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Pennsylvania Frye Test Precludes Two Experts from Testifying in Cashmere Bouquet Talc Case

Posted in Asbestos Litigation

On September 25, 2017, the Court of Common Pleas of Pennsylvania in Philadelphia County precluded two of plaintiffs’ experts from testifying in the Brandt v. The Bon-Ton Stores, Inc., et al. asbestos-related talcum powder case, effectively ending the case. Both Sean Fitzgerald and Dr. Ronald Gordon were precluded from offering expert testimony regarding the asbestos content in the Cashmere Bouquet talcum powder at issue.

 

The Brandt case involved a plaintiff who claimed she developed mesothelioma as a result of exposure to asbestos from using Cashmere Bouquet talcum powder. Defendants moved, in part, to challenge the opinions of plaintiffs’ experts regarding the asbestos content of Cashmere Bouquet on grounds the experts did not employ generally accepted methodologies to support their opinions.  During the hearing on the defendants’ challenge, the plaintiffs’ experts both conceded the tests they conducted were insufficient to differentiate between asbestos fibers and cleavage fragments—particles that look similar to asbestos fibers. The plaintiffs argued their experts’ methodologies for testing the asbestos content in Cashmere Bouquet were fodder for cross examination, and the case should proceed to the jury.

 

After four days of testimony from the plaintiffs’ experts and the defendants’ expert, Dr. Matthew Sanchez, the court issued a nine-page memorandum opinion excluding Mr. Fitzgerald’s and Dr. Gordon’s opinions as unreliable, “inherently unscientific,” and not generally accepted pursuant to the Frye test, which Pennsylvania continues to follow.  See Frye v. United States, 293 F. 1013, 1014 (D.C. Cir. 1923). The court painstakingly detailed the experts’ methodologies for determining the alleged asbestos content in Cashmere Bouquet, and concluded that while some of the methodologies employed by Mr. Fitzgerald and Dr. Gordon were generally accepted in the scientific community, each expert modified, varied, or deviated from those generally accepted methodologies, making their opinions unreliable under Frye.

 

Pennsylvania is one of few states that still apply the Frye “general acceptance” test for determining whether an expert’s opinion is admissible.  The overwhelming majority of states across the country follow the standard set forth in Daubert v. Merrill Dow Pharmaceuticals, Inc. for evaluating admissibility of expert testimony.  Under Daubert, an expert’s testimony must be both relevant and reliable; however, unlike the Frye standard, which uses general acceptance as its cornerstone, Daubert does not require or consider whether the methodologies employed by the expert are generally accepted among the scientific community.

 

It is difficult to predict whether the methodologies employed by the plaintiff’s experts in the Brandt case would have survived a Daubert challenge.  Both experts conceded that had they followed generally accepted methodologies for testing asbestos in talcum powder, they likely would have been unable to identify asbestos in Cashmere Bouquet, and it is difficult to imagine a jurisdiction where such “inherently unscientific” testimony would be sufficient to submit to a jury.  Nevertheless, jurisdictions following Daubert will not evaluate whether such testing methods are generally accepted in the scientific community. Therefore, it remains to be seen what impact the exclusion of Mr. Fitzgerald’s and Dr. Gordon’s expert opinions in the Brandt case will have generally on asbestos-related talcum powder litigation.  Regardless, the ruling should be welcomed by defendants facing liability in this next wave of mass tort litigation.

Conducting Business in Illinois May Be Insufficient to Establish Personal Jurisdiction

Posted in Premises Liability

According to the Supreme Court of Illinois, merely conducting business within that state is insufficient to satisfy the standards for personal jurisdiction established by the U.S. Supreme Court in Daimler AG v. Bauman, 134 S. Ct. 746 (2014).  The Illinois Supreme Court recently explored that issue in Aspen American Insurance Company v. Interstate Warehousing, Inc., where a plaintiff headquarted in Indiana attempted to bring an action in Illinois for damages allegedly caused by the collapse of a warehouse in Michigan.  Plaintiff Aspen brought a subrogation action in Cook County, Illinois seeking to recover damages allegedly caused by the collapse of a warehouse near Grand Rapids, Michigan, which was owned by Defendant Interstate Warehousing. The Defendant, which is headquartered in Indiana, operates eight warehouses across the country, one of which is in Joliet, Illinois.

 

In its pleadings, the Plaintiff sought to rely upon the Defendant’s Joliet warehouse to establish personal jurisdiction in Illinois. In its motion to dismiss for lack of personal jurisdiction, the Defendant did not dispute that it was doing business in Illinois. Instead, the Defendant argued that the business it was conducting in Illinois was insufficient to subject it to general personal jurisdiction under the U.S. Supreme Court’s decision in Daimler AG v. Bauman. Relying on Daimler, the Defendant explained that the Plaintiff failed to establish that the Defendant was either domiciled or “at home” in Illinois. The circuit court disagreed, and denied the Defendant’s motion. A divided appellate court affirmed the dismissal denial of the motion to dismiss.

                                                                                                                                                                                   

Writing on behalf of a unanimous Court, Justice Burke reversed the lower court decisions, holding that the Plaintiff failed to make a prima facie showing that the Defendant was “essentially at home” in Illinois, as required by Daimler. More specifically, the Court determined that the Plaintiff’s burden was to show that the Defendant was incorporated or had its principal place of business in Illinois, or in the alternative, that the Defendant’s contacts with Illinois were so substantial that an exception was warranted. In making its determination, the Court looked at Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952), in which the defendant, a Philippines company, was forced to relocate from the Philippines to Ohio during World War II. In that case, the Supreme Court found that Ohio was “the center of the corporation’s wartime activities” and, effectively, a “surrogate for the place of incorporation or head office.” Perkins, 342 U.S. at 448.

 

In the Aspen case, the Defendant Interstate Warehousing was an Indiana corporation with its principal place of business in Indiana, which was registered to conduct business in Illinois and employed the general manager of a warehouse in Joliet. The Plaintiff pointed both to the Defendant’s registration with the Illinois Secretary of State and the business it carried out at its Joliet warehouse as establishing jurisdiction; however, the Illinois Supreme Court ultimately concluded that those facts were insufficient either to render the Defendant at home in the state or to establish that the Defendant’s contacts constituted the type of exceptional connection to the forum that was recognized by the Perkins Court. The Aspen Court reasoned that “if the operation of the warehouse was sufficient, in itself, to establish general jurisdiction, then the defendant would also be at home in all the other states where its warehouses are located.” That kind of reasoning already was expressly rejected by the U.S. Supreme Court in Daimler.

 

Therefore, the Illinois Supreme Court reversed the lower court rulings and remanded the case to be dismissed for lack of personal jurisdiction. The Aspen decision is consistent with the Delaware Supreme Court’s decision last year that merely registering to do business in that state is insufficient to establish personal jurisdiction.  See Genuine Parts Co v. Cepec (137 A.3d 123 (Del. 2016). Earlier this year the U.S. Supreme Court left open the question of whether registration to do business may constitute consent to personal jurisdiction.  See BNSF Railway Co. v. Tyrrell (May 30, 2017), slip op. at 12.  Accordingly, the issue remains unsettled.  However, the Aspen and Genuine Parts decisions suggest that until the U.S. Supreme Court weighs in, momentum currently runs against the use of business registration statutes to establish personal jurisdiction.

The Third Circuit Strips Some of the Protections of the “Bare-Metal Defense”

Posted in Asbestos Litigation, Maritime Law, Products Liability

Imagine this scenario:  Company X manufactures a “bare-metal” product. After the product is sold, the buyer adds defective asbestos-containing insulation manufactured by Company Y to the product, which is sold for its proper function. Unfortunately, an end-user is then injured by the insulation manufactured by Company Y.  The “bare-metal defense” suggests that the bare-metal manufacturer, Company X, would not be liable for this injury.  In practice, the intuitive logic of the bare-metal defense is not always followed.  Thus, the short answer to the question of the bare-metal manufacturer’s liability is, “it depends.”

Some courts apply a bright-line rule, holding that a bare-metal product manufacturer is never liable for asbestos-related injuries, while other courts assess the foreseeability that hazardous asbestos materials would be added to the manufacturer’s bare-metal product. The Supreme Court has not yet addressed this issue, and neither had the United States Court of Appeals for the Third Circuit, until October 3, 2017, in In re:  Asbestos Products Liability Litigation (No. VI).

 

What is the “Bare-metal Defense”?

In simplest terms, the “bare-metal defense” contends that equipment manufacturers are not liable for the potential hazards of asbestos-related injuries, when the source of the asbestos exposure comes from aftermarket replacement component parts or insulation that the equipment manufacturer neither manufactured nor placed into the stream of commerce. Some courts have applied the defense when considering causation, concluding that the bare-metal manufacturer was not the proximate cause of an asbestos-related injury.  Others courts have analyzed similar issues when evaluating whether a bare-metal manufacturer had a duty to act with reasonable care with respect to reasonably foreseeable asbestos-related risks. Although slightly different, both analyses hinge upon foreseeability.

The Third Circuit addressed the application of the “bare-metal defense,” and in particular, whether to use a bright-line rule or a fact-specific standard, in a maritime negligence claim.

 

The Third Circuit’s Decision in In re: Asbestos Products Liability Litigation (No. VI)

            Two widows of former Navy servicemen alleged that their husbands were exposed to asbestos from insulation and other components that were added onto engines, pumps, boilers, and other equipment manufactured by defendants. Many of the defendants made their products “bare-metal” and without any asbestos-containing insulation, which was later added. These same defendants asserted the “bare-metal defense” and were granted summary judgment by the Eastern District of Pennsylvania, because they shipped their products without asbestos-containing insulation and therefore could not be liable for asbestos-related injuries.

Both widows appealed the summary judgment to the Third Circuit. In tackling this issue, the Court reviewed the four main tenets of maritime law:

  • Maritime law is deeply concerned with the protection of sailors;
  • Maritime law is built on “traditions of simplicity and practicality;”
  • Maritime law has a “fundamental interest” in “the protection of maritime commerce;” and
  • Maritime law seeks out “uniform rules to govern conduct and liability.”

The Third Circuit found only the first tenet to be dispositive of the “bare-metal defense,” and stated that none of the other tenets weigh heavily in either direction. Maritime law has deep concern for the safety of sailors due to a “special solicitude for the welfare of those men who undertook to venture upon hazardous and unpredictable sea voyages.” Moragne v. States Marine Lines, Inc., 398 U.S. 375, 387 (1970). Thus, maritime law is often far more lenient towards sailors than is common law. Courts have stated that maritime law prefers to “give [rather] than to withhold the remedy” whenever “established and inflexible rules” do not require otherwise. Id.

The Court concluded that this guiding principle calls for a fact-based standard, as opposed to a bright-line rule, which will offer a greater number of sailors an opportunity to receive compensation for their alleged injuries. The Court therefore applied the following standard:  A manufacturer of a bare-metal product may be held liable for injuries suffered from later-added asbestos-containing materials, if the injuries were a reasonably foreseeable consequence of the manufacturer’s failure to provide a reasonable and adequate warning. In making this factual determination, important factors to consider are whether the bare-metal manufacturer reasonably could have known, at the time it placed its product into the stream of commerce, that

  • asbestos is hazardous, and
  • its product will be used with an asbestos-containing part, because
  • the product was originally equipped with an asbestos containing part that could reasonably be expected to be replaced over the product’s lifetime,
  • the manufacturer specifically directed that the product be used with an asbestos-containing part, or
  • the product required an asbestos-containing part to function properly.

 

The Decision’s Impact

            Within the Third Circuit, bare-metal manufacturers should no longer expect claims against them to be dismissed under a “bare-metal defense,” unless they can show that they could not reasonably have known that harmful asbestos parts would be added to their products.  A potential defense would prove:

  • the bare-metal manufacturer did not originally equip the product with any asbestos-containing parts;
  • the bare-metal manufacturer did not specifically direct that the product be used with an asbestos-containing part; and
  • the product could have been used properly without an asbestos-containing part.

At least until the Supreme Court provides its own guidance, the Third Circuit’s decision may also be viewed as persuasive by courts in other jurisdictions.

Medical Marijuana and Workers’ Compensation Coverage

Posted in Employment Litigation

This article is Part Four of our Medical Marijuana and the Workplace: Recent Decisions from New England Courts Provide Significant Protections to Medical Marijuana Patient Employees Five-Part Series. See Parts One, Two, and Three for reference.

As the qualified use of medical marijuana to treat illnesses becomes more common and courts become more willing to extend legal protections to medical marijuana patient/employees, workers’ compensation is likely to become another focus of litigation.  One potential argument would be that if an employees’ healthcare provider certifies, recommends, or prescribes (depending on the character of the medical marijuana act at issue) the use of medical marijuana as part of a course of treatment, the treatment is reasonable and necessary, and employers and their respective workers’ compensation insurer are therefore responsible for providing it.

Few courts have addressed this issue, but those opinions that exist have tended to require employers to reimburse employees who have incurred workplace injuries and seek reimbursement for medical marijuana that is purchased to treat the underlying injury (as long as they are qualified patients and a workers’ compensation court determines that the treatment is reasonable and necessary).  In one of the few cases on the subject, the New Mexico Court of Appeals held that marijuana may be a “reasonable and necessary” medical treatment for a workplace injury, and if a treatment is reasonable and necessary, the employer and its insurer are responsible for paying the bill.  See Vialpando v. Ben’s Automotive Services, 2014-NMCA-084, 331 P.3d 975 (N.M. Ct. App.), cert. denied331 P.3d 924 (N.M. 2014); see also Lewis v. American Gen. Media, 355 P.3d 850, 856-58 (N.M. App. 2015) (rejecting challenge to reimbursement for medical marijuana under Workers’ Compensation Act based on federal preemption); cf. Maez v. Riley Indus., 347 P.3d 732, 735-37 (N.M. App. 2015) (finding sufficient evidence that medical marijuana was medically necessary).

In Vialpando, the claimant, George Vialpando, injured his back in a work-related accident in 2000 while employed by Ben’s Automotive Services (“Ben’s Automotive”), and was not able to find relief through traditional drugs and treatment. His doctor opined that Mr. Vialpando had “some of the most extremely high intensity, frequency and duration of pain, out of all of the thousands of patients I’ve treated within my seven years practicing medicine.”  Thereafter, in 2013, Vialpando was certified by his healthcare providers to become a patient in the New Mexico medical marijuana program. The program allows a qualifying patient to purchase marijuana after having secured a certification from a New Mexico licensed health practitioner that the subject individual is suffering from a debilitating medical condition and that the potential health benefits of the medical use of marijuana would likely outweigh the health risks posed by its use.

Vialpando then applied for approval from the workers’ compensation court to have the medical marijuana paid for by his former employer.  The Court approved his application, determined that the treatment was, in fact, reasonable and necessary, and ordered Ben’s Automotive to pay for the marijuana.  Ben’s Automotive appealed the Workers’ Compensation Court decision to the New Mexico Court of Appeals.

In its appeal, Ben’s Automotive argued that New Mexico’s Workers’ Compensation Act did not expressly authorize reimbursement for the cost of purchasing medical marijuana.  The appellant also contended that the Workers’ Compensation Judge’s determination violated federal law (due to marijuana’s classification as a Schedule I controlled substance).  The Court was not persuaded by either argument.

First, the Court of Appeals found that New Mexico’s Workers’ Compensation Act does not prohibit a healthcare provider from certifying that an injured worker should receive medical marijuana in the course of the treatment for his workplace injury. As long as the treatment is “reasonable and necessary” and approved by a workers’ compensation judge, the employer is responsible for paying for it under the Act.

Second, the Court found that federal law does not preclude repayment for medical marijuana under New Mexico’s Workers’ Compensation Act.  Ben’s Automotive had argued that in requiring a former employer to reimburse Mr. Vialpando for the purchase of his medical marijuana, the Worker’s Compensation Court’s order was forcing Ben’s Automotive to violate federal law, which (respondent argued) should preempt New Mexico law.  The Court of Appeals disagreed and determined that there was no direct conflict between federal law and New Mexico’s medical marijuana act.

Outside of New Mexico, administrative actions taken in California and Minnesota have also facilitated reimbursement for medical marijuana under workers’ compensation law.  First, in Cockrell v. Farmers Insurance and Liberty Mutual Insurance Company2012 Cal. Wrk. Comp. P.D. LEXIS 456, a California workers’ compensation court held that the use of medical marijuana was reasonable and necessary under the state workers’ comp law, and that the Compassionate Use Act of 1996, which legalized medical marijuana in California, did not bar reimbursement.  In 2015, the workers’ compensation insurance carrier appealed this decision to the California Workers’ Compensation Appeals Board, contending that certain sections of California Code excused “health insurance providers” and “health care service plans” from having to pay for medical marijuana. The Appeals Board ruled that a workers’ compensation insurance carrier is not a “health care service plan” but sent the case back to the court below to analyze whether a workers’ compensation carrier insurer is a “health insurance provider.”   According to the Appeals Board, the workers’ compensation court will need to analyze whether there is any rational basis to treat occupational and non-occupational insurers differently with regard to reimbursement for medical marijuana under California’s medical marijuana law.  The case has yet to return to the Appeals Board; however, it is likely that this case will end up in the California Court of Appeal, and eventually the Supreme Court of California.

In Minnesota, regulations promulgated by the Department of Labor and Industry (“DLI”) address the criteria for treatment of the most common work-related injuries, and do not permit the use of “illegal substances” as part of workplace injury treatment.  In July 2015, the DLI issued new rules that redefine “illegal substance” and specifically exclude from the definition medical marijuana prescribed under state law.  Thus, medical marijuana is now a permissible and reimbursable form of medical treatment for workers’ comp claims in Minnesota.

In Rhode Island and Massachusetts, state legislatures or administrative agencies may address whether medical marijuana is reimbursable under workers’ compensation, as the DLI did in Minnesota.  Regardless, we expect to see the issue litigated.  Based on the Massachusetts Supreme Judicial Court’s opinion in Barbuto, see Parts 1 and 2, and the Rhode Island Superior Court’s decision in Callaghan, see Part 3, it is hard to imagine that workers compensation courts in either of these jurisdictions would deviate materially from the opinion of the New Mexico Court of Appeals in Vialpando.  In other words, if a licensed physician certifies that the treatment is reasonable and necessary; employers may be required to reimburse employees for the expense of medical marijuana.  Again, employers will want to consult with counsel on how to adapt their practices to this changing environment.

Interestingly, the medical marijuana industry is facing a different workers’ compensation-related challenge in Hawaii.  Hawaiian Employers Mutual Insurance Co., the largest workers’ compensation insurer in Hawaii, announced in June that on the advice of counsel, it would soon be canceling its workers’ compensation insurance policies with marijuana growers.  The Company explained that “a strict interpretation of the conflicting state and federal laws would expose companies doing business with medical marijuana dispensaries to criminal prosecution under federal law.”  Hawaiian Employers Mutual initially wrote workers’ compensation policies to the dispensaries in 2016, after the state began approving licenses for medical marijuana dispensaries, apparently because of what the insurer characterized as a lack of clarity in federal and state law concerning the legality of medical marijuana. Hawaii first legalized the use of medical marijuana in 2000, but no marijuana dispensary has presently commenced operations in Hawaii.  Because Hawaii state law requires employers to provide minimum levels of workers’ compensation coverage for all employees, cancellation of workers’ compensation policies could significantly impair the ability of medical marijuana dispensaries to begin operations.  Similar actions in other states could effectively neuter the medical marijuana industry, regardless of whether state law favors reimbursing prescribed marijuana as a reasonable and necessary expense.

California Appeals Court Reverses Summary Judgment in Favor of Defendant Employer on PAGA Cause of Action

Posted in California Courts, Employment Litigation, Litigation Trends

In a recent decision, Lopez v. Friant., 2017 WL 2451126, the California First District Court of Appeal provided guidance as to the meaning of the Private Attorneys General Act, or PAGA.  The Lopez ruling reversed an Alameda County trial court’s ruling, which had granted summary judgment in favor of defendant-employer Friant & Associates on the grounds that plaintiff had failed to establish a knowing or intentional failure to include required information on itemized wage statements. The Court found that when a cause of action is brought under PAGA for civil penalties based on an underlying Labor Code violation requiring “injury” and “intent,” the plaintiff is not required to make a showing of those requirements. Rather, the Court found that a plaintiff may prevail merely by showing that the employer failed to make the required disclosure. By raising this disclosure omission under PAGA, rather than through a cause of action under the underlying statute, the plaintiff effectively circumvented the requirements of proving “injury” and a “knowing and intentional” violation. The Court’s opinion includes a discussion of the plain language of each statute, as well as their legislative histories. The decision exemplifies California courts’ willingness to allow wage and hour violation claims to proceed past the summary judgment stage, which could make it difficult for employers to dispose of cases early through dispositive motions.

 

In Lopez, plaintiff Eduardo Lopez  brought a lawsuit against employer Friant & Associates raising a single cause of action: a PAGA cause of action based on an alleged underlying Labor Code violation under Section 226(a)(7), which requires an employer to provide itemized wage statements that include the last four digits of an employee’s social security number. Section 226 independently authorizes a civil cause of action for aggrieved employees, and Section 226(e)(1) stipulates that the prerequisites for prevailing under this section include a showing of injury arising from a “knowing and intentional” violation of the Section.

 

At the summary judgment stage, employer Friant argued that plaintiff had failed to present a triable issue of material fact as to the requirements of injury and intent. The Alameda County trial court agreed and granted summary judgment in favor of Friant. On appeal, however, the First District Court of Appeal found that, while the civil cause of action authorized under Section 226 requires a showing of injury and knowing and intentional violation, the PAGA cause of action is separate and independent, and does not require a plaintiff to make this showing. The parties stipulated during litigation that Friant had issued 5,776 itemized wage statements to the plaintiff and other employees that failed to include such information. Accordingly, the Court reversed the grant of summary judgment because a triable issue of material fact existed.

 

The Court’s most significant discussion focuses on how to interpret the law when a plaintiff raises a PAGA-authorized claim based on an underlying Labor Code violation, such as 226, which authorizes its own cause of action with attendant elements. In reaching the conclusion that PAGA does not require the same injury and intent elements as Section 226, the Court addressed the plain language of the statutes and the legislative histories of Section 226 and PAGA.

 

In discussing the plain language of both Section 226 and PAGA, the Court noted that PAGA is a type of qui tam statute that allows aggrieved employees to recover civil penalties on behalf of the state, rather than simply for themselves. Thus, while Section 226 authorizes private statutory damages actions, PAGA “deputizes citizens as private attorneys general” to enforce the Labor Code and collect penalties that will be used for the benefit of the general public. The Court pointed to California courts’ history of distinguishing between civil penalties authorized under PAGA and statutory penalties available to employees through the Labor Code. In this case, the Court noted that Section 226(e) authorized “actual damages” or “penalties” rather than a “civil penalty,” whereas PAGA authorizes “civil penalties.” Accordingly, the Court found that the requirements of Section 226(e) to show injury as a result of a knowing and intentional violation do not apply to PAGA causes of action.

 

The Court also addressed the legislative histories that led to the enactment of both Section 226 and PAGA. The Court specifically discussed the fact that the language added to Section 226 requiring injury and a knowing and intentional violation was added long before the passage of PAGA. The Court noted that Section 226’s legislative history pointed to a desire to remedy harm caused to an individual employee from an employer’s failure to comply with the Labor Code. Indeed, a few years later the Legislature added a specific provision authorizing a civil penalty available to individuals. Accordingly, the Court found that Section 226 authorizes a separate and distinct cause of action from that authorized by PAGA.

 

The Court cited further support from the fact that a PAGA plaintiff must “comply with administrative procedures” outlined in PAGA, including allowing an employer the right to cure violations. A violation of Section 226(a) is one such non-curable violation. The Court found particularly compelling the fact that PAGA cites specifically to subsection 226(a) rather than to Section 226 generally.

 

The Court further pointed out that its interpretation is consistent with many federal court decisions that have determined Section 226(e) requirements do not apply to PAGA claims based on Section 226(a) violations. The Court also distinguished case law cited by employer Friant, explaining that the PAGA claim in question is not a derivative action, but rather an independent cause of action.

 

The Lopez decision underscores California courts’ broad interpretation of wage and hour statutes and the various means of enforcing them.