Jury Awards $36.5 Million in Compensatory and Punitive Damages to Former W.R. Grace Worker

The Asbestos Case Tracker has been following developing issues regarding hundreds of asbestos exposure cases involving plaintiffs who worked for W.R. Grace at the Libby, Montana mine and facilities. Recently, a Great Falls, Montana jury awarded $36.5 million dollars to Ralph Hutt, an Oregon man who worked at the Libby mine. Hutt’s matter is a bellwether case, which is the first of more than 800 cases filed against Maryland Casualty Company (MCC), provider of workers’ compensation coverage to Grace from 1963 until 1973, to go to trial. The following is a breakdown of the issues.

By way of background, the Montana Supreme Court issued an order establishing the Asbestos Claims Court following the Grace federal bankruptcy proceedings. In its order dated November 28, 2017, the Montana Supreme Court consolidated pending asbestos-related claims for pretrial purposes and appointed District Court Judge Amy Eddy as the Asbestos Claims Judge.

Hutt’s Lawsuit Against MCC

Hutt asserted claims of negligent causation of workplace injury and tort claims including common law insurance bad faith claim against MCC. On January 13, 2019, the Asbestos Claims Court denied in part MCC’s motion for summary judgment. The court held that genuine issues of material fact existed as to whether MCC breached its duty to warn Hutt. The court set forth:

under circumstances where a workers’ compensation insurer has developed a Safety Program, of which a duty to warn employees of hazards is an essential component; and through its own affirmative action of engaging in medical monitoring of workers has actual knowledge a known hazard is injuring workers, the workers’ compensation insurer has a common law duty to warn workers of the hazard.

On February 19, 2019, the Montana Supreme Court took supervisory control over the Asbestos Claims Court’s ruling. The court framed the issue as “[w]hether the Asbestos Court erroneously concluded that MCC had a common law duty to warn third parties of a known risk of harm caused by the conduct of its insured based merely on foreseeability of harm and related public policy?” The proceeding were argued and submitted on August 14, 2019. Thereafter, the Montana Supreme Court affirmed the Asbestos Court’s ruling on March 25, 2020. (Maryland Cas. Co. v. Asbestos Claims Ct., 2020 MT 70, 399 Mont. 279, 460 P.3d 882 (Mont. 2020) ).

Knowledge of Asbestos Dust Hazards at Grace’s Libby, Montana Area Facilities and Operations

In its decision, the Montana Supreme Court set forth that the Mineral Carbon and Insulating Company, subsequently renamed as the Zonolite Company, began mining and processing vermiculite in the Libby, Montana area in the early 1920s. In 1963, W.R. Grace acquired Zonolite and continued the mining and processing operations until 1990. From 1963 until 1973, MCC provided workers’ compensation insurance to W.R. Grace and began inspecting Grace’s Libby facilities in 1964. MCC regularly monitored and consulted with Grace throughout the duration of the coverage.

The court determined there were “clear and present” asbestos-related dangers stemming from the mining conditions as early as 1956. Specifically, “various Board of Health studies repeatedly reported that excessively high levels of airborne dust in or about the Zonolite/Grace facilities and operations . . . created a significant risk of silicosis and asbestos-related disease to exposed workers.” Further, the record showed “that the asbestos dust hazard in and about Grace’s Libby area facilities and operations was an ever-present concern to Grace, MCC, and other involved government and private entities and individuals from 1963 forward.” According to internal MCC documents, MCC knew of the hazards of asbestos dust from Grace’s operations. MCC recommended and provided a proposed dust control and safety program. MCC also knew that on-site testing showed “that the asbestos fiber content airborne dust at the Zonolite mill was between 60-80%—a level significantly higher than the limit deemed safe by that agency.” Importantly, MCC’s corporate representative admitted that MCC did not recommend that Grace warn its employees, nor did MCC independently warn Grace’s employees.

Hutt’s Work at Grace’s Libby Mills/Mine

Hutt worked in the mill and at a mine site at the Libby facilities over a sixteen month period from 1968 to 1969. While he was provided with a paper mask, Hutt testified that a Grace supervisor told Hutt that he could wear the paper mask if he wanted because the dust “would not hurt him.” Grace also denied Hutt’s request for a respirator. Following a review of x-rays screenings of Grace employees which showed fibrotic changes (including Hutt), MCC noted that the Grace employees could safely continue their work if protected. Hutt testified that he was never informed of the results of any x-rays he underwent directed by Grace.

MCC Had a Duty to Warn Grace Workers at Libby of a Known Risk of Harm Caused by the Conduct of its Insured

The Supreme Court set forth that “[o]ne generally owes a common law duty of care to another in a particular case only if the harm at issue is of a type reasonably foreseeable under the circumstances and, if so, imposition of such duty and liability comports with public policy under those circumstances.” The court synthesized the duty of care to third parties as follows:

 in the case of risks of harm to others directly caused by third parties beyond the control of the alleged tortfeasor, the threshold question of whether the alleged tortfeasor owed a common law duty of care in a particular case depends on whether: (1) a qualifying special relationship or affirmative undertaking existed or occurred under the circumstances at issue; (2) the harm at issue was of a type reasonably foreseeable under the circumstances; and (3) imposition of liability comports with public policy under the circumstances.

Based on the record before the court at the summary judgment stage, the court determined that Grace was the direct cause of the risk to Hutt and other Grace workers. Next, the court contemplated whether third party MCC owed a duty to Hutt and other Grace workers pursuant to the above standard. The court first set forth that there was no special relationship between Hutt and MCC and no affirmative undertaking under Restatement (Second) of Torts § 323. However, the Supreme Court asserted for the first time that a trial court must also analyze a third party’s duty under § 324A, except where liability is independently precluded by statute. Under § 324A:

a party owes a special duty of care to protect others from foreseeable risks of harms caused or created by a third party beyond the first party’s control if:

1. the first party, gratuitously or for consideration, affirmatively undertakes to render aid or services to the third party;
2. the first party reasonably should recognize that such aid or services are necessary under the circumstances for the protection of other persos or property; and
3. one or more of the following special circumstances exist:

Ultimately, the Supreme Court determined that MCC owed Hutt and other Grace workers a duty of reasonable care to warn of the known risk of airborne asbestos exposure at Grace’s Libby facilities. The court explained that Hutt’s employer, Grace, had a duty to warn of latent dangers. With regard to MCC, “absent some contrary indication of affirmative intent, insurers generally undertake to provide workers’ compensation insurance, and related risk management programs and activities, for the direct benefit of the insured employer.” Further, “the mere undertaking of affirmative workplace risk management programs and activities incident to providing workers’ compensation insurance is generally insufficient alone to establish an act or intent to assume all or part of an employer’s independent duty to provide workers with a reasonable safe working environment.” As such, the court framed the issue as to “whether MCC assumed a distinct aspect of Grace’s safety duty pertinent to the harm at issue.”

Here, MCC developed a proposed safety program for Grace workers. When Grace expanded its health screening program in 1964, MCC’s in-house medical director and risk management staff reviewed the results and provided safety-related recommendations to Grace. Indeed, “MCC was exclusively providing the only employee-specific, asbestos-disease-related professional medical evaluations, recommendations for more frequent radiological monitoring, and recommendations as to whether and under what circumstances those employees could continue to safely work for Grace.” MCC’s actions “constituted an assumption by MCC of that distinct aspect of the performance of Grace’s safety duty to workers regarding the airborne asbestos hazard,” of which Grace relied upon. Thus, the Supreme Court affirmed the Asbestos Claims Court’s decision.

Hutt Trial

On February 17, 2022, the jury found that MCC’s breach of its duty to warn was a cause of Hutt’s asbestos-related respiratory disease. As previously noted, the jury award broke down to $6.5 million in compensatory damages and $30 million in punitive damages. Continue to follow the Asbestos Case Tracker for developments in how this bellwether trial may affect the aforementioned 800 cases pending against MCC, as well as analysis of all asbestos-related significant verdicts.