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Howrey LLP
Trade
organizations often issue standards and approved methods
for using and installing products and equipment. The standards
and use guidelines generally are intended to improve the
safety of the products. Such practices, however, give rise
to an interesting legal question: Does a trade organization
that voluntarily creates and issues safety standards subject
itself to third-party liability relating to the standards?
The
National Spa and Pool Institute, a trade organization of
manufacturers and retailers of swimming pools and pool equipment,
faced such liability. NSPI has drafted and published voluntary
safety standards for the swimming pool industry since the
late 1950s. In 1991, a diving accident left a 16-year-old
boy a quadriplegic. The jump board off which the boy dove
met NSPI safety standards for the type of pool to which
it was attached.
The
NSPI had commissioned a study in the early 1970s which revealed
that the exact jump board-pool combination involved in the
16-year-old's spinal cord injury put a certain class of
divers at risk of serious injury. NSPI did not alter its
safety standard in light of this study and continued to
permit the use of the jump board-pool combination. However,
NSPI did publish a brochure that it sent to NSPI members
(with the intention that it be shared with consumers) in
which it urged that divers steer up immediately upon entering
the water to prevent diving injuries.
The
boy and his parents brought suit against a number of defendants,
including NSPI. This litigation resulted in a published
opinion from the Washington Court of Appeals. Meneely
v. S.R. Smith, Inc., 5 P.3d 49, 2000 Wash. App. LEXIS
1379 (2000). At the trial level, the court held that NSPI
owed plaintiff and other consumers a duty to exercise due
care in formulating its safety standards and warning about
risks of injury. A jury found that NSPI breached this duty
and assigned NSPI 60 percent of the liability. The jury
awarded $11 million in damages. NSPI appealed.
The
Washington Court of Appeals recently affirmed the trial
court, holding that a trade organization such as NSPI assumes
a duty of care to the ultimate consumer when it "undertakes
the task of setting safety standards and fails to change
those standards or issue warning after it becomes aware
of a risk posed by the standards." The court found
that NSPI "voluntarily assumed the duty" to warn
plaintiff and other consumers of the risks posed by the
jump board-pool combination when it promulgated industrywide
safety standards upon which pool and board manufacturers
relied. The court also ruled that merely warning of the
danger posed to at-risk divers was not be sufficient for
the trade organization to escape liability. The court held
that NSPI breached its duty "when it did not change
the standard after it knew that studies showed the pool
and board combination was dangerous for certain divers."
In
reaching its decision, the Meneely court acknowledged
a New Jersey decision, Meyers v. Donnatacci, 220
N.J. Super. 73, 531 A.2d 398 (1987). The litigation in Meyers
v. Donnatacci arose when the plaintiff dove into the
shallow end of a pool and suffered injuries that left him
a quadriplegic. The plaintiff sued a number of defendants,
including NSPI. NSPI had issued a revised set of standards
known as "Suggested Minimum Standards for Residential
Swimming Pools." The plaintiff asserted that NSPI was
aware of a correlation between shallow-end pool diving and
spinal cord injuries 10 years before the plaintiff's accident
but failed to distribute pool safety information. The court
faced the question of whether a trade association such as
NSPI -- which performs research and surveys and disseminates
safety information -- could be held liable to third-party
user of a pool product manufactured or installed by a NSPI
member. The plaintiff asserted that NSPI held itself out
as an expert in the area of safety standards for swimming
pools.
The
court disagreed, holding that NSPI was not liable for the
plaintiff's injuries. The court noted that NSPI had no authority
to enforce compliance with its voluntary standards. The
court also noted that NSPI did not establish design or construction
standards for pools; it only helped to establish uniformity
among those who voluntarily chose to abide by the standards.
The
court rejected the idea that the plaintiff's injuries were
foreseeable simply because an earlier report, which was
produced for NSPI and described by the court as "extremely
technical and inclusive," may have indicated a relationship
between a diver's physical build, speed upon entering the
water and drag time while under the water. The court also
rejected the idea that a subsequent report prepared for
a subdivision of NSPI made plaintiff's injuries foreseeable.
The court noted that the second report questioned the value
of posting signs and suggested a program to develop public
awareness of the risks posed by shallow-end diving. In short,
the court held that these publications did not make it foreseeable
that the plaintiff would be injured in the manner that he
was. In the court's eyes, to hold that NSPI had a duty of
care to the plaintiff would be to elevate NSPI "to
the status of a rule-making body," and the court refused
to do that.
The
Meneely court distinguished the facts before it from
the Meyers v. Donnatacci case by noting that NSPI
did not in any way "increase the risk" to the
consumer in Meyers v. Donnatacci because shallow-end
diving is a risk that exists independently of NSPI's acts.
The court stated that NSPI never had undertaken a duty to
warn against shallow-end pool diving. In contrast, the court
found that NSPI "promulgated specific safety standards
relating to diving boards. And, it failed to change the
standard after it knew of the risk."
In
contrast to the Meneely decision is an Illinois appellate
court case dealing with trade association guidelines, Bailey
v. Edward Hines Lumber Co., 308 Ill.App.3d 58, 719 N.E.2d
178 (1999), app. denied, Edward Hines Lumber Co. v. Truss
Plate Institute (In re Bailey), 187 Ill.2d 565,
724 N.E.2d 1266 (2000). The litigation in the Bailey
case arose after construction workers were injured when
the wood roof truss system they were installing collapsed.
The Truss Plate Institute, a trade association representing
the truss plate manufacturing industry, publishes a document
commonly referred to as the "Green Sheet." The
Green Sheet is a doubled-sided, legal-sized sheet outlining
"tentative recommendations" for bracing wood trusses.
The Green Sheet contains express disclaimers warning that
the recommendations on it should not be considered the only
method of bracing a roof system or a standard and should
not necessarily be given preference over the design of an
architect or engineer. Hines Lumber had designed, built
and furnished the truss system. Hines Lumber also had provided
the workers with the Green Sheet.
The
injured construction workers sued Hines Lumber, and Hines
Lumber brought TPI into the litigation. The trial court
granted TPI's summary judgment motion and denied Hines'
motion for reconsideration. Hines Lumber appealed. Whether
"a construction trade association, which disseminates
discretionary installation recommendations for the product
it represents, owes a duty of reasonable care to construction
workers who rely on these recommendations" was an issue
of first impression for the Illinois appellate court.
The
Bailey court looked at cases from other jurisdictions
in which no duties were imposed on trade associations because
the trade association did not manufacture the product causing
the injury. The Bailey court cited Evenson v.
Osmose Wood Preserving, Inc., 760 F.Supp. 1345 (S.D.Ind.
1990) for the proposition that a wood preservation industry
trade association does not owe a duty to warn a wood treatment
worker against the dangers of a pesticide when the trade
association does not manufacture, sell, distribute, design,
test, conduct safety research on or set standards for the
pesticide. The Bailey court noted that in Klein
v. Council of Chemical Associations, 587 F.Supp. 213
(E.D.Pa. 1984), the court found that trade associations
in the printing industry were not liable for a printing
industry worker's cancer because the trade associations
neither produced nor supplied the chemicals.
In
addition, the Bailey court focused on whether or
not the trade association's standards were discretionary
in nature and whether or not the trade association exercised
control over product manufacturers. The Bailey court
examined the Meyers v. Donnatacci decision, noting
that the Meyers court discussed NSPI's lack of power
to enforce its discretionary standards for pool depth. The
Bailey court also cited Beasock v. Dioguardi Enterprises,
Inc., 130 Misc.2d 25, 494 N.Y.S.2d 974 (1985) in which
a tire and rim industry trade association was found not
liable for man's death caused by a tire explosion resulting
from a tire-rim mismatch listed in the trade association's
publication because the publication was only advisory and
the trade association did not exercise control over installation.
The Bailey court cited King v. National Spa and
Pool Institute, Inc., 570 So.2d 612 (Ala. 1990), distinguishing
the King court's holding that NSPI owed consumers a duty
of care by focusing on the King court's language
that NSPI sought to influence its members' designs and construction
practices after studying consumer needs.
Ultimately,
the Bailey court declined to hold TPI liable on the
grounds that the trade association neither manufactured
the truss system nor exercised any control over the product
manufacturer. In finding that TPI owed no duty of care to
the construction workers, the court noted that TPI lacked
oversight and control over the use of its recommendations.
Id. at 183. Indeed, Hines Lumber had given the construction
workers an outdated Green Sheet. The court found that TPI's
lack of control over access to and use of the recommendations
counseled against the imposition of a duty. The court disagreed
with Hines Lumber that TPI could have voluntarily undertaken
the duty to distribute the Green Sheets to construction
workers, noting that to find a duty under the voluntary
undertaking doctrine first requires the trade association
to undertake to do an affirmative act. Because TPI did not
volunteer to undertake an affirmative act, the court could
not impose any duty of care on TPI.
The
Bailey decision was not unanimous, however. The presiding
justice dissented, finding that the voluntary undertaking
doctrine applied because TPI voluntarily undertook to publish
and distribute recommendations as to the bracing of wood
trusses. The dissent found the Green Sheet to be a detailed
how-to guide for assembling the truss system and thus was
evidence of a voluntary undertaking. The dissent also rejected
the notion that TPI lacked control and oversight over the
construction workers. The dissent pointed to the deposition
of TPI's managing director, who testified that "the
'mission' of TPI is 'to maintain the… industry on a
sound engineering basis'...." In addition, the managing
director's testimony revealed that the targeted audience
for the Green Sheets was construction workers in the field
who install truss systems.
As
these cases demonstrate, no uniform test now exists to determine
when a trade association will be subject to liability for
voluntarily creating and setting safety standards. Courts
will look at the nature of the standards, the degree of
control held by the trade organizations and their knowledge
of problems relating to their standards.
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For more information about the issues covered in this report, please contact Paul Berning in our San Francisco office at 415-848-4996 or at paulberning@howrey.com or contact your Howrey attorney. For more information about Howrey's Construction Practice Group, click here.
©2000 Howrey LLP
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