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NEVILLE CHEM. CO. v. UNION CARBIDE CORP.

December 31, 1968

NEVILLE CHEMICAL COMPANY, Plaintiff,
v.
UNION CARBIDE CORPORATION, Defendant



The opinion of the court was delivered by: WEBER

 This case arises from the extreme complexities of the modern hydrocarbon chemical industry. The products involved are derived originally from natural gas production. The gas is reduced to a liquid state, then formed into solids, which then become the basic materials for the manufacture of a wide variety of consumer products. The chain in this case begins with the defendant, Union Carbide, processing the natural gas, reducing it to liquid form, refining it, selling one of the products (we conclude that there are no such things as "by-products" in modern chemical industry) to the plaintiff, Neville Chemical Company. Neville's business is the production of resins for use by the manufacturers of floor tile, shoe soling, rubber matting, adhesives, inks, paints and chewing gum. Some of these in turn sell their products to other manufacturers who produce consumer products, such as shoes, or to the building trades for the installation of floor tiling in buildings.

 Neville Chemical Company had been purchasing a product known as "resin former oil" from Union Carbide for several years. For about two years before the cause of action in this case arose it had been purchasing a grade or type of that oil which had been given the designation of U-171. This product was developed by Union Carbide in an attempt to meet Neville's particular requirements as to color, viscosity, solubility, and polymerizable content, or the degree to which the oil would "jell" or set into a solid, all for the purpose of manufacturing resins by Neville for its industrial customers in the fields mentioned.

 Union Carbide shipped the product to Neville from its facility in the Kanahwa Valley near Charleston, W. Va. It had been collected there from four producing points, one of which was Union Carbide's Seadrift, Texas, plant. The evidence showed that a highly reactive contaminant had been introduced into the production line of this oil at the Seadrift plant. This contaminant had entered into a chemical combination with the natural components of the oil at Seadrift. The Seadrift oil had been transported in barges to the collecting point; and then after mixing with oils from other production points, and further refinement or selection, had been shipped to Neville's plant at Pittsburgh, Pa., by barge and by tank car to Neville's plant at Anaheim, California. At both these plants the resins were made and shipped to various customers in this country and abroad for manufacture into floor tiles, shoe soles, paper coatings, and the like. After these end products had been manufactured and passed into the hands of the consumers, the chemical compound which had been formed by the introduction of the contaminant began its reverse process, breaking down into components, one of which was an acid which emitted a persistent foul odor whose description taxed the powers of witnesses to explain, but which required the removal or destruction of the finished products.

 Neville brought this suit against Union Carbide based upon allegations of negligence and breach of warranty, and claimed damages for its own business losses and expenses as well as indemnity for damage claims which it had settled with its own customers.

 The trial before the jury was conducted in two stages. All evidence as to liability was submitted to the jury on special interrogatories, and after their findings of liability the issues of damages were tried and the jury returned a verdict for the plaintiff on the various categories of damages submitted, in the total amount of $2,151,534.

 We now face post-trial motions of the defendant for judgment notwithstanding the verdict, alterations and amendment of judgment, and new trial.

 This case was well and ably prepared and tried by counsel on both sides. The jury trial extended over a seven week period and presented technical scientific evidence of a complex nature on the questions of liability, and voluminous accounting testimony on damages. The Court appreciates the skill and industry of counsel in presenting these complex matters in orderly and logical form to the court and jury, and even more the unfailing courtesy which all counsel extended to each other and the court throughout the long and strenuously contested proceedings.

 Nevertheless, a verdict was rendered in a very large amount, and we are faced with reviewing the trial on the defendant's post-trial motions. Because of the size of the verdict and the strenuously contested issues, we are very conscious that our decision on the post-trial motions may not end the lawsuit. Legal issues as to both liability and damages are complex and the strenuous contest over these issues may be expected to lead to the Court of Appeals despite whatever determination we may make of them here.

 We do not speak of this prospect of appeal as an excuse for our failure to give adequate consideration to all grounds advanced in the post-trial motions. They are numerous. We have considered them all, but we are giving principal attention in this opinion to those which we believe to be most critical and most strongly advanced.

 The jury having found for the plaintiff we must take all the evidence and all the inferences reasonably arising therefrom in the light most favorable to the plaintiff.

 The defendant's arguments are principally directed to the following topics:

 
I. Proof that any action of the defendant was the proximate cause of plaintiff's damages was insufficient.
 
II. The disclaimer provisions of the sales agreement limit the plaintiff's claim in time and amount, and bar recovery for breach of warranty or negligence.
 
III. Damages awarded plaintiff for settlement of its customer claims are contrary to the law and the evidence in this case.
 
IV. Damages awarded plaintiff for its business losses are contrary to the law and the evidence in this case.

 We will consider each of these topics under the applicable sections of this opinion.

 At the outset we must consider defendant's contentions that no sufficient evidence was produced to support a finding that a causal relation existed between defendant's resin former oil U-171 and the damages claimed, both directly by Neville, and by Neville on account of settlement of customers' claims.

 We believe this causal relationship was fully supported by both circumstantial and scientific evidence. Various customers of Neville in different product lines such as floor tile, shoe soles and heels, rubber matting, paints and paper coatings, all experienced odor problems beginning at about the same time. By a process of elimination, each made an independent determination that particular Neville resins were the source of their problem, and the problem disappeared when they ceased using the particular Neville resin. By a similar process of investigation Neville determined that the odor was traceable to shipments of defendant's U-171 received after a certain date. Neville had the same problems at two separate processing plants, using different processing methods, but a common ingredient, defendant's U-171. Other Neville resins which did not contain U-171 were free of odor. When Neville ceased using U-171 the odor complaints vanished.

 The scientific research conducted thereafter confirmed these conclusions, and traced the offending material to defendant's Seadrift, Texas plant. At different times material from four separate plants of defendant were combined to produce the U-171 delivered to Neville, but it was only those shipments which contained the Seadrift plant production which were found offensive. Later investigation revealed that the dripolene at the Seadrift plant had come in contact with ethyl acrylate, a substance not naturally present in the hydrocarbons from which the dripolene is produced. The evidence showed that the ethyl acrylate contact at Seadrift began at a certain date, when a change in the production process was introduced, and that all subsequent reactions are identified in proper time sequence with that date.

 The scientific testimony showed that ethyl acrylate is a known highly reactive chemical, that its combination with the hydrocarbons in the ethylene process produces a known and expectable chemical reaction which should be recognized by trained chemists. This reaction produces a norbornene ester, whose presence in the dripolene and the resultant resin former oil U-171 is not readily detectable unless the possibility of its presence is known. The norbornene ester is not a stable compound and the process of its formation is reversible. In its decomposition its acid factor is liberated, and this is the source of the obnoxious odor. Thus the Seadrift dripolene came into contact with the ethyl acrylate, the norbornene ester was formed, the dripolene was shipped to defendant's Charleston, West Virginia plant and mixed with dripolene from other production sources, cuts were drawn off from this mixture to meet plaintiff's requirements as to color and viscosity and shipped to plaintiff's plants at Neville Island, Pennsylvania, and Anaheim, California. There the oil was incorporated into resins which were sold to plaintiff's customers, who in turn incorporated the resins into floor title, shoe soles, paints and paper coatings. Only when these products were ready for the ultimate consumer did the reaction from the norbornene ester begin and the obnoxious odor appear.

 We believe that the ring of circumstantial evidence was strong, and was reinforced by the scientific testimony. The most striking evidence to support this conclusion came from one of defendant's own witnesses, that defendant knowingly changed its production process by the re-introduction of dripolene which had been exposed to ethyl acrylate into its dripolene stream re-run. It was aware of possible adverse reaction and defendant's own employees were alerted to watch for and report any such reaction. This evidence shows that defendant undertook a known and calculated risk in the hope of increasing the yield at its Seadrift plant.

 Defendant's evidence to rebut this chain of circumstantial and scientific evidence as to causal relationship was not sufficient to overcome plaintiff's proofs in the minds of the jury. Plaintiff's evidence supports the jury's finding both as to the causal relationship and as to the reasonableness of plaintiff's actions in settling the claims of its customers.

 As to evidence in support of the finding of negligence much of which we have discussed above applies. The jury found defendant negligent both in the processing of the dripolene by allowing it to come in contact with the highly reactive ethyl acrylate, and in the failure to warn plaintiff of its change in processing methods whereby an expectable chemical reaction might later develop. Defendant did warn its own employees who were subsequent in the production process to be on the alert, but it did not warn plaintiff.

 It was shown that the presence of the norbornene ester was not expectable nor was it readily detectable in the product delivered to plaintiff until the reverse reaction set in. Even then, it required long and extensive research on the part of plaintiff to isolate and identify the offending component, without the prior knowledge of the presence of ethyl acrylate in the original processing.

 Defendant argues that plaintiff presented no evidence of the standard of care used in the trade by which defendant's conduct could be measured. We do not believe that any such evidence was essential to plaintiff's case. Such evidence might be relevant to the question of negligence, but it is not controlling as to whether, by conforming to it, the defendant has exercised the care of a reasonable man, or by departing from it has failed to exercise such care. "Customs which are entirely reasonable under the ordinary circumstances which give rise to them may become quite unreasonable in the light of a single fact in the particular case." See Restatement, Torts 2nd, ยง 295A, Comment C.; Maize v. Atlantic Refining Co., 352 Pa. 51, 41 A.2d 850, 160 A.L.R. 449 [1945].

 We conclude that the plaintiff's evidence was wholly sufficient to support the conclusions that defendant's use of ethyl acrylate in the processing of dripolene and its failure to warn plaintiff of the possible reaction from this use was the proximate cause of the damages suffered by plaintiff and the customers of plaintiff for which plaintiff made settlement. We also conclude that such use of ethyl acrylate was negligent in that it created an unreasonable risk of harm to plaintiff and the users of plaintiff's products, and that such unreasonable risk of harm was also created by the failure of defendant to warn plaintiff of the presence of the unknown and unsuspected reactive ingredient, the consequences of which were not only foreseeable, but actually anticipated by defendant.

 II. THE EFFECT OF THE DISCLAIMERS

 Defendant relies upon the disclaimers and the time and damages limitations printed in its sales agreement form, as relieving it from any warranty obligation.

 The time limitation provides that buyer unqualifiedly accepts all material and waives all claims in respect thereto unless he gives notice of a claim within fifteen days of delivery. The damage limitation limits claims to the purchase price of the material.

 The disclaimer states: "Buyer assumes all risk and liability for the results obtained by the use of the material delivered hereunder in manufacturing process of Buyer or in combination with other substances."

 It was further provided: "This agreement contains all of the representations and agreements between the parties hereto and no warranties shall be implied. * * *"


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