Survivor (Survival Action): Doe and Gratuitous Care Edition

In the recent decision Williams v. The Pep Boys Manny Moe & Jack of Cal., a California court of appeal addressed four important topics that defendants frequently confront:

  1. How to defeat a plaintiff’s attempt to name defendants late as “Does.”
  2. A not-so-welcome restatement that economic damages include nursing services gratuitously provided by family members.
  3. A welcome ruling that recoverable damages in a survival action are limited to damages incurred before death.
  4. A reminder that a settlement offer to multiple plaintiffs will not qualify for cost-shifting, even if plaintiffs fail to “beat” the offer at trial, unless the offer is apportioned among plaintiffs and is not conditioned on acceptance by all.

1. “Doe” defendants, plaintiff’s knowledge and statute of limitations.

Like most jurisdictions, California allows plaintiffs to amend their complaint to designate a defendant unknown to plaintiff at the time of filing the complaint, usually designated as “Doe.” (Cal. Code Civ. Proc., § 474.) An amendment made pursuant to this section will “relate back,” i.e. be deemed to have been filed at the same time as the original complaint, if made within three years of the original complaint, even if the statute of limitations ran in the interim.

Williams stressed that the Doe defendant procedure is “‘available only when the plaintiff is actually ignorant of the facts establishing a cause of action against the party to be substituted for a Doe.’” In other words, “[i]gnorance of the facts giving rise to a cause of action is the ‘ignorance’ required by section 474, and the pivotal question is ‘did plaintiff know facts’ not ‘did plaintiff know or believe that he had a cause of action based on those facts?’”

In Williams, plaintiffs knew before they filed the original complaint that their father died of mesothelioma, that asbestos was the cause of the mesothelioma, and that the father purchased defendant’s asbestos-containing products. They “knew most of the story.” This was enough that the Court of Appeal affirmed the trial court’s decision to dismiss the wrongful death claims as outside the statute of limitations.

2. Nursing services provided by family members to decedent prior to death are recoverable damages.

Williams reaffirmed that California allows plaintiffs to recover the value of nursing services provided to the injured plaintiff by a family member, even in the absence of an agreement or an expectation of payment.

3. Future home care that would have been provided to a spouse is recoverable up until death, not after.

Under California’s survival law, decedents’ personal representative or successor in interest can recover the decedent’s other pecuniary losses incurred before death. (Cal. Code of Civ. Proc., § 377.34.) Here, plaintiffs sought to recover the value of around the clock nursing care that decedent would have provided to his wife but for his death.

Williams ruled that section 377.34 limited recoverable damages to those incurred prior to death. Plaintiffs relied on Overly v. Ingalls Shipbuilding, Inc. (1999) 74 Cal.App.4th 164, 171, where plaintiffs attempted to recover the value of household services as income post death, even though the dying husband was still alive. The Williams court found Overly inapplicable, because it did not deal with a survival action. Furthermore, the plain language of the statute only allowed for the recovery of penalty and punitive damages incurred after decedent’s death and thus intentionally excluded other categories of damages decedent would have been entitled to had he lived. The Williams court stated that survival action damages are narrowly limited to “the loss or damage that the decedent sustained or incurred before death,” which by definition excludes future damages.

4. Cautions for settlement offers to multiple plaintiffs.

Here, as in many asbestos defense cases, plaintiffs had both a wrongful death and a survival claim. Defendant offered a single unapportioned sum in exchange for dismissal, “contingent upon acceptance by all plaintiffs as it is the intention of defendant to obtain a full and final resolution of all claims asserted by plaintiffs in this matter.” This offer did not qualify for cost-shifting, even though plaintiffs’ recovery was less than the offer amount. (Cal. Code Civ. Proc. § 998; cf. Fed. R. Civ. Proc. 67.)

The offer fell afoul of “the general rule … that a section 998 offer to multiple plaintiffs is valid only if it is expressly apportioned among them and not conditioned on acceptance by all of them.” An exception exists when one or more plaintiffs have a “unity of interest such that there is a single, indivisible injury.” A unity of interest exists for example when spouses suffer injury to community property. There is no such “unity” as between multiple survival and wrongful death claimants.

This does not mean a defendant cannot make such an offer, or that plaintiffs cannot accept one. It does however mean that such an offer will not shift costs to plaintiffs even if they fail to beat it at trial.

Conclusion

The Williams decision is a double-edged sword for defendants. On the one hand, it puts plaintiffs on notice to timely replace “Does” or face statute of limitation issues. On the other, it increases the scope of recoverable damages in survival actions to encompass fees gratuitously provided by family members. It also reminds parties (usually defendants) to carefully draft settlement agreements and appropriately apportion amounts to each cause of action and to each plaintiff without a condition for all to accept. It also shows the proper stance on the application of lost years’ damages, which hopefully shall limit the plaintiffs’ bar’s future attempts in claiming improper damages. So counsel, pay attention to the small facts and don’t cut corner with your settlements. In the famous words of Rodney Lavoie Jr. (survival Boston contestant), “this ain’t a campin’ trip. This is suhvivah!” (at least for your client’s pocket).

“But Everyone Else Did It This Way:” Industry Custom Admitted in California Strict Liability Cases

The California Supreme Court has ruled that industry custom and practice may be admissible in a strict products liability action, “depend[ing] on the purpose for which the evidence is offered.” (Kim v. Toyota Motor Corp.) The decision is a win for product liability defendants. Many trial courts have ruled all industry custom and practice evidence irrelevant as to strict liability, while allowing it in negligence.

Disapproving several prior appellate decisions, the court ruled that such evidence is admissible for the purpose of “the jury’s evaluation of whether the product is as safely designed as it should be, considering the feasibility and cost of alternative designs.” In contrast, “[e]vidence that a manufacturer’s design conforms with industry custom and practice is not relevant, and therefore not admissible, to show that the manufacturer acted reasonably in adopting a challenged design and therefore cannot be held liable.” Thus, it is admissible, but never dispositive.

Mr. Kim was injured when his 2005 pickup rolled over and crashed on the Angeles Crest Highway. Plaintiffs alleged that if the pickup had been equipped with a safety feature that came as standard equipment on SUVs, it would not have rolled over. Toyota introduced evidence that no manufacturers included that feature as standard on pickup trucks. The trial court, Court of Appeal and Supreme Court all approved.

The issue … is not whether the manufacturer complied with a standard of care, as measured by prevailing industry standards, but instead whether there is something ‘wrong’ with a product’s design … because, on balance, the design is not as safe as it should be.

[E]vidence of industry custom and practice sometimes does shed light not just on the reasonableness of the manufacturer’s conduct in designing a product, but on the adequacy of the design itself.

Another description: industry practice “illuminates the relative complexity of design decisions and the trade-offs that are frequently required in the adoption of alternative designs.” The court was persuaded in part by the fact that trade association standards are admissible, and there seemed no logical reason to distinguish those standards from industry custom.

The court was also persuaded in part by the fact that plaintiffs themselves introduced industry custom evidence, such as the evidence that many manufacturers included the safety feature on their SUVs. “[T]he rule is a two-way street.”

Is this the proverbial camel’s nose in the allegorical tent, thus the beginning of the end of the rule against introducing custom and practice in strict liability cases? If no manufacturer of a particular product ever included a warning about a supposed toxin, is that relevant? If all manufacturers of a set of products allowed a trace amount of say benzene because it was so hard to eliminate it 100%, is that admissible in a strict liability case? If all employers operating a certain kind of facility adopted one level of protections against chemical exposure, even though more could almost always at least theoretically be done? The Kim decision arguably allows such evidence, but other courts may limit the effect of the decision.

There are at least two significant limitations to the reach of this decision.

First, it applies only to the risk-benefit strict liability test. Not consumer expectations, which plaintiffs more frequently assert.

Second, it applies to “industry custom and practice,” but not “state of the art.” “By ‘industry custom and practice,’ we refer to the use of the challenged design within the relevant industry—‘what is done’—as opposed to so-called ‘state of the art’ evidence, which concerns ‘what can be done’ under present technological capacity.”

This second limit may benefit defendants. What “can be done” for safety likely includes more than what others in the industry actually do.

The Kim result may be less notable in other jurisdictions: the decision recites it is joining “the majority of states that have permitted the admission of [such] evidence.” It is, however, a major development in California.

Come to Me If You Want to Talk to Me; Plaintiffs Can’t Haul Corporate Representative to Deposition in California

Alameda County has one of the most active asbestos dockets in California, with defendants from around the country. Recently, an Alameda judge ruled that non-resident corporate representatives of a non-California defendant cannot be hauled to California for deposition. This result is consistent with prior appellate authority, but many trial judges have compelled California depositions for non-California corporate representatives (known as “persons most qualified” or PMQs in California parlance and “persons most knowledgeable” or PMKs in most other jurisdictions). So this decision is welcome news for defendants seeking to avoid that expense, inconvenience and leverage to plaintiffs.

This issue is addressed by conflicting statutes. One says that a witness is not “obliged to attend as a witness before any court, judge, justice or any other officer, unless the witness is a resident within the state at the time of service.” (Cal. Code Civ. Proc., § 1989.) Other statutes allow for depositions of “an officer, director, management agent or employee” of a party to be set at locations “within the county where the action is pending” or other California locations, with no restrictions based on the residence of the witness.” (Cal. Code Civ. Proc., § 2025.250, 2025.260.)

In Brock v. Metropolitan Life Insurance, Alameda Judge Steven Kaus ruled that the first statute governs. He refused to order a California deposition for a Rhode Island witness, and instead ordered the deposition to take place within 75 miles of the defendant’s principal office in Rhode Island.

Judge Kaus relied principally on Toyota v. Motor Corporation v. Superior Court (2011) 197 Cal.App.4th 1107. Most importantly, the court of appeal found that the Discovery Act of 1986 eliminated from section 2025.260, the phrase “Notwithstanding section 1989.” “By removing the words authorizing the trial court to override section 1989 the Legislature presumptively intended to withdraw that authority which had previously existed.”

Judge Kaus rejected Plaintiffs’ argument that Toyota did not apply because the deponent in this case was a PMQ, whereas witnesses in Toyota were named individually. “From a policy viewpoint, the differentiation between named corporate employees and PMQs, who, to coin a phrase, are people too, is form over substance.”

Judge Kaus’ decision is supported by an additional case he did not cite, I-Ca Enterprises, Inc. v. Palram Americas, Inc. (2015) 235 Cal.App.4th 257 in which the California Court of Appeal also affirmed that California superior courts have no power to compel production of defendant’s nonresident PMQ.

This decision is a win for defendants. If this decision becomes a trend, it will be interesting to see how plaintiff counsel will respond. One possibility is that they will be more strategic in whose PMQ to depose. Another could be a more strategic decision in what venue to file; or at best, the decision to dismiss some defendants whose witnesses, officers or not, reside out of state.

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.

Only Minimal Medical Evidence Sufficient to Grant Trial Preference by California Court of Appeal

California just made it easier for plaintiffs to get mandatory trial preference. Fox v. Metalclad Insulation LLC required that preference be granted based on a mere attorney declaration comprised of generic symptoms of an over-70 year old plaintiff, and even though plaintiff is in partial remission.

California allows plaintiffs to move for a preferential trial date in certain circumstances depending on the age or health of the plaintiff. If granted, the judge must set the matter for trial no more than 120 days from the date the motion was granted, with a maximum continuance of up to 15 days. The mandatory preference statute requires the granting of preference if three elements are satisfied: (1) plaintiff is over 70 years old; (2) he/she has a substantial interest in the action; and (3) “[t]he health of the party is such that preference is necessary to prevent prejudicing the party’s interest in the litigation.” The focus of the Fox decision was primarily on the third, more subjective requirement.

Trial Court
Ms. Fox sued eighteen defendants, alleging that she developed stage IV lung cancer, asbestosis, and asbestos-related pleural disease as a result of shaking and laundering her husband’s work clothing. Plaintiffs filed a motion for preference, almost a year after the initial filing of the case, supported solely by (1) an attorney declaration, with attached medical records, and (2) a declaration from Ms. Fox describing her recent medical history and current symptoms, including “fogginess in [her] thought process that impairs [her] ability to focus, concentrate and effectively communicate.” The defense opposition argued that 1) the two declarations failed to demonstrate that plaintiff’s health necessitates the granting of preference and 2) that the court should balance interests, including defendant’s due process rights, when ruling on this motion. Judge Ming-mei Lee of San Francisco Superior Court denied plaintiffs’ motion, noting that plaintiffs “failed to demonstrate that the health of Ardella Fox is such that preference is necessary to prevent prejudicing her interest in the litigation.” Plaintiffs sought a writ of mandate to compel the trial court to grant their motion.

Appellate Court
The appellate court granted the petition and issued the writ. The court extrapolated information about her current condition from her attorney’s declaration including that she is undergoing chemotherapy every three weeks, suffers from “chemo brain” leading to brain fog, and is getting increasingly weaker.

The court ruled that an attorney declaration relying on hearsay and conclusions suffices under the mandatory preference statute (although under a companion discretionary statute, “clear and convincing medical documentation” is required). Finally, the court addressed when a party’s health would make preference necessary. Here, the court found that plaintiff’s diagnoses, accompanied with her treatment, “constant discomfort,” and deteriorating mental state necessitated preference, despite her partial remission. “The absence of more specifics about Ms. Fox’s prognosis was insufficient reason to deny the Foxes’ request for calendar preference.” The court rejected defendant’s arguments that a balancing of interests must be conducted, concluding that no balancing of defendant’s due process rights or fundamental fairness was necessary. Finally, the court held that plaintiffs’ should not have to wait to file a preference motion until plaintiff “is clearly in her final days,” because this would subvert the legislative intent of granting preference to prevent prejudice.

After Fox, plaintiffs will have an easier time showing that their health makes it necessary to grant preference, as even a plaintiff in partial remission got preference granted.

As it points out, the bar for evidence to oppose (and win) this type of motion is very high. “If by way of opposition, [the defense] had submitted, say, a photograph of 81-year-old Ms. Fox scuba-diving in the Galapagos Islands just last fall, there might be some basis to expect more medical detail, but on this record we see no genuine dispute that Ms. Fox is very sick.” This decision is a win for asbestos plaintiffs in California and defendants should be aware of this decision and the high standard set for opposing preference motions.

Cleaning Products, Air Fresheners, and Automotive Products Sold In California Must Disclose Ingredients in 2020

California Governor Jerry Brown signed the Cleaning Product Right to Know Act into state law in late 2017, making California the second state to require the disclosure of information about ingredients found in cleaning products. The Act contains two disclosure provisions; the first, an online compliance portion, is scheduled to go into effect in 2020. The second, a labeling requirement, will take effect a year later.

Pursuant to the Act, manufacturers of “general cleaning products,” “air care products,” and “automotive products” sold in California must disclose ingredients on their product labels and online. The definitions of applicable products are broad, and include soap, detergent, products intended to freshen the air, and products intended to maintain the appearance of a motor vehicle. Notably, automotive paint products and pesticides are excluded. In addition to the actual manufacturers of applicable products, the Act also applies to entities for which the products are manufactured or by which the product is distributed. The Act further prohibits California retailers from selling products that do not comply with the new disclosure requirements.

For the labeling requirement, the Act permits the manufacturer to choose one of two sets of information to disclose on the product’s label: (1) each fragrance allergen contained in the product that is included in Annex III of the EU Cosmetics Regulation Number 1223/2009 as required to be labeled by the EU Detergents Regulation Number 648/2004 (“Annex III”), when present in the product at a concentration of .01% or above (100 ppm), and intentionally added ingredients contained in the product that are included on a “designated list,” or (2) a list of all intentionally added ingredients contained in the product, unless the ingredient qualifies as confidential business information (“CBI”).

For the first option, the designated Annex III list includes chemicals found on twenty-two regulatory lists published by state governments, the European Union, the federal government, the Canadian government, and international agencies.

The second option requires the disclosure of all intentionally added ingredients, with the exception of ingredients that qualify as CBI. However, CBI is defined narrowly, and does not apply to ingredients found on the designated list, all nonfunctional constituents, and all fragrance allergens included in Annex III when present at a concentration of .01% or above. A manufacturer can list fragrance ingredients and colorants generally as such, but the label must also state that the product “[c]ontains fragrance allergen(s),” if it contains a fragrance allergen that is included on Annex III at .01% concentration or above.

In addition to the labeling requirements, a manufacturer must starting in 2020 disclose certain information on its website. The Act requires manufacturers to list every intentionally added ingredient in descending order of predominance (except for CBI and fragrance ingredients), state the purpose of each intentionally added ingredient, and provide links to the regulatory lists on which the ingredient appears. The manufacturer must also list all nonfunctional constituents that are found in the product at a concentration of .01% or more.

Interestingly, the Act does not create a mechanism for enforcement nor does it impose penalties for violations. California statutes without enforcement provisions are often enforced by private litigants and district attorneys under the state’s consumer protection laws. However, while private litigants may only seek injunctive relief under these laws, actions brought by government officials are eligible for the recovery of civil penalties up to $2,500 for each violation. It is anticipated that the Act will be enforced most often through this mechanism.

California’s Cleaning Product Right to Know Act goes further than current federal disclosure obligations, which simply require that consumer and industrial cleaning products provide warnings about the physical and health hazards, but do not require full ingredient lists. It is indicative of a nationwide trend of increased state regulation of chemicals found in consumer products in the absence of significant federal regulation.

California Court of Appeal Embraces Presence – Not Evidence – As Causation

Last month, a California court of appeal ruled that “a plaintiff has no obligation to prove asbestos exposure from a specific product on a specific date or time.” Rather, in Turley v. Familian Corp., the court found that exposure can be inferred if a defendant’s product was at a work site and “sufficiently prevalent to warrant an inference that plaintiff was exposed to it.” In other words, the court ruled that circumstantial evidence of a product’s mere presence is sufficient to defeat a motion for summary judgment.

In Turley, defendant Familian moved for summary judgment on the basis that the plaintiffs could not show exposure to asbestos in a Familian-brand product. The plaintiffs’ opposition to the motion included a declaration from a third-party witness who had not been deposed, but who testified that defendant-supplied asbestos-containing gaskets were frequently used on the many high-pressure and/or high-temperature valves at the two compressor stations supervised by the plaintiff, and that the plaintiff was commonly present when the work of replacing the asbestos-containing valves was being done. The trial court ruled that this was speculative and granted summary judgment.

The court of appeal reversed. The court found that the co-worker’s testimony had adequate foundation and was not speculative. “For example, [the co-worker] testified that when he was ordering gaskets, he knew they were asbestos-containing based on PG&E’s codes and other vendor numbers … [and] that the PG&E codes were necessarily based on content, because certain applications required asbestos-containing gaskets.”

This evidence was held sufficient to defeat summary judgment, even without evidence of “exposure from a specific product on a specific date or time.” Turley relied heavily upon the 1995 decision Lineaweaver v. Plant Insulation Co., which reversed a nonsuit where “[w]hile there was no direct evidence that [plaintiff] was exposed to [defendant’s product], the circumstantial evidence was sufficient to support a reasonable inference of exposure.” The Turley court also discussed the more recent decision, Webb v. Special Electric Co., Inc. (2016) 63 Cal.4th 167, for the proposition that this kind of circumstantial evidence was sufficient in establishing causation. In Webb, the California Supreme Court rejected summary judgment where the plaintiff “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 [the plaintiff’s] mesothelioma.”

Turley v. Familian Corp. is yet another in a long line of California decisions that appear to expand liability by tempering the summary judgment standard. Unfortunately, the result may be opening the door for a rush of rather dubious asbestos cases.

Prenatal Injuries and California’s Statutes of Limitation

A growing number of cases allege that chemical exposures sustained by parents have resulted in birth defect injuries to their children. One case went to defense verdict in Southern California this year (Morales v. Well Pict, Ventura County) and additional cases have been filed both in California and elsewhere. Many of these cases are referred to as “clean room” cases, because the earliest of them involved workers claiming exposure to toxic chemicals used in “clean room” environments producing computer components. Two decisions in California have grappled with the application of two different statutes of limitations that might apply in such circumstances and have reached directly inconsistent conclusions. The Nguyen decision came first in 2014 from the Sixth District in California (covering Silicon Valley). The Lopez decision followed in 2016 in the Second District (covering Los Angeles and environs) and specifically disagreed with Nguyen.

The first statute is California Code of Civil Procedure section 340.4, which provides for a 6-year period of limitation for a minor to bring a claim for “personal injuries sustained before or in the course of … birth.” It is expressly provided that this period is not tolled while the plaintiff is a minor. The second is California Code of Civil Procedure section 340.8, which provides for a 2-year period for injuries caused by exposures to hazardous materials and toxic substances. Section 340.8 is, however, tolled while a plaintiff is a minor. One can easily see how the application of the statutes can be determinative. If section 340.4 applies, each child born with a birth defect must file not later than their 6th birthday. If 340.8 applies, a child can wait until their 20th birthday to file. So, which statute applies where the prenatal injury results from exposure to hazardous materials – the pre-natal statute of limitations, or the toxic tort statute of limitations?

Nguyen applied the toxic tort statute, section 340.8, and found that a complaint filed on behalf of a 16-year-old girl alleging injuries from her in vitro exposures to work place exposures was timely. The court found that the statute was tolled for the entire period of minority of Ms. Nguyen. Lopez acknowledged the holding in Nguyen, but decided to “depart from our colleagues in theSixth District” and held that the pre-natal statute, section 340.4, applied, so that 12-year-old Ms. Lopez was time barred from pursuing her action.

Both these decisions are lengthy and complicated. The Lopez decision drew a dissent. The California Supreme Court has accepted the Lopez decision for review. The matter has been fully briefed, with several amicus curiae briefs filed for the defense. A decision is likely sometime within the next 18-24 months.

In the meantime, just in recent weeks, the same District Court of Appeal that applied section 340.4 in Lopez to time bar an action by a 12-year-old published a decision sorting out the application of apparently conflicting statutes of limitation applying in the family law/probate arena and made some pronouncements that could be applicable to the Nguyen-Lopez disagreement. In Yeh v. Tai, the court stated: “When two statutes of limitation are applicable, the specific takes precedence over the general.”  But which statute is more specific in the clean room context? Section 340.4 applicable to injuries sustained during birth? Or section 340.8 applicable to injuries caused by exposure to toxins? There does not seem to be a clear answer.

The Yeh court went on to rule that “in the event two statutes conflict and cannot be reconciled, later enactments supersede earlier ones.” Section 340.4 was first effective in 1993. Section 340.8 was first effective in 2004. If one were to strictly adhere to the “later enactments supersede earlier ones” rule, then section 340.8 should apply, and a different panel in the Second District erred in deciding Lopez.

This remains a difficult and unclear area. We await the California Supreme Court’s decision in Lopez with great interest as it will have a substantial effect on this growing area of litigation.

Landmark Lead Paint Ruling Imposes Nuisance Liability Because Defendants “Must Have Known” Product Dangers, and Even If Their Product Not Used

The California Court of Appeal in People v. ConAgra Grocery Prods. Co. has upheld in part and reversed in part a decision that put the three defendants, ConAgra Grocery Products Company, NL Industries, and the Sherwin-Williams Company, on the hook for a $1.15 billion fund for the abatement of residential lead paint in parts of California. While the amount of the abatement fund will be reduced on remand, the decision stands as the first major lead paint public nuisance award, with implications for other companies that market products considered “defective” in hindsight.

Plaintiff, the State of California, representing 10 jurisdictions throughout the state, filed suit in 2011 alleging that the defendants created a public nuisance through their manufacture, promotion, and sale of lead pigment and lead paint for use in California homes. The trial court found that the defendants had actual knowledge of lead paint hazards when they promoted their products for residential use for decades before the sale of lead paint was eventually banned in 1978.

Defendants appealed the trial court judgment on multiple grounds. The appellate court agreed with defendants that there was insufficient evidence demonstrating that defendants promoted lead paint for residential use after 1951, and remanded the matter to the trial court to recalculate the amount of the fund so that it covered remediation only in pre-1951 homes. The rest of the trial court’s decision, however, was affirmed, with costs awarded to plaintiff.

An important takeaway from this decision is that the appellate court was satisfied that “must have known” was an adequate replacement for actual knowledge. The decision opined that it was neither speculation nor conjecture to infer that because the defendants were leaders in the paint industry at the time, they “must have”been aware of potential hazards of lead paint. “Indeed,” the panel stated, “it would be unreasonable to infer that, notwithstanding general knowledge of the hazard of their products within the industry, defendants somehow managed to avoid learning of this hazard.” Evidence that the defendants received information from a trade group in the 1930s on lead’s dangers of and children’s susceptibility was among what was found to constitute “substantial support” for the trial court’s actual knowledge findings. Acknowledging that the evidence presented by plaintiff on this point was circumstantial, the appellate court essentially all but admitted that its hands were tied under the deferential standard of review and it had no choice but to uphold the trial court’s actual knowledge findings.

Another startling portion of this opinion was the rejection of the defendants’ argument that they should not be held liable because plaintiff could not establish that their products were in any of the homes in the 10 jurisdictions. The court ruled that this “contention misconstrues the basis for defendants’ liability. Defendants are liable for promoting lead paint for interior residential use. To the extent that this promotion caused lead paint to be used on residential interiors, the identity of the manufacturer of that lead paint is irrelevant.” The court found that while the evidence plaintiff presented consisted of “generic” promotions that didn’t refer to any specific manufacturer, it nonetheless was a substantial factor which resulted in “the use of lead paint on residential interiors,” and that the evidence supported the court’s finding of causation on that basis.

Perhaps the greatest significance of this decision is that plaintiff prevailed on a public nuisance theory. Public nuisance claims in other contexts traditionally reserved for product liability (including asbestos abatement, MTBE, and firearms) have proven largely unsuccessful in part because of the difficulty of establishing the link between the alleged injury to a public rig ht and the manufacturer’s conduct, two occurrences often temporally separated by decades. In fact, many earlier lead paint cases filed in other jurisdictions under various theories of public nuisance often failed because the plaintiffs could not establish, among other things, the requisite proximate cause.

It is of stark importance that the ConAgra court rejected defendants’ arguments concerning actual knowledge and causation in this public nuisance claim. Plaintiff prevailed despite the absence of direct evidence that defendants had actual knowledge of the hazards of interior lead paint at the time they were promoting it, and without having to show that any of defendants’ products were present in any of the homes. Will courts begin to construe other “industry leaders” as having knowledge of all risks for all purposes? Can participation in trade groups which promoted the use of generic categories of products like asbestos-containing brake pads or herbicides expose specific companies to future liability? Could the reasoning that defendants were liable regardless of whether their paint was in fact used in any of the homes seep into the product liability arena, where such tenuous evidence would be insufficient to establish duty? This decision will likely have a short term impact on pending high-profile public nuisance cases, like opioids and climate change. We may also see long term ripples across industries in California where companies may face liability years—or even decades—down the road for a future, but presently unknown, harm in the form of public nuisance claims with vague legal standards and the potential for massive awards.

Coffee – a health risk or a health promoter? “Private attorneys general” or the British Journal of Medicine?

There have been a variety of media reports of late regarding the health effects of coffee. Two almost simultaneous news articles demonstrate how our regulatory environment can lead to puzzling contradictions. These same articles illuminate the vast reach and potential impact of California’s Prop. 65.

For those not familiar with Prop. 65, it is a California regulatory scheme whereby producers and distributors of any products and foods used or consumed in California must apply a cancer/birth defect warning on their products if they contain any of 800 different identified substances in levels that might lead to an exposure in excess of the mandated permissible levels. The regulations allow any attorney in California to act as a “private attorney general” to bring suit against anyone who has not properly warned. These suits can lead to injunctive relief, fines and penalties, and perhaps most importantly, an award of plaintiff’s (but not defendant’s) attorneys’ fees.

As a habitual coffee drinker, I was pleased to see that Sam Meredith of CNBC reported on November 23rd about a study from the University of Southampton, published in the British Journal of Medicine, that a review of some 200 previously published medical studies led the authors to conclude that drinking 3 to 4 cups of coffee each day was “more often associated with benefit than harm” from a health perspective. Consuming coffee can reduce the risk of numerous ailments from heart disease to dementia, and even some cancers it is reported.

Yet literally the next day, Bob Egelko in the San Francisco Chronicle reported that 7- Eleven had just obtained court approval of a settlement of a case brought against it alleging that their sale of prepared coffee without warnings was a violation of Proposition 65 as coffee contains an unsafe level of acrylamide, a substance identified as a human carcinogen by the State of California. 7-Eleven had apparently decided that it was wiser to settle this case for $900,000 than risk a court trial on the issue of whether or not consuming coffee truly presents a cancer risk to consumers in the Golden State. No doubt much of the settlement will go to Raphael Metzger, plaintiffs’ counsel in this matter.

The settlement will thus have the effect of giving Mr. Metzger more resources to continue prosecuting the same case against Starbucks and many other defendants that have been sued in the same case. If Starbucks wins its case, presumably customers will not see a Prop. 65 warning plaque on the wall behind their favorite barista, nor a Prop. 65 warning on the new Holiday Season cups. If Starbucks loses its case, those warnings may join the legions of other such warnings that have proliferated across the state. One would be left to wonder whether the citizens of California would be rendered more safe by such warnings, or instead as the University of Southampton and the British Journal of Medicine seem to feel, safer by drinking more coffee?