Document 6bVpGJ718BNjq5ez1EK3DYJx3

FILE NAME: Eagle-Picher (EP) DATE: 1983 DOC#: EP023 DOCUMENT DESCRIPTION: Asbestos Litigation Reporter Articles Asbestos Litigation Reporter ' THE NATIONAL JOURNAL OF RECORD OF ASBESTOS LITIGATION_________________ __________ Published bv Aridrews Publications. Inc., P.O. Box 200. Edgemont. Pennsylvania 19028 (215) 353-2565 July 22, 1983 IN THIS ISSUE: PAGE PLAINTIFF ATTORNEYS MAKE COUNTER OFFER TO JM INDEX TO DOCUMENTS IN THIS ISSUE REMINOER THAT CURRENT SUBSCRIPTION PERIOD OVER TYLER I DOCUMENTS UNSEALED IN TEXAS ' 1942 EAGLE PICHER' DOCUMENTS DISCUSS ASBESTOS CA JUOGE RULES CELOTEX NOT LIABLE AS SUCCESSOR JUDGE-ORDERS JM SETTLEMENT TRUST PAID TO PLAINTIFF 7TH CIR. UPHOLDS STATUTE OF LIMITATIONS DISMISSAL JM FILES SUIT AGAINST U.S. IN CLAIMS COURT 6TH CIR. REFUSES STAY TO JM CO-DEFENDANTS CU FILES ANOTHER DECLARATORY JUDGMENT AGAINST PC OHIO JUDGE FORMALLY APPOINTS SPECIAL MASTERS FLINTKOTE BARRED FROM COORDINATED CASES IN CA PLAINTIFF APPEALS TO INTERVENE IN JM ACTION MD COMPANY DISMISSED UNDER WORKMEN'S COMP SETTLEMENTS REACHED PRIOR TO PHILA. JURY TRIALS ACTION ONCE DISMISSED NOW SETTLED FOR 5157,500 PENNSYLVANIA COURT APPLIES LONG-ARM STATUTE FOUR CASES SETTLED PRIOR TO TRIAL IN WASHINGTON AL COURT CLARIFIES NEW STATUTE OF LIMITATIONS EPA FILES FOR CLEANUP OF ARIZONA MOBILE HOME PARK SEMINAR ADDRESSES INSURANCE COVERAGE DISPUTES 6,908 6,910 6,911 6,912 6,912 6,914 6,915 6,916 6,918 6,920 6,921 6,922 6,923 6,924 6,925 6,925 6,928 6,928 6,930 6,931 6,932 6,934 PLAINTIFF ATTORNEYS MAKE COUNTER OFFER TO JOHNS-MANVILLE P la in t if f attorneys comprising the Asbestos-Related L itig a n ts and/or Creditors Committee Wednesday morning made a counter-offer to JohnsM anville Corp. executives t o settle a ll pending asbestos claims against the company. The o ffe r was presented ve rb ally to JM, with explanations of the . various methodology used to arrive at the fin a l fig u re . While the o ffe r i s confid ential, i t i s known that i t i s below the $850 m illio n o r i g i n a l l y demanded by the p l a i n t i f f attorneys to se ttle the current cases. It was also well in excess of the $400 m illio n that had previously been put on the table by JM. _ ` Continued on P. 6,911 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc., Edgemont. PA 19028 July 22, 1983 INDEX TO DOCUMENTS IN THIS ISSUE A N D R E W S PUBLICATIO NS, INC.: Mailing address P.O. Box 200, Edge m ont PA 19028. Editorial and head quarters address 5123 West Chester Pike, Edgemont, PA 10928 (215) 353 2555, Teiex 6851188 ANDREW S. Leonard E B . Andrews, Editor and Publisher; Michael P. Mealey, Man aging Editor; William T. Keough, Associate Editor. Staff Writers: Harry G. Armstrong, W.Thomas Hagy, Thomas M. Hennessey, Esq., Arthur M. McGuire. Indexer/Law Ubrarian Sandra P. Sadow. P U B LIC A T IO N S: Asbestos Litiga tion Reporter, Automotive Litigation Reporter, Aviation Litigation Repor ter, D E S Litigation Reporter, General Aviation Accident Report, Hazardous Waste Litigation Repor ter, Iranian A sse ts Litigation Reporter, National Bankruptcy Reporter, O B/G Y N Litigation Repor ter, Toxic Chem icals Litigation Reporter and Stockholders & Credi tors News Service re. Braniff International, Inc.; Itel Corp.; Wickes Companies; Nucorp Energy Corp.; Johns-Manville Corp., et ai. SERV I CES: Andrews Special Litigation Seminar Programs; Federal Court Document Service; Institutional Special Research Services. C O P Y R IG H T 1983 A N D R E W S PU BLICATIO NS, INC. ALL RIGHTS RESERVED P U B L IS H E R 'S STATEMENT: A SB EST O S LITIGATION REPOR TER, published second and fourth Friday monthly since February 1979. Six month subscription record peri ods February through July and August through January. $350 for six months, $700 per year. Sent first class mail. Overseas airmail addi tional. IS S N 0273-3048 CU V. PC ( Phi 1a. ) Declaratory judgment action by Commercial Union and Falcon Insurance v. Pittsburgh Corning Corp., Philadelphia Common Pleas Court. P. 6,935. MITCHELL (ND CA) Ruling by Bankruptcy Court that 5150,000 paid to tru s t fund by Johns-Manville must be paid to p la in t if f . ND CA. P. 6,937. SPECIAL MASTERS (ND OH) Order by Federal Judge Lambros appointing special masters in asbestos l i t i g a t i o n . P. 6,941. WORKMEN'S COMP (MD) Order by Baltimore C ir c u it 'Court granting sumnary judgment to McComrick Asbestos Co. under Maryland's Workmen's Compen sation Act. P. 6,945. TYLER (ED TX) Order by Federal Judge Steger un se a lin g Tyler I documents, ED TX. P. 6,947. EAGLEPI CHER Documents from 1942 written by Eagle-Picher salesman regarding asbestos. P. 6,949. PITTS (7th Cir) Opinion by the Seventh C irc u it Court of Appeals upholding summary judgment dism issal under Indiana Statute of Lim itations. P. 6,951. JM v. U.S. Complaint and accompanying (Claims Ct) document by Johns-Manville v. U.S. Claims Court. P. 6,954. CELOTEX (ND CA) Order by Federal Judge Peckham, ND CA, that Celotex Corp. cannot be held lia b le as a successor of P h ilip Carey Manufacturing Co. fo r punitive damages. P. 6,963. STAY (6th Cir.) Ruling by the 6th C ir c u it Court Court of Appeals that co-defendants of JM are not e n title d to a stay. P. 6,973. 1983 Andrews Publications. Inc,, All Rights Reserved Reproduction strictly prohibited without permission, p _ g 9 Q 9 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc., Edgemont.'PA 19028 J u l y 2 2 , 1983 CURRENT SUBSCRIPTION PER 100 CONCLUDED This issue of the Asbestos Litig a tio n Reporter concludes the current six-month subscription period, and subscribers are reminded that they must renew their subscription i f they wish to continue receiving the publication. . . The next six-month subscription period runs from August through ' January, 1984. Cost remains $350 for the period, or $700 for a f u ll year. Annual renewals will avoid a price increase that is being considered for the subscription period beginning February, 1984. To renew, notify Andrews Publications, today at.. ?0- Box 200, Edgemont, PA^_......... 19028, or telephone (215) 353-2565. "TM 1983 A m ir m Publications, Inc,, A ll Rights Reserved. Reproduction strictly prohibited without permission, p _ g 9 1Q Asbestos Litigation Reporter Published twice monthly by Andrews Publications, Inc., Edgemont, PA 19028 July 22, 1983 Continued from P. 6,908 JM o f f ic i a l s were planning to work on the proposal over the next several days, comparing it to past settlements and judgments against it. Both sides will meet next Wednesday in a continuing' effort to reach a compromi se. There is optimism on both sides, however, that a settlement might be worked out, resulting in a consensual reorganization plan for JM sometime t h i s f a l l . That optimism yesterday resulted in an approval by Bankruptcy Judge Burton R. Lifland of another extension of the period in which JM has the exclusive right to f i l e a reorganization plan. The latest exten sion was fo r 52 days, to Sept. 15-- only eight days shorter than the 60-day extension sought by JM. It also marked a departure by Judge Lifland to limit extensions to only 30 days. Attorney John Jerome of Milbank, Tweed, Hadley & McCloy, representing the unsecured creditors, said that he expected by Sept. 15 that an agree ment for a plan will be worked 'out among all parties. If an agreement is not reached by that date, he told the court, he would oppose any further extensions of the e x c lu siv ity period. G. Earl Parker, senior vice p re si dent of JM, told Judge Lifland the company expects to know by Labor Day whether i t can achieve a consensual plan. Parker, assistant corporate counsel Dennis Marukusson and various other JM o f f i c i a l s and attorneys received the counter offer at Wednes d ay 's meeting. They agreed not to disclose it even to other committee o f f i c i a l s until after next Wednesday's session, when the two sides d is cuss the offer in detail. The offer provides a trust fund for medical research, but did not go into any detail about how the overall settlement fund would be admin istered. "We have our ideas on th a t," one p l a i n t i f f attorney said, "but there is no use in discussing how to disburse something until you know you have something to disburse." Meanwhile, in Washington D.C., meetings were being held by producers th is week in an attempt to work out agreement on a scheme to settle coverage disputes with their insurers. The meetings are part of the ongoing efforts of the so-called Asbestos Claims Counsel to resolve coverage issues and e stablish alternative dispute mechanisms to handle asbestos lit ig a t io n (See Asbestos LR 5/13/83, P. 6,589). There is optimism that the insurers and producers can eventually agree to at least an interim scheme, but some producers are said to be in fle x ib le about making any concessions to the insurance industry. Hardliners are said to be holding out for complete coverage through 1983, but are being pressured to soften that stance. Rapid progress is reportedly being made by Edward K. Hamilton of Hamilton, Rabinowitz & Szanton, a consulting firm, to draw up the plans ' for a central claims f a c i l i t y for the ACC that would arbitrate asbestos " 1983 Andrews Publications, lnc,, All Rights Reserved Reproduction strictly prohibited without permission. P . 6 , 9 1 1 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc., Edgemont, PA 19028 J u l y 2 2 , 1983 claims. There is some question over whether such a f a c i l i t y could be established without at least an interim resolution of the coverage question, however, some feel the two are not interdependant. k ir k TYLER I DOCUMENTS UNSEALED BY TEXAS JUDGE Federal Judge William Steger last week signed an order removing a1-1 Tyler I discovery materials from under seal, ru lin g that they were f u ll y discoverable without application to his court (See P. 6,947). In his July 14 order, Judge Steger said he o r ig in a lly sealed the documents to keep Tyler I discovery materials protected until all l i t igation surrounding Pittsburgh C o m in g 's Owentown Plant had been con cluded. He said that the Tyler I I settlements had su b sta n tially ended the Owentown lit ig a t io n (See Asbestos LR 6/24/83, P. 6,791), therefore "the original purposes ju s t ify in g the sealing of the Tyler I discovery materials are no longer present." .. ' Judge Steger said he had been "inundated" with requests for access to or release of the sealed documents from lit ig a n t s throughout the United States, but that he had generally refused to grant the requests because Tyler I I was s t i l l pending before his court. The documents were returned under his order to the clerk of the Eastern D istrict of Texas. . Meanwhile, the fin a l settlement document between the U.S. and Tyler p la i n t i f f attorney Blake Bailey releasing the U.S. from the Tyler I I lit ig a t io n was s t i l l being reviewed for submission to the court, although there are no hitches in the agreement. Under terms of that settlement, the U.S. w ill pursue any default judgment obtained by the p la in t if f s against Cape Asbestos Industries of England, and any of i t s sub sidiarie s. Bailey reportedly has served notice on Cape a n d 'its s u b s i d i a r i e s that he is pursuing a default judg ment before Judge Steger, and a hearing w ill lik e ly be held on that motion in September. kkk 1942 EAGLE-PICHER DOCUMENTS DISCUSS ASBESTOS HAZARDS Documents produced by Eagle-Picher Corp. in conjunction with l i t igation in Washington State reveal that a salesman for the company in 1942 alerted the company to a rtic le s dealing with the hazards of asbestos (See P. 6,949 ). ' Continued 1983 Andrews Publicsdons. Inc.. AU Rights Reserved. Reproduction strictly prohibited without permission, p Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont, PA 19028 July 22, 1983 Continued . P l a i n t i f f attorney Ronald Motley of Blatt & Fales of Barnwell, SC, who is working with the Seattle law firm of Levinson, Friedman, Vhugen, Duggan, Bland. & Horowitz'on the Washington cases, said that in his opinion, the documents make Eagle-Picher "a prime target for punitive damage cla.ims." He said he was not aware-of'the documents surfacing previously. Motley and Ted R. Wi11 hite of the Levinson firm were among those conducting the discovery. The documents were written by salesman H.M. Aber in A pril, 1942. In one, a memorandum, Aber says that while in the office of a Texas State health office r, "I had the opportunity to read a section in 'Occupation and Health,1 as compiled by the International Labor Institute , on as bestos, compiled in 1938. This a rtic le was by Dr. S.R. Gloyne of London, England and Dr. E.R.A. Meriweather of Birmingham, England. If you think mineral wool is dangerous you should read t h i s . " He continues, "You may secure a copy of th is article by writing the ' International Labor Office in Washington, D.C. and request a copy of the a rtic le on Asbestos by the two doctors as published in the Occupation and Health Supplement, dated 1938. I urge you to read this as it i s very informative. I also read an a rtic le in a magazine by the name of 'In d u s t r ia l Medicine' written by Dr. Walter J. Siebert, which apparently covers some very exhaustive research on handling glass wool by workmen." Aber was in the office of W.B. Wardlow, a chemical engineer in charge of the Texas State Board of Health Laboratories to ask him to c la r if y a letter sent to Humble Oil & Refining Co. by the State Health Office regarding possible hazards of Eagle-Picher's Supertemp Block, in which he quoted from "Occupation and Health" about mineral wool, without naming the source. The memorandum says, "Mr. Wardlow read ily saw that we had been placed in an awkward and costly position and he has promised to help straighten things out in our favor. He told me that he doesn't feel that Supertemp is any more harmful than the majority of insulations now being used. He says that he did run a spectograph test and could not find any free s i l i c a , therefore, in his opinion s i l i c o s i s would not result from hand ling th is material. At th is point I prevailed upon him to write Mr. Wiler of Humble Oil & Refining Company's safety Department in Baytown, Texas, advising him that s i l i c o s i s would not occur to workmen handling the material. He promised to do this and to also point out that the. opinions voiced in his letter were meant to deal with mineral wool in general rather than with a specific product." Aber explains in the memorandum that he requested Wardlow in writing to c l a r i f y his e a rlie r letter to Humble, then relates the information he read_in "Occupation and Health." He concludes the memorandum: " I should mention that Wardlow will contact Humble in person to make any reasonable test on Supertemp relative to it s being injurious to workmen, i f re quested by either Humble or ourselves. I f we are sure of ourselves on th is product th is might be the thing to do, as his opinion would be worth having in an authoratative report. Let me know i f you would like to have him v i s i t the Humble plant, as I believe it can be easily arranged. 8 1983 Andrews Publications, Inc- AH Rights Reserved Reproduction strictly prohibited without permission, p 6 , 9 1 3 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc., Edgemont. PA 19028 J u l y 2 2 , 1983 There is one thing to remember, however, Mr. Ward low being in the employ of the State is going to be a bit reluctant to make any d e finite sta te ments with regards to any product being absolutely harmless to workmen, as his position with the State Department more or less forces him to 'rid e the fence' so to speak.11 Later that month, Aber wrote to Humble's Safety Department to te ll . him that he could procure the "Occupation and Health" a rtic le on asbestos by writing the International Labor Office. An Eagle-Picher o f f ic ia l told of the Aber documents in an i n terrogatory, and said that the Corporate Legal Department procurred a copy of the asbestos a rtic le from "Occupation and Health" in 1980. * ** CALIFORNIA JUDGE RULES CELOTEX NOT LIABLE AS SUCCESSOR CORPORATION Chief Judge Robert F. Peckham on June 30 granted Celotex Corp. ' s motion for partial summary judgment, dismissing the p l a i n t i f f s ' claim of punitive damage l i a b i l i t y in U.S. D is t ric t Court in C aliforn ia (In Re Related Asbestos Cases, ND CA, No. C-79--358 RFP, See P. 6,963.). The claim of punitive damage l i a b i l i t y against Celotex was premised upon the a c t iv it ie s of a predecessor corporation. In it s motion for partial summary judgment, Celotex argued that under C aliforn ia law, punitive damages can be imposed upon a successor corporation only i f the successor is so sim ilar to it s predecessor as to be indistinguishable. Judge Peckham, in addressing successor l i a b i l i t y in regard to pun itiv e damages, s p e c if ic a lly cited Ray v. Alad Corp. (19 Cal. 3d 22, 28; 1977) and Moe v. Transamerica T itle Insurance Co. (21 Cal. App. 3d 289; 1971). California law, Judge Peckham determined, adheres to the general rule that a corporation which purchases the principal assets of another corp oration does not assume the l a t t e r 's l i a b i l i t i e s unless: 1) there is an express or implied agreement of assumption; 2) the transaction amounts to a consolidation or merger of the- two corporations; 3) the purchasing corporation is a mere continuation of the se lle r; 4) the transfer of assets to the purchaser is for the fraudulent purpose of escaping l i a b i l i t y for the s e l l e r 's debts. The court concluded that "the fact that Celotex has continued several of the Carey (Corp.) product lines does not raise a material issue of fact sufficient enough to r e s is t summary judgment on the punitive damage issue." In Moe v. Transamerica, the court held a successor corporation liab le for the fraudulent conduct of an employee of the predecessor. In Moe, . Continued 1983 Andrews Publications, Inc., All Rights Reserved. Reproduction strictly prohibited without permission, p _ 6, 9 1 4 ! Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 July 22, 1983 Conti nued . however, Judge Peckham pointed out that the successor/defendant made no attempt to establish it s separateness from the original corporation. Celotex has demonstrated that i t is not a mere continuation of Carey, Judge Peckham wrote. Celotex was an ongoing concern when it purchased the stock of it s predecessor. None of the predecessor shareholders became shareholders of Celotex. The p la in t if f s , according to Judge Peckham's memorandum, "plan to introduce evidence to establish how the corporate changes occurred, that certain key Carey employees continued to work for Celotex and that Celotex continued manufacturing many of the same product lines of its predecessors. 11 Judge Peckham, however, cited Cermetek Inc. v. Butler Avpak (573 F.2d 1370, 1377; 9th Cir. 1978) and ruled that in order to defeat the motion for summary judgment, p la in t if f s must produce the evidence now; they are ' not entitled to a denial of the motion "upon unsubstantiated hope they (they) can produce evidence at t r i a l . " - JUDGE ORDERS JM SETTLEMENT TRUST TURNED OVER TO PLAINTIFF Bankruptcy Judge Robert L. Hughes of the Northern D istric t of Cal ifo rn ia last week ordered that $150,000 being held in trust to pay off Johns-M anvilie's share of an asbestos settlement when the company file d fo r Chapter 11 protection last August be turned over the the p l a i n t i f f 's estate (Mitchell v. Johns-Manvi1le, et a!., Adversary No. 4-82-1691 AH, Bankruptcy No. 8 2 -B -l1656, See P. 5,937). In issuing his order, Judge Hughes rejected arguments that the funds belonged to JM's bankruptcy estate. JM said it s law firm, Moore, C liffo rd , Wolfe, Larson & Trutner, was holding the $150,000 for JM's benefit, and that the p la i n t i f f had failed to meet the full conditions of the settlement by f a i l in g to forward a release by p la in t iff Albert M i t c h e l l 's minor daughter. Those arguments were rejected by Judge Hughes. Albert Mitchell agreed to settle his claim against JM and several other defendants on June 30, 1982 for $206,500,- including $150,000 from JM,.and-the Moore, C lifford firm agreed to act on behalf of all parties in consumating the settlement. Subsequently, i t paid Mitchell $56,500, and asked for a release from M it c h e l l 's minor daughter, which was a condition of the settlement. The law firm subsequently received $150,000 from JM to pay off it s share of the settlement, but was notified shortly after JM file d for Chapter 11 protection not to disburse the funds. In rejecting JM's arguments that the law firm was holding the ' $150,000 for JM's interest, and had no fid ucia ry duty to Mitchell or his estate (he died 30 days after JM's Chapter 11 f i l i n g ) , Judge Hughes noted 9 I9S3 A ndrem Pulkanon. Ine-, AU Rights Reserved. Reproduction strictly prohibited without permission, p 6 , 9 1 5 Asbestos Litigation Reporter Published twice monthly by Andrews Publications, Inc.. Edgemont. PA 19028 J u l y 2 2 , 1983 that it is "quite common for the attorneys representing one party in a dispute to assume the role of an escrow agent or stake holder fo r pur poses of executing the terms of a settlement after a settlement is reached." He continued, "There can be no doubt from the record that Moore, Clifford assumed th is role on behalf of all parties to the se t tlement.... It accepted funds from each of the participating co-defendants." Judge Hughes concluded, " I have no trouble.finding that Moore, C l i f ford accepted a fid ucia ry duty to M itchell, which required the firm to disburse the $150,000 to Mitchell once Mitchell sa tisfie d a ll conditions of the settlement." He said that in sum, JM had neither legal nor ben e fic ia l interest in the funds, and could.not u n ila te ra lly rescind it s instructions to Moore, C liffo rd to disburse those funds. As for JM's contentions that Mitchell had failed to meet a ll the conditions of the settlement by f a i l in g to forward a release from M it c h e ll's minor daughter p rior to Aug. 25, Judge Hughes found that it was not a condition precedent to M it c h e ll's entitlement to the settlement funds. "The clearest evidence in support of th is fin d in g ," he said, " i s the fact of payment by Moore, C liffo rd of all the monies received from each of the several other defendants, both before and after Johns-Manvi11e ' s bankruptcy." The release was sent to Moore, C liffo rd subsequent to the Chapter 11 f i l i n g . Judge Hughes ordered the law firm to turn over the $150,000, plus accumulated interest. Mitchell and his estate were represented by Steven Kazan and Aaron Paul of Kazan's law firm in Oakland, California. ir k ir SEVENTH CIRCUIT UPHOLDS STATUTE OF LIMITATIONS DISMISSAL The Seventh U.S. C irc u it Court of Appeals has upheld the summary judgment dismissal of a wrongful death claim against various asbestos manufacturers on grounds it was barred by Ind iana's statute of lim itations (Pitts v. Unarco Industries, Inc., et al., No. 82-2071, See P. 6,951). The action was brought against 16 defendants by Janet E. P it ts 20 months following the death of her husband, allegedly from as bestos-related lung disease. Her husband, an insulator, was exposed between 1950 and 1979. Nine of the defendants subsequently settled, another was dismissed for want of service, while six others won summary judgment dismissal under Ind ian a's statute of limitations provision. Indiana law provides that any product l i a b i l i t y action must be com mended within two years after the cause of action accrues, or within 10 . Continued I9&3 Andrews Pudcariom, Inc., All Rights Reserved. Reproduction strictly prohibited without permission, p > g q -j g Asbestos Litigation Reporter Published twice monthly bv Andrews Publications. Inc.. Edgemont. PA 19028 July 22, 1983 Conti nued years after the delivery of the product to the in i t i a l user or consumer, except that, if the cause of action accrues more than eight years but not more than 10 years after that. in itia J delivery, the action may be com menced at any time within two years after the cause of action accures. Mrs. P itts appealed on a number of grounds-- that she did not have an opportunity to oppose the surmiary judgment motions; that the 10-year statute of 1im ita tio n s.was tolled by defendants' fraudulent concealment of their tortious conduct; that the 10-year statute of limitations in the Product L ia b ilit y Act is unconstitutional, because it deprived her of property without due process of law; and that application of the statute denied her equal protection of the laws guaranteed by the Fourteenth Amendment. The three-judge panel from the Seventh Circuit rejected all those arguments. The opinion, written by Chief Judge Walter J. Cummings, said that P it ts had ample time to respond to the summary judgment motions, and did so in a motion to reconsider and two supporting briefs. As for her claim that fraudulent conduct tolled the statute of limitations, the court held that the fraudulent concealment count was dismissed four weeks before summary judgment was granted, and the dismissal was not challenged. The opinion continued that even i f Mrs. P itts had a property right, "We cannot accept p l a i n t i f f 's argument`that the Indiana Product L ia b ilit y A c t's ten-year statute of repose vio late s due process under federal and Indiana Constitutions." It cited sim ila r holdings by the Indiana Supreme Court, which held in one case that "the right to be free of stale claims in time comes to prevail over the right to prosecute them." Finally, in rejecting P i t t s ' claim that the statute denied her equal protection of the laws, the court said the statute has "a legitimate le g is la t iv e purpose, and i t is not the courts' business to instruct the Indiana le gislature when it is better for consumers than producers" to bear the risk of defective products. Judge Cummings concluded, "P it t s was not le ft without recourse by t h is statute of lim itations. Since nine defendants could not take ad vantage of the statute, they were not immunized and indeed settled with p la i n t i f f , thus v it ia tin g P i t t s ' claim that the statute contravened the ' Indiana privileges and immunities clause by conferring blanket immunity to all producers. Instead the statute must be sustained as reflecting the le g isla tiv e twin goals of repose and reliance that stale claims will not be tolerated in view of loss of memories, witnesses or evidence." 1983 Andre Pubhcafioas, loe All Rights Reserved Reproduction strictly prohibited without permission, p _ g g j Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 July 22, 1983 JOHNS-MANVILLE SUES.U.S. IN CLAIMS COURT Johns-Manvi11e Corp. and Johns-Manvi1le Sales Corp. last Tuesday f il e d suit against the United States in the U.S. Claims C o urt,-a lleging that the it s contracts to supply the U.S. Government with asbestos during World War I I implied that the government would hold JM harmless from any and all l i a b i l i t y (No. 465-83C, See P. 6,954). The su it alleges that the government was aware shipyard workers were being exposed to dangerous levels of asbestos dust, but that no steps were taken to either warn them of those dangers, or to a lle v ia te the hazard. The complaint says, "As a direct and proximate result of Johns-Manvi11e' s compliance with Government orders and dire ctive s and Johns-Manvilie's supply of strategic asbestos-containing materials pur suant thereto, Johns-Manvilie has incurred costs and expenses in con nection with the su its and proceedings brought by the World War I I as bestos claimants. By reason of it s agreement to indemnify and hold Johns-Manvi1le harmless, the Government is liable to Johns-Manvi11e for all such damages sustained by i t . " The suit is narrow in its scope, in that it seeks damages and a t torney fees arisina..out..of settlements and judgments paid to about 50 p la in t if f s who worked in government owned or controlled shipyards p rio r to or during World War I I . S p e c ific a lly , JM wants 3768,361.09 in se t tlements and judgments and $185,741.55 for attorneys' fees, costs and expenses. JM said the su it followed an intensive review of government doc uments, including recently d eclassified papers, which show the U.S. was aware that shipyard workers were being exposed to dangerous levels of asbestos dust, but failed to correct conditions, or warn the workers of the hazards. It quoted one document written by the Navy Commander of Preventive Medicine, which read, "Asbestosis. We are having a con siderable amount of work done in asbestos and from my observations I am certain that .we are not protecting the men as we should. This is a matter of o ff ic ia l report from several of our Navy. Yards." Oennis H. Markusson, assistant corporate counsel for JM, said the documents "demonstrate that the U.S. Government is responsible for in jured shipyard workers and, thus, should share with the asbestos industry in the social and financial r e s p o n sib ility for properly compensating the injured wartime shipyard workers." John A. McKinney, chairman and pres ident of Manville Corporation, said, "The practical effect of these wartime regulations and contracts upon Johns-Manvilie was such that our entire business was e sse n tia lly being operated for the direct benefit of the U.S. Government with criminal sanctions if we did not do so. A l though almost half of the asbestos lawsuits against Manville are shipyard workers, the government has not shared any of the responsib i1ity . Yet Conti nued 1983 Andrew* Publications, Inc,, All Rights Reserved- Reproduction strictly prohibited without permission, p , 6 . 9 1 8 Asbestos Litigation Reporter ____________ Published twice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 July 22, 1983 Continued the government has accepted responsib i1it y in other health related areas. I t ' s time for the government to acknowledge and accept r e s p o n s ib ilit y for these war related in j u r ie s . " JM announced its action at a press conference Tuesday morning, hours before the complaint was f ile d in the Claims Court by the firm of Becker & Chameides. The action triggered a strong response from the Justice Department. J. Paul McGrath, assistant attorney general who heads the C iv il Division, issued the following statement: ' " I have been advised that the Manville Corp. publicly announced today i t s intent to f i l e yet another suit against the United States in its fiv e -ye a r unsuccessful campaign in the press, media, le gisla tu re and the courts to s h if t r e s p o n sib ility for .injuries due to exposure to its as bestos products to the shoulders of the taxpayers. I have not had the opportunity to review any legal documents or to benefit from the courtesy of the information given to the media in advance by Manville. Therefore, sp e c ific comment will have to wait until appropriate study can be given to the matter. Based upon reports of M a n v ille 's positions as set out in it s press release it appears that its latest theory is that the taxpayers should bear the burden of any corporate l i a b i l i t y because Manville and it s predecessor corporations were serving the war effort by meeting the demand of the m ilitary for asbestos products. Such a theory ignores the fact that Manville, as a publicaly-owned corporation, was in business for the p ro fit of its shareholders and was not a public service organization. "Indeed, one searches the record in vain for any indication that public welfare rather than maximization of corporate p rofit motivated corporate decisions. As demonstrated in cases tried to date, Manville developed and introduced i t s asbestos products into the stream of com merce and work sites all over the country. It spurred demands for its products and maintained th is demand by withholding vital information about the risk s associated with asbestos. Having promoted the use of asbestos products with great corporate success and profit, Manville now, from the haven of bankruptcy court, contends that the taxpayer ought to pay Manville creditors. M a n v ille 's theory has no foundation in re a lity or in the law, and will not j u s t i f y a sh ift in g of corporate re- s p o n b i l i l it y to the taxpayer." JM says in its complaint that, after a d ilige n t search, i t has been unable to locate or obtain from the government copies of the war supply contracts, but maintains that they implied JM would be held harmless from "any and all l i a b i l i t y " for the supply of asbestos-containing materials. The complaint at length sp e lls out the d e sir a b ilit y of including asbestos in wartime ships, and the e fforts expended by JM to meet the government's demands. Then, it goes on to spell out the U.S. Gov ernment's knowledge of the dangers posed, relying f i r s t on a report by Waldemer C. Dreessen, former A ssistant Surgeon of the Public Service, that was issued in 1938 by the U.S. Public Health Service. In that report, Dreessen wrote, "Above five m illion particles per cubic foot, 1983 Andrews Publications, Inc., AH Rights Reserved. Reproduction strictly prohibited without permission. P . 6 , 9 1 9 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 J u l y 22, 1983 numerous cases of well-marked asbestosis were found. It would seem that i f the dust concentration in asbestos factories could be kept below fiv e m illion particles (the engineering section of this report has shown how th is may be accomplished), new cases of asbestosis probably would not . appear." The complaint then quotes the March 11, 1941 memorandum by the Navy. Commander of Preventive Medicine regarding asbestosis, and asserts that by July 1942, Navy and Maritime Commission o f f ic i a l s became aware of reports of unfavorable accident situations relating to asbestos, t r ig geri ng confidential studies that showed conditions far worse than o f f ic ia ls originally believed. "The United States failed to s a t is f y it s statutory and contractual obligations with regard to the safe use of asbestos materials in s h i p - ' yards," JM says. ' 6th CIRCUIT REFUSES TO EXTEND STAY TO CO-DEFENDANTS OF JM, UNARCO Co-defendants of Johns-Manvi11e Corp. and Unarco Industries, Inc., may not invoke the stay provision of the Bankruptcy Code, the Sixth Circuit U.S. Court of Appeals held on July 1 (Lincoln Lynch, et a l., v. Johns-Manvilie Sales Corp. et a l., and Raymark Industries, defen dant-appellant, et al., 6th Cir., No. 83-3118, 83-3119, 83-3120, 83-3121, 83-3122, 83-3123, 83-3124, 83-3125, 83-3126, 83-3127, See P. 6,973). The appellate panel concluded that the interests of p l a i n t i f f s , some of whom are dying, c le arly outweigh benefits that the co-defendants could derive from a stay. I f duplication of litig a tio n results, i t is con gressionally sanctioned, the court held. Even the prospect of r e l i t i gation of issues is not strong enough to force p la i n t i f f s to wait, -the court said. The cases were on appeal from the Southern D is t ric t of Ohio where Judge S. Arthur Spiegel denied a stay of asbestos proceedings against two co-defendants of JM and Unarco--Raymark Industries, Inc., and Keene Corp. on Oct. 5, 1982. The order was later adopted in denying sim ila r motions by other co-defendants of the debtors. The appellate panel said there was no basis in law or equity fo r staying proceedings of solvent co-defendants of JM and Unarco until the debtors have been reorganized or liquidated. Section 362 of the code that stays proceedings against a debtor f a i l s to intimate, even tan gentially, that the stay includes any defendant other than the debtor, the court said. The co-defendants had urged a ju d ic ial c la s s if ic a t io n of the Chapter 11 debtors as "ind ispe nsib le " and therefore subject to a stay under Rule 19 of Federal Rules of C iv il Procedure that relate to jo in in g other Continued 1983 Andrews Publications, In c, AU Rights Reserved. Reproduction strictly prohibited without permission. p_ g Q pQ Asbestos Litigation Reporter . Published twice monthly by Andrews Publications, Inc., Edgemont, PA 19028 July 22, 1983 Continued . parties. However, the panel said that since the debtors and co-defen- ' dants are joint tortfeasors, the debtors are not indispensible. Co-defendants had argued that to continue the lawsuits without JM and Unarco would result in multiple and piecemeal lit ig a t io n on a scale unknown in American jurisprudence. The Sixth Circuit, however, said that any duplication that may exist is congressionally created and sanctioned as a byproduct of bankruptcy law. Fina lly, the court said, "(A)ny benefits which may derive to the solvent co-defendants from a stay are c le arly outweighed by the counter v e ilin g interests of the p l a i n t i f f s . " The panel quotes the F ir s t C ircuit as saying: "In a number of those (asbestos) cases, p la i n t i f f s and crucial witnesses are dying. We are not persuaded that the hardship to defendants of having to go forward on this appeal without Unarco, or the interests of judical economy in avoiding r e lit ig a t io n of the issues, are strong enough to j u s t ify forcing p la in t i f f and a number of other p la i n t i f f s to wait until bankrupt defendants are successfully reorganized in order to be able to pursue their claim s." Bankruptcy judges presiding over the JM and Unarco cases have also refused to broaden the automatic stay of proceedings to co-defendants throughout the country. The co-deferi'cfaiits"'al so-argued-ttrat- the automatic stay for JM pre- ' eludes discovery on the debtors and seriously compromises their cases. In th is regard, the panel said: "This judgment is without prejudice to the appellants to seek, in the approriate forum, authorization to conduct discovery upon Johns-Manvilie and Unarco." In JM's case, the U.S. Bankruptcy Court in Manhattan on April 14 barred discovery or production of JM's trade secrets or confidential research, development or commercial information or documents of a scan dalous or defamatory nature. irirk COMMERCIAL UNION FILES ANOTHER DECLARATORY JUDGMENT ACTION AGAINST PC Commercial Union Insurance and Falcon Insurance Co., have file d a declaratory judgment action asking the Philadelphia Common Pleas Court to declare that their p o lic ie s to Pittsburgh Corning Corp. do not cover punitive damages (No. 1489, See P. 6,935). The two insurers say they believe Pittsburgh Corning will demand that they pay for costs for defending punitive damages, as well as any awards, but claim that those costs are not covered in their policies. * 1983 Andrews Publications, Inc,, All Rights Reserved. Reproduction strictly prohibited without permission, p 6 , 9 2 1 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc., Edgemont. PA 19028 J u l y 22 , 1983 The action notes that Pittsburgh Corning was recently ordered to pay $300,000 in punitive damages in Foster v. Pittsburgh Corning Corp. in the Eastern D istric t of Texas (See Asbestos LR 5/13/83, P. 6,586). As a result, the insurance companies say, Pittsburgh Corning will seek cov erage from them. James L. G riffith of G riffith & Burr file d the action on behalf of Commercial Onion and Falcon. kirk JUDGE LAMBROS FORMALLY APPOINTS SPECIAL MASTERS Federal Judge Thomas D. Lambros of the Northern D is t r ic t of Ohio, Eastern Division, last week signed an order o f f i c i a l l y appointing two special masters to devise a plan to better manage the pre trial and t r ia l phases of asbestos cases in his court. While the appointment was to. have been made jo in tly with Cuyahoga County Common Pleas Judge James J. McMonagle, the two j u r i s t s , in a joint memorandum, noted that ru le s of c i v i l procedure governing the state court made that plan impossible. Instead, Judge McMonagle said his court would cooperate f u ll y with the federal court to achieve "just, speedy and inexpensive resolution of asbestos cases" (See P. 6,941, and Asbestos LR 7/8/83, P. 6,589). Named were Eric D. Green, associate professor of law at Boston University, and Francis E. McGovern, v is it i n g professor of law at the same university. The two are to come up with a plan by Oct. 21 to manage the pretrial and t r ia l phases of asbestos litig a t io n , and any proposal to expedite settlements. Judge Lambros gave the special masters broad powers that w ill permit them to schedule and preside over discovery proceedings, as well as examine all documents relevant to their appointment. They also may coordinate all proceedings, and adopt rules and procedures "to accomplish their task e ffic ie n tly and f a i r l y . " Each w ill be paid at the rate of $70 per hour, for a total of 1,000 hours between them. Total expenses were budgeted at $18,000. Judge Lambros ruled that compensation for the two w ill be assessed to the litig a n ts later, under Rule 54 of the Federal Rules of C iv il Procedure. *** 1983 Andrews Publicarions. Inc-, AU Rights Reserved Reproduction strictly prohibited without permission, p < 6,922 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc., Edgemont. PA 19028 July 22, 1983 JUDGE DENIES FLINTKOTE MOTION TO JOIN COORDINATED CALIFORNIA ACTIONS San Francisco Superior Court Judge Ira A. Brown Jr. refused a pe t i t i o n by Flintkote to permit it s declaratory judgment action against American Mutual L ia b il it y Insurance Co. and 26 others to be coordinated with the other insurance disputes before him. At the July 14 hearing, Judge Brown also disallowed a motion for his d isq u a lific a tion , and fined an attorney for Johns-Manvi1le Corp. $414 fo r a motion the j u r is t char acterized as "stubborn and bull headed." The hearing, attended by more than 25 attorneys, began with American M utual's motion for the peremptory d isq u a lific a tio n of Judge Brown. The motion, argued by Kenneth Ward of Capps, Staples, Ward, Hastings & Dodson, maintained that once a judge was properly challenged, he was precluded from hearing the matter. Iro n ic a lly , Ward's brief quoted C a lifo rn ia Practice Guide, C iv il Procedures Before T r i a l , co-authored by Judge Brown and Judge Robert Weil, which said `'once an a ffid av it is file d under Section 170.6, the judge is d isq u a lifie d for all purposes of the action. Therefore, that judge cannot hear any later motion or procedure in the case___ " Judge Brown asked Ward i f he wanted a t r ia l judge appointed for the entire case, simply because American Mutual did not want him to hear FIintkote'.s.peti t i on to__be jtdded on to the coordinated case later that morning. Then he denfed^the moffonT saying " " I am the only judge who can decide whether this can or should be added on,", and gave Ward 20 days to f i l e a 170.6 challenge. He also denied Ward's request for a 30-day stay, and granted American Mutual's two motions for admission pro hac vice to the C aliforn ia State Bar. Judge Brown then heard F lin tk o te 's petition for coordination of an add-on cases. E. Judge Elderkin of Brobeck, Phleger & Harrison argued fo r Flintkote that the motion should be granted because there were common matters of fact and law in the case insofar as it dealt with the in terpretation of insurance p olicie s as applied to asbestos claims (See Asbestos LR 5/13/83, P. 6,587). Elderkin said that Flintkote would be that much behind the other cases in the coordinated action if it s pe t it io n were denied, but said that the case was s t i l l in the document production stage, and that Flintkote would have documents ready within 30 days i f the court granted the Flintkote petition. Opposing the motion for American Mutual, Ward argued that lit ig a t io n was already underway in New York between the two parties, with motions pending that may be expositive. Should F lin t k o te 's petition for coord ination be granted, he said, the pending New York litig a tio n may have to be moved to California as well--and the C alifornia action, he said, was already unduly complicated. The add-on, he said, would make the coord inated lit ig a t io n "almost without reason." Judge Brown said it would be "nice i f all asbestos litig a tio n could be wound up in one law suit," but denied the motion, commenting that he 198J Andrews Publications. Inc., AU Rights Reserved. Reproduction strictly prohibited without permission, p 6 , 9 2 3 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc., Edgemont. PA 19028 J u l y 2 2 , 1983 was not afra.id of the challenge but that it would cause an "unmanageable situation" for both counsel and the court. A motion by Johns-Manvilie Corp. for reconsideration of a motion fo r r e lie f from the pre trial discovery order and for an order to produce witnesses at depositions brought Judge Brown's sanction. Robert Venning of Heller, Ehrman, White & McAul.iffe argued that JM should be allowed to depose one witness because he is over 65 years old. Judge Brown interrupted to say that "there is no evidence he is in bad health. Lots of people live past 65, thank Heaven, Mr. Venning." Gary Anderson of P illsb u ry, Madison & Sutro opposed the motion fo r Marsh & McLennan -on grounds that because the court was scheduled to hear the matter of depositions in three weeks, there was no reason to give JM's motion a special hearing. Judge Brown denied the motion and imposed the $414 in sanctions because the motion resulted from the "stubborness and bullheadedness on the part of the moving party, without substantial j u s t i f i c a t io n . " . *** PLAINTIFF FILES APPEAL TO INTERVENE IN CA INSURANCE LITIGATION A 70-year-old p l a i n t i f f has asked the C aliforn ia Court of Appeal to order San Francisco Superior Court Judge Ira A. Brown, Jr., to allow him to intervene in the Johns-Manvilie insurance coverage lit ig a t io n . Paul Johnson claims that none of the parties in the action represent his interest (Paul Johnson v. San Francisco Superior Ct., et a l., CA Appeal Ct., 1st Appellate Div., No. A023216). His petition for mandate and/or prohibition was f ile d June 27 by Harry F. Wartnick of Cartwright, Sucherman, Slobodin & Fowler in San Francisco. It argues that i f JM is declared bankrupt, Johnson's a b i l i t y to be compensated for his asbestos-health injury w ill depend so le ly on the outcome of the insurance litig a tio n . "Since Johns-Manvi1le has it s stay, it may no longer have an in centive to speedily resolve it s dispute with the insurance companies in the action below," the petition says. "Neither the insurance companies nor Johns-Manvi1le has the same incentive as does intervenor to seek a speedy resolution, maximizing recovery." Johnson was a shipyard worker and longshoreman from 1942 to 1974 when he retired. He claims he suffers from r e s tric tiv e pulmonary disease as a result of exposure to asbestos manufactured by JM. His suit alleges negligence, s t r i c t l i a b i l i t y , enterprise l i a b i l i t y , and false represen tation. Compensation must be prompt for it to be meaningful during his lifetime, the petition says. kkk 19U A n d r m Publications, Inc,, All Rights Reserved. Reproduction strictly prohibited without permission, p _ 6 , 9 2 4 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc., Edgemont. PA 19028 July 22', 1983 MARYLAND COMPANY DISMISSED UNDER WORKMEN'S COMPENSATION PROVISIONS Baltimore C irc u it Court Judge Martin B. Greenfeld granted summary judgment dismissal July 7 to McCormick Asbestos Co. on grounds that it could not be held liab le under Maryland's Workmen's Compensation Act for asbestos injuries alleged by a former employee who subsequently was exposed to asbestos products at another job (L u c ille P. Lowery, et al v. Johns-Manvilie, et al, Baltimore C ircuit Court No. 82190811/32258, See P. 5,925 ) Attorneys for L u c ille P. Lowery, widow of George W. Lowery, main tained that the "la s t employer" provision of the Maryland act transforms former employers into non-employers. They also argued that the exclus i v i t y provision of the act was meant to apply only where that particular employer is liable for workmen's compensation benefits to the employee. Judge Greenfeld rejected the f i r s t .argument on grounds that the e x c lu siv ity (or last employer) provision "does no more than designate which of several employers-- ail of which are subject to the Act -- is ultimately liab le for compensation benefits. It merely renders the last employer liable but does not, as P l a in t if f s suggest, transform a prior employer into a non-employer." The argument that the e x c lu siv ity provision of the act was meant to apply only where that particular employer is liable for workmen's compen sation benefits to the employee, he said, was not without force. However, he said, that rationale has been adopted by other courts throughout the country " only where the worker's injury or disease it s e lf is not covered by the workmen's compensation act." *** SETTLEMENTS REACHED IN PHILADELPHIA PRIOR TO JURY TRIAL Settlements of three asbestos-injury su its were concluded just as they-were to begin jury t r ia l in Philadelphia Common Pleas Court,' setting what several sources believe will be a pattern for the cases being re ferred to juries. _ Under procedures set by Common Pleas Court this year, all asbestos su its are f i r s t tried without a j u ry -- usually in separate damages and l i a b i l i t y phases. The rules allow any nonjury verdict to be appealed by virtue of jury t r i a l s , and nearly every verdict has resulted in such appeal. Jury t r ia l was to begin July 18 before Judge Lois G. Forer in John Diehl v. CM (7809-88 [123]), when settlement was reached for an un disclosed sum. Diehl, 60, died of lung cancer in 1981. He had been a Philadelphia Naval Shipyard worker and smoked two packs of cigarettes a 1983 Andrews Ptibikadons, Inc., AU Rights Reserred. Reproduction strictly prohibited without permission, p 5 , 9 2 5 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 J u l y 22, 1983 day for 35 years. On April 11, Judge Richard B. Klein'assessed damages at $575,000. Defendants were GAP Corp. and Keene Corp. Settlement in the case of Thomas Warren v. Pittsburgh Corning Corp. (7901-4052 [131] Case No. 9) came during jury selection before Judge Berel Caesar. P l a i n t i f f attorney Martin Greitzer of Greitzer & Locks would not disclose the amount. However, another attorney said it was more than the $125,000 set by Judge Berel Caesar in the nonjury t r i a l . Warren, 66, who worked at the Philadelphia Naval Shipyard for 35 years before r e t ir in g in October 1978, was alleged to have asbestosis. In the nonjury t r i a l , Judge Caesar entered judgment against Eagle-Picher Industries, Inc., Forty-Eight Insulations, GAF, Keene, Pittsburgh Corn ing and Raybestos-Manhattan, Inc. Another settlement came in the case of Timothy McIntyre v. JM (7901-54052 [131] No. 7) which was scheduled for jury t r i a l July 11 before Judge Richard B. Klein. P la in t if f attorney Marc Weingarten of Greitzer & Locks said the amount was su b sta n tially in excess of Judge K in g 's $75,000 nonjury verdict on April 7. That verdict was a g a in st_H.K. Porter, Inc.,, Southern Asbestos, Pacor, Inc., Eagle-Picher and Keener Let out on compulsory non su its were GAF, Nicolet Industries, Inc., Fibreboard Corp. and Armstrong Cork Co. At the nonjury t r i a l , Dr. Krishna Mohan-, p l a i n t i f f medical expert, te stifie d by videotape that McIntyre, 53, had asbestosis.- Dr. Paul Epstein te stifie d live for the defense that McIntyre had bilate ral pleural thickening. McIntyre was a Philadelphia Naval Shipyard worker from 1966 to 1981. He smoked three packs of cigarettes a day fo r up to 30 years and had smoked one pack a week in the past five years. In a nonjury t r i a l , Judge Forer entered judgment in favor of all defendants for in s u f fic ie n t product ide ntification evidence after she had set medical damages at $54,000 on April 14 in the case of 011-ie Tansimore v. JM (7901-4051 [131] Case No. 54). Tansimore,' who is in his late 50s, was alleged to have asbestosis. He continues to work at the Philadelphia Naval Shipyard. Judge Forer entered a verdict for $31,500 against Keene in the case of John Pressley v. JM (7901-5052 [131] Case No. 33). Pressley, 74, retired after 29 years at the Philadelphia Naval Shipyard. He is a non smoker. His medical expert, Dr. G. William Atkinson, said he has as bestosis. No medical defense was presented. A $393,500 judgment against Raybestos-Manhattan was entered by Judge Forer in the case of Henry Bottinger v. JM (7901-4052 [131] Case No. 38). Bottinger, 63, .a smoker, worked for up to 25 years at the P h ila delphia Naval Shipyard. Dr. Atkinson t e stifie d that Bottinger had as bestosis. Judge Forer found GAF and Eagle-Picher liab le for a $412,550 judgment in the case of Ronald Krajewski v. JM (7901-4052 [131] Case No. 11). Continued 6 19*3 Andrews Publications, Inc- All Rights Reserved. Reproduction strictly prohibited without permission. p _ `q ^ 2 5 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 July 22 , 1983 Continued ' Krajewski, 47, worked at the Philadelphia Naval Shipyard for about 20 years. Dr. Atkinson, p la i n t i f f medical expert, te stifie d that Krajewski has asbestosis. There was no defense medical expert. Martin Greitzer of Greitzer & Locks reprsented p la in t if f s in the four nonjury cases before Judge Forer. . ' Judge Julian F. King on July 7 found Eagle-Picher and Ray- . bestos-Manhattan liab le fo r a-$125,000 judgment in the case of Orazio Cancila v. JM (7901-4053 [131] Case No. 29). They were the only two defendants whose products Cancila, a former Philadelphia Naval Shipyard Worker, was able to identify. He quit smoking in 1972 after smoking two packs of cigarettes a day for 30 years. The nonjury t r i a l in the case of John Cook v. JM (7901-4052 [131] Case No. 68) ended abruptly on July 13 when Judge Caesar granted com pulsory non su its on procedural grounds to all defendants. The tr ia l - ' started July 11 and medical testimony had just concluded. Cook, 62, worked at the Philadelphia Naval Shipyard for six months in 1945 as a cleaner, and from 1953 to January 1982 as a rigger, when he retired due to shortness of breath. He was alleged to have asbestosis. James Pettit of Greitzer & Locks said the case has been appealed. Defendants were Raybestos-Manhattan, Pittsburgh Corning, Keene, Eagle-Picher, H.K. Porter, Southern Textile, GAF, Forty-Eight In su l ations, Fibreboard, Nicolet, Pecor, Armstrong, Owens-Corning and Celotex Corp. Judge Caesar entered a $140,000 judgment on July 20 .in the case of Edward Cuscavage v. JM (7904-3176 [134]). Cuscavage, 68, worked at the Philadelphia Naval Shipyard as a coppersmith's helper, coppersmith and p ip e fitte r for intermittent period beginning in the 1940s. He retired in 1981 but not on d is a b ilit y . P l a i n t i f f expert Dr. Joseph Sokolowski t e s t if ie d by videotape that Cuscavage had in t e r s t it ia l fib r o s is of a progressive nature, c a lc ific a tio n and pleural thickening and clubbing of the fingers. No defense medical expert was presented. The judgment, which includes $5,000 for Cuscavage's wife, Josephine, for loss of consortium, was against Pittsburgh Corning, Pecor, Eagle-Picher and Keene. P l a i n t i f f attorney Alan I. Reich of Shein and Brookman said p l a i n t i f f had settled with Owens-Corning, Uniroyal, Southern Asbestos, Turner and Newell, Celotex, Armstrong Cork, Nicolet, Forty-Eight Insulations, H.K. Porter and Southern Asbestos. Judge Klein issued a defense verdict in the case of Harry Huff v. JM (7905-5640 [140]) on July 8, saying there was not enough evidence of asbestos-related disease. Huff, 43, smoked one pack a day for 15 years. His medical expert te stifie d that he had pleural thickening. Huff worked at naval shipyards in the Philadelphia area from 1966 to 1981. s I9S3 Andrews Publications, lne,, All Rights Reserved. Reproduction strictly prohibited without permission, p 6 , 9 2 7 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 July 22, 1983 ACTION ONCE DISMISSED SETTLED FOR $157,500 A complaint that was once dismissed on Ohio's statute of lim itations then reinstated, when the Sixth C ircuit Court of Appeals ruled that man ife station of the disease rather than exposure tolle d the statute, was settled last Wednesday with all defendants but Johns-Manvilie. The action was by Catherine Mesker, widow of James L. Mesker, a factory worker employed in an aluminum cast foundry for 20 years, who died at the age of 56 of bronchogenic carcinoma. Meskers' attorney, Robert Sweeney of Cleveland, contended Mesker1s disease resulted from his exposure to asbestoform talc. S e ttling the lit ig a t io n were R.T. Vanderbilt Co., Georgia Pacific Co., U.S. Gypsum-- those defendants named in addition to CM (Meskerv. Johns-Man-vi lie et a1., No. C-78-1 326, ND OH, Eastern Oi v .). The federal court o r ig in a lly dismissed the action on grounds the statute of lim itations barred it. However, it was revived after the Sixth U.S. Circuit Court of Appeals ruled two years ago that man- ifestation of a di sease-- rather than exposure to a product-- tol led that statute (See Clutter, Asbestos LR 5/8/81, P. 3,254). Sweeney on the same day settled another asbestos claim for $47,500. That action, on behalf of an Akron insulator, Ben Worster, in Cuyahoga County Common Pleas Court (No. 016154) involved a claim of i n t e r s t i t i a l f i b r o s i s and rales from asbestos exposure, but did not show evidence of d is a b ilit y . The action-was settled against all defendants but JM and Unarco. ieirk PA COURT SUBJECTS FOREIGN HOLDING COMPANY TO PERSONAL JURISDICTION A Pennsylvania appellate court has ruled, in a personal injury action brought by asbestos workers, that the s ta te 's long-arm statute does give it personal j u risd ic t io n over a foreign holding company which did b usi ness within the state through two operating subsidiary corporations (Barber v. Pittsburgh Corning Corp., Super. Ct., No. 139). In an opinion issued July 1, the Pennsylvania Superior Court said that Charter Consolidated, Ltd., a B ritish corporation, could be sued because two of it s ind ustrial su b sid ia rie s had been conducting business in the state. "[W]e f i r s t find it evident," the opinion by Judge Montgomery said, "that Charter has purposely availed i t s e l f of the p rivilege of acting within Pennsylvania and thus invoked the benefits and protections of our laws. Charter did this constantly and repeatedly over the years Continued ' 1983 Andrews Publication. Inc., All Rights Reserved. Reproduction strictly prohibited without permission, p 6,928 Asbestos Litigation Reporter Published twice monthly'by Andrews Publications. Inc.. Edgemont. PA 19028 July 22, 1983 Continued preceding the f i l i n g of th is suit in it s conduct of recurring business a f f a ir s through it s (subsidiary) operations as well as the individual acts of various representatives." The c o u rt's ruling came in an appeal by Charter Consolidated of a lower c o u r t's denial of it s preliminary objections which raised the j u ris d ic t io n a l issue. The Superior Court affirmed the denial and re manded the case to the Allegheny County Court of Common Pleas. . Charter Consolidated is just one of 17 defendants named in a suit brought by current and former employees of the Pittsburgh Corning Corp. and their spouses. The workers, represented by George H. Cohen with Bredhoff & Kaiser in Washington, DC, are claiming to have contracted asbestosis from exposure to asbestos dust and fibers while working at Pittsburgh C o m in g 's Port Allegheny Pennsylvania plant. One of Charter Consolidated's su b sid ia rie s, Cape Industries, Ltd., owns asbestos mines in South Africa and, according to the c o u rt's opin ion, sold thousands of tons of asbestos to Pittsburgh Corning for use at the Port Allegheny Pennsylvania plant between 1964 and 1972. Two thirds of Cape's stock i s owned by Charter Consolidated. The other subsidiary, Pandrol International, Ltd., manufactures and s e l l s railroad track equipment. Wholly owned by Charter Consolidated, it was registered to do business in Pennsylvania between 1975 and 1978. In affirming it s j u r is d ic t io n over the corporation, the court said that personal j u ris d ic t io n under Pennsylvania's long-arm statute could be based upon a finding that a company had "availed i t s e l f of the privilege of acting within the state, thus invoking the benefits and protections of i t s laws," or upon a finding that the p l a i n t i f f s ' cause of action arose from the company's a c t iv it ie s within the state. The court had no d if f ic u l t y in finding that both of the subsidiaries had su ffic ie n t business a c tiv ity within the state to j u s t i f y exercise of i t s authority over them. It also said that the workers' claims arose, in part, from Pandrol's sale of asbestos within the state and t h a t 'j u r i s d ic tio n could- be based on th is finding' as well. C h a r te r Consolidated, represented by Werner L. Polak of'Shearman & S te rlin g in New York, has argued that i t could not be subjected to the j u r is d ic t io n of the Pennsylvania courts because its subsidiaries were independent corporations, not subject to i t s direction and control. The court rejected th is argument, noting that Charter had exercised f u l l control over the su b sid ia rie s through th e ir boards of directors. " I t cannot be foregotten," the court concluded, "that Charter is it s e lf only a holding company which has chosen to perform all it s business functions through operational arms that happen to be set up legally as separate corporations. Despite such separate incorporation, Charter's total control over Cape and Pandrol is so clear, that to reach any other conclusion in th is case would be to b lin d ly exhault form over substance." 1983 Andrews Publications, Iik_ AU Rights Reserved. Reproduction strictly prohibited without permission, p , g g 2 9 Asbestos Litigation Reporter Published twice monthly by Andrews Publications, Inc.. Edgemont. PA 19028 J u l y 22, 1983 FOUR CASES SETTLED PRIOR TO TRIAL IN WASHINGTON Four asbestos su its in Washington-two in the Tacoma D ivisio n of federal d is t r ic t court and two in the st a t e 's King County Superior Court-- were settled prior to t r ia l e a rlie r this month. In d is t r ic t court, the case of William Kinsman v. Johns-Manvilie, et al. (C.A. C-80-631-T) was settled in the amount of $202,500 with 12 asbestos-manufacturing' companies. The estate of Kinsman, an asbestos insulator who died a llegedly from mesothelioma at age 70 after f i l i n g suit, will receive $49,250 from Fibreboard Corp., $35,000 from Owens-Corning Fiberglas and $30,000 from Raymark Industries. Also contributing to the settlement were Celotex ($20,000), Eagle-Picher ($18,250), Forty-Eight Insulations ($2,500), H.K. Porter ($12,500), Keene Corp. ($5,000), Nicolet ($2,000), O w e ns-Illinois ($11,750), Pittsburgh Corning ($15,000) and Turner & Newall Ltd. ($1,250). A.C.&S Inc. and Armstrong Cork were let out of the case and claims remain against Unarco and CM. Another case file d in d is t r i c t court,' Joseph Weiler v. Johns-Manvilie et al. (C-80-631-T), was settled with 13 defendants prior to t r i a l for $86,000. Weiler, 67, is a former, boilermaker alleging a sbestosis. Contributing to the settlement were Armstrong ($1,250), Celotex ($12,000), Eagle-Picher ($9,000), Fibreboard ($8,500), Forty-Eight ($1,500), H.K. Porter ($9,000), Keene Corp. ($4,500), Nicolet ($2,000), Owens-Corning ($15,000), Ow ens-Illinois ($4,000), Pittsburgh Corning . ($9,500), Raymark ($8,500) and Turner & Newall Ltd. ($1,250). The case of Arthur Russell v. Ruvere Corp. et al. (No. 83-2-06733-2) was settled with 13 defendants prior to tr ia l in King County Superior Court for $80,050. Russell died at age 80, allegedly from mesothelioma. The contributors to the settlement were Armstrong Cork ($1,250), Celotex ($10,000), Fibreboard ($10,000), GAF ($2,000), Garlock Inc. `($1,000), H.K. Porter ($2,500), Keene Corp. ($12,500),. Nicolet ($2,000), Owens-Corning Fiberglas ($10,000), Ow ens-Illinois ($5,000), Raymark ($17,500), Eagle-Picher ($4,000) and Pittsburgh Corning ($2,780). A. C.&S., Forty-Eight and Standard were let out of the case. Claims against Unarco, JM and Amatex remain. In another case scheduled to be tried in King County, p l a i n t i f f Claudia Ireland settled fo r $134,750 with 11 defendants (No. 82-2-11417-1). Ireland is a 68-yar-old women who served as a pipe f i t t e r 's helper for an 18-month period from 1943 to 1945 at the Tacoma D ivision of the Sea-Tac Shipyard. A non-smoker, she alleges asbestosis. Fibreboard ($35,000), Raymark ($26,500) and Keene ($24,500) are the major contributors to the settlement. Also contributing were Armstrong Continued 1943 Andrew Pudticadons. In c, All Rights Reserved. Reproduction strictly prohibited without permission. p < g 930 / Asbestos Litigation Reporter Continued Published twice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 . J u l y 22, 1983 ($1,250), GAP ($2,000), H.K. Porter ($2,500), Garlock ($1,000), Nicolet ($2,000), Unarco ($4,000, pre-bankruptcy), Celotex ($20,000) and Eagle-Picher ($15,000). A.C.&S, Owens-Corning, Owens-Illinois and Pittsburgh Corning were released from the case. All of the p la i n t i f f s were represented by attorneys Harold Vhugen and Ted Will hi te of the Seattle firm of Levinson, Friedman, Vhugen, Duggan, Bland & Horowitz and by William S. Bailey of- the Barnwell, SC firm of Blatt & Fales. *** ALABAMA SUPREME COURT SAYS PLAINTIFFS MAY SEEK FULL MEASURE OF DAMAGES Alabama asbestos p la i n t i f f s are entitled to seek a f u ll measure of damages for in ju rie s, not just for those attributable to within one year of the f i l i n g of their complaints, the Alabama Supreme Court ruled on July 8 (Clyde Cazalas, et a l., v. Johns-Manvilie Sales Corp., et a1., AL Supreme Ct., No. 81-605 ). The ruling came in the consolidated cases of 25 Mobile shipyard workers. Mobile County C irc u it Court had dismissed all counts in the s u it s that failed to allege exposure to asbestos after May 19, 1979. On that date a new "discovery rule" became effective, allowing p la in t if f s to recover damages for in ju rie s discovered during one year prior to f i l i n g a suit. Although about 10 of the 25 cases will be barred by the Supreme C o u rt's decision, the others w ill be entitled to a fu ll measure of dam ages. Almost a ll the p la i n t i f f s worked at shipyards in Mobile. They are represented by Richard F. Pate of Pate & Peters in Mobile. Two issues were at stake: whether the t r ia l court was correct in ru lin g that p la i n t i f f s were entitled to recover only damages for injuries caused during one-year p rior to f i l i n g suit, and whether fraud a ll e gations tolled running of the statute of lim itations. The p la in t iff s had alleged fraud in an effort to t o ll the statute. ' The Alabama le gisla ture in 1979 amended the sta te 's statute of lim ita tio n s, allowing the cause of action in asbestos cases to accrue on the f i r s t date the injured party, through reasonable diligence, should have reason to discover the injury. The effective date was May 19, 1979. In 1981, the Alabama Supreme Court, in Tyson v. Johns-Manvilie Sales Corp., held that under the one-year law in effect before the amended statute became effective, a ll actions for damages caused prior to May 19, 1979 were already barred and could not be revived. The reason was that the state constitution barred retroactive application of the new sta t ute. Therefore, the court reasoned, the new "discovery rule" applied only to claims based on exposure on or after May 19, 1979. 1983 Andrews Publications, Ine-, All Rights Reserved. Reproduction strictly prohibited without permission, p 6 , 9 3 1 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 J u l y 22 , 1983 As a result, the t r ia l court in the 25 Mobile cases dismissed a ll counts that did not allege exposure to asbestos subsequent to May 19, 1979. In those cases which were not dismissed, the t r ia l court limited damages for which recovery was possible to exposure-caused damages oc curring within one year of f i l i n g suit. In their appeal, appellants urged an interpretation of the " f u l l measure of damages" language in the new statute which would allow p la in t i f f s who fa ll within the period of the statute to recover for all i n ju rie s caused by asbestos. Appellees, however, argued that any con struction of the statute that would allow for in ju rie s before May 19, 1979 would violate the state constitution. If allowed to stand, the t r ia l c o u r t's ruling would emasculate the "discovery r u le ," the Supreme Court said. In fact, p l a i n t i f f s would only be allowed to recover the damages to which they would have been entitled had the discovery rule not been enacted, the court added. There is no constitutional requirement that damages be apportioned to conform with the prescriptive period for f i l i n g an action, the court said. For example, the state workmen's compensation statute does not require apportionment' of benefits commensurate with the one-year period to bring an action. Moreover, the intention of the a c t 's framers, the high court said, was to allow p la i n t i f f s to recover a "f u ll measure of damages.", As a result, the court ruled that p la i n t i f f s should not be limited to a re covery for injuries occurring after May 19, 1979. On the issue of fraud alleged by lim itations, the Supreme Court said: refusal to warn, without more, while level of fraudulent concealment and, the statute." p la in t if f s to to ll the statute o f "We rule that a mere f a ilu r e or acitoable, does not rise to the hence, does not to ll the running of EPA FILES SUIT TO CLEAN UP CONTAMINATED MOBILE HOME PARK The United States, at the request of the Environmental Protection Agency, file d su it May 23 against the owner-operators of a now-defunct asbestos mill and a land development coorporation, alleging that the mobile homes of residents in a subdivision are located on s o il con taminated with asbestos t a ilin g s (U.S. v. Metate Asbestos Corp., et al. AZ, C.A. 83-309 GLO). Also named in the su it as defendants are Jaquays' Mining Corp. and D.W. Jaquays Mining and Contractors Equipment, which presently operate an asbestos mill on property adjacent to the Mountain View Mobile Home Estates. . Continued 1943 Andrews Pubikadons, lne,, All Rights Reserved. Reproduction strictly prohibited without permission, p , 6 , 9 3 2 Asbestos Litigation Reporter Published twice monthly by Andrews Publications, Inc., Edgemont. PA 19028 July 22, 1983 Continued . The U.S. seeks an injunction which will require the defendants to abate the releases of asbestos at Mountain 'View, correct the conditions that exist and reimburse the government for 5290,000 of Superfund money spent fo r "response, removal and remedial action" at the site. The Metate mill crushed asbestos ore to produce asbestos fo r com mercial purposes. The unusable t a ilin g s were dumped in to .uncovered p ile s at the mill site until it closed in 1972 according to the gov ernment. . The complaint says that in 1972 Neal, Capper, Neal Land and Development Corp. purchased land adjacent to the Metate m ill. Neal Development and Metate j o in t ly file d an application for approval of a subdivision and in May 1973 the c it y of Globe, AZ approved the sub d iv is io n and the property was graded for development of a mobile home park. The su it contends that asbestos t a ilin g s produced by the Metate m ill, which was shut down by the Superior Court of Arizona in April 1974, were used as the primary f i l l material to level the site, and the ta ilin g s were subsequently covered with a thin layer of so il. In 1979, Arizona health o f f i c i a l s advised residents of asbestos contamination and on Jan. 16, 1980, the Governor of Arizona declared a state of emergency at Mountain View and residents were instructed to temporarily vacate the site. In early 1980, the vacant Metate mill was demolished and buried near the subdivision, according to the suit. A six-inch soil cover was spread over most of the accessible areas of the subdivision. After the spread ing of the six-inch cover, Metate and Neal Development continued to sell lo ts in the subdivision, the U.S. alleges. Many of the residents returned to their homes in March of 1980, but the su it contends that surface water runoff, human a c tiv ity and other normal natural forces have resulted in the erosion of the six-inch soil cover. Additionally, asbestos t a ilin g s from the Metate mill are exposed in open areas around the concrete pad where the mill was located, the suit states. . The U.S. also contends that since 1958 asbestos fibers carried through the a ir from the Jaquays mill site, which s t i l l operates in termittently, have also added to the contamination of the Mountain View subdivi sion. All of the 130 residents of the subdivision have been relocated, according to the EPA Office for Public A ffa irs in San Francisco. A su it brought by the residents in October 1981 to force EPA com pliance with Superfund was dismissed in 1982 on grounds that Superfund does not contain a provision for c it iz e n s ' su its. 9 1983 Andrews Publications, Jnc,, All Rights Reserved Reproduction strictly prohibited without permission, p 6 , 9 3 3 Asbestos Litigation Reporter Published twice monthly by Andrews Publications..Inc., Edgemont. PA 19028 July 22, 1983 SEMINAR ADDRESSES INSURANCE COVERAGE DISPUTES The Practising Law In stitu e will sponsor a two-day seminar both in New York and San Francisco entitled, "Insurance, Excess and Reinsurance Coverage Disputes." The seminar will be Aug. 25 and 26 at the Waldorf Astoria in New York, and Oct. 6 and 7 at the Holiday Inn-Financial D istric t in San Francisco. ' Sessions will include a review of cases affecting insurance coverage disputes, the reservation of rights and denial of coverage, "occurrence" policy coverage-for mass tort claims, current problems in reinsurance, bankruptcy problems facing the insurance coommunity, coverage for pun itiv e damages and alternative resolutions. Co-chairmen are Thomas R. Newman of S i f f & Newman and Barry R. Ostrager of Simpson Thatcher & Bartlett, both of New York. Faculty members include Roy Babitt, former bankruptcy judge and now with Barst Mukamel & Babitt of New York; Robert Buell, senior vice president of/' Fireman's Fund; Curtis M. Caton of Heller, Ehrman, White & McAuliffe of San Francisco; and John F. Larking I I I of Mendes & Mount of New York. Cost of the seminar is $360. Course books are available for $35. For information, contact Practising Law Institute , 810 Seventh Ave., New York, NY 10019, (212) 765-5700. *** ' 1983 Andrews Pubikarions, lne,, All Rjghts Reserved. Reproduction strictly prohibited without permission, p 6 9 3 4 t PITTSBURGH CORNING Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc., Edgemont. PA'19028 July 22 , 1983 GRIFFITH & BURR, P.C. BY: JAMES LEWIS GRIFFITH ATTY. l.D. NO.: 05023 800 Chestnut Street Philadelphia, Pa. 19107 (215) 923-1900 Attorneys For Plaintiffs, Commercial Union Insurance Company and Falcon Insurance Company COMMERCIAL UNION INSURANCE COMPANY One Beacon Street Boston, Massachusetts 02108 and FALCON INSURANCE COMPANY One Beacon Street Boston, Massachusetts 02108 vs. PITTSBURGH CORNING CORPORATION 800 Presque Aisle Drive Pittsburgh, Pennsylvania 15239 COURT OF COMMON PLEAS PHILADELPHIA COUNTY A TERM, -^ 9 ACTION FOR DECLARATORY JUDGMENT 1. Plaintiff herein, COMMERCIAL UNION INSURANCE COMPANY, is a corporation duly organized and existing under the Laws of the Commonwealth of Massachusetts, has its principal place of business in the Commonwealth of Massachusetts at One Beacon Street, Boston, Massachusetts, is the successor in Interest to EMPLOYER'S LIABILITY ASSURANCE CORPORATION, and at all times relevant hereto issued insurance policies within the Commonwealth of Pennsylvania. 2. Plaintiff herein, FALCON INSURANCE COMPANY, is a corporation duly organized and existing under the Laws of Delaware, has its principal place of business in the Commonwealth of Massachusetts at One Beacon Street, Boston, Massachusetts, is the successor in interest to EMPLOYER'S SURPLUS LINES INSURANCE COMPANY, and at all times relevant hereto issued insurance policies within the Commonwealth of Pennsylvania. 3. Defendant herein, PITTSBURGH CORNING CORPORATION, is a corporation duly organized and existing under the Laws of the Commonwealth of Pennsylvania, has its principal place of business in the Commonwealth of Pennsylvania at 800 Presque Aisle Drive, Pittsburgh, Pennsylvania, and at all times hereinafter mentioned was engaged in the business, inter alia, of the manufacture of "Unibestos," an asbestos containing, high temperature insulation product as well as other chemicals, coatings, resins and fiberglass products. 4. On or about July 15, 1959, Plaintiff, FALCON INSURANCE COMPANY through its predecessor in Interest, EMPLOYER'S SURPLUS LINES INSURANCE COMPANY entered into a contract of insurance titled Umbrella Policy Number S-10167 insuring PITTSBURGH CORNING CORPORATION. A true and correct copy of Policy Number S-10167 is attached as Exhibit "A" and Is Incorporated herein by reference. 5. On or about October 1, 1963, Plaintiff, COMMERCIAL UNION INSURANCE COMPANY through its predecessor in interest, EMPLOYER'S LIABILITY ASSURANCE CORPORATION, LIMITED entered into a contract with Defendant, PITTSBURGH CORNING CORPORATION. This policy is identified as E14-8056-001. A true and correct copy of Policy Number E14-8056-001 is attached as Exhibit "B" and is incorporated herein by reference. 6. On or about October 1, 1966, Plaintiff, COMMERCIAL UNION INSURANCE COMPANY through Its predecessor In interest, EMPLOYERS LIABILITY ASSURANCE CORPORATION, LIMITED entered Into a contract with the PITTSBURGH CORNING CORPORATION. 'This policy is identified as E14-8056-004. A true and correct copy of Policy Number E14-8056-004 is attached as Exhibit "C" and is incorporated herein by reference. 7. At all times material to this Complaint, Defendant acted through its agents, servants, workmen and/or employees, acting within the course and scope of their employment on behalf of the Defendant and in furtherance of the business of the Defendant. 8. At the aforesaid times, the insurance contracts identified above in paragraphs (4), (5), (6) were negotiated, bargained for, and entered into, in the Commonwealth of Pennsylvania and furthermore, the parties in prior pleadings to the Court represented that Pennsylvania Law would govern Interpretation of said Contracts. 9. i Plaintiff FALCON INSURANCE COMPANY in the first paragraph under liability of the policy Number S-10167 identified above in paragraph four (4) and entered into on "o CD to cCnO t 8 > or about July 15, 1959, limits its liability to "... be obligated to pay by reason of the liability imposed upon it by law or assumed by It under contract tor damages, direct or consequential and expenses, hereinafter called "Ultimate Net Loss." 10. Plaintiff, COMMERCIAL UNION INSURANCE COMPANY in the first p a r a g r a p h u n d e r " C o v e r a g e s " of the p o li c y N u m b e r E-14-8056-001 identified above in paragraph five (5) and entered into on or about October 1, 1963, lim its Its coverage to "indemnify the insured for all sums which the insured should be obligated to pay by reason of the liability imposed upon him by law or liability assumed by him under contract or agreement for damages, and expenses, all as included in the definition of "Ultimate Net Loss." 11. Plaintiff, COMMERCIAL UNION INSURANCE COMPANY in the first paragraph under "Coverages" of the policy Number E-l 4-8056-004 identified above in paragraph six (6) and entered on or about October 1, 1966, limits Its coverage to "indemnify the insured for all sums which the insured should be obligated to pay by reason of the liability imposed upon him by law or liability assumed by him under contract or agreement for damages, and expenses, all as included in the definition of "Ultimate Net Loss." 12. At the aforesaid times, the Plaintiffs entered into the three Insurance contracts identified above, consistent with the Laws of the Commonwealth of Pennsylvania which preclude insuring against punitive damages as being against public policy. 13. At the present time, Pittsburgh Corning is a named defendant in several thousand asbestos cases in which underlying asbestos plaintiffs have demanded punitive damages. 14. In FOSTER V. PITTSBURGH CORNING CORPORATION ET AL. CA H-811172 (S.D. TX, Eastern Div., 1983) a Jury awarded punitive damages against Defendant for $300,000. 15. Plaintiffs believe and therefore aver that defendant PITTSBURGH CORNING in FOSTER V. PITTSBURGH CORNING CORPORATION ET AL. CA H-81-1172 (S.D. TX, Eastern Div., 1983) will seek to receive from Plaintiffs insurance coverage for the punitive a "O oi tCoO on damages awarded against Defendant by the Texas Jury and for the defense costs of defending said punitive damages award. 16. Plaintiffs believe and therefore aver that due to the exigent circumstances "C of the thousands of pending asbestos cases against Pittsburgh Corning that defendant will C demand that plaintiffs COMMERCIAL UNION INSURANCE COMPANY and FALCON cn3o- INSURANCE COMPANY pay both for its punitive damage award and that plaintiffs pay for the Cl costs of defending the punitive damage claims and therefore plaintiffs request a Judicial interpretation at this time of their insurance policies. COUNT I cr 3 o rD .( s IN ASSUMPSIT 17. Plaintiffs, COMMERCIAL UNION INSURANCE COMPANY and FALCON INSURANCE COMPANY hereby incorporate by reference the allegations contained in paragraphs one (1) through sixteen (16) as if set forth herein at length. ! 18. Plaintiffs believe and therefore aver that defendant PITTSBURGH CORNING CORPORATION will seek remuneration from Plaintiff under the contracts Identified above in paragraphs (4), (5), and (6) and attached hereto as Exhibits A, B, and C for both the punitive damage award and for the costs of defending punitive damage claims. <O 3<T (S i A \> D:l -Di 0 QTQ ?r P A aO \ ; 19. These contracts, indentified in paragraphs (4), (5) and (6) and attached hereto i as Exhibits A, B, and C did not include coverage for either punitive damages or defense payments for punitive damage claims. 20. Plaintiffs believe and therefore aver that the actions of the Defendant as 1 ro L I J )I O ) stated above in attempting to recover for punitive damages and for the costs of defending punitive damage claims from Plaintiffs constitute a misapplication of the insurance contracts 10> rD 3 and exceed the scope of the contracts between Plaintiff and Defendants. ND3 DO WHEREFORE, Plaintiffs, COMMERCIAL UNION INSURANCE COMPANY and FALCON INSURANCE COMPANY herein respectfully pray as follows: Cc, hroo co CO CO * 1983 Andrews Publications. Inc-, AU Rights Reserved. (a) that this Court enter a Declaratory Judgment construing the provisions of the various policies of Insurance referred to herein and determining the respective rights and liabilities of the Plaintiffs and the Defendant thereunder and under all of the circumstances hereinbefore set forth; (b) that this Court enter an Order declaring any payment made by an insurance company for punitive damages to be against public policy and therefore void under the provisions of plaintiffs' insurance policies. (c) that this Court enter an Order declaring that plaintiffs COMMERCIAL UNION and FALCON INSURANCE COMPANY has no obligation to pay the defense costs for claims against Pittsburgh Corning for punitive damages. GRIFFITH & BURR, P.C. BY; ______________ ____________ 'JAMES LEWIS GRIFFITH Attorney for Plaintiffs, Commercial Union Insurance Company . and Falcon Insurance Company 800 Chestnut Street Suite 200 Philadelphia, Pennsylvania 19107 (215)923-1900 Reproduction strictly prohibited without permission, p 6 9 3 7 Asbestos Litigation Reporter Published twice monthly by Andrews Publications, Inc., Edgemont. PA 19028 July 22, 1983 MITCHELL ORIGINAL FILED JUL i Ck b a n k r u p t c y court OAKLAND, CAUF0F;-':!A UNITED STATES BANKRUPTCY COURT, NORTHERN DISTRICT OF CALIFORNIA In re ) \ JOHNS-MANVILLE CORPORATION, ) et al, ) Debtor. ) ) > ) GAIL MITCHELL, Personal ) Representative of the Estate ) of ALBERT MITCHELL, ) B ankruptcy No. 82-B-11S56 A d versary No. 4-82-1691AH Plaintiff, v. J OHNS -MANU Il.LE C O R P O R A T I O N , MOORE, CLIFFORD, WOLFE, LARSON and TRUTNER, Defendants. MEMORANDUM OF DECISION This p r oceeding questions whether $150,000 held In trust by debtor's attorney for payment in settlement of an asbestos-based jpersonal Injury a c t i o n is p r o p e r t y o f the b a n k r u p t c y estate. 11 jU.S.C. $ 5 4 1 (a). I hold that it is not. I The relevant facts are undisputed. The law firm of Moore, Clifford, Wolfe, Larson t Trutner represented Johns-Manville and related companies in a large number of actions brought by persons 1913 Andrews Publications, Inc, AU High Reserved. who suffered toxic tort Injuries from exposure to asbestos. Located in Oakland, the law firm's representation was essentially limited to c l a i m s a n d a c t i o n s a r i s i n g in N o rthern California. One of the cl a i m a n t s was A aron Mitchell, whose action in the Alameda County Superior Court had advanced to the point of a settlement conference before the court. Settlement was reached on June 30, 1982 between Mitchell and several defendants, including Johns-Manville, and was announced to the court. Put most simply, M i t c h e l l a g r e e d t o r e l e a s e all of his claims in exch a n g e for $206 , 5 0 0 . T h e v a r i o u s d e f e n d a n t s allocated the total among themselves. Johns-Manville agreed to contribute $150,000. Moore, C l i f f o r d -- J o h n s - M a n v i l l e 's att o r n e y s in n e gotiating the settlement -- als o agreed to act on behalf of all parties in c o n s u m a t i n g the s e t t l e m e n t a f t e r it h a d b een effected. To this end, the law firm ordered a draft for $150,000 from JohnsM a n v i l l e o n J u l y 7, 1982 and p r e p a r e d the settlement in w r i t t e n form together with a di s m i s s a l with prejudice. It forwarded the latter p a c k a g e to M i t c h e l l ' s a t t o r n e y s o n J u l y 9, 1982. The executed Compromise and Release and Dismissal with Prejudice were returned to Moore, Clifford on July 30, 1982 together with a request for the defendants' settlement checks. Moore, Clifford replied on August 6 with $52,500 (representing contributions of all but one of Johns-Manvllle's co-defendants) and a request for a court order authorizing compromise and release as to Mr. Mitchell's minor daughter. Moore, C l i f f o r d r e c e i v e d the $ 1 5 0 , 0 0 0 d r a f t from. J o h n s Manville on August 9 and dep o s i t e d it to a trust account the next Reproduction strictly prohibited without permission, p . 6 , 9 3 8 day. The account declared that It was held by Moore, Clifford "for the benefit of Albert Mitchell..." Johns-Manville and its related companies filed bankruptcy on August 26, 1962, and shortly thereafter Moore, Clifford was directed by a representative of the debtor not to disburse the $150,000 to Mr. Mitchell. Moore, Clifford transmitted $4000, representing the remaining contribution from the other defendants to Hr. Mitchell's attorneys on September 13. Mr. Mitchell died of his injuries on September 27 and his wife instituted this litigation against Moore, Clifford and Johns-Manville in November 1962 on behalf of his estate. In response, the law firm Interpleaded the $150,000. JohnsManville's motion to dismiss or to transfer venue was denied and the matter was tried between the debtor as debtor-ln-pos3ession and the Mitchell estate. The q u e s t i o n is w h e t h e r the d e b t o r held a legal or e q u i t a b l e interest in the funds held by Moore, Clifford on August 26, 1982. II The Mitchell estate contends that Johns-Manville held no interest in the $150,000 on the date of bankruptcy because Moore, Clifford held legal title and the estate of Albert Mitchell held the beneficial or equitable interest. Johns-Manville contends that (1) M o o r e , C l i f f o r d h e l d the $150, 0 0 0 for the b e n e f i t o f Its one and on l y client, Johns-Manville, and that it could not (and presumably did not) assume any fiduciary duty to Mr. Mitchell or his estate, adversaries of Johns-Manville. The debtor also c o n t e n d s that (2) in a n y e v e n t the M i t c h e l l e s t a t e d i d n o t h a v e a > m cr* fD oi n c-f m At--< A QfQ oA p ao W m O- <nIQ> A aO ' fD < IV ) IV ) I9S3 Andrew* Pubtkanona, Ine,, AJ1 Rights Reserved. right to disbursement of the $150,000 until all of the conditions of the settlement had been satisfied and that one condition was unsatisfied as of the date of bankruptcy. A ,, Johns-Manville does not accept the proposition that Moore, Clifford could, in faithfully representing its client, assume' fiduciary duty to others. However, it is quite common for the attorneys representing one party in a dispute to assume the role of an escrow agent or stake holder for purposes of executing the terms of a settlement after a settlement is re a c h e d . For purposes of executing the settlement terms, the law firm is a f i d u c i a r y to a l l o f the parti e s , not m erely its client. T h e r e is and can be no conflict of interest at this point} all parties have the common Interest of executing the exact terms of the s e t t l e m e n t agre e m e n t . T h i s p r a c t i c e and pri n c i p l e is well recognized , and the Mitchell estate has cited several cases so holding. There can be no doubt from the record that Moore, Clifford assumed this role on behalf of all parties to the settlement after the settlement was reached. It accepted funds from each one of the participating co-defendants, i.e., from non-client defendants as well as its client. It accepted the dismissal with p r e j u d i c e from M i t c h e l l . It d i s b u r s e d all of the funds it received -- except for the $150,000 from Johns-Manville -- to M i t c h e l l (or to the M i t c h e l l e s t a t e ) . In d oing so, it a cted on behalf of the co-defendants and Mitchell. I have no trouble finding that Moore, Clifford accepted a fiduciary duty to Mitchell, which required the firm to disburse the $150,000 to Reproduction strictly prohibited without permission, p 6 9 3 9 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 July 22 , 1983 Mitchell once Mitchell had satisfied all conditions of the settlement. Johns-Manvllle contends that even if Moore, Clifford had a s s u m e d this role it d i d not b i n d J e h n s - M a n v i l l e unless it agreed and there is no evidence in the record that it agreed. Hhile there in no evidence of an express agreement between Moore, Clifford and its client as to this particular transaction, there is evidence that the law firm regularly accepted this stakeholder role in settlements and there is no evidence that Johns-Manvllle ever disapproved. Indeed, Johns-Manvllle has never disapproved o f the p r a c t i c e in this case. Nor is it a p p a r e n t w h y it w ould disapprove} given the need for the services of a stakeholder, it is l ikely that J o h n s - M a n v l l l e w o u l d p r e f e r its a t t orneys o ver plaintiff's attorneys as stake holders. I find that Moore, C l i f f o r d a cted w i t h J o h n s - M a n v l l l e `s authority in acting as escrow or stake holder. B Assuming that all of the terms and conditions of the settlement agreement were m e t as of August 26, the date of bankruptcy, Moore, Clifford held the $150,000 for the benefit of Mr. Mitchell and had a duty to disburse these funds to Hr. Mitchell. If so, Johns-Manvllle could not unilaterally rescind its instructi o n s , O q d a h l v. T i t l e I n s u r a n c e T r u s t C o . 72 Cal.App. 3d Supp. 41, 140 Cal.Rptr. 148 (1977). In sum, Johns-Manvllle had neither legal nor beneficial interest in the funds. Johns-Manvllle contends, however, that all terms and conditions were not met. It points out that the settlement a g r e e m e n t e x p r e s s l y r e q u i r e d that .a m i n o r ' s c o m p r o m i s e o rder be I9U Andrew Publicado, lnc_ All Rights Reserved o b t a i n e d f r o m the s t a t e c o u r t . This- o r d e r had not been o b tained by M i t c h e l l as o f the d a t e o b a n k r u p t c y , al t h o u g h It has since been obtained. The Mitchell estate contends that this was merely a term o the settlement and not a condition precedent to its effectiveness. It characterizes the evidence as excusing or waiving the order approving the m i n o r ' s compromise be fore the money was payable. I find that although an order approving the minor's compromise was required by the settlement agreement, it was not a condition precedent to Mr. Mitchell's entitlement to the $ 2 06,500. T h e c l e a r e s t e v i d e n c e in s u p p o r t o f this finding is the fact of payment by Moore, Clifford of all the monies received from each of the several other defendants, both before and after J o h n s - M a n v l l l e *s b a n k r u p t c y , in the a b s e n ce of the order. In addition, the Moore, Clifford secretary who controlled the trust funds testified that she discussed the absence of the order with the responsible Moore, Clifford attorney and was told she could send the checks without awaiting the order. Mr. Lyman, the responsible attorney, testified on direct and cross-examination that he never expected any problem in obtaining the minor's compromise order. On one occasion, he explained that this was because both the settlement and the minor's compromise were before the same judge. Earlier he testified that he was anxious to disburse as much money as possible to Mr. Mitchell before he died. I find that the minor's compromise order was a condition of the settlement but not to Mr. Mitchell's right to the funds. I Reproduction strictly prohibited without permission, p g g 4 0 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 July 22, 1983 Holding as I do that It was not a condition precedent, I do not address the alternate theory that the condition was waived. Ill In summary, I hold that Moore,Clifford held the $150,000 in trust for Mr. Mitchell as of the date of bankruptcy because all conditions precedent to his right to the funds had been satisfied. I further hold that Johns-Manville had neither legal nor equitable title to the $150,000 as of the date of bankruptcy and that the funds were not property of the ec^ate pursuant to 11 U.S.C. $5 4 1 (a). The M i t c h e l l e s t a t e is d i r e c t e d to prepare, s erve and lodge a fqrm of order disposing of the $150,000 and accumulated Interest. Dated: July 11, 1983 . R O B E R T L. HUGHES Bankruptcy Judge 1983 Andrews Publications, Inc,, All Rights Reserved. 1! h. L > ;;3 3 JUL 1 1 PH 12: 0 6 ; r f.'.lilCI r.i U N I T E D S T A T E S D I S T R I C T COURT.Jr.U;i l; !/ N O R T H E R N D I S T R I C T OF O H I O V:IAIH' EASTERN DIVISION SPECIAl IN RE: OHIO ASBESTOS LITIGATION ) OAL ) ) ORDER NO. 3 LAMBROS, DISTRICT JUDGE A s set f o r t h in G e n e r a l O r d e r No. 67, d a t e d J u n e 1, 1983 this District Court has determined that the majority of the cases arising out of asbestos-related diseases shall be consolidated on my docket for pretrial supervision and ultimate disposition. I have determined that the exceptional attributes of this class of l i t i g a t i o n r e q u i r e s the a p p o i n t m e n t of S p e c i a l M a s t e r s tc aid this court in the performance of its judicial duties, and that the circumstances make such an appointment particularly appropriate. Rule 53(b), Federal Rules of Civil Procedure, provides in p e r tinent part: A reference to a master shall be the exception and not the rule. In actions to be tried by a jury, a reference shall be made only when the issues are complicated; in actions to be tried w i t h o u t a jury, save in m a t t e r s of a c c o u n t and of difficult computation of damages, a reference shall be made only upon a showing that some exceptional condition requires it. Furthermore, the recent proposed revisions to Rule 16, Fed. Rules of Civil Procedure, explicitly recognizes the need for adopting special procedures for managing potentially difficult or protracted actions that may involve complex issues, multiple parties, difficult legal questions, or unusual proof problems. Reproduction strictly prohibited without permission. "a cn UD -= . MASTERS Asbestos Litigation Reporter Published twice monchly by Andrews Publications. Inc.. Edgemont. PA 19028 July 22, 1983 There can be no doubt that this genre of litigation is of an exceptional nature. Nationwide, approximately 20,000 of these cases have been filed, and while each represents an individual cause of action, not one can be viewed in a vacuum. Action against two major defendants has been stayed by bankruptcy proceedings. The potential liability of some defendants may amount to several times their available insurance coverage, and there are already complex third-party suits among insurers, reinsurers, and excess insurers. The lack of any prefiling claims procedure has resulted n o t o n l y in the l arge n u m b e r of c a s e s filed, but a l s o in a c omplex, and sometimes duplicative discovery process. It is t h e r e f o r e m y f i n d i n g t h a t c l o s e s u p e r v i s i o n by individuals who are intimately familiar with all the pertinent factors and recent developments in asbestos litigation on a n a t i o n w i d e b a s i s w i l l b e s t p r o m o t e the m a n d a t e of R u l e 1, Fed. R. Civ. Proc., in securing the just, speedy, and inexpensive determination of these actions. A c c o r d i n g l y , I h e r e b y a p p o i n t as S p e c i a l M a s t e r s E r i c D. Green, Associate Professor of Law, Boston University, and Francis E. McGovern, Visiting Professor of Law, Boston University. Each of t h e s e S pecial M a s t e r s b r i n g s to this l i t i g a t i o n u n i q u e e x p e r t i s e in. the areas of case management, dispute resolution, products liability, and asbestos l i t i g a t i o n that will assist m e in ensuring the most appropriate resolution of the cases filed in both courts with a minimum amount of delay and expense. In addition, the e x c e p t i o n a l a s p e c t s 'of a s b e s t o s l i t i g a t i o n invo l v i n g h u n d r e d s of plaintiffs alleging progressively severe personal injury justify i> the a p p o i n t m e n t of t h e s e e x t r e m e l y w e l l - q u a l i f i e d S p e c i a l Masters. ?i This a p p o i n t m e n t is ma d e pursuant to Rules 16, 26, and 53, I Federal Rules of C i v i l Procedure, and the inherent a u t h o r i t y of the rs . C o u r t to s u p e r v i s e a nd a d m i n i s t e r p e n d i n g cases. T h i s r e f e r e n c e is i made for the p u r p o s e s set forth herein in order to pres e r v e the s ability of the court to fulfill its primary judicial function of J providing, in those c a s e s that require it, trials on the basic issues involved in the litigation. The Sp e c i a l M a s t e r s are directed to p r opose a p l a n for the a 3 management of the pretrial and trial phases of these cases. In i c a r r y i n g out this m a n d a t e , .the S p e c i a l M a s t e r s are d i r e c t e d to familiarize thems e l v e s w i t h the cases filed and to study the various methods, models and systems that have been suggested or may be developed by the various national groups studying the asbestos litigation problem and by other judges, legal scholars, and interested parties. T h e S p ecial M a sters shall al s o me e t wit h the representatives of the interested parties in a manner they dees appropriate, including m e e t i n g s ex p a r t e , in order to ensu r e that they have the benefit of all available input in making their recommendations. They may schedule and preside over discovery proceedings and e x a m i n e and inspect all data, facts, do c u m e n t s anc o ther m a t e r i a l s r e l e v a n t to their a p p o intment. T h e y m a y act tc coordinate all proceedings not otherwise agreed to by the parties. T h e Spec i a l M a s t e r s m a y a d o p t a p p r o p r i a t e rules a n d p r o c e d u r e s tc I accomplish their task efficiently and fairly. i. s-o In addition, the duties of the Special Masters shall c encompass the formulation of a methodology for facilitating a to (V> r e s o l u t i o n by s e t t l e m e n t , e i t h e r as to d e s i g n a t e d parties, as to. entire causes of action, or as to all pending cases. Privileged information presented to the Special Masters Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc., Hdgemont. PA 19028 July 22, 1983 shall rem a i n p r i v i l e g e d and conf i d e n t i a l , and s hall be d i s closed to the Court only upon consent of counsel. Nothing in this reference shall be construed as abrogating the litigantB* right to a trial by jury. The Special Masters shall draft their recommendations for the handling of these cases, provide an opportunity for interested parties to comment, and submit final recommendations to me by October 21, 19B3 with a plan to manage the pretrial and trial phases of these cases and any formulations by which settlement may be achieved. Pursuant to Rule S3, compensation for the Special Masters shall be as follows: 1. The Special Masters shall be paid $70.00 (seventy dollars) per hour for performing their assigned duties. This rate has been determined by the Court to be fair and equitable in light of the complex and difficult tasks assigned them. The designated rate is o n e - h a l f the rate that w o u l d n o r m a l l y b e c h a r g e d by the Special M a sters for private consulting work of this nature, less than o n e - h a l f the h i g h e s t C l e v e l a n d r a t e for p r i v a t e a t t o r n e y s in l i t i g a t i o n , a n d a p p r o x i m a t e l y t w o - t h i r d s the a v e r a g e rate of experienced Cleveland trial attorneys. 2. T h e t o tal t i m e e x p e n d e d b y b o t h S p e c i a l M a s t e r s combined shall not exceed 1000 hours w i thout prior auth o r i z a t i o n of the Court. i Pobticariorai, Inc_ AU Rights Reserved 3. T h e S p e c i a l M a s t e r e s hall be r e i m b u r s e d for r e asonable expenses incurred in c onnection with their a ssignment b ased on an estimate for travel, administrative, secretarial, research and computer expenses. The total expenses for both Special Masters comb i n e d shall not exceed $18,000 wi t h o u t prior authorization by the Court. 4. Compensation for the Special Masters shall be charg the p a rties under Rule 54. The parties and their counsel are hereby directed to co o p e r a t e wi t h and assist the Special Ma s t e r s in these tasks. IT IS SO ORDERED. Thomas D. Lambros Dnited States District Judge 0 Reproduction strictly prohibited without permission, p g 1\ T ) p\\ i: STATES -DISTRICT C OURT NORTHERiL'ItilSTElCT O F O H I O EASTERN, rHi VIS ION LAMBROS, DISTRICT JUDGE IN THE COURT OF COMMON PLEAS CUYAHOGA COUNTY, OHIO McMONAGLE, COMMON PLEAS JUDGE Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc., Edgemont, PA 19028 July 22, 1983 IN RE: OHIO ASBESTOS LITIGATION ) FEDERAL-STATE ) MEMORANDUM OF ACCORD ) ON ASBESTOS LITIGATION Litigation associated with asbestos-related disease has had an unprecedented impact on the American judicial system. Transcending jurisdictional distinctions, to date approximately 20.000 individual cases have been filed in state and federal courtB. Of these less than 250 have gone to trial and less than 4.000 have settled. A substantial number of such cases are pending in the Common Pleas Court of Cuyahoga County, Ohio, and in the United States District Court for the Northern District of Ohio, and have been assigned to the dockets of the above-named judges. He are well-aware that numerous attempts are being m a d e by diverse groups, including the Judicial Administration Working Group on Asbestos Litigation of the National Center for State Courts, the Federal Judicial Center, the Center for Public Resources Judicial Panel, and various bankruptcy judges to resolve asbestos cases on a national or regional level. Because of the large numbers of these cases, not only on our dockets, but on the dockets of federal and state courts nationwide, and because these cases have been assigned to us over a short p e r i o d of time, it is c r u c i a l that there be significant coordination between our courts to assure uniform, fair, and efficient justice consistent with the laws and procedures t i applicable to state and federal courts. The p a rties h e r e t o have attended the joint sessions held by us on June 13 and J u n e 20, 1983 regarding the poss i b l e joint appointment of S p e c i a l M a sters to supervise and coord i n a t e the pretrial aspects of these cases. These hearings were undertaken ja out of our belief that the problems associated with asbestos > litigation cut across jurisdictional lines insofar as high s0* 2- l i tigation costs, l i a b i l i t y issues, and p r e t r i a l d i s c o v e r y p roblems 90 are c o ncerned. It w a s o ur p u r p o s e to e x p l o r e b etter w a y s of aa3. handling' this u n i q u e c l a s s of l i t i g a t i o n in our region, w i t h a hope that any plan we implement may ultimately be of use on a nationwide basis. At the hearings, we we r e immeasurably aided by the i n f ormation c o n v e y e d b y c o u n s e l r e g a r d i n g ef f o r t s a l r e a d y t aken tc coordinate discovery, and their candid expressions regarding the concurrent appointment of Special Masters. Because of differences in our respective rules of civil procedure, we have determined that the proposed concurrent a p p ointment w i l l n o t b e und e r t a k e n . B y the O r d e r d a t e d J u l y 14, 1a 1983, the S p e c i a l M a s t e r s have b e e n a p p o i n t e d to s e r v e in regards fi to the federal c a ses, a l t h o u g h n o o r d e r will issue at this time ir. ao. regards to the state cases. Nonetheless, it is our desire that l there be a coordinated and uniform treatment of the asbestos cases 5"o 3 pending b e f o r e our t w o cour t s , a n d that the a p p r o a c h d e v e l o p e d by Ia-5; the Special M a s t e r s w i l l aid in the resolution, of c a s e s o n both os. dockets. He are m i n d f u l of our jurisdictional distinctions, anc 3- c nothing in this m e m o r a n d u m s h all be c o n s t r u e d as a d e l e g a t i o n of any a u t h o r i t y p o s s e s s e d b y either of us or as a c o m m i n g l i n g of a *o cn tD Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont, PA 19028 July 22, 1983 jurisdiction. M e b e lieve that it is our dut y as judges to instill in the p u b l i c the c o n f i d e n c e that our j u d i c i a l s y s t e m w i l l fun c t i o n -to resolve these cases honorably and effectively in a manner most c o m p a t i b l e w i t h the p u b l i c inte r e s t . It is our h o p e that this memorandum of accord will achieve that goal. / s/ Thom a s D. Lambros T H O M A S D. L A M B R O S Qnited States District Judge j i ' ! /s/Ja m e s J. M c M onagle JAMBS J.MCMONAGLE Judge, Common Pleas Court If  19*3 A odm ra Pubticsooos, Ine-, All Rights Reserved. STATE F o lU O COUNTY OF CUYAHOGA ) )( S S : IN THE COURT OF COMMON PLEAS JUDGE JAKES J . HeMONAGLE i D IN RE: ) ( ORDER OHIO ASBESTOS LITIGATION ) 0000OO0000 In furtherance of the Intencione expressed at the Joint Sessions, and In light of the proposed order issued with regard to the appointment of special masters, this Court announces as follows Pursuant to Ohio Superintendence Rule 9 and Cuyahoga County local Rule 22, the Court of Common Pisas of Cuyahoga County will cooperate fully with the United States District Court, Northern District of Ohio, Eastsm Division, In Its afforts to achlava a Just, speedy, and Inexpensive resolution of asbestos cases. All counsel litigating the aebeetoa cases In this jurisdiction ars herehy instructed to cooperate with the Federal Coart and with lta litigationmanagement plan. IT IS SO ORDERED. Reproduction strictly prohibited without permission. p_ 6 , 9 4 5 DATED: - , , // / f f 3 RECEIVED FOR FJCJNQ JUL 141983 WORKMEN'S COMPENSATION' Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc., Edgemont. PA 19028 July 22, 1983 LUCILl.E P. LOWERY, e t a l * vs. * JOIINS-MAHVILLE, c t a l * IN THE CIRCUIT COURT FOR BALTIMORE CITY 82190811/32258 it is is is is k ir it is i s is it is is ie MEMORANDUM OPINION AND ORDER GREENFELD. J. This i s a m otion fo r summary judgment f i l e d by one o f the d e fe n d a n ts, McCormick A sb e sto s Company ("McCormick"). For purposes o f th is motion the fa c ts are not in d isp u te. P la in t if f s ' decedent, George W. Lowery, was employed in Maryland by M cCormick,'a su p p lie r o f asb estos produ cts, for sh ort in te r v a ls o f time in 1943, 1950, 1962 and 1970. At a l l such tim e s , McCormick com plied w ith the ap p r o p r ia te p r o v is io n s o f th e Maryland Workmen's Compensation Act (" th e A c t" ), Md. Code, A r t i c l e 101. The d eced en t a ls o worked fo r oth er companies in Maryland where he was exposed to a sb esto s pro d u cts. His la s t occu p ation al exposure to a sb esto s products occurred w h ile he was employed by W allace and Gale in 1975. I t i s a lle g e d th at the decedent con tracted an o ccu p a tio n a l d ise a se r e s u ltin g from h is exposure to asb estos products. This d isease m anifested i t s e lf a fte r 1975. Most o f the defendants in th is ca se are m anufacturers o f a s b e s to s p ro d u cts which w ere used by the d e c e d e n t's v a r io u s em ployers . Sec. 23(b) o f the Act provides as follow s: "When com pensation i s p ayab le fo r an' o c c u p a tio n a l d is e a s e , the employer in whose employment the employee was laB t in ju r io u sly exposed to the hazards o f the d is e a s e , and the insu ran ce c a r r ie r i f any, on the r is k when th e em ployee was l a s t so exposed under the employer, sh a ll be lia b le th e r e fo r ..." The p a r t ie s to t h i s m otion agree th a t b eca u se o f S e c . 2 3 (b ), W allace and Gale, being the d eced en t's la s t a sb e s to s -r e la te d employer, is the only employer lia b le fo r the payment o f workmen's compensation b en efits. S ec. 15 o f th e Act r e q u ir e s ch at ev ery em ployer s u b je c t to the Act " sh a ll pay or provide as required h erein compensation ac cording to the sch ed u les o f th is a r tic le " for such employee d is- 1983 Andrews Publication. Ine-, AH Rights Reserved. a b i l i t y or d eath as i s covered by th e A c t. The v e ry n e x t para graph provides th a t " [t]h e l i a b i l i t y p rescrib ed by the la s t para graph s h a ll be e x clu siv e ,'* except where the employer f a i l s to secure the payment o f compensation (an excep tion not a p p lica b le in cliis case) . McCormick co n ten d s th a t the e x c l u s i v i t y c la u s e o f S e c . 15 im m unizes i t from common law l i a b i l i t y , s in c e th e d e c e d e n t's d is e a s e was covered by th e A c t, and McCormick had f u l l y com plied w ith the A ct. P la in t if f s , on the other hand, f i r s t con ten d 'th at the Act only p r o te c ts an "em ployer" from common law l i a b i l i t y , bu t th a t in the case o f occu p a tio n a l d is e a s e s , the term "employer" i s lim ite d to th a t one em ployer who i s a c t u a lly l i a b l e fo r payment o f workmen's com pensation b e n e f i t s (nam ely, th e em ployer o f l a s t e x p o su re ); and th a t a l l p r io r com panies fo r whom a c la im a n t may have worked a r e, by a " le g a l f i c t i o n , " n ot c o n sid ered "em ployers" and are th e r efo r e n ot p r o te c te d by th e A c t. P l a i n t i f f s read to o much in t o S e c .2 3 (b ). T his p r o v is io n does no more than d e s ig n a te w hich o f s e v e r a l erap lo y e r s --a ll o f which are su b ject to the A c t - - ls u ltim a te ly lia b le for com pensation b e n e f it s . I t m erely renders the la s t employer l i a b l e but does n o t , a s P l a i n t i f f s s u g g e s t , tran sform a p r io r em ployer in to a non-em ployer. P la in tiffs a lso contend that the e x c lu s iv ity p rovision of S e c . 15 was meant to ap p ly o n ly where th a t p a r t ic u la r em ployer i s lia b le for workmen's com pensation b e n e fits to the em ployee. H is t o r ic a lly , the workmen's com pensation a ct was enacted as a trad e o f f which su b je cte d an em ployer to l i a b i l i t y w ith ou t regard to f a u l t but a t th e same tim e lim it e d th e m onetary amount o f the em p lo y er's l i a b i l i t y . Uood v . Aetna Cas & Su r e ty C o ., 260 Md. 651, 660 (1 9 7 1 ); B a ltim o re T r a n sit Co. v . S t a t e , 183 Md. 674, 677 (1 9 4 4 ). P l a i n t i f f s a s s e r t th a t t h is quid pro quo which u n d e rlies the A ct i s n o t p r e s e n t h e r e , s in c e th e A ct s h ie l d s McCormick from l ia b ilit y for com pensation. T his argument i s n o t w ith o u t fo r c e . However, t|ie qu id pro quo Reproduction strictly prohibited without permission, p 6 9 4 g r a tio n a le has been adopted by oth er co u rts throughout the country on ly where the w orker's in ju ry or d ise a se i t s e l f Is n ot covered by th e workmen's com pensation a c t . See Hubbard v . R eynolds M etal Company, 482 F .2d 6 3 ,6 4 (9 th C i r .,1 9 7 3 ) ; and Tysenn v . John sM anvllie Corp. , 517 F.Supp. 1290,1293 (E .D .P a ., 1981) and the c a se s c it e d th erein . In the p resen t c a se , by c o n tr a st, the d eced en t's o ccu p a tio n a l d is e a s e was in f a c t covered by the A ct, and the d eced en t was e n t it le d to c o l l e c t workmen's com pensation b e n e f it s . That the Act Lim its recovery o f com pensation b e n e fits to the la s t employer Is not Im portant. The d e te rm in a tiv e a sp e c t o f the' e x c lu s iv it y pro v is io n In th ese o u t-o f-s ta te d e c isio n s is whether the em ployee's in ju ry or d is e a s e i s compensable under the workmen's com pensation s t a t u t e r a th e r than w hich em ployer may be l i a b l e th e r e f o r . In any e v e n t, th e r u le in Maryland appears to be even more p r o t e c t iv e o f em p loyers. V ic to r y S p a rk ler Co. v . F ran ck s. 147 Md. 368 (1925) was a common law a c t io n fo r damages a g a in s t an em ployer fo r an o ccu p ation al d is e a s e . At th at tim e occu p a tio n a l d ise a se s had not been s p e c i f ic a l ly in clu d ed in the A ct. In th a t c a se , the Court o f Appeals o f Maryland i n i t i a l l y assumed th a t the p l a i n t i f f ' s d is e a s e was n o t covered under th e A c t. On t h i s a ssu m p tion , the Court n e v e r t h e le s s h e ld th a t an em ployer who com plied w ith th e A ct c o u ld n o t be sued a t common law by an em ployee whose in ju r y a r o se out o f and in th e cou rse o f h is employment, even i f the in ju ry were not compensable under the A c t. I d . . a t 376. Although the Court did u ltim a tely conclude that the p la in t if f 's occupational d isease was com pensable under the A ct, i t s dictum i s so un eq u ivocal as to be d isp o sitiv e here. It must be concluded that the employer's compliance with the Act, rather than' the fact of liability for payment of compensation, triggers the exclusivity provision. cr HD Ccr on * Zn3>T Q_ > C/) n> 3 o (X> c/> ni-- *3<1 O cr (*> > D CL n>. S A CO cro T) Cor p o' A . oPr-l O P co d too oo c_. CONCLUSION rIVo) McCormick I s s h ie ld e d from common law l i a b i l i t y b ecau se i t was an employer in com pliance w ith th e A ct, and because P l a i n t i f f s ' U3 otoo * I9S3 Andrew Puijikariora, lne,, All Rights Reserved decedent's illness was covered by the Act, Merely because McCormick, under the facts of this case, is not liable for workmen's compensation payments does not subject it to common law liability. Accordingly, --rfl it is this '"j day of July, 1983, ORDERED that Defendant McCormick Asbestos Company's motion for summary judgment be GRANTED. There being no just reason for delay, the clerk is directed to enter a final judgment in favor of this Defendant, pursuant to Md. Rule 605a. Plaintiffs' time for filing an appeal shall run from this date. cc: all counsel Martin B. Greenfeld Judge Reproductionstriciiyprohibitedwithoutpermission. 6,947 TYLER IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TYLER DIVISION Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc., Edgemont, PA 19028 July 22, 1983 .HERMAN YANDLE, ET AL vs. fpPG I N D U S T R I E S , INC., E T A L } VS . iLESTER KAY, ET AL vs. PPG INDUSTRIES, INC., ET AL vs. W I L L I A M B. McNEECE, JR. vs. UNITED STATES OF AMERICA Civil Action No. TY-74-3-CA Civil Action No. TY-74-13-CA Civil Action No. TY-75-22-CA ORDER On M a y 24, 1978, the C o u r t e n t e r e d an o r d e r a u t h o r i z i n g the Liason Attorney for the Defendants to withdraw from the Tyler Division office of the United States District Clerk for the Eastern District of Texas, all or any designated portion of, the discovery materials on file in the above entitled and numbered causes. Subsequent to the entry of the above mentioned order the discovery materials were removed from the Clerk's files and thereafter placed in the custody of the United States Attorney for the E a s t e r n D i s t r i c t of Texas. On J a n u a r y 4, 1982, the Court <t g > I 5 further ordered that the discovery materials in the custody of the United States Attorney, not be released, produced, disclosed, ?D or in any w a y m a d e avai l a b l e to a n yone e x c e p t pu r s u a n t to further order of the Court. The principal reason for the entry of this >fcS o rder was to k e e p the HT y l e r I" dis c o v e r y mate r i a l s under 4 seal until the Owentown asbestos litigation had been substan 050 t i a l l y concluded. a- S ince the e n t r y o f the o r d e r of J a n u a r y 4, 1982, the Wa C o u r t has b een i n undated w i t h r e quests for access to, or release 32 of the w i t h d r a w n d i s c o v e r y m a t e r i a l s from litigants t h roughout the United States. The Court has, with few exceptions, refused to grant any of these requests because litigation involving the operation of the P i t t s b u r g h - C o m i n g asbestos plant at Owentown, Texas, has been pending before the Court. However, in January, 1983, the rtT y l e r II*'litigation, that is, E lmer A l l e n , et al v. P P G I n d u stries, Inc., et a l , Ncf. T Y - 7 8 - 1 0 4 - C A and its companion cases, were compromised and settled as between the plaintiffs and all the industry defendants, except E.G.N.E.P. Cl Ltd. and the Cape a s b e s t o s c o mpanies, w h i c h are in d e f a u l t in faoi these cases and U n a r c o Industries, Inc., w h i c h is pres e n t l y in 3. bankruptcy. Further, as o f J une 20, 1983, the C ourt has been on o notice that a settlement between the plaintiffs and the United *a 3 a- S t ates of America, a t hird p a r t y d e f e n d a n t in the T y l e r II cases, I2! has t e n t a t i v e l y b een reached. This last d e v e l o p m e n t has served 3- to e f f e c t i v e l y t e r m i n a t e the T y l e r II litigation, excepting, of oc course, any default judgment proceedings that might be brought ff S' 3 ~XD O'* t4O^ 00 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont, PA 19028 July 22, 1983 against E.G.N.E.P. Ltd. and the Cape companies, or any post bankruptcy actions by the plaintiffs against Unarco Industries, Inc. Although cases arising out of the operation of the Owentown asbestos plant are still pending before the Court, the Court believes that the settlement of the Tyler II litigation has substantially concluded the major Owentown asbestos liti gation. Because of this, the Court has determined that the original purposes justifying the sealing of the Tyler I discovery materials are no longer present. In recognition of that determi nation, the C o u r t w i l l v a c a t e the o r d e r o f J a n u a r y 4, 1982, N and lift the seal on the Tyler I discovery materials and return them to the custody of the United States District Clerk of the Eastern District of Texas. It is, therefore, ORDERED that all discovery materials filed in the above entitled and numbered causes and in the custody of the United States Attorney for the Eastern District of Texas, be released from such custody and returned to the files of the Tyler Division office of the United States District Clerk for the Eastern District of Texas. The discovery materials returned to the custody of the United States District Clerk by virtue of this order shall, thereafter, be fully discoverable without application to this Court. SIGNED this day of July, 1983. UNITED STATES DISTRICT KJDGE I A D O N I*!. tNII*VI(W(D. roxTioH. EAGLE PICHER v:^ N rO U IH [M (M T 1. H i '- ' :fining Company. E A G L E -PIC H E R SA LE S COM PAN Y IN D U ST R IA L C O N TA CT R E PO R T /. r. Vardlow readily law that we had been placed, la aa awkward aad costly oosition l ad be has promised to help straighten things out la our favor. He told ne that he (OUR OUOTAllON. r o u R t e r m i ______ Mr Lmren_____ :urroMcn<s lcttir. ALCCM4N. c o n e s TO! H. l. AEER Hr u . Ca H r , D m i ^ - l g g TM Mr C- R. w e a n i o r m N C ________% o r r x c m u c i n c k ICMRCR IMI RALUtWlM* lU M U lal) jV dai oesn't feel that Super temp la any core harmful then the majority of insulations now " elng used. He mays that he did run a spectograph teat and could not find ary free lllca, therefore, la his opinion silicosis would not result from handling this ' aterlal. At thia point 1 prevailed upon him to write Mr. Viler of Humble Oil L ~ tefining Coopany1s Safety Department in Haytovrn, Texas,.advising him that eilicosia rould not occur to workmen handling the material, Ec promised to do this and to elao joint out that the opiniona* voiced in hia letter were meant to deal with mineral wool 5 P C A L L lOirfCT - P R IC E S Q U O T E D I SO L IC IT E D FOR Y PR O D U C T D ISC U SSE D I direct r . o . m. w o o l. Mise. CEMENT Y R E S U L T O F C A I-L Y Ln general rather than tilth a specific product. He has asked that 1 write his I > WILL CALL SACK: Oeroaxtitent a letter ln the form of a formal request for a clearer definition of his CALL 4fR Am vCoWT. /f. ACCT. T- * A " '!" * CMMACT f~ f . CONTRACT 1 IILANKCn . INIULSCAL LOCK fELT NR{ COVER'S I- DMl.WluClLLRti (OLD j DUD i latter. ' As a matter of form I have done this while ln hla office. He is to write hia letter to Hr. Viler of Humble the latter part of thia week and Is to Bend two copies to me in Houston. Ab soon as 1 receive them 1 .will contact Humble. Vhile in Hr. Uardlov* a office I had the opportunity to road a section ln "Occuoatlon a i i H A N - p o N O T W NiTC T Y P E S O P EQ U IPM E N T and Health*, aa compiled by the International Labor Institute,' on asbestos, conolled IN THIS 'COLUMN) in I9 3 K. This article was b y Dr. S. R- Gloyne of London, England and Dr. R. R.A. Heriveatber of Birmingham, England. If you think mineral wool* la dangerous you should ,.v \ PR O D U C T NOW U SED A N D C U R REN T P R IC E S ; -- read this. lou way secure a copy of thia article by writing the International Ip .b o i Office in Washington, D. C. , and request a copy of the article on Asbestoa hr the two above doctors as published in the Occupation and Health Supplement, dated I5 3 B. 1 urge yon to read thia as it is very informative. I also reed an articlo in a ' \v 'xl magazine by the name of "Industrial Medicine" written by Dr. Valter! J. Siebert, which S A L E S M A N 'S C O M M E N T S cucerently covers sooc very exhaustive research on handling o f gloss wool by. workmen. ** Mr. Kirby, Asst, to Dr. Cox, State Eoalth Officer. ' Mr. V." Vardlow, Chemical Engineer in charge of This is in the January I9 U2 issue of this magazine, I believe. It night be well that you reed this also, T" ^ Texes State Board of Eeeltb lacoratorie1 Mr. Dabney, of Dr. Cox1 office. hin 1 tried to contact Dr. Cox hut found/to he at home ill. I Please send a copy of the U. S. Ravy Report, showing chemical anelysla.-af Eagle Vool *' "a Vardlow. St^fc Department 0 / Health, Austin.-y^ixas. * vac referred to his assistant Mr. Kirby who later referred me to Hr. V, 2. Vardlow of their laboratory. It seexc that Mr. Vardlov, by hie admission, wrote ihe letter to the two errployees, Messrs. C. R. Cardiff, H. E.Karlson, of the Humble Oil L Refining Company, with regard to the srrple of Super temp Block which these two men sent to Dr. Cox fer his opinion aa to whether or not the handling of the block vac injurious to workmen. However, the letter was signed tv Ih*. a ' 3 o O r2 ->a ft Cox. ' , S i o to Mr. Wardlov and I reviewed their entire file on the S u m r t e m GO test, v/hich In reality was not a test. Hr. 1'exdlow had ~ answered the letter written to Dr. Cox by Messrs. Cardiff C_. end Etri ton by quoting from a book -- "Occupation and Health- c as compiled by the International Labor Office, which dealt with slag and mineral wool hazerds to users in a general way. ro However, this letter did not mention the authority on which ro hie opinion was based, therefore, his letter which incld-ntly was over the signature of Dr. Cox, has been badly cisconctrue _, b y Mes rrs. Cardiff and ^arlson and al g o the Humble Oil A to oo FVIIIRirY CO CO Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 July 22, 1983 t II h a i 3 .s H * i *1 M 3 m i r ei m 4 h* > 3_ 3 > tf-3 .'3 4 4 O lilt i \S 2 la s 5 &a S S s 1 1 . _ +4p 44 rO 3 H 3J o`J ,, a A 3 m u ** <i VI u "3- P. U S* h z * . w n 4* S+* o > A k Hft w a s " U3 H + u F O p -P JJ -P 44 A Q 1 fl ti 4 u 44 snu so a S0 w. It 1943 Andrews Publications, Inc., All Rights Reserved- Reproduction strictly prohibited without permission. p , 6 ,9 5 0 Reproduction strictly prohibited without permission, p 6 95"] 1983 Andrews Pubttcaoons. Idc_ AU R i?hu Rewnred Jn II,. . ^llnileh Js>hiie0 Couri of (Appeals Jlfor il|t^> cU rn il| (Oircuii No. 82-2071 J anet E. P itts. v. U narco I ndustries. I nc., e t al., Plaintiff-Appellant, Defendants-AppelleeM. Appeal from the United S tales D istrict Court for the Southern D istrict of Indians, Indianapolis Division. No. 8 1 C 1334--Calc J . B o ld e r. Judo*. Argued J anuary id, 1988--Decided J uly 11. 1983 Before CuuuiNGS, Chief Judge, COFFEY, Circuit Judge, and Aspen. District Judge.* CuuuiNGS, Chief Judge. The principal issues in this appeal are whether plaintiff was denied a fair opportunity to oppose defendants' motions for summary judgment and whether an unaccrued cause of action for wrongful death is a species of property protected by the Fourteenth Amendment and abrogated by the applicability of a tenyear Indiana statute of limitations. * The Honorable Marvin E. Aapen, District Judge of the Northern District of Illinois, is sitting by designation. PITTS Some 20 months following the death of her husband from lung disease, plaintiff, a resident of Indiana, com menced this wrongful death diversity action against 16 corporations, all residents of other sLates. Plaintiff alleged that each did business in Indiana and was involved at some sLage in the production and distribution In Indiana of products containing asbestos. Plaintiffs husband had been an asbestos insulation mechanic during the years 1960 through 1979 and she claimed that asbestoscontaining products produced and distributed by defen dants caused hiB death. She sought $1,600,000 in com pensatory damages and $1,000,000 in punitive damages. Her complaint was in five counts: Count I charged negligence; Count II, strict liability; Count Hi, breach of implied warranties of merchantability and fitness; Count IV, conspiracy to keep from the public information about * the health risks associated with asbestos; and Count V charged loss of consortium. Plaintiff abandoned Count V and on May 13, 1982, the trial court dismissed with preju dice Counts III and IV for failure to state a claim for relief, and struck from the complaint plaintiffs prayer for punitive damages. This appeal does not question these rulings. But on June 9th, the court granted final summary judgment in favor of six defendants on Counts I and II.1 This appeal is from that summary judgment. 1 Plaintiff first claims that Bhe did not have an adequate opportunity to oppose the remaining six defendants' sum mary judgment motions. On June 1st before granting those motions, the trial court ruled that the ten-year stat ute of limitations in Indiana's Product Liability Act, Ind. 1 A seventh defendant had been dismissed for want of service and the other nine settled with plaintiff. Code ft 33-1-1.6-6 (1981),* applied to plaintiffs wrongful death suit, and that under that statute unless it appeared that each defendant had delivered an asbestos-containing product to plaintiffs husband or his employer within the ten-year period preceding the date plaintiff filed suit, her claim against that defendant would be time-barred. When the trial court issued this ruling, plaintiff had yet to p re-; sent her argument about which statute of limitations should apply, and Bhe claims that she was entitled to an opportunity to do so. But the ruling was not a judgment of any sort; it was simply a preliminary statement of Lhe court's understanding of Lhe law after having read several defense motions and supporting memoranda that had been filed five days earlier. Plaintiff had ample opportuni ty to respond to those motions and to challenge the court's understanding of the luw and did so by filing a motion to reconsider on June 3 and two supporting briefs and af fidavits on June 4 and 7. On June 7 and 8 the court consid ered the respective submissions and oral arguments of the parties in open court (plaintiffs App. 231-236; defen dants' App. 89-92) before determining whether any defen dants had delivered aBbestou-coutaining products during the 10 years preceding the commencement of this suit and whether the ten-year statute of limitations barred suit. Plaintiff thus fully responded to defendants' motions--by * Indiana Code I 33-1-1.6-5 (Bums 1C 34-4-20A-6) provides: 33-1-1.6-6 Statute of limitations Sec. 6. Statute of Limitations. This section applies to all persona regardless of minority or legal disability. Not withstanding IC 34-1-2-6, any product liability action must be commenced within two (2) years after the cause of action accrues or within ten (10) years after the deliv ery of the product to the initial user or consumer; except that, if the cause of action accrues more titan eight (8) years but not more than ten (10) years after that initial delivery, the action may be commenced aLany time within two (2) years after the cause of action accrues. Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc., Edgemont. PA 19028 July 22 , 1983 Reproduction strictly prohibited without permission, p . 6 , 9 5 2 1983 Andrem PubHaom, Inc,, AU Right; Raerred. filing affidavits and two briefs challenging, on constitu tional and choice-of-law grounds, the applicability of the ten-year Btatute of limitations. Plaintiff had further op portunity to pursue those arguments during the June 7 and dhearingB. While plaintiffs motion to reconsider mentioned Local Rule 10 of the Southern District of Indiana providing 15 days to file opposition to a summary judgment motion, she merely requested "an opportunity to present a response to the motion for partial summary judgment and further, for an op portunity to present in open court argument and tes timony regarding the issues raised in the motions for partial summary judgment filed on behalf of all defendants in this matter." (Defendants' App. 86.) Since she was accorded that opportunity, no reversible error was committed in receiving her affidavits and briefs on June 4 and 7 and considering her submissions and oral argument on June 7 and 8 before granLing the summary judgment motions on June 9. II Second, plaintiff contends that the ten-year statute of limitations was toiled by defendants' fraudulent conceal ment of their tortious conduct. This contention was not ad vanced below and therefore need not be considered for the first lime on uppeal. Ohio Casualty insurance Co. v. R.J. Rynearson, 507 F.2d 573 (7th Cir. 1974). Nevertheless, plaintiff argues in her reply brief that Count IV of the com plaint contains an allegation of fraudulent concealment, but that Count was dismissed with prejudice on Muy 13, almost four weeks before summary judgment was granted, and plaintiff has not challenged that dismis sal on this appeal. In any event, the allegations iu Count IV are insufficient to charge defendants with fraudulent concealment.* Rule 9(b) of the Federal Civil Rules requires that fraud be pleaded with particularity. The only particular conduct charged in Count IV is that defendants withheld informa tion from the public. Passive silence, however, is insuffi cient to trigger the fraudulent concealment doctrine. a Paragraph 37 of conspiracy Count IV realleges paragraphs I through 36 of the complaint, but plaintiff doea not assert that any of those paragraphs raised fraudulent concealment. The remainder of Count 1V is as follows; 38. Defendants, collectively and individually, have possessed since at least 1929 medical and scientific data which clearly indicated that asbestos-containing products were hazardous to the health and safety of plaintiffs decedent, Donald E. Pitts, and others exposed to asbestoscontaining products. 39. Defendants, collectively and Individually, knew or reasonably should have anticipated that plaintiffs decedent, Donald E. Pitts, and others in his position would be exposed to the asbestos-containing products produced by the defendants. 40. Defendants, prompted by pecuniary motives, collec tively and individually, ignored and failed to act upon aaid medical and scientific data and conspired to deprive the public, and in particular the users of asbestos-containing products and their families of this information, thereby denying plaintiffs decedent, Donald E. Pitts, and others exposed to asbestos-containing products of the opportuni ty of free choice as to whether to be exposed to the asbestos-containing products produced by the defendants. 41. Defendants' conduct complained of above directly and proximately caused the plaintiffs decedent's injuries and death. ' 42. By reason of the premises, defendants are liable, jointly and severally, to the plaintiff for the injuries and damages described above. (Plaintiffs App. 49-50.) H3 car Morgan v. Koch, 419 F.2d 993, 998-999 (7th Cir. 1969); F r e n c h v. H i c k m a n M o v i n g & S to r a g e , 400 N.E.2d 1384 (Ind. App. 1980). Ill Plaintiffs third claim is that the ten-year statute of limitations in the Product Liability Act is unconstitutional as applied to her because it deprives her of property with out due process of law. An accrued cause of action is a right of property, protected by the Fourteenth Amendment, Logan v. Zimmerman Brush Co., 465 U.S. 422; an unuccrued cause of action is not. Silver v. Silver, 280 U.S. 117, 122; Munn v. Illinois, 94 U.S. 113, 134; Afartin v. Pittsburg & L.E.R. Co., 203 U.S. 284, 295; Du charme v. Merrill-National Laboratories, 574 F.2d 1307 (5th Cir. 1978), certiorari denied, 439 U.S. 1002; Carr v. United States, 422 F.2d 1007 (4th Cir. 1970). The Indiana legislature could, if it wanted, do away entirely with wrongful death actions beginning tomorrow even though there are probably some persons with living spouses who hope that the wrongful death statute, Ind. Code &34-1-1-2 (1981), remains on the books In case their spouses are ever killed because of someone else's negligence. Such a hope is protected by the voting booth, not by the federal courts. Munn v. fltinois, 94 U.S. 113, 134. Plaintiffs cause of action had not yet accrued when the Indiana legislature adopted the ten-year statute of limitations contained in the Product Liability Act. Her right to sue fqr her husband's wrongful death vested when her husband died, Fisk v. United States, 667 F.2d 167 (7th Cir. 1981); Dague v. Piper Aircraft Corp., 418 N.E.2d 207 (Ind. 1981), and he died some two years after the Product Liability Act was passed. The change in the law therefore caused her no loss of property. Even if she had a property right in thlH unuccrued cause of action, we cannot accept plaintiffs argument that the Indiana Product Liability Act's ten-year statute of repose violates due process under the federal and Indi ana Constitutions. An identical argument was rejected by vo oto GO cC _ , *< PO PO Reproduction strictly prohibited without permission, p 6 9 5 3 . . 1983 Andrew Publication*, lnc,, Ail Rights Reserved. the Indiana Supreme Court in another asbestos case (after the briefing herein) as to the three-year limitations contained in the Indiana Occupational Diseases AcL. Bunker v. National Gypsum Company, 441 N.E.2d 8 (1982). In United States v. Kubrick, 444 U.S. I l l , 117, the constitutionality of a two-year federal statute of limita tions was assumed for the following reasons: Statutes of limitations which "are found and ap proved in all systems of enlightened jurisprudence," Wood v. Carpenter, 101 U.S. 135, 139 (1879), repre sent a pervasive legislative judgment that it is unjust to fail to put the adversary on notice to defend within a specified period of time and that Mthe right Lo be free of stale claims in time comes to prevail over the right to prosecute them." Railroad Telegraphers v. Railway Express Agency, 32) U.S. 342, 349 (1944). These enactments are statutes of repose; and al though affording plaintiffs what the legislature deems a reasonable time to present their claims, they protect defendants and the courts from having to deal with cases in which the search for truth may be seriously impaired by the loss of evidence, whether by death or disappearance of witnesses, fading memories, disappearance of documents, or otherwise. United States v. Marion, 404 U.S. 307, 322, n.14 (1971); Burnett v. New York Central R. Co., 380 U.S. 424, 428 (1965); Chase Securities Corp. v. Donaldson, 325 U.S. 304, 314 (1945); Afiaaouri, K. & T. R. Co. v. Harriman, 227 U.S. 667, 672 (1913); Bell v. Morrison, 1 Pet. 361, 360 (1828). Section 2401(b), the limitations provision involved here, is the balance struck by Congress in the context of tort claims against the Government; and we are not free to construe it so as to defeat its obvious purpose, which is to encourage the prompt presenta tion of claims. Campbell v. Haverhill, 155 U.S. 610, 617 (1895); Bell v. Morrison, supra, at 360. We should regard the plea of limitations as a `'meritorious defense, in Itself serving a public interest." Guaranty Trust Co. v. United States, 304 U.S. 126,136 (1938). In Chase Securities Corp. o. Donaldson, 325 U.S. 304, a Minnesota six-year statute of limitations was sustained over charges that it violated the due process and equal protection clauses of the Fourteenth Amendment. The above examples are sufficient to persuade us that plaintiffs due process argument must be rejected. IV Plaintiffs final claim is that applying to her suit the ten-year limitations statute denies her "the equal protec tion of the laws" guaranteed by the Fourteenth Amendment. The ten-year limitations rule creates two classes of people: those injured by products more than ten years old and those injured by products less than ten years old. Those in the first c I s s b are prevented from bringing suit upon the same causes of action that those in the second class can bring. The effect of this is to lessen the risk of loss--i.e., from having to pay for injuries re sulting from use of a defective product--manufacturers face when they place a product into the stream of commerce. That is a legitimate legislative purpose, and it is not the courts* business to instruct the Indiana legisla ture when it is better for consumers lhan producers to bear that risk. See Simpson v. United States, 662 F.2d 831,833-834 (9th Cir. 1981); DiAntoniov. NorthamptonAccomack Memorial Hospital, 628 F.2d 287, 291 (4th Cir 1980). In Bunker v. National Gypsum Company, supra, also involving an asbestos-related disease, the Indiana Su preme Court rejected an equal protection clause argument similar to plaintiffs.4 And the Supreme Court of the United States did likewise in a related setting in Chase Securities Corp., supra. 4 See also Johnson v. St Vincent Hospital. Inc., 404 N.E.2d 685 (Ind. Sup. Ct. 1980). Since the privileges and immunities clause in Article 1, Section 23 of the Indiana Constitution affords plaintiff the same protection as does the Fourteenth Amendment Equal Protection Clause, Huff v. White Motor Corp., 609 F.2d 286, 298 (7th Cir. 1979); Haas v. South Bend Com munity School Corp., 289 N.E.2d 495 (Ind. 1972), we reject for the same reasons plaintiffs claim under that provision. And again Bunker, supra, is on point because there the three-year statute of limitations in the Indiunu Occupational Diseases Act was held "to be constitutional* in all respecLs" (441 N.E.2d 14) even though dissenting Justice Hunter thought its application would "defy * * * the privileges and immunities guaranteed our citizens * * " (441N .E .2dl8). ' Pitts was not left without recourse by this statute of limitations. Since nine defendants could not take advan tage of the statute, they were not immunized and indeed settled with plaintiff (note 1 supra), thus vitiating Pitts' claim that the statute contravened the Indiana privileges and immunities clause by conferring blanket immunity to all asbestos producers. Instead the statute must be sus tained as reflecting the legislative twin goals of (a) repose and (b) rcliunce that stale claims will not be tolerated In view of loss of memories, witnesses or evidence. Judgment affirmed. A true Copy: Teste: Clerk of the United States Court q Appeals fo r (As Seventh Circuit U8CA 30224--Uldweat Law Printing Co.. Inc.. Chicago--7-11-83--400 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont, PA 19028 July 22, 1983 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc., Edgemont. PA 19028 J u l y 2 2 , 1983 Reproduction strictly prohibited without permission, p 6 9 5 5 1983 Andrews Publicado*. Inc, AU Rights Reserved. noui Havy 80(100 In two or or oceans b c m clear. Ad a result, in Juno 1940 Congress approved additions to the Mavy of 2 , 172<000' tons of major coabet ships, which would triple the alia of Che float. After Pearl Harbor and by September 1942 a five ocaan Wavy waa planned to bring tha total combat tonnage of cha Mary to approximately eight ailllon tone. 11. Tha outbreak of war in Curope alao iatenalfiad tha Government's need for merchant ahlpa by draatlcally reducing tha amount of foreign flag shipping available for cha regular water borne c M M r c a of tha Onited States. Moreover fro September, 1939 through November, 1941 the American Merchant fleec was reduced, due to sales or transfer of Merchant ahlpa to Great Britain and Panama. Accordingly in addition to the increase in coesbat ships it bcae necessary to engage in unprecedented construction of oceangoing ships of Merchant types. Approx imately 9.777 Merchant-type ahipe were constructed during World Mar II. ' 12. The war in Europe engulfed the United Statee after the attack on Pearl Harbor on Decenber 7 1941. The United States recognised the eslstence of a stats of war with Japan on Decenber 1941. On Oecenber 11 1941 Germany and Italy declared war on the United States and the United Statee declared a atate of war with Germany and Italy. 13. As war threatened the security of the country, the United States required rapid construction of a vastly enlarged naval and merchant fleet to conduet naval end military operations, to provide for the transportation of extraordinarily large quan tities of materials needed to meet the requirements of the troops oversees, and to maintain services essential for tha war effort. The ships and ehipyarda which the Onited States had at the beginning of the war proved to be barely adequate to allow the United States to defend itself during the early days of the war. The existing fleet wee deficient in both alxe end type of ship, end wee largely outdated. The defense of the United States therefore required the rapid conatruction of a naval and Bacchant fleet. Thia conatruction program resulted in the deployment of the lergaat navel and marchant fleet In history. The Government's wartime need for ships accordingly dominated all aapacca of ship repair and conatruction in the United Stetea. 14. Because of Che threat to tha aecurity of the country, che policy of the United Statee wee to do everything possible to eccomplieh Che construction and repair of combat and merchant ships as quickly as posslbls. IS. To satisfy ths Onited Stetea* need for ships, the Government effectively assumed control over the shipbuilding industry in the Onited States, and issued contracts, orders snd directives binding on tbs shipbuilding industry and on its aupplisra. Contracts orders snd diractlvaa issued by Che Government required, by specification or otherwise, the use of subetantlel amounts of eebeatoa-conteining meterais In the conatruction end repair of Government ships. To ensure the availability of adequate euppliea of aebeetoa for these purposes, Che Government purchased, imported end stockpiled asbestos and strictly allocacad tha availabla asbestos supply among ths manufsetursrs of asbestos-containing products essential to the shipbuilding program. The manufacturera of asbestos-containing products were compelled by the Government's exercise of Its war powers Co eater into contracta to supply these products for use in the Government*! shipbuilding program. With regard to industrial bygiana considerations raised by this axtensive and mandatory use of asbestos, the United States recognixsd the used to enforce the United Scutes Public Health Service recommended standard for safe exposure to esbeetoe in the workplace. In its World Mar II shipbuilding program, howavar, tha Govarnment felled to adhere to the standard, thus causing shipyard workars to bs axposad to sxcesslvs concencratlone of asbestos. Horsovsr, ths Govsrnment kept knowledge of these exceaalve exposures confidential. Thane acts of the nlted Ststas lad to tha occurranca of asbeacoa-ralatad diseasa in workars who wars employed in shipyards during World War II. Thaaa workars or their representativas have ouad Johna-Hanville and others to rscovsr damsgss allegedly incurred as e result of asbestos-related disease, although those damages were in feet proximately caused by acts of the United Statee, end not JohnaHanville. THE OOYEMHCMT COMTROLLCD THE SHIfrRUlLDIMQ IMPOST* DPHIHG WORLD MAE H 16. Through tha use of the stetutea end regulations referred to in paragraph tha United States controlled the operations of the shipbuilding industry throughout World War II. 17. Construction and repair of combat nnd merchant-typo ships took piece in shipyards owned and operatad by tha Onitad Statee Wavy (hereinafter "Wavy yards* or `Government owned shipyards*). Additional ship construction end repair took piece in private shipyards operated pursuant to Government contracts end dirac- tivee and in Shipyards owned by the United States but leased to private companies for operation pursuant to Oovarnmenc direction and control (hereinafter "contract shipyards* or "Government controlled shipyards"). IB. During World Her II, the Onited States mandated to boch Mevy and contract shipyards its requirements for all combat and merchant ships, Including the number of ahipe to be conscrucced at each yard, methods of construction, end shipyard working conditions. The Government also controlled eceesa to Che shipyards and the disclosure of information concerning the work done in Che yards. Including information relating to working conditions in the yards. 19. Due to tha Government-1 efforts to increase ship con struction during World War II, the number of shipyard workars increased ninefold, from 161,000 in June, 1940 to e peak of 1,900,000. THE G0YEMMHCMT REQUIMEO ASSSSTOS IM HERCHAMT AMO HAVT 9 H I M 20. It waa imperative to the war effort and to the safety of the crews that boch combat and merchant ships be conscrucced, converted and repaired to protect them against snemy sctlon and other casualty to the greatest extent possible. In particular, thia required*protection against fire. Aebeetoa wee essential in conatruction, conversion and repair of ships because its fireproofing and insulating efficiency increased Che battleworchlnesa of ships and because its light weight resulted in Improved speed, fuel economy, operating rpnge, and load capacity. At all relevant times, there was no known substitute for asbestos satisfactory for these purposes, snd the Government required the use of lsrge quantitiee of esbeetoe in the constructlon, conversion snd repair of Governmsnt ships. 21. It was further imperative to Che war effort that ships and chair component bs standard and of uniform quality to the greatest sstant possible. Accordingly, the United Scstes prepared, established end approved specifications (hereinafter "Government specificetlons") for materials used in ship con struction, conversion end repair. Government specificetlons were expressly incorporated into and mada a part of war supply contracts for construction# conversion or repair of Govarnment ehipa, and the Government prohibited all deviation from its specificaclona without ita axpreea approval. 22. Tha war supply contracts raqulrad, by incorporation of Qovarnment specifications, the use of strategic end critical Asbestos Litigation Reporter Published t-wice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 July 22, 1983 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 J u l y 22 , 1983 8 1983 Andrews Publications, Inc., All Rights Reserved Reproduction strictly prohibited without permission, p 6 , 9 5 6 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont, PA 19028 July 22, 1983 1983 Andrei* Publication*. Inc.. AU Rights Reserved Reproduction strictly prohibited without permission, p 6 9 5 7 Asbestos Litigation Reporter s 1983 Andrews Publications, Inc- All Rights Reserred Reproduction strictly prohibited without permission, p 6 ,9 5 8 Asbestos Litigation Reporter 1983 Andrew Publications, Inc- All Rights Reserved Reproduction strictly prohibited without permission. P. 6 ,9 5 9 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont, PA 19028 J u l y 22, 1983 1983 A ndrei Publications. Inc* All Rights Reserved Reproduction strictly prohibited without permission, p 6 , 9 6 0 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont, PA 19028 July 22, 1983 1983 Andrews Publications, Ine_ Ail Rights Reserved. Reproduction strictly prohibited without permission, p 6 9 5 ] Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 J u l y 2 2 , 1983 *19*3 Andrews Publications. Inc., All Rights Reserved. Reproduction strictly prohibited without permission, p 6 962 19*3 Andrews Publication*, Inc, Ail Rights Reserved a4. Arrange to hava raspiratora itadlitid, cleaned and repaired and provide claaa placa lor thair atoraga." *CoMntt Tbara baa baan no eatiafactory coapllanca with any of thaaa racomaendatione.* I Industrial .Health and Safatv Ba-Survay of Todd Pacific Shipyard*. July 12-20, 1545.) I. During WWII, tba Govacnaiant controllad tha discrlbution of information pertaining to shipyard occupational health and aafaty. Dlaaaoanation of ahlpyard Induatrial Saaltb Survaya uaa aapraaaly prohlbltad by tha Government undar tha espionage Act, aa followat "Thia document contalna Information affacting tha national dafanaa of tba Onltad Stataa within tba aanlng of tba Caplonaga Act. O.C.C. 50) 31 and 32. Ita tranaaiaalon or tha revelation of Ita contanta lo any manner to an unauthorised paraoa la prohlbltad by law.* Reproduction strictly prohibited without permission, p 6 9 6 ^ CELOTEX Fi'LE: G i s f U ' CJ Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 July 22, 1983 , e r CC-fsT ra THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA IN R E R E LATED A S B E S T O S C ASES ) No. C-79-358B RFP ) ) MEMORANDUM AND ORDER ) In these asbestos-related personal Injury cases, plaintiffs seek recovery of punitive damages against various defendants, including the Celotex Corporation, the moving party herein. The a l l e g e d p u n i t i v e d a m a g e liab i l i t y of C e l o t e x is premised upon the activities of a predecessor corporation. Celotex, in this motion for partial summary judgment, seeks a ruling from this court that there exists no genuine issue of mater ial fart c o n c e r n i n g such purp o r t e d liability. In support of its motion, C e l o t e x advan c e s two basic arguments. First, it asserts that, under California law, punitive damages can be imposed upon a succ e s s o r corp o r a t i o n o n l y if said successor is so similar to its predecessor as to be indistinguishable. Secon d,jit urges that the impo s i t i o n of punit i v e damages in industry-wide mass tort litigation is both contrary to law and unconstjtutional. I. F ACTUAL B A C KGROUND ! The Phillip Carey Manufacturing Company ("Old Carey") was incorporated in O h i o in 1888. Thro u g h a public o ffer for tenders!in February of 1966, and through subsequent open market 1983 Andrews Publications, !nc_ All Rights Reserved purchases, Glen Alden Corporation acquired approximately 28% of the outstanding shares of Old Carey. On Dece m b e r 1, 1966, a new c o rporation was formed in Ohio. It was named P.C. Company, Inc., but to resolve a conflict of name its Articles of Incorporation were amended to change the name to XPCU Corporation on April 14, 1967. Subsequently, the name of the corporation was changed as of June 1, 1967, to the P h i l l i p C arey M a n u facturing Company ("New Carey"). O n June 1, 1967, O l d C arey was merged into Glen Alden in a transaction by which the other shareholders of Old Carey received a Preferred Stock of Glen Alden. Immediately after the merger. Old Carey transferred all its assets subject to liabilities to Glen Alden, and Glen Alden transferred to New Carey all the assets of Old Carey, subject to it6 liabilities, in exch a n g e for all the o u t s t a n d i n g shares of capital stock of New Carey. Thus, New Carey became a wholly owned subsidiary of Glen Alden. On January 23, 1968, The Phillip Carey Manufacturing Company changed its name to Phillip Carey Corporation. On April 9, 1970, P h i l l i p C a rey C o r p o r a t i o n was merged into Briggs Manufacturing Company. On the same date, Briggs, the surviving company, changed its name to Panacon Corporation. Panacon Corporation succeeded to all the assets and liabilities of Phillip Carey Corporation, which ceased to have corporate existence. A fter A pril 9, 1970, Pana c o n continued to operate "Phillip Carey" and/or "Phillip Carey Company" as a division which manufactured and sold roofing and insulation materials T3 o\ cr> -p* Reproduction strictly prohibited without permission. Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc., Edgemont. PA 19028 July 22 , 1983 but which had no separate corporate or legal existence. On April 17, 1972, Celotex Corporation purchased all the Panacon Corporation stock held by the Glen.Alden Corporation, approximately 75%, for cash. The Glen Alden Corporation did not acquire any shares of Celotex stock as a result of that transaction; nor did Glen Alden acquire any share of the stock of J i m W a lter C o r p o ration, C e l o t e x *s parent corporation, as a result of that transaction. Subsequently, Celotex offered to buy all remaining outstanding shares of Panacon Corporation from their respective owners for $6.00 per share. As a result of these transactions. Celotex bought all shares of the Panacon Corporation for cash, and no stockholders of the former Panacon Corporation became stockholders in C e l o t e x or in any of C e l o t e x 1s p a r e n t or subsidiary corporations. Celotex succeeded to all the assets and liabilities of Panacon, which ceased to have corporate existence. Celotex, after June 30, 1972, continued to operate "Phillip Carey" as a division which manufactured and sold roofing and insulation materials but had no separate corporate or legal existence. This practice ceased at the end of 1973. II. D I SCUSSI O N A. C o n s t i t u t i o n a l ! t y / I l l e g a l i t y of Puni t i ve Damages On J u n e 2, 1962, this court issued an o rder addressing t hese issues. Therein w e held that the q u estions of the illegality/unconstitutionality vel non of punitive damages in mass p r o d u c t liab i l i t y l i t i g a t i o n w e r e not suit a b le for pretrial resolution in light of the possibility that the 1983 Andrews Publication*. Inc., All Rights Reserved- plaintiffs would be unable to establish a prima facie case of liability for punitive damages, rendering the issues moot. Hence, we denied without prejudice the defendants1 motion to strike plaintiffs1 prayer for punitive damages. This order applied to all related asbestos cases falling within the In Re Related Asbestos rubric, in which the present cases are to be included. This action is therefore controlled by the June 2 order. Neither Celotex nor the plaintiffs offer new legal authority for their respective positions. We therefore adhere to our previous ruling. B. Succ e s s o r Liability Pursuant to California Civil Code S 3294(a), a plaintiff may recover punitive damages where a defendant has been guilty of "oppression, fraud, or m a l i c e . 1* The purpose of punitive damages is to punish wrongdoers and to deter the further c o mmission of wrong f u l acts.. Egan v. Mutual of Omaha Insurance C o . , 24 Cal. 3d 809, 825 (1979). In light of this purpose, punitive damage liability is not imposed on the basis of vicarious fault} California courts have recognized that punitive damages "will have no deterrent effect if awarded against a party not r e s p onsible for the wrong. (4 Witkin, Summary of Cali f o r n i a L a w , 1974, Torts, 855, p. 3147)." Hartman v. Shell Oil C o . , 68 Cal. App. 3d 240, 249 (1977). Punitive damage liability may be imposed upon a successor cor p o r a t i o n u n der three possible theories: 1) under the doct r i n e of Ray v . Alad C o r p . f i n f r a ; 2) under the p r i nciples embod i e d in Moe v. T r a n s america Title Insurance C o . , i n f r a ;.3) by analogy to section 3294(b), that is, on the basis Reproduction strictly prohibited without permission, p 6 965 Asbestos Litigation Reporter Published twice monthly by Andrews Publications, Inc., Edgemont, PA 19028 July 22, 1983 of the principal's knowledge, authorization or ratification of an agent's malicious act. 1. Ray v. Alad Corp. California, w h o s e law is appl i c a b l e in these diversity cases, adheres to the general rule that a corporation which purchases the principal assets of another corporation does not assume the latter's liabilities unlesss 1) there is an expr e s s or implied agre e m e n t of assumption; 2) the tran s a c t i o n amounts to a c o n s o l i d a t i on or merger of the two corporations! 3) the p u r c h a s i n g c o r p o r a t i o n is a m e r e continuation of the seller; 4) the tran s f e r of assets to the purc h a s e r is for the fraudulent purpose of escaping liability for the seller's debts. R a y v. Alad C o r p . , 19 Cal. 3d 22, 28 (1977). In Ray v. A l a d , the Court found that the successor therein did not fall within any of the four aforementioned exceptions; however, the Court held that the policies underlying strict tort liability for defective products called for a special exception to the general rule. The Court noted that the purpose of the doctrine of strict products liability "is to insure that the costs of injuries be borne by the manufacturers that put such products on the markets rather than by the injured persons who are powerless to protect themselves." I d . at 30. The doctrine rests upon the proposition that the risk of injury can be insured against by the manufacturer and spread amongst the consuming public as a cost of doing business. In light of these principles, the court concluded that strict liability could justifiably be imposed upon the successor to a manufacturer 1983 Andrews P ublication, Inc,, A U Rights Reserred * w here 1) the p l a i n t i f f ' s remed i e s a g a inst the original manufacturer are effectively destroyed by the successor's acq u i s i t i o n of the business; 2) the successor is able to assume the original m a n u f a c t u r e r ' s ris k - s p r e a ding role; and 3) it is fair to require the successor to assume a responsibility for defective products that was a burden necessarily attached to the original manufacturer's good will being enjoyed by the successor in the continued operation of its business. I d . at 31. Under the facts of that particular case, the Court determined that the successor manufacturer could be held liable for injuries resulting from its predecessor's products. The plaintiff had been injured while using a defective ladder m a n u f a c t u r e d by the f i rBt A l a d Corp. (Alad 1). P rior to plaintiff's injury, Alad I had 6old its inventory, equipment, trade name and good will to the Lighting Maintenance Corporation, which then took the name "Alad Corporation" (Alad II). Alad I diss o l v e d s h o r t l y thereafter. Alad II, as a result of the transaction, acquired Alad 1's plant, machinery, offices, and all other assets necessary to continue the m a n u f a c t u r e of Alad ladders. Alad II, using essentially the same factory and office personnel, and continued to manufacture the identical model of ladder which had injured the plaintiff. There was little or no indication to the general public that a different entity was manufacturing the line of ladders. In R a w l i n g s v. D . M. O l i v e r , 97 Cal. App. 3d 890 (1979), the C a l i f o r n i a C ourt of Appeal b r oadened R ay v. Alad to impose liability for a defective product upon a successor who cn ic c(Tni Reproduction strictly prohibited without permission. Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc., Hdgemont. PA 19028 July 22, 1983 merely continued the same general line of business although not the identical product. The Ninth Circuit has commented that T h e r a t i o n a l e of Ray v. Alad Corp. (and R a w l i n g s ] is consistent with California's strict liability policy of assigning responsibility for injuries arising from the manufacture of defective products to the enterprise which haB received the benefit of doing bu s iess in a p a r t i c u l a r line of products, and w hich is in the best position to spread the cost of the injury among members of society. Gee v. Tenneco, I n c . , 615 F . 2d B 5 7 f B64 (9th Cir. 1980). Both Ray v. A l a d and R a w l i n g s imposed l i a bility for compensatory damages upon successor companies. Neither case purported to extend the above principles to claims for punitive damages. Assuming, arguendo, that Celotex would be liable for compensatory damages, we conclude that California would not expand the reach of the above cases to hold Celotex liable for punitive damages under the present circumstances. The justifications underlying successor liability for compensatory damages articulated in Ray v . Alad simply are not present in the instant case. Punitive damages are not a part of a plain t i f f ' s remedies for h a r m suffered, w h i c h Ray v. Alad feared would be destroyed unless a successor corporation were held liable. Punitive damages serve only to punish and deter the wrongdoer. Unlike compensatory damages, punitive damages provide a windfall to a plaintiff. If a plaintiff is unable to recover punitive damages, he will not suffer unrectified injury. Moreover, the assets of a successor corporation could arguably suffer Buch serious depletion as a result of punitive damage suits, that the corporation would be unable to provide compensatory damages to future plaintiffs genuinely in need of monetary recovery. This danger, and the problems generally e 19S3 Andrews Publications, Inc, All Rights Reserved. posed by the imposition of p u n i t i v e damage liability in multiple-plaintiff products liability litigation, have troubled numerous courts. See Roginsky v. R i c h a r d s o n - M e r r i l l , I n c . , 378 F . 2d 832, 838-41 (2d Cir. 1967>; Rosner v. Sears, Roebuck 6 C o . , 110 Cal. App. 3d 740, 758-59 (I960) (Elkington, J., concurring). Furthermore, Celotex cannot easily assume a risk-spreading role. The probability and amount of punitive damages would be extremely difficult to anticipate, and, moreover, California law does not permit insurance coverage to include liability for punitive damages. Cal. Insurance Code S 533 provides: An insurer is not wilful act of the by the negligence agents or others. liable for a loss caused by the insured: but he is not exonerated of the insured, or of the insured's In City Products Corp. v. G lobe Indemnity C o . , 88 Cal.App.3d 31 (1979), the court noted that, under California law, a corporation may be liable for punitive damages only for malicious acts done by its agents and with the knowledge or under the direction of its corporate officers having the power to bind the corporation. Id. Therefore, the court stated. It is apparent from the foregoing that under California law the imposition of punitive damages upon a cor p o r a t i o n is based upon its own fault. It is not imposed v i c a r i o u s l y by virtue of the fault of others. I d , at 36. Because the c o r p o r a t i o n was assessed punitive damages on the basis of its own wilful acts, insurance coverage was prohibited by section 533. The. court explained further that, unlike jurisdictions which permit punitive damages on the basis of gross negligence or reckless or wanton conduct. Reproduction strictly prohibited without permission, p 6 9 6 7 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont, PA 19028 .July 22, 1983 California limits punitive damages to caseB involving fraud, oppression or malice; the latter jurisdictions have generally invalidated insurance coverage for punitive damages on policy grounds. California, the court found, fell into this category. Thus, in California, indemnification for punitive damage liability is violative of public policy. Finally, the successor has sufficiently assumed the " b u r d e n " which "runs" w i t h its e n j o y m e n t of the p r e d e c essor *s goodwill when it is rend e r e d liable for the product's defectiveness. Furthermore, if the p r e d e c e s s o r ' s m a l i c e become apparent or publicized, the successor will have received less value for its original purchase price than it anticipated. In light of the foregoing, we doubt that California would choose to expand the aegis of punitive damage liability in the context of mass product liability litigation. He therefore conclude that the fact that Celotex has continued several of the Carey product lines does not raise a material issue of fact sufficient to resist summary judgment on the punitive damage issue. 2. Hoe v. T r a n s a m e r i c a Title Insurance C ompany C a l i f o r n i a law has been quite r e s trictive in identifying those to bp deemed "responsible for the wrong," within the meaning of 3294(a), finding a successor corporation liable for punitive damages only when the predecessor and successor are effectively one and the same entity. In Moe v . Transamerica T i tle Insurance C o m p a n y , 21 Cal. App. 3d 289 (1971), the court held a successor corporation liable for the fraudulent conduct of an employee of the predecessor 1913 Andrews Publications, Inc., AU Rights Reserved. 6 ' corporation. In M o e , however, the successor/ defendant made no attempt to establish its separateness from the original entity. Bence, the court concluded that; The record shows that in its answer to the complaint, appellant Transamerica designated itself as "Transamerica Title Insurance Company, a corporation, formerly known as City Title Insurance C o m p a n y . " Elsewhere in the^answer, it was admitted that defendant Olsen was an employee and assistant secretary of "City Title Insurance Company, also -known as Transamerica Title Insurance Company." Clearly, appe l l a n t T r a n s a m e r i c a made no attempt in the trial court to contend that it was a corporation separate and d i s t i n c t from City Title or that it was subject to a different standard of liability. To the contrary, the above-quoted portions of the answer are, in effect, a d m i s s i o n s that the two corporations are one and the same. Id. at 304. In the instant case, defendant has demonstrated that it is not a mere continuation of Carey. Celotex was an ongoing c o n cern when it purc h a s e d the stock of its predecessor. Thereafter, it continued to operate with its former board of directors. See A g r e e m e n t and Plan of Merger at 3. The ! officers of Celotex in office upon the effective date of the merger were to continue as the officers of the surviving corporation. I d . at 4. N o n e of the p r e d e cessor-shareholders beca m e s h a r e holders of Celotex. D e c l a r ation of Turbiville at 1. Defendant has therefore adduced sufficient evidence to distinguish itself from the situation and principles embodied in M o e . Moreover, the agent/employee responsible for the culpable conduct in Moe apparently continued to be employed by Transamerica, the successor. In this case, plaintiffs have proffered no evidence that culpable and responsible officers of i Reproduction strictly prohibited without permission. P . 6 , 9 6 8 the predece&aor corporations continued to be employed by Celotex. P l a i n t i f f s cont e n d that they "plan to introduce evidence to establish how the corporate changes occurred, that certain key employees continued to work for Celotex after the acquisition, and that Celotex continued manufacturing many of the same product lines of its predecessors." Plaintiffs' Mem. P. t A. at 3 (emphasis added). However, in order to d e f e a t a motion for summary judgment, plaintiffs must produce sufficient evidence to raise a triable issue of fact now? they are not entitled to a denial of the motion "upon the unsubstantiated hope that (they) can produce such evidence at trial." Cermetek, Inc, v. B u t l e r Avpak, I n c . , 573 F.2d 1370, 1377 (9th Cir. 1978). In support of their position, plaintiffs offer the d e cla r a t i o n of L ewis Pechstein, w h o joined P h i l l i p C a r e y in 1955 and remained in the employ of the various successors thereafter, to be elected secretary of Celotex in 1977. However, Mr. Pechstein, as secretary, cannot be considered, solely by virtue of his position, a culpable and responsible officer. By his deposition testimony, his duties and responsibilities at Celotex required him to safekep its records and contracts, to handle the minutes of the meetings of the sole shareholder and the Board of Directors, and to prepare and review numerous contracts involving the corporation. From 1966 to 1972, his duties as secretary of new Carey and Briggs/Panacon were essentially the same as those just outlined. From 1956 to 1966, as assistant secretary of old Carey, Mr. P echstein m e r e l y assi s t e d the s ecretary in carr y i n g o ut the Ccr' On* Znr CL < on>' 3 on *3<1 c<r >D CL -i ( 9 (/) dO m CL fJQ (9 3 od -V > vOIOO oo c. *< rrvo) oo Ca Asbestos Litigation Reporter *1983 Andmra Publication!, Inc, All Rights Reserved. above duties. D e p o s i t i o n of Pech s t e i n at 45. Mr. Pechstein was never a member of the Board of Directors of old Carey. I d . at 46. Although Mr. P e c h s t e i n first b ecame aware of a health hazard associated with asbestos in 1956, when one of the plant workers filed a worker's compensation claim asserting asbestosis, this fact-- in light of Mr. Pechstein's position and in the absence of supp o r t i v e or expl a n atory f acts-- does not itself create an issue of material fact. Mr. P e c h s t e i n stated further that in 1967 the v i c e - p r e s i d e n t of sales for o l d C a r e y was Elmo A. DiSalvo, who is now, he asserted, the v i c e - p r e s i d e n t of the Celotex C o r p oration and p r e s i d e n t of one of the roofing divisions. Id. at 24-25. A r thur Mueller, w h o was involved in the 1969 decision-making process to eliminate asbestos from the formulation for high temperature insulation, and who worked for both old and new Carey-- not as an officer, but with some responsibility for formulation, manufacture and quality c o n t r o l -- is still w i t h Celotex. I d , at 26-29. Again, these bare facts do not suggest that either individual was guilty of egregious conduct nor, more importantly, that Celotex was an entity indistinguishable from old or new Carey, under Moe, merely because it retained several individuals who possessed experience and expertise. Although they have had ample opportunity to do so, plaintiffs have failed to offer additional declarations of these or other purportedly "key" employees or officers. The mere fact that several employees of Carey continue to be employed by Celo t e x is not s i g n ificant or material, unless Reproduction strictly prohibited without permission, p g g g g Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 July '22, 1983 there is affirmative evidence-- or a reasonable inference-- that they were responsible for any egregious conduct of the predecessor corporation. Nor is the simple fact that Celotex continues to produce some asbestos-related products sufficient to resist summary judgment, in l i g h t o f our r e f u s a l to extend Ray v. Alad to e ncompass the i n s tant c l a i m for puni t i v e damages. There is no evidence, finally, that C e l o t e x is p e r p e t u a t i n g the allegedly malicious conduct that would have warranted the imposition of punitive damages against a predecessor. 3. Section 3294(b) Section 3294(b) provides: An employer shall not be liable for damages pursuant to s u b d ivision (a), based upon acts of an employee of the employer, unless the employer had advance knowledge of the unfitness of the employee and employed him qr her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice. With respect to a corporate employer, the advance knowledge, ratification, or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation. In Hale v. Farmers I nsurance E x c h a n g e , 42 Cal. App. 3d 681 (1974), overruled on other grounds, E gan, supra, at 489 n.5, the court stated that: C a l i f o r n i a follows the rule laid d o w n in Restatement of Torts, section 909, which provides punitive damages can properly be awarded against a prin c i p a l beca u s e of an act of an a g e n t if, but only if M (a) the prin c i p a l aut h o r i z e d the d oing and the manner of the act, or (b) the a g e n t was u nfit and the prin c i p a l was reckless in empl o y i n g him, or (c) the agent was e m p l o y e d in a m a n a g e r i a l capa c i t y and was acting with i n the scope of employment, or (d) the employer or a manager of the employer ratified or approved the act." "Although there has been no fault on the part of a corporation or other employer, where a person acting in a managerial capacity either does an [ I A I8 outrageous act or approves of such an act by a subordinate, the imposition of punitive damages upon the employer serves as a deterrent to the employment of unfit persons for important positions.** r Rest. Torts, S 909, comment (a). Id. at 691. W here the e m p l o y e e follows the c ompany's "usual procedures," the employee's acts may be considered part of s4 employer policy. Id. at 156-57. Customary practice may be >C= considered to have been known or authorized by those who s d i c t a t e the policies of the corporation. Id. at 157. ?90 Otherwise, the evidence m u s t s how that the employer personally participated in the wrongful acts, or that he previously i authorized them, or subsequently ratified them with full k n o w l e d g e of the fact6. Id. at 696. See also Hartman v. Shell Oil C o . , 68 Cal. App. 3d 240 (1977) (ratification m ay be express or implied). Celotex contends that it could not'have possessed advance knowledge of any acts by employees of Phillip Carey C o r p oration e ight to ten y e a r s p r ior tb C e l o t e x `s purchasing one of Carey's successors. Furthermore, it asserts that the 90A former corporation and its officers and employees were not 1fi agents of Celotex whose acts it could subsequently ratify. Indeed, section 3294(b) w o u l d s e e m to have, at best, an attenuated applicability to a successor corporation. A an tt*0 corporate employer theoretically possesses the power to control a3- the future conduct of its employees, e i ther by imposition of or l sanctions for malicious behavior or by dismisssal of the 3. culpable employee. Moreover, the employer, upon discovering 3-o such outrageous conduct, may have the ability to abrogate or rect i f y . t h e results thereof. However, if an o t h e r entity or fof a "O cn to o Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 July 22, 1983 person should subsequently employ the culpable individual, even with awareness of his prior malfeasance, that employer would not, by the mere act of employment, "ratifyw that malfeasance and render itself liable therefor. - Celotex ha6 concededly retained several individuals who were employed by Carey. But this fact alone, without evidence of the employees' malicious conduct, without evidence of Celotex's knowledge thereof, and without evidence that Celotex was not a separate and distinct corporate entity, has little meaning and most certainly does not raise a genuine issue of material fact concerning Celotex's "ratification" of such alleged misconduct. As previously noted, the very concept of ratification has an attentuated applicability outside the direct agent-principal relationship; in fact, we are aware of no case authority wherein the concept has been applied in the context i of successor corporate liability. He are of the opinion that, i'n such a context, the c o n c e p t w o u l d be r e l e v a n t only in the extreme. A corporate employer, whose identity is distinct and separate from its predecessor, should generally be liable only if, with knowledge of the clearly malicious tendencies or i|ecklessness of a predecessor's employee, hires such employee, I \fho subseq u e n t l y acts in a c c o r d a n c e w i t h those p ropensities. The fault of the succ e s s o r at that p o i n t is personal; it is culpable for having recklessly employed such an individual. This, of course, is not the case b e f o r e us. W e c o n c lude that, under the circumstnces, Celotex did not "ratify," within the meaning of section 3294(b), the prior acts of its predecessors' 1983 Andrews Publications, Inc., All Rights Reserved. employees. Plaintiff has proffered no evidence or authority to suggest that a material issue of fact to the contrary exists. A l t h o u g h the law is sparse concerning the issue presently before the court, the few jurisdictions which have addressed the matter have proceeded conservatively. In Wussow v. C o mmercial Mechanisms, I n c . , 293 N.W. 2d 897 (Wis. 1980), the Court imposed punitive damages against both the original manufacturer and its acquiring corporation. Commercial Mechanisms, Inc. (CMI) had manufactured a pitching machine, which wa6 sold to Antholone Industries, Inc., which in turn sold the machine to the Bangor Area School District in June of 1970. A young boy was injured by the pitching machine about two years later. The principal evidence which supported the imposition of punitive damage liability was provided by the testimony of an engineer, Arones, employed by both CMI and its purchasing company. Advance. Arones, although primarily an employee of Advance, spent several days each month at CMI's plant and he was an integral part of both companies' operations. He was an employee of both companies and received compensation from CMI and Advance. The record shows that, after the acquisition of CMI by Advance in 1971, all the members of the board of directors of CMI were also board members of Advance. . . lA]fter the acquisition, [Arones] had general supervision of the pitching machine business conducted by CMI. Although Arones was a vice-president of Advance and had been an employee of Advance since the mid-1930's, he became an employee of CMI, as well as of Advance, following the acquisition. Arones' testimony revealed that both defendants had actual knowledge of the defective nature of the pitching machine prior to the injury of Ronald Wussow. Arones admitted that he and other employees of CMI and Advance were aware of other injuries and other lawsuits p rior to July 3, 1972 . . . [and] . . .that, although he was aware that there were other injuries, he did not check CMI's safety records upon Advance's acquisition of CMI and he did not urge the Reproduction strictly prohibited without permission, p 6 9 7 1 Asbestos Litigation Reporter Published twice monthly by- Andrews Publications. Inc., Edgemont, PA 19028 July 22, 1983 installation and manufacture of a safety guard even though he knew that other pitching machines had such guards. His examination also brought out the fact that the safety instructions which were distributed with the machines were misleading and inadequate. Although the testimony made it clear that it would have been prudent to have a formal safety review committee, Arones knew that CM1 did not have such a committee. . . . At the time of Wussow's injury, CMI was wholly owned by Advance and the pitching machine operation was under the direct control of Arones, a vice president of Advance. During the year between the acquisition of CMI and Wussow's accident, Arones was aware of the hazards inherent in the design of the pitching machine and yet nothing was done by Advance to insure that prior purchasers of the machine were informed of the hazard. Ho attempt was made during the period to manufacture or distribute guard devices, even though Arones acknowledged that the design and manufacture of a guard device was a matter of routine engineering skill and required no design pioneering. The responsibility of Advance and its liability to answer in punitive damages is made clear by the record. Id. at 905-07. This case differs significantly from Wussow. There is no discrete product, the danger of which Celotex could have averted by providing warnings to prior purchasers. Plaintiffs have generally been exposed to asbestos dust in the course of their employment during a period of time which had already passed. In Wussow, the harm could have been prevented by the successor company had it made an effort to warn previous customers that the product was dangerous or to supply ameliorative guards. There is no e v i d e n c e in this case of a key employee such as Arones, who admittedly had both knowledge of the dangers and control over the manufacturing operations and who failed to act upon this knowledge. Nor is the board of director memb e r s h i p the same in the instant case, as it was in W u s s o w / We agree that, on the facts of W u s s o w , the successor t8s5 I corporation was 1taelf guilty of outrageous behavior, although the actual product had been manufactured by a predecessor, Publications, Inc, All Rights Reserved Wussow, however! is clea r l y d i s t i n g u i s h able from the instan** case. In D r a yton v. J i f f e e Chemi c a l C o r p . , 395 F.Supp. 1081, mod, on other grounds, 591 F.2d 352 (6th Cir. 1978), the court refused to impose punitive damages upon a successor corporation. The successor, Chlorox, had acquired the predecessor manufacturer of liquid drain cleaner after the plaintiff's accident. It had immediately reformulated the product to render it safe for home use. The court noted: Its e f f orts in this r e gard were in direct contradiction to the egregious conduct of the original Jiffee management. Thus, the "outrageous conduct" for w h i c h plai n t i f f s seek retribution is more properly attributed to Jiffee's original management personnel whose attitudes and marketing policies Chlorox, on its own initiative, has successfully purged from the company. Similarly, the evidence at trial showed that many of the drain cleaners presently on the market are uniformly characterized by safer formulation, crystalline form, and unit packaging thereby avoiding' the hazards that contributed to [the plaintiff's) accident. Under these circumstances there would seem to be little deterrent value in inflicting punitive damages on the Jiffee Chemical Corporation. As a general rule punitive damages are disfavored in the law absent evidence of willful or wanton conduct by the defendant or the clear need for their imposition as a deterrent, (citations). Reproduction strictly prohibited without permission, p _ g g y p Id. at 1098. The instant case r esembles that of D r a y t o n . Thus, there would seem to be little purpose in punishing Celotex for the prior sins of its predecessors. Under rule 56(c), F.R.Civ.P., the moving party has the intial burden of demonstrating the absence of a genuine issue of material fact, but if the mqving party satisfies this burden/ the opponent must come forward with specific facts indicating that a genuine factual issue remains for trial. Rule 56(e). Feldman v, Slmk i n s Indus., I n c . , 679 F.2d 1299, 1305 (9th Cir. 19B2). That evidence must be "significantly probative" as to any allegedly disputed fact. I d . In accordance w i t h T exas Part n e r s v. C o n r o c k C o . 685 F . 2d 1116, 1119 (9th Cir. 1981), d i s m i s s e d p u r s u a n t to S.Ct. R u l e 5 3 , 51 U.S.L.W. 3686 (Mar. 11, 1963), we have afforded the plaintiffs ample opportunity to proceed with complete discovery. Despite this opportunity, plaintiffs have failed to produce significantly probative evidence material to the legal theories applicable in the instant case. IT IS THEREFORE ORDERED that the defendant's Motion for Partial Suotnary J u d g m e n t is h e r e b y GRANTED. Dated: J une 29, 1983 or 3 r4- =CL p vO tOo CO troo 0G0J Reproduction strictly prohibited without permission, p 6 , 9 7 3 1983 Andrews Publications. Inc_ All Rights Reserved. Nos. 83-3118, 83-3119, 83-3120 83-3121, 83-3122, 83-3123 83-3124, 83-3125, 83-3126, 83-3127 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT Lincoln Lynch, et al., Plalntiffs-AppeUees, Johns-M anville Sales Corporation, et AL., Defendants, Baymarjc Industries, I nc., k t al.. Defendants-Appellants. (83-3118, 83-3120, 83-3121, 83-3122, 83-3123, 83-3124, 83-3125, 83-3126), O n Appeal from The United Slates District Court for the South ern District of Ohio. Armstrong W orld Industries, Defentlant-Appellant (83-3110), N ational C ypsum Company, Defendant-Appellant (83-3127). Decided and Filed July 1. 1083 Before: Encel and Krupansky, Circuit Judges, and Brown, Senior Circuit judge. I ! STAY Khupansky, Circuit Judge. These consolidated appeals join inquiry into the legal impact upon pending asbestos actions of petitions for reorganization which have been hied pursu ant to Chapter 11 of the Bankruptcy Code, 11 U.S.C. 8 HOI et seq. (Code), by Unarco Industries, Inc. (Unarco)* and Johns-Manville Sales Corporation (j-M),* both of which are defendants in thousands of asbestos f.*ases pending in the state and federal forums throughout thq nation. As Chapter 11 petitioners, all proceedings agaiusj Unarco and J-M were automatically stayed by the mandate imposed by 11 U.S.C. 362. The bankruptcy court presjding over J-M's petition has refused to broaden the automatic stay oi proceedings af forded the debtor under 8 362 to the co-dcfendunis of J-M In asbestos actions pendlug throughout the country. It has also refused to permit the suits against J-M to proceed to judgment. See: in re Johns-Manville Corporation, et al., Nos. 82-B-11656 to 82-B-11676, adversary proceeding No. 82-6221A, Decision No. 1 (Bankr. S.D. N'.Y. Jan. 10, 1083). Similarly, the bankruptcy court presiding over Unarco's petition has re fused to lift the stay against Unurco. See: in re V N R Indus tries, Inc., 23 U.H. 144 (Bankr. N.D. 111. 1082). The removal of Unarco and J-M as defendants (in thousands of peuding as bestos actions bos generated concern by co-defendants who characterize themselves as "minor" defendants. The two Chapter 11 debtors, Unarco and J-M, were party defendants In Lynch v. Johns-Manville Sales Corporation, et al.,,No. G-l-82-358, pending before Judge Spiegel, United Stales District Court for the Southern District of Ohio. Two solvent defendants in Lynch, Buymurk Industries and Keene Corporation, moved the court for a stuy of the proceedings pending against them under 11 U.S.C. 8 362, Buie 10, Fed. H. Civ. F., and the courts inherent powers. The motions were denied by memorandum opinion and order dated October 5, 1082. The order was subsequently adopted by reference in denial of similar motions by other solvent co-defendants of Unarco and/or J-M in other asbestos actions pending before Judge Spiegel. Bender v. fohns-Manville Sales Carp., et al., No. C-l-81-900; Burke v. JoAnr-Manoille Soles Corp., et al.. No. C-l-81-280; Carle v. Johns-Manville Sales Corp., et al.. No. C-l-82-214; Chaddock v. Johns-Maiwllie Sales Corp., et ul., No. C-l-82-501; C.mid v. Johns-Manville Sales Corp., et al., No. C-l-82-127; Phillips v. Juhns-MutwlUe Sales Corp., et al.. > U narco flled Ila p e titio n in th U nited Stuteu U ankruplcy C ourt fo r th N o rth ern D iatriet o f filinola on J u ly 20, I0B2. a J-M flleil ila petition in th U nited States U ankruplcy C ourt for lite N o rth ern D iatriet of N ew York on Auguat 26, 1082. No. C-l-82-290; and Milford v. Dana Carp., No. C-l-82-362. The foregoing orders denying motions to stay these asbestos proceedings were certified by the district court for immediate appeal pursuant to 28 U.S.C. 8 1202(b) and this Court granted applications for permission to appeal. Lincoln Lynch, et al. v. Johns-ManviUe Sales Corp., et al, 701 F.2d 42 (6th Cir. 1083). Confronting the initial inquiry of whether the automatic stay provision, 11 U.S.C. 8 362(a), may be invoked by the solvent co-defendants of Unarco and J-M to stuy proceedlugs against them, it is noted that said provision facially stays proceedings "against the debtor" and fails to Intimate, even taugentully, that the stay could be interpreted as including any defendant other titan the debtor: fi362. Automatic stay (a) Except os provided in subsection (b) of ibis section, a petition filed under section 301, 302, or 303 of this title operates os a stay, applicable to all entities, of -- (1) the commencement or continuation. Including the issuance or employment or process, of a ju dicial, administrative, or other proceeding aguinst the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that urose before the commencement of the cose under this title; It is universally acknowledged that an automatic stay of pro ceeding accorded by 8 362 may not be Invoked by entitles such as sureties, guarantors, co-obligors, or others with a simi lar legal or factual nqxus to the Chapter 11 debtor. See; Jn re Flntel, 10 B.1L 50 (Bankr. Or. 1081) (surety); Mutter of Earth Lite, Inc., 9 B.H. 440 (Bankr. Fla. 1081) (guarantor); In re The Van Shop, Inc., 8 B.R. 73 (Bankr. N.D. Ohio 1980) (co-obligor); In re Aboussle BroiJiers Construction Co., , 8 B.B. 302 (E.D. Mo. 1081) (Individual partners of bankrupt partnership); G M A C v. Yates Motor Co., 159 Ga.App. 215, 283 S.E.2(1 74 (1081) (joint tortfeasors); In re Smith, 14 U.1L 950 (Bankr. D.C. Conn. 1081) (guarantor on student loan); In re The Bunk Center, Ltd., 15 B.B. 64 (Bankr. W.D. Fa. 1081) (partners of bankrupt partnership); In re iMrmar Estates, Inc., 5 B.B. 328 (Bankr. E.D.N.Y. 1080) (guarantors of loan); In re Cloud Nine, 3 -B.B. 202 (Bankr. D. N.Mcx. 1080) (co-debtors); In re Trammel Road Townshouses, Ltd., 5 B.C.C. 314 (N.D. Cu. 1077); Globe Construction Co. v. Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 July 22, 1983 c> 1983 Andrews Publications, Inc, All Rights Reserved Oklahoma City Uousing, 571 F.2d 1140 (10th Cir. 1078). Contra:In re White Itdor Credit Corp., 11 B.ll. 204 (Bankr. N.D. Ohio 1981) (dictum), reo. on other grounds, 23 B.R. 270 (N.D. Ohio 1982). The legislative history of 6362 discloses a congressional intent to stay proceedings against the debtor, and no other, to preserve the status quo of the estate In an effort to ulti mately effect and implement, to the extent possible, a suc cessful and equitable reorganization or liquidation* Hie Notes of the Committee on the Judiciary identify the debtor as the Intended primary congressional beneficiary of the stay: The automatic stay is one of the fundamental debtor protections provided by the bankruptcy laws. It gives the debtor a breathing spell from Ids creditors. It stops all collection efforts, all harassment, and all foreclosure actions. It permits the debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial pressures that drove 1dm Into bankruptcy. See: S.Bep. No. 95 089, 95th Cong., 2d Sess. 5-1-55 (1978) reprinted in V.S. Code Cong. & Admin. News. 1978, pp. 5787, 58-10-58-11. The stay of proceedings was intended to promote on orderly reorganization or liquidation of the debtors estate thereby benefiting, secondarily, creditors of the estate: The automatic stay also provides creditor protection. Without it, certain creditors would le able to pursue their own remedies against the debtor's property. Those who acted first would obtain payment of the claims in preference to and to the detriment of other creditors. Bankruptcy is designed to provide an orderly liquidation procedure under which all creditors are treated equally. A race of diligence by creditors for the debtor's assets prevents that. ll.R. Rep. No. 95-595, 95th Cong., 2d Sess. 340 (1978). reprinted ut l/.S. Code Cong. & Admin. News, 1978, p. 6297. XIn P aden v. U nion /o r E x p erim en tin g C ollege! A U niversities, 7 b i t . 280 (N.D. 111. 1980), th e sta y w as c o n stru e d as desig n ed to p rev e n t th e d issip atio n o r d im in u tio n o f th e b a n k ru p t's assets during the pendency of the C haoter X I proceeding . . . and to avoid the m u ltip licity o f claim s in d iffe re n t form s ag ain st Uie . estate. id. at 290 (describing th e p redecessor to 1362). See also; In re flo ltIvump. AM F.2d 505 (7 th C ir. 1982). Nothing in the legislative history counsels lliat the automatic slay should be invoked In a manner which would advance the interests of some third party, such as the debtors co-defen dants, rattier (bun the debtor or its creditors Tills Court concurs with tlie district court's conclusion that "it would distort congressional purpose to bold that a third party solveut co-defendant should be shielded ugalnst his creditors by a device intended for the protection of the insolvent debtor" and creditors thereof. See also: In re lleluted Asbestos Cases, 23 B.ll. 523, 527 (N.D. Cal. 1082); in re U N R industries, Inc., 23 B.B. 144 (Bankr. N.D. 111. 1982); Ashworth v. Johns ManviUe, et al, Nos. C78-470, C81-1545, C77-1088. C70-167 (N.D. Ohio Mar. 21, 1983) at 4. It is a fundamental rule of statutory construction that In clusion in one part of a congressional scheme of that which is excluded in another part reflects a congressional intent that the exclusion was not Inadverteut. See: Equal Eniploj/nicnt Opportunity Commission v. Kimberly Clark Corp., 511 F.2d 1352, 1362 (6th Cir.), cert. denied, 423 U.S. 094 (1975). In particular, this Court has acknowledged tlie Bankruptcy Act as a detailed and calculated statutory scheme particularly ap propriate to in pari materia construction. See: in re Bell, 700 F.2d 1053 (0th Cir. 1983) (construing Chapters 7 and 13 in pari moferia); in re Fulghutn Construction Corporation, -- F.2d -- (6lh Cir. 1983) (construing subsections of 11 U.S.C. 8 547 in pari materia). In the action sub judice, such a construction of Chapters 11 and 13 of the Code support tlie proposition that Congress did not envision or intend the auto matic stay of proceedings to be available to solvent co defendants of a Chapter 11 debtor. Particularly, Chapter 13 expressly slays proceedings of creditors against co-debtors of the petitioner, 11 U.S.C. 5 1301(a). whereas similar language Issignificantlyabsent from Chapter 11. Not only isthe absence of any expansion of the scope tlie stay in Cbupter 11 probative of congressional Intent but, further, the pronouncement which does appear in Cbupter 13 is extremely limited; it applies only to co-debtors rather than, as in the action at bar, co defendants of the petitioner. Accordingly, in pari materia construction of Chapters 11 and 13 counsel that Congress did not envision or Intend the & 362 stay to be utilized in a munner other than for the purpose of protecting the debtor and its estate. See also: In re Related Asbestor Cases, supra, 23 B.H. at 528; VUls v. Vnarco Industries, Inc., 698 F.2d 313 (7th Cir. 1983); In re Massachusetts Asbestos Cases, M.B.C. Nos. 1 & 2 (D. Mass. Sept. 23, 1982); In re Stay of Proceedings Against Defendants Johns-Manville Corporation atul Vnarco indus tries, Inc., 060 P.2d 271 (S.C. Wash. I083)(en banc); Clutter v. Johns Manoille, et al.. No. 0-78-1229 (N.D. Ohio Aug. 2, 1082); in re U N R industries, Inc., supra. . The solvent co-defendants of Unareo and J-M also urge a Indicia! classification of the Chapter 11 debtors as "indispen- sible" so as to inundute a stay of proceedings under Buie 19, Fed. B. Civ. P.4 Although the actions consolidated on appeal are uniformly predicated upou diversity, the issue of joinder and indispensabiliiy is one of federal law. ProuuiciK Tradesmans Rank & 7'rusf Co. v. Patterson, 390 U.S. 102, 125, note 22. 88 S.Cl. 733. 746, note 22 (1968). it is Ixjyoiul pcradvenlure that joint tortfeasors are not iu- dispcnsihlc purtics In the federal forum. See: Field v. Vo/ksmageiuoerJt-AO, 626 F.2d 293. 298 n.7 (3d Cir. I960); 4 R ule 19 provide* in p e rtin e n t p u rl: () Persons to be Joined if Feasible. A person w ho Is subject to service ot process und whose joinder will not deprive the court ot jurisdiction over the subject m atter ot the action uhall be joined as a party in llie action it (1 ) in hia absence com ptele relict cannot be accorded among those already purties, or (2) lie claim s an interest reluting to the anbject ot the ac tion und is so situated th at the disposition o t th e uction in his absence m ay (I) as a practical m atter im pair o r im pede his ability to protect thut interest o r (il) leave any o t Uie per sons alreuJy parties subject to a substantial risk ot Incurring double, m ultiple, o r otherw ise inconsistent obligations by rea son of Ids claim ed interest. If lie has not been so joined, the court shall order thut he be m ade a party. If tie should join as a plaintiff but refuses to do so, he m ay be mude a de fendant, or, in a proper cuse, an involuntary plutntlfl. If the joined purty objects to venue and his Joinder w ould render the venue of the uction improper, he shall be dism issed from tlie action. . (b) D eterm ination bp Court Whenever Joinder not Feasible. If u person as described in subdivision ( a ) ( l) - ( 2 ) hereof can not be m ude a party, the court ahull determ ine w hether in equity and good conscience the action should proceed uinoog Die parlies before it. o r should b e dism issed. Die ubsent person being thus regarded us indispensuble. Tlie factors to be con sidered by tlie court include: Arst, to w hat ex ten t a judgm ent ren d ered in th e person's absence m ig h t be p reju d icia l to him or those ulreudy parlies; second, the extent to which, by pro tective p r o v is io n in tlie jud g m en t, b y Die shuping of relief, o r oilie r m easures. Die p reju d ice can b e lessened o r avoided; third, w hether a judgm ent rendered In the person's absence will be adequute; fourth, w h eth er Die plaintiff w ill have an adequate rem edy if the action is dismissed for nonjoinder. Reproduction strictly prohibited without permission, p CTi CO *^vj ~0 Ccr i/i 3n>" Cl > cri / } o' CD 3o 3 ur -}f cr '< O cr (Z> >3 Cl *-i o 0. 00 CfO T3 aCr p a o ' 0 . Po3 O W 3p m ft> CL (IQ fD v 3 o o 3 H>3 ft) vO O oo c_. c. <* fh\oJ V0O0 03 Asbestos Litigation Reporter Published twice monthly by Andrews Publications. Inc.. Edgemont. PA 19028 July 22, 1983 1913 Andrews Publications, Inc_ All Rights Reserved. Ileqjtck v. Wallace, 430 F.2d 792, 817 (5th Clr. 1970); Wiiulert Watch Co., Inc. v. Remex Electronics, Ltd., 468 F.Supp. 1242, 1246 (S.D. N.Y. 1979); 7 Wright & Miller, Fed eral Practice and Procedure, 8 1623 at 241-42 (1973 & Supp. 1981);Royal Truck and Trailer v. Armadora Maritime Salvadorena, 10 11.11. 488 (N.D. 111. 1981); }ett v. Phillips & Asso ciates, 439 F.2d 987 (lOlh Clr. 1971); Smuiohei v. Armour & Co., 429 F.2d 2-19 (8th Clr. 1970); 3A Moore. Federal Practice fl19.07(1)(2d ed. 1007). Indeed, the Advisory Com mittee Notes accompanying Rule 19 provide that " a tortfeasor with the usual 'joint and several* liability is merely a permis sive party to an action against another with like liability*'and "joinder of these tortfeasors continues to be regulated by Rule 20". Since the complaints at bar allege conditions of asbestosis resulting from exposure to products of both the solvent co defendants and Unarco and/or }-M, the Chapter 11 debtors are joint tortfeasors and accordingly not Indispensible. See also: In re Related Asbestos Cases, 23 B.R. 523 (N.D. Cal. 1982); Austin v. Unarco Industries, Inc., 705 F.2d 1 (1st Clr. 1983); Ashworth v. ]ohns-Manollle Sales Corp., Case Nos. C78-470, C81-1545, C77-1088, C79-I67 (N.D. Ohio Mar. 21, 1983) ; (n re Slap of Proceedings Against Defendants JohnsManolUe Corp. v. Unarco Industries, Inc., 660 P.2d 271 (S.C. Wash. 1983) (en banc). Last, the solvent co-dcfendants of Unarco and J-M emplore this Court to Invoke Its inherent power to stay proceedings. Landis v. North American Co.. 299 U.S. 248 (1936). It is submitted that the factors incorporated in Rule 19(b), Fed. R. Civ. P., as interpreted in Provident Tradesmens Bank & Trust Co. v, Patterson, 390 U.S. 102 (1068), should be employed, by analogy, to determine of such inherent power should be exercised. Particularly, the solvent co-defendants conjecture that a continuation of proceedings in the absence of J-M and Unarco will result in multiple and piecemeal litigation on a scale heretofore unknown in the history of American juris prudence; initial litigation would transpire in the state and federal forums and (lien duplicative litigation would issue in the respective bankruptcy forums for indemnity or contri bution thereby adversely impacting upon valuable judicial re sources and generating a risk of inadequate and conflicting adjudications. Additionally the solvent co-defendants assert that the automatic stay of 11 U.S.C. 6 362 precludes discovery upon j-M and Unarco thereby seriously compromising their ability to successfully defend pending actions. Confronting these argument?, it is initially observed that any duplicative or multiple litigation which may occur Isa di rect by-product of bankruptcy jaw. As such, the duplication, to the extent that it may exist,iis congressfonally created and sanctioned. More importantly* however, any benefits which may derive to liresolvent co-defendants from a stay ure clearly outweighed by the counterveilihg interests of the plaintiffs. As the First Circuit has cogently:observed; In a number of those (asbestos) cases, plaintiffs and crucial witnesses are dying. W e are not persuaded that the hardship to defendants of having to go forward on this appeal without Unarco, or the interests of judicial economy in avoiding relltfgation of the issues, are strong enough to justify forcing plaintiff and a number of other plaintiffs to .wait until bankrupt defendants are successfully reorganized hr order to be able to pursue their claims. Austin, supra, 705 F.2d at 5. The First Circuit's Implicit concern that time Is of the essence iiii the prosecution of asbestos cases (s further amplified by the unknown and poten tially unlimited duration of the stay which, to successfully avoid duplicative litigation, must necessarily issue until reor ganization is effected: A "temporary" stay which was keyed to the resolution of the pending "relicf-from-sluy" petitions in the bankruptcy courts could, indeed, become one of nearly "indefinite," or, at least, unpredictable duration. These plaintiffs should not be thus denied a forum in which to pursue their claims against those defendants who remain un shielded by the bankruptcy laws. In re Related Asbestos Cases, supra, 23 U.R. at 532. Accordingly, this Court finds no basis in law or equity for staying proceedings of the solvent co-defcndauts of Unarco and j-M until such time as said debtors have been reorganized or liquidated. The orders of the district court denying mo tions for stays are therefore Affuimioa This judgment is without prejudice to the appellants to seek, in the appropriate forum, authorization to conduct discovery upon johns-Munville and Unarco. Reproduction strictly prohibited without permission, p , 6, 975 o