California Supreme Court Set To Untangle Webb

Asbestos personal injury cases have been around for decades, and they show no sign of abating.  They could well be evidence for the supreme ingenuity of the plaintiffs’ bar in devising the first perpetual motion machine.  Workman’s compensation cases offer the prospect of “no-fault” recoveries, but the compensation is often based upon a scheduled award, which in some states may not adequate.  Civil actions, on the other hand, offer the prospect of jackpot recoveries, but the tort law duty is not always applicable, and plaintiffs must show duty, breach, proximate cause, in addition to injury and damages.

A recent California decision illustrates how the tort system has been twisted and tortured to make up for the perceived inadequacies of the workman’s compensation system.  At age 67, William Webb developed pleural mesothelioma.  He and his wife sued several companies, including Special Electric Company, Inc., and some automobile brake suppliers.

Starting in 1969, Webb worked for a plumbing supply company, Pyramid Pipe and Supply (Pyramid), where he regularly handled a Johns-Manville (JM) asbestos pipe, known as Transite.

Special Electric brokered South African crocidolite (blue asbestos) in the United States, including some sales (about 7,000 tons) to JM’s Long Beach, California, facility, which manufactured Transite.  JM sold the Transite to Familian (a pipe supply company), which in turn sold the Transite to plaintiff’s employer, Pyramid .

By the time of trial, only Special Electric and two automobile brake suppliers remained in the case.  A jury heard the case in January and February 2011, in Los Angeles County Superior Court, Case No. BC436063, before the Hon. John Shepard Wiley, Jr.  The brake defendants pointed the finger to the blue asbestos in J-M’s Transite, but then, their courage lagging behind their convictions, they settled during closing arguments.  The jury returned a verdict, for the Webbs, for over $5 million, with allocations of 18% to Special; 49% to JM, 33% to other third parties. Webb v. Special Electric Company, Inc., 214 Cal.App. 4th 595, 153 Cal.Rptr. 3d 882, 888 (2013).

 

PROCEDURAL PRETZELS

Before the case was submitted to the jury, Special Electric moved for a directed verdict on the failure to warn claims because JM had been warned or because the dangers were “obvious and known” to JM, and because Special Electric had no duty to warn downstream, unsophisticated customers when it reasonably relied upon JM to provide warnings.  Id. at 888-889.  The Webbs countered that there was some evidence that not all asbestos shipped to JM had warnings, and that the warnings given to JM were inadequate.  Id. at 889. These counters were  non-responsive to Special Electric’s motions.  The Webbs also argued that there was no finding that Special Electric had reasonably relied upon JM to warn downstream buyers.  Id. This argument also was irrelevant to Special’s legal argument about objective reasonable reliance.

The trial court granted Special’s motions, noting that “[t]elling Johns-Mansville about asbestos is like telling the Pope about Catholicism,” id. at 889, or like “carrying coals to Newcastle,” id. at 895.

Exactly when the trial court ruled on Special’s motions in relation to entry of judgment  is unclear, but the trial court did enter judgment n.o.v. for Special on the failure to warn claims.  The Webbs objected to the lack of written notice and other procedural aspects to the timing of the trial court’s decision.

The Webbs appealed on procedural and substantive grounds.  Special did not file a protective cross-appeal.  The California Court of Appeals, over a trenchant dissent by Judge Rothschild, reversed on both procedural and substantive issues.  Last month, June 12, 2013, the California Supreme Court vacated the intermediate appellate court’s decision and granted review on both the substantive and procedural issues.  Webb v. Special Electric Co., Inc., S209927 Cal. S. Ct. (granting review June 12, 2013).

 

MENDACIOUS HISTORY

Many asbestos cases have been tried in which the issue of who knew what, when, was relevant to the existence of a duty to warn.  The essential nature of a failure to warn case is that the seller has “knowledge” not available to the buyer.  The law addresses this inequality of knowledge by imposing a tort obligation to warn about these hidden or undisclosed hazards. Imposing tort liability for failure to warn often makes sense in the context of a product sold to consumers by sophisticated sellers.  In that context, the imbalance of knowledge will be significant and “actionable.”  In the context of sales of raw materials to large manufacturing concerns, the imbalance will often be in the opposite direction; the buyer will know more about the hazards, and especially about the circumstances of the use of the raw material, than the seller.

Certainly, there are some asbestos cases fall into the category in which the sellers of asbestos-containing products had “secret” knowledge of hazards, which was unknown to the buyers.  There are also some cases in which the parties might dispute whether the seller knew, or should have known, of the undisclosed hazards.

The Webb case may well represent a new generation of asbestos case in which the relevant exposure took place so “late in the day” that the historical evolution of knowledge about asbestos hazards, and the historical inequality of knowledge between sellers and buyers, are irrelevant to the tort law goal of addressing failing to warn.

Special Electric brokered the crocidolite fiber in question to JM, from 1974, until about 1982.  Id. at 898.  JM incorporated this crocidolite into its Transite pipe product, which it supplied to Familian, which in turn supplied Transite to Pyramid.  Special was not the only supplier of crocidolite to JM, and thus it was not clear that any Transite that went to Pyramid actually contained crocidolite brokered by Special.

Mr. Webb thus could possibly not have used Transite, which may have had Special’s crocidolite, before 1974, and probably not before 1975.  The relevant “state of the art” thus was the mid-1970s forward.

The plaintiffs presented an expert witness, Barry R. Horn, MD, who testified that beginning before the 1920s (thus sometime in 1910s), “there was ‘an enormous literature, just huge’, that occupational exposure to asbestos posed a great risk of cancer.” Id. at 900.  Horn is a “regular” plaintiffs’ witness.  He testifies about once a week for asbestos cases, always for plaintiffs.  Testimony of Barry Horn in McGrail v. Thorpe Insulation Co., Superior Ct Calif., Los Angeles Cty. No. BC 363913 (Nov. 11, 2008).  Presumably, Horn has plenty of opportunity to get the historical state-of-the-art knowledge correct; yet, his testimony that there was any literature, let alone “an enormous literature” before the 1920s about the carcinogenicity of any kind of asbestos is blatantly false.  His testimony was also, in the context of the Webb case, blatantly irrelevant.

By 1974, the public, labor, industry, government, and academics had spent over a decade of absorbing, developing, and disseminating information about the hazards of asbestos, and specifically, the cancer-causing nature of asbestos.  By the time JM Transite, which might have contained Special’s crocidolite, could have arrived at Pyramid, Webb’s employer, the cancer hazards of asbestos were discussed on television and radio, written about in newspapers, and testified to in Congress.  Asbestos cancer hazards were the primary issue that galvanized the resolve of organized labor, and drove passage of the Williams-Steiger Act of 1970, 84 Stat. 1590 et seq., 29 U.S.C. 651 et seq., which led to the formation of the federal Occupational Safety & Health Administration (OSHA).  Of course, at the top of OSHA’s priorities in 1971 and 1972, were the formulation and promulgation of regulations on asbestos permissible exposure limits.  The OSHA efforts thus kept public awareness of asbestos hazards at a high level throughout the early 1970s.  By 1975, EPA and OSHA had promulgated regulations that curtailed the use of asbestos, of all types, in the United States.

Asbestos cancer hazards were, by 1974, public knowledge, open and obvious to everyone.  There was no imbalance of knowledge; no hidden or secret knowledge, at issue. Horn’s false testimony about knowledge of cancer risks before the1920s was thus irrelevant to the issues in the Webb case.

 

A MISREPRESENTED MISREPRESENTATION

According to the majority’s opinion, the trial record included evidence that Special had instructed its sales force to market its crocidolite asbestos as “much safer” than other chrysotile asbestos, and even safer than fiberglass.  Webb v. Special Electric Co., Inc., 214 Cal.App. 4th at ___, 153 Cal.Rptr. 3d at 898, 900, 901, 904 (2013).  If Special’s salesmen made this misrepresentation to JM, their lie would have been truly reprehensible.  The evidence, however, does not make sense.  Accepting that such lies were told, the appellate court never mentions whether the lies were told to JM.  If they had been, JM, an owner and operator of chrysotile mines in Canada, would have found the suggestion that crocidolite was safer than chrysotile laughable.  By the mid-1970s, JM was reasonably advocating the relative harmlessness of chrysotile compared to crocidolite.

The majority, however, is dodgy about whether and when the supposed misrepresentation was made to JM.  According to the dissent, there was but one salesman who made these misrepresentations about crocidolite, and he left Special Electric in 1973.  There was no evidence that this salesman had any dealings with JM, and there was no evidence that Special supplied any crocidolite to JM, at its Long Beach facility, before 1974.  Id. at 913 n.8.

Interestingly, the dissent also noted that there was no evidence that Special Electric knew or should have known that crocidolite was more dangerous than other asbestos minerals.  Id.  The omission of such evidence in the record is curious because it would have been easy to have shown, at the relevant time, not only that crocidolite was known to be more dangerous than chrysotile, but that JM was interpreting the available data as showing that crocidolite and amosite were the predominant causes of mesothelioma and that chrysotile did not cause mesothelioma at all.

 

DUTY IS THE COURT’S DUTY TO DEFINE

The Court of Appeals spends a good deal of effort in trying to identify the factual issues for the jury, and the jury’s failure to find in favor of Special Electric on particular factual issues such as:

  • whether all the asbestos shipped to JM had warnings,
  • whether the warnings on the crocidolite brokered by Special were adequate
  • whether Special Electric knew or should have known that JM was unreliable as a conduit for warnings
  • whether Special had undertaken reasonable efforts to warn downstream users

The appellate court took the jury’s verdict to mean that these issues were disputed, and that the Webbs had carried their burden of persuasion on them.  Id. at 895.  The appellate court focused unduly upon whether jury instructions were given to determine whether issues had been raised and resolved by the jury.  The problem is that Special Electric’s motions for directed verdict and for j.n.o.v., would have had to assume the correctness of all plaintiffs’ evidence and inferences.  Its motions were made to obtain a ruling on a question of law, on undisputed facts.  The appellate court’s meanderings thus take it away from the central issues in Special’s motions.

The Court of Appeals declares that Special had a duty, as a matter of law, because it knew that crocidolite was dangerous, and it knew that users, such as Webb, would not know it was dangerous.  Id. at  897.  This formulation, of course, ignores and omits, the essential role of the intermediaries in the case.  The formulation also ignores the realities of the post-1964, post-Selikoff world. Webb may have testified he was unaware of the hazards, but by 1974, such testimony, from someone who worked in a plumbing supply store, is suspect.  In any event, the Court of Appeals simply assumes without evidence that Special would have known that Webb did not know.

Pushed to the wall to find a source of the duty to warn, the Court of Appeals invokes Restatement Second of Torts § 402A, but this section addresses only the selling of goods that are expected to reach the ultimate user without substantial change in their condition.  Id. at 894, citing earlier California intermediate appellate court decisions, Stewart v. Union Carbide Corp., 190 Cal. App. 4th 23, 29, 117 Cal. Rptr. 3d 791 (2010); Jenkins v. T&N PLC, 45 Cal.App. 4th 1224, 1228-1231, 53 Cal.Rptr. 2d 642 (1996).  In the Webb case, there clearly was an expectation that the asbestos fiber would be incorporated into a finished product, and that there was no practicable way for the fiber supplier to warn the ultimate user.

The dissent calls attention to the majority’s misdirections and confusions between law and fact, and points out that California and other courts have generally held that the reliance issue is really not a factual issue to be litigated:

“commerce would be impossible without the operation of such a presumption. When a manufacturer or distributor  has no effective way to convey a product warning to the ultimate consumer, the manufacturer should be permitted to rely on downstream suppliers to provide the warning. ‘Modern life would be intolerable unless one were permitted to rely to a certain extent on others doing what they normally do, particularly if it is their duty to do so’.”

Id. at 908-09 (quoting Restatement Second Torts § 388, com. n) (internal citations omitted).

Astonishingly, the Court of Appeals states that it is

“not called upon to confront whether it would have been difficult or even impossible for Special Electric to effectively warn consumers of its asbestos, as the trial court apparently concluded. That question was not made an issue at trial. Special Electric offered no evidence that it would have been difficult or impossible to warn Webb, nor evidence that it had even considered that question. Special Electric did not request that the jury be instructed that a finding of reasonable efforts on its part would satisfy its duty to warn. Finally, Special Electric failed to request a finding by the jury, either that it could not reasonably have acted to warn Webb, or that it had acted reasonably in failing to do so.”

Id. at 902.  Of course, the question identified by the majority was exactly the question that Special Electric was asking the trial court to decide, and which was decided. The appellate court’s immersion in the jury instructions obscures

the legal issue that was before the trial court. The appellate court majority went as far as declaring that its holding was limited to the trial factual issues:

“We do not hold that an asbestos-supplier’s duty to warn users of its asbestos cannot be obviated by proof that the users needed no warning, or that its duty may not be discharged by a showing of reasonable efforts to provide warnings, or by reasonable reliance upon others to do so. The effect of the trial court’s ruling was to hold that—as a matter of law—Special Electric had no duty to warn foreseeable users of the dangers of its asbestos, even though Special Electric knew or should have known that those foreseeable users would be unaware of the dangers.

The conclusion that Special Electric had no such duty, or that its duty was discharged as a matter of law, is unjustified by the law and is contrary to the record in this case.”

Id. at 903.

The dissent seized upon the majority’s failure to engage with the actual evidence at hand, and the arguments that were made.  The majority had acknowledged that:

“No one in this appeal doubts that Johns–Manville was a sophisticated user of asbestos, who needed no warning about its dangers.”

Id. at 895.  This, of course, was the issue, and none of the collateral factual issues that were submitted to the jury, or not submitted to the jury, detracted from the legal significance of this judicially noticeable fact.  By ignoring this material fact, the majority was able to persuade itself:

“that it can be a tort to fail to tell someone something they already know, and that it can also be a tort to fail to impose on someone a contractual duty to do something they already have a tort duty to do.”

Id. at 906 (Rothschild, J., dissenting).

The dissent appropriately emphasized that plaintiffs conceded at trial, and in oral argument on appeal, that Special Electric did not owe a warning directly to Mr. Webb.  Id. at 907.  The plaintiffs’ theory was that Special Electric should have contractually obligated JM to provide warnings on products that incorporated Special’s crocidolite.  Id. at 908.  This theory, however, is counter to central principles that permit persons to presume that others will know and comply with the law.  Such a contractual requirement would have been unsupported  by consideration.  A contract that required anything else other than the buyer’s compliance with the law would have been void.  Moreover, the suggestion that brokers and sellers of raw materials should dictate such terms of their contracts with corporate behemoths such as JM is unrealistic in the extreme.

 

QUESTIONABLE TESTIMONY FROM JM EMPLOYEE

A former JM employee testified that Special Electric’s brokered crocidolite did not have warnings until 1980 or 1981, and that no one from Special visited JM to inspect JM’s use of warnings on finished products going out to market.  Id. at 900.  This unnamed employee further testified that JM was “evil,” and “started to panic” in the mid-1970s, when it became a target for personal injury lawsuits.  Id.   The questionable provenance of this testimony was not discussed, but the veracity of the testimony is doubtful.

The Court of Appeals notes that correspondence from 1975, shortly after Special began brokering fiber to JM, from Special’s president, showed that Special was concerned with potential liability, and that it had been discussing the need to identify the bags as containing hazardous materials.  The contemporaneous evidence thus casts doubt on the 30+ year recall that Special’s asbestos had no warnings in the 1970s.  The Court of Appeals takes the 1975 correspondence as “indicating” that warnings were not given before 1975, and then embellishes that some JM employees were unaware of asbestos dangers until the mid-1970s.  The correspondence, however, has a much less sinister interpretation.  The fiber was being brokered.  Special was not mining, milling, and bagging the fiber, which came from South Africa.  The bags of crocidolite fiber may well have lacked warnings, but U.S. law required warnings on asbestos by 1975.  Special understandably taking steps to ensure that JM did what the law required it, as both an employer, and a seller, to do.  The Court of Appeals’ inference that there were no warnings given before 1975 is, at best, irrelevant given that Mr. Webb did not begin to handle JM Transite pipe that might have had Special’s brokered crocidolite until the mid-1970s.

 

SUPREME COURT REVIEW

Both majority and dissent do not discuss the regulatory structure that was in place in California, and in the United States.  Employers had (and still have) a duty to notify employees of the dangerous materials that they handle, and to instruct them on the use of safety equipment.  The entire discussion of knowledge of hazards proceeds without taking notice that the country was a decade past the most sensationalistic exposes of asbestos cancer hazards.   Perhaps these deficiencies reflect the abridgments of the record that occur in judicial opinion writing.  Even if the record is spotty on many of these facts, the California Supreme Court, and parties, can supply many of these facts by judicial notice.

The opening brief in this appeal was due July 12, 2013, but Special’s counsel filed a request for an extension until September 10.  Let’s hope that the Supreme Court does not delay restoring rationality to the law of product warnings.  The time has come to state that the duty to warn must be based upon the seller’s knowledge, actual or constructive, of hazards unknown to the buyer.

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