Application of § 5 of Federal Employers Liability Act (FELA) for Releases Remains Clear as Mud

Two plaintiffs in two jurisdictions bargain for settlement in asbestos related claims. Both agree to take money in exchange for a release of all future claims. Both later develop new diseases and sue the same defendant again. Only this time, one court finds the release unenforceable and the other court dismisses the complaint. No doubt the split that exists in federal circuits applying § 5 of FELA is confusing and remains fact intensive. The two predominant rules are found in Babbitt v. Norfolk & Western Railroad Company, 104 F. 3d 89 (1997) and Wicker v. Conrail, 142 F. 3d 690 (1998). Babbitt is known as the strict scrutiny test and Wicker tends to be more lenient. Recently, two federal courts analyzed the application of § 5 of FELA and issued opinions on opposite ends of the spectrum in cases with somewhat similar fact patterns.

In South v. Chevron Corporation, 2017 N.Y. Slip Op 06343, 153 A.D. 3d 461 (2017), a federal court recently affirmed the trial court’s denial of summary judgment involving a prior release pursuant to § 5 of FELA. Plaintiff South released a defendant from a 1997 asbestosis suit and agreed to release the defendant from “all bodily and/or personal injuries, sickness or death” from asbestos exposure including “the long term effects of exposure.” The defendant paid the plaintiff for the release. Years later, the plaintiff developed mesothelioma and filed suit again against the same defendant. The defendant moved for summary judgment and the plaintiff responded with the position that § 5 of FELA prohibited the settlement from applying to his newly added claim for mesothelioma. The release signed by the plaintiff stated that “he knew that he would be giving up the right to bring an action in the future for any new or different diagnosis that may be made as a result of his exposure to asbestos or other product.” The court concluded that under Babbitt the application of the release would be barred because defendant had not proved its burden because the release did not “explicitly mention” mesothelioma was being given up as a claim by the plaintiff. Under the less stringent Wicker standard, the court also refused to enforce the settlement because the plaintiff’s intent to release the subsequent mesothelioma claim was not clear. The court made this conclusion based on general allegations of the complaint which were unclear as to whether the plaintiff had actually developed any disease. The court also noted the relatively low sum of $1,750.00 paid to the plaintiff. Was this a tacit disapproval of the amount? Traditionally, courts do not play referee over the adequacy of consideration barring unconscionability. Also, the court noted that since the plaintiff did not have a diagnosis of mesothelioma in 1997, the settlement “did not reflect the actual circumstances known to him” despite the settlement having used language to encompass a broad spectrum. The decision suggests that a defendant cannot utilize “all-encompassing” language to safeguard against future claims as the court may find the language as unenforceable boilerplate. Moreover, it may encourage plaintiffs to file again in instances for the same exposures where they’ve already recovered. A strong dissent followed by Judge J.P. Tom hammered the concept that stipulations are favored by the court and act as a complete bar of action which is the subject of the settlement. Relying on Wicker, Judge Tom noted that evidence of the plaintiff’s intent to release the defendant was clear and illustrated his understanding of future injuries. Moreover, the dissent stated that the time for a clear standard to judge a release is here.

Two days later another court, in similar factual circumstances, issued an opinion rendering the opposite effect from South. In Cole v. Norfolk Southern Railway Company, Record No. 161163 the plaintiff developed lung cancer as a result of his work as a machinist for Norfolk Southern Railroad Company (NSRC). Like in South, plaintiff Cole had signed a release stating he “does hereby release and forever discharge NSRC from all liability for all claims or actions for pulmonary respiratory occupational diseases and/or other known injuries, physical, mental or financial, suffered or incurred, including but not limited to a) medical, hospital and funeral expenses, b) pain and suffering, c) loss of income, d) increased risk of cancer, e) fear of cancer, f) any and all forms of cancer, including mesothelioma g) and all costs, expenses and damages whatsoever, including all claims, debts, demands, actions, or causes of action of any kind, in law or equity, which the plaintiff has or may have at common law or by statute or by virtue of any action under FELA.” The trial court found the release to be enforceable as the plaintiff had “contemplated his injuries including the risk of cancer. On appeal, the Supreme Court of Virginia discussed Babbitt and Wicker, and chose to adopt the “Risk of Harm case” in which a settlement is not barred by § 5 of FELA provided that 1) there is consideration 2) the release is limited to those risks which are known at the time of settlement. The crucial part of the risk of harm test is the intent of the employee upon release. The language of the release is fair game to determine intent according to the court. However, an employee may attack the intent analysis where boilerplate plate language is prevalent. For Cole, the court found that the trial court’s finding of intent on the part of the plaintiff to release risks known including future injury was found in the language of the release itself. Here, Cole released “all future cancer claims” for the sum of $20,000.  There were no evidentiary findings of the trial court with respect to the plaintiff’s challenge on the boilerplate language. Accordingly, the Supreme Court of Virginia affirmed the trial court’s enforcement of the release.

How is it that the court in the South case rendered the opposite when he too released all actions which may accrue in the future and where he received consideration? Obviously, the court was applying the strict standard. But how do parties safely negotiate a release with application of two different standards? At the moment the answer appears to rest with the particular jurisdiction. Until a clear standard is set, as pointed out by the dissent in South, defendants may be left with a level of uncertainty in certain jurisdictions.


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