SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
CONRAD BEAUCHAMP and OPAL GERALDINE BEAUCHAMP,
ALLIS-CHALMERS CORPORATION PRODUCT LIABILITY TRUST; ET AL,
Case No.: BC 357289
[COMPLEX ASBESTOS LITIGATION – SUBJECT TO THE GENERAL ORDERS CONTAINED IN FILE NO. C 70000]
PLAINTIFFS’ MEMORANDUM OF LAW IN TO RESPONSE TO OWENS-ILLINOIS’ MOTION FOR NONSUIT ON PLAINTIFFS’ PUNITIVE DAMAGES CLAIM
Accompanying Papers: DECLARATION OF JOHN LANGDOC PROOF OF SERVICE
Action Filed:August 18, 2006
Trial Date:February 26, 2007
Judge: Hon. Joseph R. KalinCOME NOW PLAINTIFFS and respectfully request that the Court deny Defendant Owens-Illinois’ Motion for Nonsuit on Plaintiffs’ Punitive Damages Claim, and in support thereof show as follows:
The evidence in Plaintiffs’ case has clearly demonstrated that Conrad Beauchamp used the Owens-Illinois asbestos-containing insulation product “Kaylo” while working as a laborer, pipefitter, and insulator from 1948-1958; that he was exposed to asbestos dust while working with Kaylo; that Owens-Illinois knew in 1943 that Kaylo had all the makings of a “first class hazard,” and yet Owens-Illinois marketed Kaylo as a non-toxic product. Indeed, Conrad Beauchamp testified that the Kaylo packaging did not warn him as to any potential hazards of exposure to Kaylo. Such evidence is more than sufficient to satisfy the requirements of C.C.P.§ 3294(c).
It is not necessary that Plaintiffs show that a specific officer, director, or managing agent had a malicious state of mind. This is a gross misreading of California law, which requires only that the corporate conduct be malicious, oppressive, or fraudulent in order to impose punitive damages. Further, Philip Morris USA v. Williams (2007) 127 S. Ct. 1057 presents no bar to Plaintiffs’ punitive damages claim; Philip Morris stands merely for the proposition that in calculating punitive damages, the harm to be calculating the damages is the harm to the party before the case, and not the harm it is alleged to have visited on nonparties. Accordingly, Owens-Illinois’ Motion for Nonsuit on Plaintiffs’ Punitive Damages Claim should be denied.
Plaintiffs’ evidence clearly demonstrates that Owens-Illinois’ conduct in manufacturing and marketing asbestos-containing Kaylo as a “non-toxic” product was a willful and conscious disregard of the rights and safety of end-users such as Conrad Beauchamp.
A.A motion for nonsuit must be denied if the court, accepting all of plaintiffs’ evidence as true, finds that plaintiffs’ proof raises more than a scintilla of evidence.
A nonsuit is proper only if there is no substantial evidence to support a jury verdict in the plaintiff’s favor. In determining whether the plaintiff’s evidence is sufficient, the court may not weigh the evidence or determine the credibility of witnesses. The evidence favorable to the plaintiff must be accepted as true and any conflicting evidence disregarded. If facts sufficient to support a verdict in the plaintiff’s favor may logically and reasonably be inferred from the evidence, the motion must be denied even if the evidence is also susceptible to conflicting inferences. Nonsuit may be granted only if there is no substantial evidence upon which reasonable minds could differ.
It is for the trier of fact, and not the court on a motion for nonsuit, to determine whether plaintiffs’ evidence is less than clear and convincing:
We cannot agree a nonsuit is necessarily proper whenever the court deems the plaintiff’s evidence less than clear and convincing. ‘The sufficiency of the evidence to establish a given fact, where the law requires proof of the fact to be clear and convincing, is primarily a question for the [trier of fact] to determine, and if there is substantial evidence to support its conclusion, the determination is not open to review on appeal.’ Where reasonable minds could differ as to whether the evidence would support punitive damages, the resolution of the conflicting inferences and the weighing of opposing evidence is for the jury; for the court to grant a nonsuit in that circumstance, or the appellate court to affirm a judgment of nonsuit, would be to usurp the jury’s function.
B.Plaintiffs’ evidence demonstrates that Owens-Illinois acted with malice, oppression, and fraud.
“Malice” is “conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.”
“Oppression” means “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.”
“Fraud” means “an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.”
Dr. Richard Lemen, former Assistant Surgeon General of the United States and former Deputy Director of the National Institute for Occupational Safety and Health, testified for Plaintiffs as an expert in epidemiology and asbestos state of the art. Dr. Lemen testified that Owens-Illinois was aware in 1941 that inhalation of asbestos fibers presented a health hazard. Dr. Lemen testified that when Owens-Illinois submitted Kaylo to the Saranac Laboratories in 1943 to see if it was safe for end-users such as Conrad Beauchamp, the scientists at Saranac warned Owens-Illinois that its asbestos-containing Kaylo had all the makings of a “first class hazard.” In 1944, Saranac informed Owens-Illinois that Kaylo was toxic when injected into animals, and that it caused a disease akin to asbestosis. In 1948, Saranac informed Owens-Illinois that Kaylo, with enough time for latency, produced the fatal disease asbestosis. Dr. Lemen testified that as a result of the Saranac studies, Owens-Illinois knew before the United States Government that asbestos exposure produced disease only after a long latency, and that early reports demonstrating asbestos’ safety were in misleading, because they did not allow the workers enough time to develop an asbestos-related disease. Further, Dr. Lemen testified that as early as 1951, Owens-Illinois knew, based on testing that it has commissioned of Kaylo at the Saranac Laboratories, that there was no known safe level of exposure to asbestos.
Owens-Illinois, even after they knew in 1948 that inhalation of asbestos from Kaylo was a “first class hazard,” continued to manufacture and place Kaylo into the stream of commerce. Indeed, in the same year that Owens-Illinois finds out that if one breathes asbestos from Kaylo, and then waits long enough, that one will get sick, Owens-Illinois increased its production of Kaylo.
During the entire time that Owens-Illinois manufactured Kaylo, from 1943 to 1958, it did not place a warning on Kaylo as to any health hazards arising from the use of Kaylo. Indeed, Owens-Illinois falsely advertised Kaylo as being “non-hazardous” or “non-toxic.” The ordinary user of Kaylo in the 1940″s and 1950’s, such as Conrad Beauchamp, would have had no understanding as to the danger of this product.
Dr. Lemen testified that Owens-Illinois did not act reasonably in promoting its toxic product Kaylo with no warnings, and instead falsely advertising that it was non-toxic.
Plaintiffs offered into evidence the testimony of Willis G. Hazard, who worked as an industrial hygienist at Owens-Illinois from 1934 to 1978. Mr. Hazard testified that he knew in 1948 that exposure to Kaylo upon inhalation is capable of causing asbestosis. Dr. Hazard testified that despite being informed of the severe health hazards of Kaylo, Owens-Illinois did not eliminate asbestos from Kaylo. Further, after receiving warnings from Saranac Laboratories in 1948 as to the health hazards of Kaylo, Owens-Illinois did not issue any warnings to the customers or users of Kaylo. Even after Owens-Illinois was told by Saranac in 1952 that “the results of the investigations with animals show that Kaylo dust is capable of producing a peri-bronchiolar fibrosis, typical of asbestosis,” Mr. Hazard was not aware of any program on the part of Owens-Illinois to eliminate asbestos from Kaylo. Nor did Owens-Illinois issue any warnings as to the hazards of Kaylo in 1952. In 1952, Willis Hazard recommended that employees at the Owens-Illinois Berlin plant who might have contact with asbestos be x-rayed annually. Willis Hazard recognized at the time that he read the Fleischer-Drinker report in 1946 that there were significant findings of asbestosis for those with longer latency periods. Mr. Hazard testified that although Owens-Illinois took care to provide proper ventilation to its workers in its plants, even though Owens-Illinois knew that its end-users were exposed to asbestos from Kaylo in confined areas with little ventilation.
Clearly, such evidence demonstrates that Owens-Illinois acted in conscious disregard to the health and safety of the end-users of Kaylo. Further, Owens-Illinois acted fraudulently by concealing from its end-users the fact that Kaylo is a “first class hazard,” and instead marketed it as “non-toxic.”
It is not necessary that Plaintiffs show that a specific officer, director, or managing agent had a malicious state of mind.
Owens-Illinois misrepresents to this Court that California law requires that Plaintiffs identify an officer, director, or managing agent of Owens-Illinois who individually committed acts with conscious indifference. Specifically, under facts not applicable to the case at hand, California law requires that the individual acts of an employee are not attributable to the corporation unless the employee holds sufficient responsibility and the trappings of agency with respect to the corporation.
It is an absolute misconstruction of California Civil Code § 3284 to argue that Plaintiffs in this case are required to show that at least one officer, director, or managing agent had a malicious state of mind. In Romo v. Ford Motor Company, 99 Cal. App. 4th 1115 (2002), rev’d in part on other grounds, 113 Cal. App. 4th 738 (2003), Ford Motor Company asserted that it was not liable for punitive damages in the design and manufacture of a 1978 Bronco and in failing to warn consumers about the absence of rollover protection, because plaintiffs had not introduced clear and convincing proof that at least one particular Ford employee, officer, director or managing agent had the malicious state of mind in 1978.” The Romo court held that Ford’s position was a “fundamental misconception of the required proof” under California Civil Code § 3284. In Romo, the Court explained that the requirements of § 3294 that a “managing agent” commit the tortious act arose from the instances where the initial liability arises from the particular tortious act of the employee of the corporation, rather than the corporation acting itself pursuant to corporate policy. In contrast, when the entire organization is found to be involved in the particular offensive acts at issue, there is no need to pinpoint the actions of an individual managing agent:
Defendant has cited no case, and our own research has failed to disclose any case, in which a series of corporate actions and decisions, such as the design, production, and marketing of an automobile, has been found inadequate to support an award of punitive damages on the basis that the multitude of employees involved in various aspects of the process were not high enough in the corporate chain of command. When the entire organization is involved in the acts that constitute malice, there is no danger a blameless corporation will be punished for bad acts over which it had no control, the primary goal of the “managing agent” requirement.
“There is no requirement that the evidence establish that a particular committee or officer of the corporation acted on a particular date with ‘malice.'”
Instead, the Court held that a plaintiff satisfies the managing agent requirement of § 3294 through evidence “showing the information in the possession of the corporation and the structure of the management decision making that permits an inference that the information in fact moved upward to a point where corporate policy was formulated.” These inferences may be established by circumstantial evidence.
As demonstrated at length by the evidence set forth above, Owens-Illinois’ corporate policy was to manufacture and market asbestos-containing Kaylo without warning and instead with reassurances that it was “non-toxic,” despite the fact that Owens-Illinois knew that it was a first-class hazard. The evidence is that Owens-Illinois commissioned Saranac in 1943 to investigate the hazards of Kaylo to those end-users, such as Conrad Beauchamp, who installed Kaylo:
Q:And this is document February 12, 1943, that Owens-Illinois wrote to Saranac, and basically laid out to them, the questions that they had, that they wanted Saranac to look into correct?
Q.And I think you pointed out this morning that there were three different questions the last of which was they wanted to know if there was any sort of health hazards to the people that were working in the Owens-Illinois factory and also, to anyone who might be using our product out in the field, correct?
A.Yes, that’s point number three.
The evidence is that Saranac Laboratories in the 1930’s-1950’s was one of the premier laboratories that studied dust disease. The Saranac Laboratory Study on the potential hazards of Owens-Illinois Kaylo was published in 1955 for “all the world to see.” The evidence clearly demonstrates that Owens-Illinois’ policy was to have its product tested by one of the “premier laboratories” that studies disease, and yet proceed to ignore the warnings of this laboratory when such warnings were not in the economic interest of Owens-Illinois.
The case cited by Owens-Illinois, Cruz v. Homebase, 83 Cal. App. 4th 160 (2000), stands for the inapposite proposition that where a security guard and his supervisor detained and struck the patron of a store, the corporation cannot be liable for punitive damages for this conduct unless the employee was a “managing agent” who reflected “corporate policy.” In other words, a corporation cannot be liable for “every corporate employee’s reckless or malicious conduct” if the conduct is not a reflection of corporate policies or the actions of the on the policy-makers of the corporation.
In contrast, as is explained by the Court in Cruz, where the “corporate policy” of a corporation is embodied in “formal rules or understandings – often but not always committed to writing – that are intended to, and do, establish fixed plans of action to be followed under similar circumstances consistently over time,” then the corporation as a whole is liable. In this case, it was Owens-Illinois who acted as a corporation with a fixed plan of action to market asbestos-containing Kaylo without warnings and indeed with the reassuring language that Kaylo was “non-toxic,” despite having been forewarned in 1943 by its corporate testing laboratory Saranac that Kaylo was a “first class hazard.”
Hoch v. Allied-Signal is inapplicable to the facts of this case, because the defendant in Allied-Signal was unaware of the hazards of its product.
Owens-Illinois erroneously cites Hoch v. Allied-Signal, 24 Cal. App. 4th 48 (1994) for the position that the aggregate of Plaintiffs’ evidence does not rise the to level of malicious, oppressive, or fraudulent conduct. In Hoch, Plaintiff’s Decedent was killed when her seat belt released during a car collision, and she was thrown from the car. Allied-Signal manufactured the buckle on the seat belt. There was no evidence that Allied-Signal knew that the buckle might malfunction under the conditions of an actual automobile accident. Thus, the court in Hoch held that given that in the absence of knowledge on the on the part of Allied-Signal that the buckle might unlatch in an accident, Plaintiffs could not show that Allied-Signal acted in conscious disregard of anyone’s safety.
In contrast, Owens-Illinois (i) knew that Kaylo was a “first class hazard;” (ii) knew that initial reports from Fleischer-Drinker might be false because there was not a sufficient latency period to allow for the development of disease; and (iii) knew that its plant workers should be protected from exposure to asbestos, but did nothing to warn the end-users of its asbestos -containing Kaylo. Thus, unlike the the corporation in Hoch who was not aware of any inherent hazards of its belt buckle, Owens-Illinois was fully apprised of the “first class hazard” presented by Kaylo, yet it did nothing to warn, and in fact, told its end-users that Kaylo was “non-toxic.”
Philip Morris USA v. Williams (2007) 127 S. Ct. 1057 presents no bar to Plaintiffs’ punitive damages claim; Philip Morris stands merely for the proposition that in calculating punitive damages, the harm to be calculating the damages is the harm to the party before the case, and not the harm it is alleged to have visited on nonparties.
Finally, Owens-Illinois erroneously argues that the Supreme Court’s recent opinion in Philip Morris USA v. Williams (2007) 127 S. Ct. 1057 finds in the Constitution a requirement that “a plaintiff must show conduct by the defendant aimed at the plaintiff.”
In Philip Morris, the lawsuit arose out of the death of Jesse Williams, a heavy cigarette smoker. Williams’ widow sued Philip Morris, the manufacturer of Marlboro, the brand name that Williams favored. A jury found that Williams’ death was caused by smoking; that Williams smoked in significant part because he thought it was safe to do so; and that Philip Morris knowingly and falsely lead him to believe that this is so. During closing argument, the plaintiff’s attorney asked the jury to “think about how many other Jesse Williams in the last 40 years in the State of Oregon there have been . . . . In Oregon, how many people do we see outside, driving home . . . smoking cigarettes? [C]igarettes . . .are going to kill ten [of every hundred]. [And] the market share of Marlboros [i.e. Philip Morris] is one-third [i.e. one of every three killed].” The jury awarded the plaintiff $79.5 million in punitive damages.
The Supreme Court held that while it is permissible to show harm to other victims by the Defendants conduct in order to demonstrate reprehensibility, it is not permissible for the jury to calculate harm done to a “nonparty victim” in order to calculate punitive damages. In other words, a jury’s calculation of punitive damages may not “punish a defendant directly on account of harms it is alleged to have visited on nonparties.”
Owens-Illinois grossly distorts the holding in Philip Morris and misleads this Court by stating that this case stands for the proposition that Owens-Illinois is not liable for punitive damages unless Owens-Illinois had a specific intent to harm Conrad Beauchamp. On the contrary, Philip Morris stands merely for the proposition that in calculating punitive damages, the harm to be assessed in calculating the damages is the harm to the party before the case, and not the harm the Defendant is alleged to have visited on nonparties.
Plaintiff’s evidence is more than sufficient to withstand Owens-Illinois’ motion for nonsuit on Plaintiffs’ punitive damages claim. The evidence has established knew that the company’s Kaylo asbestos product was a “first class hazard,” chose to sell it anyway, decided not to warn of Kaylo’s known dangers and instead elected to deceive workers about the risks of Kaylo by labeling and advertising the product as “non-toxic.” The evidence of Owens-Illinois’ actual knowledge of the hazards of its asbestos Kaylo product and of the company’s conduct in light of that knowledge is more than significant. Accordingly, Plaintiffs respectfully request that Defendant’s Motion for Nonsuit be denied.
DATED this 9th day of May, 2007.
Laurie K. Anger
Schiff Hardin, L.L.P.
Spear Street Tower
San Francisco, CA 94105
Attorneys for OWENS-ILLINOIS, INC.
Lucinda L. Storm
Law Offices of Lucinda L. Storm
610 A Third Street
San Francisco, CA 94107
Attorneys for DURABLA MANUFACTURING CO.
- ↑ Video Deposition Testimony of Conrad Beauchamp, March 29, 2007, at 3-5; 9; 12-14; 18-19. attached hereto as Exhibit “C.”
- ↑ See id.
- ↑ Testimony of Dr. Richard Lemen, March 22, 2007 afternoon testimony at 9, attached hereto as Exhibit “A.”
- ↑ Testimony of Dr. Richard Lemen, March 22, 2007 afternoon testimony at 24, attached hereto as Exhibit “A.”
- ↑ See id.
- ↑ Courts across the country have routinely upheld awards of punitive damages assessed against Owens-Illinois based on evidence, similar to that introduced in this trial, that the company acted maliciously toward the users of its products. See, e.g., Ingram v. ACandS, Inc. (9th Cir. 1992) 977 F.2d 1332, 1342 (applying Oregon law) (evidence including the “Saranac Lake documents” informing Owens-Illinois that Kaylo was “a potentially hazardous material” coupled with “the failure of O-I to place warnings on Kaylo packages after learning of the danger of asbestos” was “sufficient clear and convincing evidence of wanton conduct” to support the jury’s punitive award)(attached as Exhibit A); Johnson v. Celotex Corp. (2d Cir. 1990) 899 F.2d 1281, 1289 (affirming a punitive damages award against Owens-Illinois based on evidence that Owens-Illinois “knew of the dangers of asbestos and did not adequately protect or warn users of asbestos, thereby acting in a wanton or reckless manner”); In re Joint E. & S. Dist. Asbestos Litig.(E. & S.D.N.Y. 1991) 1991 WL 4420 (denying Owens-Illinois’ motion for judgment notwithstanding the verdict of punitive damages because the “egregious nature of O-I’s behavior, as evidenced, inter alia, by the Saranac documents, the use by O-I’s executives of respirator masks at a time when plaintiff’s decedent was not told that such masks were necessary, is sufficient to support the award.”); Fibreboard Corp. v. Pool (Tex. Ct. App. 1991) 813 S.W.2d 658, 686-87, cert. denied, (1993) 508 U.S. 909. The facts and the law in this case are equally compelling. The evidence of Owens-Illinois’ conduct here is sufficiently egregious to warrant the jury’s imposition of this sanction.
- ↑ A copy of this decision is attached hereto as Exhibit “E.”
- ↑ See Carson v. Facilities Development Co., 36 Cal. 3d 830, 839 (1984); see also Naley v. Grace Community Church, 47 Cal. 3d 278, 291 (1988).
- ↑ See Hoch v. Allied-Signal, 24 Cal. App. 4th 48, 58 (1994).
- ↑ Hoch, 24 Cal. App. at 59, citing Crail v. Blakely, 8 Cal. 3d 744, 750 (1973).
- ↑ Cal. Civ. Code § 3294(c)(1).
- ↑ Cal. Civ. Code § 3294(c)(2).
- ↑ Cal. Civ. Code § 3294(c)(3).
- ↑ Testimony of Dr. Richard Lemen, March 22, 2007 morning testimony at 33-35, attached hereto as Exhibit “A.”
- ↑ See id. at 9
- ↑ See id. at 13.
- ↑ See id. at 17.
- ↑ See id. at 21.
- ↑ See id. at 31-32.
- ↑ See id. at 23.
- ↑ See id. at 24.
- ↑ See id. at 24.
- ↑ See id. at 24
- ↑ See id. at 24-25.
- ↑ See id. at 64.
- ↑ Testimony of Willis Hazard, March 27, 2007 at 48, attached hereto as Exhibit “B.”
- ↑ See id. at 49.
- ↑ See id. at 49-50.
- ↑ See id. at 50.
- ↑ See id. at 50-51.
- ↑ See id. at 60-61
- ↑ See id. at 66.
- ↑ Testimony of Willis Hazard, March 27, 2007 at 75-76, attached hereto as Exhibit “B.”
- ↑ See Cal. Civ. Code § 3294(b).
- ↑ Plaintiffs have attached the Romo decision, parts I and II, as Exhibit “D” to this motion. Romo I was reversed by the Supreme Court only on the issue that the damages awarded were too excessive. Both Romo I and Romo II affirmed the principal that punitive damages were appropriate where the corporate policy and corporate actions were malicious, and that there was no need to identify the actions of a particular corporate officer or managing agent.
- ↑ Id. at 1139.
- ↑ See id. at 1140.
- ↑ Id. at 1140.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Testimony of Dr. Richard Lemen, March 22, 2007 afternoon testimony at 32, attached hereto as Exhibit “A.”
- ↑ See id. at 40.
- ↑ See id. at 42.
- ↑ Cruz v. Homebase, 83 Cal. App. 4th 160, 168 (2000).
- ↑ Id. at 167.
- ↑ See id. at 61-62.
- ↑ See id.
- ↑ A copy of this decision is attached hereto as Exhibit “E.”
- ↑ Defendant’s Brief at 10.
- ↑ Philip Morris v. Williams, 127 S.Ct. 1057, 1060 (2007).
- ↑ Id. at 1061.
- ↑ The Supreme Court clearly states that evidence of harm to others, while not permissible for purposes of compensating nonparties to the litigation, is permissible in order to show reprehensible conduct: Respondent argues that she is free to show harm to other victims because it is relevant to a different part of the punitive damages constitutional equation, namely, reprehensibility. That is to say, harm to others shows more reprehensible conduct. Philip Morris, in turn, does not deny that a plaintiff may show harm to others in order to demonstrate reprehensibility. Nor do we. Evidence of actual harm to nonparties can help to show that the conduct that harmed the plaintiff also posed a substantial risk of harm to the general public, and so was particularly reprehensible . . . . Id. at 1063-64.
- ↑ Id. at 1064.
- ↑ Owens-Illinois’ position is so wholly without basis in the law that it is hard to imagine under what circumstance Owens-Illinois believes that it might be responsible for punitive damages to a user of its product. Presumably, Owens-Illinois contemplates Board Room meetings wherein Owens-Illinois put up a picture of Conrad Beauchamp and determined that it was proper to act towards him with conscious indifference to his health and safety.