The Ohio Supreme Court has declined to adopt the "integrated system" rule as a means of avoiding coverage for losses involving property damage due to the incorporation of the insured's product into a larger whole. The case is Motorists Mutual Ins. Co., v. Ironics, Inc., 2022-Ohio 841 (Ohio Mar. 23, 2022).
Ironics was a buyer and seller of metal products, including steel mill waste. The case involves material that was originally generated as waste by a steel mill in Youngstown, Ohio that makes tubular products. Ironics obtained the waste product, called "tube scale," in raw form, processed it and sold it to several customers.
Owens, a manufacturer of glass containers, purchased tube scale from Ironics to use as a coloring agent to color glass containers amber and brown. After using the tube scale for the intended purpose, though, Owens discovered that there were chrome stones embedded in the containers, which increases the likelihood that the containers would break. The stones could not be removed from the containers, nor could the containers otherwise be restored to use. The company had to scrap more than 1,850 tons of glass containers. Ironics investigated and found that the tube scale had been contaminated by its materials processor.