Berg v. Johnson & Johnson et al

Filing 196

ORDER granting in part and denying in part 92 Motion for Summary Judgment. Signed by U.S. District Judge Karen E. Schreier on 3/25/2013. (KC)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION
DEANE BERG,
Plaintiff,
vs.
JOHNSON & JOHNSON;
JOHNSON & JOHNSON
CONSUMER COMPANIES, INC.;
LUZENAC AMERICA, INC.;
JOHN DOES/JANE DOES 1-30;
UNKNOWN BUSINESSES
AND/OR CORPORATIONS A-Z,
Defendants.

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

CIV. 09-4179-KES

ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY
JUDGMENT

Deane Berg alleges claims for strict liability (failure to warn), negligence
(failure to warn), breach of warranties, civil conspiracy, acting in concert, and
gross negligence (Docket 1) against defendant Luzenac America, Inc. and
others. Luzenac moves for summary judgment (Docket 92) on all claims. Berg
resists the motion. For the following reasons, Luzenac’s motion is granted in
part and denied in part.
FACTUAL BACKGROUND
Berg was diagnosed with ovarian cancer in December of 2006. She was
49 years old at the time. Prior to her diagnosis, Berg used codefendant
Johnson & Johnson products—Johnson’s Baby Powder and Shower to

Shower—to dust her perineum for feminine hygiene purposes. She applied the
products on a daily basis from 1975 until 2007.
Talc is one of the main ingredients in Johnson’s Baby Powder and
Shower to Shower. Talc is a naturally occurring mineral that is mined from the
ground and used in various applications. For example, it is used in foodstuffs,
pharmaceutical products, paper, paints, plastics, rubber, ceramics, adhesives,
asphalt, fertilizers, pesticides, and cosmetics.
Luzenac has supplied talc to Johnson & Johnson since 1989 under the
terms of various supply agreements. Before supplying talc to Johnson &
Johnson, the talc needed to meet specifications given by Johnson & Johnson.
These specifications related to the brightness, purity, and fineness of the talc,
and Luzenac was also required to comply with certain processing techniques at
the direction of Johnson & Johnson. Included in the supply agreements was
the following exclusion of warranties clause:
EXCEPT FOR THE WARRANTIES CONTAINED IN THIS
AGREEMENT, SELLER MAKES NO OTHER WARRANTY OF ANY
KIND, EXPRESSED OR IMPLIED, IN FACT OR BY LAW,
WHETHER OF MERCHANTABILITY, FITNESS FOR ANY
PARTICULAR PURPOSE OR USE OR OTHERWISE.
Docket 93 at 2.
Luzenac and Johnson & Johnson are members of the Cosmetic, Toiletry,
and Fragrance Association (CTFA).1 In 1992, the CTFA created the Talc

1

The CTFA is now known as the Personal Care Products Council.
2

Interested Party Task Force in response to a study that suggested that an
association existed between the use of talc in the perineal area and the
occurrence of ovarian cancer in women. The task force worked to find experts
to defend the talc industry, and it also began to prepare talking points to be
used in press releases regarding the association between talc use and ovarian
cancer.
In 2000, the National Toxicology Program (NTP), a part of the Department
of Health and Human Services, began investigating the association between
talc use and ovarian cancer. The task force focused its efforts on convincing the
NTP that talc was a safe material. The end result was that the NTP did not label
talc as a carcinogen.
Berg asserts that it has been about 40 years “since talc producers, the
cosmetics industry, in general, and Johnson & Johnson, in particular, have
been aware of a possible connection between cosmetic talc use and ovarian
cancer.” Docket 102 at 3. Thus, she has brought this products liability action
against Johnson & Johnson and Luzenac.
LEGAL STANDARD
Summary judgment is appropriate if the movant “shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). The moving party can meet this
burden by presenting evidence that there is no dispute of material fact or that
the nonmoving party has not presented evidence to support an element of her
3

case on which she bears the ultimate burden of proof. Celotex Corp. v. Catrett,
477 U.S. 317, 322-23 (1986). “The nonmoving party may not ‘rest on mere
allegations or denials, but must demonstrate on the record the existence of
specific facts which create a genuine issue for trial.’ ” Mosley v. City of
Northwoods, Mo., 415 F.3d 908, 910 (8th Cir. 2005) (quoting Krenik v. County
of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995)).
Summary judgment is precluded if there is a dispute in facts that could
affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986). For purposes of a summary judgment motion, the court views the
facts and the inferences drawn from such facts “in the light most favorable to
the party opposing the motion.” Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 588 (1986).
Because this is a diversity action, the court applies the law of the state in
which it sits. Prudential Ins. Co. of Am. v. Kamrath, 475 F.3d 920, 924 (8th Cir.
2007). Thus, South Dakota law applies to Berg’s claims.2
ANALYSIS
Luzenac argues that it is neither strictly liable nor negligently liable to
Berg because it had no duty to warn her of any alleged dangers associated with
her talc use. Further, Luzenac argues that it did not breach any warranties,
express or implied, that it may have owed to Berg as a third-party beneficiary.

2

The parties do not dispute that South Dakota law applies.
4

Lastly, Luzenac argues that Berg’s claims of civil conspiracy and acting in
concert fail because they cannot exist on their own.
I.

Duty to Warn—Strict Liability and Negligence
Luzenac relies on the raw material supplier doctrine3 or, alternatively,

the sophisticated intermediary doctrine, to support its position that it did not
owe Berg a duty to warn,4 under either a strict liability theory or a negligence
theory, of any dangers associated with Johnson & Johnson products.
The parties agree that In re Temporomandibular Joint (TMJ) Implants Prod.
Liab. Litig., 97 F.3d 1050 (8th Cir. 1996) [hereinafter In re TMJ Litig.], controls

3

The raw material supplier doctrine is also referred to as the component
part doctrine. See In re Temporomandibular Joint (TMJ) Implants Prod. Liab.
Litig., 97 F.3d 1050, 1056 n.6 (8th Cir. 1996) (“We believe it makes no
difference whether FEP film is characterized as a ‘component part’ or a ‘raw
material.’ ”). In its brief, Luzenac called the doctrine the “bulk supplier
doctrine,” but consistently cited to In re TMJ Litig.—a case analyzing the raw
material supplier doctrine. Because the parties agree that In re TMJ Litig.
controls the outcome of this case, the court will apply the raw material supplier
doctrine and refer to it as such.
4

Whether Luzenac owed Berg a duty to warn is a question of law. See
Janis v. Nash Finch Co., 780 N.W.2d 497, 500 (S.D. 2010) (“[T]he existence of a
duty is a question of law to be determined by the court.”).
5

the outcome of this case.5 In In re TMJ Litig., the Eighth Circuit Court of
Appeals held:
If . . . the finished product was unreasonably dangerous because
the [raw material] was unsuited for the particular use that the
finished product manufacturer chose to make of it, then the defect
is in the design of the finished product rather than in the design of
the [raw material]. In these cases, it is the finished product
manufacturer and not the [raw material] supplier that may be held
strictly liable.
Id. at 1056. Likewise, “raw material . . . suppliers have no duty to warn the
ultimate consumer of other companies’ finished products if the raw materials
. . . have multiple safe uses and are not inherently dangerous.” Id. at 1058.

5

The parties did not cite and the court is unaware of any South Dakota
case that specifically addresses the raw material supplier doctrine. Thus, the
court must determine what the South Dakota Supreme Court “would probably
hold were it to decide the issue.” Farr v. Farm Bureau Ins. Co., 61 F.3d 677, 679
(8th Cir. 1995). In making this determination, the court may consider relevant
state precedent, analogous decisions, scholarly works, and judicial decisions
from other jurisdictions with similar doctrinal approaches to legal matters. Id.
A number of states endorse the raw material supplier defense. See generally
Kealoha v. E.I. du Pont de Nemours & Co., 82 F.3d 894, 900 n.7 (9th Cir. 1996)
(noting endorsement by Hawaii, Michigan, Missouri, California, Connecticut,
Minnesota, New Jersey, North Carolina, North Dakota, Oklahoma,
Pennsylvania, and Utah); see also Davis v. Komatsu America Ind. Corp., 42
S.W.3d 34, 38-39 (Tenn. 2001) (noting that “every court presented with the
issue has adopted the component parts doctrine”). Moreover, in Moor v. Iowa
Mfg. Co., 320 N.W.2d 927, 928 (S.D. 1982), the South Dakota Supreme Court
applied reasoning that parallels the reasoning found in In re TMJ Litig. There,
the Supreme Court held that a part, which by itself did not create a danger,
could not form the basis for liability when it was later placed into a defective
design. Id. The Supreme Court also noted that the part supplier did not design
the defective product. Id. For these reasons, the court predicts that the South
Dakota Supreme Court would apply the raw material supplier doctrine to the
facts of this case.
6

Berg does not dispute that talc has multiple safe uses; for example, it is
used in foodstuffs, pharmaceutical products, paper, paints, plastics, rubber,
ceramics, adhesives, asphalt, fertilizers, pesticides, and cosmetics.
Nevertheless, in her brief, Berg alleges that “talc is inherently dangerous to
women because it causes ovarian cancer, and talc should never be a
component of a personal care product.” Docket 102 at 10. But Berg’s mere
assertion that talc is inherently dangerous does not make it so. Berg must put
forth sufficient facts to support her assertion that talc is inherently dangerous.
She has failed to do so. All of the evidence that Berg has put forth goes to the
limited situation in which talc is applied to a woman’s perineum. Thus, talc
cannot, in law or fact, be classified as inherently dangerous and placed
alongside the likes of “poisons or explosives which must be handled with
infinite care.” Grammar v. Mid-Continent Petroleum Corp., 71 F.2d 38, 43 (10th
Cir. 1934).
Because talc has multiple safe uses and is not inherently dangerous,
Luzenac, as a supplier of an inherently safe raw material, had no duty to warn
Berg, as the end-user of Johnson & Johnson’s finished product, about dangers
posed by the design of Johnson & Johnson’s product. See In re TMJ Litig., 97
F.3d at 1058-59 (“Under the raw material/component part supplier doctrine,
suppliers of inherently safe raw materials have no duty to warn end-users of a
finished product about dangers posed by the incorporation of the raw materials

7

into that product.”). The Eighth Circuit has noted various reasons for applying
such a rule.
First, the primary duty to warn is owed by the designer of the final
product, not the supplier of only one of the product’s parts. Id. at 1058. This is
because the dangerousness of the product stems from its overall design,
including how the product is eventually advertised and marketed.6 Id. Here,
Luzenac did not control the design, marketing, or advertising of the product.
Berg argues that Luzenac controlled the testing and manufacturing of the
product because it complied with certain specifications7 set out by Johnson &
Johnson prior to supplying the talc. Such facts, however, do not show that
Luzenac had any decision-making authority in the ultimate design of the final
product. As Berg points out, these were “extremely detailed specifications that
[Johnson & Johnson] require[d] from Luzenac.” Docket 102 at 12. The fact that
Luzenac complied with Johnson & Johnson’s detailed specifications shows that
Johnson & Johnson, not Luzenac, had complete control over the design of the
final product.

6

Because of the nature of Berg’s claim, the determination of how the
final product was marketed and advertised is an important factor to
incorporate into the court’s analysis of the overall design of the product.
7

The specifications related to the brightness, purity, and fineness of the
talc. Luzenac was also required to perform other processing techniques, all at
the direction of Johnson & Johnson.
8

Second, holding Luzenac liable for dangers that allegedly stem from
Johnson & Johnson’s failure to warn end-users of possible dangers associated
with a particular use of the product “would not only be unfair, but it also would
impose an intolerable burden on the business world.” In re TMJ Litig., 97 F.3d
at 1057. Luzenac cannot be expected to “retain an expert in every finished
product manufacturer’s line of business and second-guess the finished product
manufacturer whenever any of its employees received any information about
any potential problems.” Id. (emphasis added). Also, Luzenac cannot be
expected to watch over Johnson & Johnson’s shoulder so that it has knowledge
of every time Johnson & Johnson decides to market its products in a certain
manner. Such an expectation would simply be “unreasonable and impractical”
because it places “the burden of testing and developing all” products that
incorporate talc as a material on Luzenac. Id. “Suppliers of versatile materials
. . . cannot be expected to become experts in the infinite number of finished
products that might conceivably incorporate their multi-use raw materials[.]”
Id.
Here, just as in In re TMJ Litig., the responsibility to design a safe
product is Johnson & Johnson’s alone because, as the finished product
manufacturer, advertiser, and marketer, “it knew the specific end-use it
intended to make of the [talc] and was in a far better position to evaluate
[talc’s] safety for that particular end-use.” Id. at 1058. Luzenac, as a mere
supplier of talc, cannot be expected to guarantee the safety of Johnson &
9

Johnson’s products. To impose such responsibility on the supplier of an
inherently safe raw material would simply extend liability too far. Id. Thus,
Luzenac owed no duty to warn Berg. Accordingly, summary judgment will be
granted in favor of Luzenac on Berg’s strict liability and negligence claims. See
id. at 1059 (noting that plaintiffs’ negligent failure to warn claim must fail
because “the same analysis which leads us to the conclusion that the
defendants had no duty to warn plaintiffs under a theory of strict liability leads
us to conclude that they had no duty to warn under a theory of negligence”).
II.

Breach of Warranties
Berg claims that Luzenac breached the implied warranty of

merchantability and breached the implied warranty of fitness for a particular
purpose.8 Under South Dakota law, a seller’s warranties, whether express or
implied, extend “to any person who may reasonably be expected to use,
consume or be affected by the goods and who is injured by breach of the
warranty.” SDCL 57A-2-318. This places third-party beneficiaries in the shoes
of the buyer for purposes of enforcing any warranties the seller has made.
Rynders v. E.I. Du Pont De Nemours & Co., 21 F.3d 835, 839 (8th Cir. 1994)
(interpreting South Dakota law). South Dakota law also allows warranties

8

Luzenac also made reference in its brief in support of its motion for
summary judgment to a possible claim for breach of express warranties. Berg
did not address any such claim in her response brief (Docket 102),
supplemental response brief (Docket 126), or sur-reply brief (Docket 136).
Thus, the court assumes that Berg is not pursuing a claim for breach of
express warranties against Luzenac.
10

implied in sales contracts to be modified or excluded in their entirety.
SDCL 57A-2-316; Rynders, 21 F.3d at 840. “And, to the extent that the
contract of sale contains provisions under which warranties are excluded or
modified . . . such provisions are equally operative against beneficiaries or
warranties under [SDCL 57A-2-318].” Rynders, 21 F.3d at 840 (internal
quotations omitted). Thus, any implied warranty that Luzenac excluded with
respect to Johnson & Johnson is equally excluded with respect to Berg as a
third-party beneficiary.
SDCL 57A-2-316(2) controls the exclusion of implied warranties and
provides:
[T]o exclude or modify the implied warranty of merchantability or
any part of it the language must mention merchantability and in
case of a writing must be conspicuous, and to exclude or modify
any implied warranty of fitness the exclusion must be by a writing
and conspicuous. Language to exclude all implied warranties of
fitness is sufficient if it states, for example, that “there are no
warranties which extend beyond the description on the face
hereof.”
Whether a term or clause is conspicuous is a decision for the court. SDCL 57A1-201(10).
In the sales contracts between Luzenac and Johnson & Johnson,
Luzenac included the following language:
EXCEPT FOR THE WARRANTIES CONTAINED IN THIS
AGREEMENT, SELLER MAKES NO OTHER WARRANTY OF ANY
KIND, EXPRESSED OR IMPLIED, IN FACT OR BY LAW,
WHETHER OF MERCHANTABILITY, FITNESS FOR ANY
PARTICULAR PURPOSE OR USE OR OTHERWISE.

11

Docket 93 at 2; Docket 102-3 at 6-7. The court finds that the use of all capital
letters and bolded typeface makes the language used by Luzenac conspicuous.
See Pearson v. Franklin Labs., Inc., 254 N.W.2d 133, 141 (S.D. 1977) (noting
that language that is printed in capitals or bolded is considered conspicuous).
Moreover, the language complies with SDCL 57A-2-316 to the extent that it
excludes the implied warranty of merchantability and any implied warranty of
fitness for any particular purpose or use. See Rynders, 21 F.3d at 841 (noting
that implied warranties of fitness can be excluded generally and exclusions of
the implied warranty of merchantability must mention merchantability).
Berg argues that the exclusion clause is unconscionable and thus
unenforceable. SDCL 57A-2-302 allows the court, as a matter of law, to find
any contract clause unconscionable, and the court may refuse to enforce it.
When a party claims that a clause is unconscionable, she “shall be afforded a
reasonable opportunity to present evidence as to its commercial setting,
purpose and effect to aid the court in making the determination.” SDCL 57A-2302(2).
Here, Berg has certainly been afforded the opportunity to present
evidence as to the commercial setting, purpose, and effect of the exclusion
clause in the contracts between Johnson & Johnson and Luzenac as she has
submitted three briefs related to this motion. She has failed to submit,
however, any evidence to suggest that Johnson & Johnson was in a position
where it was unable to bargain for more favorable contract terms or unable to
12

test the talc before it was purchased. See Schmaltz v. Nissen, 431 N.W.2d 657,
662 (S.D. 1988) (finding a situation where a party is unable to bargain for more
favorable contract terms to be unconscionable). Instead, Berg’s sole argument
as to why the exclusion clause is unconscionable is that she (not the
contracting party, Johnson & Johnson) is left without a remedy for any alleged
breach of contract. Berg’s argument lacks merit because she does in fact have
a remedy—a suit against Johnson & Johnson.9 As a result, the court finds that
Luzenac’s exclusion of the implied warranties of merchantability and fitness for
a particular purpose are not unconscionable.
Thus, summary judgment is granted in favor of Luzenac with respect to
Berg’s breach of warranty claims.
III.

Civil Conspiracy
To establish a prima facie case of civil conspiracy, Berg must show: (1)

two or more persons; (2) an object to be accomplished; (3) a meeting of the
minds on the object or course of action to be taken; (4) the commission of one
or more unlawful overt acts; and (5) damages as the proximate result of the
conspiracy. Kirlin v. Halverson, 758 N.W.2d 436, 455 (S.D. 2008). “Civil
conspiracy is not an independent cause of action, but is sustainable only after

9

Berg has failed to cite any authority in which a court has found that an
exclusion clause in a contract between two sophisticated parties is
unconscionable because it disallows someone in Berg’s position (a consumer of
a product created by one of the contracting parties) as a third-party beneficiary
from bringing a breach of an implied warranty claim.
13

an underlying tort claim has been established.” Selle v. Tozser, 786 N.W.2d
748, 756 (S.D. 2010).
Luzenac argues that Berg’s civil conspiracy claim fails because there are
no remaining claims against Luzenac that could qualify as the underlying tort.
There are, however, remaining tort claims against Johnson & Johnson, the
alleged co-conspirator, that may constitute the underlying tort. See Farmland
Industries v. Frazier–Parrott Commodities, Inc., 871 F.2d 1402, 1409 (8th
Cir.1989) (“[T]he doctrine of civil conspiracy extends liability for tort to persons
other than the actual wrongdoer but it is the acts causing damage to the
plaintiff that give rise to liability for damages, not the conspiracy itself.”); see
also Morganroth & Morganroth v. Norris, McLaughlin & Marcus, P.C., 331 F.3d
406, 415 (3d Cir. 2003) (“Not every conspirator must commit an overt act in
furtherance of the conspiracy, so long as at least one does.”). Thus, Luzenac’s
argument is unpersuasive.
Because Luzenac’s argument is unpersuasive, the court must now
consider whether Berg has put forth enough evidence to establish that a
question of fact remains on her civil conspiracy claim. Berg claims that
Luzenac and Johnson & Johnson worked together to suppress public
knowledge of any possible dangerous effects talc may cause, particularly with
respect to ovarian cancer. She alleges that the two companies worked together
and organized efforts to ensure that talc was not labeled as a carcinogen. These
efforts included finding experts to defend the talc industry and prepare talking
14

points for the press. Docket 102 at 6. As Berg notes in her brief, the
defendants’ reason for doing so was because they felt that labeling talc as a
carcinogen “was incorrect based on the sound science.” Docket 126 at 10.
Although a close call, the court finds that Berg has met her burden. Thus,
summary judgment is denied with respect to Berg’s claim for civil conspiracy.
IV.

Acting in Concert
Luzenac argued that South Dakota does not recognize a claim for acting

in concert, or, alternatively, that Berg’s acting in concert claim was subsumed
by her civil conspiracy claim. This argument was first asserted in Luzenac’s
reply brief, which was filed after Berg’s initial response to Luzenac’s motion for
summary judgment. The court allowed Berg to file a supplemental response
following Luzenac’s reply. Because Berg did not respond to Luzenac’s
arguments, the court assumes that Berg is not alleging an independent cause
of action for acting in concert.
CONCLUSION
Because Luzenac owed no duty to warn Berg about any dangers
associated with Johnson & Johnson’s products, Berg’s strict liability and
negligence claims fail. Moreover, Luzenac effectively excluded the implied
warranty of merchantability and any implied warranty of fitness for any
particular purpose in its supply contracts with Johnson & Johnson, thereby
precluding Berg from bringing such actions as a third-party beneficiary. Lastly,

15

summary judgment is denied with respect to Berg’s civil conspiracy claim.
Accordingly, it is
ORDERED that Luzenac’s motion for summary judgment is granted in
part and denied in part consistent with this order.
Dated March 25, 2013.
BY THE COURT:

/s/ Karen E. Schreier
KAREN E. SCHREIER
UNITED STATES DISTRICT JUDGE

16