Artiglio v. Corning Inc.
76 Cal. Rptr. 2d 479, 957 P.2d 1313, 18 Cal.4th 604 (1998)
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Rule of Law:
Under the negligent undertaking doctrine (Restatement (Second) of Torts § 324A), a duty of care to a third party arises only when the risk of physical harm to that third party is foreseeable at the time the undertaking is performed. A parent corporation that performs limited, historical toxicology research on a general material does not owe a duty to end-users of a specific product developed and marketed years later by its subsidiary if the harm was too attenuated and remote at the time of the research.
Facts:
- In 1943, The Dow Chemical Company (Dow Chemical) and Corning Incorporated co-founded Dow Corning Corporation (Dow Corning) to develop and produce silicone products, with each owning 50% of its stock.
- Beginning in 1948 and through the 1950s, Dow Chemical scientists conducted and published toxicological research on various silicones for Dow Corning.
- This research identified potential health hazards, including that some silicones caused irritation and organ weight increases, and that one compound later used in implants could migrate within animal bodies.
- In one 1957 study, Dow Chemical researchers observed that globules in rat livers could be silicone rather than fat but did not include this observation in the final report sent to Dow Corning.
- In 1961, a plastic surgeon approached Dow Corning about using silicones for breast implants, leading to clinical trials in 1962.
- In 1964, Dow Corning established its own medical products division with its own staff of scientists to market breast implants and other devices.
- Dow Chemical never manufactured or sold silicone gel breast implants.
- In 1975, Dow Chemical granted Dow Corning the right to use its tradename and trademark, retaining the right to inspect Dow Corning's manufacturing processes to assure product quality.
Procedural Posture:
- Eda Artiglio and other plaintiffs filed lawsuits against Dow Chemical Company and Dow Corning Corporation in various California state courts.
- The individual lawsuits were coordinated into a single proceeding before the superior court (the trial court of first instance).
- Dow Chemical filed a motion for summary judgment, arguing it owed no duty of care to the plaintiffs.
- The trial court granted Dow Chemical's motion for summary judgment.
- Plaintiffs (as appellants) appealed the judgment to the California Court of Appeal.
- The Court of Appeal affirmed the trial court’s ruling in favor of Dow Chemical (appellee).
- Plaintiffs petitioned the Supreme Court of California for review, which was granted.
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Issue:
Does a parent corporation that provides limited toxicology research to its subsidiary regarding a general product ingredient (silicone) owe a duty of care to end-users of a specific medical product (breast implants) developed and marketed years later by the subsidiary, under the negligent undertaking theory of Restatement (Second) of Torts § 324A?
Opinions:
Majority - Werdegar, J.
No. A parent corporation that provides limited, historical toxicology research to its subsidiary does not owe a duty of care to end-users of a specific product developed years later because the harm to those end-users was not foreseeable at the time of the undertaking. The court reasoned that for a duty to arise under the negligent undertaking theory of § 324A, the actor must recognize that its services are necessary for the protection of the third person. Here, Dow Chemical's research was conducted in the 1940s and 1950s, long before Dow Corning developed and marketed silicone breast implants in the 1960s and beyond. The potential consequence for the plaintiffs was 'exceedingly attenuated and remote' at the time the research was performed. Dow Chemical’s undertaking was limited to specific research projects and was not a broad, ongoing commitment to ensure the safety of all of Dow Corning's future silicone products. The 1975 trademark agreements did not create a new or expanded duty to test products or guarantee their safety.
Dissenting - Mosk, J.
Yes, a triable issue of fact exists as to whether a duty was owed. The dissent argues that the majority improperly decided the issue of foreseeability as a matter of law, when it should be a question of fact for a jury. When Dow Chemical undertook human toxicological research on silicones for biomedical applications, it was foreseeable that individuals would be implanted with silicone devices and could suffer physical harm if the research was performed negligently. The majority’s conclusion that the risk was unforeseeable is, in the dissent's view, an analysis of proximate cause, which is inappropriate at the summary judgment stage. The general principle of negligence is that everyone is responsible for injuries caused by their lack of care, and public policy does not support creating an exception for a company like Dow Chemical.
Analysis:
This decision significantly narrows the application of the negligent undertaking doctrine, particularly in the context of parent-subsidiary corporate liability. The court establishes that foreseeability is a key component of duty under § 324A, and this foreseeability is judged at the time the services are rendered. By framing the issue as one of duty determined by the court, rather than proximate cause for the jury, the ruling makes it more difficult for plaintiffs to hold parent corporations liable for historical, general research that a subsidiary later uses to develop a specific harmful product. This holding reinforces the corporate veil by limiting liability to the specific scope and time frame of the undertaking, thereby protecting parent companies from open-ended liability for all future products developed by their subsidiaries.
