Bay Summit Community Assn. v. Shell Oil Co

In Bay Summit Community Assn. v. Shell Oil Co. (1996) 51 Cal.App.4th 762, polybutylene plumbing installed in a condominium complex developed numerous leaks. ( Bay Summit, supra, 51 Cal.App.4th at p. 766.) The condominium association and various homeowners sued numerous entities including Shell Oil Company, a supplier of resin for the polybutylene pipes. A jury found Shell strictly liable for damages caused by defective fittings in the polybutylene plumbing system. (Ibid.) Shell filed an appeal, arguing that it was merely a supplier of a nondefective product (resin) and therefore could not be held strictly liable to plaintiffs. ( Id. at p. 767.) On appeal, the issue was "whether Shell's supplying the nondefective resin, in combination with Shell's marketing activities, warrants holding Shell strictly liable under the circumstances." ( Bay Summit, supra, 51 Cal.App.4th at p. 772.) The appellate court concluded that a defendant can be strictly liable under a marketing enterprise theory when a plaintiff establishes that "(1) the defendant received a direct financial benefit from its activities and from the sale of the product; (2) the defendant's role was integral to the business enterprise such that the defendant's conduct was a necessary factor in bringing the product to the initial consumer market; and (3) the defendant had control over, or a substantial ability to influence, the manufacturing or distribution process." ( Id. at p. 778.) The court concluded that Shell's involvement in the marketing of the product could support a judgment under the marketing enterprise theory but that the jury had not been properly instructed. (Ibid.)