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Asbestos Cases and Every Exposure Causation: Proper Expert Witness Preparation Is Essential In Any Jurisdiction

Posted in Asbestos Litigation, Litigation Trends

Judge's GavelCompanies around the country grapple with different standards of causation in different jurisdictions.  If recent trends continue, some jurisdictions may take a harder look at the “every exposure” theory of causation advanced by plaintiffs’ attorneys in asbestos litigation.

Pennsylvania has recently reaffirmed the “well established” concepts involving the requirements for substantial factor causation:

  • The each and every exposure theory may not be relied upon;
  • The plaintiff bears the burden of proof as to frequency, regularity, and proximity of alleged exposures
  • In cases involving dose-responsive diseases, expert witnesses must consider dose as a factor in their opinions;
  • De minimus exposure is not enough to establish substantial factor causation;
  • An individual analysis of the particular injured parties’ exposure history is required
  • Summary judgment is proper in light of de minimis exposures.

The recent Pennsylvania decision confirmed the Pennsylvania high court’s decision from 2012, in which the Court explained that

“Simply put, one cannot simultaneously maintain that a single fiber among millions is substantially causative, while also conceding that a disease is dose responsive”.

As Bryan Redding noted on the LexisNexis Legal Newsroom Litigation Blog, the Pennsylvania Court found that the single fiber theory offers a broad-scale opinion on causation to anyone who inhaled a single asbestos fiber above background levels, and in doing do, the plaintiff’s pathologist “did not use the language of a methodology or standard applied in the field of pathology.  Maddox’s testimony makes it clear that his opinion was grounded in risk assessment” which is not typically within the field of expertise of pathologists.  As such, defense attorneys should be attuned to the qualifications of the experts who may offer every exposure-based testimony.

The rejection of the every exposure theory appears to be a growing trend.  As Arlow M. Linton noted, courts in Rhode Island and Utah have also rejected the every exposure approach to causation in the past year.

Texas has required an analysis of the frequency, regularity, and proximity with defendant-specific evidence relating to the dose to which the plaintiff was exposed for several years now. Borg Warner decision pdf download. Not all jurisdictions have required such a rigorous causation analysis.  For example, Illinois courts are also required to consider the frequency, proximity, and regularity, but the Illinois courts allow plaintiff’s experts to offer opinions that every exposure is a substantial factor. Noland decision pdf download.

Similarly, the Supreme Court of California has set forth a rule requiring that trial courts take frequency, regularity and proximity into account, but lower courts in California have often applied this standard in manner in essentially the same manner as in Illinois.  Rutherford decision pdf download. Hernandez decision pdf download.

Take Away

Courts seem to be increasingly skeptical about the every exposure theory.  However, even in jurisdictions where existing case law does not require a diligent analysis of causation based on the duration, frequency and proximity of the alleged exposures, the same basic principles can still assist in the defense of the case.  Thorough expert discovery in particular is crucial for the defense of these cases.  Determining whether the plaintiff’s expert witnesses have any education or training on which they base their opinions and exploring the internal consistency of their opinions and their methodology is of the utmost importance.  Even in jurisdictions that allow experts to offer generalized conclusions that a single exposure is a substantial factor, courts should still require those experts to have a proper basis for that opinion.

Companies and insurers involved in asbestos litigation should be willing to undertake serious expert witness discovery, both offensively and defensively.  A comprehensive evaluation of the medical and scientific bases of the plaintiff’s case is more important now in light of these trends.

Delaware Judge Upholds $2.8 Million Verdict in Galliher Asbestos Trial

Posted in Asbestos Litigation, Delaware Courts

industrial talc powder

Background: 

Judge John A. Parkins, Jr. recently upheld a $2.8 million verdict awarded to the estate of a deceased 62 year old man in a mesothelioma case .  The Simmons firm represented Plaintiffs in this case against R.T. Vanderbilt (“Vanderbilt”).  Plaintiffs argued that Vanderbilt’s NYTAL industrial talc (pdf download) contained asbestiform materials and caused Mr. Galliher’s mesothelioma.  Vanderbilt argued that those asbestiform fibers could not cause mesothelioma.  At trial, Vanderbilt moved for a mistrial based on inadmissible testimony presented to the jury and judgment as a matter of law.  Judge Parkins denied the motion for a mistrial and reserved ruling on the motion for judgment as a matter of law.  Vanderbilt renewed its motions after trial and recently the Court denied both motions (pdf download).

Motion for New Trial:

Vanderbilt moved for a new trial based on the following evidence presented to the jury which it claimed was improper:

  • Plaintiffs failed to remove certain excluded hearsay testimony from the video testimony of a Vanderbilt employee regarding asbestos being present in the talc.
  • Dr. Barry Castleman inappropriately suggested that Vanderbilt spent $16 million “buying senators and lobbying the government.”
  • Dr. Castleman inappropriately referenced Johns Manville calling Vanderbilt “liars” regarding the marketing of its talc.
  • Sean Fitzgerald inappropriately relied upon ratios derived from an excluded report in his testimony.

Reasoning

Judge Parkins analyzed each of Vanderbilt’s arguments and determined they did not warrant a new trial.  Considering each claim individually, he found:

  • The Vanderbilt employee’s hearsay testimony was cured through a curative instruction.  Moreover, Vanderbilt had an opportunity to review the edited tape before it was shown to the jury, but did not find the mistake prior to its presentation to the jury.  The Court noted, “Vanderbilt took a calculated risk when it sent only one counsel to try the case.”
  • Dr. Castleman gave the $16 million statement in response to questions from Vanderbilt’s attorney.  The Court struck the testimony and instructed the jury to disregard it.  Ultimately, it determined that the testimony was not significant enough to warrant a new trial.
  • Dr. Castleman testified regarding the liars comment in response to questions from Vanderbilt.  The testimony comes directly from a paragraph in Dr. Castleman’s book, about which Vanderbilt specifically asked.  Vanderbilt’s argument largely fell on deaf ears because as the Court stated, “for no obvious reason Vanderbilt’s counsel decided to venture into the minefield.”
  • The Court determined the Fitzgerald testimony was cured through curative instructions.

Take-Away

Given the high standard for a new trial, the Court is unlikely to grant one unless the errors are egregious.  The Court will make every effort to cure prejudice during trial through curative instructions as it did here.  Finally, the Court appears to suggest that given the complexity of asbestos trials, the last minute nature of many evidentiary rulings inherent in these trials, and the time constraints of this trial (counsel had limited time to present the case), defendants should consider sending two trial counsel or rely more heavily on local counsel to assist with daily trial preparation.

Motion for Judgment as a Matter of Law:

Vanderbilt offered the following reasons the Court should grant judgment as a matter of law in its favor:

  • Plaintiffs failed to offer sufficient testimony that Mr. Galliher worked with or around the talc on a frequent and regular basis.
  • Plaintiffs failed to offer sufficient evidence that asbestiform fibers caused Mr. Galliher’s mesothelioma.
  • Plaintiffs failed to offer evidence that Vanderbilt was on notice of the dangers of asbestiform fibers giving rise to a duty to warn.
  • Plaintiffs failed to offer evidence that Vanderbilt’s warning was inadequate.

 Reasoning

Judge Parkins determined that the jury relied on reasonable record evidence to support its findings.  Plaintiffs offered several experts in support of their argument that asbestiform fibers in the talc caused Mr. Galliher’s mesothelioma and the jury relied on that testimony.  They also offered evidence that Mr. Galliher worked with the talc and that it contained a warning that said non-asbestiform.  Accordingly, the verdict was grounded in the evidence and Judge Parkins would not overturn the jury’s decision.

Take-Away

The Delaware standard for judgment as a matter of law after the jury returns a verdict is highly deferential to the jury.  Here, the pivotal issue was whether fibers in the talc could cause mesothelioma.  The best way to challenge scientific testimony in Delaware is through a Daubert challenge.  If a party’s witnesses and cross-examination of the other party’s witnesses is insufficient to convince a jury the science is inadequate, the Court is unlikely to overturn their finding.  Moreover, convincing a jury that a product cannot cause mesothelioma is a difficult proposition, when you cannot point the finger at another party as was the case here.

* Disclosure: Bill Larson served as Judge Parkins’ law clerk during the Galliher trial, but had no involvement in this decision. 

Social Media: #Discovery

Posted in Litigation Trends

Everybody Into The Digital PoolThere is little doubt that Facebook, LinkedIn, and Twitter have enhanced our ability to communicate with one another and express our ideas and feelings. These social networks—and countless others—make it easy to share photographs of our children at birthday parties, organize social events, or boast about our latest culinary creations. Often, we use social networking platforms to communicate our state of mind in real time (i.e., status updates). We expect that only our closest friends and family will be interested when posting a picture from last night’s party on Facebook or Instagram. It is a rare and litigious person, indeed, who understands that his or her status updates could be discoverable in a lawsuit.

In Romano v. Steelcase Inc., the Supreme Court of Suffolk County, New York granted a defendant’s motion to compel access to the plaintiffs’ social networking accounts. In doing so, the court reasoned that those “who place their physical condition in controversy may not shield from disclosure material which is necessary to the defense of the action … including a plaintiff’s claim for loss of enjoyment of life.” The plaintiffs posted images of themselves smiling outside their home to a publicly accessible Facebook page despite legal claims that they were restricted to bed by their injuries. The court found that, under such circumstances, “there is a reasonable likelihood that the private portions of [plaintiffs' Facebook pages] contain further evidence” regarding their enjoyment of life.

Claims for personal injury, including products liability and complex tort actions, almost always demand relief for emotional pain and suffering. That being so, what defense litigation attorney would not cherish Instagram photos of the personal injury plaintiff dancing at a party? Employment disputes may also contain elements of emotional distress, suggesting discoverability of social network data. Certainly, a Tweet could be central to a defamation case. With so much of our lives online, it is hard to imagine many circumstances where social media evidence is not responsive to a narrowly tailored and reasonable discovery request.

The discovery rulings, much like the social networking sites, continue to develop. In July, the Southern District of Indiana decided that “tagged” photographs are discoverable (“Tagging” is a process by which a third party can take and post a photograph and digitally associate the photograph with the responding party, thereby making such photographs available on the responding party’s Facebook page).  The Employer Handbook: Facebook “tagging” adds a new wrinkle to social media discovery. Consequently, even the actions of third parties over which the responding party bears little control may be subject to a well-drafted and targeted discovery request.

Take Away

Of course, discovery of social networking data must have limits. Less than a year after the New York Supreme Court decided Romano, the court ruled that a demand to access a party’s social media account cannot amount to a “fishing expedition.” Caraballo v. City of New York. Generally, a discovery request is almost always successful when narrowly tailored and likely to result in admissible evidence. The information is, most often, rightfully discoverable provided that there is a factual predicate for the request. These discovery principles cannot change even though the types of information to which they are applied frequently do. For discovery request examples, see Sample Discovery Requests: Facebook and Social Media.

Massachusetts Court Finds Plaintiffs’ Claims Against Generic Drug Manufacturers Are Barred By Preemption

Posted in Massachusetts Courts, Pharmaceutical and Medical Devices

Generic Drugs

Written by Jonathan F. Tabasky and Kate B. Puccio

Massachusetts Superior Court Judge Bruce R. Henry recently dismissed a series of claims against several manufacturers of the generic drug Metoclopramide (“MCP”), against whom failure to warn claims was alleged.  See White v. Elsevier, Inc., Middlesex Superior Court Civil Action No. 11-04441.  In so doing, Judge Henry held that Plaintiffs’ state law claims were preempted by federal law which prohibited different labeling than that associated with corresponding brand-name drugs.

Physicians commonly prescribe MCP and its Brand equivalent Reglan to treat digestive tract problems. In support of their claim for liability, the Plaintiffs proffered evidence that long term use of the drug can cause tardive dyskinesia, a severe neurological disorder.  Documented side-effects have included involuntary muscle movements, tongue protrusions and the like. The Plaintiffs claimed that the warnings in place were too weak, and underreported the incidence of such side-effects.  In support of their claims the Plaintiffs argued that in 2009, the FDA ordered a black box warning, its strongest, which states: “Treatment with [Reglan/MCP] can cause tardive dyskinesia, a serious movement disorder that is often irreversible . . . Treatment with [Reglan/MCP] for longer than 12 weeks should be avoided in all but rare cases.” The Plaintiffs further alleged that these hazards were well known by the defendants before they started taking the drug, and had the black box warning been in place at the time they ingested same, they would have taken another drug, or limited the period during which they took the drug.

The Generic Defendants moved to dismiss the Plaintiffs’ claims pursuant to Mass. R. Civ. P. 12(b)(6), contending that the Plaintiffs failed to state a claim upon which relief may be granted because federal law preempts their claims.  In making this argument, the Generic Defendants relied upon Pliva, Inc. v. Mensing, 131 S. Ct. 2567 (2011), a United States Supreme Court decision which addressed similar preemption issues concerning the same drug and many of the same generic manufacturers as in this case.

Judge Henry’s opinion contains a useful summary of the regulations governing the production and sale of generic drugs.  He noted that under federal law, “[a] brand-name manufacturer seeking new drug approval is responsible for the accuracy and adequacy of its label.” Conversely, ‘generic drugs’ can gain FDA approval simply by showing bio-equivalence to the brand-name drug that has already been approved by the FDA, and that the safety and efficacy labeling proposed is the same as the labeling approved for the [brand-name] drug (citations and ellipsis omitted). After this initial FDA approval, generic drug manufacturers have an ongoing federal duty of ‘sameness.’ A generic drug manufacturer that makes unilateral changes to strengthen a generic drug’s warning label would therefore violate the statutes and regulations requiring a generic drug’s label to match its brand-name counterpart’s.

Because the Plaintiffs alleged that the Generic Defendants’ duty to warn could have been satisfied by “Dear Doctor” letters or other modes of communication, Judge Henry noted that the Code of Federal Regulations definition of labeling to include almost every conceivable communication, including but not limited to: brochures, booklets, literature, references published (for example, the Physicians’ Desk Reference, drug information supplied by the manufacturer, packer, or distributor).  He also noted that the Mensing decision held that “Dear Doctor” letters fell within the definition.

Judge Henry concluded that the Plaintiffs’ negligence, breach of warranty, fraud and consumer protection claims arose out of the claim that Reglan/MCP labeling was inadequate. Judge Henry found, however, that the Generic Defendants could not change the labeling of MCP as to do so would have deviated from the labeling of their brand-name Reglan counterparts in violation of federal law.  For the same reasons, the Generic Defendants could not disclose additional safety information to the medical community by “Dear Doctor Letters” or other means. Therefore, just as in Mensing, federal law preempts the plaintiffs’ claims because it is impossible for the Generic Defendants to comply with both their duties to warn under Massachusetts law and under federal law.

The White case is continuing against brand defendant, pharmacy defendants, and patient education monographs (PEM) defendants.  Updates regarding this important case will follow in the near future.

Another Brick In The Wall Against Medical Monitoring Claims

Posted in Asbestos Litigation, Massachusetts Courts, Toxic Tort

Brick Wall

United States District Court Judge Mark L. Wolf recently denied the “medical monitoring” claims of a putative class alleging beryllium exposure. This is the first decision addressing medical monitoring claims in Massachusetts since the landmark Donovan ruling in 2009, and strengthens the restrictions on such claims.

Medical monitoring claims, a relatively modern addition to tort law, seek monetary damages for medical testing required after toxic exposure. States increasingly allow medical monitoring claims to proceed. However, a divide remains between courts which require evidence of physical injury and those which require only evidence of increased risk of injury. In Donovan v. Philip Morris USA Inc., 455 Mass. 215 (2009), Massachusetts’ highest court ruled that medical monitoring claims are allowed, as long as evidence of physiological, or “subcellular,” changes are present.

In Donovan, plaintiffs sought to represent a class of symptom-free smokers and asked the court to order medical monitoring. Philip Morris sought dismissal of the medical monitoring claims based on the lack of injury to any of the plaintiffs. On the question of whether medical monitoring claims are valid under Massachusetts law, the U.S. District Court certified the question to the Supreme Judicial Court.

The primary dispute: whether plaintiffs must establish physical injury to sustain their claims, or merely an increased risk of injury. The SJC ruled that plaintiffs can sustain a medical monitoring claim in Massachusetts by proving seven elements, including: “[exposure] to a hazardous substance that produced, at least, subcellular changes that substantially increased the risk of serious disease, illness, or injury.” Donovan at 226. The requirement of “subcellular,” or physiological, changes was a departure from the law of many other states. While the Donovan decision confirmed that medical monitoring claims could be brought in Massachusetts, it also restricted such claims to plaintiffs who had suffered actual physical damage.

Fast forward two years. This past June, U.S. District Court Judge Mark L. Wolf granted a defendant summary judgment in the first medical monitoring decision to be addressed in Massachusetts since Donovan. In the consolidated cases of Betucchy, et al. v. Raytheon Co. (1:10-cv-11652) and Genereux v. Hadric Laboratories Inc. (04-cv-12137), plaintiffs sued Raytheon for, among other things, medical monitoring costs associated with exposure to beryllium at Raytheon’s Waltham facility. Their complaints alleged that Raytheon’s improper handling of the chemical increased their risk of developing Chronic Beryllium Disease (“CBD”). None of the members of the putative class exhibited any signs or symptoms of CBD, and none had received abnormal results on the BeLPT, the test for that disease.

Raytheon moved for summary judgment, claiming that the plaintiffs failed to produce any evidence of the “subcellular change” required by the SJC in Donovan. In granting Raytheon’s motion, Judge Wolf examined the plaintiffs’ only evidence: the testimony of plaintiffs’ expert. The expert could not conclude that any of the plaintiffs suffered subcellular changes, nor did he find that any plaintiff had abnormal BeLPT tests. Finally, he had testified that increased exposure to beryllium does not necessarily lead to subcellular change, but only an increased risk of subcellular change.

Judge Wolf ruled that the plaintiffs’ expert’s opinion did not meet the “subcellular change” requirement established by the SJC. He acknowledged that the SJC had left open the possibility of cases in which subcellular change would not be required. However, the claims in this case could not be considered as such because plaintiffs’ complaints specifically alleged “subcellular changes to [their] persons.” In addition, Judge Wolf upheld the SJC’s reasoning that the “subcellular change” requirement acts as a check on plaintiffs’ ability to seek medical monitoring merely on the basis of increased risk of harm. The requirement of physiological change, in other words, ties the modern doctrine of medical monitoring in with traditional elements of tort law: physiological changes establish the  element of injury and damages.

The Take Away

While the trend has been for courts to allow medical monitoring claims, defendants must utilize well-reasoned opinions, such as Betucchy to push for clearly-defined restrictions on such claims, such as a requirement that plaintiffs demonstrate some physical harm, even if that harm consists of only subcellular changes.

Defense Verdict Obtained Via Independent Rebuttal Witnesses in Living Mesothelioma Case Brought by Medical Expert Dr. Richard Luros

Posted in Asbestos Litigation, California Courts, Toxic Tort

lungs

On July 12, 2013 an Alameda jury returned a defense verdict in the living mesothelioma asbestos case Richard Luros v. Amcord, Inc., Alameda Superior Court Number RG11600370. (Luros complaint pdf download).

The California defense asbestos bar had been watching the case with interest since it was filed in October 2011, as the Plaintiff, Dr. Richard Luros, had for many years prior to his mesothelioma diagnosis served as a medical expert witness in asbestos litigation for plaintiffs represented by the Brayton Purcell LLP law firm. The Brayton Purcell firm represented Plaintiff Luros at trial.

After a month long trial culminating in approximately two days of jury deliberations, the twelve person jury returned a verdict in favor of the remaining trial defendant, Union Carbide. The jury found that Dr. Luros had not been exposed to asbestos from a product associated with the remaining trial defendant, despite Plaintiff’s sworn testimony to that effect. (Luros jury verdict form pdf download). In other words, the case was ultimately won on the issue of credibility –the jury did not believe Dr. Luros’s testimony with respect to how he was exposed to asbestos and by whom he was exposed.

The defense verdict was due, in large part, to the investigation and evidence collected in the nearly two years that elapsed between the filing of the Complaint and the actual trial date (an unusually long amount of time for the defendants to prepare for trial in living mesothelioma cases, which are generally accorded an expedited trial date in California of 120 days). Specifically, the defense verdict appears to have turned on the credibility of the witnesses, and in particular, on the testimony of a number of independent percipient witnesses, which contradicted plaintiff’s testimony.

Of particular concern for defendants, and indicative of the uphill battle asbestos defendants face at trial, despite the “overwhelming” affirmative evidence presented by defendants which tended to demonstrate that Dr. Luros fabricated his testimony, when polled post verdict, five of the jurors – almost half the jury – admitted that their initial vote was in favor of Plaintiff.

Plaintiff’s Evidence in Luros

Plaintiff Dr. Richard Luros filed his Complaint for personal injuries, namely, mesothelioma, on October 18, 2011, against approximately 34 defendants. The named defendants were, for the most part, manufacturers of asbestos-containing joint compound and drywall products, insulation and drywall contractors, and the owners of various hospital premises where Plaintiff alleged asbestos exposure.

At his pre-trial deposition, plaintiff claimed he was exposed to respirable asbestos dust during his residency and through his work as a medical doctor at various hospitals in California. Specifically, plaintiff Luros testified that he worked in the presence of others who applied and sanded joint compound, and other asbestos containing construction products, while he made his rounds as a medical doctor treating patients in various hospitals where new construction and renovation work was performed. He alleged asbestos exposure at virtually every hospital where he worked.

Defendants’ Rebuttal Evidence in Luros

During the pre-trial discovery process, defendants were able to identify and depose various co-workers of Dr. Luros at the hospitals where he alleged asbestos exposure. By the time of trial, defendants had videotaped the testimony of no less than eight percipient rebuttal witnesses, including several of plaintiff’s medical colleagues, nurse administrators, and maintenance/janitorial staff. These rebuttal witnesses disavowed any personal knowledge or recollection of the events described by plaintiff at his deposition – ie, un-segregated work by hospital personnel and/or outside construction contractors with dust generating construction materials in or near areas where medical doctor’s such as Luros, treated their patients. In fact the witnesses testified that such practices would have violated hospital protocol.

In addition to rebuttal evidence in the form of fact witness testimony, Defendants retained construction sequencing experts to demonstrate that plaintiff’s alleged exposure scenario was implausible.

The Take-Away

Tony Miller took Plaintiff Luros’s deposition on behalf of various defendants who were dismissed prior to trial. He states that, defendants were very aware [at the Plaintiff’s deposition] that Luros’s exposure testimony was fabricated, or at the least exaggerated,” and on that basis made a conscious group effort to lock the Plaintiff into concrete positions with respect to when and how he was allegedly exposed to asbestos at his deposition, with an eye towards developing affirmative rebuttal evidence from independent third party witnesses for trial.

Ultimately, the Luros verdict highlights the importance of pre-trial fact investigations to develop evidence which rebuts plaintiff’s product identification and exposure evidence.  Unlike many of the more technical aspects of a defense case, such as a medical or fiber defense, all jurors tend to understand and can effectively assess credibility.  As such, a factual investigation of a plaintiff’s allegations, including, but not limited to, interviews of percipient witnesses, is many times a defendant’s most effective defense in asbestos litigation.

Brent Karren concurs in the above assessments.

“Jury verdict research has shown time and again that asbestos trials are won and lost on the believability of the product identification evidence. This case appears to be a perfect example of how to win a defense verdict in an asbestos trial.”

Fairness of Imposing Statutory Interest Rate on Private Entity Defendants When Rate is Significantly above Existing Market Interest Rates

Posted in Litigation Trends, Massachusetts Courts

 

interest rates for judgments in massachusetts

In Massachusetts, the interest rate for pre-and post-judgment interest is 12%, a number which was last revised in 1982 during the Reagan Administration.   See Mass. Gen. Laws ch. 231,§ 6B.   Massachusetts has not followed the lead of other states and federal district courts which use a floating rate or an economic benchmark for determining what the pre- and post-judgment interest rate should be and although six other states (see list to follow), which had set their interest rate at 12%, have recently lowered the percentage, Massachusetts remains an outlier on this issue.

Here’s a list of the six states that have recently lowered the interest rate for pre- and post-judgments:

At the time that the rate was set at 12%, it may have seemed reasonable given the market interest rates at the time, however given the current economic environment, providing a plaintiff with a significantly above market interest rate by which interest on damages is calculated may not serve the goal of compensating a plaintiff for his or her losses but instead serve to provide a plaintiff with a windfall.  See Sec’y of Admin. & Fin. v. Labor Relations Comm’n, 434 Mass. 340, 346 (2001).  At the time the rate was set it closely tracked the Federal Reserves’ annual one-year constant maturity Treasury Yield Rate of 12.27%, however that rate is currently 0.14%. Although Massachusetts utilizes a floating pre- and post-judgment interest rate and puts a cap on that rate, when calculating interest on damages to be paid by the Commonwealth to injured parties, it has not adopted the same floating rate for damages to be paid by private entities nor does a cap exist for damages to be paid by private entities.  See Mass. Gen. Laws ch. 231, §6I.

The Supreme Judicial Court arguably recently sent a signal to the defense bar that the court may be ready to evaluate the question of applying the 12% pre- and post-judgment interest rate to punitive damages in general when it sought briefs on the issue in the Willie Evans v. Lorillard Tobacco Company, et al. matter, SUCV-2004-02840 (pdf download).  In Lorillard, the jury awarded damages in the amount of $152 million, broken down into $71 million in compensatory damages and $81 million in punitive damages.  The trial judge reduced the compensatory damages to $35 million, but did not reduce the punitive damages award and Lorillard appealed.  Prior to issuing its opinion in Lorillard, the Supreme Judicial Court sought briefs on the question of the constitutionality of imposing the 12% interest rate on the punitive damages award in the case.

Ultimately, because the Supreme Judicial Court vacated the punitive damages award, in its opinion, the Court stated that it did not need to address the “various issues regarding the amount of interest on punitive damages.”  

One of the amicus briefs submitted to the Court was filed by the Massachusetts Defense Lawyer’s Association which included a review of other states and federal courts and their practices for handling pre- and post-judgment interest rates.  It found that MA is among 7 states with a fixed 12% pre- and post-judgment interest rate while there are 27 states that have a rate lower than 12% and 23 states and federal courts that utilize a floating rate. (pdf download). Additionally, it addressed the question of how other states have set out rules that clearly define the purpose for pre- and post-judgment interest, while Massachusetts statutes do not.  It offered examples to the Court of instances where the rate encourages settlements but at the same time limits the punitive nature of having such a high interest rate set by statute.  The brief urged the Court to find that the current rate set in Massachusetts is not only unconstitutional but also violates due process as an excessive punitive award and asked the court to determine a fair rate of interest for the Lorillard case.

The pre- and post-judgment interest rate on damages is the same for both tort and contract actions in MA, but there is an added risk of increased damages in contract actions based on the potential length of time that a plaintiff may be able to claim that damages have accrued from. In Tort actions, the interest on damages may only run from the date of the commencement of an action, however, the date that damages may accrue from can be one of three possible dates, including the date of the alleged breach. In a recent MBA article, MBA article, Matthew R. Fisher an attorney at Mirick O’Connell outlined how the potential rewards to a plaintiff in a contract action for interest on damages from a date as early as when an alleged breach could occur and instructed the plaintiffs’ bar the availability of the pre- and post-judgment interest rate as a potential source of added damages in such cases.

Conclusion

Given the risk of damages in a contract actions running from an even earlier date than the commencement of an action, the defense bar must be aware of the potential “windfall” that plaintiffs may be able to receive if they are successful in obtaining a verdict in their favor. The additional amount of time potentially available to plaintiffs in contract actions is another example of the problematic nature of the high pre- and post-judgment interest rate that is assessed on damages in Massachusetts.

The issue of questioning the fairness of maintaining the current rate of pre- and post-judgment interest remains an open one in Massachusetts.  The Defense Bar must recognize that it is an issue that should be raised throughout a trial so that it can be preserved and raised in an appeal of a damages award, particularly on the issue of the potentially excessive amount of damages that may be owed given the fact that the existing rate is so far above market interest rates.  By preserving the issue for an appeal, the defendants leave open the possibility for the Supreme Judicial Court to potentially weigh in on the issue that it may be ready to more fully evaluate and address

Furthering Asbestos Claims Transparency Act: Discovery of Bankruptcy Claim Information to Avoid Double Compensation

Posted in Asbestos Litigation, Toxic Tort

As previously reported on Defense Litigation Insider, the United States House of Representatives is presently considering the “Furthering Asbestos Claims Transparency (FACT) Act.” (H.R. 982) Since our last report, the bill was approved by the House Judiciary Committee by a 17-14 vote despite efforts to amend its original form.

The bill, introduced by Rep. Blake Farenthold (R-TX) and co-sponsored by Rep. Jim Matheson (D-UT), would require asbestos bankruptcy trusts to file publicly available reports that include demands made against the trusts as well as the names and exposure history of the claimants. Although Congress tracking website, govtrack.us, projects that the bill has only a 14 percent chance of passing, defense attorneys in many jurisdictions can still take steps to pursue the information during litigation.

Bankruptcy claim information is helpful to defense attorneys because, often, plaintiffs in litigation against non-bankrupt asbestos defendants conceal claims made against bankruptcy trusts in an effort to obtain “double compensation.” In many jurisdictions, relief afforded by a bankruptcy trust, if known, would reduce the liability exposure to the non-bankrupt asbestos defendants.

Some jurisdictions have attempted to eliminate the possibility of fraud, abuse, and double compensation legislatively or by judicial order. An Ohio statute, for instance, requires disclosure of bankruptcy claim information. In Delaware, a standing case management order of the Superior Court likewise calls for asbestos plaintiffs to identify bankruptcy trust claims.

If a given jurisdiction does not have a legislative remedy available, many state and federal courts have held that bankruptcy trust claim information is available through discovery. This discovery might include claim forms, which occasionally contain factual allegations that are inconsistent with the plaintiff’s pleadings. The Eastern District of Pennsylvania, home of federal multi-district litigation, has allowed such discovery. So, too, has the State of California.

Conclusion

Defense attorneys must be vigilant in protecting their clients from increased exposure as a result of concealed asbestos claims. Until a national solution is in place, defense attorneys can likely stay on guard of potential double compensation scenarios through focused discovery and subpoena practice.

Minimizing the risk of litigation by complying with the Food Safety Modernization Act

Posted in Uncategorized

As discussed in prior blog posts, the Food Safety Modernization Act (FSMA) aims to prevent contamination of the United States food supply by requiring that food facilities be in compliance with a series of regulations in order to distribute products in the U.S.  The FSMA was signed into law by President Obama on January 4, 2011.    

 The FSMA requires that all food facilities, domestic and foreign, be registered with the US Food and Drug Administration (“FDA”) in order to manufacture, process, pack, or store food for animal or human consumption in the US.[1]  If a facility fails to comply with the registration requirements, products manufactured by foreign facilities will be refused entry into the U.S. and domestic facilities will be unable to legally sell products in interstate commerce.[2]  Every two years, every food facility must renew its registration.[3]  Facilities that registered prior to October 1, 2012 must renew their registration. [4]

The FSMA has granted the FDA greater authority to hold imported foods to the same standard as domestic foods—making it even more difficult for companies who wish to import into the US food from other companies.[5]  Importers are now required to verify that any foreign suppliers have controls in place to guarantee that the food they produce is safe.[6]  Qualified third parties are now able to certify that foreign food facilities are in compliance with U.S. food safety standards.[7]  Foreign facilities that produce foods that are at a high risk of contamination may be required to receive third-party certification or another form of compliance in order to be admitted into the US.[8]  The FDA is able to refuse entry to food from any facility that has denied the FDA inspection access or is located in a country that has denied the FDA access.[9]

Although the FSMA presents challenges to food companies, if companies educate themselves on the registration requirements and pay close attention to their suppliers, they will be in compliance.  Additionally, importers that are offering food from program-certified facilities are able to participate in a program that expedites the process.[10]

Insurers Hold Attorney-Client Privilege in Instances where Bankrupt Corporation with No Officers or Directors is the Insured

Posted in Asbestos Litigation, California Courts, Litigation Trends

Court Ruling

In Melendrez v. Superior Court (download), 214 Cal.App.4th 1343 (2013), the California Court of Appeals, Second District, recently resolved the issue of who may verify discovery responses on behalf of a bankrupt entity with no directors or officers.  The decision also reaffirms prior cases which hold that attorneys cannot waive the attorney-client privilege on behalf of their clients.  Rather, insurers hold the privilege in instances where no corporate representative exists.  If an insurer decides to waive the privilege to allow the attorney to verify responses, the waiver is only for the identity of the sources of the information contained in the responses.

Factual Background

Plaintiffs brought a wrongful death action against numerous defendants in which they alleged that decedent died of mesothelioma as a result of exposure to asbestos.  Defendant Special Electric Company (“SECO”), a manufacturer and supplier of asbestos-containing products and supplier of raw asbestos fibers, had filed for bankruptcy years prior to the instant suit, and as a result of the reorganization, was reduced to a shell for the sole purpose of processing asbestos lawsuits.

Plaintiffs propounded discovery on defendants.  SECO provided unverified responses to Requests for Admissions (“RFAs”), and Plaintiffs moved to deem the RFAs admitted and to compel verifications, as case law provides that unverified responses are tantamount to no response at all.  The trial court denied the motion to deem the RFAs admitted, and at the request of SECO, it deemed the responses verified.  Plaintiff subsequently served SECO with Form Interrogatory 17.1, which requires the responding party to provide substantive responses for all RFAs not unequivocally admitted.  SECO provided substantive, unverified responses to Form Interrogatory 17.1, and Plaintiffs, again, moved to compel verifications.  The trial court again denied Plaintiffs’ motion.  Plaintiffs appealed.

The Court of Appeals Decision

The court distilled the issue in the case to this:

 “‘Who can waive the privilege on behalf of a dissolved corporation with no officers, directors, or employees?’ It may be that although SECO had no officers or directors, a means may have existed by which a director could have been elected or appointed.  If that is not the case, we believe that the privilege, in the somewhat unique circumstances of this case, would have passed to SECO insurers.”

The court noted that Civil Code § 2033.240(b) allows for an attorney acting as an agent of the party to verify responses.  When an attorney does so, however, the party “waives any lawyer-client privilege and any protection for work product . . .concerning the identity of the sources of the information contained in the response.”  The court further recognized that the client corporation is the holder of the attorney-client privilege and an attorney cannot waive the privilege.  That means that although the attorney for a defendant corporation is an agent of the corporation capable of verifying discovery on its behalf, executing a verification requires a limited waiver of the attorney-client privilege, which, the attorney cannot do absent the consent of the client.  This creates a Catch 22 in instances where no corporate officer exists.

The situation is resolved by passing the privilege to the insurer.  The insurer, however, holds the privilege only when the defendant company exists solely as an empty shell to process the actions against it and a director cannot be obtained.  In those instances, the insurer may waive the privilege on behalf of the corporation so that the attorney can verify discovery responses.  Verifying discovery on behalf of a client waives the attorney-client privilege, but only concerning the identity of the sources of information contained in the response.  The court was clear that there would not be any further intrusion into privileged matters and the verifying attorney should not be subject to deposition.

Conclusion

It is important for attorneys and insurers to understand the Melendrez holding, and to whom it may apply.  The court clearly distinguished between dissolved corporations and those that are no longer in existence “in any real sense.” Melendrez only applies to the latter and only if there is no director, officer, or employee available to verify responses.  When those factors are met, which will require a look at the individual corporation’s state laws, insurers need to be aware that they are the holders of the privilege and may have to waive it so that counsel may verify discovery responses.