In a much-needed effort to assure disclosure of individual claim submissions to asbestos trust settlements created from corporate bankruptcies, Congress is considering action.  For any company sued for asbestos disease claims, it would seem a matter of fundamental fair play that the plaintiff be required to disclose the information contained in any claim filed with an asbestos settlement trust.  And yet plaintiff lawyers resist disclosing such information.  Are the allegations in a pending lawsuit consistent with representations made to one or more trusts with respect to date of diagnosis, products involved, and the nature of any alleged exposure?  All these basic facts should be consistent.  But if they are not and there are inconsistencies, perhaps someone is playing fast and loose with the truth.  

Obtaining this information from the trusts is very difficult and the information is rarely voluntarily produced by plaintiff lawyers.  One can but wonder why.  Plaintiff lawyers oppose such disclosure proposals, citing defendants’ intent to delay and frustrate pending cases.  Our experience is that trust data has no impact on how fast cases move through the court system.

Dennis H. Markusson has been selected to the 2012 list of The Best Lawyers in America® for his Product Liability Litigation - Defendants.  

Markusson, an asbestos litigation lawyer and asbestos expert witness serves as national counsel defending a publically held corporation in asbestos litigation matters.  He also works as an asbestos expert witness and works with clients on asbestos issues including insurance coverage and reinsurance.  Go here to learn more about Dennis Markusson.  

 

The 6^th Circuit Court of Appeals held on July 8, 2011 that an umbrella policy insurance carrier did not have a duty to defend asbestos injury claims against the automotive supplier Federal–Mogul Corp. because the primary coverage provided by three other insurers had not been exhausted.

The Federal–Mogul U.S. Asbestos Personal Injury Trust, established by the Michigan company’s Chapter 11 bankruptcy plan, brought its duty-to-defend case against its umbrella insurance carrier in U.S. District Court for the Eastern District of Michigan.

In a complaint for declaratory relief, the Trust claimed that after its policy through one of several insurance carriers had been exhausted, the Trust’s umbrella policy began coverage.

Siding with the trial court’s finding for the umbrella carrier, the Court affirmed a district court’s decision to dismiss the Trust’s September 2008 lawsuit.

The three-judge panel agreed the umbrella carrier had no duty to defend the Trust because its policy had not been triggered since the Trust’s other two primary insurance policies were still providing coverage.

The policy’s Defense, Settlement, Supplementary Payments (DSSP) Insuring Agreement provides for the defense of claims against the trust when “an occurrence is not covered by the underlying insurance listed in the underlying insurance schedule or any other underlying insurance collectible by the insured, but covered by the terms of this policy, without regard to the retained limit contained herein.”

The appeals court ruled that for the umbrella carrier’s duty to defend to arise, the claims must not be covered by any other underlying insurance collectible by the Trust.

We find the result predictable and unremarkable. We surmise the Trust was exploring potential additional assets.

The case is Federal-Mogul U.S. Asbestos Personal Injury Trust v. Continental Casualty Company et al., 6th Cir., No. 10–1290.

Dennis Markusson recently served as an expert witness in a re-insurance case related to asbestos liabilities.  The issue was whether the asbestos cases in which the insured was involved were subject to aggregation clauses triggering millions of dollars of re-insurance.  Mr. Markusson testified as an expert witness for the re-insurance carrier, documenting and opining how each and every asbestos case had unique elements and could not be said to arise from a single cause.  The re-insurance carrier prevailed in this multimillion-dollar case.  Mr. Markusson will consider engagements as an expert on asbestos-related matters.

FRCP 26(b)(4): This rule is amended to provide work-product protection against discovery of draft expert disclosures and reports, and against communications between an attorney and the expert (except for compensation, data provided to the expert by the attorney, and assumptions that the attorney asked the expert to rely on).

FRCP 56: This rule is amended to clarify the procedures for presenting and contesting summary judgment, but it does not change any deadlines or the standards for deciding summary judgment motions. The timing provisions of former FRCP 56 - which permit defendant to file SJ motion at any time or a claimant to file 20 days after the action commences - are superseded (although the new rule allows a motion for SJ to be filed at the commencement of the action). The primary impact of this rule change is that citations to various provisions of Rule 56 in motions and response need to be carefully checked.

USDC D Colo. - Standard Scheduling Order: This form has been modified to include references to new FRCP 26(a)(2) disclosure amendments. 

USDC D Colo. - Standard Final Pretrial Order: This form has been amended to conform FRCP 26(a)(3) pretrial disclosures and objections to the time frames set forth in federal rules. In other words, Rule 26(a)(3) disclosures are to be made 30 days before trial, and any objections thereto are to be made within 14 days after the Rule 26(a)(3) disclosures have been made or provided. 

Other time frames modified in the local rules are too peripheral to the primary deadlines to be incorporated into the deadline calculators. However, it is worth noting that a requirement has been added that the removing party file a current docket sheet (and separately file each pending motion, petition or related response) within 14 days of filing the notice of removal. D.C.COLO.LCivR 81.1(B).

California’s Second Appellate District upheld a trial court decision in which the trial judge refused to instruct the jury under a “sophisticated purchaser defense.” Stewart vs. Union Carbide Corp., No. B216193 (2nd App. Dist. Nov. 16, 2010).

Plaintiff was employed as a plumber from the late 1960s until he developed mesothelioma in 2007. While working on various commercial and residential construction jobs, the plumber often worked near the drywallers who were installing drywall and using joint compound. The joint compound, which contained asbestos at certain times, was manufactured by USG and Hamilton Materials. The plumber presented evidence that USG and Hamilton Materials obtained the raw asbestos from Union Carbide Corp.

According to the plumber, the drywallers followed the plumbers on any given job. Drywallers would install the drywall, tape the joints, put joint compound over the tape and then sand the joint compound. Significant amounts of dust were created during the sanding phase. Laborers would later sweep up the area, thereby stirring the dust up again. The plumber testified that “there was no way to avoid breathing this dust.”

During the closing at trial, the plumber’s counsel argued that Union Carbide failed to meet its burden of proof and that there was a complete lack of evidence that the other entities listed on the special verdict form were at fault. Union Carbide objected to the plumber’s counsel’s comment in that it implied that Union Carbide had the burden of proving specific fault percentages. It asked the court to instruct the jury accordingly. The court refused.

A directed verdict was entered in favor of Union Carbide on the fraud count. However, the jury found in favor of the plumber and against Union Carbide on all causes of action for negligence and strict products liability on both failure to warn and design defect/consumer expectations theories. Although 47 entities were named in the action, the jury allocated 85 percent of the fault in the case to Union Carbide and 15 percent to Hamilton Materials; there was no fault allocation to the other entities. A multiple seven-figure verdict was rendered against Union Carbide.

On appeal, Union Carbide argued that the trial court improperly refused to instruct the jury on the “sophisticated purchaser defense.” In particular, Union Carbide wanted the jury to hear and be instructed on the following: “Where the risk of using a hazardous product is already known, or should be known, by the purchaser of that product, the product supplier has no duty to warn of the product’s potential hazards; that a bulk supplier’s or raw materials supplier’s duty to warn is measured by what is generally known or should be known to purchasers of the raw product, rather than by the individual plaintiff’s knowledge; and that the sale of a raw material to a sophisticated intermediary purchaser who knew or should have known of the risks of that raw material cannot be the legal cause of any harm the raw material may cause.”

Union Carbide cited Johnson vs. American Standard, Inc., 43 Cal. 4th 56 (2008), in support of its position on appeal. In Johnson, plaintiff was a certified air conditioning repair technician who was injured on the job while he was repairing an air conditioner that lacked a warning of a dangerous condition which could occur during repair. Johnson stands for the proposition that manufacturers have a duty to warn consumers about the hazards inherent in their products, but that there is an exception to the rule that “sophisticated users need not be warned about dangers of which they are already aware or should be aware.”

Distinguishing Johnson, the Stewart court clarified that Johnson “did not impute an intermediary’s knowledge to the plaintiff, or charge him with any knowledge except that which had been made available to him through his training and which, by reason of his profession and certification.” The court criticized Union Carbide’s position because the plumber had not obtained any knowledge of the dangers associated with asbestos and had no obligation to do so. Johnson also did not stand for the principle that since Union Carbide’s customers (Hamilton Materials and USG) knew or should have known of the dangers of asbestos, Union Carbide did not have to warn the plumber. The court stated, “[a]s we have seen, however, Johnson was not concerned with the knowledge of the purchaser, but with the knowledge of the user.” Further, “the employer-employee relationship is different than the relationship between a sophisticated user intermediary and an unknown number of non-employees who may at some point work with the sophisticated user’s product.”

The Stewart decision will be disconcerting to many because the court has limited the application of the sophisticated user doctrine to instances where the actual user knew or had reason to know of the product’s dangers. It also seems to limit the application of the bulk supplier and component part defenses. Finally, the decision seems to unfairly imply that the “defendant” has the burden of proof to provide specific percentages of fault in order to reduce its own liability in the case. That has never been the law in California.

The U.S. Court of Appeals for the Eleventh Circuit, on September 30, 2010, emphatically rebuked Medicare over the way the agency treats settlements and held that Medicare does not have the right to claim full reimbursement from an undifferentiated settlement, as it has for years. Instead, Medicare must participate in any state-authorized process to prorate its lien claim or accept the result when it refuses to participate. The decision is the first by a federal circuit court on the issue.

A Florida nursing home resident died from complications of bed sores and received a settlement of $50,000. Since Medicare had paid for the deceased’s medical expenses, the 11 surviving children, who sued for loss of consortium, invited Medicare to participate in an allotment of the settlement. Medicare claimed the entire amount of $38,875.08, less procurement costs, or a net amount of $22,480.89, citing its manual and later refused to take part in a probate hearing to allot the settlement. The family went to federal court seeking recognition of the probate court’s decision. The court deferred to Medicare’s interpretation of the 1980 Medicare Secondary Payer Act.

The Eleventh Circuit overruled the District Court and held that the Medicare Manual lacked the force and affect of law, that the statute did not authorize Medicare’s position, and that, having chosen not to participate in the allocation; Medicare must accept the probate court’s decision that Medicare’s proportionate share of the settlement was only $787.50.

www.ca11.uscourts.gov/opinions/ops/200913765.pdf

The 10th Circuit U.S. Court of Appeals on Aug. 16 affirmed a lower court’s $2.7 million award to insurers for costs and expenses they incurred in representing their insured under a reservation of rights in an underlying case for false billing claims made by the United States and the State of Colorado (Valley Forge Insurance Co., et al. v. Health Care Management Partners Ltd., et al., Nos. 09-1251, 09-1263, 09-1264, 09-1265, 09-1278, 09-1279, 10th Cir.; 2010 U.S. App. LEXIS 17098; See 6/4/2009, Page 5).