Asbestos Alert: Paulus v Crane Co.

by Low, Ball & Lynch
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Second District Court of Appeal, Division Three, Action # B246505 (Filed Feb. 21, 2014, modified Mar. 24, 2014) 2014 WL 1157284 ____Cal.App.4th____

Sufficiency of Expert Testimony to Prove Causation; Bankruptcy Trust Damage Offset

In asbestos-related personal injury cases, the determination of whether a particular defendant’s product was or was not a substantial factor in contributing to the plaintiff’s risk of developing an asbestos-related disease is typically a matter for expert testimony and inferences based on circumstantial evidence.  Where the plaintiff has been exposed to multiple sources of asbestos, a defendant who supplies a product can take some comfort from the holding of O’Neil v. Crane Co. (2012) 53 Cal.4th 335 that a defendant is not liable for the harm caused by another manufacturer’s asbestos simply because it was foreseeable that the other manufacturer’s asbestos-containing product would be used in conjunction with the defendant’s product.  While recognizing the continuing validity of that holding, this case somewhat erodes it by closely scrutinizing a plaintiff’s expert’s testimony in order to uphold a jury verdict favorable to the plaintiff.  In addition, the case addresses the argument that there should be a settlement offset for funds available to the plaintiff from Bankruptcy Trusts, even where the plaintiff has not yet made application for those funds.  In the process of rejecting that argument, the Court suggests that the issue should have been handled at trial pursuant to a failure to mitigate defense, rather than raised on appeal for the first time.

This is a wrongful death/survival case where plaintiffs’ decedent, a commercial plumber, died of mesothelioma.  Defendant Crane Co., the sole defendant to remain through jury verdict, appealed from an adverse judgment finding it to be 10% liable for gross damages of $6,898,635 before settlement offsets (net judgment of $749,935).  The two grounds for appeal were the arguments that: (1) plaintiffs failed to introduce expert testimony that Crane’s asbestos alone  (as opposed to acting in combination with others’ asbestos) constituted a substantial factor in the development of decedent’s mesothelioma; and (2) the trial court erred in not reducing the damages awarded against Crane to account for settlements plaintiffs could obtain from other potentially liable parties’ bankruptcy trusts.   The court rejected both arguments and affirmed the trial result.

Plaintiffs contended that decedent’s exposure to Crane asbestos products occurred in two ways.  First, when decedent was attaching valves to pipes in a boiler or pipe room, the valves were attached with flanges. To make the attachments water-tight, it was necessary to use gaskets. The valves did not come with flange gaskets; the plumbers would make them. They had sheets of gasket material from which they would punch out gaskets. There were two types of gasket material which decedent used almost exclusively: Cranite, which was distributed by Crane; and Garlock, which was not. The Cranite gasket material was 75 to 85 percent asbestos. When punching a new gasket out of Cranite, asbestos would be freed into the environment, and decedent inhaled it.

The second type of exposure relating to valve work occurred when there was a leak in a valve, requiring decedent to open the valve to repair it. Upon opening the valve, decedent would be required to clean it of old gasket material and install a new gasket. Decedent would remove the worn out gasket by scraping it with a piece of threaded rod. This process released asbestos into the environment, and decedent inhaled it. Gasket removal involves not the flange gasket on the outside of the valve, but a bonnet gasket inside the valve. Bonnet gaskets are unique to the valve; a plumber cannot simply make a bonnet gasket out of Cranite as he or she would a flange gasket. Crane valves (with bonnets) would come with asbestos bonnet gaskets pre-installed. Crane also sold asbestos bonnet gaskets as replacement parts, but when a plumber encountered a replacement bonnet gasket inside a Crane valve, the plumber could not be certain whether the replacement gasket came from Crane or another supplier. It was not disputed, however, that decedent removed some originally-installed bonnet gaskets from Crane valves, thereby being exposed to asbestos from the Crane bonnet gaskets.

It was not disputed that Crane could not be held liable for decedent’s exposure to replacement asbestos bonnet gaskets used in its valves, if the bonnet gaskets were made by another manufacturer. Nor could Crane be held liable for another manufacturer’s asbestos insulation used on or near its valves.

The court characterized the appeal as follows: “The dispute in this case centers on one word of testimony given by Dr. Edwin Holstein, plaintiffs’ expert in preventive medicine and occupation medicine.” Dr. Holstein testified that his opinions were within a reasonable degree of scientific and medical certainty. His opinion was that “Cranite and Crane Co. valve work was a substantial factor in causing [decedent’s] mesothelioma.” (Emphasis added.) He similarly testified that, if decedent’s disease had been lung cancer, decedent’s “exposures from Cranite gaskets and Crane valves were a substantial factor in the development” of decedent’s lung cancer. (Italics added.) In both places, Dr. Holstein’s testimony referred to the exposures from Crane valves, which, according to Crane, could have encompassed exposures from non-Crane replacement bonnet gaskets and non-Crane insulation. In other words, Crane argues that Dr. Holstein did not testify that decedent’s exposures to Cranite and Crane gaskets alone constituted a substantial factor, but included non-Crane asbestos in the exposures which cumulatively constituted a substantial factor causing decedent’s mesothelioma. The appellate court disagreed.  The court considered the testimony of Dr. Holstein in the context of other testimony by him as well as other evidence that was sufficient for the jury to infer that decedent’s exposure to Crane asbestos products alone was a substantial factor in contributing to his risk of developing mesothelioma.

As to the second ground of appeal, Crane argued that it was entitled to a further setoff for settlements plaintiffs would be entitled to recover, but had not yet sought, from various asbestos bankruptcy trusts. The trial court disagreed.  On appeal, Crane argued that authority exists for such a setoff based on Code of Civil Procedure section 877 and a court’s broad equitable powers. The court of appeal disagreed. Code of Civil Procedure section 877 provides for a setoff when a settlement is given “before verdict or judgment.” It has no application to a post-judgment settlement. Similarly, a court has no equitable power to modify a judgment for a settlement which may or may not be sought, may or may not occur, and would be in an unknown amount. The court found Crane’s argument to be based on nothing more than speculation about future events.

Crane also argued that refusing the additional setoff would allow plaintiffs an improper double recovery. The court found, to the contrary, the judgment against Crane did not constitute a double recovery in any way. All other settlements in existence had been properly taken into account. If a later settlement subsequently allowed plaintiffs a double recovery, that does not retroactively make the instant judgment improper.

Finally, Crane suggested that the additional setoff is mandatory because plaintiffs’ failure to obtain available settlements from asbestos bankruptcy trusts constituted a failure to mitigate their damages. The appellate court assumed, without deciding, that obtaining recovery from bankruptcy trusts related to other responsible entities is a part of a plaintiff’s duty to mitigate damages in an asbestos action.  Then the court stated that the duty to mitigate is an issue to be resolved by the trier of fact at trial, not something to be raised on new evidence after judgment.

COMMENT AND EVALUATION: Crane Co. asserted that plaintiffs’ expert’s characterization of “valves”, rather than the gaskets within them, rendered his opinion on substantial factor insufficient to support a verdict.  The appellate court rejected this position. The decision, however, potentially opened the door to further discovery relating to asbestos bankruptcy trusts.  Defendants should always assert a mitigation of damages defense and conduct discovery, in the form of requests for admissions and otherwise, seeking to have plaintiffs admit that bankruptcy trust funds are available to offset damages. The discovery should seek to quantify, by dollar amount or reimbursement formula, the amount of the available offset.

For a complete copy of the opinion, click here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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