The Florida Asbestos and Silica Fairness and Compensation Act (the “Act”) has governed asbestos litigation in Florida nearly seamlessly for more than a decade until a series of recent challenges threw a wrench into the system by calling into question its constitutionality.

The purpose of the Act, which came into effect in June 2005, is to preserve funds of viable defendants in asbestos litigation to ensure compensation for those who develop or may develop asbestos-related cancers or an actual physical impairment caused by asbestos, and enhance the ability of the judicial system to supervise and control asbestos litigation. See § 774.202. While Defendants will argue the Act has served its purpose, Plaintiffs contend quite the contrary. In three separate motions filed in the Robert G. Clark, et. al. v. Borg Warner Corporation, et. al., Case No. 14-027985, Miami-Dade County, Florida case, Plaintiffs attempt to undo the legislative reform of asbestos litigation in Florida by challenging the constitutionality of the following provisions of the Act: (1) the pleading requirements for establishing an alleged non-malignant asbestos-related physical impairment; (2) the limitations on the liability of sellers and retailers; and (3) the abolition of punitive damages.

In the first of the three motions, Plaintiffs address the provisions of the Act, which govern the pleading requirements applicable to plaintiffs pursuing claims for non-malignant asbestos-related diseases. See Fla. Stat. §§ 774.204(1) and 774.205(2). These provisions require a plaintiff to demonstrate a “physical impairment” by requiring them to file prima facie evidence supporting his/her alleged asbestos-related injury along with their complaint. In Clark, while Plaintiffs provided medical documentation, which they maintain establishes Mr. Clark’s alleged diagnosis of asbestosis, they concede not only that the documentation provided does not meet the requirements of the Act, but also that they will never be able to meet those requirements. As such, they argue that these provisions of the Act should be declared unconstitutional on the following grounds: (1) they are procedural in nature, and therefore violate the separation of powers provision of the Florida Constitution; (2) they restrict access to the Courts; and (3) they violate Plaintiffs’ right to equal protection.

Plaintiffs’ first argument in support of this motion is based on the premise that the Act is procedural in nature, and therefore violates the separation of powers provision of the Florida Constitution, which grants the Florida Supreme Court exclusive authority to enact procedural laws. Plaintiffs look to the Florida Supreme Court’s ruling in Massey v. David, 979 So.2d 931, 936 (Fla. 2008) (citing Allen v. Butterworth, 756 So.2d 52, 59 (Fla. 2000)), which states “[g]enerally, the Legislature is empowered to enact substantive law” and the Florida Supreme Court “has the authority to enact procedural law.” In Massey, the Court described the difference between procedural and substantive law as follows:

Substantive law has been defined as that part of the law which creates, defines, and regulates rights, or that part of the law which courts are established to administer…On the other hand,


Continue Reading Florida Plaintiffs Challenge the Constitutionality of Florida’s Asbestos and Silica Fairness and Compensation Act

Oxford Global Resources, LLC v. Hernandez
Superior Court of Massachusetts
(Suffolk, Business Litigation Session)
Docket No. 1684-CV-03911-BLS-2


The Business Litigation Session of the Suffolk Superior Court in Massachusetts invalidated a contractual forum selection clause and dismissed an employer’s action to enforce a noncompetition agreement signed by a former employee, because the employer forced a Massachusetts forum upon a California employee in order to circumvent California public policy against the enforcement of noncompetition agreements.

Plaintiff-employer Oxford Global Resources, LLC (“Oxford”), a recruiting and staffing company specializing in placement of information technology contractors to businesses, hired defendant-employee Hernandez to an entry-level position as an account manager. When hired, Hernandez had to sign an offer letter and a separate “protective covenants agreement” which contained confidentiality, noncompetition, and non-solicitation provisions. The agreement also contained a forum selection clause requiring that any lawsuit arising from the agreement be brought in Massachusetts, and a choice-of-law provision providing for the application of Massachusetts law to the agreement.

Oxford hired Hernandez to work in its Campbell, California, office. Hernandez interviewed for the position in California; signed the offer letter and agreement in California; was trained by Oxford in California; conducted all of his work for Oxford in California; and reported to Oxford supervisors who were located in California. Indeed, the Court found that all relevant events and all of Oxford’s alleged injuries occurred in California. The only connection to Massachusetts, the Court noted, was Oxford’s allegation that its principle place of business was there.

Oxford sued Hernandez in Massachusetts alleging that Hernandez used information regarding the identity of Oxford’s customers to solicit those customers on behalf of a competitor in California. Hernandez moved to dismiss the action under the doctrine of forum non conveniens, which permits dismissal when “the court finds that in the interest of substantial justice the action should be heard in another forum.” Mass. Gen. Laws, ch. 223A, § 5. Despite the forum selection clause, Hernandez prevailed and the Court dismissed the action in order for it to be heard in a California court.

The Court engaged in a three-step analysis leading to dismissal. First, it determined that California law governed the agreement despite the choice-of-law provision favoring Massachusetts law because the agreement was an improper contract of adhesion since Hernandez did not have a meaningful opportunity to negotiate it. Oxford’s offer to Hernandez was a take-it-or-leave-it offer, no negotiation of the agreement’s terms took place, and Hernandez had no bargaining power as an entry-level employee with no previous experience in the industry. The Court discounted the agreement’s boilerplate language that Hernandez had the opportunity to consult a lawyer and that he was not under duress as insufficient to overcome the disparity in bargaining power between the parties.

Significantly, the Court found the choice-of-law provision to be an apparent attempt by Oxford to circumvent California’s public policy against the enforcement of noncompetition agreements. Without the provision, California law would have governed the agreement because California had the most significant relationship to the
Continue Reading Massachusetts Superior Court Invalidates Forum Selection Clause and Dismisses Employer’s Action To Enforce a Noncompetition Agreement

architecture-22039_960_720“Veil piercing” is an equitable remedy that allows a plaintiff with a claim against an entity to obtain relief from the entity’s owners, in spite of laws providing for limited liability.  When the owners provide personal guarantees or otherwise contract around liability protections, or when the owners are sued in their own right based on their own conduct, it is not necessary to pierce a veil of limited liability.  True veil piercing – where the owners are asked to stand in for acts of the entity – is an extraordinary remedy to be reserved for the most extreme cases.

Courts generally have reviewed several factors, with varying degrees of emphasis, when determining whether to pierce the veil of a corporation.  These have included the existence of fraud, adherence to “corporate formalities” such as holding and documenting meetings, the level of capitalization, whether a dominant stockholder siphoned funds from the corporation, and whether investors are so active in the management of the corporation that the corporation is their “alter ego” or “instrumentality.”  Fraud may, depending on the circumstances, provide an independent basis for the liability of stockholders and others on the grounds that individuals are being found liable based on their own conduct.  Other factors supporting veil piercing also often stand in as proxies for fraud, or reasons to suspect fraudulent behavior.

As has become increasingly clear, Delaware “alternative entities” such as limited partnerships and limited liability companies are not the same thing as corporations.  While many of the same fiduciary principles applicable to corporate fiduciaries may apply under certain circumstances to the fiduciaries of an alternative entity, courts must remain sensitive to distinctions in entity law.  In the context of veil piercing, these distinctions suggest that a Delaware LLC should not be subject to true veil piercing at all, as opposed to the imposition of liability under standard concepts of fraud, fraudulent conveyance, etc.; and that assuming the LLC’s veil may be pierced, any piercing should be subject to different standards than those applicable to piercing the corporate veil.

Section 102(b)(6) of the Delaware General Corporation Law (“DGCL”) states that a certificate of incorporation “may” contain “[a] provision imposing personal liability for the debts of the corporation on its stockholders to a specified extent and upon specified conditions; otherwise, the stockholders of a corporation shall not be personally liable for the payment of the corporation’s debts except as they may be liable by reason of their own conduct or acts.”  8 Del. C. § 102(b)(6).  Thus, under the DGCL, the default rule is that stockholders are not personally liable for corporate debts based on their ownership of stock, but may be liable as a result of their own conduct, and may also agree in the charter to be liable to a specified extent and upon specified conditions.

Section 18-303(a) of the Delaware Limited Liability Company Act (“DLCCA” or “Delaware LLC Act”) states that

Except as otherwise provided by this chapter, the debts, obligations and liabilities of a limited liability company,


Continue Reading The Delaware LLC is Not a Corporation and Should Be Subject to a Different Veil Piercing Analysis

louisiana-890549_960_720Causation opinions from plaintiff’s experts in asbestos exposure cases have undergone a puzzling evolution as they continue to face successful challenges. From “every exposure” to “every exposure above background” and “every significant exposure,” each iteration has attempted to make the same end run around the plaintiff’s burden of proof by stating that all exposures in a lifetime work together to cause disease. A recent federal decision, however, struck another blow to the “every exposure” theory, adding to the growing case law debunking it as nothing more than junk science.

Under the “every exposure” theory advanced by plaintiff’s attorneys in asbestos litigation, each defendant whose product plaintiff may have worked with or around, no matter how infrequently, is equally liable. The theory claims that each exposure contributes to the development of disease, without making any attempt to quantify the specific exposures from various products. This is particularly problematic when you consider that exposures to asbestos from certain products may be so low that, taken individually, may not have resulted in disease. The “every exposure” theory glosses over these de minimis exposures with the opinion “each and every exposure” to asbestos contributes to the causation of disease.

Recently, federal courts have begun to critically analyze this “every exposure” theory, and to demand a more stringent causation analysis. In Smith v. Ford Motor Co, a Utah federal court found held that the “each and every exposure theory is based on a lack of facts and data.” Smith involved a plaintiff’s expert who opined that the plaintiff’s mesothelioma was caused by his total and cumulative exposure, with all exposures playing a contributory role. The court excluded that testimony, finding that the “every exposure” theory “asks too much from too little evidence as far as the law is concerned. It seeks to avoid not only the rules of evidence but more importantly the burden of proof.” Likewise, in Yates v. Ford Motor Co., a case out of the Eastern District of North Carolina, the court excluded testimony of another well-known plaintiff’s expert, finding that his adherence to the “each and every exposure” theory lacked a basis in supporting facts or data.

And most recently, in Bell v. Foster Wheeler Energy Corp., the Eastern District of Louisiana referenced the growing line of exclusionary opinions and stated that the “deficiencies of the “each and every exposure” theory of causation in asbestos exposure cases have been extensively discussed.” The court held that the theory is not an acceptable theory of causation because it amounts to “nothing more than the ipse dixit of the expert.” Though some state and federal courts continue to permit the “every exposure” theory, cases like Smith, Yates, and Bell add to the growing number of jurisdictions requiring plaintiffs to meet their burden of proof.
Continue Reading Another Blow to “Every Exposure” in Asbestos Litigation

california-160550_960_720Last month, the California Supreme Court issued a ruling on two coordinated “take-home” asbestos exposure cases, in which it held that employers using asbestos in the workplace have a duty of care to protect an employees’ household members from exposure to asbestos through off-site contact with employees who carry asbestos fibers on their work clothing and/or persons, also referred to as “take-home” exposure plaintiffs.  The Court noted that the duty of care existed regardless of whether the plaintiff states a claim for general negligence or premises liability.  This ruling helps clarify the law in California on the duty of care owed to “take-home” exposure plaintiffs, and in doing so further establishes California as a plaintiff-friendly state in asbestos litigation.

The Court’s opinion was premised on two “take-home” asbestos cases.  In one matter, the plaintiff filed suit against various defendants alleging that they exposed him to asbestos and caused his peritoneal mesothelioma.  Among the defendants was Pneumo Abex, LLC.  The plaintiff alleged that his uncle worked and was exposed to asbestos in a Pneumo Abex plant, which he then took home on his clothes and person and to which the plaintiff was subsequently exposed to during the 1970s.  In the other matter, the plaintiffs filed a wrongful death lawsuit against various defendants, alleging that their mother passed away from mesothelioma after also having been exposed to asbestos.  Among other defendants, the plaintiffs alleged that BNSF Railway Company employed and exposed the decedent’s husband to asbestos fibers, which he then brought home to the household he shared with the decedent, thereby exposing her to asbestos as well.

The Supreme Court set out to determine whether an employer or premises owner using asbestos has a duty to protect individuals secondarily exposed to asbestos through the clothing and persons of individuals either employed by the defendant or on the defendant’s premises.  After evaluating the facts and law, the Court held that “[w]here it is reasonably foreseeable that workers, their clothing, or personal effects will act as vectors carrying asbestos from the premises to household members, employers have a duty to take reasonable care to prevent this means of transmission,” and that the duty applies to employers and “also applies to premises owners who use asbestos on their property, subject to any exceptions and affirmative defenses generally applicable to premises owners.”  However, the Court noted that this duty  extends only to members of a worker’s household, regardless of whether they are a relative.

In reaching this holding, the California Supreme Court first noted that California Civil Code section 1714 “establishes a general duty to exercise ordinary care in one’s activities,” thereby meaning that the issue is not whether a new duty should be established, but rather whether the Court should create an exception such that employers and premises owners would not owe a duty of reasonable care towards a workers’ household members secondarily exposed to asbestos.  California law requires that courts consider the factors outlined in Rowland v. Christian, 69 Cal. 2d 108 (1968)
Continue Reading California Supreme Court Recognizes a Duty of Care to “Take-Home” Plaintiffs