Professional Liability

Ramsey v. Georgia Southern University Advanced Development Center, et al., No. 305, 2017, C.A. No. N14C-01-287 ASB (Del. June 27, 2018).

On June 27, 2018, the Supreme Court of the State of Delaware issued a fifty-seven-page opinion in the above-mentioned case, creating new precedent for Delaware employer liability in secondary or “take-home” asbestos cases. Below is a summary of both the relevant factual and procedural background, as well as Chief Justice Strine’s opinion.

The plaintiff’s spouse, Robert Ramsey, worked for Haveg Industries, Inc. at its industrial plant for twenty-four years. From 1967 to 1979, Mr. Ramsey regularly handled asbestos-containing products manufactured by Georgia Southern University Advanced Development Center and Hollingsworth and Vose Company as part of his job as a maintenance worker at Haveg. Throughout this period his wife, Plaintiff, Dorothy Ramsey, washed Mr. Ramsey’s asbestos-covered clothing. Mrs. Ramsey eventually developed lung cancer, from which she subsequently died in 2015. Her estate sued the manufacturers of the asbestos products, alleging that the cancer was caused by Mrs. Ramsey’s exposure to her husband’s asbestos-riddled clothing. In granting the appellee manufacturers’ motions for summary judgment and dismissing the claims, the Delaware Superior Court relied primarily on two previous Delaware Supreme Court cases, Riedel v. ICI Americas Inc., 968 A.2d 17 (Del. 2009), and Price v. E.I. DuPont de Nemours & Co., 26 A.3d 162 (Del. 2011), in which the Delaware Supreme Court held that an employer owed no duty to non-employees, including their spouses, for failure to adequately warn of the dangers of handling clothing exposed to asbestos, minus a special relationship between the employer and the non-employee, because the failure to warn was nonfeasance rather than misfeasance. Mrs. Ramsey appealed, arguing that in distinguishing an employer from a manufacturer: 1) a manufacturer of asbestos products creates the danger of asbestos-related harm and therefore commits misfeasance by failing to warn foreseeable victims; and 2) to the extent the holdings in Riedel and Price would block recovery on take-home claims against manufacturers, those holdings should be overruled. The appellant defendants argued that Riedel and Price controlled, and prevented Mrs. Ramsey from recovering from manufacturers because they are even further removed from an employer’s spouse than the employer itself. Additionally, they argued that allowing such claims would impose upon manufacturers an essentially limitless duty to warn that would be both impractical and unfair.

The Supreme Court acknowledged the compelling arguments on each side, but ultimately agreed with Mrs. Ramsey. First, the Court held that manufacturers owe a duty to warn to reasonably foreseeable users of their products, stating that “[b]ecause the risk of harm from take-home asbestos exposure when laundering asbestos-covered clothing is reasonably foreseeable, a plaintiff in Mrs. Ramsey’s position has a viable claim against a manufacturer . . . . Ramsey. at p. 44 of 57. However, the Court limited this duty by stating that the “sophisticated purchaser” defense would cut off a manufacturer’s liability to ultimate end users once the manufacturer has warned the
Continue Reading

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
Continue Reading

Asbestos(Cropped)Travelers Casualty and Surety Company (“Travelers”) dodged a bullet when a $36 million judgment entered against it was unanimously overturned by a recent Third Circuit ruling in General Refractories Co. v. First State Ins. Co., 2017 WL 1416364 (3d. Circ. 2017). Significantly, the Third Circuit held that Travelers had no obligation to indemnify its policyholder, General Refractories Company (“GRC”), for any losses associated with underlying asbestos-related lawsuits based on a policy exclusion for losses “arising out of asbestos.” The crux of the Court’s decision is hinged on the interpretation of the language that shaped the asbestos exclusion in Travelers’ insurance policy, which provided:

“It is agreed that this policy does not apply to EXCESS NET LOSS arising out of asbestos, including but not limited to bodily injury arising out of asbestosis or related diseases or to property damage.”

By way of background, GRC was a manufacturer and supplier of refractory products, some of which contained asbestos. The historical use of asbestos in some of GRC’s products resulted in over 30,000 lawsuits alleging injuries from exposure to asbestos starting in the late 1970s. While GRC’s primary liability insurers handled these claims, it also obtained excess insurance policies for additional coverage from a number of insurers, including Travelers. GRC began tendering the claims to its excess insurers in 2002, after its liabilities had far exceeded the limits of its primary insurance coverage, and the primary insurers could no longer defend and indemnify the company for these claims. All of GRC’s excess insurers, including Travelers, denied coverage based on their policies’ asbestos exclusions. As such, GRC initiated a lawsuit in the Eastern District of Pennsylvania, Gen. Refractories Co. v. First State Ins. Co., 234 F.R.D. 99, 100 (E.D. Pa. 2005), seeking to recover its losses from the underlying asbestos matters against its excess insurers, alleging that the asbestos exclusion did not preclude it from recovering under the policies. Through the course of the litigation, all of the excess insurers, with the exception of Travelers, resolved with GRC.

The District Court endeavored to interpret Travelers’ asbestos exclusion with a one-day bench trial, and considered argument and evidence from both parties. GRC held strong with its narrow interpretation of the asbestos exclusion, arguing that it only applied to raw mineral asbestos, not asbestos-containing products. In support of its position, GRC presented evidence of: (1) comparable insurance policies that clearly stated asbestos-containing products were excluded; (2) comparable insurance policies with definitions of “asbestos” that failed to include asbestos-containing products; (3) Travelers’ consecutive policies containing less ambiguous language; (4) the definition of asbestos-related claims from outside sources; and (5) expert testimony distinguishing between asbestos and asbestos-containing products. Travelers’ interpretation, however, was much broader, asserting that all asbestos-related claims were precluded under the asbestos exclusion.

The District Court agreed with GRC’s narrow interpretation of the word “asbestos” — concluding that it should be interpreted to mean raw mineral asbestos only. The Court explained that its interpretation was supported by GRC’s evidence of industry custom at the
Continue Reading

blood-pressure-1573037_1920On March 3, 2017, after less than four hours of deliberations, a Massachusetts federal jury found that Fresenius Medical Care was not liable for the 2012 death of one of their patients. The verdict drew to a close a four-week long bellwether trial, the second for plaintiffs who opted out of a $250 million settlement offered by Fresenius relating to dialysis products, NaturaLyte and GranuFlo.

The matter arose out of the death of fifty-seven year old North Carolina man, Carley Dial. The decedent’s wife and representative of the estate, Florella Dial, alleged that Mr. Dial suffered from cardiac arrest as a result of the misuse of NaturaLyte, a dialysis product manufactured and sold by Fresenius. Lead trial counsel, Robert Carey of Hagens Berman Sobol Shapiro, argued in his closing that Fresenius did not adequately warn about their products, nor did they have an understanding of their products to ensure they were safe.

Over the course of the fourteen day trial, several Fresenius staff members, from Mr. Dial’s treating nurse at the Pembroke, North Carolina clinic, to the current Chief Medical Officer of Fresenius, headquartered in Waltham, Massachusetts, testified before the jury to evidence the methods that were used to educate, train, and instruct dialysis clinics on their product, NaturaLyte. Plaintiff challenged this testimony by offering Mr. Dial’s treating physician assistant and staff member of Carolina Kidney Care, and PowerPoint presentations created by Fresenius in her attempt to evidence the alleged confusion regarding NaturaLyte.

Plaintiff expert, Dr. G.M. Samaras, a professional engineer and an expert in the field of industry accepted standards and risk management, testified that Fresenius was aware that the information and training they provided regarding NaturaLyte was confusing. Plaintiff also offered nephrologist, Dr. Borkan, who opined that Mr. Dial died from cardiac arrest as a result of metabolic alkalosis, caused by the mismanagement and overuse of NaturaLyte in Mr. Dial’s dialysis treatment. Ultimately, the jury disagreed and found that the use of NaturaLyte in Mr. Dial’s dialysis treatment was not the proximate cause of Mr. Dial’s death.

During his closing, lead trial counsel for Fresenius, James Bennett of Dowd Bennett LLP, argued that Mr. Dial did not die from cardiac arrest, but suffered a heart attack at home, hours after the conclusion of his dialysis treatment. He referred to Mr. Dial’s medical history which evidenced heart blockages and an undetected prior heart attack. Attorney Bennett argued that Mr. Dial’s blockages had been developing for several decades and Mr. Dial did nothing to correct them. Attorney Bennett highlighted that NaturaLyte has been on the market for more than three decades, contains the same amount of acid concentrates as competitors, and more than 305 million gallons of NaturaLyte were sold between 2000 and 2012.

Dr. William Buchanan, Mr. Dial’s treating nephrologist responsible for prescribing NaturaLyte, testified that he received appropriate training by Fresenius regarding the use of their products and that he had a clear understanding of the acid/base balance and conversions of NaturaLyte. Dr. Buchanan believed he provided individualized
Continue Reading

california-160550_960_720California’s Unfair Competition Law

The Legislature enacted California’s Unfair Competition Law (the “UCL”) to deter unfair business practices and protect consumers from exploitations in the marketplace. Allen v. Hyland’s Inc. (C.D. Cal. 2014) 300 F.R.D. 643, 667. Under the UCL “unfair competition” means “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act.” Bus. & Prof. Code, §§ 17200; 17500. The Legislature initially imposed no standing requirements for private litigants to bring suit and, “[a]s a result, a private individual or entity with no relationship to the alleged wrongful practice could use the statute to force a business to repay substantial sums arguably acquired through a UCL violation.” In re Tobacco II Cases (2009) 46 Cal.4th 298, 329 (dissenting opinion).

In November 2004, California voters passed Proposition 64, a ballot proposition designed to prevent “shakedown suits” brought under the UCL. In re Tobacco II Cases, 46 Cal.4th at 316. Lawmakers aimed Proposition 64 at “unscrupulous lawyers” who exploited the UCL’s generous standing requirement to extort money from small businesses by bringing frivolous lawsuits. Id.[1]  

Proposition 64 required that for private litigants to bring an action under the UCL the litigant must suffer an actual economic injury as a result of the unfair business practice at issue. Bus. & Prof. Code, § 17204. Critically, under Proposition 64, local public prosecutors can still bring UCL lawsuits without meeting the more stringent standing requirements applicable to private litigants. Bus. & Prof. Code, § 17204. Thus, while Proposition 64 limited private litigants’ standing to sue under the UCL, government prosecutors’ standing was in no way affected by this law. Californians For Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 232.

The Aftermath of Proposition 64

Ever since the Legislature amended the UCL pursuant to Proposition 64, California courts have been faced with the issue of interpreting the “as a result of” language under the UCL. The California Supreme Court has opined the “as a result of” language requires that a putative plaintiff actually relies on the conduct at issue in order to have standing to sue under the UCL. In re Tobacco II Cases (2009) 46 Cal.4th 298, 326. The actual reliance need not be the only cause of the plaintiff’s harm; so long as the reliance is a substantial factor in actually influencing the plaintiff’s decision, standing will lie. Id., at 326-27.

In 2016 the Court of Appeal for the Second District recognized that the “as a result of” language required “reliance on a statement for its truth and accuracy.” Goonewardene v. ADP, LLC (2016) 5 Cal.App.5th 154, 185 (citing Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 327).

Veera v. Banana Republic, LLC

The California Supreme Court will have another opportunity to further define “as a result of” under the UCL in a case which appellant Banana Republic recently filed for review. In Veera v. Banana Republic, LLC the plaintiffs alleged that they were “lured” into a
Continue Reading