California Court Opinions

Filed 4/23/10

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

JAMES E. FULTON, JR.,

Plaintiff and Appellant,

v.

THE MEDICAL BOARD OF CALIFORNIA,

Defendant and Respondent.

B215102

(Los Angeles County

Super. Ct. No. BC387318)

APPEAL from a judgment by the Superior Court of Los Angeles County, Richard L. Fruin, Judge. Affirmed.

Martin & McCormick, John D. Martin and Kathy J. McCormick for Plaintiff and Appellant.

Edmund G. Brown, Jr., Attorney General, Paul C. Ament and Vladimir Shalkevich, Deputy Attorneys General, for Defendant and Respondent.

____________________________

Appellant James E. Fulton, Jr., appeals from a judgment denying his claim for declaratory and injunctive relief against respondent, The Medical Board of California (the Board). Appellant was a licensed physician in California before surrendering his license in 2003 to settle disciplinary charges filed by the Board. Afterwards, the Board published disciplinary information about appellant on its Web site, including information about a medical malpractice judgment entered against him, and the surrender, retirement, and indefinite suspension of his licenses to practice medicine in other states. Appellant sued the Board, claiming that because he no longer was licensed in California, he was not a “licensed physician” or a “licensee” under Business and Professions Code section 2027, (and by implication the cross-referenced section 803.1) and therefore the Board was not required to disclose the information. The trial court found the Board acted within its statutory mandate and denied appellant’s claim. He appeals, arguing the court erred in its interpretation of the statutes. We disagree, and hold that sections 803.1 and 2027 required the Board to publish the information.

FACTUAL AND PROCEDURAL SUMMARY

Following the usual rules on appeal after a trial on the merits, we construe the facts in the light most favorable to the judgment. (Woodman Partners v. Sofa U Love (2001) 94 Cal.App.4th 766, 771.)

Appellant was first licensed to practice medicine in California in 1970. Beginning in 1997, California and several other states initiated disciplinary actions against him. In 2002, appellant voluntarily surrendered his California license as part of a stipulated settlement with the Board; the surrender became effective in 2003. Shortly thereafter, the Board posted information on its Web site showing that appellant surrendered his California license in 2003. The same year, the Board changed its disclosure policy about individuals formerly licensed in California. Under its new policy, which remains its policy, information about disciplinary actions undertaken by the Board and in other states, felony convictions, and certain settlements and arbitration awards is available on the Internet. (See fn. 4, infra.) The Board posted information about enforcement actions taken against appellant in other states while he was licensed in California, and updated disclosures as out-of-state cases proceeded. The disclosures included the surrender, retirement, and indefinite suspension of appellant’s medical licenses in Florida, New York, and Louisiana, and a malpractice judgment entered against him in Orange County Superior Court. Actions initiated against appellant after he surrendered his California license were not disclosed, including the revocation of his Tennessee license in 2005.

Although appellant was no longer licensed to practice medicine in any state, he continued to work in a field closely related to medicine. Appellant gave three-day lectures in California and elsewhere for a company, Advanced Aesthetics Training Institute, about diseases of the skin, the causes and treatments of acne, and other dermatological topics. Attendees were given certificates signed by appellant as an “M.D.” Appellant’s family had an ownership interest in a company, Vivant Pharmaceuticals (Vivant), that produced dermatological products which appellant promoted at trade shows in various states, including California. Advertising materials for the products attributed the titles “Dr.” or “M.D.” to appellant, described him as a “Lead Formulating Consultant,” and mentioned his “35 years of experience as a physician.” Vivant’s products were sold to the public through a Web site that described appellant’s medical education, and claimed that he was a “leading researcher, cosmetic surgeon and dermatologist.” Appellant answered questions on the Web site regarding the causes and treatments for skin conditions as “Dr_Fulton.” The record does not show that the Web site disclosed that appellant was not licensed to practice medicine. An investigator from the Board purchased products from the Web site, which were delivered to California with an embossed inscription of appellant’s signature “James E. Fulton, M.D.”

Appellant filed this action against the Board in 2008. He alleged that the Board’s disclosures of his disciplinary record caused him to lose work opportunities and suffer “public and private ridicule and embarrassment.” Some of Vivant’s customers called the company and discussed, in an agitated manner, the information posted on the Board’s Web site. While appellant was giving a lecture at a conference in Malaysia, the chairman of the conference received an email referencing the Board’s Web site, with the comment “shame, shame, shame.” Appellant was not invited to subsequent conferences. He sought a declaratory judgment that the Board was not statutorily required to publish the disciplinary information, and an injunction prohibiting the Board from posting any information about him on its Web site. The matter proceeded to trial, and judgment was entered for the Board. This appeal followed.

DISCUSSION

Appellant argues that sections 803.1 and 2027 do not require the Board to “post information regarding disciplinary actions against physicians who are no longer licensed by the State.” Because this claim requires interpretation of sections 803.1 and 2027, we apply a de novo standard of review. (Szold v. Medical Bd. of California (2005) 127 Cal.App.4th 591, 596, fn. 4.)

“In construing any statute, ‘[w]ell-established rules of statutory construction require us to ascertain the intent of the enacting legislative body so that we may adopt the construction that best effectuates the purpose of the law.’ [Citation.] ‘We first examine the words themselves because the statutory language is generally the most reliable indicator of legislative intent. [Citation.] The words of the statute should be given their ordinary and usual meaning and should be construed in their statutory context.’ [Citation.] If the statutory language is unambiguous, ‘we presume the Legislature meant what it said, and the plain meaning of the statute governs.’ [Citation.]” (Whaley v. Sony Computer Entertainment America, Inc. (2004) 121 Cal.App.4th 479, 484-485.) “If, however, the statutory terms are ambiguous, then we may resort to extrinsic sources, including the ostensible objects to be achieved and the legislative history.” (Day v. City of Fontana (2001) 25 Cal.4th 268, 272.) The Board interprets sections 803.1 and 2027 to require that it disclose enforcement actions that occurred while former licensees were licensed in California, and to correct errors in disclosures. We accord respect and consideration to the Board’s interpretation, but we apply our independent judgment in construing the statutes. (See Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 7-8.)

Sections 803.1 and 2027 require the Board to disclose information about “licensees” and “licensed physicians” without explicitly stating whether the Board must make disclosures about individuals who no longer hold a license to practice medicine in this state. But, provisions of the statutes demonstrate that the Legislature intended the disclosure requirements to apply to former license holders. Section 803.1, subdivision (a) requires the Board to disclose “any enforcement actions taken against a licensee by [the Board] or by another state . . . .” Enforcement actions include “[r]evocations, suspensions, probations, or limitations on practice ordered by the board, including those made part of a . . . stipulated agreement.” (§ 803.1, subd. (a)(3).) By definition, “revocations” include licenses that have been revoked and hence are no longer valid, and it is reasonable to interpret this provision to apply to former license holders. Section 2027, subdivision (a)(1) requires that the Board post on the Internet enforcement actions set forth in section 803.1. Section 2027, subdivision (b)(1) requires that the Board post enforcement actions, including license revocations and malpractice judgments, on its Web site for a period of 10 years after the information comes within its possession, custody, or control without providing for its removal if an individual is no longer licensed in California. Limiting required disclosures to current licensees would render this provision ineffectual.

The legislative history and background of these statutes are consistent with this reading. Over the course of a decade, the Legislature expanded the substance and form of the Board’s disclosure mandates. When originally enacted in 1993, section 803.1 required the Board to disclose to the public temporary restraining orders, suspensions, limitations on practice, and letters of reprimand. (Sen. Bill No. 916 (1993-1994 Reg. Sess.) § 4.3.) In 1997, the Legislature added medical malpractice judgments, arbitration awards, and hospital disciplinary actions to the disclosure requirements. (Assem. Bill No. 103 (1997-1998 Reg. Sess.) § 4.) At the same time, it enacted section 2027, requiring the Board to post on the Internet information about the status of a license and whether a licensee had been subject to discipline by the Board or another state. (Assem. Bill. No. 103 (1997-1998 Reg. Sess.) § 7.) That bill’s proponents argued that expanded disclosures would “enable consumers to make informed decisions about their physicians.” (Sen. Com. on Business and Professions, Rep. on Assem. Bill No. 103 (1997-1998 Reg. Sess.) June 23, 1997.) It was sponsored to allow the public easy access to disciplinary information about physicians, particularly information about medical negligence. (Ibid.) In 2002, section 803.1 was amended to require disclosure of revocations, including those made part of a stipulated agreement, and section 2027 was changed to require disclosure of enforcement actions set forth in section 803.1. (Sen. Bill. No. 1950 (2001-2002 Reg. Sess.) §§ 6, 13.)

This history shows the Legislature intended that the Board disclose information about physicians’ disciplinary records to protect consumers and prevent medical malpractice. In interpreting these statutes, we presume “‘“the Legislature intended reasonable results consistent with its expressed purpose, not absurd consequences.”’” (Hellinger v. Farmers Group, Inc. (2001) 91 Cal.App.4th 1049, 1056.) In a literal sense, once a license is revoked, a former license holder is no longer a licensee. But public knowledge of the fact that a putative physician no longer holds a license to practice medicine in this state is central to the informative purpose of the statutes. Limiting the meaning of “licensee” to current license holders would defeat that purpose.

Perhaps in acknowledgment of this, appellant argues that the public would be equally protected if the Board only posted information showing when he surrendered his California license, without including information about his out-of-state license revocations and the medical malpractice judgment entered against him. The facts of this case illustrate the correctness of the Board’s interpretation of the statutes. Appellant repeatedly held himself out as a physician when marketing products and giving lectures in California. The public has an interest in the professional disciplinary history of an individual who affiliates with the practice of medicine, and the Board’s disclosures further the public safety and welfare. We note that even if appellant did not work in the medical field or represent himself as a physician, there is no reason why the Board would not disclose information in its custody or control on the Internet rather than require an inquiring member of the public to search through databases of different states.

A reasonable interpretation of the text of the statutes, made in consideration of their purpose, supports the Board’s position. We interpret sections 803.1 and 2027 to require the Board to publish information about enforcement actions initiated while an individual is licensed to practice medicine in California, and to correct those disclosures when new information becomes available.

DISPOSITION

The judgment is affirmed. Respondent to have its costs on appeal.

CERTIFIED FOR PUBLICATION.

EPSTEIN, P. J.

We concur:

WILLHITE, J.

MANELLA, J.

Filed 4/22/10

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FIVE

BRUCE E. ELLISON, M.D.,

Plaintiff and Appellant,

v.

SEQUOIA HEALTH SERVICES,

Defendant and Respondent.

A124408

(San Mateo County

Super. Ct. No. CIV469933)

Defendant and respondent Sequoia Health Services (Sequoia) terminated the medical staff membership and hospital privileges of plaintiff and appellant Bruce E. Ellison, M.D., a licensed physician specializing in orthopedic medicine. Dr. Ellison appeals from a judgment denying his petition for writ of mandate to compel the reinstatement of his privileges. (Code Civ. Proc., § 1094.5.) We affirm.

FACTS AND PROCEDURAL HISTORY

Dr. Ellison graduated from Stanford Medical school, where he also completed an internship in general surgery. He secured a research fellowship at the University of Massachusetts (UMass) and began a residency in orthopedic surgery. He resigned from this program, having been required to repeat a year, and finished his residency in orthopedics at the Phoenix Residency Program in Arizona. After a three-month fellowship in sports medicine/reconstructive surgery in Phoenix, he submitted an application for staff privileges to Sequoia, a community hospital in San Mateo.

Sequoia approved Dr. Ellison’s application in June 2004 and he became a member of the provisional staff with privileges to perform orthopedic surgery, subject to an initial period of proctoring. He was proctored on seven procedures between June and September 2004 and received favorable reports on all of them. In October 2004, the Surgical Control Committee at Sequoia notified Dr. Ellison that proctoring was no longer required for lower extremity procedures, but would continue on upper extremity procedures until further notification. It later came to light that Dr. Ellison performed several upper extremity procedures without a proctor.

In October 2005, Dr. Ellison was reappointed for a two-year period. In February 2006, the Medical Executive Committee (MEC) appointed an ad hoc committee composed of three staff physicians to review eight of Dr. Ellison’s cases: (1) a surgery to repair the patient’s anterior cruciate ligament (ACL), which had taken a relatively long time (five and a half hours) to complete; (2) the cancellation of an ACL repair after the patient had been anesthetized, due to the inexperience of the particular “scrub tech”; (3) a decision to forego leg splints as a palliative measure on a patient awaiting surgery to repair tibial fractures, who was transferred to another hospital due to insurance reasons; (4) a surgery to repair a left elbow fracture, which took approximately four hours due to Dr. Ellison’s ultimately unsuccessful attempt to preserve the radial head; (5) the surgical treatment of a six-year old with a broken arm, whose father was highly critical of Dr. Ellison’s follow-up care and demeanor in the face of the boy’s near-hysteria when the cast was removed; (6) a surgery to release the patient’s trigger finger, which required a second surgery by another physician; (7) a longer-than average surgery time for a lateral menisectomy; and (8) a complicated (and unproctored) hand surgery in which Dr. Ellison had to call a plastic surgeon for a consultation in the middle of the operation.

The ad hoc committee initially recommended that Dr. Ellison remain under proctorship for upper extremity cases and that Sequoia’s Orthopedics Department continue to review all of his surgeries. Later, the ad hoc committee recommended that Dr. Ellison’s staff privileges be revoked. The MEC decided that a revocation of privileges was too severe, but concluded that Dr. Ellison required additional training and should be accompanied by both a proctor and a board certified assistant surgeon during all surgical procedures. The MEC also found that Dr. Ellison had appeared non-responsive and evasive during the investigation.

Dr. Ellison filed a request for a hearing before the hospital’s Judicial Review Committee (JRC) as he was entitled to do under Sequoia’s written bylaws. The MEC filed a notice of charges alleging that, based on the eight cases described above, “Dr. Ellison appears to lack the requisite clinical judgment, technical capability and patient management skills to practice safely and competently as an orthopedic surgeon.” The notice also alleged, “There are questions and concerns regarding the adequacy of Dr. Ellison’s background and training as an orthopedic surgeon.”

In describing the “questions and concerns” in the second charge, the notice referred to Dr. Ellison’s lack of candor with respect to his background and training. The notice alleged: “Initially, based on the information provided in his application for Medical Staff membership and in a letter from the University of Massachusetts Medical School in 2003, it appeared that Dr. Ellison left the program voluntarily and for innocuous reasons. However on April 13, 2006, he admitted to the MEC that they ‘did not like him’ there and suggested that he leave.” Additionally, “In the past, Dr. Ellison has been evasive about his Board certification status. In his application for Medical Staff membership dated September 23, 2003, he wrote: ‘Board Eligible (Results Pending) Orthopedic Surgery.’ However, on February 5, 2004, when Dr. Margolis [of Sequoia] asked him about it, he denied that he had taken the exam. When asked again in the same conversation, he said that he had taken the exam, but when asked if he had passed, he said that he was ‘confused.’ Finally, he admitted that he had failed.” The notice did not specifically allege that this lack of candor rendered Dr. Ellison unfit to practice at Sequoia or required additional remedial measures.

An extensive hearing was held before the JRC, which was composed of four physicians from Sequoia’s medical staff and presided over by an attorney who was appointed to serve as the hearing officer. Although the MEC had previously concluded that Dr. Ellison should retain his privileges subject to the dual proctor/assistant surgeon requirement, it took the position before the JRC that all staff privileges should be revoked. Dr. Ellison took the position that the dual proctoring/assistant surgeon requirement was too restrictive.

The MEC presented the testimony of physicians who worked with Dr. Ellison at Sequoia and who had been involved in the cases at issue and/or the investigation of those cases. Broadly speaking, these doctors were critical of Dr. Ellison’s performance and believed additional training and/or supervision was necessary. Dr. Sampson, an outside orthopedic surgeon who had been retained by the hospital to evaluate the eight cases under review, concluded that Dr. Ellison had shown a lack of experience but did not fall below the standard of care. Dr. Schurman, an orthopedic surgeon whom Dr. Ellison called as an expert, opined that while proctoring should continue in upper extremity cases, the requirement of a Board certified assistant surgeon during all procedures was excessive. Dr. Ellison testified on his own behalf regarding his handling of the cases.

Evidence was also elicited on the subject of Dr. Ellison’s honesty. Although he had been asked by UMass to repeat the second year of his residency program, he did not specifically disclose this on his application for privileges at Sequoia (though he did accurately state the dates he was in the UMass program). When MEC members had questioned him about his reason for leaving UMass, he variously said that he wanted to be closer to his girlfriend, that the UMass people had not liked him, that it had been suggested he leave, and that he “snuck” out. When the MEC asked him about the number of times he had failed the first portion of his Board examination, Dr. Ellison claimed not to remember and then said he had failed it twice, even though he appeared to have failed the examination three times. Dr. Ellison had claimed not to remember the date of his graduation from medical school and gave varying answers about his training, among other things, saying that he did a sports medicine fellowship that he never completed. At the time of his initial appointment to Sequoia, Dr. Ellison had represented that he was “board eligible,” even though he had twice failed the first portion of his Board examination.

The JRC issued a written report in which it concluded that the eight cases it considered “demonstrate [ ] that Dr. Ellison was inexperienced and that the MEC’s concerns about the quality of his training were not unjustified. . . . However, based on the totality of the evidence the JRC considered, . . . the eight cases did not demonstrate a pattern proving that, in fact, Dr. Ellison so lacks clinical judgment, technical capability, and patient management skills, as to make the MEC’s dual corrective action regime reasonable.” It affirmed the MEC’s decision to require the presence of a board certified assistant surgeon during Dr. Ellison’s surgical procedures, but reversed the requirement that a separate proctor also be present. It recommended that the MEC formulate a protocol specifying the duration of the assistant surgeon requirement.

The JRC’s report also concluded: “1. Dr. Ellison was intentionally unclear and evasive about the circumstances and reasons for his departure from the orthopedic residency program at [UMass]. [] 2. Dr. Ellison was not candid or honest about the number of times he had taken and failed the Board Certification examination. [] 3. Dr. Ellison’s performance at [UMass] and, subsequently, at the Phoenix Orthopedic Residency Program, were both below average. [] 4. Dr. Ellison had low percentile scores on the three Board Certification exams he failed and the one he subsequently passed. [] . . . . [] Much more troubling to the JRC than Dr. Ellison’s post-medical training and education were Dr. Ellison’s lack of candor, evasiveness, and misrepresentations (whether intentional or not). . . . Rather than providing complete and truthful responses, Dr. Ellison frequently either temporized, was evasive, professed confusion or faulty memory, was incomplete, parsed words, or was untruthful. On occasion, his testimony during the JRC hearing was marked and marred by the same deficits. [] “There is no practical way to initiate a corrective action regime which can police or effectively assure honesty or ethical behavior. While Dr. Ellison professes to have learned much from this experience, there is no assurance that he will in the future be more candid and complete with respect to the problematic personal or clinical issues. [] “The MEC is entitled to expect honesty and ethical behavior from its Medical Staff members. While what has occurred in the past is now in the past, the JRC recommends to the MEC that it avail itself of all appropriate remedies available to it if in the future it documents or establishes conduct by Dr. Ellison which is not in keeping with the ethical requirements of medical staff membership.”

Both Dr. Ellison and the MEC appealed the JRC’s decision to Sequoia’s Board. As permitted by the bylaws, the MEC submitted a letter from El Camino Hospital showing that it had denied Dr. Ellison’s application for reappointment to its staff, based on (1) his failure to give El Camino access to peer review information from the proceedings at Sequoia; (2) a question about the accuracy of information in his initial application and reapplication for privileges concerning the severance of his relationship with UMass; and (3) concerns raised by staff during his proctoring at El Camino. The MEC argued the letter was relevant to show Dr. Ellison had not been truthful when, during the JRC hearing, he testified that there was a pending recommendation to deny his privileges at El Camino solely because of the peer review proceedings at Sequoia.

The Board concluded that the hearing officer had mistakenly ruled that the JRC could not impose a greater sanction than initially recommended by the MEC, and could not consider the MEC’s revised recommendation that Dr. Ellison’s privileges be revoked. Noting that Dr. Ellison’s honesty and credibility had been key issues throughout the proceedings, the Board remanded the matter to the JRC so that it could reconsider the revocation of his privileges on that basis. The Board authorized the JRC to take additional evidence.

On remand, Dr. Ellison chose not to reopen the proceedings on issues relating to his honesty. The JRC did not change its factual findings and rejected the MEC’s argument that revocation was the appropriate outcome: “The JRC has unanimously decided that revocation of Dr. Ellison’s professional staff membership as a remedy purportedly commensurate with its ‘findings’ regarding issues of Dr. Ellison’s honesty, credibility, and ethics, is not factually supportable. Accordingly the imposition of a more stringent corrective action is not warranted and, necessarily, not reasonable.”

The MEC again appealed to the Board, which reversed the JRC’s second decision and revoked Dr. Ellison’s hospital privileges. The Board concluded that in light of the JRC’s factual findings concerning Dr. Ellison’s lack of honesty, there was no substantial evidence that Dr. Ellison met the hospital’s standards of honesty and integrity. The JRC hearing officer submitted a letter in response to the Board’s decision, noting that the JRC had been “extraordinarily conscientious and thorough” and that it “unanimously never believed that there was any factual basis to support any decision other than the one the JRC made initially and reconfirmed on remand.” He further noted, “[T]he JRC was uniformly of the view that while, as noted in its initial Decision and Report, the [JRC] was troubled by certain cited examples of Dr. Ellison’s evasiveness and lack of candor, none of such deficiencies supported corrective action as draconian as termination of membership and privileges.” The Board did not revise its decision.

Dr. Ellison filed a petition for writ of administrative mandate challenging the Board’s decision. (Code Civ. Proc., § 1094.5.) The superior court denied the petition and this appeal follows.

DISCUSSION

Dr. Ellison argues that the Board’s decision must be reversed because: (1) the Board did not correctly apply the substantial evidence standard to the JRC’s decision; (2) the Board violated his right to a fair hearing and the peer review statutes by imposing a harsher corrective action than that initially recommended by the MEC and by basing its revocation of staff privileges on ethical issues distinct from the original charges regarding the quality of care; and (3) federal regulations preclude a hospital board from “unilaterally” revoking a physician’s privileges. We reject these claims.

I. Peer Review at Sequoia Hospital

California has enacted a comprehensive statutory scheme governing hospital peer review. (Bus. & Prof. Code, § 809 et seq.; Mileikowsky v. West Hills Hospital & Medical Center (2009) 45 Cal.4th 1259, 1267; Smith v. Selma Community Hospital (2008) 164 Cal.App.4th 1478, 1482-1484 (Smith).) The purpose of peer review is “to protect the health and welfare of the people of California by excluding through the peer review mechanism ‘those healing arts practitioners who provide substandard care or who engage in professional misconduct.’ ” (Mileikowsky, supra, 45 Cal.4th at p. 1267, citing Bus. & Prof. Code, § 809, subd. (a)(6).)

An acute care hospital such as Sequoia must have “an organized medical staff responsible to the governing body for the adequacy and quality of the care rendered to patients.” (Cal. Code Regs., tit. 22, § 70703, subd. (a).) The medical staff must adopt written bylaws establishing a process of peer review to deal with “staff applications and credentials, appointments, reappointments, assignment of clinical privileges, appeals mechanisms and such other subjects. . . .” (Id., subd. (b).) A hospital’s bylaws govern its peer review proceedings, subject to the requirements of the peer review statutes. (Payne v. Anaheim Memorial Center, Inc. (2005) 130 Cal.App.4th 729, 739-740, fn. 5; Kaiser Foundation Hospitals v. Superior Court (2005) 128 Cal.App.4th 85, 97; Unnamed Physician v. Board of Trustees (2001) 93 Cal.App.4th 607, 617, 622; see Bus. & Prof. Code, § 809, subd. (a)(8) [“It is the intent of the Legislature that written provisions implementing Sections 809 to 809.8, inclusive, in the acute care hospital setting shall be included in medical staff bylaws . . . .”].)

Sequoia’s written bylaws delineate a three-tier process of peer review relating to possible disciplinary action or restriction of hospital privileges. At the first level, the MEC, composed of professional staff members from various departments, is authorized to investigate a staff member when reliable information indicates that he or she “may have exhibited acts, demeanor, or conduct reasonably likely to be 1) detrimental to patient safety or to the delivery of quality patient care within the hospital; 2) unethical; 3) contrary to the Professional Staff Bylaws and Rules; or 4) below applicable professional standards.” (Sequoia Hospital Professional Staff Bylaws, September 7, 2005 revision (Bylaws), art. VII, § 1(a), art. XIII.)

At the second level of review, a staff member may appeal an adverse action by the MEC to the JRC, composed of not less than three members of the medical staff, and is entitled to a hearing before that body. (Bylaws, art. VIII, §§ 1(a), 4(d) .) In all cases except those involving an initial application for membership or clinical privileges, the MEC “shall have the burden of persuading the [JRC] by a preponderance of the evidence that the action or recommendation is reasonable and warranted. . . .” (Bylaws, art. VIII, § 2(j).) The JRC must issue a written report and decision containing “[f]indings of facts and a conclusion articulating the connection between the evidence produced at the hearing and the decision reached. . . .” (Bylaws, art. VIII, § 2(l)(1).)

Finally, a decision by the JRC may be appealed by the staff member or the MEC to the Board on the grounds of “(a) alleged substantial failure of the [JRC] or [MEC] to comply with the procedures required by the law in the conduct of hearings so as to deny due process and a fair hearing; (b) the action taken or recommended is not reasonable and warranted under the circumstances.” (Bylaws, art. VIII, § 3(a).) An appeal to the Board “shall be in the nature of an appellate hearing based upon the record of the hearing before the [JRC], provided that the Board [] may accept additional oral or written evidence subject to the same rights of cross-examination or confrontation provided at the [JRC] hearing. . . .” (Bylaws, art. VIII, § 3(d).) The Board “may affirm, modify or reverse the decision of the [JRC], or, in its discretion, remand the matter for further review and recommendation.” (Bylaws, art. VIII, § 3(e).)

II. Judicial Review of Peer Review Decision

A hospital’s final decision in a peer review proceeding may be judicially reviewed by a petition for writ of administrative mandate. (Code Civ. Proc., § 1094.5; Bus. & Prof. Code, § 809.8; Smith, supra, 164 Cal.App.4th at p. 1499.) As relevant here, the writ shall issue when necessary to correct a prejudicial abuse of discretion by the hospital’s governing body, which is established when “the findings are not supported by substantial evidence in light of the whole record.” (Code Civ. Proc., § 1094.5, subds. (b) & (d).) In an appeal from an order granting or denying the writ, the appellate court must apply the same standard of review as the trial court, giving no deference to the trial court’s decision. (Smith, at p. 1499.)

When a court reviews a hospital’s final decision in a peer review proceeding on the ground that its findings were not support by substantial evidence within the meaning of Code of Civil Procedure section 1094.5, subdivision (d), two issues must be determined: First, did the hospital’s governing body (in this case the Board) apply the correct standard when it conducted its own review of the matter? (Bode v. Los Angeles Metropolitan Medical Center (2009) 174 Cal.App.4th 1224, 1235 (Bode); Hongsathavij v. Queen of Angels etc. Medical Center (1998) 62 Cal.App.4th 1123, 1138 (Hongsathavij).) Second, assuming the governing body applied the correct standard, was its own decision supported by substantial evidence? (Ibid.)

When the issue presented is whether the hospital’s determination was made according to a fair procedure, the court will treat the issue as one of law, subject to independent review based on the administrative record. (Pomona Valley Hospital Medical Center v. Superior Court (1997) 55 Cal.App.4th 93, 101.)

III. Sequoia’s Bylaws Gave the Board the Authority to Exercise its Own Independent Judgment as to Penalty and it Properly Exercised that Power in this Case

We first address Dr. Ellison’s contention that the Board’s decision must be reversed because it substituted its own judgment for the JRC’s when determining the appropriate disposition, rather than applying the more deferential substantial evidence standard required by Sequoia’s written bylaws. We reject the claim because we disagree with its premise. As we explain below, Sequoia’s bylaws required the Board to accept the JRC’s factual findings if supported by substantial evidence, but gave the Board the power to exercise independent judgment as to the appropriate disposition. (Bylaws, art. VIII, § 3(a) & (d).) The Board in this case properly accepted the JRC’s findings as to the historical facts, but reasonably concluded that based on those facts, Dr. Ellison’s privileges should be revoked.

Sequoia’s bylaws provide that any party aggrieved by a JRC decision may file an appeal with the Board. (Bylaws, art. VIII, § 3(a).) This is consistent with the peer review statutes, under which a hospital’s medical staff and its governing body both play a role in peer review proceedings. Under Business and Professions Code section 809.05, “It is the policy of this state that peer review be performed by licentiates. This policy is subject to the following limitations: [] (a) The governing bodies of acute care hospitals have a legitimate function in the peer review process. In all peer review matters, the governing body shall give great weight to the actions of peer review bodies and, in no event, shall act in an arbitrary or capricious manner.”

Business and Professions Code section 809.05, subdivision (a) has been interpreted to mean that a hospital governing body may exercise its own independent judgment about evidence presented to a peer review committee composed of medical staff, provided that it gives due weight to the findings of that committee and provided that the hospital’s bylaws do not require the governing body to apply a more deferential standard of review. (Weinberg v. Cedars-Sinai Medical Center (2004) 119 Cal.App.4th 1098, 1103, 1108, 1110-1111 (Weinberg).) Our initial task is ascertaining whether Sequoia’s bylaws provide for a more deferential standard of review than it would otherwise exercise under the statute.

Sequoia’s bylaws provide that a proceeding before the Board “shall be in the nature of an appellate hearing.” (Bylaws, art. VIII, § 3(d).) Case law has construed this phrase to invoke a substantial evidence standard of review under which the governing body must uphold the factual findings of the peer review body if they are supported by substantial evidence. (Bode, supra, 174 Cal.App.4th 1224, 1235; Smith, supra, 164 Cal.App.4th 1478; Huang v. Board of Directors (1990) 220 Cal.App.3d 1286, 1293.) But this does not entirely resolve the issue before us.

The bylaws also give the Board the ultimate responsibility of determining whether the action taken or recommended by the JRC is “reasonable and warranted under the circumstances.” (Bylaws, art. VIII, § 3(a).) This is essentially a factual determination. (Smith, supra, 164 Cal.App.4th at pp. 1509-1510, 1515.) By giving the Board the power to make this factual determination based on evidence presented at the JRC hearing (and on any additional evidence taken by the Board under article VIII, § 3(d)), the bylaws effectively allow the Board to exercise its independent judgment as to what constitutes a reasonable disposition, even though it must defer to the JRC with respect to its findings on the underlying facts.

Our conclusion that the Board may independently determine the appropriate disposition of a case, based on the facts found true by the JRC and supported by substantial evidence, is consistent with other provisions of Sequoia’s bylaws. For example, the Board may take and consider additional evidence not presented to the JRC, a power that would be meaningless if the Board could not make certain factual determinations independent of the JRC’s. (Bylaws, art. VIII, § 3(d).) The Board also has the power to “affirm, modify or reverse” the JRC’s decision, specifically allowing it to structure a different disposition than the JRC’s if the latter’s is not reasonable and warranted.

Turning to the specifics of this case, we consider whether the Board applied the correct standard when reviewing the JRC’s decision. (Bode, supra, 174 Cal.App.4th at p. 1235.) The Board’s written decision indicates that it applied the substantial evidence standard of review to the JRC’s underlying factual findings and accepted as true those facts determined by the JRC. The Board went on to state that in light of the findings relating to Dr. Ellison’s honesty and integrity, there was no substantial evidence to support the JRC’s determination that he should retain his hospital privileges. Although the Board couched this conclusion in terms of a lack of substantial evidence, it effectively determined that the JRC’s decision was not “reasonable and warranted under the circumstances”—a finding it was authorized to make under the bylaws.

Because the Board appropriately reconsidered the JRC’s decision as to penalty, we must uphold that decision so long as it was itself supported by substantial evidence. (See Hongsathavij, supra, 62 Cal.App.4th at pp. 1136-1137; Bode, supra, 174 Cal.App.4th at p. 1235; Code Civ. Proc., § 1094.5, subds. (b)-(d).) It was. The Board reasonably determined that Dr. Ellison’s failure to honestly and completely respond to the questions about his board certification examinations and his reasons for leaving the UMass residency was behavior that could jeopardize patient safety in the future. A physician who conceals information about himself to protect his reputation might well withhold information about a case if it reflected negatively upon his skills as a practitioner. The JRC expressly found that there were no remedial measures available to assure honest and ethical behavior. “[I]t is absolutely vital that [a] physician be absolutely truthful in his or her application. Hospitals exist to help the sick and injured; they are not detective agencies. They should have the widest possible discretion in decisions affecting physician staff privileges.” (Oskooi v. Fountain Valley Regional Hospital (1996) 42 Cal.App.4th 233, 248-249 (Sills, J. conc.), fns. omitted.)

IV. The Board Did Not Violate Dr. Ellison’s Fair Procedure Rights or the Peer Review Statutes by Imposing a Disposition More Severe than that Initially Recommended by the MEC or by Basing its Decision on Ethical Issues Identified During the Peer Review Process

“[T]he overriding goal of the state-mandated peer review process is protection of the public and [] while important, physicians’ due process rights are subordinate to the needs of public safety.” (Medical Staff of Sharp Memorial Hospital v. Superior Court (2004) 121 Cal.App.4th 173, 181-182.) A physician facing peer review is not entitled to the same due process protections as a criminal defendant. (Ibid.) The question, rather, is whether the procedure leading to the revocation of privileges was fair. (Kaiser Foundation Hospitals v. Superior Court, supra, 128 Cal.App.4th at pp. 101-102.) In this context, we consider Dr. Ellison’s arguments that the Board violated the peer review statutes and his right to a fair hearing.

Dr. Ellison claims the peer review proceedings were unfair because the Board imposed a disciplinary measure more severe than the MEC’s decision to allow him to retain privileges subject to the requirement that he be monitored by a proctor and assisted by a board certified surgeon. We disagree. The bylaws expressly allow the Board to “affirm, modify or reverse” a peer review decision. (Bylaws, art. VIII, § 3(e).) So long as the Board applies the correct standard when reviewing the JRC’s decision and issues a decision that is itself supported by substantial evidence, the bylaws impose no barrier to the imposition of greater restrictions than recommended during the earlier stages of peer review. (See Hongsathavij, supra, 62 Cal.App.4th at pp. 1127-1128 [hospital appeals board removed physician from hospital panel even though judicial review committee found no sufficient basis for doing so]; Weinberg, supra, 119 Cal.App.4th at pp. 1105-1106 [same].)

We are not persuaded by Dr. Ellison’s argument that the MEC’s initial dual proctor/assistant surgeon requirement was the most restrictive action that could be taken by the Board. Though the governing statutes and bylaws require the MEC to recommend a “final proposed action” and to give notice of that action, this notice does not place a limit on what the governing body might ultimately decide. (See Bus. & Prof. Code, §§ 809.1, subds. (a)-(b).) As previously noted, Business and Professions Code section 809.05, subdivision (a) provides, “The governing bodies of acute care hospitals have a legitimate function in the peer review process. In all peer review matters, the governing body shall give great weight to the actions of peer review bodies and, in no event, shall act in an arbitrary or capricious manner.” The Board’s opinion demonstrates that it carefully considered the JRC’s decision and that it did not act in an arbitrary or capricious manner in reaching a different conclusion about the appropriate disposition.

Nor did the Board unfairly penalize Dr. Ellison for pursuing his right of administrative appeal. The goal of protecting the public would not be served by a rule that precluded the governing body from taking necessary action simply because the appealing physician assumed that the appeal would not result in a greater penalty. The bylaws expressly authorized the Board to reverse or modify the JRC’s decision, providing adequate notice that an appeal of the JRC decision could result in greater sanctions.

Dr. Ellison also complains he was deprived of his right to a fair hearing because he was not given adequate notice that his privileges could be revoked based on concerns about his honesty and integrity. Although the MEC’s initial investigation focused on quality of care issues, the notice of charges it filed before the JRC hearing specifically alleged that Dr. Ellison had provided incomplete and inconsistent answers to questions about his board certification and his reasons for leaving his first residency at UMass. Dr. Ellison was questioned extensively about both of these issues at the JRC hearing and had every opportunity to explain his behavior. When the Board remanded the case to the JRC following the first appeal, he was given the opportunity to present additional evidence on this subject, but he elected not to do so.

Finally, Dr. Ellison argues that the proceedings conducted in his case violated the peer review statutes and the bylaws because he did not receive two full levels of peer review. He relies on Mileikowsky, supra, 45 Cal.4th 1259, in which the JRC hearing officer had terminated peer review proceedings based on the physician’s failure to cooperate with discovery, without securing the JRC’s approval of that order. (Id. at pp. 1266, 1275.) The Supreme Court held that the dismissal was erroneous and could not be ratified by the governing body because the peer review body had never acted on the charges before it, thus depriving the physician of one level of peer review. (Id. at p. 1275.)

In this case, both the MEC and the JRC reviewed Dr. Ellison’s case. Though the MEC did not issue a proposed final action with respect to the allegations relating specifically to honesty and integrity, it identified these issues in its notice of charges and took the position before the JRC that a revocation of privileges was appropriate. Dr. Ellison has not demonstrated that he was deprived of meaningful peer review.

V. Federal Regulations Do Not Preclude the Result in this Case

Finally, we reject Dr. Ellison’s argument that federal regulations preclude a hospital board from taking “unilateral” action to revoke staff privileges. He notes that in hospitals accredited for Medicare purposes, “The governing body appoints and reappoints to the medical staff and grants initial, renewed, or revised clinical privileges, based on medical staff recommendations, in accordance with the bylaws, rules and regulations, and policies of the medical staff and of the hospital.” (Comprehensive Accreditation Manual for Hospitals (2000), MS 5.1.) These guidelines (which are not controlling) contemplate that members of a hospital’s medical staff will participate in the peer review process and make recommendations. They do not require a hospital’s governing body to follow staff recommendations in every case.

DISPOSITION

The judgment of the superior court denying the petition for writ of mandate is affirmed. Sequoia is awarded costs on appeal.

_________________________

Needham, J.

We concur:

_________________________

Jones, P. J.

_________________________

Bruiniers, J.

Ellison v. Sequoia Health Services (A124408)

Trial court: San Mateo County Superior Court

Trial judge: Hon. Steven L. Dylina

Moscone, Emblidge & Quadra, G. Scott Emblidge and Rachel J. Sater, for Petitioner and Appellant.

Law Office of Jeffrey C. Grass and Jeffrey C. Grass, for Semmelweis Society International, Inc. as Amicus Curiae on behalf of Petitioner and Appellant.

Manatt, Phelps & Phillips, Barry S. Landsberg, Doreen W. Shenfeld and Joanna S. McCallum, for Respondent.

Filed 4/22/10

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

EDWARD WALTON et al.,

Plaintiffs and Respondents,

v.

THE WILLIAM POWELL COMPANY,

Defendant and Appellant.

B208214

(Los Angeles County

Super. Ct. No. BC361382)

APPEAL from a judgment of the Superior Court of Los Angeles County, Ralph W. Dau, Judge. Reversed and remanded with directions.

Horvitz & Levy, Lisa Perrochet and Jason R. Litt; Foley & Mansfield, Douglas G. Wah and Khaled Taqi-Eddin for Defendant and Appellant.

Simon, Eddins & Greenstone and Brian P. Barrow for Plaintiffs and Respondents.

__________________________________

Respondents Edward and Carol Walton asserted claims for negligence and strict liability against appellant The William Powell Company (Powell), alleging that asbestos-laden materials associated with valves made by Powell injured Edward Walton. After the jury returned a verdict in the Waltons’ favor, a judgment was entered awarding them $5,660,624.39 in damages. We conclude that because Edward Walton’s injuries stemmed entirely from exposure to asbestos-laden products for which Powell is not liable, we must reverse.

RELEVANT FACTUAL AND PROCEDURAL BACKGROUND

A. Pretrial Proceedings

Beginning in the late 1940’s, Powell sold metal valves, together with asbestos gaskets and packing, to the United States Navy. Edward Walton served in the United States Navy from 1946 to 1968. During two periods of his service Walton repaired shipboard propulsion and heating systems, which used valves in conjunction with asbestos insulation and other asbestos-laden items. After leaving the Navy, Walton operated a painting business that brought him into contact with products containing asbestos. In November 2005, Walton was diagnosed as suffering from lung cancer.

On November 2, 2006, the Waltons filed their complaint for negligence and strict liability against Powell and approximately 45 other defendants. The complaint alleged that Edward Walton’s lung cancer and related medical conditions resulted from his exposure to asbestos in connection with the defendants’ products. The Waltons sought compensatory and punitive damages.

Several defendants other than Powell sought summary judgment on the Waltons’ claims, contending that the pumps, valves, and other items they had provided to the Navy did not, in fact, cause Edward Walton’s injuries. These motions relied in part on the so-called component parts doctrine, which in some circumstances shields a component manufacturer from strict liability for a finished product that incorporates its component. (Taylor v. Elliot Turbomachinery Co. Inc. (2009) 171 Cal.App.4th 564, 576 (Taylor).) In addition, Powell and other defendants joined in a motion in limine to exclude the Waltons’ evidence on the basis of the doctrine. The trial court denied all but one of the motions for summary judgment and the in limine motion.

B. Trial

On February 20, 2008, at the commencement of jury selection, six defendants remained in the action, including Powell. The next day, when the Waltons made their opening statement to the jury, Powell and a pump manufacturer were the only defendants in the action. By midtrial, Powell was the sole defendant in the action.

At trial, evidence was presented that Powell manufactured metal valves for a large number of military and nonmilitary applications. The valves were of many types, and employed a variety of gaskets, some of which contained no asbestos. Although some of the valves used asbestos gaskets and packing, Powell made only the valves. The Navy was among Powell’s customers for these valves. From the late 1940’s to 1991, Powell provided asbestos gaskets and packing from other manufacturers with its valves; in addition, Powell sold replacement asbestos gaskets and packing, but received relatively few orders because the “end users” preferred to order directly from gasket and packing manufacturers, who sold the same items at lower prices. No warnings about asbestos were placed on the valves. According to Powell, it first became aware of the hazards of asbestos in the mid-1980’s, and began phasing out the use of asbestos in its products in 1987.

Edward Walton testified as follows: He enlisted in the Navy in 1946, and served as deckhand prior to 1953, when he began working as a welder and metal smith. From 1953 to 1959, and from 1966 to 1968, Walton repaired shipboard heating and propulsion systems. During these periods, he served aboard destroyer tenders, vessels that provided maintenance services for destroyers. The shipboard systems on the destroyers that he serviced used asbestos insulation and other asbestos-laden items. Among his tasks was the maintenance of valves and pumps below deck in the engine and fire rooms, where the boilers and turbines were located. The valves and pumps were supplied by several manufacturers. He first encountered a Powell valve after June 1956.

In working on a valve, Walton removed asbestos insulation from the valve’s exterior, removed the asbestos gaskets (if any) that sealed the valve to adjoining pipes, extracted asbestos packing from the valve’s interior, and installed new asbestos packing and gaskets, as needed. The gaskets were often cut from sheets of asbestos, and the packing was fashioned from rolls of replacement packing. Walton also encountered asbestos insulation and gaskets when he worked on pumps. During these activities, the air that Walton breathed became dirty and dusty. He removed asbestos insulation from Powell valves “numerous times, many, many times,” but saw no warnings about asbestos on the valves.

Walton attributed none of the asbestos products he contacted to Powell. He testified that he often serviced valves in destroyers built during or before World War II, and worked only on old valves “with many coats of paint.” Walton believed that the valves’ original gaskets and packing had been replaced before he worked on them. According to Walton, most of the replacement packing and gaskets came from a source other than Powell, and he otherwise could not specify their sources. He knew neither the manufacturer of the valves’ insulation nor the number of times that the insulation had been replaced.

Walton left the Navy in 1968 and operated a painting company until 1999. As a painter, he worked with asbestos-laden sheetrock, textured ceilings, and taping mud. In late 2005, he was diagnosed as suffering from lung cancer.

Dr. Edwin Crosby Holstein, a specialist in asbestos-related diseases, and Arnold R. Brody, a cell biologist and experimental pathologist, testified regarding Edward Walton’s medical condition and its causes. Holstein opined that Walton’s exposure to asbestos in connection with Powell valves was a significant contributing cause of Walton’s lung cancer. Brody testified that Walton’s history of asbestos-related and medical conditions were sufficient to establish that asbestos caused his lung cancer.

C. Verdict and Judgment

The jury found that Edward Walton had suffered $561,861 in economic damages and $20,000,000 in noneconomic damages, and allocated Powell a 25 percent share of the responsibility for the causation of these damages. In addition, the jury found that Powell had acted with malice, oppression, or fraud, but awarded no punitive damages. On March 6, 2008, a judgment was entered in favor of the Waltons awarding damages totaling $5,660,624.39. The trial court later denied Powell’s motions for a new trial and judgment notwithstanding the verdict. This appeal followed.

DISCUSSION

Powell contends that the Waltons’ claims for strict liability and negligence fail because its valves were not defective and caused no injury to Edward Walton. We agree. As explained below, Powell supplied none of the asbestos products to which Edward Walton was exposed, and its valves had no defect rendering Powell liable for the injuries that Walton may have sustained through exposure to asbestos products from other sources.

Generally, in a products liability case, a plaintiff may seek recovery on theories of strict liability and negligence. (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 478-479.) “[U]nder either a negligence or a strict liability theory of products liability, to recover from a manufacturer, a plaintiff must prove that a defect caused injury. [Citations.] Under a negligence theory, a plaintiff must also prove ‘an additional element, namely, that the defect in the product was due to negligence of the defendant.’” (Id. at p. 479, quoting Prosser, Strict Liability to the Consumer (1966) 18 Hastings L.J. 9, 50-51.) Here, the Waltons sought recovery on theories of strict liability and negligence, asserting that Powell’s valves lacked adequate warnings about the hazards of asbestos and were otherwise defective in their design.

A. Strict Liability
B.
C.
D.
1. Governing Principles

We begin with the Waltons’ claims based on strict liability. California law “provides generally that manufacturers, retailers, and others in the marketing chain of a product are strictly liable in tort for personal injuries caused by a defective product.” (Peterson v. Superior Court (1995) 10 Cal.4th 1185, 1188.) However, strict liability is not imposed on parties that are “not a part of the manufacturing or marketing enterprise of the allegedly defective product that caused the injury in question.” (Ibid.) The burden falls upon the plaintiff to produce adequate evidence “linking the injury-producing product with a particular entity in the stream of commerce of that product.” (Taylor, supra, 171 Cal.App.4th at p. 576.) Recovery is permitted in strict liability for three kinds of defects: manufacturing defects, design defects, and “‘warning defects,’ i.e., inadequate warnings or failures to warn.” (Anderson v. Owens-Corning Fiberglas Corp. (1991) 53 Cal.3d 987, 995.)

Pertinent to our inquiry is the component parts doctrine, which in some circumstances exempts a manufacturer from liability arising from a finished product that incorporates a component supplied by the manufacturer. (Taylor, supra, 171 Cal.App.4th at p. 576.) Generally, a component manufacturer is subject to liability only when the component itself has a defect that results in injury, or the manufacturer plays a material role in integrating the component into the finished product, whose defects cause injury. (Rest.3d Torts, Products Liability, § 5. )

Two policy considerations underlie the component parts doctrine. “First, requiring suppliers of component parts to ensure the safety of their materials as used in other entities’ finished products ‘“would require suppliers to ‘retain an expert in the client’s field of business to determine whether the client intends to develop a safe product.’” [Citation.] Suppliers of “products that have multiple industrial uses” should not be forced ‘to retain experts in a huge variety of areas in order to determine the possible risks associated with each potential use.’ [Citation.] A second, related rationale is that “finished product manufacturers know exactly what they intend to do with a component or raw material and therefore are in a better position to guarantee that the component or raw material is suitable for their particular applications.” [Citations.]’” (Taylor, supra, 171 Cal.App.4th at p. 584, quoting (Springmeyer v. Ford Moter Co. (1998) 60 Cal.App.4th 1541, 1554.)

2. No Strict Liability

The Waltons’ strict liability claim relies on allegations that Powell’s valves suffered from “warning” and design defects. For the reasons explained below, the claim fails under each theory.

a. No Duty to Warn
b.
c.
d.
At trial, the Waltons asserted that Powell’s valves were defective because they incorporated no warning regarding the hazards of asbestos packing, gaskets, and insulation. “Generally speaking, manufacturers have a duty to warn consumers about the hazards inherent in their products. [Citation.] The requirement’s purpose is to inform consumers about a product’s hazards and faults of which they are unaware, so that they can refrain from using the product altogether or evade the danger by careful use.” (Johnson v. American Standard, Inc. (2008) 43 Cal.4th 56, 64.) A product that is otherwise flawless in its design and manufacture “‘may nevertheless possess such risks to the user without a suitable warning that it becomes “defective” simply by the absence of a warning.’” (Finn v. G. D. Searle & Co. (1984) 35 Cal.3d 691, 699.)

In Taylor, on facts materially similar to those before us, the appellate court held that a strict liability claim predicated on a warning defect failed as a matter of law. (Taylor, supra, 171 Cal.App.4 at p. 571.) There, the widow of a Navy seaman sued several valve and pump manufacturers, alleging that they were responsible for her husband’s asbestos-related injuries. (Id. at pp. 570-571.) The defendants had supplied valves and pumps, along with asbestos gaskets and packing, to the Navy in the 1940’s. (Ibid.) The plaintiff asserted negligence and strict liability claims based on the theory that the defendants had a duty to issue a warning regarding the hazards of asbestos. (Id. at pp. 571, 593.) In seeking summary judgment on the claims, the defendants established that they had manufactured only the valves and pumps they had supplied the Navy; that the husband enlisted in 1964; and that he had repaired valves and pumps whose original packing and gaskets had been replaced by items from other manufacturers. (Id. at pp. 571-572.)

The appellate court affirmed the grant of summary judgment in the defendants’ favor, concluding that the plaintiff’s “duty to warn” strict liability claim failed for three reasons. (Taylor, supra, 171 Cal.App.4 at pp. 577-586.) First, as the court noted, the defendants were not part of the chain of distribution of the injury-causing products, as the husband had no contact with any asbestos-laden products that the defendants had provided. (Id. at pp. 577-579.) Second, following an examination of California law, the court determined that the defendants had no duty to issue warnings regarding the hazards of asbestos “released from products made or supplied by other manufacturers and used in conjunction with [the defendants’] equipment.” (Id. at pp. 579-583.) Third, the court concluded that the component parts doctrine shielded the defendants from liability, as there was no evidence that their valves and pumps were themselves defective or that the defendants played a material role in the design of the shipboard systems. (Id. at p. 585.) Although the defendants had provided valves and pumps in accordance with the Navy’s specifications, the court reasoned that this conduct was insufficient to support strict liability, pointing to the Restatement Third of Torts, which states: “A component seller who simply designs a component to its buyer’s specifications, and does not substantially participate in the integration of the component into the design of the product, is not liable . . . .” (Rest. 3d Torts, Products Liability, § 5, com. e., p. 135.)

We conclude that the Waltons’ strict liability claim based on the duty to warn fails for the same reasons. To begin, the Waltons did not establish that Powell was part of the chain of distribution of the asbestos products that contributed to Edward Walton’s injuries. Nothing before us supports the inference that Edward Walton had any contact with asbestos products supplied by Powell.

There is no evidence that Powell ever provided the type of insulation covering the valves that Walton repaired. Nor does the record support a reasonable inference that Powell supplied either the packing and gaskets that Walton removed from the valves or their replacements. On these matters, Walton testified that he first worked on a Powell valve no earlier than June 1956; that many of the ships whose valves he serviced were built during or before World War II; that all the valves he encountered were old, as evidenced by their “many coats of paint;” and that the original packing and gaskets had probably been replaced — perhaps many times — before he worked on the valves. He also stated that a manufacturer other than Powell provided most of the new packing, and that he did not know whether Powell had supplied any of the replacement gaskets or packing. There is no evidence that the Navy ever bought replacements from Powell; the only evidence suggested that the Navy did not, as Powell received relatively few orders for replacements due to its high prices.

On this record, any inference that Walton was exposed to asbestos from products supplied by Powell is speculation. Because the Waltons failed to “link[] the injury-producing product with [Powell] in the stream of commerce of that product,” Powell’s original provision of asbestos packing and gaskets to the Navy did not render it strictly liable for Walton’s injuries. (Taylor, supra, 171 Cal.App.4th at pp. 577-579; Cadlo v. Owens-Illinois, Inc. (2004) 125 Cal.App.4th 513, 523-524 [former supplier of asbestos insulation to Navy was not strictly liable for seaman’s injuries from exposure to asbestos insulation, as there was no evidence that former supplier had role in the design and marketing of asbestos insulation to which seaman was actually exposed].)

Nor was Powell subject to a duty to warn because its valves were used in combination with the asbestos-laden products to which Walton was exposed. As explained in Taylor, the employment of a nondefective component in an injury-causing shipboard propulsion or heating system is not, by itself, sufficient to trigger the duty to warn; the plaintiff must show that component manufacturer “participated in the integration of the[] component[] into the design of the [system].” (Taylor, supra, 171 Cal.App.4th at p. 585.) The Waltons made no such showing. The record discloses only that the Navy, in ordering the valves from Powell, specified that the valves must have a certain type of flange (or fitting for gaskets); that Powell provided valves with the specified flange; and that Powell also supplied the Navy with technical documents and instruction manuals regarding the valves they provided. As these facts do not show that Powell participated in the design of the Navy’s systems or the system components provided by other manufacturers, they do not establish a duty to warn. (Id. at pp. 584-586; see also Blackwell v. Phelps Dodge Corp. (1984) 157 Cal.App.3d 372, 377-378 [acid manufacturer had no duty to warn about dangers of pressure formation from acid when manufacturer lacked control over shipping arrangements, and placed the acid as ordered in defective tank cars provided by other parties]; Garman v. Magic Chef, Inc. (1981) 117 Cal.App.3d 634, 637-638 [propane stove manufacturer had no duty to warn regarding hazards associated with pipe connecting stove to propane tank when it did not supply or install pipe].)

b. No Design Defect

At trial, the Waltons also asserted that Powell’s valves were defective because they were designed for use in concert with asbestos gaskets, packing, and insulation. They presented evidence that Powell’s valves were designed to permit the replacement of the packing and gaskets, and that Powell knew that insulation placed by others on its valves would have to be removed when the valves were repaired. On appeal, the Waltons contend that the valves were defective in their design even if none of the asbestos products with which Walton had contact were provided by Powell. The crux of their contention is that Powell intentionally designed their valves to be used with asbestos products from other manufacturers. In our view, the theory that the valves suffered from a design defect fails under the component parts doctrine.

Generally, the doctrine applies to items such as “raw materials, valves, [and] switches, [which] have no functional capabilities unless integrated into other products.” (Rest.3d Torts, Products Liability, § 5, com. a, pp. 130-131.) As explained in the Restatement Third of Torts, Products Liability, the doctrine encompasses such items — provided that they are nondefective in themselves — because “[i]mposing liability would require the component seller to scrutinize another’s product which the component seller has no role in developing. This would require the component seller to develop sufficient sophistication to review the decisions of the business entity that is already charged with responsibility for the integrated product.” (Rest.3d Torts, Products Liability, § 5, com. a, p. 131.)

Powell’s valves fall squarely within this rationale for the component parts doctrine. Powell made only metal valves, which had no functional value until integrated into broader systems with pipes and other elements, such as the Navy’s propulsion and heating systems. Because integration would have been impossible if the valves were not compatible with other products used in such systems, Powell designed metal valves that could be combined with gaskets, packing, and insulation from other sources, as Powell itself made none of these items. Nothing before us suggests that Powell had a role in designing the available gaskets, packing, and insulation or the shipboard systems into which its valves were integrated. To impose liability on Powell for the hazards associated with asbestos would have obliged it to scrutinize the development of several products — the gaskets, packing, and insulation made by others, and the Navy’s shipboard systems — over which it had no control. This would have required Powell to acquire “sufficient sophistication to review the decisions of the . . . entit[ies]” directly responsible for the products in question. (Rest.3d Torts, Products Liability, § 5, com. a, p. 131; see also Cadlo v. Owens-Illinois, Inc., supra, 125 Cal.App.4th at pp. 523-524 [former asbestos insulation manufacturer is not liable for injuries arising from exposure to asbestos insulation it neither designed nor marketed].)

c. The Waltons’ Contentions
d.
e.
f.
Pointing primarily to Tellez-Cordova v. Campbell-Hausfeld/Scott Fetzger Co. (2004) 129 Cal.App.4th 577, 579-581 (Tellez-Cordova), the Waltons contend that Powell is strictly liable for Edward Walton’s injuries, even if Powell did not supply the asbestos-laden products that he encountered while working on Powell’s valves. In Tellez-Cordova, the plaintiff asserted strict liability claims based on “warning” and design defects against manufacturers of grinding tools that the plaintiff had used. The plaintiff’s complaint alleged that he had suffered injury as the result of exposure to toxic dust released from abrasive discs powered by the tools. (Ibid.) The defendants successfully demurred to the complaint on the basis of the component parts doctrine. (Id. at p. 581.) In reversing, the appellate court noted that the complaint alleged that the tools were specifically designed to be used with the abrasive discs for the purpose of grinding metals, and that toxic dust was created when the tools were used for their intended purpose. (Id. at pp. 582-583.) In view of the allegations, the court concluded that the component parts doctrine was inapplicable, as the defendants’ grinding tools had only one intended purpose — that is, to power abrasive wheels — and there was no “‘finished product manufacturer’” in a superior position to issue warnings about the “completed product.” (Ibid.)

In our view, Tellez-Cordova stands for the proposition that the component parts doctrine is inapplicable when a manufacturer’s product is uniquely designed to complete a system that is hazardous in its intended use. That is not the case here. Unlike Tellez-Cordova, in which the tools and discs formed a single system over which the tool manufacturers had significant control, the combination of Powell’s valves with the packing, gaskets, and insulation formed no such system. Even when joined with the packing, gaskets, and insulation, the valves had no functional value until integrated into broader systems — for example, the Navy’s shipboard systems — containing other components; moreover, there is no evidence Powell played a role in developing the shipboard systems in which its valves were placed.

The remaining case authority upon which the Waltons rely is also distinguishable. In Wright v. Stang Manufacturing Co. (1997) 54 Cal.App.4th 1218, 1222 (Wright), the defendant manufactured a water cannon that had been mounted on a fire engine. When the plaintiff, a firefighter, used the water cannon, it broke loose, threw him to the ground, and fell on him. (Ibid.) The defendant obtained summary judgment on the plaintiff’s strict liability claim on the theory that the cannon’s mount, rather than the cannon itself, was defective. (Id. at pp. 1222-1223.) In reversing the summary judgment, the appellate court concluded that there were triable issues whether the cannon suffered from a design defect because it was incompatible with a sufficiently strong mounting system; in addition, the court determined that there were triable issues whether the defendant had failed to warn about a potential mismatch between the cannon’s water pressure and the strength of its mount. (Id. at p. 1236.)

In Wright, unlike here, the defendant’s product itself injured the plaintiff. Moreover, the design and warning defects were directly tied to features of the product — principally, the cannon’s water pressure and incompatibility with safe mounting — that its manufacturer was in the best position to identify as problematic. As explained above, Powell had no control over the development of the asbestos-laden products used in conjunction with its valves.

In Deleon v. Commercial Manufacturing & Supply Co. (1983) 148 Cal.App.3d 336, 340, the plaintiff, a worker in a fruit processing plant, was injured when her arm was caught in a rotating power shaft located three feet above a fruit bin she had been cleaning. She sued the bin’s manufacturer, which obtained summary judgment on her strict liability claims. (Id. at pp. 340-342.) The appellate court reversed, concluding there were triable issues regarding the application of the component parts doctrine, as there was evidence the manufacturer had participated in the design of the production line that incorporated the bin. (Id. at p. 345.) In contrast, here there was no evidence Powell contributed to the design of the asbestos products or the Navy’s systems.

Finally, in Gonzales v. Carmenita Ford Truck Sales, Inc. (1987) 192 Cal.App.3d 1143, 1145-1146, the plaintiff was injured when the brakes of his truck failed. The plaintiff asserted claims for negligence and products liability against the defendant, which had sold and serviced the truck. (Id. at p. 1146.) At trial, the court declined to instruct the jury on the plaintiff’s theory that the defendant had failed to give adequate warnings about the necessity for regular adjustments to the truck’s air brakes. (Id. at pp. 1147-1152.) In determining that the denial was error, the appellate court stated that warnings are in order when necessary to prevent a product from becoming unreasonably dangerous. (Id. at p. 1551.) Here, unlike Gonzales, Powell did not provide the products that injured Walton. As explained above (see pt. A.2.a., ante), Powell had no duty to provide a warning about products from other sources.

The Waltons also suggest that Powell was strictly liable for Edward Walton’s injuries because it was foreseeable to Powell that Walton would be exposed to asbestos while working on Powell’s valves, even if none of the asbestos he encountered came from products supplied by Powell. We disagree. As explained in Taylor, foreseeability alone does not warrant imposition of strict liability when, as here, the upshot of the imposition would be to require the component manufacturer 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.”’” (Taylor, supra, 171 Cal.App.4th at pp. 585-586, quoting Artiglio v. General Electric. Co. (1998) 61 Cal.App.4th 830, 838-839.) In sum, the Waltons’ strict liability claims fail as a matter of law.

E. Negligence
F.
G.
H.
At trial, the Waltons asserted that Powell was liable for Edward Walton’s injuries on a theory of negligence. We conclude that this theory also fails under Taylor. There, applying the multi-factored test stated in Rowland v. Christian (1968) 69 Cal.2d 108, the appellate court held that the defendants had no pertinent duty of care toward the plaintiff’s husband. (Taylor, supra, 171 Cal.App.4th at pp. 593-596.) In so concluding, the court placed special emphasis on the defendants’ lack of responsibility for injury under the theory of strict liability, as well as the fact that the husband was exposed to asbestos from third party products more than 20 years after the defendants provided their valves and pumps to the Navy. (Id. at pp. 594-596.) Here, as in Taylor, Powell is not strictly liable for Walton’s injuries, which arose from exposure to asbestos products from other sources long after Powell supplied the valves that Walton encountered. In view of Taylor, Powell had no duty of care toward him for purposes of a negligence claim. The Waltons therefore cannot state a claim for negligence.

DISPOSITION

The judgment is reversed, and the matter is remanded with directions to the trial court to vacate the judgment and enter a new judgment in favor of Powell on the Waltons’ claims. Powell is awarded its costs on appeal.

CERTIFIED FOR PUBLICATION

MANELLA, J.

We concur:

EPSTEIN, P. J.

WILLHITE, J.