Government Contractor Defense Victory in California

A recent California decision describes a set of facts in which the government contractor defense can be successfully applied. Such circumstances have been few and far between.

In Kase v. Metalclad Insulation Corp., the appeal was from an order by San Francisco’s soon-to-be Presiding Judge Teri Jackson granting summary judgment to defendant.

12-2Mr. Kase claimed exposure to asbestos-containing insulation products while working on US Navy nuclear submarines in the 1970’s. The court pointed out that unlike other defendants who have in the past unsuccessfully attempted to assert the defense, Metalclad did not design or produce a piece of hardware or equipment. Instead, Metalclad was a broker of Unibestos. The court finds the government contractor defense was properly asserted for Metalclad while simultaneously acknowledging other decisions that have denied its application for equipment manufacturers. We are left with the predicament wherein a broker who distributes Unibestos can assert the government contractor defense, whereas an equipment manufacturer who has its products insulated with Unibestos cannot. The court notes that the record demonstrated that the Unibestos product at issue was never in the possession of Metalclad. Instead, Metalclad had only arranged for its delivery to the shipyard.

The opinion is lengthy, 28 pages, and includes several points benefitting potential government contractor defendants, including:

  • There is no “off the shelf” limitation to the application of the defense.
  • Products “incidentally sold commercially” may still qualify as military equipment.
  • Insulation specifications required, first explicitly and later impliedly, the use of asbestos. The court ruled that that if only asbestos will fulfill the performance requirements, then it is not necessary that the government specifications explicitly use the word asbestos. “Performance requirements can mandate a design choice, and the uncontroverted evidence is that it did so in this case.”
  • There was no duty to warn as the Navy “was well aware of the potential hazards of asbestos.”
  • Similarly, although this case did not involve “back and forth” negotiations characteristic of other successful government contractor defenses, that not necessary. “We recognize this is not a case involving substantial “back and forth” between a government agency and a contractor designing a unique piece of equipment, such as an aircraft or transport vehicle. [Citations omitted] No case involving that scenario, however, has involved the decades of naval studies and investigations, and the history of naval specifications, unique to the universe of asbestos cases.”
  • Unibestos had asbestos warnings on its insulation products not later than 1968.

While this decision is certainly good news for Metalclad and other similarly situated defendants, other courts may limit it to the specific facts of this case. It seems odd that a company that arranges for the delivery of boxes of Unibestos to the shipyard is protected from liability, while the company that ships its pumps to the same shipyard with comparatively miniscule rings of asbestos containing packing inside their pumps nevertheless is frequently denied the same defense. Perhaps arguing this inconsistency will gain some traction for government contractor equipment manufacturers in the future.

The HPV-Lung Cancer Link: A New Issue for the Asbestos Bar?

011516_hpv_THUMB_LARGELong known for its link to cervical cancer, recent medical research suggests a potential link between the Human Papilloma Virus (“HPV”) and lung cancer. While the science in this field is still developing, it is trending towards a conclusion that HPV may independently cause lung cancer in non-smokersincluding those that have never smoked —  and may also contribute to the causation of lung cancer in smokers and former smokers.

Two recent papers have addressed this hypothesis. The earlier is HPV and lung cancer risk: A meta-analysis from Zhai et al in the Journal of Clinical Virology 63 (2015) 84 – 90.  These authors looked at nine published studies spanning 1995 to 2013 and covering 1094 cases of lung cancer.  They set the context by commenting that “Lung cancer (LC) is the most common cause of morbidity and mortality worldwide”  and “approximately 25% of those with LC are never smokers.”

The authors broke out their results for HPV in general, and for subtypes such as HPV 16 and HPV 18.  For HPV in general they reported:  “A statistically significant association was observed  between HPV and LC patients” and recorded an Odds Ratio (OR) of 5.67 with a 95% confidence interval.  Compare that odds ratio for the similar calculations that are discussed in asbestos disease cases involving auto mechanics for example. They then looked at specific subtypes of LC and noted:

We also evaluated the cancer risk of HPV16/18 in different LC histological types. In SCC (squamous cell cancer), HPV 16/18 was significantly associated with cancer risk (OR=9.78, 95% confidence interval: 6.28 – 15.22, P<0.001, l2=44.9%); however, OR was not significant in AC (adenocarcinoma) (OR=3.69, 95% confidence interval: 0.99 – 13.71, P= 0.052; l2 + 75.5%).  [Author’s note:  this OR is not “significant” because the 95% CI includes 1, but just barely so.]

In discussing their findings, these authors note that “Most people are infected with HPV at some point in their lives, but only persistent infections cause pathological changes.” They reiterate their conclusion that HPV plays a distinct role in the pathogenesis of different LCs.  They ultimately address the elephant in the room by stating “Whether smoking interacts with HPV to promote the development of LC is unclear.”

A second recent paper is Human papillomarivirus infection and risk of lung cancer in never-smokers and women: an “adaptive” meta-analysis; Bae et al, Epidemiology and Health 37 (2015).  One of their initial observations is: “The increasing incidences of lung cancer among women never-smokers is a global trend {citations omitted} and it has been suggested that lung cancer in never-smokers should be considered separately, a disease different from lung cancer in smokers {citations omitted}.”  These researchers note the work of Zhai discussed above and comment that they are expanding on it by analyzing women and never-smokers.

These researchers ultimately focused on four case control studies and calculated a “summary odds ratio” (SOR).  They found a SOR for women of 5.32 and for never-smokers of 4.78.  The authors conclude that the risk of HPV caused lung cancers for women never-smokers was expected to be even higher.

Given the substantial increase in asbestos-related lung cancer civil case filings over the past five years, the hypothesis, if ultimately proven, could result in novel new claims by both plaintiffs and defendants in the litigation. This issue has already arisen in a recent California case, in which a core needle biopsy of the lung tumor of the plaintiff was obtained and reviewed by two defense pathologists.  Administering an accepted immuno-histochemical test to that tumor tissue, the pathologists found it to be positive for P16, signifying the presence of the HPV  in the tumor.  From that, both experts were prepared to opine that the presence of the HPV in this plaintiff more probably than not caused or contributed to her cancer. The literature discussed above was part of the scientific basis they were prepared to point to in support of their conclusion.    Therefore, while more research may be indicated, in lung cancer cases for which tumor tissue is available, defense counsel may want to consider if testing for the presence of HPV is indicated.

Registered in Delaware Is Not At “Home” There: Not Enough For General Jurisdiction

4-21Earlier this week, the Supreme Court for the State of Delaware ruled that a corporation registered in Delaware was nevertheless not subject to general jurisdiction in Delaware. Genuine Auto Parts v. Cepec. This was a decision of some substance, generating a written opinion of some 44 pages responding to the arguments and briefs of not only the plaintiff and defendant, but also several amicus curiae briefs. This is an issue that we have blogged about before (California Court rules no jurisdiction over foreign parent corporations; No in state dealings for years – no jurisdiction; and Out of state defendant? Out of state exposure? File suit somewhere else).

The court framed the issue succinctly:

This interlocutory appeal raises the singular issue of whether Delaware may exercise general jurisdiction over a foreign corporation for claims having nothing to do with Delaware, as price for the corporation agreeing simply to be able to do business in Delaware.

Cepek reversed the decision of the court below, finding that Daimler AG v. Bauman, 134 S. Ct. 746 (2014) “fundamentally undermined” earlier jurisprudence regarding jurisdiction.

Daimler makes plain that it is inconsistent with principles of due process to exercise general jurisdiction over a foreign corporation that is not “essentially at home” in a state for claims having no rational connection to the state.

This was so despite the existence of a Delaware long-arm statute and a Delaware registration statute that had previously been interpreted as effectuating a “consent” to general jurisdiction by foreign corporations registering in Delaware. This is a recurring argument for the plaintiffs’ bar in its efforts to evade or limit Daimler. Cepek explicitly addressed this issue and found that the weight of authority is that registration or similar activity is not enough to evade Daimler.

The plaintiffs’ selection of Delaware as the location of filing may have been driven by the fact that 5 of 7 defendants present in the case were incorporated in Delaware. But Genuine Auto Parts is a Georgia corporation and the alleged exposures occurred in Georgia. Genuine Auto Parts had registered in Delaware and appointed an agent for service of process in Delaware. Plaintiffs argued that by registering in Delaware, Genuine Auto Parts had “consented” to general jurisdiction and prior cases in Delaware supported this contention. Plaintiffs argued that this “consent” rendered this case immune to an application of the logic of Daimler.

This decision is important for at least three reasons. First, the Supreme Court for the State of Delaware acknowledged that Daimler “made a major shift in our nation’s personal jurisdiction jurisprudence” that superseded the numerous prior decisions upon which the plaintiffs relied.

Second, the court supports its decision with strikingly pro-business language, stating:

Every state in the union, and the District of Columbia, has enacted a registration statute that requires foreign corporations to register to do business and appoint an in-state agent for service of process. As the home of a majority of the United States’ largest corporations, Delaware has a strong interest in avoiding overreaching in this sensitive area. If all our sister states were to exercise general jurisdiction over our many corporate citizens, who often as a practical matter must operate in all fifty states and worldwide to compete, that would be inefficient and reduce legal certainty for businesses. Human experience shows that “grasping” behavior by one can lead to grasping behavior by everyone, to the collective detriment of the common good. (emphasis added)

Third, where does this leave the plaintiffs’ bar in multi-defendant cases? For some reason, plaintiffs did not want to file this case in Georgia where the exposure occurred and the plaintiffs were located. It would seem logical that they would then pick a jurisdiction that was “home” to a majority of the defendants. This decision says that if they do so select, they may jeopardize their ability to pursue at least some defendants. What is the answer for the plaintiffs who want to pursue multiple defendants? One response is “file where the exposure occurred.” But what if the exposure occurred in several different states? This is just one of several issues that are yet to be worked out. In the meantime, the lack of clarity seems to inure to the benefit of at least some defendants.

California Chocolates: Labelled for Lead?

4-2Chocolate is bad for you. But not for the reasons you thought.

Don’t touch that left over chocolate Easter Bunny. Step away from that Hershey’s chocolate bar, and don’t even think of buying a box of See’s chocolates for your mother for Mother’s Day. That’s right, all these delights, and many others, are bad for your health. But not for the reasons that probably first comes to mind.

As recently reported by CNN, a California Safe Drinking Water and Toxic Enforcement Act (affectionately referred to as Proposition 65 Prop. 65 in California) bounty hunter with the biblically-themed name of As You Sow has announced that it has served notice on numerous candy companies of impending litigation due to their sale in California of candies with impermissibly high levels of lead and cadmium. As You Sow reports that they have tested numerous candy products and found at least 18 to have excess levels of lead or cadmium.

Those of us practicing in California have for years dealt with lawsuits brought against manufacturers and distributors of innumerable products because they purportedly contained levels of chemicals labeled as hazardous – in excess of the “Maximum Allowable Daily Level” or “No Significant Risk Level” – as identified by the state regulators tasked with applying Prop. 65. When one manufactures or distributes a product found to have such an excess level, the options are to label the products with a “Prop 65 warning,” reformulate the products, or stop selling them in California. Failing to do so results in litigation wherein entities such as As You Sow acting as “private attorneys general” seek an award of civil penalties, injunctive relief and an award of their own attorneys’ fees.

As lead has long been acknowledged to create hazards to some exposed individuals at certain exposure levels, lead has frequently been the target chemical in Prop 65 cases. The alleged exposures can come from ingesting lead or from “dermal absorption” of lead. We have seen cases about lead in women’s jewelry, and lead in herbal supplements. Since lead is a naturally occurring mineral in the Earth’s crust, it is everywhere. And plants that take their nourishment from the soil of the Earth collect measurable levels of lead. Lead is in fruits and vegetables, nuts and berries, and yes even in chocolate. The level of lead content triggering regulatory action in California is 1 part per million.

The result of the frequent litigation over Prop 65 in California has been the proliferation of Prop 65 warnings. California residents see Prop 65 warnings not only on numerous products, but even posted in the lobbies of hotels and office buildings. Californians can rest easier knowing that concerned citizens like As You Sow are working hard to ensure that we will see a Prop 65 warning on some future date on the door at See’s Candies, or on the label of a Hershey Bar or on the box of Godiva truffles.

Expanded Acceptance of Custom & Practice in Strict Liability Cases

In California, the “consumer expectations” theory of design defect has been the bane of defense attorneys for years. I cannot tell you how many times we have been unable to persuade the court that it should not allow plaintiffs to pursue this theory. Further, in cases applying either this or the companion strict liability test, risk/benefit, courts regularly exclude virtually all evidence in support of the product design. In a recent opinion from the Court of Appeal for the State of California, Second Appellate District, the court has offered a ray of hope on these very issues.

3-29In Kim v. Toyota Motor Corp., plaintiffs claimed that their Toyota Tundra was defective for failing to incorporate an Electronic Stability Control (“ESC”) system. By motion in limine, plaintiffs sought to preclude any evidence “comparing the Tundra to competitor’s vehicles and designs.” The court interpreted this as a request to exclude “all evidence of custom and practice in the pickup truck industry.” Plaintiffs also sought to pursue the “consumer expectations” prong of strict product liability under California law, in addition to a risk/benefit analysis. The court surprised this commentator by affirming the determination by the trial court that evidence of industry custom & practice may be admissible under some circumstances in a risk/benefit case, and by affirming the decision of the trial court to preclude plaintiffs from pursuing consumer expectations.

The court proceeds through a lengthy analysis of California cases discussing strict liability and the admissibility of evidence of industry custom and practice in such cases. The court identifies two distinct lines of cases discussing the issue in the past (Titus v. Bethlehem Steel Corp. (1979) 91 Cal.App.3d 372 and its progeny on the one hand, and Howard v. Omni Hotels Management Corp. (2012) 203 Cal. App. 4th 403 and its progeny on the other). Remarkably, the court indicates that it is going to follow neither, and instead adopt a “middle ground”:

We are not persuaded either line of authority is entirely correct. Instead, we conclude that evidence of industry custom and practice may be relevant and, in the discretion of the trial court, admissible in strict product liability action, depending on the nature of the evidence and the purpose for which the party seeking admission offers the evidence.

The court explained that industry custom was valuable information.

Industry custom may reflect legitimate, independent research and practical experience regarding the appropriate balance of product safety, cost and functionality. (citations omitted) The parties in a strict products liability action probably will dispute whether and to what extent industry custom actually reflects such considerations and whether it strikes the appropriate balance. But that does not make the evidence inadmissible. Evidence of compliance with industry custom may tend to show that a product is safe for its foreseeable uses, while evidence of noncompliance with industry custom may tend to show that a product is unsafe for its foreseeable uses.

The decision points out that some elements of what is typically considered a negligence analysis have already crept into strict products liability. The court cites the example of comparative fault of the plaintiff, and the possible application of the sophisticated user defense in strict liability cases as evidence that such cases are not totally divorced from any negligence type analysis. That, in the court’s mind, justifies the admission of evidence of custom and practice in some strict liability cases.

Exactly when such evidence is going to be admissible, and when it will not, is not entirely clear. Kim holds that it will be up to the trial court to determine on a case by case basis when such evidence will be admissible. The decision discusses multiple examples of both when such evidence would be admissible and when it would not. This is going to provide fertile grounds for counsel to argue either side in future cases.

For example, Kim  ruled that evidence that competitors tried to produce safer designs that ultimately malfunctioned or were prohibitively expensive would be relevant “to the mechanical feasibility factor,” and evidence that competitors’ designs made products less efficient or desirable “would be relevant to the adverse consequences factor.” On the other hand, evidence that Toyota’s competitors did not offer ESC would be neither relevant nor admissible. Frankly, the logic of the examples cited by the court is not readily apparent to this commentator and causes one to expect that attorneys will be struggling with this issue in future cases.

Kim affirmed the trial court’s determination that this case was not suitable for a consumer expectations analysis. In essence, the court concluded that this assessment of an auto maker’s design decision to incorporate, or not incorporate, an “ESC” system, was simply beyond the keen of an ordinary consumer. This is very encouraging for the defense. The experience of this commentator has been that courts are typically reluctant to preclude plaintiffs from pursuing consumer expectations regardless of defense counsel pleas that the issues are too complex to fit within “consumer expectations.”

Kim’s discussion regarding evidence of custom and practice addresses “strict products liability” generally, and appears to be saying that evidence of industry custom and practice could be admissible in either a consumer expectations case or a risk/benefit case. But then again, Kim involved only risk/benefit as the trial judge had expressly precluded use of the consumer expectations prong. Thus, plaintiffs may argue that this case stands for the proposition only that evidence of custom and practice might be available in some risk/benefit cases, but does not support the proposition that such evidence is admissible in any consumer expectations case. This should encourage many plaintiff practitioners to do what they are already doing: pursue consumer expectations and forego risk/benefit.

Government Contractor Defense Fails to Protect Navy Contractor

The recent decision of the Supreme Court in Campbell-Ewald Co. v. Gomez (No. 14 – 857, decided Jan. 20, 2016) has garnered attention for its discussion of the role of Rule 68 offers to compromise class actions. (See opinion by Ginsburg, concurrence by Thomas and dissent by Alito here). Tucked away in the majority opinion is a discussion of the applicability of the government contractor defense for entities engaged by the US Navy to assist in developing a multimedia recruiting campaign for the Navy.

1-28To this writer, it has always seemed logical that manufacturers that sell equipment to the Navy pursuant to Navy specifications should have the benefit of the defense. Yet defendants have often had trouble gaining traction in asserting this defense in the courts and are frequently stymied by plaintiff arguments such as “but the Navy did not have a specification prohibiting the company from warning.” A reading of Campbell-Ewald, in our estimation does not offer defendants much encouragement.

In Campbell-Ewald, the Court determined that the government contractor had not only violated the prohibitions of the Telephone Consumer Protection Act, but had also violated express instructions of the Navy. The Court set forth the question and then answered it thusly:

Do federal contractors share the Government’s unqualified immunity from liability and litigation? We hold they do not.

—-

When a contractor violates both federal law and the Government’s explicit instructions, as here alleged, no “derivative immunity” shields the contractor from suit by persons adversely affected by the violation.

The court goes on to say:

Qualified immunity may be overcome … if the defendant knew or should have known that his conduct violated a right ‘clearly established’ at the time of the episode in suit. (emphasis added)

On the facts presented, it should come as no surprise that the Court rejected the contractor’s efforts to shield itself from liability by arguing the applicability of the government contractor defense. After all, the government appeared in support of Gomez. It is an uphill battle to seek the protection of the government contractor defense when the government believes the contractor is liable. However, we can certainly envision that plaintiffs’ counsel will seek to use this language to their benefit in future cases. Using the language cited above, plaintiffs may argue that they need not even demonstrate that the manufacturer failed to warn about a known hazard, but merely that it failed to warn of a hazard about which they should have had knowledge. The right of workers and sailors to be free from toxic exposures can certainly be construed as “clearly established” at all relevant times. Plaintiff counsel, with the assistance of their experts, may even argue that the government contractor defense should not be afforded to equipment manufacturers in violation of federal laws such as the Walsh Healy Public Contracts Act (49 U. S. C. § 35 et seq) and its prohibition of exposure to asbestos in excess of 5 million particle per cubic foot of air.

While the broader legal community may be looking at Campbell-Ewald for guidance in an area in which the Courts of Appeal may not have been in complete accord, the decision offers scant encouragement to the defense bar regarding the government contractor defense. However, an accurate and complete portrayal of the state of the art may well show a court or jury that equipment manufacturers could not be expected to have knowledge of hazards that were not yet appreciated, nor that a fair estimation of the exposures occasioned by use of their equipment violated the standards of the Walsh Healy Act or any other applicable standard, thus rendering the facts of Campbell-Ewald distinguishable.

Bare Metal Defense Applied For First Time In Yet Another Jurisdiction: Wyoming

In an order issued on October 9, 2015, the U.S. District Court for the District of Wyoming determined that under Wyoming law, equipment manufacturers can employ the “bare metal defense” against strict liability causes of action. In essence, plaintiffs now cannot argue that defendants are strictly liable for insulation or any replacement parts that they did not provide. However, defendants remain strictly liable for original components, and plaintiffs can argue that defendants were negligent for failing to warn about replacement parts provided by others.

Judge Alan Johnson analyzed in detail the “bare metal defense” and noted this was an issue of first impression for the courts in Wyoming. Although he did not accept defendants’ argument “that a majority of the courts” that have looked at this issue have adopted the defense, Judge Johnson went on to rely upon the Schwartz v. Abex decision by Judge Robreno in 2015 for guidance on how to decide the issue. Doing a similar analysis, Judge Johnson concluded that Wyoming would adopt the bare metal defense, at least in regards to strict liability. He noted that to do otherwise “would allow foreseeability alone to be sufficient to create [a] strict liability claim and impose an almost absolute liability for all manufacturers that sell products with replaceable components.”

Judge Johnson also concluded that under Wyoming law, strict liability and negligence are treated separately and that under a negligence analysis the plaintiffs could still recover if they can demonstrate that:

1. Defendant knew that its product would be used with an asbestos-containing component part,

2. Defendant knew that asbestos was hazardous, and

3. Defendant failed to provide an adequate and reasonable warning.

The order then, however, goes on to say:

Accordingly, the Court finds that it will not grant summary judgment on Plaintiff’s negligence claim against Goulds regarding parts that Goulds manufactured or supplied or those that Goulds did not manufacture or supply but it specified, required or were necessary to the operation of its pumps. (emphasis added).

This final clause seems to add more prerequisites in addition to Nos. 1-3 above, and would certainly allow defendants to make additional arguments responsive to negligence claims. For example, one could argue that none of the equipment “required” asbestos to the extent that the equipment could work with non-asbestos materials. And certainly language in catalogs or sales materials that may be a “requirement” or “specification” in the eyes of plaintiff counsel is likely to be construed differently by defense counsel.

On balance, if this ruling is followed by other courts in Wyoming, it will make plaintiffs’ cases a little harder in Wyoming, but leaves a number of viable causes of action and theories.

Out-of-State Defendant? Out-of-State Exposure? File Suit Somewhere Else: Defendants Escape Jurisdiction in California Asbestos Case

On August 11, 2015, Judge Emilie Elias of the Superior Court for the County of Los Angeles granted 5 separate motions to quash on grounds that may be available to many non-California defendants. The case, Malek v. Blackmer Pump Co., involved a plaintiff who now resides in California, but for whom all the alleged exposures occurred while plaintiff resided in Iran. The moving parties relied on Daimler AG v. Bauman (2014) 134 S. Ct. 746, which, as this blog has previously reported (here and here), holds that jurisdiction rests only (1) where the tort occurred or (2) where the defendant is “at home,” such as where it has its principal place of business. Daimler held that a California court may not exercise general jurisdiction over a foreign company solely due to the in-state activities of its subsidiaries, but the principle is not limited to cases involving parent and subsidiary corporations.

The moving parties in this case, including John Crane, Inc., Fisher Controls, RJ Reynolds and Exxon Mobil, all are readily acknowledged to be “doing business” in California, but are not “at home” in California, so under the guidelines of Daimler California lacks special jurisdiction over them. Plaintiffs’ counsel, Weitz & Luxenberg, filed oppositions and argued the motions.

Judge Elias discussed with counsel the potential challenges that her ruling may present. Plaintiff’s counsel commented that they may be obliged to sue the dismissed defendants in other jurisdictions where they are “at home.” This presents the potential for multiple cases for the same plaintiff against different defendants in different jurisdictions. Nevertheless, Judge Elias felt she was bound by Daimler and subsequent California decisions, both federal and state.

For example, in Senne v. Kansas City Royals Baseball Corp., the Northern District of California made clear that the concept of “at home” in the context of general jurisdiction should be construed very narrowly – observing Daimler’s emphasis that merely [even] engaging in a “substantial, continuous and systematic course of business” is not enough to establish general jurisdiction.

Similarly, in BNSF Ry. Co. v. Superior Court, the California Court of Appeal applied Daimler in a directly analogous asbestos personal injury case to reverse the trial court’s exercise of general jurisdiction over a defendant with admittedly substantial and continuous business in California. Although the California Supreme Court has granted review and thereby depublished this decision, its rationale is likely to be followed, as it was in Malek.

For those cases in which asbestos plaintiffs seek to file suit in a jurisdiction in which they cannot establish special jurisdiction (i.e. where the tort occurred), and in which the target defendants are not “at home,” these authorities and the recent order of Judge Elias present significant challenges. At least in Los Angeles going forward, one can expect defendants to seriously consider motions to quash for their corporate defendants incorporated elsewhere and with corporate offices elsewhere.

Hawaii’s Novel Environmental Court

The residents of the state of Hawaii have long prided themselves on their commitment to maintaining the beauty and the pristine condition of their island home. The importance of protecting the environment is in fact reflected in their state constitution. Now, for the first time ever, Hawaii intends to establish specific courts to adjudicate all manner of environmental litigation. The Hawaii constitution, Article XI, Section 1, provides:

6-17For the benefit of present and future generations, the State and its political subdivisions shall conserve and protect Hawaii’s natural beauty and all natural resources, including land, water, air, minerals and energy sources, and shall promote the development and utilization of these resources in a manner consistent with their conservation and in furtherance of self-sufficiency of the State.

All public natural resources are held in trust by the State for the benefit of the people.

To further implement this goal, the legislature in 2014 passed Act 218, which provides:

The legislature finds that environmental disputes are currently dealt with in a variety of courts. This organizational structure inadvertently promotes inconsistent application of the wide variety of environmental laws. The legislature also finds that the continued maintenance and improvement of Hawaii’s environment requires constant vigilance and continued stewardship to ensure its lasting beauty, cleanliness, uniqueness, and the stability of its natural systems, all of which enhance the mental and physical well-being of Hawaii’s people.

The legislature further finds that Hawaii’s natural resources are compromised every day resulting in numerous violations of the law. An environmental court will better ensure that the State upholds its constitutional obligation to protect the public trust for the benefit of all beneficiaries.

The court, which was originally to be comprised of just one judge, has not yet been established. However, the statutory scheme envisions this court having jurisdiction over such diverse matters as to include possible violations of rules for use of hunting dogs and Hawaii’s Environmental Response Law; handling of stray animals in state parks and Hawaii’s Safe Drinking Water Act; crew requirements for canoe operation and Hawaii’s Hazardous Waste Act; and civil actions as well as criminal actions. Anticipating a substantial case load for this court, and recognizing that environmental actions can be and are filed in any number of different courts around that state, the Chief Justice has recommended that more than one judge be appointed as a member of this court. There is also discussion of ensuring the assigned judges have access to appropriate training to enhance their ability to handle these cases.

The likely effective date for this program is not clear, though the legislature previously expressed a desire to have it implemented during this calendar year.

This concept of an Environmental Court with experienced jurists familiar with the comprehensive array of environmental statutes and regulations is intriguing. One would hope that a judge trained in regards to environmental regulations and experienced in litigation resulting from their implementation would be the right jurist to hear future disputes. However, as noted above the mandate established in the constitution and statutes is for the courts to “ensure that the State upholds its constitutional obligation to protect the public trust for the benefit of all beneficiaries,” which suggests a possible “tilt” against defendants in environmental cases. Other states may monitor this new court to determine if it should be emulated elsewhere.

Los Angeles Asbestos Court Demands Bankruptcy Trust Transparency

As previously reported, Judge Elias in Los Angeles had indicated an intention to bring to conclusion a long standing discussion with counsel regarding the extent of disclosure regarding asbestos bankruptcy trusts that plaintiffs will be obliged to provide when responding to “General Order” discovery requests for all asbestos cases in Los Angeles.  Despite receiving supplemental papers from the plaintiff bar urging her to alter her position, Judge Elias has now issued a formal order regarding such discovery. It varies little from the proposed order Judge Elias floated previously, and might be the first order requiring a signed authorization from plaintiff for the release of claims submitted to bankruptcy trusts.

bankruptcy_filing

The order was entered retroactively and made applicable to all cases filed on or after February 1, 15, 2015.  Though it is to remain in force for a “trial period” of 6 months, it will stay in effect thereafter “unless amended, vacated or otherwise superseded by further order.” Therefore, as of now, the standard discovery in Los Angeles will include:

1.         An authorization from plaintiff for release of claimant information submitted to an asbestos bankruptcy trust.

2.         Additional interrogatories included within the “standard” discovery.  The existing discovery included 4 questions regarding claims to bankruptcy trusts.  These are now augmented by 6 more questions requiring extensive information regarding exposure to the products of, or on the premises of, dozens of identified trusts.  Further the new order requires that such responses be updated not later than 5 days before trial, regardless of whether a claim has been made or will be made to such bankrupt entity.

3.         The order broadly requires the disclosure of claims and any other communications with all trusts. In particular, the court finds “all documents sent to, received from, shown to, exchanged with, or otherwise disclosed to any established or pending asbestos trust funds — for any purpose” to be discoverable, and requires that “Plaintiffs shall produce” all such materials.

4.         The documents that must be produced further includes “ballots, questionnaires, submitted or filed forms, summaries, claims, ‘placeholder’ claims, request for extensions, requests for deferrals, all supporting documentation, all related communications, and all documents filed … pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure.”   This order is meant to require production of some of the required and verified disclosures that must be made by any “groups, committees and entities” that represent “multiple creditors” in a Ch.  9 or 11 proceeding. In past asbestos-related bankruptcies, these filings were not generally accessible to the public as they would be in a normal bankruptcy.  Garlock had made attempts to obtain such documents, but the bankruptcy courts rejected those attempts. Judge Elias’ order specifically ordering the production of these may be the first discovery order to specifically mention Rule 2019 disclosures in this context.

5.         The court also requires production of signed affidavits or declarations that “have been circulated to someone other than plaintiff and plaintiff’s counsel” as they are not privileged.  Thus any declaration sent to a trust must be disclosed.

No doubt the plaintiffs’ bar is considering its possible responses.  Defense counsel in other jurisdictions in California are already seeking ways to expand upon this. In particular, the presiding asbestos judges in San Francisco and Alameda Counties will be urged to implement similar orders.