MG+M Boston Attorneys Eric Skelly and Christos Koutrobis successfully obtained dismissals for two clients in James T. Casey, Jr. v. Apax Partners et al., 1:18-cv-11211-DJC, a case that was pending at the U.S. District Court for the District of Massachusetts. On behalf of MG+M’s foreign client, a motion to dismiss for improper service and lack of personal jurisdiction was granted by Judge Casper. MG+M navigated a voluntary dismissal for its other client through the discovery process by demonstrating, based on the evidence, that the client was not liable for the product at issue.

Plaintiff alleged in his lawsuit that he was ordered to wear an electronic monitoring bracelet as part of his pre-trial probation. In his complaint, he stated that the bracelet wrongfully indicated that he was outside of the approved geographic area, which resulted in two days of imprisonment. As such, he brought forth claims against the defendants under the Massachusetts’ consumer protection laws as well as claims for design defect and negligence.

In its decision on defendant’s motion to dismiss, the Court highlighted Plaintiff’s allegation that the defendant, a foreign entity, was liable because its unidentified affiliate assumed the rights and liabilities of the former manufacturer of the electronic monitoring bracelet. The Court noted that even if the Plaintiff established that this affiliate conducted activities in Massachusetts that would subject it to the Court’s jurisdiction, Plaintiff still would need to prove that the affiliate’s conduct could be imputed to the foreign entity by “piercing the corporate veil.” Under Massachusetts law, corporations are presumed to be separate entities. To ignore corporate separateness a party must demonstrate: 1) “active and direct participation by the representatives of one corporation, apparently exercising some form of pervasive control, in the activities of another and there is some fraudulent or injurious consequence of the intercorporate relationship;” or 2) “a confused intermingling of activity of two or more corporations engaged in a common enterprise with substantial disregard of the separate nature of the corporate entities, or serious ambiguity about the manner and capacity in which the various corporations and their respective representatives are acting.” My Bread Baking Co. v. Cumberland Farms, Inc., 353 Mass. 614, 619 (1968). Plaintiff attempted to satisfy these requirements through evidence that suggested the foreign entity merely advised its unidentified affiliate during the acquisition of the electronic monitoring business. The Court, however, held that this evidence fell short of the threshold to disregard corporate separateness and “pierce the corporate veil.” Accordingly, the Court held that it did not have personal jurisdiction over the foreign entity.

This decision reinforces the long-standing principle of corporate separateness and should be beneficial to foreign defendants challenging personal jurisdiction in the future.

Defendants DCo, LLC (formerly known as Dana Companies) and Ford Motor Company (collectively “Defendants”) recently obtained a defense verdict in an asbestos personal injury matter following a nine day trial that took place in the Western District of Washington. Plaintiffs alleged the decedent, Patrick Jack, developed mesothelioma as a result of exposure to asbestos from products manufactured or supplied by the Defendants. Plaintiff passed away at the age of 81. Specifically, Plaintiffs claim that Mr. Jack was exposed to asbestos: (1) during his childhood and teenage years through his father’s work at Union Pacific; (2) through his own work as a machinist and piping inspector during his service in the U.S. Navy from 1955 to 1962 and 1967 to 1973; and (3) through his own work as an automotive mechanic from 1955 to 2001. Plaintiffs* claimed Mr. Jack was exposed to asbestos through his father’s work clothing. Mr. Jack testified at his deposition that after finishing a day’s work, his father returned home dirty and was routinely greeted by Mr. Jack. Further, Mr. Jack testified at his deposition that he remembered being present as his grandmother shook out his father’s clothes before washing them. On occasion, Mr. Jack accompanied his father to work at Union Pacific and recalled witnessing individuals cut cement pipe and handle insulation. Through his own work, Mr. Jack alleged exposure to asbestos from work with automotive clutches and brakes manufactured by Ford, among others, and automotive gaskets manufactured by Victor (a brand associated with DCo, LLC formerly Dana Companies), among other manufacturers. In April 2017, Plaintiffs brought both common law negligence claims and statutory strict liability claims as enumerated in WASH. REV. CODE 7.72 et seq., in which they alleged defective design and failure to warn against a number of entities, in addition to the Defendants, predominantly associated with Naval vessel equipment. However, because Mr. Jack’s alleged exposure predated the 1986 Washington Tort Reform Act, which established proportionate several liability, the Defendants were subject to the pre-existing law which imposes joint and several liability.

The defendant-equipment manufacturers associated with Mr. Jack’s Naval service were no longer in the case at the time of trial. At trial, Plaintiffs relied on expert testimony of Dr. Carl Brodkin (occupational medicine); Dr. Arnold Brody (cell biology), Dr. Ronald Gordon (pathology; lung fiber burden), and Sean Fitzgerald (geology expert who tested Victor gaskets found in Mr. Jack’s garage). As stated above, because the Plaintiffs’ claims were subject to Washington’s pre-Tort Reform law, mandating joint and several liability with set-offs for prior settlements, only Dana and Ford could be included on the verdict slip. The trial began on October 1, 2018 and both Plaintiffs and Defendants were limited to 24 hours each on the record. After both sides presented their respective cases, the jury began deliberations on October 11, and returned with a verdict the next day. The jury found that neither defendant was strictly liable for allegedly manufacturing and or selling a defective product. However, the jury was not able to reach a unanimous decision as to the remaining negligence claim against each defendant. As a result, U.S. District Court Judge James Robart declared a mistrial as to both negligence claims, but reserved judgment until October 24 to allow parties an opportunity to challenge the verdict concerning strict liability. The Court has reported that once the judgment is entered, it will set a new trial date on the negligence claims.

Plaintiffs were represented by Ben Adams of Dean Omar in Los Angeles and Tom Breen of Schroeter Goldmark in Seattle.

______________________________________________________

*Leslie Jack, individually and as the personal representative of Patrick Jack and David Jack, individually.

Recently, the Texas Court of Appeals (1) upheld a jury’s finding of gross negligence and (2) explained how a trial court should calculate exemplary damages under Texas law, in The Goodyear Tire & Rubber Company, v. Vicki Lynn Rogers, et al., No. 05-15-00001-CV, 2017 WL 3776837 (Tex. App. Sep. 13, 2017).  In this case, the decedent, Carl Rogers, passed away from mesothelioma.  From 1974 to 2004, he worked as a tire builder at a Goodyear facility in Tyler, Texas, where he allegedly was exposed to asbestos from overhead insulation and from brakes in tire building machines located in the Tyler facility.  Mr. Rogers’ wife (as the representative of his estate) and two daughters sued his employer, The Goodyear Tire & Rubber Company (“Goodyear”), for wrongful death allegedly caused by Goodyear’s gross negligence.  Typically, workers’ compensation is the exclusive remedy for plaintiffs who attribute the cause of death to the negligence of a decedent’s employer.  However, Texas’ workers’ compensation law allows a plaintiff’s surviving spouse and heirs to recover exemplary damages when the employee’s death resulted from the employer’s gross negligence.

 

The jury found by clear and convincing evidence that Goodyear’s gross negligence caused Mr. Rogers’ mesothelioma, and ultimately, his death.  To calculate exemplary damages, the trial court asked the jury to determine plaintiffs’ past and future pecuniary loss, past and future loss of companionship and society, and past and future mental anguish.  In addition to making those findings, the jury assessed $15 million in exemplary damages, with 90 percent of the award apportioned to the widow and 5 percent to each daughter.  After the jury’s verdict, the trial court conducted its own calculation of damages according to section 41.008(b) of the Texas Civil Practice and Remedies Code, which lowered the total award to $2,890,000.  On appeal, Goodyear unsuccessfully challenged the jury’s finding of gross negligence, but prevailed in its challenge to the trial court’s calculation of exemplary damages, reducing the total award to $1,150,000.

 

To prove gross negligence, “a plaintiff must demonstrate, by clear and convincing evidence that: (1) when viewed objectively from the defendant’s standpoint at the time of the event, the act or omission involved an extreme degree of risk, considering the probability and magnitude of the potential harm to others, and (2) the defendant had actual, subjective awareness of the risk involved, but nevertheless proceeded with conscious indifference to the rights, safety, or welfare of others.”  U-Haul Int’l, Inc. v. Waldrip, 380 S.W.3d 118, 137 (Tex. 2012).

 

The Texas Court of Appeals first addressed the objective component of gross negligence, and described extreme risk as the likelihood of the plaintiff’s serious injury, rather than a remote or even high probability of minor harm.  While Goodyear conceded that mesothelioma is a serious injury, it argued the plaintiffs did not prove the likelihood of that injury.  To support this argument, Goodyear used the plaintiffs’ best evidence regarding dosage, which increased the risk of developing mesothelioma by 22 times over that of someone who was not exposed to asbestos.  Even with this increase, Mr. Rogers’ chance of developing mesothelioma still amounted to one in 45,000, which Goodyear asserted could not amount to an extreme risk as a matter of law.  Instead of relying on the statistical evidence as Goodyear requested, the Texas Court of Appeals focused on the relationship between the employer and its employees.  There was evidence presented at trial that suggested the Goodyear plant in Tyler was aware of risks associated with asbestos from 1972 to 1983 and even was directed to conduct air sampling.  When new asbestos standards were released by OSHA in 1972, Goodyear communicated the standards in a letter sent to its plant personnel managers with Goodyear’s own instructions regarding asbestos.  The letter included a warning that asbestos fiber inhalation possibly caused mesothelioma, and stated that routine air sampling was to be conducted in the Goodyear facilities.  An employee for Goodyear, Ray Jackson, was trained in industrial hygiene and testified on behalf of Goodyear at trial.  He testified to personally taking asbestos samples at the Tyler plant from 1972 to 1976, but provided no physical proof.  However, at his deposition a few weeks before trial, he testified that the first time Goodyear performed air sampling tests for asbestos was in 1978 in response to an OSHA complaint.  Goodyear also kept a report of chemical samples that were taken in the Tyler facility, according to which thirty-six asbestos samples were taken, starting in 1978.  The report also indicated that Goodyear monitored the asbestos exposure to the contractors working in its facility, but not the exposure to its employees.  Further, Goodyear did not warn its employees of the risks associated with asbestos exposure until 1983.  In the mid-1980s, it began replacing the tire building machines with non-asbestos containing machines and commenced asbestos abatement of the insulation in the Tyler facility.  This relationship between the employer and its employees, along with the quick death associated with mesothelioma, were the main reasons the court upheld the jury’s decision regarding the objective component of gross negligence.

 

Next, Goodyear argued that plaintiffs did not prove the subjective element of gross negligence.  This element requires that the plaintiff prove the defendant knew about a risk, but by its actions or omissions established it did not care.  Regarding knowledge, Goodyear argued on appeal that the evidence at trial showed only that Goodyear generally knew, from 1974 to 1985, that asbestos exposure could cause mesothelioma, and not that it knew the dose of asbestos Mr. Rogers was exposed to could cause mesothelioma.  The Texas Court of Appeals was not persuaded.  In upholding the jury’s decision regarding the subjectivity component, the Court stated that it was sufficient to show that Goodyear knew that exposure to low levels of asbestos could cause people to develop mesothelioma, and that the communications Goodyear sent to its plants in 1972 gave the jury sufficient evidence to come to that conclusion.  As for an action or omission, Goodyear’s only evidence that it displayed proactive behavior came through its employee, Ray Jackson, who was impeached at trial with his prior deposition testimony.  Plaintiffs, on the other hand, submitted evidence that Goodyear had a pecuniary motive to not monitor its employees.  In a letter dated August 1981 from Goodyear to plants not manufacturing asbestos-containing products, Goodyear sought to avoid classification as an employer where asbestos fibers were released, citing the “considerable expense and duration” of a monitoring and medical surveillance program.  In the Court’s view, the reasons outlined above were sufficient for the jury to find the subjective component of gross negligence had been established against Goodyear.

 

The final and perhaps most interesting part of the decision concerned the trial court’s calculation of exemplary damages.  Under section 41.008(b) of the Texas Civil Practice and Remedies Code, the statutory calculation of exemplary damages is the sum of two times the economic damages, plus the statutory maximum of $750,000 in noneconomic damages.  The difference between “economic” and “noneconomic” damages formed the heart of the Texas Court of Appeals’ calculation pursuant to section 41.008(b).  Goodyear argued that the jury impermissibly considered non-monetary damages, like Mr. Roger’s practical advice to his spouse, in its calculation of exemplary damages.  Economic damages were defined by the Court as “those types of losses that are supported by evidence of an existing in fact, real monetary loss like lost wages, lost profits, or the increased expenditures associated with obtaining replacement or new services.”  Thus, practical advice given by Mr. Rogers was not considered an economic loss unless actual evidence was provided that displayed a monetary effect to replace that advice.  Based on this error, the Court of Appeals agreed with Goodyear’s assertion that plaintiffs had shown only $200,000 in actual monetary damages.  As a result, the court suggested a remittitur of exemplary damages reducing the total award to $1,150,000.