Asbestos IV: Conspiracy Theory in Asbestos Litigation
Introduction
Since Johns Manville filed for bankruptcy in 1982, asbestos litigation has bankrupted 71 companies, but the disappearance of these original defendants has not stopped the plaintiffs’ attorneys from litigating asbestos claims. Rather, plaintiffs’ attorneys have developed theories on which to name new defendants. One principal theory is liability through conspiracy.
Cases involving conspiracy theory arise in two different contexts. Conspiracy theory first arose where the plaintiff was unable to prove which company’s asbestos-containing product caused the injury. The other context is the so-called “conspiracy-only” suit. These are cases where the defendant is named in a conspiracy count even though the plaintiff never had any intention of trying to prove exposure to the defendant’s products. Conspiracy-only can be a misnomer because many complaints allege exposure to all the defendants’ products even though the plaintiff has no intention of proving exposure to each product.[1]
Although all states recognize conspiracy, liability is usually based on the damage caused by the underlying tort. In addition to proof of an agreement, the plaintiff must prove that the fraud of concealment was committed by failing to disclose information. States are split on the legal question of whether there is a cause of action against a defendant whose asbestos products did not cause (or cannot be proven to cause) the purported injury but who allegedly conspired with other asbestos manufacturers to actively suppress and intentionally misrepresent medical evidence warning of the health hazards of asbestos.
Advantages of Conspiracy Theory
Cases alleging conspiracy theories give plaintiffs a number of significant advantages:
1. Under federal and most state rules of evidence, there is an exception to the hearsay rule for statements by alleged co-conspirators.[2] This means that many judges in different states will permit the introduction of internal (incriminating or “bad”) documents from alleged co-conspirators against a conspiracy defendant even though the defendant never saw the document, had nothing directly to do with the other company’s internal deliberations, and may not even manufacture or sell similar products. In other words, an alleged “co-conspirator” can be tagged with all of Johns-Manville’s or Raybestos Manhattan’s (or whoever’s) bad documents, even though, at the time the documents were created, the defendant was totally ignorant of them.[3]
2. “Conspiracy” in virtually all states is a basis for the imposition of punitive or exemplary damages. In many circumstances, punitive damages cannot be insured. In some states insuring punitive damages violates public policy. Even where insuring punitive damages does not violate public policy, some policies have an express exclusion for these damages or an “intentional acts exclusion” which bars coverage.[4]
3. Even where a conspiracy finding does not lead to a punitive or exemplary damages award, it may cause the jury to award substantially more in compensatory damages than would otherwise have been the case. Because compensatory damages are generally relegated to the “enlightened conscience of the jury,” there is normally little hope for appellate review or reduction in inflated verdicts based solely on compensatory damages.
4. Perhaps most significantly, co-conspirators are generally jointly and severally liable for the acts of all co-conspirators in the course of and in furtherance of the aims of the conspiracy. Not only does this mean that an adjudged co-conspirator is vulnerable to all the liabilities that have driven other defendants into bankruptcy, but it means that plaintiffs’ counsel routinely name the company as a defendant in every one of their cases.[5] A “peripheral” defendant – such as a friction products manufacturer (who traditionally was only named in brake lining cases) or an insulation manufacturer (with limited geographical activities) or even a non-manufacturer can suddenly find itself a defendant in tens or even hundreds of thousands of cases all across the country.[6]
Historical Development
Defendants’ raised two arguments against recognizing conspiracy in the asbestos cases:
1- The defendants argued that the concept of conspiracy by an entire industry is ludicrous: How could an entire industry, with literally thousands of companies who manufactured asbestos-containing materials, “agree” to misrepresent the dangers of asbestos?
2- There can be no actionable wrong in suppressing knowledge about the dangers of asbestos unless the defendant had a duty to warn, and no defendant has a general duty to the public to warn. This argument presumes that the duty to warn only arises from the sale of a company’s own products.
However, starting with Delaware in 1986[7], the following states have recognized a cause of action for a civil conspiracy to suppress asbestos information: Illinois,[8] Arkansas,[9] North Dakota,[10] Hawaii,[11] and Mississippi.[12] Texas requires specific intent.[13] [14]
Some states may be beginning to scrutinize the sufficiency with which conspiracy theory is proved. A Florida[15] court noted that, where there is no duty to speak, mere silence would not constitute actionable fraud. A California[16] court noted that Met Life had no duty to the plaintiff or to the public to disclose information about the health hazards of asbestos, and the court ruled that “a cause of action for civil conspiracy does not arise where the alleged participant is not personally bound by the duty violated by the wrong doing.” Another California court [17] noted the market share theory of liability should not apply in asbestos cases due to the variations in asbestos quantities in products, difficulty in defining relevant product and geographic market, and variations in longevity of exposure.
Nevertheless, in those jurisdictions that do recognize the cause of action, conspiracy can be a very potent weapon. Mark Lanier[18] said:
“conspiracy theory offers an opportunity to bring into every case, regardless of product identification, large companies including Metropolitan Life Insurance Company, Union Carbide, Exxon, Dow Chemical, and the Big Three automakers.”[19]
Even in jurisdictions rejecting a conspiracy-only theory of liability, allegations of conspiratorial conduct can be very advantageous to a plaintiff seeking to introduce hearsay evidence that can inflame a jury into awarding either punitive or greatly increased compensatory damages.
Elements of Civil Conspiracy
In a conspiracy case, the plaintiffs allege that defendants possessed medical and scientific data indicating that asbestos and asbestos-containing products were hazardous to plaintiffs and others in the same position. Sometimes, this knowledge is proved directly through the defendant’s old corporate documents, but the knowledge can also be imputed through a defendant’s membership in a particular trade organization.
The plaintiffs allege that companies had knowledge as far back as the 1930s and 1940s and had confirming medical evidence in the 1950s and 1960s that asbestos dust could be dangerous to the health of humans.[20] By showing that these companies had knowledge of asbestos dangers, plaintiffs allege that defendants, prompted by pecuniary motives, ignored medical and scientific data and conspired to deprive the public of such data. In fact, the evidence indicates that some companies suggested in writing that this information should be hidden from their employees.
By failing to educate the public about the dangers of asbestos, so the argument goes, these defendant companies placed people at risk and are therefore responsible for the results. As a result of defendants’ alleged suppression of medical evidence and/or alleged failure to warn, plaintiffs were denied the opportunity to decide whether to continue working with (or using) the defendants’ asbestos-containing products.
The general theory of civil conspiracy is well established in all states and generally requires a showing of (1) a combination of two or more persons;[21] (2) to accomplish an unlawful purpose or to accomplish a lawful purpose by unlawful means; (3) which results in damage to person or property. A successful conspiracy claim imposes joint and several liability not only for the products manufactured and sold by one’s co-conspirators but also for the co-conspirator’s actions, if those actions were done in furtherance of the conspiracy. A conspirator may also be liable for punitive damages imposed as a consequence of the actions of a co-conspirator in furtherance of and in the course of the conspiracy.[22]
In many states, a plaintiff need not prove a specific intent to injure. In addition to proving that a defendant was a participant in a conspiracy, the plaintiff must prove that the underlying tort (fraud of concealment) occurred. It is the underlying tort (fraud of concealment) that is actually responsible for the damages suffered by the plaintiff so that if the plaintiffs prove conspiracy but not the underlying tort, there are no damages. Some plaintiffs have failed in attempting to prove this latter requirement, and it is this failure, which, at times, has allowed defendants to avoid liability.[23] Alabama, Florida, Maryland, Massachusetts, and Pennsylvania expressly recognize an independent tort of civil conspiracy. In all other states, only the damages that arise out of the fraud or concealment are recoverable.
The burden of proof for conspiracy varies by state. Some states require clear and convincing[24] evidence. Others require that the plaintiff must prove his claim by a preponderance of the evidence.[25]
The Plaintiffs’ Success in Conspiracy-Only Cases
The successful use of a conspiracy-only theory of liability will vary from state to state. Plaintiffs have been successful in Delaware. The Delaware courts have been willing to impose liability for injuries to a plaintiff that are:
“caused by exposure to another party’s asbestos if it is shown that the defendant and the other party conspired to suppress information about the dangers of asbestos and that, as a result of and in furtherance of that conspiracy, the other party supplied asbestos without proper and adequate warning to the [plaintiff] . . .”[26]
Although mere membership in a trade organization is not enough to be considered a conspirator, implied approval of a conspiracy may be enough.[27]
The Illinois Supreme Court recognized that conspiracy allegations state a cause of action.[28] Later, however, it reversed a conspiracy verdict against Owens Corning Fiberglass (“OCF”,) finding that the plaintiff had not proved the conspiracy by “clear and convincing evidence.”[29] The court held that although parallel conduct may serve as circumstantial evidence of a conspiracy, by itself, it is insufficient proof to show the existence of an agreement. The Illinois intermediate Court of Appeals then reversed an earlier case,[30] and entered judgment for OCF on conspiracy but the court granted a new trial.[31] Burgess I has a good description of the trial of a conspiracy case. Although it granted a new trial because of evidentiary issues, Burgess II demonstrates that some courts require little proof of the conspiratorial agreement. These lenient proof requirements demonstrate how jaundiced many judges are toward the asbestos defendants. In short, Illinois serves as a good example of the far-reaching consequences of “conspiracy-only” theory (neither company had anything to do with the plant at which the plaintiff had worked) and more recent judicial reluctance to take the theory to its furthermost reaches.[32]
North Dakota has also upheld conspiracy as a cause of action in asbestos litigation and has permitted circumstantial evidence to be used as proof of the conspiracy.[33] The Court agreed with the plaintiff that The Asbestos Textile Institute’s concerted action to suppress information of asbestos health risks deprived the plaintiff of a warning of these dangers. The Court decided that manufacturers have a duty to warn if they know of the danger. The Court also found sufficient evidence that the defendant was involved in a conspiracy with other members of Asbestos Textile Institute’s to suppress information relating to the health hazards of asbestos.
In other states, courts are more reluctant to impose such liabilities on companies who have no proven link to the plaintiff’s injury other than an association with other companies. In one California case, a judge held that Metropolitan Life Insurance Company (“Met Life”) had no duty to the plaintiff or to the public to disclose or publish information about the health hazards of asbestos .[34] In another case, the judge said: “a cause of action for civil conspiracy does not arise where the alleged participant is not personally bound by the duty violated by the wrongdoing.”[35]
Because of the varying factual evidence in each case, the issue of liability and foreseeability of injury is unpredictable, and a ruling in favor of Met Life in California does not preclude a ruling against Met Life in another state, or even in California under different factual circumstances. In fact, Met Life has paid substantial sums to settle conspiracy cases, and other courts have held the conspiracy allegations against Met Life to be sufficient.
Similarly, the Court refused to recognize civil conspiracy as a cause of action in asbestos-building cases in New York.[36] The court held that the possibility that some members of the asbestos industry knew of risk connected with asbestos and acted to suppress information about that knowledge, was insufficient to permit imposition of liability on members of the industry who were not shown to have had knowledge of the concealment.
Recent Conspiracy Cases
The 2002 Rand study noted that complaints filed in Florida, Louisiana, Mississippi, Maryland, New York, Ohio, Pennsylvania, Virginia, West Virginia, and Texas accounted for eighty-four percent (84%) of the asbestos case filings in recent years. In prior years, states such as California and New Jersey also had a high concentration of filings. This data suggests that plaintiffs are forum shopping for states in which their likelihood of success is greater.
The forum shopping is made easier with liberal choice of venue statutes as well as the ability of some states to consolidate multiple asbestos claims (e.g. Maryland, New York, West Virginia, Texas, and Mississippi). Thus, as long as plaintiffs continue to be successful in these venues, plaintiffs’ attorneys will continue to bring suits in these states and avoid states where they think the likelihood of success is lower.
In state court in Brazoria County, Texas,[37] the Kelly-Moore Paint Company has sued Dow Chemical, Union Carbide, Cooper Industries, Pneumo Abex Corporation, and Flintkote solely on the basis of civil conspiracy. The plaintiff alleges that the Defendants were directly involved with various conspiracies to hide the dangers of asbestos from the public and that Defendants performed overt acts in furtherance of these various conspiracies by maliciously withholding medical and scientific data regarding the risks and damages of exposure to asbestos, including allowing false or misleading scientific reports relating to asbestos to be presented to the public and distorting the results of medical examinations of workers who had been exposed to asbestos.
The conspiracy theory is not limited to asbestos makers and sellers. As noted earlier, Met Life has been a conspiracy defendant for years. Recently, a new type of conspiracy asbestos suit was filed against insurance companies in West Virginia.[38] This complaint alleges conspiracy and unfair claims settling practices against insurance companies.[39] The plaintiffs in that case allege that the defendants and other insurers conspired with each other and with asbestos companies to fight asbestos claims in spite of their long-standing knowledge of the hazards of asbestos.[40]
Since there is often no reported court ruling, it is difficult to determine how many conspiracy claims have been successfully litigated. The decision to settle may be based on other factors. A search of Mealey’s Jury Verdict Reports showed that the following defendants had verdicts entered against them when conspiracy was an allegation in the case:
- Goodyear Turner & Newall
- Kaiser Abex
- Owens-Illinois Pittsburgh Corning
- Owens-Corning Fiberglass Raymark
- Union Carbide
- Turner & Newall
- Abex
- Pittsburgh Corning
- Raymark
The following defendants were listed in Mealey’s as having settled claims in which conspiracy was an allegation:
- Allied Signal General Motors
- Dana & Maremont Eaton & Carlisle
- Met Life Pneumo-Abex
- Wagner
[1] In these “conspiracy-only” cases, the insurers usually have a duty to defend since the complaint on its face alleges products liability within a policy’s coverage. Several Rand reports have found that defense costs are often much larger than indemnity payments, so this is not inconsequential.
[2] Technically, under Fed. R. Evid. 801(d)(2), “a statement by a co-conspirator of a party during the course and in furtherance of the conspiracy” is not hearsay.
[3] Many “bad” documents are also admissible simply because they are old under the “ancient documents” exception (See, e.g., Threadgill v. Armstrong World Industries, Inc., 928 F.2d 1366 (3d Cir. 1991), Fed. R. Evid. 802(16). Bad documents are also admissible under other exceptions: (a) records of regularly conducted activities, Fed. R. Evid. 803(6), (b) recorded recollection, Fed. R. Evid. 803(5), or (c), as statements against interest where the declarant is unavailable, Fed. R. Evid. 804(b)(3).
[4] Some policies expressly exclude “punitive or exemplary damages.” Even without such an exclusion, in the conspiracy context, it is difficult to suffer such an award without having deliberately agreed with one’s co-conspirators to do the tortious act that formed the basis for the award. It is, therefore, the unusual conspiracy case where one could meet the requirement in most general liability policies that the resulting “bodily injury” must not be “expected or intended from the standpoint of the insured” or the correlative (and sometimes redundant) “intentional acts” exclusions, which generally exclude damages “expected or intended by the insured.”
[5] As the Delaware Superior Court explained sixteen years ago in Nutt v. A. C. & S. Co., 517 A.2d 690, 694 (Del. Super. 1986), aff’d, 525 A.2d 146, 148 (Del. 1987): “If five people conspire to commit a tort, and only one of the five actually commits the tort, with a conspiracy count a plaintiff can bring in all five.”
[6] Similarly, Metropolitan Life Insurance Company , according to the opinion in its coverage case, Metropolitan Life Ins. Co. v. Aetna Cas. & Sur. Co., No. X04CV950115305S 1999 WL 244642 (Conn. Super. Ct. Apr. 16, 1999), aff’d, 765 A.2d 891 (2001), by 1999, had been sued in 200,000 cases and had paid “nuisance value” settlements.
totaling $250 million.
[7] In Re Asbestos Litig., 509 A.2d 1116 (Del. Super. 1986), aff’d, sub. num., Nicolet, Inc. v. Nutt, 525 A.2d 146 (Del. 1987)
[8] Adcock v. Brakegate, 645 N.E.2d 888 (Ill. 1994). In this case, the state high court affirmed the entry of judgment against OCF on a claim of civil conspiracy as a sanction for violating a court order requiring production of two corporate officers as witnesses. See, also, Adcock v. Brakegate Ltd., 617 N.E.2d 885, (Ill. App. 1993), aff’d, 645 N.E.2d. 888 (Ill. 1994).
[9] Rogers v. Armstrong World Indus., 744 F. Supp. 901 (E. D. Ark. 1990).
[10] In Re N. Dakota Pers. Injury Asbestos Litig. No. 1, 737 F.Supp. 1087 (D.N.D. 1990
[11] In Re Hawaii State Asbestos Cases, (1st Cir., Hawaii 1991)
[12] See, Black v. Carey Canada, Inc., 791 F. Supp. 1120, 1124 (S.D. Miss. 1990) (but refusing to find long-arm personal jurisdiction for the out-of-state conspiracy)
[13] Juhl v. Airington, 936 S.W.2d 640, 644 (Tex. 1996)
[14] According to plaintiffs’ lawyer Mark Lanier, civil conspiracy was the basis for a $3.75 million verdict against Raymark in 1998 holding Raymark liable for Johns-Manville’s products.
[15] Suter v. Armstrong World Indus., No. IP-89-1189-C (1990).
[16] Todak v. Asbestos Defendants, Case No. 320621, California (2002).
[17] In re Related Asbestos Cases, 543 F. Supp. 1152 (N. D. Cal. 1982).
[18] Mark Lanier, based in Texas, is widely recognized as one of the top asbestos trial lawyers in the United States and practices law throughout the country. Mr. Lanier’s $115 million verdict for 21 asbestos victims in February 1998 was record-setting.
[19] See, W. Mark Lanier, Conspiracy Theory: Putting New Defendants in Manville’s Chair, ALI-ABA Course of Study: Asbestos Law & Litigation 271, 273 (Dec. 6-7, 2001) (Copied in full in the supplementary materials as Exhibit 1 of the Conspiracy Theory Exhibits).
[20] This knowledge was based on a review of the medical literature at the time, and in addition to information known by the defendant companies’ medical advisors, many of the asbestos trade organizations also had access to this information. The trade organizations (of which many of the defendant companies were members) include: the Industrial Hygiene Foundation – IHF, Magnesia Silica Insulation Manufacturers’ Association – MIMA, Thermal Insulation Manufacturers’ Association – TIMA formerly known as National Insulation Manufacturers Association - NIMA, Quebec Asbestos Manufacturers Association – QAMA, and ATI, the Asbestos Textile Institute.
[21] A “person” can be a corporation, or other legal entity.
[22] See, e.g., Hayes v. Schweikart’s Upholstering Co., 402 S.W.2d 472 (Tenn. Ct. App. 1966) (Each conspirator is liable for all damages flowing from any wrongful act of a co-conspirator in carrying out the common design).
[23] Civil Action No. 86-C-763 (Cir. Ct. Monongalia County, W.Va. 1986); Pitts v. Unarco Indus., Inc., 712 F.2d 276, 279 (7th Cir. 1983); Carlson v. Armstrong World Indus., 693 F. Supp. 1073 (S.D. Fla. 1987)
[24] Alabama, Connecticut, Georgia, Hawaii, Illinois, Michigan, Missouri, Ohio, Oklahoma, Pennsylvania, Utah, Washington, West Virginia, and Wisconsin.
[25] Arkansas, Colorado, Delaware, Indiana, Louisiana, Maryland, Nevada, and Texas.
[26] In re Asbestos Litig., 509 A.2d 1116, 1120 (Del. Super. 1986), aff’d, sub. nom. Nicolet, Inc. v. Nutt, 525 A.2d 146 (Del. Super Ct. 1987)
[27] See, James Julian, Inc. v. Raytheon Co., 557 F. Supp. 1058 (D. Del. 1983) (Court stated that mere membership in an unincorporated trade association, including attendance at meetings, does not give rise to an inference of a conspiracy; however, proof of knowing, intentional participation in the illegal activities of the trade association (or its members) would support a cause of action); See also, Hunt v. Mobil Oil Corp., 465 F. Supp 195 (S.D.N.Y. 1978), aff’d, 610 F. 2d 806 (2d Cir. 1979); Federal Prescription Servs., Inc. v. Am. Pharms. Ass’n., 663 F.2d 253; (D.C. Ct. App. 1981) (Mere membership in an association is not enough to establish participation in a conspiracy).
[28] Adcock v. Brakegate, Ltd., 645 N.E.2d 888 (Ill. 1994).
[29] McClure v. Owens Corning Fiberglas Corp., 720 N.E.2d 242 (Ill. 1999).
[30] Burgess v. Abex Corp., 712 N.E.2d 939 (Ill. Ct. App. 1999) (Burgess I, Copied in full in the supplementary materials as Exhibit 2 of the Conspiracy Theory Exhibits).
[31] Burgess v. Abex Corp., 725 N.E.2d 792 (Ill. Ct. App. 2000) (Burgess II, Copied in full in the supplementary materials as Exhibit 3 of the Conspiracy Theory Exhibits).
[32] See Abadie v. Metro. Life Ins. Co., 784 So.2d 46 (5th Cir. 2001), cert. denial, 122 S.Ct. 2318 (2002) as a good example of the risk to defendants of having over one hundred plaintiffs in a single trial (Copied in full in the supplementary materials as Exhibit 4 of the Conspiracy Theory Exhibits).
[33] In Re North Dakota Personal Injury Asbestos Litigation No. 1, Civil Action Nos. A1-89-098 through A1-89-138 and A1-89-145 and 146 (1990).
[34] Todak v. Asbestos Defendants, No. 320621, California (2002). See also, article in Andrews Insurance Coverage Litigation Report entitled “CALIF. COURT GRANTS NON-SUIT MOTION TO INSURER IN ASBESTOS SUIT” April 5, 2002.
[35] In Re: Asbestos Litigation, No. 91-80,000 (42) (Eleventh Jud. Cir., Fla. 1992) — The court dismissed all conspiracy claims against Metropolitan Life and noted that there was no basis in law for these claims. The defendant, in its brief to the court noted that “as a life insurance company, Metropolitan Life’s financial interest is served when people live long and healthy lives. To conceal the dangers of asbestos, therefore, would have been intrinsically inconsistent with Metropolitan Life’s financial interest.”
[36]210 E. 86th Street Corp. v. Combustion Eng’g, Inc., 821 F. Supp. 125 (S.D.N.Y. 1993).
[37] The case was remanded from the United States District Court for the Southern District of Texas.
[38] Charles L. Wise v. One Beacon Ins. Group, NO. 02-1070, (S.D. W.Va. filed on Aug. 26, 2002)
[39] The companies include: One Beacon Insurance Group, Brandywine Holdings, Inc., Century Indemnity Co., Kemper Insurance Co., Lumbermen’s Mutual Casualty Co., American Motorists Insurance Co., American International Group (“AIG”), American International Underwriters, American Home Assurance Co., Birmingham Fire Insurance Company of Pennsylvania, Granite State Insurance Co., Insurance Company of the State of Pennsylvania, Lexington Insurance Company, and National Union Fire Insurance Company of Pittsburgh, PA.
[40] Also, another West Virginia consolidated case recently ended. This case was a good example of the number of asbestos defendants who actually litigate the claims. The West Virginia case began with over 250 named defendants and, at the start of the trial, only four defendants remained (Exxon Mobil, Dow Chemical Co.’s Union Carbide unit, Amchem, Inc., and John Crane). Only one defendant, Union Carbide, was still in the case at the time of the verdict. This level of settlement is not unusual. Using Mealey’s Litigation Report on Asbestos, RAND identified asbestos trial verdicts from 1993 to 2001. They noted that “[d]uring that time, relatively few asbestos cases have reached verdict: there have been 527 trial verdicts involving 1598 plaintiffs.” The RAND study also indicated that the number of plaintiffs whose cases have been tried to verdict has decreased dramatically since 1993. Finally, the study stressed that “[c]alculating a trial rate for asbestos suits is complicated because most claims are brought against scores of defendants, some of whom may settle and some of whom will contest cases up to verdict. Moreover, different defendants will settle at different times.”
