Judge Eduardo Robreno recently ruled that punitive damages were available to seamen in the consolidated asbestos products liability multidistrict litigation pending in the Eastern District or Pennsylvania. After discussing the history of punitive damages and maritime law, Judge Robreno reasoned (with internal citations omitted, and emphasis added):
Having concluded that maritime law does not impose a general bar on punitive damages in unseaworthiness claims, the Court turns to the question of whether punitive damages are appropriate when such claims arise in the context of asbestos cases. This issue underpins the availability of punitive damages and necessarily must be addressed in this context.
Although various rationales have historically been used to justify punitive damage awards, the consensus today is that punitive damages are not intended to compensate the plaintiff for a loss suffered, but instead are “imposed for purposes of retribution and deterrence.” Courts also generally limit punitive damages to cases “where a defendant’s conduct is ‘outrageous,’ owing to ‘gross negligence,’ ‘willful, wanton, and reckless indifference or the rights of others,’ or behavior even more deplorable.'” Put simply, punitive damages are aimed at punishing and deterring particularly egregious conduct.
Some judges and commentators have suggested that those rationales do not apply in the context of today’s asbestos litigation. They note that there is little conduct left to deter in that area as the Occupational Safety and Health Administration (“OSHA”) began regulating occupational exposure to asbestos in 1971, and–although not banned outright in all products–asbestos is now tightly regulated. Moreover, asbestos litigation has since ballooned to enormous proportions, prompting dozens of companies to declare bankruptcy. Critics of punitive damages say that, because of those numerous and high-profile bankruptcies, the “message of deterrence, both specific and general, has been heard loud and clear,” obviating deterrent effect of a punitive damages award.
As for the retributive function of punitive damages, some scholars suggest that the significant time lapse between the relevant conduct and the current litigation undermines the need for retribution. for most, if not all, companies involved in asbestos litigation, “the economic players today are quite different from those who made the risk decisions decades ago at the time of exposure.” For that reason, “[p]unitive awards in asbestos cases usually do not punish the individuals who were responsible for the offensive conduct,” but instead “inflict harm on current shareholders, customers, and employees” of the defendant corporation. Some commentators therefore conclude that punitive damages awards serve neither of their intended functions in the asbestos context, and so “use of that weapon is no longer justified.”
In addition to challenging the overarching rationales behind punitive damages, some commentators add that punitive damages are unlikely to be appropriate in most current asbestos cases. The factors relevant to an assessment of punitive damages include, among other things: “(1) the act itself, including the motives of the wrongdoer, the relations between the parties, and provocation or want of provocation; (2) the extent of harm to the injured person, including the expense to which plaintiff had been put in bringing a lawsuit; (3) the wealth of the defendant; and (4) the existence of multiple claims. Critics of punitive damages contend that, in most asbestos cases, those factors caution against awarding punitive damages. They offer a variety of reasons supporting that proposition, including that today’s defendants are often peripheral players who neither manufactured or distributed asbestos and were unaware of its dangers, that enormous litigation spending has already ensued[,] that injury costs are fully internalized by defendants, and that punitive damages awards deplete available funds and thus penalize future claimants. For all of those reasons, these critics suggest that the public is generally ill-served by punitive damages awards in asbestos cases.
Finally, critics of punitive damages further note that asbestos cases, like many mass tort cases, pose the “multiple punishments problem.” First identified in the 1960s by Judge Henry Friendly, the “multiple punishments problem” arises when “a defendant, who has injured multiple potential plaintiffs by a single act or course of conduct, faces multiple punitive damages awards for that conduct.” In such a situation, there is a risk that the defendant will be repeatedly punished for the same conduct, which could result in a punishment “so irrational as to offend the due process clause of the Fourteenth Amendment.” In light of that concern, several courts . . . have indicated that a successive punitive damages award would be improper if there is evidence “that the aggregate of prior awards has reached the maximum amount tolerable under the Due Process Clause.”
But despite the persuasiveness of many of those arguments as a matter of public policy, they do not provide a strong doctrinal foundation for the Court to conclude that punitive damages are generally unavailable in asbestos cases. First of all, the Third Circuit made clear in its en banc decision in Dunn v. HOVIC that the multiple punishments problem is not–standing alone–a proper basis for barring punitive damages in all asbestos cases. Indeed, the majority in Dunn explicitly stated that, as a general matter, “multiple punitive damages awards are not inconsistent with the due process clause or substantive tort law principles.” The court explained that duplicative awards can be reduced or overturned on due process grounds only as to an individual defendant, and only if that defendant has presented evidence “demonstrating the amount of punitive damages it has actually paid in the past.” Other courts have responded to similar arguments even more pointedly. For example, the Fifth Circuit held that the “multiple punishments problem” is not a basis for denying punitive damages in asbestos cases, emphatically rejecting the notion that “when a defendant injures tens of thousands and manifests reckless disregard for the victims’ lives and welfare, punitive damages should be unavailable as a matter of law.” In light of those holdings, it is not within this Court’s authority to disallow punitive damages claims overall as a matter of public policy due solely to the potential for repetitive punishment.
Furthermore, many of the other critiques of punitive damages presume certain facts that may not present in every case. For example, although many of the defendants in the instant litigation may be “peripheral defendants who did not engage in conscious, flagrant wrongdoing” it is possible that at least some do not meet that description. Similarly, despite the overall sums spent on asbestos litigation, there may be some defendants who are not in dire financial straits, and thus are able to pay future compensatory damages on top of a punitive damages award. In other words, not every feature of the overall asbestos litigation is necessarily present in every case.
Moreover, the punitive damages standard itself prevents awards in such cases. Simply because punitive damages are theoretically available does not mean they are appropriate in any and all cases. A peripheral defendant who did not engage in flagrant wrongdoing likely has not committed the “outrageous” conduct necessary for a punitive damages award, and the wealth of the defendant and the existence of multiple claims are factors to be considered when assessing appropriate damages. Because courts are able to consider these factors in the context of individual cases, the decision regarding the overall propriety of punitive damages in asbestos cases seems more like a legislative determination based on social policy than a judicial one.
There is one critique, however, that arguably could apply in all cases–namely, that the deterrence and retribution rationales for punitive damages are not implicated in asbestos cases because of the significant time lapse since the relevant conduct. It is true that deterring the future use of asbestos is unlikely to be considered a legitimate rationale for a punitive damages award, as federal regulation has largely ensured that result. It is also true that punitive damages awarded today are unlikely to punish the correct actor, as the relevant players have changed. But there are counterarguments here as well; in particular, a punitive damages award could (at least hypothetically) deter future willful or reckless conduct regarding a different risky product. As the Sixth Circuit has explained, “[w]hether a defendant’s particular course of conduct has ceased is irrelevant to the accomplishment of the broader general deterrence function of punitive damages awards.” . . .
More importantly, there are virtually no cases in which a federal court barred a punitive damages award solely on the basis that–as a general matter–the rationales for punitive damages are no longer applicable in asbestos cases. As with the other critiques of punitive damages generally, this one has stayed firmly within the domains of academics and partisans, while courts have continued to address the punitive damages claims based on the specific facts of each case.
In sum, the policy considerations cautioning against the punitive damage awards in asbestos cases do not provide a basis for a judicial ruling that under maritime law punitive damages are unavailable in all such cases as a matter of law. That conclusion does not, however, suggest that there is no room for the Court to impose certain and in some cases restrict limitations as to the kind of conduct which would warrant them or the appropriate size of punitive damage awards. . . .
. . .
For the foregoing reasons, the Court concludes that punitive damages are not off-limits as a matter of law to seamen bringing claims of unseaworthiness in asbestos cases, but, however, may be subject to limitations under the specific circumstances of the individual cases.
In Re: Aspestos Products Liability Litigation, MDL No. 875 (July 9 , 2014).
Please click this link to read the opinion.
Tip of the hat to Megan Coluccio for the article she posted at JDSupra.
(Note: I first published this post on Navigable Waters: A Maritime, Longshore and Defense Base Act Blog.)