Product 1
< Back to 2015-2016 Executive Summary

NEW YORK CITY ASBESTOS LITIGATION

Just five weeks after last year’s Judicial Hellholes report was released and ranked the New York City Asbestos Litigation court (NYCAL) as the least fair civil court jurisdiction in the nation; and several year’s NYCALsince ATRA had begun to raise questions about troubling ties between then-New York Assembly Speaker Sheldon Silver and the plaintiffs’ law firm for which he moonlighted, Silver was arrested and arraigned on several federal corruption charges, stemming in part from taxpayer-funded research grants Silver directed to a physician who in turn referred patients with asbestosrelated illnesses to Silver’s firm. On December 1, 2015, a federal jury in Manhattan found Silver guilty on all counts.

For those lucrative referrals to the asbestos litigation specialists at Weitz & Luxenberg, prosecutors demonstrated that Silver had been paid millions. Of course, other critics of Silver’s relationship with the law firm that has for years dominated proceedings at NYCAL are certain he had also been rewarded for dependably thwarting any and every bipartisan tort reform bill reasonably aimed at limiting civil liability in the crumbling former Empire State.

But with Silver’s conviction, continuing investigations of asbestos claims, and the appointment of a new top judge at NYCAL, there is reason to hope. Reflecting that hope, New York’s infamous asbestos court slides to a #2 ranking this year.

WILL NEW TOP JUDGE BRING GREATER FAIRNESS

Regular Judicial Hellholes readers will remember past discussion of former Speaker Silver’s influence over a state panel for judicial appointments and of the longtime manager of the NYCAL docket, Justice Sherry Klein Heitler. Heitler, who was replaced in early 2015, had reportedly fast-tracked asbestos cases litigated by Silver’s Weitz & Luxenberg firm and otherwise seemed deferential to plaintiffs’ counsel. For example, it was Heitler in April 2014 who ordered the end to a nearly two-decade long deferral of punitive damages after the firm had sought their reinstatement as a means to more easily threaten and force asbestos defendants into settlements before trial.

A former manager of the NYCAL docket, Justice Helen Freedman, had deferred “all punitive damages indefinitely” in the Case Management Order (CMO) because it “seemed like the fair thing to do for a number of reasons.”

“First, to charge companies with punitive damages for wrongs committed twenty or thirty years before, served no corrective purpose. In many cases, the wrong was committed by a predecessor company, not even the company now charged. Second, punitive damages, infrequently paid as they are, only deplete resources that are better used to compensate [future] injured parties. Third, since some states do not permit punitive damages, and the federal MDL court precluded them, disparate treatment among plaintiffs would result. Finally, no company should be punished repeatedly for the same wrong.”

In any case, Justice Heitler has now been replaced by Justice Peter Moulton, and he has shown thus far a willingness to deal more evenhandedly with the mounting concerns of NYCAL defendants, including punitive damages. He has begun a process to negotiate a new CMO after defense counsel moved at the end of March 2015 for an emergency 60-day stay of all asbestos cases. But Justice Moulton did not grant their motion, finding in August that current NYCAL procedures are “not so rampantly unfair as to warrant” such a stay.

Not “rampantly unfair,” only mostly unfair. The justice sounded a bit like Billy Crystal’s character “Miracle Max” in the 1987 hit film “The Princess Bride” (20th Century Fox) when he finds Cary Elwes’s “Westley” to be “only mostly dead.” Understandably then, NYCAL defense counsel are not yet convinced they’ll get any help storming the castle. But they remain hopeful that as CMO negotiations take shape in early 2016, Justice Moulton will insist on both sides participating in good faith to resolve longstanding problems fairly.

'PERVASIVELY PREJUDICIAL' CONSOLIDATIONS

Among those longstanding problems facing NYCAL defendants has been the willingness of trial judges to consolidate often dissimilar cases. And a July 2014 appellate court ruling was deferential to judges’ whims and thus arguably imposes no standard at all.

This now routine consolidation of NYCAL cases is contrary to a clear nationwide trend and makes it difficult for defendants
to receive a fair trial, raising due process concerns. According to a recently published empirical study, “NYCAL data suggest that
consolidated trial settings create administrative and jury biases that result in an artificially inflated frequency of plaintiff verdicts at abnormally large amounts.”

The report found that “from 2010 through 2014, NYCAL jury awards in consolidated trials have totaled a staggering $324.5 million across 14 plaintiffs for an average of more than $23 million per case. These consolidated verdicts are 250% more per plaintiff than NYCAL
awards in individual trial settings over that same span, and 315% more per plaintiff than the national average award.”

Furthermore, the jury bias caused by consolidation has increased the frequency of plaintiff verdicts at trial. “Since 2010, 88% of plaintiffs (14 of 16) in NYCAL consolidated verdicts received jury awards, as compared to 50% of plaintiffs (4 of 8) in NYCAL individual trials, and approximately 60% nationwide.”

Beyond this recent study, one knowledgeable observer has noted that small scale consolidations, such as those in NYCAL, “significantly improve outcomes for plaintiffs.” Another says that, “Of all the discretionary rulings that a judge can make concerning the course of a trial, few are as pervasively prejudicial to a product liability defendant as deciding to consolidate cases if they bear little similarity other than that the same product resulted in an alleged injury in each case.” A “maelstrom of facts, figures and witnesses” is created that juries cannot keep straight. “[T]here is a higher probability that at least one defendant will appear callous, and this benefits all plaintiffs.”

Rather than rationally accept the evidence that shows consolidations to be both unfair to defendants and even inefficient for courts in the long run as defendants seek reconsideration of lopsided verdicts, Weitz & Luxenberg has decided instead to attack the messenger by serving a subpoena in October 2015 on the economic consulting firm that authored the empirical study critical of NYCAL consolidation. Showing that it’s more interested in getting its way than negotiating a just and workable CMO, Weitz & Luxenberg says it will drop its efforts to depose the study’s authors with questions about who paid for their bullet-proof research if defense counsel will stop using the study’s data in CMO negotiations with Justice Moulton.

Of course consolidation is among the key issues in the negotiation, and it will be up to Justice Moulton to see to it that plaintiffs’ intimidation tactics are shut down. Meanwhile, the state’s highest court is poised to review in 2016 the 2014 appellate decision that has effectively allowed consolidation of just about any NYCAL cases based on the most general of similarities.

THIRD-PARTY LIABILITY

The clear majority rule nationwide is that a manufacturer of a given product is not legally responsible for asbestoscontaining materials made and sold by third-parties simply because it may have been foreseeable that such materials would be used near or in conjunction with the manufacturer’s product post-sale. For example, the California Supreme Court has held that “a product manufacturer may not be held liable in strict liability or negligence for harm caused by another manufacturer’s product unless the defendant’s own product contributed substantially to the harm, or the defendant participated substantially in creating a harmful combined use of the products.”

Federal courts have found that New York law is in harmony with this clear majority rule, and have refused to impose legal responsibility upon a manufacturer for an allegedly injurious product that the manufacturer did not make, sell or otherwise place in the stream or commerce. New York’s highest court has ruled in a non-asbestos case that, in a combined use scenario, a manufacturer can only be held liable for a harm caused by an injurious defective product made or sold by a third-party when the manufacturer: 1) controlled the production of the injury-producing product, 2) derived a benefit from the sale of the injury-producing product, or 3) placed the injury-producing product in the stream of commerce. And New York’s Fourth Department appellate court has even applied this rule and followed the majority approach in an asbestos case.

Yet various New York state judges – primarily in NYCAL cases – rely on “a one-paragraph [memorandum] opinion with no clear holding” to provide a rule that an equipment manufacturer has a legal duty to warn for every asbestos-containing product that could have (in hindsight) had a foreseeable use in conjunction with that equipment, even though the opinion stands for no such proposition.

The New York Court of Appeals, the state’s highest court, has an opportunity in two cases presently under review to confirm that New York law is in harmony with the clear majority rule nationwide. In both cases, plaintiffs received significant awards against a valve manufacturer even though it did not make, supply or place into the stream of commerce any of the asbestos-containing products to which exposure was alleged.

TRUST CLAIM GAMES

Recent data, including NYCAL data, highlight a case that gained nationwide attention early in 2014 and makes clear the need for transparent, comprehensive monitoring of asbestos claims both administered by asbestos bankruptcy trusts and adjudicated by the tort system. As discussed in last year’s report, a North Carolina federal bankruptcy judge found that Garlock Sealing Technologies’ settlements of mesothelioma claims in the tort system were “infected by the manipulation of exposure evidence by plaintiffs and their lawyers.” The judge explained:

Beginning in early 2000s, the remaining large thermal insulation defendants filed bankruptcy cases and were no longer participants in the tort system. As the focus of plaintiffs’ attention turned more to Garlock as a remaining solvent defendant, evidence of plaintiffs’ exposure to other asbestos products often disappeared. Certain plaintiffs’ law firms used this control over the evidence to drive up the settlements demanded of Garlock.

The judge described a NYCAL case that Garlock had settled during trial for $250,000. “The plaintiff had denied any exposure to insulation products,” according to the court. After the case settled, however, the plaintiff ‘s lawyers filed 23 trust claims on the plaintiff ‘s behalf, including 8 trust claims that were filed within 24 hours of completing the settlement with Garlock.

The NYCAL case management order has language that should address this problem. A 2003 amendment to the CMO, when the NYCAL docket was managed by Justice Freedman, provides that “[a]ny plaintiff who intends to file a proof of claim form with any bankrupt entity or trust shall do so no later than ten (10) days after plaintiff’s case is designated [for trial], except in the in extremis cases in which the proof of claim form shall be filed no later than ninety (90) days before trial.”

In 2012 Weitz & Luxenberg filed a motion to vacate the proof-of-claim element of the CMO. Justice Heitler appeared to reject the request, explaining that to strike “this particular clause . . . would diminish the effectiveness of the CMO as a whole.” But by adding, “The CMO requires Plaintiffs to file their intended claims with the various bankruptcy trusts within certain time limitations, not claims they may not anticipate filing,” she knowingly or foolishly provided a loophole that NYCAL plaintiffs’ lawyers contend allows them to delay the filing of bankruptcy trust claims and thus continue to withhold from juries critical exposure evidence that would weigh in defendants’ favor.

'DEEP POCKET' LIABILITY

Another manner in which the law is applied unfairly in NYCAL cases involves joint and several liability. New York law generally provides for fair-share liability for noneconomic damages among defendants that are determined to be 50% or less at fault for the plaintiff’s harm. This reform was enacted to eliminate the unfairness of holding a defendant liable for damages far out of proportion to its share of fault for an injury. An exception allows the imposition of full “deep pocket” liability on a minimally at-fault defendant that is found to have “acted with reckless disregard for the safety of others.”

This narrow statutory exception, applicable only to truly “reckless” defendants, has been exploited by NYCAL judges and effectively allowed to subvert the general rule of limited liability altogether. Plaintiffs’ lawyers now routinely seek – and NYCAL judges routinely provide – jury instructions to find recklessness in situations that fall far below the high bar set by the New York Court of Appeals. As a result, juries find the exception applicable in virtually every NYCAL case, even though that was clearly not the legislature’s intent. This should be another important element of the new NYCAL CMO now being negotiated.

FLIPPING THE BURDEN OF PROOF

One last issue this report will put on Justice Moulton’s radar screen as he seeks to navigate a new CMO that will lead to fairness and due process for defendants in the notoriously plaintiff-friendly NYCAL stems from a 2014 appellate decision affirming yet another incredibly biased order by Justice Heitler. That order effectively flipped the burden of proof, requiring NYCAL defendants to prove unequivocally, even when plaintiffs do not know for certain, that the plaintiffs were not exposed to their products. This Kafkaesque rule lifts the plaintiff’s traditional burden of proof and seeks to crush the defendant.

BEYOND NYCAL

Whether Sheldon Silver ever spends a day in jail for his corruption conviction, and whether federal prosecutors indict others for corrupting the civil justice system in New York, one thing’s for sure: the former assembly speaker can no longer strangle civil justice reform bills in their cradle in Albany. This means that lawmakers can finally move to reform New York’s antiquated “scaffold law,” which continues to add hundreds of millions of dollars annually to the costs of taxpayer-funded public works projects while discouraging privately funded development projects that could otherwise provide jobs and tax revenues. It also means that lawmakers could act to rein in medical liability payouts in the state – the highest in the nation.

Of course, with tort claims against the taxpayers of New York City alone expected to rise by 17.5% to more than $800 million annually by the 2018-19 fiscal year, and with all such claims – many of them nuisance claims – driven by parasitic plaintiffs’ lawyers who take some of their cues from New York Attorney General Eric Schneiderman, a man recently ranked among the nation’s six worst attorneys general, it’s difficult to be particularly optimistic about the State of “Sue” York.

Latest News

View all News