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From Products Liability Law Daily, February 16, 2017

Sophisticated intermediary defense affords asbestos products maker no defense to nearly $1.5M verdict

By Sara Cracau, J.D.

In wrongful death action, the trial court properly refused to instruct the jury on the sophisticated intermediary defense because there was no evidence of any dealings between the asbestos product manufacturer and the employer that would justify that instruction, a California court of appeal ruled in an unpublished decision, affirming a jury award of $1.496 million in compensatory damages. In addition, an injured oil refinery worker introduced sufficient evidence to support the jury’s finding of liability on the basis of the consumer expectation theory of design defect. However, the court reversed the $3.6 million punitive damages award because, despite a full and fair opportunity to develop and present the case for punitive damages, no evidence was presented on the manufacturer’s ability to pay (Saller v. Crown Cork & Seal Co., Inc., February 15, 2017, Johnson, J.).

An employee worked at an oil refinery from 1959 to 1967. Although he did not work primarily with asbestos-containing products, he worked around other workers who did perform such work, which exposed him to dust and to pieces of asbestos-containing insulation from these products when he cleaned up after the insulators. After he was diagnosed with mesothelioma in 2005, the employee and his wife brought suit against 22 parties, including the manufacturers of various asbestos products to which the employee believed he had been exposed. The suit, which was continued by his wife and daughters after his death, ultimately proceeded to trial against two of the original 22 defendants.

In 1963, a company named Crown Cork & Seal Co., which produced food and beverage containers and packaging, purchased a controlling interest in the company that produced the asbestos-containing products used at the employee’s workplace, but Crown Cork did not enter the asbestos-containing products business. After another asset sale, and after the food and beverage container manufacturer purchased the remaining stock of the asbestos-containing products manufacturer, it merged with this company.

After a retrial, a jury found Crown Cork liable for the employee’s wrongful death and guilty of malice. In addition to awarding economic damages in the amount of $1.365 million and non-economic damages in the amount of $131,543.22, the jury awarded $3.6 million in punitive damages. The food and beverage container manufacturer appealed. (The other defendant filed for bankruptcy during the first appeal, leaving Crown Cork as the only defendant.).

Sophisticated intermediary defense. The trial court’s refusal to instruct the jury on the sophisticated intermediary defense was proper, the appellate court opined, because there was insufficient evidence to justify such an instruction. There was no evidence whatsoever about the dealings between the worker’s employer and the asbestos-containing products manufacturer such that the jury could have inferred that the asbestos-containing product manufacturer actually and reasonably relied on the employer to provide the necessary warnings to the employee. Such an expectation was based purely on speculation rather than inferential reasoning. The testimony of the single witness that was offered regarding the asbestos-containing products manufacturer was very limited and highly generalized. Although there was evidence that the employer was aware of the risks of asbestos in general before or while the employee worked for the company, there was no evidence to establish that the employer knew about the risks posed by the asbestos-containing products supplied by the asbestos-containing products manufacturer.

Consumer expectation test. The appellate court also concluded that the jury’s finding on the consumer expectation theory of design defect was supported by substantial evidence. Based on both the employee’s own testimony and that of his expert, the jury could properly find that the refinery workers could form an affirmative expectation during the period 1959 to 1967 that exposure to insulation dust was harmless even without the use of safety precautions, such as a respirator. The employee never saw any warnings on boxes of products supplied by the asbestos-containing products manufacturer and his employer never warned him of any health risks that could result from exposure to these products. The employee’s testimony alone would have been sufficient to allow an inference by the jury that the asbestos-containing products did not meet the minimum safety expectations of its ordinary users. Furthermore, the jury found that there was a defect under the consumer expectations theory and that the defect was a substantial factor in causing the employee’s mesothelioma.

Punitive damages. The appellate court reversed the jury’s award of punitive damages because, despite a full and fair opportunity to develop and present the case for punitive damages, no evidence was presented on the manufacturer’s ability to pay. An award of punitive damages cannot be sustained on appeal unless the trial record contains meaningful evidence of the financial condition of the defendant. Otherwise, the court could only speculate on whether the award was appropriate or excessive. Here, the only evidence of ability to pay concerned the manufacturer’s parent company, which was not liable for the actions of the former, and such evidence was not evidence of the subsidiary manufacturer’s ability to pay. There was no evidence of the manufacturer’s ability to pay, such as evidence of its net worth, net income, total assets, total liabilities, cash flow or expenses. Although the case had been pending since 2005 and two trials had been conducted against the parent of the asbestos-containing products manufacturer, discovery was not requested until after the liability verdict was rendered. Furthermore, the court declined to provide the deceased employee’s wife an opportunity for a second bite at the punitive damages apple.

The case is No. B260277.

Attorneys: Michael B. Gurien (Waters Kraus & Paul) for Donna Saller. Dean A. Olson (Morris Polich & Purdy LLP) and William H. Armstrong (Armstrong & Associates) for Crown Cork & Seal Co., Inc.

Companies: Crown Cork & Seal Co., Inc.

MainStory: TopStory DamagesNews DesignManufacturingNews DefensesLiabilityNews WarningsNews AsbestosNews CaliforniaNews

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