California Court of Appeal Reverses $3,000,000 Punitive Damages Award

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On July 5, 2022, the California Court of Appeal, Second Appellate District (Los Angeles), issued an opinion in Willie McNeal, Jr. v. Whittaker, Clark & Daniels, Inc. (B313472, July 5, 2022) reversing $3,000,000 in punitive damages awarded to a plaintiff who was diagnosed with mesothelioma partially linked to the usage of Old Spice talcum powder that contained asbestos. The appellate court agreed that plaintiff had not met the burden of showing that defendant supplier of the talc in Old Spice, had acted with the required malice, oppression or fraud.

Plaintiff had been a regular user of Old Spice talcum powder beginning in 1958, until it was discontinued in 1980. Defendant was a distributor of minerals and pigment, and supplied the talc that was used in Old Spice talcum powder. This talc contained asbestos. Plaintiff supported his claim for punitive damages by asserting that defendant’s officers and directors knew of the potential health hazard of their talc and were aware of the dangerous consequences of their conduct surrounding the 1970s testing of the talc they supplied to defendant’s customers, and deliberately failed to avoid those consequences. The jury found defendant to be negligent, and 42 percent responsible for the mesothelioma that plaintiff developed later in life. They awarded economic and noneconomic damages totaling $448,761.10 against defendant. The jury also found that defendant acted with malice, oppression or fraud, and awarded $3,000,000 in punitive damages.

Defendant did not dispute the finding of negligence, nor the economic and noneconomic damages awarded. They argued, however, that the punitive damages were unfounded, as the officers, directors, and managing agents of the company did not act with any malice when the talc was sold. The Court of Appeal agreed.

The Court of Appeal determined that there was not substantial evidence that defendant’s executives acted with malice, fraud or oppression to support punitive damages against the company. In making their decision, the Court of Appeal examined 24 separate instances in which defendant was informed or should have had some knowledge that the talc they were selling could have harmful side effects. This evidence included letters, testing results, FDA decisions and a variety of meetings in which defendant’s employees were involved. The appellate court noted that the FDA did not even start questioning the safety of asbestos themselves until 1971. Even as more information about asbestos became available, there was no scientific consensus on the danger of asbestos, particularly the “trace” asbestos found in talc.

Defendant eventually began testing their talc for asbestos levels, believing it to be an “unsafe ingredient” in talc if enough was present. At that time, however, no one was aware of the link between exposure to talcum powder and mesothelioma. That connection was not established until 1994, 14 years after the Old Spice talcum powder was discontinued. Because there was no knowledge of the link between talcum powder and mesothelioma, defendant’s executives could not have acted with malice, fraud, or oppression. Plaintiff’s evidence of defendant’s knowledge that asbestos could be dangerous, while extensive, does not conclusively draw the connection between talcum powder and mesothelioma. There was also evidence that defendant made efforts to eliminate or limit asbestos in the talc they sold. The Court of Appeal concluded that they “cannot see how defendant’s conduct surrounding its testing protocols and lack of warnings on the possible asbestos content of their talc in the 1970’s—albeit negligent—can be characterized as ‘despicable conduct’ that was carried on with an awareness of its ‘probable dangerous consequences.’”

While this case deals specifically with talcum powder and mesothelioma, the Court of Appeal provides an in-depth discussion of just how strict the punitive damages standard should be—especially against a business. The directors of the company must actively be aware what they are doing is harmful, and continue that behavior. Even when significant evidence raises questions, as was the case here, there must be actual or constructive knowledge of probable dangerous consequences to constitute malice.

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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