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Brian D. Gross is a partner at MG+M who has extensive experience in a broad spectrum of litigation. He is also a member of several corporate defendants’ national trial teams.

Overview

On March 30, 2018, Judge Rya Zobel of the United States District Court (District of Massachusetts) issued a memorandum of decision on two Defendants’ (NSTAR Electric, formerly Boston Edison, and General Electric) Motions for Summary Judgment in an asbestos personal injury and wrongful death matter, June Stearns and Clifford Stearns as Co-Executors of the Estate of Wayne Oliver v. Metropolitan Life Insurance Co., et al., that addresses multiple issues, including statute of repose, strict liability and liability of a premises owner.

Background

Plaintiff’s decedent, Wayne Oliver, worked on the construction of two power plants, Pilgrim Nuclear Power Station (Massachusetts) and Calvert Cliffs Nuclear Power Plant (Maryland), between 1971 and 1978 and his estate alleges that Mr. Oliver was exposed to asbestos-containing products present at those sites. Defendant NSTAR Electric (formerly Boston Edison)(“Boston Edison”) owned the Pilgrim premises.  Defendant General Electric (“GE”) allegedly designed, manufactured, and sold generators used at Pilgrim and at Calvert Cliffs.  Oliver worked as a pipe inspector for Bechtel, the architect-engineer on projects at both Pilgrim and Calvert Cliffs.

 

As the owner of Pilgrim, Boston Edison conducted safety audits while the construction proceeded, but primary responsibility for the site construction rested with GE and Bechtel: GE for the steam supply system, nuclear fuel system, and the generators themselves; and Bechtel for everything else. In that capacity, Bechtel hired and supervised all subcontractors on the project, including an insulation installer, New England Insulation (“NEI”). Although NEI reported to Bechtel, it installed the asbestos-containing insulation around the generators pursuant to directions from both Bechtel and GE, and pursuant to GE’s specifications that specifically required asbestos-containing insulation.  The Court also recognized that at both Pilgrim and at Calvert Cliffs, GE had rejected suggestions or proposals for an asbestos-free insulation alternative.

 

Oliver allegedly sustained exposure to asbestos at both sites while inspecting pipe near dusty thermal insulation as other subcontractors installed it around the generators. He was subsequently diagnosed with mesothelioma in 2015 and died in 2016.  In denying summary judgment to GE and granting summary judgment to Boston Edison, the Court found that:  (1) while the construction work performed by GE met the definition of an improvement to real property for purposes of the statute of repose, public policy considerations necessitated an exception to the application of the statute in cases involving alleged asbestos-related disease; (2) the installation of asbestos insulation was not an abnormally dangerous activity; (3) Boston Edison did not exercise sufficient control over the work at issue to be held negligent; and (4) a premises owner, such as Boston Edison, has no duty to warn where the subcontractor has knowledge of the hazard which is equal to or greater than that of the premises owner.

 

Application of Statute of Repose

GE argued protection from Plaintiffs’ claims under Massachusetts’s six-year statute of repose, which bars claims concerning “improvements to real property.” Under Massachusetts law, this involves a “permanent addition” versus “ordinary repair.” Whether this statute applied to asbestos claims against manufacturers posed an issue of first impression for the Court. GE argued that its generators were permanent improvements to the plant. Plaintiff disagreed, and further argued that public policy prevented the application of the statute to asbestos claims given their long latency.

 

Ultimately, the Court agreed with GE that the generators were permanent improvements, but found that public policy cut against the application of the statute of repose to GE’s benefit. Though the public policy behind statutes of repose is based on the policy judgment that a potential defendant should have no reasonable expectation of responsibility for injuries that occur after the passage of a number of years, the Court held that such a policy rationale does not apply to asbestos cases because: (1) the potential dangers associated with asbestos exposure were well known by 1971; and (2) the typical latency period from asbestos exposure to disease is much longer than the six-year window for filing personal injury claims under the statute of repose.  Accordingly, the Court found that an asbestos defendant should not have a reasonable expectation that an injury, if one should occur, would likely manifest itself within the six year statute of repose.

 

The Court further relied on what it called a “somewhat relaxed” burden of proof in asbestos cases, thereby minimizing the argument that evidence relied upon by the parties would become stale over the passage of time, another policy reason behind the application of statutes of repose. The Court also noted that GE’s responsibility was not typical of a manufacturer that releases its products to an end user without much retained control. In this case, GE directed the material selection and at least some of the work allegedly giving rise to the exposure.  In addition, GE continued to exercise some level of control for an extended period of time through on-site maintenance and inspections following completion of the project. On these grounds, the Court refused to bar Plaintiffs’ claims against GE on statute of repose grounds.

 

Although the decision purports to rely on a case-by-case factual approach to the application of the statute of repose, as evidenced by the Court’s statement that “although designers, engineers, and contractors like GE appear facially covered by the statute of repose, their protection is ultimately determined by reference to underlying acts.” the Court implicitly states that the statute of repose can never properly apply to asbestos claims, because such application would bestow upon asbestos defendants “absolute immunity” due to the typical latency period for asbestos-related diseases.

 

Strict Liability of Premises Owner

Plaintiff argued for the imposition of strict liability on Boston Edison based on the premise that the act of insulating equipment with asbestos-containing insulation amounted to an abnormally dangerous activity. Massachusetts imposes a balancing test on the application of strict liability in which the court evaluates: (a) whether an activity risks harm; (b) the magnitude of the harm; (c) whether the risk can be mitigated with reasonable care; (d) whether the activity is a common one; (e) whether the activity is appropriate where it is taking place; and (f) the activity’s value to the community. Here, the Court disagreed with Plaintiff’s argument and found that, despite the risk of significant harm posed by asbestos-containing insulation, the fact that asbestos insulation was commonly used during the time frame at issue, and the possibility of taking reasonable precautions to mitigate that harm weighed against the imposition of strict liability. Accordingly, the Court granted summary judgment in favor of Boston Edison on Plaintiffs’ strict liability claim. This decision suggests that, going forward, the Court will not be receptive to the blanket categorization that asbestos products are abnormally dangerous.

 

Negligence of Premises Owner

In addition, Plaintiffs argued that, to the extent Plaintiff’s employer, Bechtel, was negligent by exposing him to asbestos, Boston Edison bears vicarious responsibility. In Massachusetts, an employer of an independent contractor on their premises is not liable for harm caused by that independent contractor’s negligence, unless the employer retains control over performance of the work. Plaintiffs argued that Boston Edison’s authority to monitor the construction, coupled with the ability to shut down the project, rose to a sufficient level of control. The Court disagreed, and considered the right of inspection and the right to impose work stoppage insufficient levels of control to justify imposition of vicarious liability, and granted summary judgment. This decision supports the arguments of premises owners charged with responsibility for their independent contractors, and reaffirms the importance of clearly delineated responsibilities.

 

Plaintiffs further argue that, as premises owner, Boston Edison negligently failed to give Oliver’s employer a warning regarding the dangers of on-premises asbestos. Massachusetts landowners owe a duty of reasonable care to employees of independent contractors. However, courts distinguish pre-existing hazards with those created by the work the independent contractor undertakes to perform. With the latter, the independent contractor stands on equal footing with regard to the risk. The Court considered the insulation a case of the latter—where Boston Edison’s knowledge of the risks of asbestos was no greater than Bechtel’s, Boston Edison had no duty to warn, and therefore no liability, and granted summary judgment. This decision cuts against plaintiffs’ attempts to make premises owners the effective “insurers” for on-premises work, the nature of which subcontractors may be more or equally aware.

Recently, in Sawyer v. Foster Wheeler LLC, the Fourth Circuit held that a government contractor is entitled to federal jurisdiction, even in product liability failure-to-warn actions, based on the contractor’s assertion that it has a colorable federal defense of government contractor immunity. 860 F.3d 249 (4th Cir. 2017). The big takeaway from this case, however, is that the Fourth Circuit has now joined the Second, Third, Fifth, Seventh, and Ninth Circuits in holding that a government contractor need not demonstrate that it attempted to provide a warning, but was prohibited from doing so by the government. Id.; see Cuomo v. Crane Co., 771 F.3d 113 (2nd Cir. 2014); Papp v. Fore-Kast Sales Co., Inc., 842 F.3d 805 (3d Cir. 2016); Zeringue v. Crane Company, 846 F.3d 785 (5th Cir. 2017); Ruppel v. CBS Corp., 701 F.3d 1176 (7th Cir. 2012); Leite v. Crane Co., 749 F.3d 1117 (9th Cir. 2014). Instead, for the government contractor defense to apply, the contractor is only required to establish that the government dictated or approved the warnings the contractor actually provided.

 

Sawyer involved the claims of a decedent’s family against Foster Wheeler LLC in Maryland state court, in which they alleged that the decedent’s death was caused by exposure to asbestos while he assembled Foster Wheeler boilers for use aboard Navy vessels in the boiler shop of the Sparrows Point Shipyard, and that the defendants failed to warn him of the dangers associated with asbestos exposure. Sawyer, 860 F.3d at 249. Foster Wheeler removed the case to federal district court based on federal officer jurisdiction conferred as a result of its government contractor defense. Following plaintiffs’ motion, the district court remanded the case and Foster Wheeler appealed. Id.

 

In support of federal officer jurisdiction, Foster Wheeler asserted that it manufactured boilers for the Navy under the Navy’s strict specifications and that “in the manufacture and sale of boilers and auxiliary equipment for the Navy, including all aspects of warnings associated with that equipment, [it] was acting under an officer or agency of the United States.” Id. In support, Foster Wheeler supplied the affidavits of a former employee and a retired Navy captain, in which they attested: (1) Foster Wheeler designed boilers to match highly detailed ship and military specifications provided by the Navy, that “deviations from these specifications were not acceptable,” and the Navy exercised “intense direction and control over all written documentation to be delivered with its naval boilers;” and (2) “the Navy was well aware of the health hazards associated with the use of asbestos from the early 1920s,” and that the Navy’s information “with respect to the specification and use of asbestos, and the health hazards associated with its use aboard Navy vessels, far exceeded any information that possibly could have been provided by a boiler manufacturer.” Id.

 

The Plaintiffs argued: (1) that the government contractor defense does not apply to failure-to-warn actions; and (2) the boilers were not constructed on U.S. naval ships, were manufactured under the direction of Foster Wheeler personnel, and only later transported and installed upon U.S. naval ships.  Id.  In addition, Plaintiffs argued that there is no evidence that the government prohibited Foster Wheeler from warning those individuals constructing the boilers concerning the hazards associated with asbestos exposure. Id.

 

The Fourth Circuit reversed and remanded, finding that Foster Wheeler satisfied all three criteria to establish federal jurisdiction, namely that: (1) it acted under a federal officer; (2) it has a colorable government contractor defense; and (3) the charged conduct was carried out for or in relation to official authority. Id. With regard to the government contractor defense, the Fourth Circuit held that the defense applies to failure-to-warn claims where the defendant can demonstrate that: (1) the government exercised discretion and approved certain warnings; (2) the defendant provided the required warnings; and (3) the defendant warned the government about hazards that were known to it but not to the government.  But, the Court went one step further and held that “the government need not prohibit the contractor from providing additional warnings; the defense applies so long as the government dictated or approved the warnings the contractor actually provided.” Id.

 

In its application of that standard, the Fourth Circuit found that Foster Wheeler demonstrated that the Navy “exercised intense direction and control over all written documentation to be delivered with its naval boilers,” including those manufactured by Foster Wheeler. Id. The Court cited one of Foster Wheeler’s affidavits which stated that “Foster Wheeler would not be permitted, under the specifications, associated regulations and procedures, and especially under actual practice as it evolved in the field, to affix any type of warning or caution statement to a piece of equipment intended for installation onto a Navy vessel beyond those required by the Navy.” Id. It also found that Foster Wheeler actually gave the warnings that were required by the Navy and that the Navy would penalize any deviation. Id. Finally, the Court found that Foster Wheeler credibly demonstrated that the Navy’s knowledge of asbestos-related hazards exceeded Foster Wheeler’s during the relevant time period. Id.  Based on those findings, the Court held that Foster Wheeler had demonstrated that it was entitled to litigate this case in a federal forum. Id.

 

 

Lady JusticeEver since the United States Supreme Court’s 2014 decision in Daimler A.G. v. Bauman, 134 S. Ct. 746 (2014), in which the Court held that general personal jurisdiction exists over a corporation only where the corporation is fairly regarded as “at home,” many plaintiffs and state courts have attempted to distinguish Daimler in an effort to expand the boundaries of a court’s exercise of personal jurisdiction. It should come as no surprise then that the U.S. Supreme Court, with five personal jurisdiction cases before it and its Daimler decision seemingly under attack, ultimately decided to grant review of two such cases in 2017: BNSF Railway Co. v. Tyrrell, and Bristol-Myers Squibb Co. v. The Superior Court of San Francisco County, which attack the Daimler holding from very different perspectives.

As you may recall from your first year law school basics, personal jurisdiction requires, among other things, that the “the defendant’s conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).  This can be established through either specific jurisdiction, where the defendant has sufficient contacts with the forum state which directly relate to the underlying controversy, or general jurisdiction, where “the [ defendant’s] affiliations with the [forum s]tate are so ‘continuous and systematic’ as to render them essentially at home in the forum [s]tate.” Daimler, 134 S. Ct. at 748-49, 760.

BNSF Railway, begs the question as to whether a state court may decline to follow the Supreme Court’s decision in Daimler, as The Montana Supreme Court directly challenged the limitations on general personal jurisdiction established by the Daimler Court. It did so by holding that the Federal Employers Liability Act (“FELA”) essentially creates an exception to the “at home” requirements of Daimler.  The plaintiffs in BNSF Railway are two employees who seek damages from the company pursuant to FELA, which provides railroad employees with a federal cause of action for personal injuries caused by their employer’s negligence. Neither plaintiff resides in Montana, nor did the injuries occur in Montana. Yet, plaintiffs brought suit in Montana. Under Daimler, BNSF should not have been considered “at home” in Montana, as it is incorporated in Delaware and has its principal place of business in Texas. Despite these facts, the Montana Supreme Court held that Montana courts could exercise general jurisdiction over BNSF.  The Montana Supreme Court reasoned that Section 56 of FELA allows a plaintiff to bring suit in any federal district court in which the defendant does business, and also confers concurrent jurisdiction over FELA suits to state courts. As such, the Court reasoned that state courts should have general jurisdiction in FELA matters over defendants in any state in which the defendant did business.  Tyrrell v. BNSF Ry. Co., 373 P.3d 1 (Mont. 2016).

As previously reported, in Bristol-Myers Squibb the California Supreme Court took a different approach to challenging the limits of the exercise of personal jurisdiction.  Instead of directly attacking Daimler’s holding concerning the limits of general personal jurisdiction, the California Supreme Court used specific personal jurisdiction as a tool to enlarge the Court’s power to exercise personal jurisdiction over a foreign corporation.  In Bristol-Myers Squibb, the California Supreme Court expressly held, consistent with Daimler, that Bristol-Myers Squibb was not subject to general personal jurisdiction in California, as its contacts with the state were not substantial enough to render it “at home” in the jurisdiction. It held, however, that specific personal jurisdiction existed over Bristol-Myers Squibb in California—even for plaintiffs who were not injured in California—based on its “purposeful availment” of the benefits and privileges of the laws of the State of California as a result of its “nationwide marketing, promotion and distribution [that] created a substantial nexus between the non-resident plaintiffs’ claims and the company’s contacts in California . . . .” Bristol-Myers Squibb Co. v. Superior Court, No. S221038, 2016 WL 4506107(Cal. Aug. 29, 2016).

Of the two decisions, Bristol-Myers Squibb may be the most troublesome for defendants, particularly product manufacturers. That is because the California Supreme Court’s “purposeful availment” test essentially guts Daimler and effectively would subject product manufacturers to personal jurisdiction in every state in which they sell their products. Accordingly, 2017 could be a game changer when it comes to personal jurisdiction, including the impact it has on a corporation’s ability to be sued, and potential forum shopping by plaintiffs. We should note, however, that in 2010 the U.S. Supreme Court expressed the need for clear jurisdictional rules in order to allow businesses predictability as to where they are subject to suits. The Hertz Corp., v. Friend, 130 S. Ct. 1181 (2010). Given the impact of both BNSF Railway and Bristol-Myers Squibb, the Court may take this opportunity to do just that in terms of both general and specific personal jurisdiction. Stay tuned…

California Supreme Court
California Supreme Court

The United States Supreme Court’s decision in Daimler A.G. v. Bauman, 571 U.S. __, 134 S.Ct. 746 (2014), has played a significant role this year in cases pending in Delaware and Rhode Island. Most recently, the California Supreme Court has weighed in, changing what we thought we knew about personal jurisdiction, at least in California.

In Daimler, the U.S. Supreme Court held that a court can exercise general jurisdiction (whereby a state court asserts jurisdiction over a defendant on claims unrelated to the defendant’s activities in the forum state) only when the defendant can be said to be “at home” in the forum – the paradigm being the state in which it is incorporated or has its principal place of business. The California Supreme Court has now found a way to turn that decision on its head. It held in Bristol-Meyers Squibb Co. v. Superior Court, 377 P.3d 874 (Cal. 2016) that plaintiffs from outside California whose claims do not arise out of anything involving California can sue a non-California defendant in a California court.

Bristol-Myers argued, pursuant to Daimler, that it was not subject to personal jurisdiction in the California courts for the suits of 592 non-California plaintiffs. First of all, it argued that it was not subject to specific personal jurisdiction because none of the 592 lawsuits by non-California plaintiffs arose out of anything plaintiff or defendant did in California. Moreover, it argued that it was not subject to general personal jurisdiction because it was not “at home” in California, based on the fact that it was neither headquartered nor incorporated in California.

The California Supreme Court agreed that there was no basis for the exercise of general jurisdiction, but instead found that a “new wave” specific jurisdiction existed because Bristol-Myers engaged in “nationwide marketing, promotion and distribution [that] created a substantial nexus between the non-resident plaintiffs’ claims and the company’s contacts in California . . . .” And, according to the Bristol-Meyers court, the more wide-ranging the defendant’s forum contacts, the more readily a “connection” between the defendant’s forum contacts and the claims by the non-resident plaintiffs can be found.

This decision of the California Supreme Court appears to basically moot the Daimler decision and may make any company that does business nationally subject to personal jurisdiction in California. Bristol-Meyers has filed a writ of certiorari with the U.S. Supreme Court, so this decision may have a short shelf life. For the time being, however, companies should be prepared to litigate in California, as the Bristol-Meyers decision is likely to factor into plaintiffs’ decision when choosing a forum in which to litigate.

Lady JusticeOn October 13, 2016, Presiding Justice Alice B. Gibney of the Rhode Island Superior Court ruled on Defendant Dana Companies, LLC’s Motion to Dismiss for Lack of Personal Jurisdiction pending in the case of Harold Wayne Murray and Janice M. Murray v. 3M Company, et al., granting the defendant’s motion to dismiss upon finding that the court lacked sufficient minimum contacts to exercise personal jurisdiction – either general or specific – over the defendant. With this ruling, Rhode Island joins a growing list of jurisdictions that have applied the United States Supreme Court’s standard passed down in Daimler AG v. Bauman, 134 S. Ct. 746 (2014).

The Murray case was filed in Providence Superior Court, and involves a Tennessee resident alleging he developed mesothelioma as a result of exposure to asbestos through his work with and around numerous defendants’ products over the course of his lifetime, predominantly at locations in Tennessee and Virginia. The complaint filed in Murray named hundreds of defendants who allegedly manufactured, sold, or supplied asbestos or asbestos-containing products to which Mr. Murray was allegedly exposed, including Dana Companies, LLC (“Dana”). Dana subsequently moved to dismiss the plaintiff’s claims on the grounds that a Rhode Island court’s exercise of jurisdiction, either specific or general, would violate its due process rights pursuant to the United State Constitution as well as the Supreme Court’s ruling in Daimler AG v. Bauman and its progeny.

Specifically, Dana asserted that as the plaintiff’s claims arose from alleged conduct that occurred entirely outside of Rhode Island with consequences transpiring outside of the State, the court’s exercise of specific personal jurisdiction was clearly improper. During his deposition taken near his home in Johnson City, Tennessee, Mr. Murray confirmed that he’d never lived in, worked in, received treatment in, or visited the State of Rhode Island. Absent a nexus between the plaintiff, the forum, and the litigation to permit the court’s exercise of specific personal jurisdiction, the court’s review of Dana’s motion to dismiss turned on the question of whether there was a basis to exert general jurisdiction over the defendant.

The court’s general jurisdiction analysis began by citing the Supreme Court’s decision in Goodyear Dunlop Tires Operations, S.A. v. Brown for the proposition that a court may reasonably exercise general jurisdiction over a foreign corporation where the corporation’s affiliations with the state are so continuous and systematic as to render them essentially “at home” in the forum state. 564 U.S. 915, 919 (2011); Int’l Shoe Co. v. State of Wash., Office of Unemployment Comp. and Placement, 326 U.S. 310, 317 (1945)).Upholding Daimler’s elaboration of this “at home” standard, the court reasoned that “with very limited exceptions, a defendant can customarily be subject to general jurisdiction in the state of its incorporation and the state of its principal place of business.” Going further, the court specified that evidence of a corporation’s continuous and systematic contact with a jurisdiction was relevant only to the determination of specific jurisdiction, and was not the proper ground for a finding of general jurisdiction.

Turning to the facts at bar, the court observed that both Dana and its predecessor were incorporated in Virginia with principal places of business in Ohio, with no offices, employees, or property in Rhode Island, and not registered or authorized to do business in Rhode Island. Dana reported no product sales to Rhode Island, though Dana’s predecessor reported historical sales to two Rhode Island businesses. However, such sales by Dana’s predecessor were reported to account for less than one-tenth of one percent of the company’s total annual net sales from 1997 to 2006. The court reasoned that under Daimler, “such contacts with the State of Rhode Island are insufficient to substantiate a finding of general jurisdiction over Dana.” The court went on to conclude that as Dana was not virtually ‘at home’ in the forum state for the purposes of general jurisdiction, the court lacked both general and specific personal jurisdiction over the defendant.

Beyond its significance for the extension of Daimler, the Murray ruling is instructive as to the proper exercise of the personal jurisdiction defense so as to avoid forfeiture.  In an attempt to avoid the constitutional constraints of personal jurisdiction, the plaintiff’s opposition argued that Dana forfeited its personal jurisdiction defense by attending four days of the plaintiff’s deposition prior to filing its motion, then attending eleven days of deposition following the filing of its motion.  To inform its analysis of the question of forfeiture, the court focused on the “crucial” question of whether the party advancing the Rule 12 motion met the Rule’s underlying objective of eliminating unnecessary delay at the pleading stage. Citing Dana’s timely filing of its motion to dismiss for lack of personal jurisdiction thirty days after receipt of service of the plaintiff’s complaint, and its “limited and reasonable participation in discovery,” the court concluded that Dana did not forfeit its right to assert a motion to dismiss for lack of personal jurisdiction.

The Murray decision is merely the latest in a line of cases expounding upon the landmark Daimler decision, with much remaining to be determined about the limits of a forum’s exercise of personal jurisdiction over a foreign corporation. The full decision can be read here.

About The Authors

Carolyn Riggs is an Associate in the firm’s Products Liability & Complex Tort practice where she focuses on insurance defense and toxic tort litigation. In her career, Carolyn has represented corporate clients in all phases of civil litigation in both state and federal court. She has defended clients against a variety of claims, including negligence, breach of warranty, failure to warn, wrongful death, breach of fiduciary duty, and consumer protection violations.

Brian Gross is a Partner in the firm and has extensive experience in a broad spectrum of litigation, including complex product and food liability matters, toxic tort and environmental litigation, pharmaceutical and medical device litigation, business and commercial disputes, and corporate and shareholder litigation.