Money-wrapped by gavel

Asbestos Year in Review: Punitive Damages in Asbestos Litigation

In asbestos litigation, it is common for plaintiffs to demand punitive damages, alleging that the conduct of some or all of the defendants was so egregious that the defendants must pay exemplary damages. Unlike compensatory damages, the purpose of punitive damages is not to compensate the plaintiff but rather to punish a defendant for reckless and wanton acts and to discourage the defendant and others from acting in a similar way in the future.

While compensatory damages are rooted in actual expenses, the value of punitive damages varies widely and can be difficult to predict. A trial verdict that includes punitive damages can be vastly inflated versus a verdict of compensatory damages alone. To that end, the mere threat of punitive damages will often be enough to give an asbestos defendant pause, and skilled plaintiff’s attorneys will leverage allegations of punitive damages to obtain higher settlements. In asbestos litigation, many agree that settlement values generally account for the potential of a jury award of punitive damages, but the exact impact on asbestos settlement values is difficult to quantify.

Recent decisions from 2022 reflect a trend of favorable punitive damages decisions for defendants in asbestos litigation matters, at least in the dispositive motion stage. In particular, courts in New York and California have struck down plaintiffs’ prayers for punitive damages, diligently holding plaintiffs to their burdens under the law. Plaintiffs generally have a higher burden to meet to prevail on a claim for punitive damages than they do on a typical negligence claim. In many states, in order to prevail on a claim for punitive damages, there must be “clear and convincing evidence” that the defendant committed the tortious act with fraud and/or malice. California, for example, requires a plaintiff to provide evidence that there was an “intentional misrepresentation, intent to cause injury, or some other despicable conduct carried out with willful and conscious disregard for the rights and safety of others.”

Early last year on January 12, 2022, the Supreme Court of New York, New York County issued its decision in Moxam v. ABB Inc. In that case, defendant Graybar Electric Company filed a motion for partial summary judgment, arguing that the plaintiff’s claim for punitive damages ought to be dismissed because the plaintiff only encountered Graybar’s product once during his career. The Appellate Division, First Department, has held that it is “singularly rare cases where punitive damages are warranted by extreme aggravating factors such as improper state of mind or malice.” Moxam v. ABB Inc., 2022 NY Slip Op 30105(U), ¶ 1 (Sup. Ct.) citing Maltese v. Westinghouse Elec. Corp. The court cited Maltese v. Westinghouse Electric Corporation, in which the Appellate Division set aside a jury award for punitive damages and the Court of Appeals affirmed, holding that evidence of a defendant’s “general awareness that exposure to high concentrations of asbestos over long periods of time could cause injury” was insufficient to support a finding of punitive damages.

The court reiterated that punitive damages must be considered on a case-by-case basis, and due to the plaintiff’s limited contact with Graybar’s product, the court in Moxam found that Graybar’s conduct towards the plaintiff did not rise to the “high threshold of moral culpability” required for an award of punitive damages. The court further held that even if Graybar had a general knowledge that prolonged exposure to asbestos could cause an injury, this was insufficient to support punitive damages. Moxam ultimately set a favorable precedent that was generally followed throughout 2022.

The New York decisions continued with Cioni v. Avon Products, in which the plaintiff argued that she was entitled to punitive damages against defendant Colgate-Palmolive Company because Colgate “continuously and intentionally placed corporate profits above the health and safety of its product end user.” The court again cited Maltese, noting that the level of conduct required for punitive damages in asbestos litigation in that jurisdiction is a negligence standard, requiring that the actor “has intentionally done an act of an unreasonable character in disregard of a known or obvious risk that was so great as to make it highly probable that harm would follow and has done so with conscious indifference to the outcome.” Based largely on Colgate’s testing protocol and preemptive measures to test for asbestos contamination, the court dismissed the plaintiff’s claim for punitive damages.

Meanwhile on the other side of the country, in McNeal v. Whittaker, Clark & Daniels, Inc., the Court of Appeal of California, Second Appellate District, backed a defendant’s opposition to punitive damages. In McNeal, a jury awarded $3 million in punitive damages to a plaintiff who alleged asbestos exposure from his use of talcum powder. A defendant who supplied talc contested the jury’s award of punitive damages, contending that the evidence was insufficient to establish any officer, director or managing agent acted with malice, oppression or fraud as required under California law. The court agreed, reversing the award of punitive damages. Notably, the court focused on the defendant’s knowledge and actions in the 1970s. There was evidence to suggest the defendant’s executives were aware of the possibility of trace amounts of asbestos in their talc, knew asbestos was generally harmful, and had reason to doubt testing methodologies at the time were sufficient to rule out asbestos in their talc. However, the defendant did not have any medical literature describing any association between cosmetic talcum powder and mesothelioma until 1994. Ultimately, the court held that medical or scientific developments that arose years after the plaintiff’s use of the product cannot establish that a risk was knowable, let alone known and ignored. The recent McNeal decision implies that in order for a defendant to be liable for punitive damages, the evidence must allow a reasonable person to conclude that it is highly probable that an officer, director, or managing agent of the defendant was aware of the probable dangerous consequences of his conduct in connection with the company’s distribution of talc to the purchaser and willfully failed to avoid those consequences.

Throughout 2022, California courts continued to hold plaintiffs to their burdens regarding punitive damages. On October 25, 2022, the Superior Court of California, County of Los Angeles in Freeman v. 3M Co., et al. considered a defendant’s motion for summary adjudication on the claim for punitive damages. Freeman v. 3M Co., 2022 Cal. Super. LEXIS 67392, *6. The court noted that summary judgment is proper only when no reasonable jury could find the plaintiff’s evidence to be clear and convincing proof of malice, fraud or oppression. Punitive damages may be available when a defendant knew the dangers of asbestos, took no action to protect its own employees from the hazard, knew that its products were likely to pose a danger to users, and did not warn users, as such evidence is sufficient to show malice. In Freeman, although the plaintiffs submitted discovery responses that they claimed establish that the defendant deliberately chose not to warn end users of asbestos hazards, the court disagreed, finding that the plaintiffs’ discovery responses would not allow a reasonable jury to find clear and convincing proof of malice, fraud, or oppression by the defendant. Once again, the court granted the defendant’s motion for summary judgment on the claim for punitive damages.

Further, on November 17, 2022, the Supreme Court of New York, Appellate Division reiterated in two separate cases that even in cases of gross negligence, punitive damages are awarded only in “singularly rare cases” such as those involving an improper state of mind or malice, or cases involving wrongdoing to the public. Arana v. A.O. Smith Water Prods. Co., 2022 NY Slip Op 06542, ¶ 1, 176 N.Y.S.3d 772,773 (App. Div. 1st Dept.); Maffei v. A.O. Smith Water Prods. Co., 2022 NY Slip Op 06555, ¶ 1, 176 N.Y.S.3d 775, 775 (App. Div. 1st Dept.) In those recent matters, the plaintiffs had supplied no evidence of a concerted effort to suppress information about the dangers of asbestos. To the contrary, the product at issue came with multiple warnings that it could not safely be worked with using dry saws or the like. Without any further support for the plaintiffs’ claims, the court decisively held that the plaintiffs’ punitive damages demands were unsupported.

Not every 2022 decision has been so favorable to asbestos defendants, even within the same judicial systems. On April 26, 2022, the Superior Court of California, County of Los Angeles denied a defendant’s motion for summary judgment, finding that the defendant had not met its initial burden of establishing that the plaintiff has no evidence to support her claims for punitive damages. Uriostegui v. Am. Iron & Metal, 2022 Cal. Super. LEXIS 35491, *20. That court reached the same conclusion four months later in another asbestos matter. Gottfried v. 3M Co., 2022 Cal. Super. LEXIS 48393, *3. However, even accounting for these limited decisions, U.S. Courts—specifically those in California and New York—exhibited a trend of striking plaintiffs’ punitive damages claims before the trial stage in cases where the plaintiffs could not meet their burden. While the impact of these recent decisions may take some time to fully materialize, one can anticipate that the courts’ swift dismissal of unsupported punitive damages claims may ultimately result in leverage for asbestos defendants at the settlement stage. With the threat of punitive damages weakening, asbestos defendants will be in a better position moving forward to negotiate favorable settlements based on compensatory damages rather than the fear of an inflated verdict.