Wisconsin Gubernatorial Candidate Supporting Repeal of Wisconsin’s Asbestos Bankruptcy Trust Transparency Act

Wisconsin gubernatorial candidate Mary Burke has announced that, if she translates last week’s primary victory into a general election victory this fall, she will repeal Act 154, Wisconsin’s new asbestos bankruptcy trust transparency law. Burke supports the proposed Assembly bill to repeal Act 154, which was signed by Wisconsin Gov. Scott Walker in March 2014.  More than 100,000 Wisconsin veterans and various lobbyists opposed the enactment of Act 154, and apparently the fight is not yet over.

Act 154, which applies to lawsuits filed on or after March 29, 2014, requires asbestos plaintiffs to disclose all potential and pending asbestos trust claims via sworn statements, and sets guidelines for the substance and effects of the required disclosure.  The plaintiff’s sworn statement must include “the name, address, and contact information for the asbestos trust, the amount claimed by the plaintiff, the date that the plaintiff filed the claim, the disposition of the claim and whether there has been a request to defer, delay, suspend, or toll the claim against the asbestos trust.”

To enhance transparency, the Act allows this information to be used in court:  “Trust claims materials and trust governance documents are admissible in evidence.  No claims of privilege apply to trust claims materials or trust governance documents.”  The Act broadly defines “trust claims materials” as all documents and information relevant or related to a pending or potential claim against an asbestos trust. These materials include claims forms and supplementary materials, proofs of claim, affidavits, depositions and trial testimony, work history, and medical and health records.  The plaintiff is obligated to supplement the information and materials provided within 30 days after filing an additional claim or receiving additional information or documents related to any asbestos trust claim.

In addition, under the Act, the defendants may identify additional asbestos bankruptcy trusts that the defendants reasonably believe the plaintiff should file claims with, even if these trusts are not identified by the plaintiff.  Upon motion of the defendants with supporting documentation, the court may order the plaintiff to file claims against defense-identified asbestos trusts.

Further, the Act provides that trust documents may be used at trial “to support a jury finding that the plaintiff may have been exposed to products for which the trust was established to provide compensation and that such exposure may be a substantial factor in causing the plaintiff’s injury that is at issue in the action.”

The Act also governs trial verdicts and the plaintiff’s ability to collect damages.  For a verdict where the defendant is negligent, the plaintiff may not collect any amount of damages until after the plaintiff assigns to the defendant all rights and claims against asbestos trusts.

Wisconsin’s Act 154 is thus a model for increased transparency between the bankruptcy and civil systems.  That it faces possible repeal threatens that transparency, without providing any fairer compensation to injured workers.

To read more about asbestos bankruptcy trusts, see prior posts on this blog:

$17.7 Million Verdict in Los Angeles Smoking Lung Cancer Case

On July 30, a Los Angeles County jury found that Lorillard Tobacco Co.’s cigarettes contributed to the 1998 death from lung cancer of smoker William “Earl” Major. The jury reportedly deliberated for about a day before finding in favor of Major’s widow, Tajie Major.

In a 12-0 decision in Major v. Lorillard Tobacco Co., the jury found Major had damages totaling $17,736,700. The jury reportedly apportioned liability 17 percent to Lorillard, 50 percent to Major and 33 percent to cigarettes he smoked that were made by other manufacturers. The trial judge was the Honorable Amy Hogue. Plaintiff’s counsel was Gilbert Purcell of Brayton Purcell.

Tajie Major filed her product liability/negligence complaint in November 2011. She said her husband smoked Kent, as well as Marlboro and Winston, which were made by Philip Morris USA Inc. and R.J. Reynolds Tobacco Co., respectively. Two other tobacco companies were sued along with Lorillard, but Major’s claims against them were dismissed before trial.

This case is particularly interesting because the Brayton Purcell firm is best known for its work in the asbestos litigation; its past claims against Lorillard have focused on its asbestos liabilities, as Lorillard used asbestos in the “micronite filter” of its Kent brand of cigarettes in the 1950s.  In fact, before bringing this tobacco action, the Brayton firm previously filed an asbestos-related complaint in San Francisco Superior Court in 1999 on Mrs. Major’s behalf, arguing that asbestos was the cause of her husband’s disease, and named Lorillard, R.J. Reynolds and Philip Morris in that lawsuit.

This case represents a clear change in direction by the Brayton firm, and it remains to be seen whether Brayton’s success may inspire other traditional asbestos plaintiffs’ firms to enter the tobacco litigation.  The number of lung cancer cases being filed in recent times is increasing.

Will the Government Contractor Defense Go Before the Supreme Court?

Counsel for Hawaii asbestos plaintiffs has asked the U.S. Supreme Court to review a decision finding a “colorable” government contractor defense in favor of vendors selling equipment to the military (see attached petition for writ of certiorari).  In an April 25 opinion, Judge Paul Watford writing for the 9th Circuit, affirmed rulings by Judges Leslie Kobayashi and J. Michael Seabright of the U.S. District Court for the District of Hawaii denying motions to remand. Leite v. Crane Co., 749 F. 3d 1117 (9th Cir. 2014).

In the two cases, the defendants – suppliers of products to be used on U.S. Navy warships – had removed the actions from the Hawaii state court to federal court, arguing that they would be able to rely upon  the “government contractor” defense to defeat failure to warn claims.  Plaintiffs’ counsel Galiher DeRobertis Ono brought motions to remand arguing that the defendants could not present a “colorable” federal defense.  The judges of the district court found that the defendants had made a showing of a “colorable” defense by presenting evidence including affidavits from expert witnesses, and the 9th Circuit agreed.

Importantly, the removing defendants, to sustain their burden to defeat a motion to remand, need only show a “colorable” defense.  As the 9th Circuit stated, at this stage, the removing defendant “doesn’t have to prove that its government contractor defense is in fact meritorious, and we express no view on whether it is.” The 9th Circuit drew an analogy comparing the standard to be applied to the evidence submitted by the removing defendant, with the standard to be applied to the evidence submitted by a plaintiff when a defendant challenges subject matter jurisdiction relying upon Fed. R. Civ. P. 8(a)(1).

The petition focuses on the contention that it was inappropriate for the district court to rely upon expert affidavits to interpret or construe government specifications dealing with the obligations of vendors to provide warnings when selling equipment to the Navy.  While this relatively narrow issue does not truly address the central principles of the government contractor defense, it is possible that if the petition is granted and the decision is reviewed, the Supreme Court may consider more broadly the application of the defense in such settings. Any decision in this area could preserve, or otherwise impact, the ability of defendants across the land to avail themselves of removal to place their cases in the district court. Watch this blog for further developments on this petition.

Madison County, Illinois: Open for Business to Plaintiffs From Everywhere

Madison County, Illinois, has long been a favored jurisdiction for plaintiffs to file asbestos cases, regardless of where they reside or where their exposure occurred.  This trend has accelerated over the past three years, with thousands of asbestos filings there each year.

Recently, new firms have begun filing there, encouraged by the prospects of favorable juries and favorable damages law.  For example, Madison County set a record last year with 1,678 new asbestos case filings, more than any other jurisdiction in the nation, a 42 percent increase in filings since 2010.  In the first quarter of 2014, out-of-state plaintiffs’ firms filed a majority of the new cases, a shift from 2010 when local firms held the majority.  Recently, when Judge Stephen A. Stobbs denied four forum non conveniens motions to dismiss, Madison County sent the message – loud and clear – that it is open for business and welcomes new filings from out of state.

Defendants in four different cases moved for dismissal based on forum non conveniens by arguing that Madison County was an inconvenient venue for the parties.  Beacher (Brown) v. American Biltrite Co. (Case No. 12-L-1392); Warden v. Caterpillar, Inc. (Case No. 12-L-1065); Murphy v. CBS Corp. (Case No. 12-L-1141); and Hunt (Munsey-Hunt) v. 84 Lumber Co. (Case No. 12-L-1140).  Under Illinois Supreme Court Rule 187(c)(2), a court that has jurisdiction over the parties and the subject matter involved “may nevertheless decline jurisdiction of a case when it is apparent that trial in another forum with jurisdiction over the parties would be more convenient and better serve the ends of justice.”  Berbig v. Sears Roebuck & Co. Inc., et al., 378 Ill. App. 3d 185, 188 (1st Dist. 2007) quoting Vinson v. Allstate, 144 Ill. 2d 306, 311 (1991); see Il. S. Ct. R. 187.

Each of the four motions was predicated on similar facts: (1) none of the plaintiffs lived in Illinois, let alone Madison County, and (2) none of the plaintiffs ever worked in Illinois, let alone Madison County.  While venue was proper based on the presence of a Madison County defendant, the defendants argued that Madison County was inconvenient for all the parties and the witnesses involved, and the cases should be dismissed.

Despite the obvious lack of connection to Illinois, Stobbs denied all four motions.  Stobbs insisted that for defendants to meet their burdens under the motion, they must demonstrate which court would be the appropriate court to try the cases, whether such court would have jurisdiction and venue over all parties to the case, and whether this court would be more convenient to all parties to the litigation.  Stobbs found that the defendants’ motions failed to adequately address which forum would be more convenient and how that forum would be more convenient to each and every party. The defendants argued that the standard is almost impossible to show when a plaintiff sues dozens or hundreds of defendants at a time (standard in asbestos cases), and essentially makes the forum non conveniens doctrine a dead letter in Madison County asbestos cases.

These rulings herald that Madison County is “open for business” to asbestos plaintiffs, regardless of where the operative events took place.  This is all the more concerning given that numerous out-of-state firms have recently filed in Madison County for the first time, and its asbestos docket has substantially increased over the past three years.  As the West Coast becomes less attractive to plaintiffs because of legal developments in those jurisdictions, these decisions clearly solidify Madison County’s reputation as a venue of choice for plaintiffs nationwide.

Three of the four decisions are being appealed.  In their appeals, the defendants argue that Stobbs abused his discretion in denying the forum non conveniens motions in cases that have absolutely no connection to Illinois.  The defendants maintain that these cases should be tried in the most appropriate forum, the one with the most connections to the case.

The defendants also cite staggering statistics to support their argument that sustaining Stobbs’ denials would render the forum non conveniens doctrine virtually useless in Madison County.  The defendants use the firm of Napoli, Bern, Ripka, Shkolnik, which represents these plaintiffs, as an example.  The firm’s filings rose from 343 in 2012 to 548 in 2013, making it the top asbestos filer in the county.  Napoli also files a majority of the lung cancer cases in Madison County, which is particularly concerning because lung cancer is most often caused by smoking and non-asbestos-related causes.  The defendants argue that if Madison County opens its arms to lung cancer cases from around the country, most of which will have no ties to Illinois, then those filings will “overwhelm the docket, swamp the court and crowd out court resources that would otherwise be available to actual Madison County residents.”

As the Illinois Court of Appeals decides whether to overturn Stobbs’ decisions, Madison County will remain “open for business” for plaintiffs all around the country.  Regardless of whether those plaintiffs have stepped foot inside the state, worked for an Illinois company, or  come close to a product manufactured by an Illinois business, for now, they are welcomed with open arms in Madison County.

California Court Rules: No Jurisdiction Over Foreign Parent Corporations

This week in Young v. Daimler AG, the California Court of Appeal held that there is no general personal jurisdiction over foreign companies in California whose only “connections” to the state are the activities of its legally separate but wholly owned subsidiaries. This is the first appellate case in California applying the U.S. Supreme Court’s January 2014 decision on this issue, Daimler AG v. Bauman (2014) 134 S.Ct. 746.

Young is particularly significant because it abrogates an entire theory of general jurisdiction law in California — the “representative services doctrine” — and gives out-of-state and foreign defendants welcome protection from lawsuits in California, even if they have in-state subsidiaries doing substantial business. It is important to note that this case did not involve any other theory of jurisdiction, such as an “alter ego”-type of theory holding a foreign parent subject to jurisdiction in California, where its corporate formality-ignoring subsidiary operates.

The representative services doctrine, set forth in Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, held that general personal jurisdiction could be asserted over a foreign defendant if its in-state subsidiary performed “a function that is compatible with, and assists the parent in pursuit of, the parent’s own business.” In other words: “[I]f a parent uses a subsidiary to do what it otherwise would have done itself, it has purposely availed itself of the privilege of doing business in the forum. Jurisdiction over the parent is therefore proper.” This may describe many foreign parent-domestic subsidiary relationships, but the U.S. Supreme Court held in Bauman that it does not confer personal jurisdiction, and Young agrees.

This is not the only such case before the Court of Appeal on this very issue — Daimler AG v. Superior Court (Pierson) is scheduled for oral argument on August 18, 2014. Young and Pierson involve the same question, arising out of the same fact pattern: May a California state court exercise general personal jurisdiction over a foreign company, solely due to the in-state activities of its subsidiaries? Young, applying the U.S. Supreme Court’s Bauman decision, answered “no.” The California Supreme Court unanimously ordered in March 2014 that the Pierson plaintiffs show cause why service of summons on Daimler should not be quashed in light of Bauman. Pierson is before a different Court of Appeal district (the Third, in Sacramento) than was Young (the First, in San Francisco), but Pierson is likely to be decided the same way.

Young and Pierson are product liability cases involving Jeep vehicles manufactured by DaimlerChrysler before Chrysler’s split from Daimler AG and bankruptcy. Both plaintiffs pursued their claims against Daimler AG as the ultimate parent of DaimlerChrysler at the time the vehicles in question were manufactured.

In Young, the plaintiffsasked the court to apply the Ninth Circuit’s then-current decision in Bauman v. DaimlerChrysler Corp. (2011) 644 F.3d 909, which held that general jurisdiction over Daimler AG was appropriate in California because of the extensive activities of its indirect subsidiary Mercedes-Benz USA. This case cited the representative services doctrine as the source of its holding, that is, Mercedes-Benz USA’s activities in California were so important to Daimler AG that general jurisdiction over Daimler AG was appropriate.

In reversing the Ninth Circuit, the U.S. Supreme Court held in Bauman that the representative services doctrine “rested primarily on [the] observation that [American subsidiary] MBUSA’s services were ‘important’ to Daimler, as gauged by Daimler’s hypothetical readiness to perform those services itself if MBUSA did not exist. Formulated this way, the inquiry into importance stacks the deck, for it will always yield a pro-jurisdiction answer[.] . . . The Ninth Circuit’s agency theory thus appears to subject foreign corporations to general jurisdiction whenever they have an in-state subsidiary or affiliate, an outcome that would sweep beyond even the ‘sprawling view of general jurisdiction’ we rejected in” other cases.

Applying Bauman, Young affirmed the trial court’s grant of Daimler AG’s motion to quash service of summons and agreed that because Daimler AG itself did not do business in California, there was no general personal jurisdiction: “In our view, appellant’s argument impermissibly ‘elide[s] the essential difference between case-specific and all-purpose (general) jurisdiction. . . . Indeed, the test endorsed in Bauman . . . whether a foreign defendant is ‘essentially at home in the forum state’—focuses on the defendant’s significant corporate presence in the forum.”

Young recognized that this means the representative services doctrine is essentially dead: “While the Bauman II Court questioned the formulation and application of the Ninth Circuit’s agency test [the representative services doctrine], in the end it assumed agency and still concluded that MBUSA’s California contacts were insufficient to confer general jurisdiction in California.” This is hugely important to multistate and international businesses. Such defendants cannot be sued in California, even if their subsidiaries do substantial business in California. Young is a clear rejection of the representative services doctrine and the opinion did not limit the application of its decision to the particular facts of the case before it.

Out-of-state and foreign businesses participating in California’s economy through subsidiaries are common. Such businesses must remain careful to ensure that their subsidiaries observe corporate formalities and remain legally separate. Overall, however, Young brings California general jurisdiction law in line with U.S. Supreme Court precedent and will make establishing jurisdiction over out-of-state and foreign defendants significantly more difficult in the future.

California Decision Requires Product Identification Proof, But Nixes Sophisticated User Again

A California Court of Appeal recently issued an interesting decision affirming summary judgments for two asbestos defendants on product identification grounds, but reversing a summary judgment that had been awarded to a third defendant on “sophisticated user” grounds.

Collin v. CalPortland Co. (C063875, C065180, certified for publication July 30, 2014) affirmed summary judgment for CalPortland. The company sold two cements during the same time period: one called plastic cement that did not contain asbestos, and a second product called Colton gun plastic cement that did contain asbestos. Both were packaged and used similarly, the only difference being the one with asbestos was labeled Colton gun plastic cement. The plaintiff argued that even though he couldn’t recall the word “gun” on the packaging, the similarities between the two products were sufficient to raise an issue of fact. The court said this was speculative, rejecting the plaintiff’s product similarity argument. “Plaintiff does not claim that further discovery may produce evidence of exposure to Colton gun plastic cement, as opposed to the asbestos-free plastic cement. … [¶] Although a party may rely on reasonable inferences drawn from direct and circumstantial evidence to satisfy its burden on summary judgment, we do not draw inferences from thin air.”

Collin also affirmed summary judgment for Kaiser Gypsum. The plaintiff testified he saw Kaiser Gypsum pre-mixed joint compound at construction sites from the 1950s to 1995, but could not pinpoint any particular year. Kaiser submitted evidence that it started selling asbestos containing pre-mixed joint compound in 1959, began selling an asbestos-free joint compound in 1974, and stopped selling products with asbestos by early 1976. The plaintiff argued that based on probabilities, there was a greater than 50 percent chance that the joint compound he encountered contained asbestos, since Kaiser Gypsum used asbestos for the first 17 years of his work history (1959-1974) and asbestos-free only for a couple of years thereafter. Collin said this was speculative and rejected the plaintiff’s probability argument.

Collin reversed the grant of summary judgment to J-M Manufacturing Co. and Formosa Plastics Corporation USA (alleged alter egos and makers of Transite pipe). These defendants argued that the plaintiff was a sophisticated user because he owned two construction businesses; had obtained information from the Contractors State License Board that working with asbestos products could be hazardous; and from 1976-1980, he saw notices specific for asbestos posted at job sites. Collin found this insufficient to bar liability under the sophisticated user defense. Unlike the HVAC technician in Johnson v. American Standard, there was no evidence that the plaintiff had specialized knowledge or training with regard to Transite pipe, or ever read a material safety data sheet (MSDS) concerning Transite. There was no expert testimony that the plaintiff should have known of the dangers associated with Transite pipe, nor did the plaintiff recall ever seeing any warnings about the dangers of asbestos on any Transite pipe.

This is a hopeful decision on product identification grounds, and another in a series of California cases finding the sophisticated user defense inapplicable. It came from the Court of Appeal, Third Appellate District (Sacramento), which is a less frequent venue for asbestos cases than the First (San Francisco) and Second (Los Angeles) Districts.

California Appellate Court Reverses Summary Judgment for Asbestos Defendant: Must Company Logos Be Shown in Deposition?

Ever since Scheiding v. Dinwiddie Construction Co. (1999) 69 Cal.App.4th 64, defendants in California asbestos cases (unlike most other jurisdictions) have dutifully asked  “client identification” questions of plaintiffs at deposition, specifically counsel have asked whether the deponents recognize their client’s name.

Decedent Mark Ganoe worked as a “utility man” at an industrial plant. Metalclad moved for summary judgment on the following evidence: (1) the plaintiffs’ allegedly boilerplate responses to Metalclad’s “all facts” special interrogatory; (2) a “case report” in which the plaintiffs identified the decedent’s co-worker Richard Ettress as their sole product identification witness against Metalclad; (3) Ettress’ deposition testimony stating that he had never heard of Metalclad; and (4) a declaration from Metalclad’s person most knowledgeable, Don Trueblood, stating that Metalclad had no information or documents to suggest that it had ever performed any work or supplied materials to the plant at which Ganoe worked.

Approximately two months after Metalclad filed its motion, Trueblood was deposed and produced a document showing that Metalclad had once performed insulation work in the same department of the plant in which Ganoe worked.  The plaintiffs served amended discovery responses highlighting Metalclad’s insulation work in Ganoe’s department.  The plaintiffs’ opposition to Metalclad’s summary judgment motion was therefore based on: (1) the plaintiffs’ (unverified) amended responses to written discovery;  (2) Ganoe’s testimony that he had  observed insulation lines in his department repaired and that it was a “dusty process”; (3) a declaration from Ettress that he had witnessed an outside contractor perform the insulation work at the plant; and (4) a declaration from expert Charles Ay that the insulation removed in Ganoe’s presence was more likely than not asbestos-containing due to the application and the time period in which the work took place.

The trial court granted summary judgment because: (1) the document belatedly produced by Metalclad did not show that it performed work in the vicinity of the decedent and failed to provide “specific dates when, and locations within the plant where, the work occurred”; (2) Ettress had testified that he had no information regarding Metalclad; and (3) although Ettress stated that he saw “outside contractors” perform insulation work, he did not identify Metalclad as one of those contractors.

The Second Appellate District disagreed that Metalclad had met its burden of proof and reversed. The court found that the plaintiffs’ amended responses to Metalclad’s interrogatories “contained ‘specific facts’ showing that Metalclad had exposed Ganoe to asbestos … by removing asbestos-containing insulation” in the area where the decedent worked while he was present.

Although Ettress at deposition stated that he had “never heard of” Metalclad, Ganoe distinguished McGonnell v. Kaiser Gypsum Co. (2002) 98 Cal.App.4th 1098, in which the plaintiff had “never heard of” Kaiser Gypsum, but “was able to identify the kinds of materials he worked with, and the brand names of some of the products he had used.” Here, in contrast, there was no evidence that (and presumably no deposition questions asked whether) “Ettress was able to identify other contractors who had performed insulation work” at the plant. (This seems an odd distinction, given that there was only one insulation job in evidence.)

The court opined that the Ganoe case was “more analogous to Weber v. John Crane, Inc. (2006) 143 Cal.App.4th 1433, where the court found that the defendant had not “made out a prima facie case that plaintiffs would be unable to establish that [he] had been exposed to a [defendant] product, by submitting evidence that [the plaintiff] had no recall of the [defendant’s] name.” The Weber court noted that “[i]t cannot be inferred that Weber would have been unable to recognize a [defendant] product had he been shown one, or had he been shown its packaging or its logo.”  Weber was unlike the typical summary judgment motion fact pattern, in that the defendant did not conduct any “special discovery” designed to ascertain what evidence the plaintiffs had beyond the statements of Weber himself.  Ganoe pointed out that “as in Weber, Metalclad did not show Ettress its logo – which Metalclad workers may have displayed when they performed services for clients – and ask Ettress if he recognized it, but merely asked him if he recognized Metalclad’s name. The negative response to that question by itself was insufficient to create an inference of nonexposure or that the plaintiffs could not prove exposure by other means.” It might be enough for such an inference in a case that did not have late-revealed Metalclad documents, which themselves are “other means” of evidencing exposure.

Although the Ganoe ruling heavily relies on Weber, the court’s language distinguishing McGonnell may be more informative.  “In McGonnell, the defendant’s product might have contained asbestos, which might have been used somewhere in the building where decedent worked, and the decedent might have cut into that product while generally performing plumbing work sometime during his 24 years of employment there.” In contrast, the Ganoe plaintiffs had evidence that Metalclad performed insulation work on steam piping in the department at the plant where Ganoe worked, while he worked there. Moreover, the plaintiffs’ expert opined that the insulation removed was more likely than not asbestos-containing.

In practice, cross-examining witnesses with the “Scheiding questions” remains of critical importance and will continue to be a tricky endeavor for California asbestos defendants. The Ganoe decision provides practice pointers to defendants on how to follow McGonnell and potentially succeed on summary judgment, namely by providing evidence that the witness was able to identify similarly situated defendants at the same job site even if they have never heard of your client (e.g. other contractors performing work at the same site if you represent a contractor defendant). Unfortunately, the decision also provides a road map to plaintiffs on how to prepare a circumstantial evidence case opposing summary judgment.  Overall, although the Ganoe decision is disappointing from a defense perspective, the case-specific discovery issues addressed in the opinion, such as the late-served documents placing Metalclad at the decedent’s plant, may provide additional fodder for defendants to distinguish the case.

Proposed Revision to California Sophisticated User Jury Instruction – Comment Period Closes Soon

The Judicial Council of California has the responsibility of crafting “standard” jury instructions recommended for use in all the trial departments in the state courts.  Since 2008, those instructions have included one for instructing the jury when the issue of a “sophisticated user” defense is posed.  Recently, the Judicial Council has presented for comment by the legal community a draft revision of this standard instruction.  The proposed revisions at first glance seem to require a more detailed showing from the defendants.  However, these proposed changes, in the author’s opinion, in practice would not reduce the ability of defendants to persuade the courts to give such an instruction.

The current instruction on sophisticated user reads (with some required information filled in) as follows:

Manufacturing Co. claims that it is not responsible for any harm to Plaintiff based on a failure to warn because Plaintiff is a sophisticated user of the product.  To succeed on this defense, Manufacturing Co. must prove that, at the time of the injury, Plaintiff, because of his particular position, training, experience, knowledge, or skill, knew or should have known of the product’s risk, harm, or danger.

The proposed revised instruction reads, with information inserted to complete the instruction, as follows:

Manufacturing Co. claims that it is not responsible for any harm to Plaintiff based on a failure to warn because Plaintiff is a sophisticated user of the product.  To succeed on this defense, Manufacturing Co. must prove that, at the time of the injury, Plaintiff, because of his particular position, training, experience, knowledge, or skill, knew or should have known all of the following:

  1. That [describe the risk posed by the product] breathing dust from the product could cause lung disease;
  2. That [describe the severity of the potential consequences] the lung disease could be disabling or fatal; and
  3. Any ways to use the product to reduce or avoid the risks that were known to the Manufacturing Co.

The “Sources and Authorities” relied upon are Johnson v. American Standard, Inc. (2008) 43 Cal.4th 56; Johnson v. Honeywell International, Inc. (2009) 179 Cal.App.4th 549; Stewart v. Union Carbide Corp. (2010) 190 Cal.App.4th 28; Pfeifer v. John Crane, Inc. (2013) 220 Cal.App.4th 1270; and Buckner v. Milwaukee Electric Tool Corp. (2013) 222 Cal.App.4th522.

The existing instruction is quite simple, nonspecific, and even vague.  If that original instruction is given, a defendant has a fair amount of latitude to argue a variety of facts.  But courts have been reluctant to give the instruction when plaintiffs argue that the necessary foundational facts have not been demonstrated.  Perhaps the courts are concerned that the existing instruction is in fact too broad and are thus reluctant to give the instruction, as the court can anticipate some defense counsel arguing that it is applicable even in those cases when not truly supported by the facts.

The proposed revision seems to require a more specific showing from the defendant.  And no doubt exactly how the brackets are completed in each case will be vigorously argued.  For No. 1, for example, plaintiffs’ counsel will no doubt argue that the bracket should include not just reference to lung disease, but either asbestosis, lung cancer or mesothelioma depending on the facts of each case.  Certainly it will be harder for a defendant to show that a sailor or shipyard worker knew about mesothelioma than to show that he knew that breathing lots of dust could be harmful.  No. 3 may be contested as well.  Defendants will argue that everyone knows the ways to avoid lots of dust (wet down the material, use a mask, have good ventilation, do not use compressed air), while plaintiffs will argue that more needs to be shown regarding specific precautions for asbestos dust.

With the proper questioning of a plaintiff at deposition, and perhaps using other evidence of what was known in the Navy and the shipyards at the relevant time, a defendant could present facts adequate to support each of the requirements whether using the old instruction or the new.  The question is whether the new version makes the task harder, easier, or does not change it.  My sense is that the relative burden on the defendant really does not change that much regardless of which version of the instruction is used.  It is also my sense that defense counsel will have a better chance of persuading a judge to give an instruction if the new version is approved and the defendant can make a showing that evidence has been produced to satisfy the three elements.  It just sounds more persuasive if one can argue that he or she has fulfilled the obligations of each of the enumerated subparts, rather than simply generally arguing that a showing has been made.

After allowing for a comment period, which ends Aug. 29 at 5 p.m., the Judicial Council will make its recommendations as to whether the proposed revisions should be adopted (the Council has indicated that the preferred way of receiving comments is in a Word file attached to an e-mail sent to civiljuryinstructions@jud.ca.gov).  Concerned practitioners will be monitoring whether the instruction is to be modified, and if so, what impact the modifications may have in the trial courts.

Texas Supreme Court Reaffirms Standard of Proof in Mesothelioma Cases: Bostic v. Georgia-Pacific

On July 11, 2014, the Texas Supreme Court released an opinion of major importance in Bostic v. Georgia-Pacific – an opinion Gordon & Rees partner William A. Ruskin recently commented on in a Law360 article.  The court’s decision reaffirmed the bedrock significance of the concept of dose in toxic tort litigation and rejected out of hand the argument that a less rigorous standard should be applied in a mesothelioma case than in an asbestosis case.  Bostic articulated that plaintiffs must prove substantial factor causation in all toxic tort litigation in general and in asbestos litigation in particular.

ETT BLOG_texasTimothy Bostic’s relatives sued Georgia-Pacific and 39 other asbestos-related product manufacturers claiming that Bostic’s fatal mesothelioma was caused by exposure to their products.  At trial in 2006, the jury allocated 25 percent of the causation to Knox Glass Co., the decedent’s former employer, and 75 percent to Georgia-Pacific. An amended judgment awarded plaintiffs over $11 million in compensatory and punitive damages. The Court of Appeals reversed the trial court’s decision holding that the plaintiffs failed to prove that the exposure to Georgia-Pacific’s asbestos was a substantial factor in bringing about Bostic’s death.
In affirming the Court of Appeals, the Texas Supreme Court held that the substantial factor causation standard applies to all asbestos cases involving multiple sources of exposure. To meet this standard, proof of “some exposure” or “any exposure” did not suffice to establish causation.  Instead, there must be defendant-specific evidence relating to the approximate dose to which the plaintiff was exposed, along with evidence that the dose was a substantial factor in causing the asbestos-related disease.

Bostic elaborates upon the Texas Supreme Court’s prior decision in Borg-Warner Corp. v. Flores, an asbestosis case. Flores addressed the issue of why the plaintiff’s causation evidence was legally insufficient in the absence of evidence of how much asbestos the plaintiff might have inhaled. Flores explained that proof of frequency, regularity, and proximity to a toxic substance alone is not sufficient to support causation, because it does not demonstrate that the defendant-specific dose was a substantial factor in causing the disease. Bostic expressly rejected the plaintiffs’ attempted distinction between a mesothelioma case and an asbestosis case. Rather, the court held the “framework for reviewing the legal sufficiency of causation evidence lends itself to both types of cases.”

Fundamentally, a plaintiff must show that the defendant supplied the product that caused the injury. Hence, the court viewed plaintiff’s “any exposure” theory as “illogical,” in part because it does not take into account a background dose of exposure.  In asbestos-related cancer cases, plaintiffs are not required to show that specific fibers from a defendant’s products were the ones that actually caused the asbestos-related cancer. Instead, it must be shown that exposure to a defendant’s product was a substantial factor in contributing to the total dose of asbestos the plaintiff inhaled, and therefore to the risk of developing asbestos-related disease.

The Supreme Court disagreed with the lower court, however, stating that the plaintiffs do not have to meet the heightened standard of “but-for” causation. Although the court recognized that “producing cause” or “but-for” is the level of causation applicable to most products liability cases, it was unwilling to apply that standard in a case with 40 defendants.

Acknowledging that causation is difficult to prove in multidefendant cases, the court referenced its prior holding in Merrell Dow Pharmaceuticals, Inc. v. Havner, 953 S.W.2d 706 (Tex. 1997), which offers an alternative method for establishing causation in the absence of direct proof. Havner recognized the possibility of using epidemiological studies to prove a population exposed to a toxin faces the increased risk of injury as compared to an unexposed or general population. Under Havner, the epidemiological evidence must show that the plaintiff’s exposure to the defendant’s product more than doubled the plaintiff’s risk of contracting the disease.

In essence, the Texas Supreme Court found the causation evidence in Bostic to be legally insufficient to uphold the trial verdict. The plaintiffs did not establish any approximation of dose resulting from Bostic’s exposure to Georgia-Pacific’s products. Bostic rejected the plaintiffs’ “any exposure” standard and instead reaffirmed adherence to substantial factor causation.

Alexana Gaspari is a law clerk in Gordon & Rees’s New York office.

Image courtesy of Flickr by Ray Bodden

Transparency Still Needed to Resolve Asbestos Claims on the Merits

Gordon & Rees Philadelphia partners William Shelley, Jacob Cohn, and Joseph Arnold recently wrote a follow-up article, “The Need for Further Transparency Between the Tort System and Section 524(g) Asbestos Trusts, 2014 Update – Judicial and Legislative Developments and Other Changes in the Landscape Since 2008,”  23 Widener L.J. 675 (2014).  The new article looks over the history of discovery of information arising from asbestos trust claims since their initial article in 2008.  Based on what has been uncovered in the last seven years, the authors explain the continuing need for complete disclosure of exposure and setoff information in asbestos cases, even though it would seem the issue should have been resolved.

In “The Need for Transparency Between the Tort System and Section 524(g) Asbestos Trusts,” 17 Norton J. of Bankr. L. & Practice 257 (2008), Shelley, Cohn, and Arnold described the need for increased transparency between the tort system and the asbestos bankruptcy system.  The 2008 article addressed how defendants in the tort system were facing increased claims and increased settlement demands following the bankruptcy of major players in the asbestos manufacturing business, even though the goal of bankruptcy was that trusts would be formed to continue to compensate claimants on behalf of these entities.  However, back in 2008 there were signs of manipulation of this system for financial gain, as illustrated by the case of Kananian v. Lorillard Tobacco Co.  In the Kananian case, the trial judge found persistent manipulation of evidence between civil cases and trust claims, which resulted in the revocation of pro hac vice privileges and findings of intentional and deceptive manipulation of the trust and discovery processes.  Based on this case, the authors urged for the implementation of procedures to ensure full discovery to avoid further such cases.

The 2014 trial findings by the Garlock court, seven years later, have shown that Shelley, Cohn, and Arnold were seeing the beginning, not the end, of this trend of manipulation.  Kananian was not an isolated instance.  After a three-month trial, Bankruptcy Judge George Hodges concluded that gasket manufacturer Garlock was resolving claims to avoid transaction costs, which were inflated by widespread concealment of facts by plaintiffs’ attorneys.  This concealment caused Garlock to resolve cases at settlement values far out of proportion to the connection, if any, between Garlock’s gaskets and disease causation.

Shelley et al.’s new article documents many other instances around the country in addition to the findings of the Garlock court, where evidence of similar practices have come to light.  Other trial judges have seen similar instances of concealment of evidence supporting bankruptcy claims in cases pending in their courtrooms.  See Peggy Abelman, “A Case Study from a Judicial Perspective: How Fairness & Integrity in Asbestos Tort Litigation Can Be Undermined by Lack of Access to Bankruptcy Trust Claims,” 88 Tul. L. Rev. 1185 (2014).

The article also outlines attempts by the trusts to block discovery by insurers, who have requested disclosure of information to ensure the hundreds of millions of dollars placed into trusts for asbestos claimants are actually paid to legitimate claimants.  Finally, the article outlines the failure of arguments by the trusts that their status as creations of the federal bankruptcy courts somehow shields them from the discovery process.

The fundamental premise laid down in Volkswagen of America v. Superior Court remains unchanged.  These claims, and all information that would support these claims, is discoverable.  Unfortunately, recent history has shown that asbestos plaintiffs have not disclosed this information fully and fairly.

Asbestos trusts pay billions of dollars each year in settlement of asbestos claimants.  When cases settle without full disclosure of facts, the legal system produces inconsistent results.  Cases are resolved based on avoidance of legal costs, rather than factual or legal liability.  The resolution of claims to avoid transaction costs out of proportion with actual fault violates the fundamental principle of our legal system that defendants should pay only when they are actually responsible.  Payments to avoid legal transaction costs do not serve the same goals as when claims are resolved to compensate for actual liability.

Unless we take these historical lessons to heart, allowing unchecked discovery abuse may lead to future bankruptcies of otherwise solvent companies.  The civil tort system should approximate the outcome the parties would reach in the absence of transaction costs; that is, payment only on a showing of actual liability, based on full disclosure.  The historical facts that caused exposures are known to plaintiffs and their lawyers, and all such facts should be part of required disclosures early in any asbestos case.  Further, there must be penalties for late disclosure.  Efficient and full discovery in the tort system of all sources of exposure is the only way to ensure that claims filed in the tort system reflect fair compensation, and preserve assets for future claimants.