144 N.J. 34 (1996) 675 A.2d 620

GERARDO ZAZA AND FRANCES ZAZA, HIS WIFE, PLAINTIFFS-RESPONDENTS,
v.
MARQUESS AND NELL, INC., A CORPORATION D/B IN NEW JERSEY; CALGON CARBON COMPANY, A COMPANY D/B IN NEW JERSEY; WILLIAM MERZ; AND BRENNAN COMPANY, INC., A COMPANY D/B IN NEW JERSEY, DEFENDANTS, AND INTERNATIONAL SHEET METAL & PLATE MFG., INC., A NEW JERSEY CORPORATION, DEFENDANT-APPELLANT.

The Supreme Court of New Jersey.

Argued January 3, 1996. Decided May 9, 1996.

*41 John J. Scanlon argued the cause for appellant (Scanlon & Heim, attorneys).

Alfred D. Alvarez argued the cause for respondents (Mr. Alvarez, attorney; Mr. Alvarez and Andrew S. Maza, on the brief).

The opinion of the Court was delivered by GARIBALDI, J.

This appeal presents the question of whether under the Products Liability Act, N.J.S.A. 2A:58C-1 to -7, a component part fabricator that builds a system component in accordance with the specifications of the owner, which component is not dangerous until it is integrated into the larger system, can be held strictly liable to an injured employee for the failure of the owner, installer-assembler, and training consultant to install safety devices and provide warnings. The Appellate Division found that such a fabricator could be held strictly liable. We now reverse.

*42 I

On January 28, 1990, plaintiff Gerardo Zaza^[1], an employee of Maxwell House Coffee (Maxwell House), a division of General Foods Manufacturing Corporation, discovered a clog in a quench tank located in the Hoboken plant. While working to repair the quench tank, hot molten water and carbon within the quench tank overflowed and landed on plaintiff's back, arms and upper extremities, causing second degree burns over twenty-one percent of plaintiff's body.

The quench tank is an integral part of a large, complex manufacturing process — the Maxwell House trecar-carbon regeneration system — which is used to produce decaffeinated coffee beans. The system contains a multiple hearth furnace, a quench tank, and numerous pipes, watering screws, scrubbers and fans. All of those parts must be fully integrated and assembled in order to create a properly working trecar-carbon regeneration system. It is a two-fold system. In the top portion of the system, the ultimate coffee product is made, and a byproduct (carbon) is reclaimed in the lower portion. The quench tank is located in the lower portion where the carbon regeneration process takes place. After the basic coffee product has been made in the top portion, the carbon, which has been heated in the multiple hearth furnace to 1700 degrees fahrenheit, leaves the furnace through a large tube and enters the quench tank. At the same time the molten carbon enters the quench tank, cool water is pumped into the quench tank at the rate of twenty-two gallons per minute. The superheated carbon-water mixture moves through the quench tank for approximately thirty minutes, then exits the tank through two pipelines, and finally comes to rest in separate storage tanks where it is kept for future processing.

The initial designs for the quench tank were prepared by Maxwell House and were submitted to the engineering firm of *43 Marquess and Nell, Inc., (Marquess) who prepared the final design plans. Marquess contracted with defendant International Sheet Metal & Plate Mfg., Inc. (International) for a fabricated quench tank. Maxwell House hired Brennan Company, Inc. (Brennan) to assemble and integrate the trecar-carbon regeneration system. Calgon Carbon Company (Calgon) was hired to prepare training materials on how to operate the system and to educate Maxwell House employees in the use of the trecar-carbon regeneration system. William J. Merz, an engineer employed by Calgon, conducted a training session for Maxwell House employees on how to use the trecar-carbon regeneration system, including the quench tank. Plaintiff attended the training session.

The specifications on which defendant bid for the quench tank did not require that the fabricator prepare or install any safety devices. Rather, the specifications called for the fabricator to cut holes for the safety devices. The quench tank fabricated by defendant is best described as a stainless steel tank with holes in it. The tank also contains six flanges, which are devices used to hold pipes in place. The quench tank was sold to Maxwell for $7,400. When it was delivered to Maxwell House, professional installers had to connect water ingress piping, carbon extrusion piping and water discharge piping before it could be made operational.

The final plans and specifications for the trecar-carbon regeneration system incorporated three safety devices designed to avoid an overflow of the molten fluid out of the quench tank. These safety devices were to be installed by Maxwell House and Brennan. The devices included a spectacle shut-off valve, a high-level fluid sensor, and an overflow pipe. The spectacle shut-off valve was designed to stop the flow of the molten carbon from leaving the hearth furnace and entering the quench tank whenever personnel were working on the quench tank or associated piping. It was supposed to be located in the chute between the hearth furnace and the quench tank. The high-level fluid sensor was designed to trigger an alarm and light whenever the fluid level in *44 the quench tank reached a dangerous level. The overflow pipe was to be located eight inches below the top of the quench tank and was designed to divert the fluids within the quench tank through a piping system to another location away from the user if the fluids reached a high level within the tank. It is uncontroverted that the installation of the overflow pipe would have prevented the quench tank from pouring out its molten contents on plaintiff.

Although all three safety devices were included in the design plans prepared by Marquess, none was actually in operation at the time plaintiff sustained his injuries. Brennan, the installer, claims that its function was to install and integrate the quench tank into the system based on the plans provided to it by Maxwell House, that Maxwell House decided to omit the safety devices recommended by Marquess, and that Maxwell House approved the installation. Maxwell House's decision to omit the safety devices appears to have been deliberate. Although the spectacle shut-off valve was on site and available when the tank was being installed, Maxwell House chose not to install it. When an engineer informed Maxwell House of the omission, the company chose to disregard the advice.

In June 1991, plaintiff filed this action against Marquess, Calgon, William J. Merz, Brennan, and International. The complaint against International alleged that strict liability should be imposed because the quench tank was defectively designed and lacked adequate warnings.

Motions for summary judgment were filed by Marquess, Calgon, its employee William J. Merz, and International. Plaintiff filed a motion for summary judgment, opposed defendants' motions for summary judgment and simultaneously cross-motioned for summary judgment as to defendants Marquess and International.

During oral argument on the motions for summary judgment, the trial court attempted to sort out the responsibilities of the designer (Marquess), fabricator (International), training consultant *45 (Calgon) and installer-assembler (Brennan). With respect to International's legal responsibility, the court found that:

[Defendant] doesn't create the spectacle shutoff system, the high liquid sensor device, or the overflow pipe system. He tells me he's the fabricator who makes the holes for them.... And here's a sheet metal guy who prepares pieces of sheet metal that he submits to an installer who puts them together at the site, and he's got all the holes in them. And you're [plaintiff's counsel] saying that he's got a non-delegable duty to the consumer or to the injured party to see to it that the installer puts it in, the manufacturer install his sheet metal properly before it is functional; is that what you're saying?

In granting International's motion for summary judgment, the court reasoned:

With respect to Defendant International, the colloquy that we've had, the discussion we've had on the record is very enlightening and illuminating because it does not appear that the manufacturer of sheet metal that is not the manufacturer of an integrated machine should be held to the same degree of responsibility that one who manufacturers a total machine and that machine when it's put into the stream of commerce creates injury should be held to. The standard for an individual who creates a component part of a machine is whether or not they have properly manufactured that component part. The plaintiff's expert does not indicate that any part of the sheet metal itself, the work done by International caused this unit to be used without the proper safety devices. Therefore, I don't find that there is any material issue of fact with respect to the work that was done by International. Therefore, the motion for the Summary Judgment is granted with respect to International.

At a hearing on a motion for reconsideration, the trial court further elaborated on its rationale for granting International's motion for summary judgment. With respect to the design defect, the court opined:

It was uncontroverted that International Plate Metal did do whatever design they were required to perform, whatever fabricating of the holes and cutouts that were required in the specifications that were given to them by Ma[r]quess & Nell, the designer. There was never any suggestion that International Sheet Metal & Plate Manufacturer was responsible for supervision of the installation. They merely had to do their work and thereafter others were required to install all of the pipes and the safety devices, and the fittings, and the sealants that were necessary to make this skeleton a viable component in this overall unit.

Concerning the alleged failure to warn, the court found:

*46 The plaintiff says the defendant failed to provide warnings. There was no way that the fabricator could even know what the final looks of that machine would be or what type of use the machine would entail or what component parts would be added to that tank in order to make it into a manufacturing instrument, into an operative working unit.

Brennan and Calgon settled. Plaintiff then appealed to the Appellate Division from the order granting summary judgment in favor of International. In his appeal, plaintiff argued that the quench tank was "defective" under N.J.S.A. 2A:58C-2 because: (1) defendant deviated from the design specifications by not incorporating an overflow pipe into the quench tank; (2) defendant failed to provide adequate warnings to Maxwell House and plaintiff; and (3) the quench tank was unsafe for its intended purpose.

The Appellate Division, by a 2-1 majority, reversed the grant of summary judgment in favor of International and remanded the matter to the trial court for further proceedings. According to the Appellate Division majority, whether the quench tank was a complete product or a component part in the trecar-carbon regeneration system was irrelevant. The majority explained that:

[International] had a duty to furnish a safe product, the breach of which triggers strict liability.... The fact that defendant may have understood that Maxwell House would install the safety devices in the holes it cut did not relieve defendant from potential liability.... That fact only relates to the issues of proximate cause.

According to the majority, if installation was not feasible or premature, defendant had a duty to warn foreseeable users — Maxwell House and Maxwell House employees — of the omission and of the dangers of operating the quench tank prior to the installation of the safety devices.

The dissenting member found that it was not "reasonable" to hold a sheet metal fabricator strictly liable for a tank that it built in full accordance with the plans and specifications supplied by the assembler. The dissent opined that it was Maxwell House's *47 obligation to install the safety devices required by the plans before putting the tank into operation.

The dissenting member was also unequivocal in his belief that a warning was not necessary. He wrote:

It [a warning] makes no sense to me. This was not a finished product placed in the stream of commerce. It was a special order, placed after competitive bidding. International has not been shown to have deviated from the specifications and standards required of it in its contract. It is not reasonable to require that warnings be placed on the tank by International as the plans of Maxwell House put all on notice that three safety devices were required. .. . Why was a warning necessary when engineers who were on the site for the very purpose of seeing to it that the plans were followed and that the operation was carried out safely.... Further, a warning would not have served to put the plaintiff on notice. This was not a machine or tool that was put into the hands of a user or worker. It was part of a system installed within a plant as part of a fully designed and integrated manufacturing process.

Defendant appeals to this Court as of right. R. 2:2-1(a).

II

We first focus on whether a fabricator, who produces a non-defective component part for an integrated manufacturing system in accordance with the designs and specifications of the owner, has a legal duty to ensure that the owner and installer-assembler properly integrate the component into the system.

The Products Liability Act, (the Act), N.J.S.A. 2A:58C-1 to -7 applies. The Legislature passed the Act as "remedial legislation to establish clear rules [in] ... actions for damages for harm caused by products, including certain products under which liability is imposed." N.J.S.A. 2A:58C-1. The Act has been interpreted as evincing a legislative policy "to limit the expansion of products-liability law." Roberts v. Rich Foods, Inc., 139 N.J. 365, 374, 654 A.2d 1365 (1995) (quoting Shackil v. Lederle Labs., 116 N.J. 155, 187, 561 A.2d 511 (1989)). The Legislature intended for the Act to limit the liability of manufacturers so as to "balance[] *48 the interests of the public and the individual with a view towards economic reality." Shackil, supra, 116 N.J. at 188, 561 A.2d 511 (quoting Shackil v. Lederle Labs., 219 N.J. Super. 601, 643, 530 A.2d 1287 (1987) (Shebell, J.A.D., dissenting), rev'd., 116 N.J. 155, 561 A.2d 511 (1989)). See also DePrimo v. Lehn & Fink Prods. Co., 223 N.J. Super. 265, 273, 538 A.2d 461 (Law Div. 1987) (finding that in interpreting the Act, courts should "as a matter of sound judicial policy, ... apply this conservative legislative policy").

The Act does not "codify all issues relating to product liability" rather, the Legislature intended it to address "matters that require[d] clarification." Roberts, supra, 139 N.J. at 374, 654 A.2d 1365 (quoting N.J.S.A. 2A:58C-1). The Act left unchanged the three theories under which a manufacturer or seller may be held strictly liable for harm. Jurado v. Western Gear Works, 131 N.J. 375, 384, 619 A.2d 1312 (1993); Dewey v. R.J. Reynolds Tobacco Co., 121 N.J. 69, 94-95, 577 A.2d 1239 (1990); Fabian v. Minster Mach. Co., 258 N.J. Super. 261, 271, 609 A.2d 487 (App. Div.), certif. denied, 130 N.J. 598, 617 A.2d 1220 (1992). Specifically, N.J.S.A. 2A:58C-2 provides:

A manufacturer or seller of a product shall be liable in a product liability action only if the claimant proves by a preponderance of the evidence that the product causing the harm was not reasonably fit, suitable or safe for its intended purpose because it: a. deviated from the design specifications, formulae, or performance standards of the manufacturer or from otherwise identical units manufactured to the same manufacturing specifications or formulae, or b. failed to contain adequate warnings or instructions, or c. was designed in a defective manner.

[Ibid.]

III

Under strict products liability a manufacturer has a duty to ensure that the products it places into the stream of commerce are safe when used for their intended purposes. N.J.S.A. 2A:58C-2. The focus in a strict liability case is on the product *49 itself. Freund v. Cellofilm Properties, Inc., 87 N.J. 229, 238, 432 A.2d 925 (1981); Suter v. San Angelo Foundry & Machine Co., 81 N.J. 150, 169-70, 406 A.2d 140 (1979). A prerequisite of any recovery under strict tort liability is the existence of a defective condition. To succeed under a strict liability design-defect theory, a plaintiff must prove "that the product was defective, that the defect existed when the product left the defendant's control, and that the defect caused injury to a reasonably foreseeable user." Feldman v. Lederle Labs., 97 N.J. 429, 449, 479 A.2d 374 (1984); see Becker v. Baron Bros., 138 N.J. 145, 151, 649 A.2d 613 (1994); O'Brien v. Muskin Corp., 94 N.J. 169, 179, 463 A.2d 298 (1983); Michalko v. Cooke Color & Chem. Corp., 91 N.J. 386, 394, 451 A.2d 179 (1982). An inference of defectiveness may not be drawn from the mere fact that someone was injured. Liability should be imposed only when the manufacturer is responsible for the defective condition. Taylor v. Paul O. Abbe, Inc., 516 F.2d 145, 147 (3d Cir.1975); see also O'Brien, supra, 94 N.J. at 179-80, 463 A.2d 298 (citations omitted) ("The necessity of proving a defect in the product as part of the plaintiff's prima facie case distinguishes strict from absolute liability, and thus prevents the manufacturer from also becoming the insurer of a product.")

The term "defect" is not self-defining and has no universally accepted meaning suitable for every strict products liability case. Soler v. Castmaster, 98 N.J. 137, 145, 484 A.2d 1225 (1984); O'Brien, supra, 94 N.J. at 180, 463 A.2d 298. Defects are classified as design defects, manufacturing defects or inadequate warning defects. Feldman, supra, 97 N.J. at 449, 479 A.2d 374. Generally, the emphasis in strict products liability analysis is on the safety of the product, not on the reasonableness of the manufacturer's conduct. Becker, supra, 138 N.J. at 152, 649 A.2d 613 (citing Feldman, supra, 97 N.J. at 450, 479 A.2d 374). However, under the Act, as under the common law, the ultimate question to be resolved in design-defect and failure-to-warn cases is whether the manufacturer acted in a reasonably prudent manner in designing and fabricating a product. Feldman, supra, 97 *50 N.J. at 451, 479 A.2d 374; Fabian, supra, 258 N.J. Super. at 273, 609 A.2d 487; William A. Dreier, New Jersey Products Liability & Toxic Torts Law et al., ¶ 1:1-2, at 2, 1995 ed. As we observed in Feldman, supra, 97 N.J. at 451, 479 A.2d 374:

When the strict liability defect consists of an improper design or warning, reasonableness of the defendant's conduct is a factor in determining liability. The question in strict liability design-defect and warning cases is whether, assuming that the manufacturer knew of the defect in the product, he acted in a reasonably prudent manner in marketing the product or in providing the warnings given. Thus, once the defendant's knowledge of the defect is imputed, strict liability analysis becomes almost identical to negligence analysis in its focus on the reasonableness of the defendant's conduct.

IV

Plaintiff, relying on safety-devices cases such as Michalko, supra; Freund, supra; Suter, supra; Cepeda v. Cumberland Engineering Co., 76 N.J. 152, 386 A.2d 816 (1978); Finnegan v. Havir Mfg. Corp., 60 N.J. 413, 290 A.2d 286 (1972); and Bexiga v. Havir Mfg. Corp., 60 N.J. 402, 290 A.2d 281 (1972), contends that International had a non-delegable duty to see that Maxwell House and its team of hired professional assemblers properly integrated the quench tank into the trecar-carbon regeneration system. But the cases cited by plaintiff involved either suits against manufacturers of finished products or rebuilders of machinery. It was within the power of the defendants in those cases to install safety devices. In contrast, the fabricator of a component part that is not inherently dangerous has no control over whether the purchaser properly installs the component part into the final system.

Where a finished product is the result of work by more than one party, a court must examine at what stage installation of safety devices is feasible and practicable. In many jurisdictions, responsibility for installing a safety device is determined by reference to three criteria: (1) the trade custom indicating the party that normally would install the safety device; (2) the relative expertise of the parties, looking to which party is best acquainted with the design problems and safety techniques in question; and (3) practicality, focusing on the stage at which installation of the device is most feasible. See, e.g., Verge v. Ford Motor Co., 581 *51 F.2d 384 (3d Cir.1978); Christner v. E.W. Bliss Co., 524 F. Supp. 1122 (M.D.Pa. 1981); Ford v. International Harvester Co., 430 So.2d 912 (Fla. Dist. Ct. App.), cert. denied, 441 So.2d 631 (Fla. 1983).

In Michalko, supra, we limited the factual inquiry for determining responsibility for the lack of a safety device to the question of practicality or feasibility of the installation of a safety device by the component manufacture.^[2] We stated that "when it is feasible for the rebuilder of machinery or the manufacturer of component parts to incorporate a safety device and it fails to do so, the rebuilt machine or component part will be deemed to be a defective product when delivered by the manufacturer to its owner." Michalko, supra, 91 N.J. at 395, 451 A.2d 179 (emphasis added). Similarly, in Bexiga, supra, we stated:

Where a manufacturer places into the channels of trade a finished product which can be put to use and which should be provided with safety devices because without such it creates an unreasonable risk of harm, and where such safety devices can feasibly be installed by the manufacturer, the fact that he expects that someone else will install such devices should not immunize him.

[60 N.J. at 410, 290 A.2d 281 (emphasis added).]

In Bexiga, supra, 60 N.J. at 409-10, 290 A.2d 281, we concluded that it was practical for the manufacturer to install a safety device that could be used for all purposes of the machine, and therefore we held the manufacturer strictly liable for the plaintiff's injuries. But see Verge v. Ford Motor Co., 581 F.2d 384 (3d Cir.1978) (holding that component part manufacturer was not responsible for including backup warning device or other safety device on cab and chassis and would not be liable for injuries caused in absence of such device, where installation of safety devices by component part manufacturer was not feasible).

A further requirement for the imposition of strict liability on a component part fabricator is that the component part reach *52 the user without substantial change. Michalko, supra, 91 N.J. at 399, 451 A.2d 179. 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. Accord City of Franklin v. Badger Ford Truck Sales, Inc., 58 Wis.2d 641, 207 N.W.2d 866, 870 (1973).

V

In its recent draft, the American Law Institution (A.L.I.) concluded that a component part manufacturer generally is not liable unless the component itself is defective or the component provider substantially participated in the design of the final product.

[I]t would be unjust, impractical, and inefficient to impose liability solely on the ground that the manufacturer of the integrated product utilizes the component in a manner that renders the integrated product defective. To hold a component supplier to the same liability as the seller of the integrated product would require the component seller to scrutinize another's product with respect to which the component seller has no role in developing. This would impose substantial costs on the component seller, who would have to develop sufficient sophistication to review the decisions of the business entity that already has assumed responsibility with regard to the integrated product.

[Restatement (Third) of Torts § 10 cmt. a (Tentative Draft No. 3, 1996) (hereinafter Restatement, Tentative Draft).]

The majority of courts from other jurisdictions 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, so long as the specifications provided are not so obviously dangerous that it would be unreasonable to follow them. For example, in Jordan v. Whiting Corp., 49 Mich. App. 481, 212 N.W.2d 324 (1973), rev'd in part on other grounds, 396 Mich. 145, 240 N.W.2d 468 (1976), a plaintiff brought suit against the manufacturer of component parts used in a crane. The plaintiff alleged that the assembled crane was defectively designed. However, the component parts were not in and of themselves defective. The trial court granted a directed *53 verdict to the component part manufacturer and the verdict was affirmed on appeal. The appellate court stated:

The obligation that generates the duty to avoid injury to another which is reasonably foreseeable does not — at least yet — extend to the anticipation of how manufactured components not in and of themselves dangerous or defective can become potentially dangerous dependent upon the nature of their integration into a unit designed, assembled, installed, and sold by another.

[Jordan, supra, 212 N.W.2d at 328.]

See also Koonce v. Quaker Safety Products & Mfg., 798 F.2d 700, 715 (5th Cir.1986) (holding that "[i]f the component part manufacturer does not take part in the design or assembly of the final system or product, he is not liable for defects in the final product if the component part itself is not defective"); Spangler v. Kranco, Inc., 481 F.2d 373, 374-75 (4th Cir.1973) (holding that manufacturer of crane produced to owner's specifications was not liable for injury which might have been prevented if crane had been equipped with alarm which sounded when backing up, so long as specifications provided were not so obviously dangerous that they should not reasonably have been followed); Lesnefsky v. Fischer & Porter Co., 527 F. Supp. 951, 955 (E.D.Pa. 1981) (holding that manufacturer of component parts that produces component part in accordance with specifications of buyer is not liable for part's defective design unless manufacturer has or should have knowledge that product is unsafe for intended use); Orion Ins. Co. v. United Technologies Corp. 502 F. Supp. 173, 178 (E.D.Pa. 1980) (holding that manufacturer of helicopter's stationary star, that was manufactured according to specifications of a third party with superior knowledge and in which there was no manufacturing defect, not liable for design defect that arose from third party's incorporation of star into helicopter); Mayberry v. Akron Rubber Machinery Corp., 483 F. Supp. 407, 413 (N.D.Okla. 1979) (holding that where "a supplier furnishes a component part free of defects and without knowledge of the design of the end product, strict liability should not be imposed on the supplier for injury resulting from the end product design"); Castaldo v. Pittsburgh-Des Moines Steel Company, 376 A.2d 88, 90 (Del. 1977) (holding manufacturer of product (storage tank), built in accordance with plans *54 and specifications of employer, not liable for damage occasioned by defect in specifications, unless plans are so obviously dangerous that no reasonable person would follow them); Woods v. Graham Engineering Corp., 183 Ill. App.3d 337, 132 Ill.Dec. 6, 8-9, 539 N.E.2d 316, 318-19, cert. denied, 127 Ill.2d 644, 136 Ill.Dec. 611, 545 N.E.2d 135 (1989) (holding that component part manufacturer is liable only when responsible for design of final product or component part itself caused the injury, but component manufacturer not liable under strict liability if injury resulted from dangerous condition created by party who created final product); Loos v. American Energy Savers, Inc., 168 Ill. App.3d 558, 119 Ill.Dec. 179,