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.

Connecticut Supreme Court Rules That Plaintiff Must Use Expert Testimony To Prove That Work With Defendant’s Product Can Create Respirable Dust

In Bagley v. Adel Wiggins Grp., No. 19835, 2017 Conn. LEXIS 304 (Nov. 7, 2017) Connecticut’s Supreme Court directed the trial court to grant defendant’s directed verdict where there was no expert testimony that decedent’s work with defendant’s adhesive can create respirable asbestos fibers. Both negligence and strict liability claims failed because plaintiff did not prove that the subject product, an adhesive used in the manufacture of helicopter blades, was unreasonably dangerous or that the adhesive was the legal (proximate) cause of plaintiff’s decedent’s mesothelioma. The court required that plaintiff use admissible expert testimony to prove that the adhesive emitted respirable asbestos fibers, and that without such evidence a direct4ed verdict for the defense was proper.

In Bagley, the plaintiff executrix of decedent’s estate sought damages pursuant to Connecticut’s Product Liability Act (§ 52-572m et seq.) (the “CPLA”) for inter alia, wrongful death of the decedent under both negligence and strict liability theories. The evidence at trial showed that, for approximately ten (10) months in 1979 and 1980, the decedent worked as a manufacturing engineer at Sikorsky. Plaintiff’s decedent’s office was on a mezzanine above the helicopter blade shop where defendant’s adhesive, FM-37, was used to bind together interior parts of the blades. The evidence further showed that FM-37 contained 8.6% asbestos and was chiseled or sanded off if it ended up on unwanted portions of the blades. Decedent was diagnosed with mesothelioma in 2011 but acknowledged, to his medical providers before his death, that he had been exposed secondarily to asbestos through his father’s work at a shipyard.

The plaintiff called multiple witnesses during trial, including a former co-worker of the decedent and three experts. It was established at trial that the decedent was exposed to dust from the sanding of FM-37, that FM-37 contained 8.6% asbestos and that the inhalation of asbestos fibers is a cause of mesothelioma. At the close of plaintiff’s evidence, the defendant moved for a directed verdict, which was denied by the trial judge. The jury subsequently returned a verdict of $804,777 for the plaintiff on the strict liability, negligence, and loss of consortium claims. Following the jury verdict, the defendant filed a motion to set aside the verdict and for judgment notwithstanding the verdict, which was again denied by the trial court.

The Connecticut Supreme Court agreed with the defendant. Because the plaintiff failed to prove that respirable asbestos fibers were released from defendant’s adhesive, there was insufficient evidence to show either that the adhesive was dangerous, or that it was the legal cause of the decedent’s mesothelioma. Therefore, the court reasoned that the trial court improperly denied both the defendant’s motion for directed verdict and motion to set aside the verdict for motion notwithstanding the verdict. Moreover, the court directed the trial court to grant the defendant’s motion for directed verdict.

The court reasoned that, while one of the plaintiff’s experts opined that the defendant’s product could have caused the decedent’s mesothelioma, the expert’s opinion was not based on any evidence specific to defendant’s product. In this regard, none of the experts or witnesses performed any testing or examination of defendant’s or any similar product to establish that respirable asbestos fibers may be emitted when the product is sanded. The court reasoned that there was also no evidence presented that plaintiff’s causation expert had any specialized knowledge concerning how modified epoxy adhesives behave under the conditions in the Sikorsky blade shop. Because of these gaps in the evidentiary record, the court found that the jury could not have relied on this expert opinion to find that the decedent had been exposed to respirable asbestos fibers from defendant’s product.

The Bagley decision is undoubtedly a victory for defendants in the Connecticut asbestos litigation. In particular, the court made it more difficult (and more costly) for plaintiffs to pursue newer asbestos defendants or to pursue new product lines. This is especially true where plaintiffs’ experts have yet to test the new product for creation of respirable asbestos fibers during work allegedly performed by their plaintiffs. Defendants in the Connecticut asbestos litigation should be aware of the Bagley decision and the requirement for specialized testing or knowledge regarding release of asbestos fibers from a particular type of product.

A link to the Connecticut Supreme Court’s decision is available here: http://jud.ct.gov/external/supapp/Cases/AROcr/CR327/327CR114.pdf

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?

How Perilous are Consolidated Trials?

We recently were involved in two living mesothelioma cases consolidated roughly one month before trial in Solano County, CA. The cases were fully resolved after plaintiffs’ opening statement. So how adversely, if at all, were the defendants affected by the consolidation?

Some of my friends and colleagues have tried consolidated cases in the past, but I have not. This was my first experience with such a process, and I offer some observations for those of you who may have to face this in the future.

When the cases were consolidated, there were many defendants in each of the two cases and expert discovery was underway. We proceeded through hearings on motions in limine, took literally a week to pick a jury and proceeded to opening statement. Along the way many defendants dropped out. Plaintiff counsel gave his opening statement with only two defendants left in the proceedings, both of them involved in the same single case.

Since the consolidation was ordered after we had already submitted motions in limine, this meant that we needed to reconsider our filed motions in limine. For example, the claimed exposures in the two cases arose from the same worksite, but with different durations. So our motion in limine re: excluding evidence of post-sale conduct had a much different potential impact in one case than the other. And the arguments to be made in favor of it in one case were stronger than in the other. Having the motion heard in both cases at the same time had the effect of reducing our chances of success in either of them.

In expert discovery our work was made more difficult. We had to consider that something said by an expert in one case might have an adverse impact, intended or unintended, in the other. This meant attending more expert depositions and reviewing more expert reports and notes. The same applied to coworkers identified in one case, but not the other. The court made an order that a witness identified only in one case could not testify in regards to the other, and adopted a “limiting instruction” meant to clarify things for the jury. That alleviated our concerns to some extent, but did not eliminate them. How were we to prepare for testimony by a coworker for whom we did not participate in his deposition and who had not been questioned about the products of our client?

We never reached the point of writing a verdict form, or forms, but can only think that asking one jury to decide two cases simultaneously could only increase the risk of jury confusion or error.

We did pick a jury, and that was difficult indeed. Since we were to try two cases simultaneously, the court provided our prospective jurors an extra-lengthy time estimate. This meant that many on our panel sought a “hardship” excuse. We spent more than a day dealing with hardship requests. Many, many prospective jurors were excused. This effectively eliminated from our jury pool many people that a defense attorney would be happy to see.

Voir dire was equally challenging. Once the jurors understood how one might be excused for cause, it was remarkable how many professed to be unable to be fair for one reason or another.

And throughout the voir dire there were repeated references to the fact that the jurors would be listening to evidence about two men, with the same cancer, each alleging it came from exposures at the same work site. Since we were dealing with exposures at a U S Navy shipyard, it was never contemplated that the defendants would argue there was no exposure, but it still left us to worry how the jury might be impacted by hearing about two soon-to-be-fatal cancers at the same time. And as noted above, by the time plaintiff opened, there were only two defendants left, and they were both in the same single case. So we picked a jury telling them that they would hear the cases of two men with fatal cancers, and would be in the court for many, many weeks, only to have one case settle and plaintiff open for only one case that would clearly take much less time. Many of our prospective jurors had been excused based upon a trial estimate that would have proved to be much longer than what was actually needed.

Our client resolved the case during opening statements, with the final defendant doing likewise immediately thereafter. So we will never learn how the case may have been presented and decided. But we saw enough to know that orders consolidating cases for trial make a defense lawyer’s work much more challenging.

Connecticut Superior Court Imposes Jurisdiction on Texas Defendant and Narrowly Interprets Daimler AG v. Bauman

Since the United States Supreme Court’s decision in Daimler AG v. Bauman, 134 S. Ct. 746 (2014) defendants, especially those defending product liability claims, have increasingly pursued motions to dismiss on personal jurisdiction grounds. A Connecticut superior court recently denied such a motion and held that a Texas-based manufacturing company was subject to personal jurisdiction in Connecticut, even though the defendant’s sales into Connecticut were less than .01% of total company sales, and the defendant did not sell to plaintiff’s workplace until after he worked there. Daimler held that a specific jurisdiction is limited to where the defendant’s in-state activities are continuous and systematic, and give rise to the liabilities sued on, the Connecticut decision, suggests that at least one Connecticut superior court does not consider the Daimler as greatly limiting the reach of the state’s long-arm statute.

The Honorable Judge Barbara Bellis of the Connecticut Superior Court in the Judicial District of Fairfield at Bridgeport decided Rice v. American Talc Co., No. FBT CV-15-6053658-S (Sept. 7, 2017), applying Connecticut’s broad long-arm statute:

Every foreign corporation shall be subject to suit in this state, … on any cause of action arising as follows: … (3) out of the production, manufacture or distribution of goods by such corporation with the reasonable expectation that such goods are to be used or consumed in this state and are so used or consumed, regardless of how or where the goods were produced, manufactured, marketed or sold or whether or not through the medium of independent contractors or dealers; …

Conn. Gen. Stat. § 33-929 (f)(3).

The plaintiff argued that the defendant Texas company was subject to the court’s jurisdiction under Conn. Gen. Stat. § 33-929 (f)(3) because plaintiff’s decedent was allegedly exposed to defendant’s asbestos-containing talc while working at an American Standard plant in Connecticut. Plaintiff further argued that the defendant had a reasonable expectation that its products would be used in the State of Connecticut. Defendant was a producer of talc, American Standard allegedly used that talc in the manufacturing process, and American Standard was one of the defendant’s customers. Additionally, plaintiff proffered that the defendant purposefully sought out the Connecticut market, and shipped products directly to consumers there.

Defendant, on the other hand, argued that the plaintiff’s decedent’s injuries could not have arisen out of any transaction by the defendant in Connecticut because the defendant did not acquire rights to mine allegedly asbestos-containing talc until three years after plaintiff’s decedent stopped working at the American Standard plant. Defendant manufacturer also argued that it did not have the minimum contacts in the forum state to justify jurisdiction because it never had offices, employees, or sales agents in Connecticut, had no sales to any company in the forum state after the 1970s and the few sales that it did have into Connecticut were less than .01% of its sales in any given year.

The court used a two-part test to consider the defendant’s challenge to personal jurisdiction via motion to dismiss. First, the court determined that the state’s long-arm statute authorizes jurisdiction over the defendant because the “arising… out of” language does not require a plaintiff’s cause of action and defendant’s contacts with the forum state to be causally connected. The court further agreed that a plaintiff does not need to show that the defendant solicited business in the state, only that the defendant could reasonably anticipate being sued by some person who had been solicited in Connecticut.

In Rice, the plaintiff submitted a deposition transcript stating that, when the defendant was selling products to a distributor, defendant also knew who the distributor’s customer was. Sales records established that the defendant sent a sample shipment of twenty bags of talc to Connecticut in November 1972, and sales invoices showed numerous shipments to Connecticut between 1969 and 1976. Based on this evidence, the court concluded that it was reasonably foreseeable that the defendant could be sued in Connecticut.

Under part two of the test, the court determined that whether the exercise of jurisdiction over the defendant under Connecticut’s long arm statute did not violate Constitutional principles of due process. Daimler held that a state could exercise personal jurisdiction over an out-of-state defendant if the defendant had minimum contacts with the forum state such that the suit does not offend the “traditional notions of fair play and substantial justice.” Rice found that “minimum contacts” was satisfied because the defendant shipped products to Connecticut (even if it was a small percentage of sales) and was aware of the ship-to-point when sending products to distributors. Moreover, the court reasoned that while the defendant shipped products to Connecticut after plaintiff’s decedent stopped working at the American Standard plant, the defendant shipped other products to Connecticut while the plaintiff’s decedent was allegedly exposed to defendant’s asbestos-containing products working as a painter.

Rice found that jurisdiction accorded with “fair play and substantial justice,” based on five factors: (1) the burden that the exercise of jurisdiction will impose on the defendant; (2) the interests of justice of the forum state in adjudicating the case; (3) the plaintiff’s interests in obtaining convenient and effective relief; (4) the interstate judicial system’s interest in obtaining the most efficient resolution of the controversy; and (5) the shared interest of the states in furthering substantive social policies.

Rice weighed factor (1) in favor of the defendant, stating that travel costs could be a burden because the defendant is incorporated in Texas and would have to defend a suit in Connecticut. According to the court, however, factors (2) through (5) all weighed in favor of the plaintiff. Connecticut has a strong interest in adjudicating personal injury actions involving its own citizens where the claimed injury was caused in part by a defendant who purposefully distributed products in the state. Furthermore, the plaintiff is a resident of the forum state and has an interest in obtaining convenient and effective relief in the state. The court decided that adjudicating in Connecticut would also be the most efficient use of judicial resources because the plaintiff has sued multiple defendants over a single and indivisible injury (mesothelioma). Requiring the plaintiff to maintain multiple actions in different jurisdictions would not only be inefficient, but impose a greater burden on the plaintiff than the burden of subjecting the defendant to suit in Connecticut.

The Rice decision displays that shipping products to Connecticut, even only a small fraction of a company’s sales, may be enough to reasonably foresee being sued in Connecticut. This can be enough to subject a foreign company to specific jurisdiction in Connecticut, even if the dates of sales do not overlap with the timing of the alleged injury. Additionally, solely being incorporated in a distant state and incurring travel costs during trial likely will not be sufficient to establish that the traditional notions of fair play and substantial justice have been violated.

As a trial court ruling, the Rice decision is not binding precedent. But if it is followed by other Connecticut courts, the result will be s a heavy burden on foreign corporations seeking to apply Daimler to limit Connecticut jurisdiction. There is no word yet on whether an appeal will be filed.

Illinois Supreme Court Rejects Plaintiff’s Fishy Basis for General Jurisdiction, Mandating that Out-of-State Corporation Be “Essentially at Home” Pursuant to Daimler

On September 21, 2017, in Aspen American Insurance Co. v. Interstate Warehousing, Inc., No. 121281 (Illinois, September 21, 2016), the Illinois Supreme Court held that an out-of-state corporation must be “essentially at home” in Illinois before general jurisdiction may be found, rejecting plaintiff’s argument that the presence of a single warehouse in the state meets this standard.  In a straightforward interpretation of Daimler AG v. Bauman, et al., 134 S.Ct. 746 (2014), the court confirmed that general jurisdiction requires “continuous and systematic” contacts with Illinois, which can be met by showing that a defendant is either incorporated in Illinois or has its principal place of business there.  The Illinois Supreme Court’s ruling follows on the heels of two recent U.S. Supreme Court Decisions, both of which confirm that Daimler meant what it said about the limits of general jurisdiction, and Illinois now joins other states – such as Delaware, Missouri, and Rhode Island – which have rendered similar rulings.

Aspen  arose after Eastern Fish Company, a corporation in the business of importing fish products, contracted with defendant Interstate Warehousing Inc. to store its products at one of defendant’s warehouses located in Michigan.  When the warehouse’s roof collapsed, the importer’s products were contaminated and deemed unfit for human consumption.  Plaintiff, which insures Eastern, paid Eastern’s claim for the loss and then brought this subrogation action in the circuit court of Cook County.  ¶ 3.

Defendant moved to dismiss the complaint on the ground that Illinois courts lacked personal jurisdiction.  ¶ 6.  In response, Plaintiff first argued that because the dcfendant has a warehouse located in Joliet, Illinois, it was doing business in the state and thus subject to personal jurisdiction.  Plaintiff further argued that because defendant Interstate was registered to do business in Illinois, it could be sued in Illinois.  ¶ 8.  The circuit court denied the motion to dismiss and the Appellate Court for the First District affirmed, finding that Plaintiff had made a prima facie showing of general jurisdiction.  Illinois’ highest court reversed the lower courts’ decisions.

The Illinois Supreme Court first examined the federal due process standards set forth in Daimler, as well as Illinois’ long-arm statute, codified at 735 ILCS 5/2-209 , which governs the exercise of personal jurisdiction over non-resident defendants.  In doing so, the court followed in Daimler’s footsteps by finding that a “plaintiff must make a prima facie showing that defendant is essentially at home in Illinois.”  ¶ 18.  In order to do so, a plaintiff must show that the “defendant is incorporated or has its principal place of business in Illinois or that defendant’s contacts with Illinois are so substantial as to render this an exceptional case.”  Id.

Although the defendant does business through its Joliet warehouse, the court found that it was insufficient to establish Illinois as a  “surrogate home,” even though the evidence established that the warehouse had been in continuous use in Illinois for 25 years.  ¶ 19.  If it were sufficient, the court reasoned, then that the defendant would be considered at home in every state in which it has a warehouse, opening up numerous forums for it to be sued within.  Id.  The U.S. Supreme court had previously rejected this idea in Daimler, holding that “[a] corporation that operates in many places can scarcely be deemed at home in all of them.”  Daimler AG v. Bauman, 134 S. Ct. 746, 762 n. 20 (2014). Aspen followed suit and held that general jurisdiction was not authorized under Illinois’ long-arm statute as it would deny defendant due process of law.  ¶ 20.

The Illinois Supreme Court next looked to the Business Corporation Act of 1983 (“Act”) to see if it permitted general jurisdiction.  Upon examination, the court found that Defendant’s registration to do business within Illinois under the Act is not enough to subject it to personal jurisdiction within the state.  The court further found that the fact that the defendant has a registered agent in Illinois for service of process is also not enough to subject it to personal jurisdiction.  ¶ 22.  The court reasoned that the Act does not require out of state corporations to consent to general jurisdiction as a condition of doing business in Illinois and that a corporation does not waive its due process rights by registering in Illinois or appointing a registered agent.  ¶ 24.  For these reasons, the court held that general jurisdiction is also not permitted under the Business Corporation Act of 1983.

Illinois now joins other states which have made clear that they will apply the Daimler court’s test for personal jurisdiction, requiring that a defendant’s “affiliations with the forum state be so ‘continuous and systematic’ as to render them essentially at home.” Under Daimler, this can be accomplished by a showing defendant’s incorporation in that state or by showing that the defendant’s principal place of business is located there.  Daimler AG v. Bauman, 134 S. Ct. 746, 754 (2014) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)).”    Accordingly, Aspen provides Illinois defendants a powerful new tool to fight forum shopping, and to ensure Constitutional due process to litigants in Illinois courts.

 

 

California Limits Take-Home Claims and Affirms That “Substantial Factor” Means More than “Possible”

A California appellate court has sided with the defendants in an alleged take-home asbestos exposure case. Petitpas v. Ford Motor Company (July 5, 2017, B245027) —Cal.App.5th—presents many strong arguments for defendants, including what is required to show that an asbestos product was a substantial factor in causing asbestos disease.

Plaintiffs Joseph and Marline Petitpas alleged that Joseph Petitpas’ work at a gas station owned by Exxon and at various construction sites brought home asbestos which injured Ms. Petitpas.

I.  Take Home Exposures – Duty Not Extended

While the appeal was pending, the California Supreme Court issued its opinion in Kesner v. Sup. Ct. (2016) 1 Cal.5th 1132. Kesner allowed take home cases to be brought in California. However, it limited those cases to household members, reasoning that “persons who live with the worker and are thus foreseeably in close and sustained contact with the worker over a significant period of time” are protected. (Id. at 1154-1155.) In Kesner, the injured person was the nephew of a worker who lived for periods of time with his uncle, who manufactured brake linings. In Petipas, Plaintiffs conceded that the parties did not live together when Mr. Petitpas worked at the Exxon station (they were married later). The court in Petipas declined Plaintiffs’ invitation to extend the duty in take home cases to non-household members. “Inviting a trial to determine whether a non-household member’s contact with the employee was ‘similar to the status of a household member’ appears to be exactly what the Supreme Court was attempting to avoid with this bright-line rule.”

II.  Substantial Factor – Probable vs. Possible

To meet their burden in an asbestos case, plaintiffs must show that there is exposure to a defendant’s product that was “in reasonable medical probability” a substantial factor in bringing about the injury. (Rutherford v. Owens-Illinois, Inc. (1997) 16 Cal.4th 953, 982.) Many factors are considered to determine if the exposures are substantial factors, including frequency, proximity and duration of the exposures. The evidence in this case merely suggested it was possible that Mr. Petitpas brought asbestos dust home on his clothing from his inspection of construction jobs. He only did this for an hour a day and returned to his office for the remainder. Neither Plaintiff testified that Ms. Petitpas shook out his clothes when washing them. Further, it was merely possible she was exposed when visiting the construction sites, because there was no active construction occurring and there was no visible dust. Mere presence of asbestos at a site was simply not sufficient to show that asbestos-containing products used at these sites was a substantial factor in causing Ms. Petitpas’ mesothelioma.

III.  Replacement Parts Doctrine – Applies to Defect as Well as Failure to Warn Claims

Ford submitted a jury instruction which stated that it was not liable for exposure to replacement brakes, clutches and gaskets on Ford vehiclesthat were manufactured by parties other than Ford. This instruction was based upon O’Neil v. Crane Co. (2012) 53 Cal.4th 335. The O’Neil decision established that a product manufacturer cannot be held liable in strict liability or negligence for harm caused by another manufacturer’s product “unless the defendant’s own product contributed substantially to the harm, or the defendant participated substantially in creating a harmful combined use of the products.” Plaintiffs objected that O’Neil only applied to failure to warn cases, and that Ford’s design was defective because “it is a Ford design that called for the installation and inclusion of asbestos-containing brake products, whether or not they were made by Ford or anyone else.” The court rejected Plaintiffs’ argument because they did not present any evidence that the Ford cars were unable to use non-asbestos parts or were somehow incompatible with non-asbestos parts.

IV.  Jury Instructions in Asbestos Cases

Plaintiffs also argued that the trial court committed error by allowing jury instructions CACI Nos. 430 and 435 to be read to the jury. Both of these instructions give the jury direction on what a “substantial factor” is under California law.  CACI No. 430, the generally applicable instruction, defines “substantial factor” as a factor that “contributed to the harm.” This Use Notes for this instruction state that it should not be read in asbestos related cancer cases.  However, Exxon argued that CACI No. 430 was applicable to it because it was a premises liability defendant, not a product manufacturer or supplier. CACI No. 435 is the instruction for asbestos cancer cases.

CACI No. 435, applicable in asbestos cases only, defines “substantial factor” as one that “contributed to the risk,” not just the harm. Plaintiffs argued that using CACI No. 430 confused the jury and imposed a greater burden on them.

The court allowed both instructions to be read. “That the Use Notes caution against giving the more general CACI No. 430 in a mesothelioma case, when the more specific instruction CACI No. 435 is more applicable, does not support a conclusion that it was error to give both instructions. CACI No. 430 is a correct statement of the law relating to substantial factor causation, even though, as Rutherford noted, more specific instructions also must be given in a mesothelioma case.”

V.  No Studies Show Take-Home Hazards from Brake Repair

The jury found that Exxon did not know, and should not have reasonably known, that Mr. Petitpas’ work at the gas station put Ms. Petitpas at unreasonable risk.

Plaintiffs argued that because the management at Exxon refineries knew about the hazards of asbestos, their agents at service stations also knew. The court did not agree with this argument. Since the jury only heard evidence that conditions at other locations posed a risk to other classes of employees (which Exxon knew about), the jury properly found that Exxon did not know about the risks at its service stations.

The Petitpas court went so far as to suggest that had the jury found otherwise, it would have to be reversed. Dr. Castleman admitted that there were no studies “of any statistical power…that speak of the mesothelioma risk of mechanics that do brake repair work” and that no such studies exist today. Plaintiff’s expert Dr. Horn also conceded this fact. Therefore, the court reasoned, “There was no evidence linking asbestos exposure to occasional bystanders who were near automotive workers as they did brake work.” The court’s conclusion in Petitpas can and should be used as an argument in all brake take-home repair cases.

This decision bodes well for defendants challenging plaintiffs’ often broad and sweeping allegations in asbestos cases.

New Limits on Supplemental Environmental Projects Increase Risks to Business in EPA Enforcement

The United States Environmental Protection Agency has long made good use of its policy on Supplemental Environmental Projects (“SEP”). Since most environmental enforcement matters are resolved through settlements, the policy has resulted in significant environmental benefits in the communities directly impacted by violations.

Under EPA’s SEP policy, an alleged violator can voluntarily agree to undertake an environmentally beneficial project in exchange for mitigation of the penalty to be paid. The policy establishes guidelines, categories of projects and importantly, makes clear that a SEP does not include the activities required for a return to compliance. A SEP is something beyond compliance with a nexus to the damage allegedly caused by the violation. In exchange, EPA exercises its enforcement discretion in penalty assessment resulting in a smaller penalty payment.

A good Supplemental Environmental Project is a win-win-win. SEPs further EPA’s goal of protecting and enhancing the public health and the environment. Settling businesses often view SEPs as a better way to spend penalty dollars, giving them some say over how those dollars are spent and maybe even some positive public relations. SEPs are also often viewed positively by non-governmental organizations and local government because SEPs provide local benefits, which are viewed more positively than payments to the federal general fund. SEPs have resulted in the retirement of emissions credits, reductions in neighborhood emissions or restored wetlands, to name a few examples.

The future use of SEPs as a settlement tool is in question following Attorney General Session’s recent directive prohibiting any settlement agreement that “directs or provides for a payment or loan to any non-governmental person or entity that is not a party to the dispute.”

Many SEPs are performed by the alleged violator but third parties are the beneficiaries. While EPA’s policy does include a nexus requirement, it may be difficult to demonstrate that such SEPs meet the directive’s requirement that such settlement “directly remedies the harm that is sought to be redressed.” This standard will be especially challenging where the SEP goes beyond compliance requirements.

In taking away the option, or maybe just limiting it, it is not clear where the win falls and only time will tell if the new directive results in enforcement litigation instead of enforcement settlements. While a SEP may not have been the one thing that pushed a settlement to resolution, it often effectively opens the door to productive discourse. Going forward, businesses facing enforcement should take early stock of their options and be prepared for an increased likelihood of litigation and higher penalty assessments.

There’s No Place Like Home: United States Supreme Court Reaffirms Daimler, Sends Out-of-State Plaintiffs Packing In Two Highly Anticipated Cases

The United States Supreme Court has issued two highly-anticipated personal jurisdiction decisions limiting suits against defendants who are not “at home” in a state, or alternatively, did not commit a wrongful act in that state.

Specific Jurisdiction

“General jurisdiction” exists over a defendant only where it is “at home,” generally where it is incorporated or has its principal place of business.  “Specific jurisdiction” exists only when the claims in a lawsuit arises out of a defendant’s connection to the jurisdiction, such as selling products. The Supreme Court reaffirmed these limits on jurisdiction in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County, No. 16-466 (June 19, 2017).

Some 678 plaintiffs (592 of whom were out-of-state residents) filed suit in California state court against Bristol-Myers Squibb Company (“BMS”), asserting various state-law claims based on injuries allegedly caused by a BMS drug called Plavix. BMS moved to quash the non-residents’ suits for lack of jurisdiction. BMS was headquartered and incorporated outside California, so there was no general jurisdiction. Despite the fact that the nonresidents had not taken the drug in California, the California Supreme Court held that California courts had “specific jurisdiction to entertain the nonresidents’ claims.”  The United States Supreme Court reversed.

The California Supreme Court had applied a “sliding scale approach to specific jurisdiction,” finding that BMS’s “extensive contacts with California” permitted a “less direct connection between BMS’s forum activities and plaintiffs’ claims than might otherwise be required.” Because the claims of both the resident plaintiffs and non-resident plaintiffs were similar and “based on the same allegedly defective product and the . . . misleading marketing and promotion of that product,” the “less direct connection” requirement as met. Thus, the court reasoned, it had personal jurisdiction over all the claims of all the plaintiffs, even in the absence of any California conduct as to the out-of-state plaintiffs.

The Supreme Court rejected this in no uncertain terms:

“Under the California approach, the strength of the requisite connection between the forum and the specific claims at issue is relaxed if the defendant has extensive forum contacts that are unrelated to those claims. Our cases provide no support for this approach, which resembles a loose and spurious form of general jurisdiction. For specific jurisdiction, a defendant’s general connections with the forum are not enough….What is needed—and what is missing here—is a connection between the forum and the specific claims at issue.”

This is true even if the defendant would suffer minimal or no inconvenience, even if the defendant has extensive contacts with the state, even if the forum had a strong interest in the application of its laws, and even if the forum state were the most convenient location for the litigation. Bristol-Myers should serve to help defendants limit the jurisdictions in which suit may properly be brought, and reduce forum-shopping in mass tort and perhaps other cases.

General Jurisdiction

On the issue of general jurisdiction, BNSF Railway Co. v. Tyrrell, No. 16-405 (May 30, 2017), the Supreme Court made clear that its 2014 ruling in Daimler AG v. Bauman precludes the exercise of general jurisdiction over a non-resident defendant unless that defendant has contacts which are so “continuous and systematic” so as to render that defendant essentially at home in the forum state. Thus, the Court rejected multiple theories on which plaintiff attempted to justify jurisdiction over BNSF in Montana.

First, it ruled that the Federal Employers’ Liability Act (“FELA”), a federal law that allows railroad workers to sue their employers for injuries that occur on the job, does not itself create a special rule authorizing jurisdiction over railroads just because they happen to do business in a particular place. Second, and most notably, the Court held that a Montana law that allows courts in the state to exercise jurisdiction over “persons found” was in violation of the Constitution. That is, even if BNSF conceded that it is “found” in Montana, the Court held that exercising jurisdiction over BNSF must still be consistent with the Due Process clause. Under its earlier decision, the Court explained, BNSF Railway can only be sued in Montana if it is “at home” there – something which normally means that the company is either incorporated in the state or has its principal place of business there.

With neither of those criteria met, the railroad was not so “heavily engaged in activity” in Montana as to present the kind of “exceptional” case in which jurisdiction could exist even outside the company’s state of incorporation and principal place of business. Thus, although BNSF could be sued in Montana for claims that are related to its business in Montana, it could not be sued there for claims that aren’t related to anything it did within the state.

Analysis

The Court’s two defense-friendly decisions on jurisdiction should bode well for defendants challenging jurisdiction, even in cases outside these specific factual contexts. General jurisdiction can only exist where a defendant is actually “at home,” and creative efforts – such as California’s “sliding scale” – will not pass constitutional muster to establish specific jurisdiction without a clear connection, such as a wrongful act, actually occurring in the forum state.