Stein v. Pfizer Inc.

KRAUSER, C.J. The issue before us is whether Pfizer Inc., appellee, may be deemed an “apparent manufacturer” of an asbestos-containing cement, “Insulag,” which purportedly caused the illness and subsequent death of Carl Stein from mesothelioma. The product at issue was manufactured and sold to Mr. Stein’s employer, Bethlehem Steel Corporation, by Quigley, Inc., both before and after it became a wholly-owned subsidiary of Pfizer. If Pfizer does not qualify as an “apparent manufacturer,” then it is covered by the “channeling injunction” issued by the United States Bankruptcy Court for the Southern District of New York, in addressing Quigley’s petition for Chapter 11 protection, that bars asbestos-related lawsuits against Quigley or Pfizer, such as the one before us, and directs such claims to a trust for consideration and, ultimately, compensation. If, on the other hand, Pfizer satisfies the criteria of such a designation, then Mr. Stein’s family, appellants, may continue to ⁷⁶ pursue their products liability claims against Pfizer in the Circuit Court for Baltimore City, where this matter was initially filed by Mr. Stein, before his death.

The Baltimore City circuit court resolved this issue, by granting summary judgment in favor of Pfizer, after determining that it did not qualify as an “apparent manufacturer,” We agree and shall affirm. I. The Stein Family’s Lawsuit Carl Stein (the “decedent”) worked, from 1949 through 1985, as a bricklayer for the Bethlehem Steel Corporation at its Sparrows Point plant. During his thirty-six years of employment at the Sparrows Point plant, the decedent purportedly used Insulag, an asbestos-containing cement, in the performance of his duties at that facility. After the decedent became ill, from his exposure to asbestos, he brought an action, in the Circuit Court for Baltimore City, against a number of business entities, 1 which had sold asbestos-containing materials to Bethlehem Steel, alleging negligence, breach of warranty, strict liability, fraud, and conspiracy.

None of these entities is, however, a party to the instant appeal. Then, in April 2012, the decedent, who had, by that time, been diagnosed with mesothelioma, succumbed to that disease. Fifteen months later, in July of 2013, his widow, Harriette Stein, individually, and as the personal representative of his estate, together with his surviving children, Carl B. Stein, Jr.; Mark A. Stein; Robert B. Stein; and Patricia A. Robinson (all of whom we shall collectively refer to as “the Stein family”), ⁷⁷ filed an amended complaint, in the same action, adding Pfizer Inc., the appellee, as a defendant in that suit, as well as several new counts averring loss of consortium and wrongful death. The theory underlying the Stein family’s claims against Pfizer was that the decedent’s exposure to an asbestos-containing refractory cement, called “Insulag,” which was supplied to his employer, Bethlehem Steel, by Pfizer’s subsidiary, Quigley Company, Inc., was a substantial factor in bringing about his illness and resultant death from mesothelioma and that, because Quigley’s invoices and marketing materials also bore Pfizer’s trademarks, as well as its own, and because, in some instances, the words: “Manufacturers of Refractory Products,” appeared beneath the exhibition of those corporate designations, Pfizer had, in effect, held itself out as a “manufacturer” of Insulag and was therefore liable for the illness and death of Mr. Stein, as an “apparent manufacturer” of that product.

II

Quigley’s Relationships with Pfizer and Bethlehem Steel Quigley, founded in 1916, manufactured and sold refractory products, that is, products “that retain their strength at high temperatures,” for use in steel mills, power plants, and refineries. In re Quigley Co., 449 B.R. 196, 198 (S.D.N.Y.2011), aff'd, 676 F.3d 45, 48, 59 (2d Cir.2012), cert. denied sub nom. Pfizer, Inc. v. Law Offices of Peter G. Angelos, - U.S. -, 133 S.Ct. 2849 , 186 L.Ed.2d 908 (2013). One of the products it manufactured and sold, beginning in the 1930’s, was “Insulag,” a heat-resistant cement, which contained asbestos.

In August 1968, Pfizer acquired all of the stock of Quigley, thereby rendering that corporate entity a wholly-owned subsidiary of Pfizer. In re Quigley Co., 676 F.3d at 47 . After its acquisition by Pfizer, Quigley continued to operate as a separate and distinct corporation, designing and manufacturing its products, and maintaining its own sales and distribution network, without any participation by Pfizer in those processes. Yet, its marketing and promotional materials, and its invoices, “began to include the Pfizer name, logo, and trademark.” Id.

(citation and quotation omitted). ⁷⁸ Nor did its acquisition by Pfizer affect its relationship with Bethlehem Steel. It continued to directly supply Bethlehem Steel with Insulag, as it had done, periodically, since 1955, regularly shipping that asbestos-containing product to the decedent’s place of employment, Bethlehem Steel’s Sparrows Point plant, until 1974, when Quigley phased out its manufacture of Insulag, in favor of producing “Insulag AF,” a non-asbestos containing cement. After the decedent became ill, as a result of his purported exposure to asbestos at the plant, he filed suit, in the Circuit Court for Baltimore City, against Bethlehem Steel and a number of other business entities. During the course of that litigation, he was deposed, and, though he testified in detail as to the products to which he was exposed while working at the Sparrows Point plant, he did not mention “Insulag,” or, for that matter, either Quigley or Pfizer, which is not surprising as, in the complaint he filed, Insulag was not alleged to have been the cause of his illness, and neither Pfizer nor Quigley were named as “defendants.” 2 Nonetheless, there is no dispute that Insulag was used at the Sparrows Point plant, by bricklayers (such as the decedent), from 1955 to 1974, 3 which overlapped with the time period, from 1968 to at least the filing of this suit, during which Quigley was a wholly-owned subsidiary of Pfizer.

Nor is there any dispute that the decedent worked at that plant throughout the time period when Insulag was being used there, and there is no disagreement that that product was supplied by Quigley. 4 ⁷⁹ III. The Quigley Bankruptcy and the “Channeling Injunction” “After the health effects of asbestos became known,” and more than 160,000 asbestos-related suits had been filed against Quigley (approximately 100,000 of which also named “Pfizer” as a defendant), Quigley filed, in 2004, a bankruptcy petition, under Title 11 of the United States Code (“Chapter 11”), in the United States Bankruptcy Court for the Southern District of New York. In re Quigley Co., supra, 449 B.R. at 199 . In its petition, Quigley sought court approval of a reorganization plan and, most relevant to the issue before us, “an injunction that would stop all asbestos-related lawsuits against itself and Pfizer.” Id.

At the outset of those proceedings, the bankruptcy court “preliminarily enjoined all asbestos-related claims from proceeding against both companies (including those arising from Pfizer’s own products) during the pendency of Quigley’s bankruptcy proceeding.” Id. That injunction was subsequently amended, in accordance -with 11 U.S.C. § 524 (g), 5 to channel asbestos-related lawsuits against either Quigley or Pfizer or both to a trust, largely funded by Pfizer, for review and possible compensation of such claims. The amended injunction (hereafter the “channeling injunction”) provided that during the pendency of Quigley’s chapter 11 case, all parties ... are hereby stayed, restrained and enjoined from commencing or continuing any legal action against Pfizer alleging that Pfizer is directly or indirectly liable for the conduct ⁸⁰ of, claims against, or demands on Quigley to the extent such alleged liability of Pfizer arises by reason of— (I) Pfizer’s ownership of a financial interest in Quigley, a past or present affiliate of Quigley, or a predecessor in interest of Quigley; (II) Pfizer’s involvement in the management of Quigley or a predecessor in interest of Quigley; or service as an officer, director or employee of Quigley or a related party; (III) Pfizer’s provision of insurance to Quigley or a related party; (IV) Pfizer’s involvement in a transaction changing the corporate structure, or in a loan or other financial transaction affecting the financial condition, of Quigley or a related party, including but not limited to— (aa) involvement in providing financing (debt or equity), or advice to an entity involved in such a transaction; or (bb) acquiring or selling a financial interest in an entity as part of such a transaction. In re Quigley Co., supra, 676 F.3d at 48 . 6 Because Pfizer fell “within the ring of fire created by asbestos litigation,” In re Quigley Co., 449 B.R. at 202, the “channeling injunction” at issue, here, covered most, though not all asbestos-related claims against Pfizer, Quigley’s parent company. 7 IV.

The Scope of the “Channeling Injunction” After the “channeling injunction” was issued by the bankruptcy court, a controversy arose as to its scope when, “[b]e-ginning in 1999,” The Law Offices of Peter G. Angelos, PC (the same law firm that represents the Stein family in this ⁸¹ appeal), “commenced lawsuits in Pennsylvania on behalf of plaintiffs who had been exposed to asbestos-containing products sold by Quigley and Pfizer, including Insulag.” In re Quigley Co., 449 B.R. at 199 . As in the instant case, the Pennsylvania asbestos claimants alleged that Pfizer was an “apparent manufacturer” of Insulag. And, as does the Stein family here, they claimed that Pfizer, by placing “its logo on Insulag packaging” and on advertisements, had “held itself out to consumers as a manufacturer of Insulag.” Id. at 200 . When, in response, Pfizer filed a motion, requesting that the bankruptcy court enforce the “channeling injunction” as to those claims, the bankruptcy court granted that motion, holding that the “apparent manufacturer” claims were enjoined by the “channeling injunction” and ordering the Angelos law firm to cease its prosecution of all of its “apparent manufacturer” lawsuits in Pennsylvania state courts.

Id. at 198-200 . The United States District Court for the Southern District of New York disagreed, however, and reversed that decision, holding that the “apparent manufacturer” claims did not fall within the scope of the “channeling injunction.” 449 B.R. 196 . That decision was, in turn, affirmed by the United States Court of Appeals for the Second Circuit. 676 F.3d 45 . It avowed that a claim against Pfizer is subject to the “channeling injunction” only when Pfizer’s alleged liability for “the conduct of or claims against” Quigley has arisen “as a legal consequence of’ one of the four of the following: “(I) Pfizer’s ownership of a financial interest in Quigley, a past or present affiliate of Quigley, or a predecessor in interest of Quigley”; “(II) Pfizer’s involvement in the management of Quigley or a predecessor in interest of Quigley; or service as an officer, director or employee of Quigley or a related party”; “(III) Pfizer’s provision of insurance to Quigley or a related party”; or “(IV) Pfizer’s involvement in a transaction changing the corporate structure, or in a loan or other financial transaction affecting the financial condition, of Quigley or a related party[.]” Id. at 48, 62 . ⁸² Thus, as the Second Circuit observed, a claim against Pfizer, based upon a product manufactured by Quigley, that seeks the imposition of liability under such legal doctrines as “piercing the corporate veil,” respondeat superior, or successor liability, is subject to the “channeling injunction,” as the products liability it alleges “arise[s] as a legal consequence” of Pfizer’s ownership, management, or control of Quigley.

Id. at 49, 60 . But that is not so, declared the Second Circuit, with respect to a claim that Pfizer was an “apparent manufacturer” of a product, actually manufactured by Quigley, because such a claim, explained that court, does not “in any legal sense” depend upon Pfizer’s ownership, management, or control of Quigley. Id. at 62 . V. Cross-motions for Summary Judgment Predictably, the parties herein filed, in the circuit court, cross-motions for summary judgment as to the issue of whether Pfizer was an “apparent manufacturer” of Insulag.

The Stein family claimed, in their motion, that Pfizer, as well as Quigley, had “put out the asbestos-containing Insulag to which [the decedent] was exposed” and that, though Quigley was the manufacturer of Insulag, Pfizer qualified as an “apparent manufacturer” of that asbestos-containing cement. Specifically, it cited advertisements and promotional materials for Insulag, as well as invoices, from sales of Insulag, issued by Quigley, from 1968 to 1974, which displayed both Pfizer’s and Quigley’s trademarks and, in some instances, stated, beneath those trademarks: “Manufacturers of Refractory Products.” That reference to “Manufacturers,” maintained the Stein family, was an allusion to both Pfizer and Quigley, and thus established that Pfizer had held itself out as a “manufacturer” of the asbestos-containing Insulag. Then, as further evidence that Pfizer qualified as an “apparent manufacturer” of Insulag, the Stein family noted that a 1971 end-of-year Pfizer sales report stated the sales price and cost of Pfizer’s annual product sales to Bethlehem Steel (which presumably included sales of Insulag) but contained no mention of Quigley (or, for that matter, Insulag); and that each of ⁸³ several filings (Forms 10-K), by Pfizer with the Securities and Exchange Commission (“SEC”), during the 1990’s, asserted that “[t]hrough the early 1970’s, Pfizer (Minerals Division) and Quigley Company, Inc., a wholly-owned subsidiary, sold a minimal amount of one construction product and several refractory products containing some asbestos.” The evidence proffered by Pfizer, and relied upon by the circuit court in granting summary judgment, included the following unrebutted testimonial statements and documents: the deposition testimony of Louis Killian, the former plant manager of Quigley’s New Jersey factory where Insulag was manufactured, stating that, even after Pfizer acquired Quigley, it “had no role in running Quigley’s business” and “had no input whatsoever”; an affidavit of that same individual, asserting that, “[following its acquisition by Pfizer, Quigley continued to operate as a separate and independent corporation, manufacturing, selling, and marketing Insulag as it had done prior to the stock purchase” of its shares by Pfizer; the deposition testimony of Terence Gallagher, a former Pfizer attorney and member of Quigley’s board of directors, stating that Quigley, after its 1968 acquisition by Pfizer, “was a separate corporation and subsidiary of Pfizer,” that no Quigley employees held positions with Pfizer, and that the only Pfizer employees, who held positions with Quigley, were several high-ranking Pfizer employees who sat on Quigley’s board of directors; the deposition testimony of Susan M. Raterman, C.I.H., an industrial hygienist and an expert witness for the Stein family, stating that, to her knowledge, “Quigley was responsible for manufacturing” Insulag; and the deposition testimony of three Bethlehem Steel employees, who had worked in the Brick Department and were responsible for purchasing the supplies used at the Sparrows Point plant, collectively asserting that Insulag was manufactured and sold by Quigley. Moreover, in response to the Stein family’s heavy reliance on and repeated references to the phrase: “Manufacturers of Refractory Products” and its placement on Quigley products beneath the trademarks of both Pfizer and Quigley, Pfizer ⁸⁴ presented an assortment of Quigley invoices and sales brochures, all of which bore dates preceding Quigley’s acquisition by Pfizer, which displayed only the Quigley trademark, and which, nonetheless, stated: “Manufacturers of Refractory Products.” In ruling on the cross-motions for summary judgment, the circuit court, while acknowledging that the “documents that have been produced ... do mention both names on the letterhead,” stressed that “[tjhey don’t say anything explicit about the manufacturer other than this phrase ‘manufacturers of Insulag’ ... which is the logo that ...

Quigley had long used,” that is, long before its acquisition by Pfizer. The court further observed: I don’t think a reasonable person could rely in any way, if that were required, upon Pfizer as the manufacturer ... particularly given [the documents] were provided to sophisticated people involved in the industry. The court then declared: I do not believe that a reasonable person under all the circumstances provided to me in this case could come to the conclusion from the documents that Pfizer was the manufacturer of the product.

VI

Motion to Take Judicial Notice During the pendency of this appeal, the Stein family filed, in this Court, a motion, requesting that we exercise our discretion, under Maryland Rule 5-201, and take judicial notice of additional documentary evidence, which, it claims, contradicts Pfizer’s contention that, both before and after its 1968 acquisition of Quigley, the marketing and promotional materials of Quigley included the plural designation: “Manufacturers of Refractory Products.” We decline to do so, as the Stein family does not claim that it did not have an opportunity to present this evidence below. To do otherwise would run afoul of Maryland Rule 8-131 (a), which confines the scope of our appellate review to matters which were before the circuit court. ⁸⁵ VII. Standard of Review A circuit court may grant summary judgment if there is “no genuine dispute as to any material fact,” and “the party in whose favor judgment is entered is entitled to judgment as a matter of law.” Md. Rule 2 — 501(f). In reviewing a circuit court’s grant of summary judgment, we must construe all facts, as well as the inferences that may reasonably be drawn from those facts, in a light most favorable to the non-moving party, in this case, appellants.

May v. Air & Liquid Sys., Inc., 446 Md. 1, 8 , 129 A.3d 984 (2015). Because a grant of summary judgment is predicated upon a ruling on a question of law and not a dispute of fact, our review is de novo. Id.

VIII

History of the “Apparent Manufacturer” Doctrine Before proceeding any further with our analysis of the issues, we feel impelled to provide an account of the history of the “apparent manufacturer” doctrine, tracing its decisional evolution in the context of the successive Restatements issued by the American Law Institute, notably: the Restatement of Torts (“the First Restatement ”), then the Restatement (Second ) of Torts (“the Second Restatement ”), and finally, the Restatement (Third) of Torts: Products Liability (“the Third Restatement”). We believe that account will provide some helpful assistance in understanding the development and current nature and scope of the “apparent manufacturer” doctrine and thereby provide guidance in addressing the central question of this appeal: whether Pfizer was an “apparent manufacturer” of Insulag. A. References to what was to become known as the “apparent manufacturer” doctrine first appeared in judicial decisions 8 of the early twentieth century. By the 1930’s, this doctrine had gained enough notoriety that it was included in the 1934 ⁸⁶ publication of the First Restatement, as Section 400, under the rubric: <cVendor Selling as His Own Product Chattel Made by Another.” It asserted: One who puts out as his own product a chattel manufactured by another is subject to the same liability as though he were its manufacturer.

Restatement of Torts, § 400 (1934). That articulation of what was to be dubbed the “apparent manufacturer” doctrine confined the application of that doctrine to just sellers and distributors of goods or, in other words, only to those in the chain of distribution of the product in question, a constraint reaffirmed by comment a to that section, which defined, “one who puts out a chattel,” as “any one who supplies it to others for their own use or for the use of third persons, either by sale or lease or by gift or loan.” And a central feature of that doctrine, though unexpressed in the body of Section 400, was, according to comment c to Section 400 of the First Restatement, a buyer’s reliance upon the care taken by the seller, who puts out a product as if it were his own. As that comment explained: “By putting a chattel out as his own product,” a seller “causes it to be used in reliance upon his care in making it” and, consequently, is liable, as an “apparent manufacturer,” if, “because of some negligence in its fabrication or through lack of proper inspection during the process of manufacture, the article is in a dangerously defective condition which the vendor could not discover after it was delivered to him.” Or, as it was more succinctly put by the Supreme Court of Errors of Connecticut, 9 in a decision which cited a “Tentative Draft” of what would later become Section 400 of the First Restatement, a seller, by “putting out a chattel as his own product” and thereby “inducting] reliance,” by the purchasing public, “upon his care in making it,” is estopped from denying his identity as its manufacturer. Burkhardt v. Armour & Co., 115 Conn. 249 , 161 A. 385, 391 (1932) (citation and quotation omitted). ⁸⁷ The appellate decisions rendered during the early years of the “apparent manufacturer” doctrine either expressly or impliedly employed an objective “reliance” test, in determining whether an individual or entity should be deemed an “apparent manufacturer” for liability purposes.

That is, the test was whether a reasonable consumer would have relied upon a business’s label or advertising materials in purchasing the product at issue. See, e.g., Swift & Co. v. Blackwell, 84 F.2d 130, 132 (4th Cir.1936); Swift & Co. v. Hawkins, 174 Miss. 253 , 164 So. 231, 231-32 (1935); Slavin v. Francis H. Leggett & Co., 114 N.J.L. 421 , 177 A. 120, 121 (N.J.Sup.Ct.1935); Burkhardt, supra, 161 A. at 391 ; Thornhill v. Carpenter-Morton Co., 220 Mass. 593 , 108 N.E. 474, 491 (1915); Willson v. Faxon, Williams & Faxon, 208 N.Y. 108 , 101 N.E. 799, 800-01 (1913). And, at least one federal appellate court took “reliance” a step further and promulgated an “actual reliance” test. Under that test, a claimant must show not only that it was reasonable to rely upon the seller’s representation that it was the “apparent manufacturer” of the defective product at issue but that he or she “actually” did so.

Carney v. Sears, Roebuck & Co., 309 F.2d 300, 304 (4th Cir.1962) (applying Virginia law) (stating that “the basic test is whether or not the vendee reasonably believed in and relied upon the vendor’s apparent manufacture of the product”). It is important to keep in mind, however, that, when the First Restatement was published, setting forth the “apparent manufacturer” doctrine, products liability law, at that time, differed from its current manifestation in two significant respects: First, actual manufacturers of defective products and mere non-manufacturing sellers of those products were not generally subject to the same tort rules; and, second, the doctrine of strict liability had not yet gained much currency. Indeed, at the time that the First Restatement was issued, a non-manufacturing seller of a defective product was usually (unless deemed an “apparent manufacturer”) held to a lesser duty than the manufacturer of that commodity. The general ⁸⁸ rule, then, was that, in the “absence of misrepresentation or of negligence in the selection of goods, an intermediate distributor [was] liable to a customer only for defects discoverable upon reasonable inspection, unless he ha[d] represented that he was the actual manufacturer[.]” Swift & Co. v. Blackwell, supra, 84 F.2d at 132 .

If he had, the First Restatement imposed a greater duty on him than the duty placed on a non-manufacturing seller or distributor. In other words, while an actual manufacturer of a chattel had a duty to warn potential users of any danger that might arise from its intended use, Restatement of Torts, §§ 388, 394, 10 a non-manufacturing seller or distributor of that chattel generally did not. And, although an actual manufacturer had a duty “to exercise reasonable care in the manufacture of a chattel which, unless carefully made,” presented “an unreasonable risk of causing substantial bodily harm” to its user, Restatement of Torts, § 395, a non-manufacturing seller or distributor of that chattel generally had no such duty. But, when a non-manufacturing seller or distributor of a chattel was deemed an “apparent manufacturer,” under Section 400 of the First Restatement, such a person or entity was held to the same duty of care borne by the actual manufacturer. 11 The scope of that liability was not, yet, however, extend ⁸⁹ ed to trademark licensors or other non-sellers.

That extension did not occur until the 1970’s, when, for the first time, trademark licensors were held to be, under certain circumstances, “apparent manufacturers.” Furthermore, at the time of the First Restatement, unlike today, tort liability of the supplier of a defective chattel, whether the supplier was an actual manufacturer, a non-manufacturing seller, or an “apparent manufacturer,” was predicated upon proof of some negligent act. See Restatement of Torts, §§ 394-398. In instances where an “apparent manufacturer” had not, itself, committed a negligent act, the plaintiff, in a tort-based products liability action, had to prove that someone in the distribution chain, typically the actual manufacturer, was negligent, as a prerequisite to the imposition of liability on an “apparent manufacturer.” 12 ⁹⁰ B. When, in 1965, the Restatement (Second) of Torts (“the Second Restatement ”) was issued, it included a revised Section 400, which was nearly identical to its predecessor, Section 400 of the First Restatement. Comment d to Section 400 of the Second Restatement, in expounding upon the reliance-based rationale for the “apparent manufacturer” doctrine, which had been set forth in the First Restatement, explained that an “apparent manufacturer” “frequently” induces consumer reliance in two ways: by causing a chattel “to be used in reliance upon his care in making it”; and by causing a chattel “to be used in reliance upon a belief that he has required it to be made properly for him and that the actor’s reputation is an assurance to the user of the quality of the product.” Restatement (Second) of Torts, § 400, cmt. d (1965).

While leaving largely undisturbed the explication of the “apparent manufacturer” doctrine that appeared in the First Restatement, the Second Restatement broke new ground by adding Section 402A, entitled “Special Liability of Seller of Product for Physical Harm to User or Consumer,” to its text, which extended the liability of sellers by prescribing a doctrine of strict liability as to those in the chain of distribution. Specifically, it stated that “[o]ne who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property” was liable for any physical harm caused by that condition to “the ultimate user or consumer, or to his property,” even when “the seller ha[d] exercised all possible care in the preparation and sale of his product.” 13 ⁹¹ Or, as expressed in comment f to Section 402A, strict liability “applies to any person engaged in the business of selling products for use or consumption,” including “any manufacturer of such a product” as well as “any wholesale or retail dealer or distributor.” Restatement (Second) of Torts, § 402A, cmt. f. During the decade that followed the publication of the Second Restatement, most state appellate courts that addressed this issue 14 adopted the strict liability doctrine of Section 402A. Those states were joined by Maryland’s Court of Appeals, in Phipps v. General Motors Corp., 278 Md. 337, 346, 352-53 , 363 A.2d 955 (1976), where our highest Court adopted both Section 402A and its “official comments” as part of Maryland common law.

Thereafter, in all jurisdictions that ⁹² had adopted Section 402A (including Maryland), strict products liability was imposed on all entities in the distribution chain of a defective product, from the manufacturer to the retail seller. That development, some courts and commentators believed, called into question whether the “apparent manufacturer” doctrine retained any relevance, since the strict liability of Section 402A appeared to now “provide a remedy for consumers injured by unsafe products,” which was the “aim” of the “apparent manufacturer” doctrine. Hebel v. Sherman Equip., 92 Ill.2d 368 , 65 Ill.Dec. 888 , 442 N.E.2d 199, 202 (1982); see David G. Owen and Mary J. Davis, 2 Owens & Davis on Products Liability, § 16:15, at 636 (4th ed.2014). 15 But, in the years following the widespread adoption of strict products liability, the “apparent manufacturer” doctrine did not fall into desuetude. In fact, state and federal courts began to apply that doctrine to entities outside the chain of distribution of defective products, such as trademark licensors. 16 In so doing, those courts frequently relied upon ⁹³ comment d to Section 400 of the Second Restatement, which first appeared as a 1948 revision to the First Restatement.

It provided in part: The actor puts out a chattel as his own product in two types of cases. The first is where the actor appears to be the manufacturer of the chattel. The second is where the chattel appears to have been made particularly for the actor. In the first type of case the actor frequently causes the chattel to be used in reliance upon his care in making it; in the second, he frequently causes the chattel to be used in reliance upon a belief that he has required it to be made properly for him and that the actor’s reputation is an assurance to the user of the quality of the product....

Thus, one puts out a chattel as his own product when he puts it out under his name or affixes to it his trade name or trademark. When such identification is referred to on the label as an indication of the quality or wholesomeness of the chattel, there is an added emphasis that the user can rely upon the reputation of the person so identified. Restatement (Second) of Torts, § 400 cmt. d (emphasis added). In sum, comment d seemingly imposed “apparent manufacturer” liability on one who “affixes to [a defective product] his trade name or trademark,” regardless of whether that individual or entity played no role in the manufacture or distribution of that product.

Thereafter, judicial decisions considering the applicability of the “apparent manufacturer” doctrine, under Section 400 of the Second Restatement, to trademark licensors fell “roughly into three categories” 17 : (1) decisions “holding that a non[-]seller trademark licensor could be held liable as an ⁹⁴ apparent manufacturer if it exercised substantial control over the production of the product” 18 ; (2) decisions “holding that a non[-]seller trademark licensor may be held liable as an apparent manufacturer, despite having had little or no participation in the design or manufacture of a product, by reason of the likelihood that buyers or users of the product would rely on the trademark as an assurance of the product’s quality” 19 ; and (3) decisions “which declined to hold trademark licensors liable under the apparent manufacturer doctrine in circumstances in which they had little or no involvement in the design or manufacture of the product.” 20 As we shall see, in the following subsection of this opinion, application of the “apparent manufacturer” doctrine to trademark licensors led to the development of an alternative test, for determining whether a non-selling defendant should be deemed an “apparent manufacturer,” in a products liability action, namely, the “enterprise liability” test. ⁹⁵ c. In 1998, the “apparent manufacturer” doctrine was presented, in a slightly modified form, in the Restatement (Third) of Torts: Products Liability (hereinafter “the Third Restatement ”), in Section 14, which is entitled “Selling or Distributing as One’s Own a Product Manufactured by Another.” That section states, in pertinent part: One engaged in the business of selling or otherwise distributing products who sells or distributes as its own a product manufactured by another is subject to the same liability as though the seller or distributor were the product’s manufacturer. The authors of the Third Restatement acknowledged that the adoption of strict liability, in the years following the publication of the Second Restatement, called into question the continued vitality of the “apparent manufacturer” doctrine, noting that [a]fter inclusion of § 402A in the Restatement, Second, imposing strict liability on all commercial sellers of defective products for harm caused by product defects, it was questionable whether § 400 remained relevant in the context of products liability. Once § 402A imposed strict liability on all product sellers it made little, if any, difference whether the seller of a defective product was a retailer or a manufacturer.

Restatement (Third) of Torts: Products Liability, § 14, cmt. a (1998). Nonetheless, comment c to Section 14, largely echoing the comments to Section 400 of the First and Second Restatements, 21 which we have previously discussed, appeared to retain the rationale, if not the test, of “consumer reliance,” as to non-manufacturing sellers of defective products. Comment c to Section 14 provides that, when “a commercial seller sells a ⁹⁶ product manufactured by another under its own trademark or logo, the seller is liable as though it were the manufacturer of the product” because “the seller is presumed to cause the product to be used or consumed, in part at least, in reliance on the seller,” or, in other words, the “seller’s reputation is an implied assurance of the quality of the product[.]” Recognizing, however, that some courts had begun to apply the “apparent manufacturer” doctrine to entities outside the chain of distribution of defective products, the drafters of the Third Restatement attempted to clarify, in comment d to Section 14, when non-sellers, specifically trademark licensors, may be held liable for defective products, under an “apparent manufacturer” theory: d. Liability of trademark licensors.

The rule stated in this Section does not, by its terms, apply to the owner of a trademark who licenses a manufacturer to place the licensor’s trademark or logo on the manufacturer’s product and distribute it as though manufactured by the licensor. In such a case, even if purchasers of the product might assume that the trademark owner was the manufacturer, the licensor does not “sell or