulevard,
14th Floor
Philadelphia, PA 19103
Attorneys for Appellant
Richard D. Shapiro, Esquire
Hellring, Lindeman, Goldstein &
Siegal
One Gateway Center, 8th Floor
Newark, NJ 07102
Philip T. Bruns, Esquire
Jennifer Horan Greer, Esquire
Andrew L. Pickens, Esquire
Gibbs & Bruns, L.L.P.
1100 Louisiana, Suite 5300
Houston, TX 77002
Attorneys for Appellee
Arcadian Corporation
Andrew T. Berry, Esquire
Kevin J. Connell, Esquire
McCarter & English
100 Mulberry Street, Four Gatewary
Center
Newark, NJ 07101-0652
2
John T. Montgomery, Esquire
(Argued)
Michael P. Allen, Esquire
Douglas Hallward-Driemeier, Esquire
Ropes & Gray
One International Place
Boston, MA 02110-2624
Attorneys for Appellee
Hydro Agri North America, Inc.
Peter N. Perretti, Jr., Esquire
Glenn A. Clark, Esquire
Riker, Danzig, Scherer, Hyland &
Perretti
One Speedwell Avenue
Morristown, NJ 07962-1981
Attorneys for Appellee
Dyno Nobel Inc.
OPINION OF THE COURT
ROTH, Circuit Judge:
This case arises from the February 26, 1993, terrorist
detonation of an explosive device under the World Trade
Center in New York City, which caused six deaths, many
injuries and massive property damage. Plaintiff-appellant,
the Port Authority of New York and New Jersey, owner of
the World Trade Center, sued defendants, manufacturers of
fertilizer products, on theories of negligence and products
liability, alleging that the terrorists used defendants'
fertilizer products to construct the explosive device.
The District Court, in a thorough and well-reasoned
opinion, granted defendants' motion to dismiss for failure to
state a claim upon which relief may be granted under Fed.
R. Civ. P. 12(b)(6). Plaintiff appealed. We find that it was
appropriate, in light of the record, for the District Court to
dismiss the action under Rule 12(b)(6). Specifically, we
agree with the District Court that as a matter of law
defendants owed no duty to plaintiff and that the World
3
Trade Center bombing was not proximately caused by
defendants' actions. Furthermore, we reject plaintiff's
argument that the issues of duty and proximate causation
were jury issues not properly decided by the court on a
Rule 12(b)(6) motion. Accordingly, we will affirm the
judgment of the District Court.
I. Factual and Procedural History
A. Factual Background
The Port Authority of New York and New Jersey is the
owner of the World Trade Center in New York City. On
February 26, 1993, a bomb, which had been fabricated by
terrorists out of ammonium nitrate, urea, and nitric acid,
exploded in an underground parking garage at the World
Trade Center, causing six deaths, many injuries and
massive property damage.
The ammonium nitrate, urea, and nitric acid used in the
bomb were allegedly sold in New Jersey, and the bomb was
allegedly assembled in New Jersey by New Jersey residents.
Defendants Hydro-Agri North America, Inc., and Dyno
Nobel Inc., formerly known as Ireco, Inc., are alleged to
have manufactured, designed, marketed, distributed
and/or sold the ammonium nitrate used by the terrorists.
Defendant Arcadian Corporation is alleged to have
manufactured, designed, marketed, distributed and/or sold
the urea used by the terrorists.
The ammonium nitrate and urea, alleged to have been
purchased by the terrorists, were sold in prill form, i.e., a
white, round, hardened droplet about the size of the tip of
a ball point pen. The prills were manufactured to be used
as fertilizer. The ammonium nitrate prills can be rendered
explosive by the addition of fuel oil or other sensitizing
substances; the urea prills can be rendered explosive by the
addition of nitric acid and water (forming urea nitrate). The
terrorists are alleged to have rendered the prills explosive
by adding these substances. Defendants point out that, as
conceded in the Amended Complaint, the prills are not
explosive in and of themselves.
Plaintiff alleges that defendants knew or should have
known that the ammonium nitrate and urea could easily be
4
made into explosives and that terrorists had used them
prior to the bombing at the World Trade Center, but
nevertheless defendants failed to take appropriate steps to
render their products non-detonable. Specifically, plaintiff
points to two incidents. First, an explosion of ammonium
nitrate over fifty years ago destroyed two ships docked at
Texas City, Texas, killing 468 persons and causing
extensive damage in the city. Second, more than thirty
years ago, anti-war protesters used ammonium nitrate to
bomb the Mathematics Research Building at the University
of Wisconsin, leading to injuries, death and property
damage.
Plaintiff alleges that defendants had the means to reduce
the danger of their products. In 1968, Samuel Porter
patented a process that rendered ammonium nitrate
fertilizers non-detonable. The process called for adding five
to ten percent of diammonium phosphate, a high grade of
fertilizer, to ammonium nitrate at a nominal additional
cost. When the patent was made available to ammonium
nitrate manufacturers, one of the explicit purposes was to
deter the criminal use of ammonium nitrate in bombs. In
1985, the Porter patent entered the public domain, making
the process available to all manufacturers free of license or
royalty.
Plaintiff alleges that the danger of these products
prompted governments here and abroad to attempt to
regulate their manufacture and distribution. Specifically, in
response to the University of Wisconsin bombing, several
states introduced legislation to require that all ammonium
fertilizers be desensitized by a chemical agent (as described
in the Porter patent) to reduce, if not eliminate, the
explosive properties of ammonium nitrate. The legislative
efforts were allegedly well publicized, including within the
fertilizer industry, but plaintiff asserts that various fertilizer
manufacturers resisted the legislation, leading to its
ultimate defeat.
In addition, in 1975, the European Economic Community
Council issued a directive that established (1) strict
standards for the formulation of solid ammonium nitrate
and (2) detonation tests that could be required by member
countries to ensure that fertilizer sold in those countries
5
had a low potential for use as explosive. Belgium, Denmark,
Germany and the Netherlands prohibited the sale of certain
ammonium nitrate fertilizers. France mandated that all
ammonium nitrate fertilizer be tested by detonation.
Three years prior to the EEC directive, terrorist bombings
in Northern Ireland and the Republic of Ireland prompted
the United Kingdom and Ireland to enact regulations that
were even more stringent. Those regulations limited the
amount of nitrate that could be used in fertilizer products
and required the addition of calcium, sulfates, and other
materials to reduce their detonability.
Information about urea and the means to desensitize it
was allegedly similarly well known, yet not utilized, prior to
the World Trade Center bombing. It was allegedly known
that the addition of phosphate and other additives to urea
prills would decrease or eliminate their use as explosive
and energetic materials. Explosives made of urea nitrate
were allegedly used in the Middle East, South America,
Pakistan and the United States prior to the World Trade
Center bombing. In 1992, the sales of urea and ammonium
nitrate fertilizer were banned in Peru as a result of the
extensive use of urea and ammonium nitrate prills in
explosives set off by the Shining Path terrorists.
B. Procedural Background
Plaintiff filed this action on February 26, 1996, in the
Superior Court of New Jersey in Essex County. Defendants
removed the actions to the United States District Court for
the District of New Jersey on the grounds of diversity of
citizenship. Plaintiff filed an Amended Complaint before
defendants responded to the original Complaint, in order to
correct the name of one of the defendants.
The Amended Complaint asserts three grounds for
holding defendants liable. Count I, a claim of negligence,
asserts that defendants "negligently failed to design,
manufacture, market, distribute and/or sell [ammonium
nitrate or urea prills] with a formulation" that would either
"render them less detonable or non-detonable" or "decrease
or eliminate their explosive properties." Count II, a claim in
strict liability, asserts that defendants are liable because
the ammonium nitrate and urea prills were "unreasonably
6
dangerous and defective when they left the respective
control of each of the Defendants." Count III asserts that
defendants are liable because they "failed to provide
guidelines, instructions, and/or warnings to their
distributors, retailers, dealers or other suppliers to confirm
that buyers in the general and unrestricted public market
have legitimate and lawful purposes for use of Defendants'
products."
Defendants filed a Motion to Dismiss pursuant to Fed. R.
Civ. P. 12(b)(6). The District Court granted the motion and
dismissed the Complaint with prejudice. See Port Authority
of New York & New Jersey v. Arcadian Corp., 991 F. Supp.
390 (D.N.J. 1997). Plaintiff filed a timely appeal.
II. Analysis
A. Standard of Review
The standard of review of a district court order
dismissing a complaint under Fed. R. Civ. P. 12 (b)(6) is
plenary. Alexander v. Whitman, 114 F.3d 1392, 1397 (3d
Cir. 1997). The court "must determine if plaintiff may be
entitled to relief under any reasonable reading of the
pleadings, assuming the truth of all the factual allegations
in the complaint." Id. (citations omitted). "A court may
dismiss a complaint only if it is clear that no relief could be
granted under any set of facts that could be proven
consistent with the allegations." Id.
B. Jurisdiction
The District Court had diversity jurisdiction pursuant to
28 U.S.C. S 1332. Because this is an appeal from a final
order of the District Court, we have jurisdiction pursuant to
28 U.S.C. S 1291.
C. Choice of Law
As an initial matter, the District Court found it was not
necessary to make a determination whether New York or
New Jersey law applies to the Amended Complaint. Instead,
the District Court determined that the Amended Complaint
failed to state a claim under the law of either state. The
District Court's approach was appropriate. A federal court
7
sitting in diversity applies the choice of law principles of the
forum state. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S.
487, 496-97 (1941). Under New Jersey law, when the same
result -- dismissal of a complaint -- is required under the
laws of all relevant jurisdictions, the court need not decide
which law would apply to the action. See Rohm & Haas Co.
v. Adco Chem. Co., 689 F.2d 424, 429 (3d Cir. 1982);
Mueller v. Parke-Davis, 599 A.2d 950, 954 (N.J. Super. Ct.
App. Div. 1991). Because we agree that dismissal is
required under both New Jersey and New York law, we
similarly need not decide the choice of law issue.
D. The District Court's Application of Fed. R. Civ. P.
12(b)(6)
We first address plaintiff's argument that the District
Court erred in failing to recognize the legal sufficiency of
the Amended Complaint pursuant to Fed. R. Civ. P.
12(b)(6). Plaintiff argues that, although the District Court
quoted the correct standard under Rule 12(b)(6), it
misapplied it to the case. In essence, plaintiff contends that
the Amended Complaint alleges facts sufficient to plead the
elements of the causes of action (under either jurisdiction)
but that the District Court elected to conclude that a jury
could not rule in favor of plaintiff under any set of facts
consistent with the Amended Complaint. Plaintiff argues
that this ruling was premature and inconsistent with the
mandate that the District Court must interpret allegations
in the light most favorable to the plaintiff. Plaintiff argues
that, in dismissing the complaint, the District Court made
rulings on factual issues of foreseeability and proximate
cause, which are traditionally the province of the jury. In
sum, plaintiff claims that the District Court exceeded its
limited role in reviewing the sufficiency of a complaint and
that plaintiff is entitled to discovery and to present evidence
to a jury because the allegations in the Amended Complaint
are sufficient.
We find, however, that the District Court applied the
standard correctly. Thus, the District Court assumed that
the facts alleged in the Amended Complaint were true but
determined that the facts, even if true, could not legally
support plaintiff's claims. Plaintiff disagrees with this
conclusion in two respects. First, plaintiff contends that the
8
District Court's task was merely to go through a check list
for the elements of a tort claim. Consequently, since the
Amended Complaint contained all the elements of the
causes of action pled, the motion to dismiss should have
been denied. Rule 12(b)(6), however, is designed to screen
out cases where "a complaint states a claim based upon a
wrong for which there is clearly no remedy, or a claim
which the plaintiff is without right or power to assert and
for which no relief could possibly be granted . . .." Melo-
Sonics Corp. v. Cropp, 342 F.2d 856, 859 (3d Cir. 1965)
(quoting Leiman v. State Mutual Life Assurance Co., 108
F.2d 302, 305-06 (8th Cir. 1940)). We find that the District
Court carried out this mandate by taking all the allegations
in the Amended Complaint as true and making every
favorable inference in favor of plaintiff but deciding
nevertheless that no relief could be granted.2
Second, we disagree with plaintiff's insistence that the
District Court misapplied Rule 12(b)(6) by considering
whether plaintiff's claims were sufficient as a matter of
"fairness" or "sound policy." Plaintiff argues that such
considerations improperly substituted the court's views for
those of the jury. Plaintiff, however, misunderstands the
role of the courts in developing and administering the tort
system. Tort law is essentially concerned with the
"allocation of losses" arising out of "socially unreasonable
conduct." Prosser & Keeton, The Law of Torts,S 1 at 6. The
courts must consider not only the interests of the litigants
but also the interests of society in general, including the
social and economic costs of any expansion of the outer
boundaries of tort liability. Id. This consideration
_________________________________________________________________
2. Plaintiff argues that District Court Judge Bassler indicated during
oral
argument that he believed that plaintiff would prevail if the case was
presented to a jury. "Then at the end, I mean, I can't believe a jury not
bringing recovery on the facts of this case." App. 172a, T30-23. This
quote is taken out of context. Judge Bassler was asking counsel whether
judicial economy would be served by having a Third Circuit opinion on
the issue before investing tremendous resources and going to trial. In
other words, the judge was speculating that a jury would probably find
for plaintiff on the facts of the case at trial. He was not indicating
that
he believed a legal basis existed for it to do so. And in dismissing the
case, he ruled as a matter of law that recovery was precluded.
9
necessarily involves considerations of social and public
policy. Id.
As we will explore more fully below, the legal bounds of
duty and of proximate cause are aspects of tort law in
which issues of fairness and public policy are particularly
relevant. We conclude that the District Court properly
considered questions of fairness and policy and made
rulings of law on issues of reasonable foreseeability and
proximate causation. Moreover, a jury would be asked to
determine if a duty had been violated or if the harm in
question had been proximately caused by the defendants
only after the court had determined as a matter of law
either that defendants did have a duty to safeguard plaintiff
from the risk of these bombs or that the defendants'
supplying the terrorists with a component of these bombs
was a legal proximate cause of plaintiff's damages. Because
the District Court found as a matter of law that there was
no duty and no proximate causation, there was nothing for
a jury to consider.
E. Duty
The District Court properly concluded that the Amended
Complaint failed to establish the existence of a duty owed
by defendants. Under both New Jersey and New York law,
the question of whether a duty is owed is a question of law
to be decided by the court. Strachan v. John F. Kennedy
Mem'l Hosp., 538 A.2d 346, 349 (N.J. 1988) ("The question
of whether a duty exists is a matter of law properly decided
by the court. . . ."); Purdy v. Public Adm'r , 526 N.E.2d 4, 6
(N.Y. 1988) ("The question of whether a member or group of
society owes a duty of care to reasonably avoid injury to
another is of course a question of law for the courts.").
Under the law of either jurisdiction, it is appropriate for
us to focus on product liability principles in determining if
defendants did owe plaintiff a duty. Under New Jersey law
negligence is no longer viable as a separate claim for harm
caused by a defective product. Oquendo v. Bettcher Indus.,
Inc., 939 F. Supp. 357, 361 (D.N.J. 1996) (citing Tirrell v.
Navistar Int'l, Inc., 591 A.2d 643 (N.J. Super. Ct. App. Div.
1991)). Even though plaintiff alleges a negligence claim in
Count I, this count is based solely on harm caused by
10
defendants' allegedly defective products. It therefore falls
within the New Jersey Product Liability Act (the"NJPLA"),
N.J.S.A. 2A:58C-1 et seq., which is "the sole basis of relief
under New Jersey law available to consumers injured by a
defective product." Repola v. Morbark Indus., Inc., 934 F.2d
483, 492 (3d Cir. 1991). Similarly, under New York law,
theories of negligence and strict liability for design and
warning defects are functionally equivalent. Elsroth v.
Johnson & Johnson, 700 F. Supp. 151, 158 n.9 (S.D.N.Y.
1988) (citing DeRosa v. Remington Arms Co., 509 F. Supp.
762, 766 (E.D.N.Y. 1981), and Cooley v. Carter-Wallace,
Inc., 478 N.Y.S.2d 375, 379 (App. Div. 1984)). A"plaintiff
can recover nothing in negligence on his products claims
that he cannot first recover under his strict liability claims
asserting product, design, and warning defects." Id. at 158.
We find that defendants owed no duty to plaintiff under
either New Jersey or New York law. First, the manufacturer
of a raw material or component part that is not itself
dangerous has no legal duty to prevent a buyer from
incorporating the material or the part into another device
that is or may be dangerous. By plaintiff's own allegations,
defendants' products were not in and of themselves
dangerous but were merely the raw materials or
components that terrorists used in combination with other
ingredients to build a bomb. Second, manufacturers have
no duty to prevent a criminal misuse of their products
which is entirely foreign to the purpose for which the
product was intended.
The New Jersey Supreme Court examined the duties of a
component manufacturer in Zaza v. Marquess & Nell, Inc.,
675 A.2d 620 (N.J. 1996). In that case, the plaintiff was
injured when hot water and carbon overflowed from a
quench tank he was attempting to unclog. The quench tank
was a component part of a coffee bean decaffeination
process. The defendant, who had manufactured the quench
tank, knew from designs that, once integrated into the
larger system, the tank would need certain safety devices.
Nevertheless, the New Jersey Supreme Court held that the
component part manufacturer owed the plaintiff no duty
regarding any danger posed by the integrated device,
stating that a component part fabricator may only be held
11
"strictly liable for injury caused by a defective component
where the defect is in the component part and the part did
not undergo substantial change after leaving the
manufacturer's hands." Id. at 636.3 The court relied on a
tentative draft of the Restatement (Third) of Torts, in which
the American Law Institute "concluded that a component
part manufacturer generally is not liable unless the
component part is defective or the component provider
substantially participated in the design of thefinal
product." Id. at 629. The court also followed the "majority
of courts from other jurisdictions [which] have held that a
manufacturer of a component part, which is not dangerous
until it is integrated by the owner into a larger system,
cannot be held strictly liable to an injured employee for the
failure of the owner and/or assembler to install safety
devices." Id.
In the instant case, there is no allegation that the
_________________________________________________________________
3. We disagree with the District Court's conclusion that New Jersey has
rejected the component part doctrine. See Port Authority, 991 F. Supp. at
400. The District Court relied on Zaza's reference to Michalko v. Cooke
Color & Chem. Corp., 451 A.2d 179 (N.J. 1982), in which the court had
held that a manufacturer of a component party must add a safety device
if it is feasible. The court in Zaza, however, explained that "[a] further
requirement for the imposition of strict liability on a component part
fabricator is that the component part reach the user without substantial
change. Where a component part is subject to further processing, or
where the causing of the injury is not directly attributable to any defect
in the component part, the fabricator is typically not subject to strict
liability." Zaza, 675 A.2d at 629 (citation omitted). By contrast, in
Michalko, the court held that there was no substantial change to the
defendant's product, because its defect (the failure to add a safety
device)
was "untouched and remained unaffected by" the subsequent work on
the machine. Michalko, 451 A.2d at 186. In the instant case, it is
undisputed that the fertilizer products underwent substantial change
after leaving defendants' hands.
The two other cases relied on by the District Court did not involve raw
materials or component parts, but rather, purchasers who had removed
safety devices from the defendants' finished products. See Port Authority,
991 F. Supp. at 400 (citing Oquendo, 939 F. Supp. at 362 (removal of
point-of-operation guard and rewiring to bypass interlock mechanism);
and Brown v. United States Stove Co., 484 A.2d 1234, 1239-41 (N.J.
1984) (purchaser removed safety valves from space heater)).
12
fertilizer products were dangerous in and of themselves.
Under plaintiff's own allegations, the raw ammonium
nitrate and urea sold by defendants were not explosive until
the terrorists purposefully manipulated and adulterated
them by mixing them together with additional chemicals
such that they were transformed into energized materials
that could be incorporated into an explosive charge. The
danger to plaintiff was presented not by the raw materials,
but by a bomb that incorporated the raw materials after
they had been substantially altered. In addition, defendants
had no control over the fertilizer once it was sold and no
control over the final assembly of the bomb.
Moreover, under the NJPLA, a plaintiff must prove"that
the product causing the harm was not reasonablyfit,
suitable or safe for its intended purpose." N.J.S.A. 2A:58C-
2 (emphasis added); see also Zaza, 675 A.2d at 627 (stating
that a "manufacturer has a duty to ensure that the
products its places into the stream of commerce are safe
when used for their intended purposes"). The
"unforeseeable misuse of a product may not give rise to
strict liability." Suter v. San Angelo Foundry and Mach. Co.,
406 A.2d 140, 144 (N.J. 1979). "A product is not in a
defective condition when it is safe for normal consumption
and handling." Id. (quoting Restatement (Second) of Torts,
S 402A cmt. h). Where "the use of the product is beyond its
intended or reasonably anticipated scope," an injury
resulting from that use is "not . . . probative of whether the
product was fit, suitable, and safe." Id. There is no
allegation here that the fertilizer products were unsafe for
their intended purposes, that is, when used as fertilizer.
Plaintiff attempts to argue that defendants should be
liable nonetheless because the New Jersey courts have held
that a manufacturer's duty also encompasses objectively
foreseeable misuses and alterations. See Oquendo, 939 F.
Supp. at 362 (D.N.J. 1996) ("New Jersey courts have held
manufacturers strictly liable for products, despite another's
subsequent substantial alterations, where those alterations
were objectively foreseeable and likely to cause injuries.");
Jurado v. Western Gear Works, 619 A.2d 1312, 1317 (N.J.
1993) ("Hence, the plaintiff in a design-defect products
liability suit may succeed even if the product was misused,
13
as long as the misuse or alteration was objectively
foreseeable."); Soler v. Castmaster, 484 A.2d 1225, 1232
(N.J. 1984) ("Thus, in the event of either a substantial
alteration or misuse, the manufacturer will be responsible
for resultant injuries to an operator if the alteration or
misuse implicated in the actual use of the machine was
foreseeable and could have been prevented or reduced by
the manufacturer.").
We conclude, however, that the alteration and misuse of
defendants' fertilizer products were not objectively
foreseeable. We reject, therefore, plaintiff's attempt to hold
defendants liable under this theory. The court in Oquendo
set forth New Jersey law as follows:
Objective foreseeability means reasonable
foreseeability. The standard "does not affix
responsibility for future events that are only
theoretically, remotely, or just possibly foreseeable, or
even simply subjectively foreseen by a particular
manufacturer." . . . Rather it "applies to those future
occurrences that, in light of the general experience
within the industry when the product was
manufactured, objectively and reasonably could have
been anticipated."
Oquendo, 939 F. Supp. at 362 (quoting Brown v. United
States Stove Co., 484 A.2d 1234, 1241 (N.J. 1984)).
Significantly, the fact that plaintiff alleges that defendants
were aware of previous instances in which fertilizer
products were used in bombs does not suffice to establish
objective foreseeability. "Such knowledge . . . tends to show
only subjective foreseeability, and . . . subjective
foreseeability is irrelevant to the [objective] foreseeability
determination." Id. at 363.
Plaintiff argued below, and again on appeal, that the
issues of objective foreseeability and reasonableness should
be left for a jury to decide. We recognize that these issues
are indeed generally a matter to be determined by a jury.
See Soler, 484 A.2d at 1234. An exception is to be made,
however, where "the inferences are so clear that a court can
say as a matter of law that a reasonable manufacturer
could not have foreseen the change." Id. (quoting
14
parenthetically Merriweather v. E.W. Bliss Co. , 636 F.2d 42,
45 (3d Cir. 1980) (quoting D'Antona v. Hampton Grinding
Wheel Co., 310 A.2d 307 (Pa. Super. Ct. 1973)).
The inferences in this case are indeed so clear that we
can say as a matter of law that the transformation and
integration of the otherwise safe fertilizer products into the
type of explosive device used in the World Trade Center
bombing was not objectively foreseeable to the defendants
at the time of this bombing. We agree with the District
Court's conclusion that:
No jury could reasonably could conclude that one
accidental explosion 50 years ago, one terrorist act in
this country almost 30 years ago, and scattered
terrorists incidents throughout the world over the
course of the last 30 years would make an incident like
the World Trade Center bombing anything more than a
remote or theoretical possibility.
Port Authority of New York & New Jersey, 991 F. Supp. at
402-03.
We, of course, must follow the precedents of the New
Jersey Supreme Court. Travelers Indemnity Co. v. DiBartolo,
131 F.3d 343, 348 (3d Cir. 1997). The District Court's
conclusion is consistent with the refusal of the New Jersey
Supreme Court to impose a duty in cases involving
outrageous misuses of a product wholly unrelated to its
intended purpose, where such a duty would expose
manufacturers to endless liability. See, e.g. , Jurado, 619
A.2d at 1318 ("If . . . a plaintiff undertakes to use his power
saw as a nail clipper and thereby snips his digits, he will
not be heard to complain. . . .") (citation omitted); Suter,
406 A.2d at 144 ("[T]he manufacturer of a knife cannot be
charged with strict liability when the knife is used as a
toothpick and the user complains because the sharp edge
cuts."); see also Taylor v. General Elec. Co., 505 A.2d 190,
193 (N.J. Super. Ct. App. Div. 1986) (holding that bleach
manufacturer had no duty to warn against using plastic
Clorox bottles to carry gasoline because such a duty would
cover an infinite variety of misuses).
We agree with the District Court that imposing a duty on
defendants in this case would be unfair. "Ultimately, the
15
determination of the existence of a duty is a question of
fairness and public policy. Foreseeability of injury to
another is important, but not dispositive. Fairness, not
foreseeability alone, is the test." Kuzmicz v. Ivy Hill Park
Apartments, Inc., 688 A.2d 1018, 1020 (N.J. 1997). Indeed,
it would be grossly unfair to impose a duty on defendants
to anticipate and prevent the use of their products as one
part of a terrorist's explosive device. Their products were
not explosive in and of themselves, without being mixed
with other substances and incorporated into a bomb.
Finally, imposing a duty in this case would expand the
scope of manufacturers' liability under New Jersey law, a
result contrary to the legislative policy of the NJPLA, which
"has been interpreted as evincing a legislative policy to limit
the expansion of products-liability law." Zaza, 675 A.2d at
627 (internal quote marks omitted). We leave such an
expansion of duty to the legislature.
Similarly, under New York law, we find that no duty
exists that would provide a basis for liability. The
manufacturer of a component part is not liable for the ways
in which a purchaser subsequently processes or integrates
that product. In Munger v. Heider Mfg. Corp., 456 N.Y.S.2d
271, 273 (App. Div. 1982), the court held that
manufacturers of component parts, not themselves
defectively designed, could not be liable to one injured by
the malfunction of the assembled unit. Indeed, under New
York law, a manufacturer is not liable where its product
became dangerous only due to substantial alteration even
if the product is not a component part or raw material. In
Robinson v. Reed-Prentice Div. of Package Mach. Co., 403
N.E.2d 440, 441 (N.Y. 1980), the New York Court of
Appeals held that "a manufacturer of a product may not be
cast in damages, either on a strict products liability or
negligence cause of action, where, after the product leaves
the possession and control of the manufacturer, there is a
subsequent modification which substantially alters the
product and is the proximate cause of plaintiff's injuries."
In Robinson, the court rejected the plaintiff's attempt to
hold a machine manufacturer liable for an injury caused
because safety guards were removed, saying "[m]aterial
alterations at the hands of a third party which work a
16
substantial change in the condition in which the product
was sold . . . are not within the ambit of the manufacturer's
responsibility." Id. at 444.
Another New York case, Elsroth v. Johnson & Johnson,
700 F. Supp. 151 (S.D.N.Y. 1988), also establishes that a
manufacturer cannot be held liable for failing to add a
safety device to its product to prevent other substances
from being combined with it. In that case, an individual
laced Tylenol capsules with cyanide and replaced the
deadly product on store shelves, causing a consumer to die
after ingesting the capsules. Id. at 153-54. Thus, like the
instant case, Elsroth concerned a criminal who injured a
victim by adulterating the defendant's product. The plaintiff
alleged that the manufacturer could have prevented the
death by producing the drug in caplet form, which would
have made it more difficult for a criminal to adulterate the
product. Id. at 160, 163. The court rejected this argument,
holding that "there exists no common law duty requiring .
. . manufacturers to design their product in such a way as
to anticipate and frustrate criminal tampering." Id. at 164.
This limiting principle is not altered even if the misuse of
the product might be foreseeable. In Elsroth, the
defendant's product had been tampered with in the same
way four years earlier. Id. at 153. Similarly, in Robinson,
the court concluded that the machine manufacturer had no
duty to prevent disengagement of a safety device"however
foreseeable that modification may have been." Robinson,
403 N.E.2d at 444; see also McCarthy v. Sturm, Ruger, and
Co., 916 F. Supp. 366, 369 (S.D.N.Y. 1996) (holding as a
matter of law that defendant, a manufacturer of
ammunition, owed no duty to prevent the criminal misuse
of ammunition, regardless of its foreseeability).
On appeal, plaintiff attempts to distinguish these New
York cases on their facts but fails to provide any reason
why the principles and rules articulated in them are
inapplicable to this case. Plaintiff relies exclusively on the
proposition that a manufacturer has a duty to make its
product safe when "used for its intended purpose or for an
unintended but reasonably foreseeable purpose." Lugo v.
LJN Toys, Ltd., 552 N.E.2d 162, 163 (N.Y. 1990); Micallef v.
Miehle Co., 348 N.E.2d 571, 577 (N.Y. 1976). The fatal flaw
17
in the argument is that plaintiff ignores the more specific
rule applicable here, that where a product has undergone
substantial alteration after leaving the manufacturer's
control and it is the alteration that creates the danger, the
prevention of such alteration is not within the scope of the
manufacturer's responsibility. Moreover, Lugo and Micallef,
the cases cited by plaintiff, are merely examples of a
manufacturer making a product that was unsafe even when
used precisely in the manner that the manufacturer
anticipated. See Lugo, 552 N.E.2d at 163; Micallef, 348
N.E.2d at 577. Neither case supports the imposition of
liability on a manufacturer of fertilizer products, which are
safe when used for their intended purposes but were
rendered unsafe by terrorists who substantially altered the
products so that they could be used for a violent purpose
wholly foreign to their intended purposes.
Because no duty exists under the law of either New
Jersey or New York, we find that it was appropriate for the
District Court to dismiss the Amended Complaint for failure
to state a claim upon which relief could be granted.
F. Proximate Causation
The District Court also properly concluded that, under
the law of either jurisdiction, defendants' actions or
inactions were not the proximate cause of the World Trade
Center bombing.
As the District Court explained, the correct legal
framework under New Jersey law is set forth in Zaza:
Utilization of [the] term [proximate cause] to draw
judicial lines beyond which liability will not be
extended is fundamentally . . . an instrument of
fairness and policy, although the conclusion is
frequently expressed in the confusing language of
causation, "foreseeability" and "natural and probable
consequences." Many years ago a case in this State hit
it on the head when it was said that the determination
of proximate cause by a court is to be based "upon
mixed considerations of logic, common sense, justice,
policy and precedent."
Zaza, 675 A.2d at 635 (quoting Caputzal v. Lindsay Co.,
222 A.2d 513, 517 (N.J. 1966)).
18
In another case, also cited by the District Court, the New
Jersey Supreme Court provided the following guidance:
A negligent act is not necessarily a substantial factor or
proximate cause of an accident simply because it
contributed to the occurrence in the sense that absent
such an act the accident would not have transpired.
Rather, the critical consideration, in the context of
multiple factors contributing to the cause of the
accident, is whether the faulty act was itself too
remotely or insignificantly related to the accident. If it
can fairly be regarded as sufficiently remote or
insignificant in relation to the eventual accident then,
in a legal sense, such fault does not constitute"a
cause of the accident, . . . [but] simply presents the
condition under which the injury was received, . . .."
Brown v. United States Stove Co., 484 A.2d 1234, 1243
(N.J. 1984) (citations omitted).
In Brown, the court also noted that, with regard to the
subsequent alteration of a product, "if the original defect,
although not the sole cause of the accident, constituted a
contributing or concurrent proximate cause in conjunction
with the subsequent alteration, the [original manufacturer]
will remain liable." Id. at 1242. Furthermore, "[t]he critical
factor in determining whether a subsequent substantial
alteration of a product or its misuse can be attributed to a
manufacturer as a proximate result of an original design
defect under the risk-utility standard is `foreseeability.' " Id.
at 1240.
Plaintiff argued below and on appeal that the issue of
proximate causation is for a jury to decide. The District
Court properly recognized, however, that the court may
conclude as a matter of law that defendants' actions were
not the proximate cause of the plaintiff's injury."The issue
of responsibility for the highly extraordinary consequence is
also a matter of law for the court." Griesenbeck v. Walker,
488 A.2d 1038, 1043 (N.J. Super. Ct. App. Div. 1985);
accord Caputzal, 222 A.2d at 518 ("The idea of non-liability
for the highly extraordinary consequence as a matter of law
for the court has already been recognized in this state.").
Furthermore, even if the existence of a duty may not be
19
resolved as a matter of law, it may still be appropriate to
decide the issue of proximate causation as a matter of law.
See Brown, 484 A.2d 1244 (finding a genuine issue of
material fact with respect to the existence of a duty, but
granting summary judgment on the issue of proximate
cause). The New Jersey courts have on many occasions
held that proximate causation did not exist as a matter of
law. See Griesenbeck, 488 A.2d at 1043; Jensen v.
Schooley's Mountain Inn, Inc., 522 A.2d 1043, 1045 (N.J.
Super. Ct. App. Div. 1987); Brown, 484 A.2d at 1244;
Caputzal, 222 A.2d at 518.
Similarly, under New York law, a defendant is not held
liable for every conceivable consequence that might
somehow be causally related to its conduct. See Dyer v.
Norstar Bank, N.A., 588 N.Y.S.2d 499, 499 (App. Div. 1992)
("[C]onceivability is not the equivalent of foreseeability.");
Van Valkenburgh v. Robinson, 639 N.Y.S.2d 149, 151 (App.
Div. 1996) (holding no proximate cause where injury was
possible, but not probable, result of negligence). As in New
Jersey, courts use proximate cause to draw judicial lines to
limit liability. See Ventricelli v. Kinney System Rent a Car,
Inc., 383 N.E.2d 1149, 1149 (N.Y. 1978) ("What we do mean
by the word `proximate' is, that because of convenience, of
public policy, of a rough sense of justice, the law arbitrarily
declines to trace a series of events beyond a certain point.").
As the District Court recognized, in New York, as in New
Jersey, "questions of whether an intervening act severs the
chain of causation depend on the foreseeability of the
intervening act and should be determined by thefinder of
fact." McCarthy, 916 F. Supp. at 372 (citation omitted).
"However, in appropriate circumstances, the court may
resolve the issue as a matter of law. Those cases generally
involve independent intervening acts which operate upon
but do not flow from the original act." Id.
We find the decision of the Tenth Circuit in Gaines-Tabb
v. ICI Explosives, USA, Inc., 160 F.3d 613 (10th Cir. 1998),
to be persuasive on the issue of proximate causation. In
that case, the plaintiffs sued the alleged manufacturers of
the fertilizer used in the Oklahoma City bombing. The
District Court dismissed the complaint for failure to state a
claim, and the Tenth Circuit affirmed. Although that case
20
was not decided under New York or New Jersey law, the
principles and doctrines applied by the court are similar to
those in the instant case. The court noted that causation
was generally a question of fact, but that "the question
becomes an issue of law when there is no evidence from
which a jury could reasonably find the required proximate,
causal nexus between the careless act and the resulting
injuries." Id. at 620 (citation omitted). Applying the relevant
state law, the court wrote:
[W]e hold that as a matter of law it was not foreseeable
to defendants that the [ammonium nitrate] that they
distributed to the Mid-Kansas Co-op would be put to
such a use as to blow up the Murrah Building.
Because the conduct of the bomber or bombers was
unforeseeable, independent of the acts of defendants,
and adequate by itself to bring about plaintiffs'
injuries, the criminal activities of the bomber or
bombers acted as the supervening cause of plaintiffs'
injuries. Because of the lack of proximate cause,
plaintiffs have failed to state a claim for negligence.
Id. at 621.
In the instant case, we similarly hold as a matter of law
that the World Trade Center bombing was not a natural or
probable consequence of any design defect in defendants'
products. In addition, the terrorists' actions were
superseding and intervening events breaking the chain of
causation. Thus, we find that, under the law of either
jurisdiction, the District Court was correct infinding the
World Trade Center bombing was not proximately caused
by defendants. Rather, it was caused by the terrorists'
intentional acts to create an explosive device and to cause
the harm to the World Trade Center and its occupants.
Therefore, the District Court correctly concluded that
plaintiff failed to state a claim upon which relief could be
granted.
G. Failure to Warn
The District Court dismissed plaintiff's failure to warn
claims on two independent grounds: first, that defendants
owed no duty to warn the middlemen; second, that plaintiff
is unable to allege facts showing that such a warning would
21
have prevented the harm. We agree with the District Court
on both theories.
Plaintiff alleges that defendants owed a duty to warn the
distributors, wholesalers, retailers, and other suppliers not
to sell the fertilizers to customers without confirming "that
buyers in the general and unrestricted public market have
legitimate and lawful purposes for use of defendants'
products." Essentially, plaintiff's claim is that defendants
negligently marketed their products to the general public,
not that defendants failed to warn users of the products'
dangers.
As the District Court noted, plaintiff cannot point to a
single case that supports its theory. The parties have raised
the issue of whether the New Jersey Products Liability Act
acts as a bar to plaintiff's theory. The NJPLA requires only
a warning "that communicates adequate information on the
dangers and safe use of the product taking into account the
characteristics of, and the ordinary knowledge common to,
the persons by whom the product is intended to be used."
N.J.S.A. S 2A:58C-4. Plaintiff argues that, because the
NJPLA "is not intended to codify all the issues related to
products liability," id. at S 2A:58C-1, there is no statutory
bar. Defendants argue that, by requiring only warnings
about intended uses, the statute precludes any additional
duties to warn. Like the District Court, we see no need to
resolve this question because no cases, even under the
common law, support the existence of such a duty. The
cases cited by plaintiff do not support its existence at all. In
the first case, Parks v. Pep Boys, 659 A.2d 471 (N.J. Super.
Ct. App. Div. 1995), the plaintiff did not assert a failure to
warn claim, nor did it sue the manufacturer at all. The
second case, Coffman v. Keene Corp., 628 A.2d 710, 718
(N.J. 1993), only discusses the heeding presumption-- the
presumption under New Jersey law that the plaintiff would
have "heeded" the warning if the manufacturer had given
one. Nothing in the opinion imposes a duty on
manufacturers to warn their middlemen. Finally, Macrie v.
SDS Biotech Corp., 630 A.2d 805 (N.J. Super. Ct. App. Div.
1993), does not support the existence of such a duty. That
case involved the question whether the manufacturer has a
duty to warn remote vendees. As the District Court
22
recognized in the instant case, plaintiff is not seeking to
hold the defendants liable for failing to warn the terrorists
of the dangers of the fertilizer products.
Plaintiff's argument similarly fails under New York law.
Plaintiff can cite no case establishing such a duty. The only
case cited, Tucci v. Bossert, 385 N.Y.S.2d 328 (App. Div.
1976) is not on point, as there is no allegation that
defendants in this case failed to warn the party exposed to
the harm -- here, the plaintiff. Furthermore, the suggestion
in Tucci that the adequacy of a warning is a jury issue
should not be taken to mean that the question of the
existence of the duty is a jury issue. As we have seen, the
existence of a duty is properly a question for the court.
Thus, plaintiff can cite no authority (and we canfind
none) under either New Jersey or New York law which
supports the existence of a duty to warn middlemen that
consumers, after purchasing their products, may alter the
products and harm third parties. The District Court
properly dismissed the failure to warn claim on this
ground. See also Gaines-Tabb, 160 F.3d at 625 (holding
that plaintiffs failed to state a failure to warn claim under
Oklahoma law because "defendants had no duty to warn
the suppliers of its product of possible criminal misuse").
In addition, we agree with the District Court that plaintiff
is unable to allege facts showing that an adequate warning
would have prevented the harm. The District Court
observed correctly that under both New Jersey and New
York law, a plaintiff must show proximate cause in a failure
to warn claim. Under New Jersey law, "[i]n a product
liability case plaintiff has the burden of proving that the
failure to give adequate warnings was a proximate cause of
the accident and injuries and that the failure was a
substantial factor in bringing about the happening of the
accident." Malin v. Union Carbide Corp., 530 A.2d 794, 799
(N.J. App. Div. 1987). "If the basis for recovery under strict
liability is inadequacy of warnings or instruction about
dangers, then plaintiff would be required to show that an
adequate warning or instruction would have prevented the
harm." Id. (quoting Campos v. Firestone Tire & Rubber Co.,
485 A.2d 305, 311 (N.J. 1984) (quoting Keeton, Products
Liability--Inadequacy of Information, 48 Tex. L. Rev. 398,
23
414 (1970))). New York law requires the same showing of
proximate cause. See Elsroth, 700 F. Supp. at 166 ("Simply
put, this tragedy would have occurred whether or not there
had been a warning . . . , and the claim, therefore, must
fail.").
Applying this law, we agree with the District Court's
reasoned elaboration of why the failure to warn claim must
fail:
In light of the elaborate efforts the terrorists went
through to commit their heinous crime, it would defy
all logic, common sense, and fairness, the touchstones
of proximate causation, to presume that the World
Trade Center bombing would have been prevented had
Defendants warned their middlemen not to sell to
terrorists because terrorists might use the fertilizer to
create a bomb. Given the terrorists' obvious
determination, the Court cannot presume that even if
the middlemen heeded this warning, the terrorists' plan
would have been thwarted.
Port Authority of New York & New Jersey, 991 F. Supp. at
410.
Thus, the District Court properly found that plaintiff's
failure to warn claim must be dismissed because no
reasonable jury could conclude that the crime could have
been prevented by defendants' warnings to middlemen that
the fertilizer could be criminally misused.
III. Conclusion
For the reasons discussed above, we will affirm the
District Court's dismissal of the Amended Complaint for
failure to state a claim upon which relief may be granted.
24
Hoeveler, District Judge, Concurring:
I concur in the very well developed opinion of Judge
Roth. I am, however, constrained to offer an observation
which may bear the fruit of protection from further similar
disasters. The precedential value of our decision, as well as
that of the Tenth Circuit in Gaines-Tabb v. ICI Explosives,
USA, Inc., 160 F.3d 613 (10th Cir. 1998), rests largely on a
slender and temporal reed: lack of foreseeability of the
intervening criminal act. Whether experience and failure to
use available safeguards will, in time, create new legal
duties on the part of the manufacturer remains to be seen.
We live in a society in which the disgruntled more and more
resort to violence. Appellees' products, so easily convertible
to dangerous qualities, need not -- with proper treatment
-- become a part of that violence.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
25