Kenneth R Meyer, Ivan J Whittenburg, Brian P Sharkey. Defense Counsel Journal. Volume 72, Issue 3. July 2005.
On September 25, 2002, the Rand Institute for Civil Justice released an Interim Report (“Rand Report”) estimating that only twenty to fifty percent of the total potential asbestos-related personal injury claims were filed and that defendants and insurers faced approximately $145 to $210 billion in future asbestos litigation costs. Last year, Stephen Carroll, the senior economist who authored the Rand Report, estimated that defendants had already paid $70 billion on 730,000 claims, making asbestos litigation the most expensive mass tort in American history. In 2003, plaintiffs filed approximately 110,000 asbestos claims-the most ever filed in one year. As a growing number of traditional asbestos defendants are forced to seek bankruptcy protection from their massive litigation expenses, counsel for plaintiffs are increasingly adding nontraditional defendants to the fray. The Rand Report identified a predictable, yet alarming trend—a rapid growth in the volume of claims by workers allegedly exposed to asbestos in industries that had not been targeted in the past. Indeed, the number of claims filed annually against this new class of defendants has grown so swiftly that by 2002, it was already equivalent to the number of claims filed annually against traditional defendants.
Plaintiffs’ attorneys have been filing cases for years against premises owners in the ship construction and petrochemical industries where the heavy use of asbestos-containing products, especially insulation, was integral to those industries’ operations. But now, owners and operators of virtually any industrial facility constructed prior to the mid-1970s are potential targets. Premises liability claimants are typically former employees of outside contractors who sue the owners of the facilities where they performed their work. In Texas, the representatives of deceased employees of premises owners have also asserted premises claims.
The recently targeted premises defendant is typically an industrial company that has been in business since before the mid-1970s when manufacturers began to eliminate asbestos from their insulation products. Typically, defendants never manufactured or sold asbestos-containing products, but they used or had products such as pipecovering, gaskets, refractory materials, roofing, and floor tile in their facilities. To date, these defendants have included, but have not been limited to, metal refineries, paper mills, pharmaceutical plants, candy factories, textile factories, and utilities.
Texas is currently at the forefront of asbestos premises liability litigation. Between 1988 and 2000, Texas led the nation in the number of newly-filed asbestos-related lawsuits. The emergence of this type of litigation in Texas is likely attributable to the following factors: (1) Juries in several Texas counties have a history of rendering high verdicts in asbestos-related cases; (2) Texas law permits a plaintiff who sues a defendant on a claim for an asbestos-related non-malignant disease (e.g., asbestosis) to file a second action against another defendant for a subsequently diagnosed asbestos-related malignant disease (e.g., mesothelioma); (3) Texas law permits lawsuits against employers (e.g., premises owners) by the survivors of a deceased employee whose death was allegedly caused by the employer’s gross negligence or intentional conduct; and (4) Certain Texas plaintiffs’ attorneys sponsor aggressive asbestos-disease screening programs—essentially mass recruitment campaigns that target former industrial and construction workers.
Theories of Liability
The theories of liability articulated by plaintiffs to support asbestos premises lawsuits vary from state to state. They also differ depending upon whether the plaintiff was an employee of an outside contractor or an employee of the premises owner.
The employee of an outside contractor is generally deemed a business “invitee” for purposes of a premises liability analysis. Business invitees who file suit typically allege that their injuries occurred due to an unreasonably dangerous condition at the premises. The standard of care imposed upon the premises owner depends upon the genesis of the unreasonably dangerous condition.
In cases where the employees of outside contractors allege injuries caused by dangerous conditions that arose outside of their work activity, premises owners are typically held to a standard of ordinary care based upon general negligence principles. That standard of care generally imposes a duty upon the premises owner to inspect the premises and warn the outside contractor of the dangerous conditions of which it is or should have been aware.
In cases where the employees of outside contractors allege injuries caused by their own work activity, premises owners are generally not held liable for failing to provide a safe workplace. However, there are exceptions to this general rule. The most significant exception arises when plaintiffs allege that the premises owner exercised or retained some degree of control over the manner in which the contractor performed the work, had actual knowledge of the danger or condition that caused the injury, and failed to adequately warn. Under these circumstances, a premises owner generally owes a duty to the contractor’s employees to exercise such control with reasonable care.
The employee of a premises owner is generally barred from filing a lawsuit against his or her employer by the exclusive remedy provisions of most states’ workers’ compensation statutes. However, statutes and case law in various states provide a narrow exception to the general rule permitting the survivors of deceased employees to file lawsuits against former employers for wrongful death caused by an employer’s intentional conduct.
Where Are Plaintiffs Filing Premises Claims?
Because the theories of liability available to premises plaintiffs vary by state, especially with regard to lawsuits contemplated by premises owners’ employees, plaintiffs’ attorneys’ decisions regarding venue reflect those differences. Asbestos premises litigation has found a comfortable home in a number of states, including Texas, West Virginia, California, and Louisiana where premises cases are routinely litigated. Attorneys in other parts of the country are warning that premises owners may be vulnerable to asbestos premises claims in their respective jurisdictions. Asbestos premises verdicts have been reported in various states including West Virginia, Texas, Indiana, and Illinois.
Cancer and Lung Disease Verdicts
In late, 2002, during Phase I (liability) of a mass consolidated state trial in Kanawha County, West Virginia (In re: Asbestos Personal Injury Litigation), the jury delivered a verdict against Union Carbide, the sole remaining defendant, finding the company responsible for creating “unreasonably dangerous” work conditions in its plants. The case also included claims against Union Carbide for the sale of defective asbestos-containing products. The jury also found that Union Carbide should pay punitive damages in an amount equal to three times compensatory damages should they be found responsible in Phase II (damages) of the trial. Thousands of contract workers, who alleged they suffered from cancer and respiratory ailments as a result of working in Union Carbide plants, filed these cases.
In May, 2003, a jury in Harris County, Texas, awarded $9.6 million to the family of a decedent contractor in Tipp v. Dow Chemical Company. The decedent worked as a contractor at Dow Chemical Co. for twenty-six years and claimed asbestos exposure. The jury found Dow Chemical Co. one-hundred percent liable.
Just a year prior to the Harris County verdict, a jury in Marion County, Indiana (Roberts v. Central Soya, Inc., et al.), in Indiana’s first asbestos premises liability case tried to verdict, awarded $3.8 million to the plaintiff. From 1958 to 1992, the plaintiff worked for contractor AC&S repairing insulation in various facilities in Indiana including PSI Energy, Inc., Kroger Co., Eli Lilly & Co., and Central Soya, Inc. The jury found the plaintiff twelve percent liable, PSI Energy, Inc. thirteen percent liable, AC&S (a non-party) thirty-six percent liable, and fifteen other non-party product defendants thirty-nine percent liable. The jury did not assess liability against Kroger Co., Eli Eilly & Co., or Central Soya, Inc.
On May 20, 2000, a jury in infamous Madison County, Illinois, awarded $34.1 million to a plaintiff diagnosed with mesothelioma in Hutcheson v. Shell Wood River Refinery Co., et al. The plaintiff worked at Shell oil Co.’s Wood River refinery as a roofer between 1956 and 1966 where he claimed he was exposed to asbestos-containing products. The jury’s verdict included an award of $25 million in punitive damages.
In another Madison County case, Whittington v. U.S. Steel Corp., a jury awarded $250 million to a former U.S. Steel Corporation employee who was diagnosed with mesothelioma. The plaintiff was a steelmaker at U.S. Steel’s plant in Gary, Indiana, from the early 1950s until 1981 where he claimed he was exposed to asbestos-containing products. The jury awarded $50 million in compensatory damages and $200 million in punitive damages. The jury found U.S. Steel one-hundred percent liable. Because the plaintiff was exposed to asbestos in Indiana, that court applied that state’s law to the case under the Illinois borrowing statute. A post-verdict settlement was reached for less than $50 million.
Why Are Asbestos Premises Cases Currently Concentrated In Only A Few States?
To analyze why plaintiffs’ attorneys are pursuing asbestos premises cases in some states and not in others, one must first examine a larger landscape. Asbestos litigation has historically been concentrated in a relatively small number of states. In the initial stage of litigation, plaintiffs filed cases in about twelve federal and state courts in coastal areas where workers alleged exposure to asbestos in shipyards, petrochemical refineries, and asbestos product manufacturing facilities. Between 1970 and 1987, sixty percent of the state court cases were filed in California, Pennsylvania, New Jersey, and Illinois. Over time, the litigation landscape changed. From 1998 through 2000, sixty-six percent of filed state court cases had shifted to Texas, Mississippi, New York, West Virginia, and Ohio. The Rand Report concludes that the shifts in these filing patterns were likely due to litigation dynamics including the establishment of new law firms, increasingly aggressive asbestos-disease screening practices (a firm-specific business strategy), and changes in the perceived attractiveness of the various forums utilized by plaintiffs.
Many plaintiffs’ firms seeking new asbestos clients have significantly impacted the volume of claims filed and the locations where those claims are filed by sponsoring free mass x-ray screenings. Indeed, the number of industrial and construction workers who have participated in attorney-sponsored, asbestos-disease screening programs likely exceeds 1,000,000. Many more claims are, and will be, filed in those areas of the country where plaintiffs’ firms are able to marshal the assets necessary to advertise for and sponsor mass-screenings. One plaintiffs’ firm in Texas reportedly sponsors approximately five-hundred screenings annually in the Amarillo area. Another screening enterprise has reportedly screened approximately 400,000 workers from all around the country. Plaintiffs’ firms’ advertisements for screenings appear on television, radio, in newspapers, and at union halls and have generated a flood of cases of dubious merit involving plaintiffs who are asymptomatic for an asbestos-related illness. Plaintiffs served one particular defendant, that had facilities in Texas, with its first asbestos premises complaint in 1998. That defendant subsequently litigated over 150 premises lawsuits in Texas involving hundreds of claims. About ninety-five percent of those claims involved asymptomatic plaintiffs, the vast majority of whom were the subject of mass-screenings.
The weaknesses of screening-based cases have not escaped judicial scrutiny. Indeed, in January 2002, the Honorable Charles R. Weiner, Senior United States District Judge for the Eastern District of Pennsylvania who manages the federal multi-district asbestos litigation program (“MDL”), found that “the filing of mass-screening cases is tantamount to a race to the courthouse and has the effect of depleting funds, some already stretched to the limit, which would otherwise be available for compensation to deserving plaintiffs.” Judge Weiner ordered that all non-malignant, asbestos-related cases assigned to the MDL which were initiated through a screening program would be subject to administrative dismissal without prejudice and with the tolling of all applicable statutes of limitations. The mass-screening cases are so controversial that there is even a split among plaintiffs’ firms on this issue. Attorneys who limit their representation to plaintiffs diagnosed with malignant diseases believe that the enormous number of screening-based cases are flooding the courts and “imperiling the availability of compensation to those who have been seriously injured by asbestos exposure.”
Asbestos premises case filing patterns indicate that plaintiffs’ attorneys generally file their cases in the states, although not necessarily the counties, where their clients worked. Of course, there are exceptions. For example, in 2002, an employee of an outside contractor diagnosed with mesothelioma filed suit against a defendant in Illinois asserting a premises claim involving a facility in Utah. The choice of Illinois stemmed in part from the fact that the plaintiffs attorney had already negotiated a settlement payment matrix with the defendant for the resolution of products claims in Illinois—it was simply an easy way to pursue and resolve another claim. That same year, several defendants settled a case filed in El Paso County, Texas, on behalf of a plaintiff from Vermont who alleged that he was exposed to asbestos-containing products while working in New Jersey. In that case, plaintiff’s attorneys sued many of the traditional products defendants as well as the owners of each of the large facilities in New Jersey where plaintiff worked, including a pharmaceutical plant and a candy factory. When asked why a Vermont resident allegedly exposed to asbestos at facilities in New Jersey would file his case in El Paso County, Texas, where juries deliver notoriously high verdicts, the plaintiff indicated that he followed the advice of the attorney whom he located on the Internet. Defendants’ efforts to challenge venue were not successful at the trial level.
Examples of Texas plaintiffs’ attorneys “forum shopping” among counties are legion. Not too long ago, scores of premises claims originating from a Texas panhandle facility were routinely filed over 400 miles away in a county known for its higher jury verdicts. At least one judge made efforts to cease these “forum shopping” efforts by issuing judicial sanctions. On November 7, 2002, the Honorable Nanette Hasette, Judge of the 28th District Court in Nueces County, Texas, levied a $500,000 sanction against a plaintiffs’ firm in response to its efforts to allegedly “shop” for judges in the county court house. The firm reportedly filed four single-plaintiff asbestos lawsuits at the same time against the same multiple defendants. After the cases were assigned to various judges, plaintiffs’ attorneys amended the pleadings assigned to the judge they allegedly favored to join an additional 300 plaintiffs.
Plaintiffs frequently assert both premises claims and product claims in the same pleading. In many of the cases in Texas, plaintiffs’ attorneys join between one to four premises defendants and fifty to one-hundred product defendants together in a single lawsuit. It appears that these plaintiffs’ attorneys initially joined premises defendants to a few of their products cases simply as an expedient way to ferret out additional “deep pockets.” The technique, once conceived and successfully executed, quickly became routine in Texas. It is convenient for plaintiffs’ attorneys because a significant number of plaintiffs worked or claimed to have worked within one or more of the same facilities.
An enormous problem faced by premises defendants in case after case is posed by the outside contractor who alleges that he worked at a defendant’s facility over twenty years ago and cannot recall where within the facility or on which particular project he worked. The sheer number of such claims is suspicious and the willingness of some judges to overlook a plaintiff’s inability to support such claims with something more than hazy recollections is alarming.
Whether the strategy of plaintiffs’ firms in Texas will be successfully adopted in the other states where asbestos litigation is already concentrated remains unclear. However, as reflected by the sample of recent jury verdicts previously discussed, the waters of several other jurisdictions are already being tested by attorneys in search of additional “deep pockets.”
Despite these discouraging trends, the tide may be turning as both Congress and state legislatures have started to take action to respond to the asbestos litigation crisis. In that regard, premises defendants should be aware of a Congressional bill that could radically alter the current litigation scheme. In fact, the legislation would completely eliminate asbestos litigation by prohibiting the pursuit of such claims in either state or federal court. Instead, the legislation would require claimants who allege that they suffered an asbestos-related injury to seek relief from a publicly-administered, privately-financed trust fund.
The burdens and expenses associated with asbestos litigation have compelled various observers to call on Congress to enact legislation to deal with this situation. For example, the U.S. Judicial Conference Ad Hoc Committee on Asbestos Litigation, which was appointed by U.S. Supreme Court Chief Justice William Rehnquist, issued a 1991 report that described the “most objectionable aspects” of asbestos litigation, stating that “dockets in both federal and state courts continue to grow; long delays are routine; trials are too long; the same issues are litigated over and over; transaction costs exceed the victims’ recovery by nearly two to one; exhaustion of assets threatens and distorts the process; and future claimants may lose altogether … The worst is yet to come … unless Congress acts to formulate a national solution.” Similarly, in Amchem Products, Inc. v. Windsor; the Court declared that “[t]he argument is sensibly made that a nationwide administrative claims proceeding regime would provide the most secure, fair, and efficient means of compensating victims of asbestos exposure.” Similarly, in Ortiz v. Fibreboard Corporation,” Justice Souter, writing for the Court, observed that “the elephantine mass of asbestos cases … defies customary judicial administration and calls for national legislation.” In a concurring opinion, Chief Justice Rehnquist agreed that the asbestos litigation crisis, “cries out for a legislative solution.” Over the past several years Congress has tried, but repeatedly failed, to pass asbestos litigation reform legislation.
Despite that history of legislative failure, several senators continue their efforts to work with the interested stakeholders to arrive at a legislative solution to the asbestos litigation problem. Most significantly, Senator Arlen Specter, who earlier this year became chairman of the Senate Judiciary Committee, the committee to which asbestos reform legislation is assigned, was involved in long negotiations with asbestos defendants, insurers, labor representatives, trial lawyers, other senators, and various other interested parties to try to achieve a legislative compromise among all those parties. Senator Specter’s efforts led to the introduction of S.852, the “Fairness in Asbestos Injury Resolution Act of 2005,” (“FAIR Act”), on April 19, 2005. The FAIR Act was approved by the Senate Judiciary Committee by a thirteen to five vote on May 26, 2005.
Although a comprehensive examination of all the details of this bill extend beyond the scope of this article, it is important to point out some of the relevant aspects of the legislation. The FAIR Act defines an “asbestos claim” as “any claim, premised on any theory, allegation, or cause of action for damages or other relief presented in a civil action or bankruptcy proceeding, directly, indirectly, or derivatively arising out of, based on, or related to, in whole or part, the health effects of exposure to asbestos, including loss of consortium, wrongful death, and any derivative claim made by, or on behalf of, any exposed person or any representative, spouse, parent, child, or other relative of any exposed person.” The bill bars such claims from state or federal court. Instead, individuals who assert that they were injured as a result of asbestos exposure must file a claim to receive an award from the Asbestos Injury Claims Resolution Fund (the “Fund”). Nonetheless, the Act would allow asbestos claimants to return to state or federal court under limited circumstances, including if the Fund was not sufficiently financed.
This Fund, created by the FAIR Act, would be administered by a newly-created office within the Department of Labor referred to as the Office of Asbestos Disease Commission. The Fund would be financed by companies that have previously expended significant sums of money related to asbestos claims, as defined by the Act, in settlement funds, damages, defense fees, or indemnity costs. The FAIR Act provides a no-fault scheme whereby individuals who satisfy certain requirements, including medial criteria, would recover a specified amount of money based on the type of disease they have. Asbestos defendants should scrutinize the FAIR Act’s provisions concerning its applicability to existing claims to determine how the legislation would impact a company’s individual circumstances.
Although legislation similar to S.852 has failed in the past, including in the last Congressional session when a trust fund reform bill made it out of the Senate Judiciary Committee but was not passed by the full Senate, supporters of this bill are nonetheless optimistic for several reasons. First, the bill has bipartisan support. Of the bill’s nine co-sponsors, six are Republicans and three are Democrats, including Senator Patrick Leahy, the ranking member of the Judiciary Committee. Senator Leahy has been heavily involved in this issue and his support for S.852 has been viewed as a positive sign. Specifically, proponents of the bill hope that his support and that of other Democrats will be sufficient to withstand the pressure that traditional opponents of such legislation, like plaintiffs’ trial lawyers and labor, will exert in an attempt to defeat the bill. Trial lawyers, historical allies of Democrats, have opposed the FAIR Act, not only because it would eliminate one of their cash cows but also because fees would be capped at five percent for attorneys representing asbestos claimants in the Fund. In terms of labor groups, the AFL-CIO has expressed its opposition to the bill, but other groups, including the United Auto Workers, have endorsed the bill.
In addition to the opposition voiced by supporters of the current litigation scheme, there are also divisions among asbestos defendants and insurers—the entities that would be financing the Fund. While some asbestos defendants support the legislation, others do not, and many of the opposition believe that the Act’s formula for allocating financial responsibility is unfair. Moreover, the insurance industry is divided, and the American Insurance Association has called the bill “wholly unacceptable.” Finally, there are divisions within Senate Republicans that must be overcome before the legislation will be enacted. For example, three Republicans on the Senate Judiciary Committee voted to pass the bill out of the committee, but nonetheless expressed concerns about the legislation and announced that they would work to change certain provisions when it is considered by the full Senate.
In short, Congressional legislation that would eliminate civil asbestos litigation seems, for the first time, to be a realistic possibility although passage is far from guaranteed. In that regard, the bill faces an uncertain future before the full Senate, as it will be attacked from both the political left and right, although supporters hope that the Senate will pass the bill during the summer of 2005. Advocates of the FAIR Act expect that the bill will be well-received in the House of Representatives, which has historically supported such reform. House Majority Leader Tom DeLay has indicated that if the Senate passes S.852, the House will consider it, and he described the bill as a “very important piece of legislation.” However, other House Republicans favor a different approach to asbestos reform. On April 28, 2005, Representative Christopher Cannon, along with fifty-two Republican co-sponsors, introduced H.R. 1957, the “Asbestos Compensation Fairness Act of 2005,” a medical criteria bill that requires plaintiffs to satisfy those criteria in order to initiate or maintain an asbestos lawsuit.
Finally, the White House has long supported tort reform, including asbestos reform. In President Bush’s April 28, 2005, press conference, he referred to the “positive noises” on Capitol Hill concerning the enactment of asbestos reform and stated that the legislation is “an important reform in order to make sure that our economy continues to grow.” In addition, following the Senate Judiciary Committee’s passage of the FAIR Act, Senator Specter indicated that the White House supported the bill. Despite the fact that it must overcome many hurdles, including the opposition of a broad array of groups, it appears that Congress may finally be in a position to enact legislative reform that would relieve asbestos defendants of the burdens, costs, and liabilities that they have to deal with in the civil litigation context.
Asbestos defendants should also be aware of various legislative reforms to asbestos litigation that are occurring at the state level. Some states, like Georgia and Texas, have enacted medical criteria legislation that require an asbestos plaintiff to demonstrate that he or she suffers from a medical condition to which exposure to asbestos was a substantial contributing factor as a pre-requisite to initiating or maintaining an asbestos claim. Other states, including the asbestos hotbed West Virginia, are considering similar legislation.
Prepare Your Client
Absent legislation, you and your client can expect to see an expansion of asbestos premises liability litigation in states or counties that share one or more of the following characteristics:
- Venues where juries traditionally deliver high verdicts;
- Regions where industrial facilities are located, particularly facilities that utilize high temperature manufacturing processes;
- Jurisdictions where well-established asbestos plaintiffs’ firms have opened satellite offices. For example, plaintiffs’ firms in Texas have established offices in Ohio, California, and New York; and
- Areas where plaintiffs’ firms initiate advertising campaigns or sponsor mass-screenings to attract asbestos litigation clients.
As attorneys for plaintiffs throughout the country intensify their search for what one reporter has termed “solvent bystanders,” the volume of claims filed against nontraditional defendants will continue to rise. As a result, it is likely that the owners of industrial facilities that operated when it was common to use asbestos-containing products will find themselves inexorably drawn into the morass of asbestos premises litigation. If one of your clients owns an industrial facility that operated prior to the mid-1970s, you should urge them to evaluate their exposure for premises claims. Advise them to review their old insurance policies, industrial hygiene surveys, OSHA records, safety policies, and construction and maintenance contracts for work performed at the facility in order to begin to develop the strategies necessary to effectively defend against potential claims. As solvent asbestos-containing product manufacturers rapidly become relics of the past, the owners of industrial facilities where such products were once utilized should prepare to be increasingly identified as target defendants.