Fourth Circuit Refuses To Reduce Record-Breaking $32.7 Million Verdict

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On August 24, 2020 in Ann Finch v. Covil Corp., 972 F.3d 507 (4th Cir. 2020), the Fourth Circuit Court of Appeals upheld a North Carolina federal district court’s decision, sustaining a $32.7 million verdict in favor of  the plaintiff in an asbestos-related wrongful death lawsuit against insulation contractor Covil Corporation. On appeal, Covil argued that the district court erred in instructing the jury as to proximate cause and refused to reduce the damages award, however the three-judge panel found no fault with the district court’s jury instructions or its rationale for refusing to reduce the jury verdict.

Background

Franklin Finch was diagnosed with mesothelioma in March 2016 and passed away in January 2017. Mr. Finch’s wife subsequently filed a wrongful death lawsuit naming several defendants, but only one, Covil Corporation (Covil), proceeded to trial. She alleged that Mr. Finch’s injury and death were caused by exposure to asbestos throughout his career at a tire plant. His work changing tires produced a “sandstorm” of dust largely the result of disturbed insulation on steam pipes which Mr. Finch inhaled daily for 20 years. Mrs. Finch purported to introduce evidence that Covil supplied the asbestos-containing insulation that caused her husband’s diagnosis, which resulted in significant pain and suffering. Covil responded that it stopped selling asbestos-containing insulation prior to the tire plant’s construction and therefore did not supply the insulation in question. The jury returned a $32.7 million verdict against Covil. Covil appealed on two grounds, maintaining that the district court improperly: (1) excluded the language of controlling precedent from the jury instructions; and (2) refused to reduce the amount of the jury’s damages award.

Analysis – Jury Instruction

Covil first contended the district court reduced the plaintiff’s burden of proving substantial factor causation by omitting certain language imperative to the standard set forth in Lohrmann v. Pittsburgh Corning Corp., 782 F.2d 1156, 1162 (4th Cir. 1986). The court disagreed, clarifying that “appellate opinions may guide,” but are “by no means intended to preempt a district judge’s discretion to formulate a suitable charge for a specific trial.”

In Lohrmann, the Fourth Circuit set out the de minimis rule requiring a plaintiff to show more than casual or minimum contact with a product to prove causation. Id. at 1162-63. The Lohrmann standard mandates, “evidence of exposure to a specific product on a regular basis over some extended period of time in proximity to where the plaintiff actually worked.” Id.

In Finch, the district court instructed the jury to consider a series of questions to determine causation but did not include the exact language set forth in Lohrmann. The Fourth Circuit found this instruction to be sufficient. Though Covil correctly asserts that it did not mimic the “frequency” and “regularity” components in Lohrmann, the instruction charged the jury with making the synonymous exposure inquiries of “how often” and “how much.”

Analysis – Damages Award

Covil next asserted the district court should have reduced the amount of damages the jury awarded on several grounds. First, Covil maintained the $32.7 million verdict amount was so large that it was clearly “given under the influence of passion or prejudice,” which is improper under North Carolina law. Covil insisted the plaintiff’s counsel’s closing argument invited the jury to consider that Covil may have destroyed important records. Agreeing with the district court, the appellate court did not take issue with this fact, finding that it was a permissible inference from the evidence. Covil next argued that that the amount of the award was disproportionate to the damages. The court also rejected this argument responding that North Carolina allows the jury to consider “recovery for the services, society, and companionship of the decedent” and highlighting Mr. Finch’s significant medical treatment, loss of income, and pain and suffering which were within the province of the jury to assess and adequately supported by the evidence. Lastly, Covil argued that federal law required a comparative verdict comparison in diversity cases, however the appellate court rejected this argument on the grounds that Covil failed to preserve the issue for appeal.

An Issue for the U.S. Supreme Court

The $32.7 million verdict in Finch is reportedly the largest single-plaintiff verdict and the largest mesothelioma-related verdict in North Carolina history. Additionally, the verdict is four times larger than any other North Carolina mesothelioma verdict. Noting these considerations, Covil recently filed a motion to stay enforcement of the mandate expressing its intention to file a petition for writ of certiorari with the U.S. Supreme Court seeking review of the August 24, 2020 decision issued by the appellate court. Covil states that its petition for writ of certiorari will seek to resolve a circuit court split as to whether a district court sitting in diversity must undertake a comparative analysis of the verdict to comparable state awards as a matter of federal procedure. The court however, denied Covil’s motion to stay on October 15, 2020. For toxic tort defendants it is yet to be seen whether the issue will indeed make its way to the highest court and potentially provide a further tool to check nuclear verdicts.

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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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