California: Statute of Limitations for Prenatal Exposure Tolled Until Adulthood, and (Effectively) Beyond

The California Supreme Court yesterday ruled, contrary to the interest of defendants, that the statute of limitations for alleged in utero exposure to “a hazardous chemical or toxic substance” is tolled while the plaintiff is a minor. Further, the applicable statute is subject to a “discovery rule.” This means that such cases may lie dormant for decades before being sprung on defendants.

In Lopez v. Sony Electronics, the court resolved the question “which statute of limitations applies: that for toxic exposure claims, or that for prenatal injuries?” The court recognized that a claim for prenatal toxic exposure “appears to fall within the ambit of both statutes of limitations.”

“Because the toxic exposure statute was more recently enacted, and its language plainly encompasses prenatal injuries, we conclude it applies here.” The court also found persuasive that the toxic exposure statute included two express exclusions, reasoning that if the legislature had intended to exclude prenatal injuries as well that would have been in the statute. “Under the maxim of statutory construction, expressio unius est exclusio alterius, if exemptions are specified in a statute, we may not imply additional exemptions.”

The effect on defendants is potentially drastic. “The limitations period for toxic exposure suits is two years, but it is tolled while the plaintiff is a minor.” The prenatal injury statute of limitations, in contrast, is six years but with no tolling during minority. That alone is a difference of fourteen years. Further, the toxic exposure suit (but not the prenatal statute) is subject to the discovery rule, meaning that the two-year period may not begin to run until even later, when plaintiff claims first knowledge of “(1) an injury, (2) the physical cause of the injury, and (3) sufficient facts to put a reasonable person on inquiry notice that the injury was caused or contributed to by the wrongful act of another.” Thus, the Lopez decision means more defendants will be faced with suits on stale facts, disappeared witnesses and documents, frayed memories, and everything else that statutes of limitation are supposed to protect against.

Click here and here for previous blog posts on this issue.

California Greenlights “Jurisdiction by Joinder” in Mass Tort Cases

9-1The California Supreme Court earlier this week issued an opinion that, in the words of the dissent, allows for “jurisdiction by joinder.” (Bristol-Myers Squibb Co. v. Superior Court (Anderson), Case No. S221038.) Plaintiffs with claims arising wholly outside California, against non-California defendants, may nevertheless be entitled to jurisdiction in a California court. The keys appear to be (a) whether the claims are similar to those of California residents (b) who are also plaintiffs in the suit (c) against a defendant that conducts significant activity in California as well as elsewhere. While Bristol-Myers most directly applies to large entities in mass tort cases, its rationale could well extend to any lawsuit in which a product was sold or activity conducted in multiple states. The 4-3 decision may also be the subject of a petition for certiorari to the United States Supreme Court.

“Bristol-Myers Squibb Company (BMS), a pharmaceutical manufacturer, conducts significant business and research activities in California but is neither incorporated nor headquartered here.” Eight California lawsuits were filed against it related to BMS’s drug Plavix. Plaintiffs were 86 California residents and 592 nonresidents. None of the residents purchased the drug in or from California, or had other relevant contacts with the state.

The opinion recognizes that “BMS’s business contacts in California are insufficient to invoke general jurisdiction,” because under Daimler AG v. Bauman (2014) 571 U.S. __ , 134 S.Ct. 746, 187 L.Ed.2d 624 that is restricted to a corporation’s state of incorporation or principal place of business. (We have blogged about Daimler and its progeny before: California Court rules no jurisdiction over foreign parent corporations; No in state dealings for years – no jurisdictionOut of state defendant? Out of state exposure? File suit somewhere else; Registered in Delaware Is Not At “Home” There; and A More Personal Touch: Challenge to Madison County Jurisdiction.) Bristol-Myers held, however, that “the company’s California activities are sufficiently related to the nonresident plaintiffs’ suits to support the invocation of specific jurisdiction.”

The court found that it was undisputed that there was specific jurisdiction over the California plaintiffs’ claims, and found that there should be jurisdiction over the nonresidents’ claims as well because “BMS sold Plavix to both the California plaintiffs and the nonresident plaintiffs as part of a common nationwide course of distribution.”

The California activities that Bristol-Myers found “related” to the nonresident plaintiffs’ claims: “BMS’s extensive contacts with California, encompassing extensive marketing and distribution of Plavix, hundreds of millions of dollars of revenue from Plavix sales, a relationship with a California distributor, substantial research and development facilities, and hundreds of California employees” is enough for California courts to “exercise specific personal jurisdiction over nonresident plaintiffs’ claims in this action, which arise from the same course of conduct that gave rise to California plaintiffs‘ claims: BMS’s development and nationwide marketing and distribution of Plavix.”

Bristol-Myers pointed out that the court had previously “adopted a sliding scale approach to specific jurisdiction,” such that that “the more wide ranging the defendant‘s forum contacts, the more readily is shown a connection between the forum contacts and the claim.” Specific jurisdiction is thus proper in this case because “BMS’s contacts with California are substantial and the company has enjoyed sizeable revenues from the sales of its product here — the very product that is the subject of the claims of all of the plaintiffs.”

The court identified several California interests in the joint litigation. One is that “evidence of the injuries allegedly suffered by the nonresident plaintiffs may be relevant and admissible to prove that Plavix similarly injured the California plaintiffs,” so “trying their cases together with those of nonresident plaintiffs could promote efficient adjudication of California residents’ claims.” Similarly, the court was concerned that “separating the nonresident plaintiffs from the resident plaintiffs and forcing the nonresidents to sue in other states” could result in “delays in the California proceedings that would be created by the litigation and appeals of discovery and factual conflicts in the various other forums.” A further, case-specific reason was that “California also has an interest in regulating the conduct of BMS’s codefendant, McKesson Corporation, which is headquartered in California, as a joint defendant with BMS.”

As the dissenting opinion stated: “The majority expands specific jurisdiction to the point that, for a large category of defendants, it becomes indistinguishable from general jurisdiction.” The dissent argued that “mere similarity of claims is an insufficient basis for specific jurisdiction. The claims of real parties in interest, nonresidents injured by their use of Plavix they purchased and used in other states, in no sense arise from BMS’s marketing and sales of Plavix in California, or from any of BMS’s other activities in this state.” The dissent quoted with approval a law review article on the Court of Appeal’s decision: “The claims of the California and nonresident plaintiffs are merely parallel.”

Although the majority opinion was couched in terms of “the particular circumstances of this case,” the dissent looked to the broader precedent being set.

“[T]he majority notes that BMS maintains some research facilities in California, although the majority concedes Plavix was not developed in those facilities. … This second ground of relatedness is both illogical and startling in its potential breadth. Because BMS has performed research on other drugs in California, claims of injury from Plavix may, according to the majority, be adjudicated in this state. Will we in the next case decide that a company may be sued in California for dismissing an employee in Florida because on another occasion it fired a different employee in California, or that an Illinois resident can sue his automobile insurer here for bad faith because the defendant sells health care policies in the California market?”

“As California holds a substantial portion of the United States population, any company selling a product or service nationwide, regardless of where it is incorporated or headquartered, is likely to do a substantial part of its business in California. Under the majority’s theory of specific jurisdiction, California provides a forum for plaintiffs from any number of states to join with California plaintiffs seeking redress for injuries from virtually any course of business conduct a defendant has pursued on a nationwide basis, without any showing of a relationship between the defendant’s conduct in California and the nonresident plaintiffs’ claims. The majority thus sanctions our state to regularly adjudicate disputes arising purely from conduct in other states, brought by nonresidents who suffered no injury here, against companies who are not at home here but simply do business in the state.”

The dissent took issue with other reasons proffered by the majority. While “[t]he majority argues that taking jurisdiction over the nonresidents’ claims furthers a California interest because evidence of their injuries may be admissible to help the California plaintiffs prove Plavix was a defective product,”  the dissent pointed out that “admissibility of other injuries does not depend on joinder of the other injured person.” The majority thought that joint litigation would help the California plaintiffs, but the dissent pointed out that there are many other Plavix suits in other courts around the country. “Whether or not real parties’ claims are heard together with those of the California plaintiffs, inefficiency and the potential for conflicting rulings will exist so long as actions are simultaneously pending in several state and federal courts….No mechanism exists for centralizing nationwide litigation in a state court; there is no means by which pending actions in Illinois courts, for example, can be transferred to a California court.”

The dissent also answered the question, what’s the superlative of “red herring?”

“Finally, the majority asserts that California’s interest in regulating the conduct of codefendant McKesson Corporation (McKesson), a pharmaceutical distributor headquartered in California, justifies adjudicating real parties’ claims against BMS in a California court.…Of all the majority’s red herrings, this is perhaps the ruddiest.” Because of course the question is jurisdiction against Bristol-Myers, not the co-defendant (and there was question as to its role anyway). Research indicates this is the first use of “ruddiest” in a reported California decision. It may not be the last.

As stated above, while Bristol-Myers most directly applies to large entities in mass tort cases, its rationale could well extend to any lawsuit in which a product was sold or an activity conducted in multiple states. The most significant limitation appears to be that a nonresident plaintiff still may not be able to challenge a nonresident defendant in California courts alone; the nonresident needs to find California plaintiffs with similar claims. In any event, counsel who have been advising clients that the Daimler decision forecloses claims in California courts based on general jurisdiction should re-examine that position in light of the Bristol-Myers ruling on specific jurisdiction.

California Adopts “Sophisticated Intermediary” Defense

Earlier this week, the California Supreme Court formally adopted the “sophisticated intermediary” defense for product suppliers. The court significantly restricted applicability of the defense, however, and ruled that there was insufficient evidence in this case that Johns-Manville qualified as such an intermediary.

5-24Webb v. Special Electric Co., Inc. articulated the defense as follows: “a [product] supplier may discharge its duty to warn end users about known or knowable risks in the use of its product if it: (1) provides adequate warnings to the product’s immediate purchaser, or sells to a sophisticated purchaser that it knows is aware or should be aware of the specific danger, and (2) reasonably relies on the purchaser to convey appropriate warnings to downstream users who will encounter the product.”

Perhaps the most significant hurdle to use of the defense in the future is the requirement that “a product supplier must show not only that it warned or sold to a knowledgeable intermediary, but also that it actually and reasonably relied on the intermediary to convey warnings to end users.”

The challenge posed by that requirement was exemplified here, where the Supreme Court ruled that Special Electric, a 2-person broker of raw crocidolite asbestos, had a duty to warn asbestos behemoth Johns-Manville and the downstream users of Johns-Manville products that incorporated Special Electric-brokered raw material. In part, this reflected a welcome understanding about the divergent toxicities of the different minerals classified together as asbestos. “Although the record clearly shows Johns-Manville was aware of the risks of asbestos in general, no evidence established it knew about the particularly acute risks posed by the crocidolite asbestos Special Electric supplied.”

Webb identified four other reasons why the evidence did not justify the trial court’s decision to grant a defense JNOV in the face of a jury verdict finding negligence.

  1. “The evidence is disputed about whether Special Electric consistently provided warnings to Johns-Manville during the relevant time frame.” Note that it is not just “warnings,” but “consistent warnings.”
  2. “[P]laintiffs presented evidence that at least one Special Electric salesperson told customers crocidolite was safer than other types of asbestos fiber, when the opposite was true. If the jury credited this evidence, it may have found it unreasonable for Special Electric to believe Johns-Manville was so sophisticated that a warning about the particular dangers of crocidolite asbestos was not called for.”
  3. Further, “the record does not establish as a matter of law that Special Electric actually and reasonably relied on Johns-Manville to warn end users like William Webb about the dangers of asbestos. We recognize that direct proof of actual reliance may be difficult to obtain when, as in the case of latent disease, the material was supplied to an intermediary long ago. However, actual reliance is an inference the factfinder should be able to draw from circumstantial evidence about the parties’ dealings.”
  4. “[T]he jury could have reasonably determined that any reliance on Johns-Manville would have been unjustified. Plaintiffs presented testimony from a former Johns-Manville employee criticizing the company’s handling of asbestos warnings and asserting it had failed to warn its own workers about the hazards of asbestos before the mid-1970s.”

While this evidence may be slim, it was enough to support the jury’s finding of negligence and thus to overrule the trial court’s grant of JNOV to the defense. The evidence in the case may also have been sufficient to support a jury finding that Special Electric was entitled to rely on the sophisticated intermediary defense, but the issue was presented only to the court and not to the jury.

Webb overruled an earlier Court of Appeal decision that had rejected the sophisticated intermediary defense on the rationale that “that doctrine, where it applies at all, applies only if a manufacturer provided adequate warnings to the intermediary.” Webb ruled that “[t]his assertion cannot be reconciled with our analysis in Johnson [v. American Standard, the key California “sophisticated user” decision].Insofar as it expresses a different view, Stewart v. Union Carbide Corp. is disapproved.” So in at least some cases a defendant that provides no warnings can rely on the sophisticated intermediary defense.

A footnote that is off the main point is nevertheless a troubling sign for product liability defendants, because it appears to allow very speculative evidence about whether a plaintiff ever encountered a defendant’s product. “Plaintiffs introduced evidence that Webb was exposed to dust from Johns-Manville products containing trace amounts of crocidolite at roughly the same time Special Electric was supplying crocidolite asbestos to Johns-Manville. While evidence of the link could be stronger, it is nonetheless sufficient for the jury to have found that Special Electric’s asbestos was a substantial factor in causing Webb’s mesothelioma.” “[E]vidence of the link could be stronger” is an understatement. This footnote portends both an easier path for plaintiffs to “prove” exposure, and a court not willing to put much “substantial” in “substantial factor.”

Ninth Circuit Rejects Plaintiffs’ “Every Exposure Counts” Theory

4-4A Ninth Circuit panel including former Chief Judge Kozinski last week rejected the “every exposure” theory advanced by many plaintiff expert witnesses, who thereby try to impose liability on defendants responsible for only vanishingly small amounts of asbestos.

McIndoe v. Huntington Ingalls Inc. framed the question in terms of the substantial factor test. “Absent direct evidence of causation, a party may satisfy the substantial-factor test by demonstrating that the injured person had substantial exposure to the relevant asbestos for a substantial period of time.” The Ninth Circuit found this evidence lacking, thereby justifying summary judgment to defendants.

At most the heirs have provided evidence that McIndoe was “frequently” present during the removal of insulation aboard the Worden and was present 20–30 times during such removal aboard the Coral Sea. But, as the district court found, even if McIndoe was around asbestos dust several times, his heirs presented no evidence regarding the amount of exposure to dust from originally installed asbestos, or critically, the duration of such exposure during any of these incidents.

Plaintiffs “argue[d] that evidence of prolonged exposure is not needed, because they presented the opinion of Dr. Allen Raybin—a medical expert who asserted that every exposure to asbestos above a threshold level is necessarily a substantial factor in the contraction of asbestos-related diseases.”

Both the Ninth Circuit and the district court rejected this argument on the ground that the “every exposure” theory of asbestos causation” amounts “to reject[ing] the substantial-factor test as a whole.” Plaintiffs’ expert “did not make distinctions between the overall dose of asbestos McIndoe breathed aboard the ships and that portion of such exposure which could be attributed to the shipbuilders’ materials,” and his “testimony aims more to establish a legal conclusion—what general level of asbestos exposure is required to show disease causation—than to establish the facts of McIndoe’s own injuries.” Thus, the defendant shipbuilders were entitled to summary judgment.

McIndoe was decided under federal maritime law, and so may not be directly applicable in state law cases. It joins a long list of cases that have rejected the every exposure theory, but interestingly comes mere weeks after a California appeals court allowed every exposure testimony. McIndoe’s emphasis on the amount and duration of exposure is consistent with most decisions on point, and may offer an additional reason for California defendants to seek to remove cases to federal court.

In another holding, McIndoe found that naval warships do not constitute “products,” so that only negligence and not strict liability was available to plaintiffs. Arguably the holding on required evidence of substantial factor causation would be the same under both theories.

California: Insurers Must Cover “Long Tail” Claims Regardless of Corporate Reorganization During Intervening Years

Many insurance policies contain provisions barring assignment of the insured’s rights without the insurer’s consent, which have been interpreted to include “assignments” via merger or corporate reorganization. Last week, in Fluor Corp. v. Superior Court (Hartford Accid. & Indem. Co.), the California Supreme Court ruled that such restrictions do not apply after the event triggering coverage has occurred. Instead, the law “bars an insurer from refusing to honor an insured’s assignment of policy coverage regarding injuries that predate the assignment.”

The decision is likely to have particular resonance in the environmental and toxic tort area. Many such claims are notoriously “long-tail” – the injuries do not manifest, or clean-up responsibilities do not mature, until decades after the “occurrence” of exposure, with more time, and often more reason, for corporate reorganization. The California decision follows a recent New Jersey decision to the same effect, and both states are venues for many environmental and toxic tort claims.

The California Supreme Court held that this result was compelled by a little-known statute. “An agreement not to transfer the claim of the insured against the insurer after a loss has happened, is void if made before the loss.” (Ins. Code, § 520.) “Under that provision, after personal injury (or property damage) resulting in loss occurs within the time limits of the policy, an insurer is precluded from refusing to honor an insured’s assignment of the right to invoke defense or indemnification coverage regarding that loss. This result obtains even without consent by the insurer — and even though the dollar amount of the loss remains unknown or undetermined until established later by a judgment or approved settlement.”

The decision distinguished assignments of policy rights before and after the triggering event, which it somewhat imprecisely referred to as the difference between assigning a risk and assigning a loss. “The insurer has a right to know, and an interest in knowing, for whom he stands as insurer. He may be willing to insure one person and unwilling to insure another … But these considerations have no application to the assignee of [a claim for coverage under] the policy, for it makes no difference to the insurer to whom he pays the insurance in case of a loss.” A “postloss assignment generally does not ‘increase the risk to the insurer associated with an undesirable assignee.’” Further, the court reasoned, not allowing an insured to assign policy benefits after the coverage-triggering event would provide “an insurer … the windfall of not having to insure an occurrence that it received premiums for covering.”

Fluor is a corporation with many subsidiaries, all covered under CGL insurance policies with Hartford. Insurer Hartford assumed defense and indemnity of many claims, including many personal injury and wrongful death claims related to asbestos. After the relevant exposures, Fluor created a new entity (Fluor II) into which it put assets and operations, including those related to the asbestos activities. Hartford sued for declaratory relief that this was an invalid assignment under standard consent-to-assignment provision in the CGL policies.  Fluor moved for summary adjudication on the issue and lost. Fluor thereupon filed a writ petition, which the Court of Appeal denied twice (once summarily and once after full briefing), before the Supreme Court granted review, reversed and remanded.

“[P]recluding an insurer, after a loss has occurred, from refusing to honor an insured’s assignment of the right to invoke policy coverage for such a loss,” said the court, has the beneficial effect of “facilitating the productive transformation of corporate entities, and thereby fostering economic activity.” Although the decision arose in the context of a big corporation’s complex reorganization, the principle should be no less applicable in reorganizations of smaller operations as well. After Fluor, an insurer may have a hard time arguing that its permission is necessary when an insured small LLC turns into an S corporation with the same participants, or vice versa.

The decision is contrary to, and expressly disapproves, the earlier California Supreme Court decision of Henkel Corp. v. Hartford Accident & Indemnity Co. (2003) 29 Cal.4th 934, 945 [“an assignment is subject to consent by the insurer unless ‘the benefit has been reduced to a claim for money due or to become due.’”]) The rationale for departing from precedent is that section 520 was neither briefed nor addressed in the earlier case. “We now recognize that [Henkel’s] determination, reached without consideration or analysis of section 520, conflicts with the rule prescribed by that statute.”

Delayed Filing of Birth Defect Actions: Toxic Tort Exception to the General Rule in California

In Nguyen v. Western Digital Corp., the California Court of Appeal, Sixth Appellate District concluded that a child born in 1994 with pronounced birth defects purportedly caused by in utero exposure to various chemicals at the “clean room” workplace of her mother could nevertheless timely file an action against that employer in 2010.

The primary issue was which California statute of limitations applied, the six-year statute for pre-birth injuries (Code Civ. Proc., § 340.4) or the statute related to exposure to toxic substances (Code Civ. Proc., § 340.8). The two-year toxic statute of limitations is, however, tolled during a plaintiff’s minority.

Nguyen grappled with these issues through more than 30 pages of detailed legal analysis and interpretation of legislative intent, and ruled in favor of the plaintiff.

Construing both section 340.4 and section 340.8, we hold that claims based on birth or pre-birth injuries that are due to exposure to hazardous materials or toxic substances are subject to the limitations period in section 340.8. We also hold that even though section 340.8 did not take effect until almost 10 years after Plaintiff was born, it applies in this case because the allegations of the third amended complaint support a claim of delayed accrual until December 31, 1998. And since Plaintiff’s claims did not accrue until that date, they were not barred by the six-year limitations period in section 340.4 (pre-birth injuries) on January 1, 2004, when section 340.8 (toxic exposures) went into effect. Moreover, since Plaintiff’s claims were subject to the limitations period in section 340.8 when it took effect, she is entitled to tolling for minority that applies to section 340.8 claims. Thus, her action filed on October 25, 2010, when she was 16 years old, was timely.

The plaintiff had adequately alleged “a claim of delayed accrual until December 31, 1998” because that was allegedly “the last possible date that ‘health service providers affiliated with . . . [employer] falsely represented to [parent] . . . that there was no causal connection between [parent’s] occupational chemical exposure and [Plaintiff’s] injuries.’ ”

The court analyzed the application of the two statutes by first looking at section 340.4:

Since the allegations of the third amended complaint support a claim of delayed accrual until December 31, 1998, [Plaintiff]’s claims were not barred by the six-year limitations period in section 340.4 (pre-birth injuries) on January 1, 2004 when section 340.8 (toxic exposures) went into effect.

Having resolved the question of a possible bar by the earlier-enacted section 340.4 favorably for the plaintiffs, the court moved on to the later-enacted section 340.8:

Since her claims had not yet expired, she was entitled to rely on the statute of limitations in section 340.8, which included tolling for minority. Thus, [Plaintiff’s] action filed on October 25, 2010, when she was 16 years old, was timely.

It is difficult to say how far-reaching this decision may become with regard to birth defect cases in California.  Perhaps it will have no effect other than on cases involving children born within six years prior to the January 1, 2004, effective date of the toxic tort statute. Further, in this opinion the court had to take all of the plaintiffs’ allegations as truthful, since the ruling in the court below was at the demurrer stage, and pursuant to rules of statutory interpretation the court was obliged to seek any set of facts that would allow for a conclusion that the action was timely filed. The court found such a set of facts by accepting the contentions of the family that they did not suspect any chemical cause of the birth defects as of 1998 such that one statute did not extinguish the claim, and then supplanting that statute with application of a second, later-enacted statute so as to afford the family more time to file.

It could have been worse. The plaintiff also alleged that pursuant to the discovery rule, the action should not be deemed to have accrued until 2008, when family members heard on the radio that attorneys were investigating cases of birth defects caused by chemical exposures in the semiconductor industry … contacted the attorneys and “learned for the first time” of the potential harm from the chemicals at work. Nguyen did not address that issue, because it found the action timely on other grounds. If the plaintiff’s argument was adopted, it would essentially mean that attorney advertisements would become the trigger for statutes of limitations, which in turn would mean the certainty of the statute would vanish.

Perhaps the lesson to be learned here is that defeating what initially appears to be a stale birth defect claim by application of the statute of limitations in California is going to be a difficult, but not impossible task. The Sixth Appellate District issued two other unpublished decisions (meaning they cannot be cited as precedent in California) also interpreting application of the California statutes of limitations and the discovery rule in “clean room” cases involving delayed filing of actions for birth defects.  In one, Ovick v. National Semiconductor Corp., the ruling of the trial court dismissing the action at the demurrer stage was reversed.  In the second, Studdendorf v. National Semiconductor Corp., the court sustained a dismissal at the demurrer stage. While the case cannot be cited, it may still have value in suggesting a way to convince a court that the discovery rule means something other than an attorney telling you it is a problem.

In Studdendorf, as in the other cases, the plaintiffs alleged that “Parents did not know [the child’s] birth defects were caused by workplace exposure to hazardous chemicals until December 2008, when they heard on the radio that their attorneys were investigating cases of birth defects caused by chemical exposures in the semiconductor industry.” One key difference in this case: “But Plaintiffs also allege that around the time Christopher was diagnosed with retinoblastoma in October 1987, Parents asked [their employer] ‘whether they had worked with or otherwise been exposed to any hazardous chemicals.’ ” In 1987, only the six-year statute was in effect, so the plaintiff “was required to file suit within six years of discovery, or no later than October 1993.”

Parents suspected that Christopher’s injuries were caused by chemical exposure in their workplace. The averments of the second amended complaint support the conclusion that they suspected both wrongdoing and the alleged cause of Christopher’s injuries shortly after the diagnosis when they went to NSC and asked “whether they had worked with or otherwise been exposed to any hazardous chemicals.” The use of the word “hazardous” supports the conclusion that Parents suspected something in their work environment was dangerous to human health; not simply a cause, but a wrongful cause.

Thus, defendants in long-delayed birth defect cases should pursue any evidence that parents asked employers, or for that matter perhaps doctors or anyone else, about possible causes of harm near the time the defects first became apparent.

Challenges to the timeliness of such actions must be considered and made.  And if at first the defense does not succeed, similar arguments can be resurrected after discovery and investigation through a summary judgment motion.  In the final analysis, it may remain difficult to convince courts to dismiss such cases on statute of limitations arguments. The rules of statutory interpretation allow the courts to seek a means of maintaining actions that have such strong emotional appeal.

 

New Jersey: No Liability for Other Parties’ Asbestos Products

New Jersey has joined the list of jurisdictions that hold a defendant is not liable for asbestos in replacement parts supplied by others, regardless of whether there was asbestos in the same part as originally supplied.

Hughes v. A.W. Chesterton Co. is a generally good result for asbestos defendants. Notably, it did not get to the result the same way that other cases (e.g., California, Washington, and the asbestos MDL) did.

Hughes held that there was a duty to warn, but found no liability as a matter of causation. Many other cases coming to the same result as Hughes held that there is no duty to warn. (For example, California’s O’Neil, Washington’s Braaten and Simonetta, the Sixth Circuit’s Lindstrom, the MDL’s Prange, etc.)

Hughes imposed a duty to warn on the grounds that it was reasonably foreseeable at the time the Goulds pumps were sold that original gaskets and packing would be regularly replaced with gaskets and packing that contained asbestos. “Since the risk of exposure continued and was perhaps increased by the replacement process, a warning given at the time of the initial sale would ensure that this information was available to be considered in subsequent decisions regarding the choice of replacement parts and any additional safeguards for workers who made the replacements. We therefore conclude that it would be reasonable, practical, and feasible to impose a duty to warn upon Goulds under the facts here.”

“We do not agree that plaintiffs may prove causation by showing exposure to a product without also showing exposure to an injury-producing element in the product that was manufactured or sold by defendant.” The court rejected plaintiffs’ argument that causation may be proved by mere likelihood that defendant’s equipment would be used with asbestos-containing replacement parts, requiring instead proof that such parts were “manufactured or sold by the defendant.”

“California law,” as O’Neil  says in contrast, “does not impose a duty to warn about dangers arising entirely from another manufacturer’s product, even if it is foreseeable that the products will be used together. Were it otherwise, manufacturers of the saws used to cut insulation would become the next targets of asbestos lawsuits.”

It is unclear whether the Hughes/New Jersey/causation approach will lead to more consistently positive results for defendants than the O’Neil/California/no duty approach. For example, California courts have since split on whether cases against various defendants, including some that never made any asbestos-containing products but only products that were used with such products, fall within O’Neil exceptions. Such exceptions to O’Neil may be irrelevant to a causation analysis under Hughes. Another potential difference is that it ought generally to be easier to win summary judgment on duty, a legal issue, than on causation, which will involve facts. On the other hand, it’s still all about one question: “was it the defendant’s product that contained the asbestos?”

More Fallout From Garlock Ruling Finding That Asbestos Plaintiff Counsel Withhold and “Change” Evidence

ASBESTOS TRUSTS FIND “PATTERN” OF SUBMITTING UNRELIABLE EVIDENCE TO SUPPORT TRUST CLAIMS

Audits of several asbestos bankruptcy trusts have revealed that a plaintiffs’ attorney “has submitted unreliable evidence to each of the Trusts and … has done so in a pattern.” Case 2:12-ap-02182-BB; Doc. 198 at pp.17-18. Through his counsel, attorney Michael Mandelbrot stipulated to sanctions including that he may file no new claims with any of the trusts, that he must cease activity on pending claims and must substitute out as attorney, and that he receive no “payments from any of these trusts for any reason.” He has since claimed that he stipulated under duress, including threat of criminal liability by (as well as incompetence of) his own counsel, and that he has discovered “evidence of criminal conduct” by other plaintiff counsel serving as trustees of asbestos bankruptcy trusts.

This audit finding, the “it’s not just me it’s others” defense, and the possibility of sanctions comes fresh on the heels of the ruling in In re Garlock Sealing Technologies that found widespread differences between what several different asbestos plaintiffs’ counsel represented to bankruptcy trusts and what they represented in civil court proceedings. The Thorpe and Western Asbestos audits and anticipated ruling may, and should, spur further efforts for greater transparency in the asbestos bankruptcy trust process.

The audits covered some 5,900 claims. The specifics of the “pattern” of “unreliable evidence” are unclear, because the bulk of the trusts’ evidence was submitted under seal. In Garlock, exposure evidence relevant to claims against bankrupt entities with trusts was suppressed in each and every one of the 15 asbestos injury lawsuits in which post-verdict investigation was conducted. In Garlock too, much of the underlying evidence was filed under seal. The press and several defendants have moved to unseal the evidence in Garlock, and a similar move seems likely  in Thorpe.

These rulings contradict pronouncements by asbestos plaintiffs’ counsel that the system is working fine and does not need greater transparency, such as this statement recently presented by plaintiffs’ attorney Elihu Inselbuch (who represents many plaintiff committees in asbestos bankruptcies) to Congress: “[D]espite trying to find instances of widespread fraud and abuse, there is none. Defendants have no evidence to support their assertions of fraud by plaintiffs. The Kananian case, on which they so heavily rely, was an isolated incident, remedied by a state court.” Not so “isolated” as all that – as the Garlock and now Thorpe cases demonstrate.

Similarly, on the day Congress passed Federal legislation to mandate transparency in the trust claiming process, one plaintiffs’ attorney posted the following statement: “Multiple independent studies prove any fraud is negligible.”  No citations to these “independent studies” are provided.

It is no longer a question of whether there is fraud in the asbestos trust system, which is beset with other problems as well. Now the question is how widespread it is, and what to do about it, on both a case-by-case and systemic basis.