Fight rages over punitive damages in N.Y. asbestos cases; Defendants claim 'chaos'

NEW YORK (Legal Newsline) - Nearly four months after New York Supreme Court Justice Sherry Klein Heitler reinstated claims for punitive damages in the New York City Asbestos Litigation, the parties continue to fight over whether the order was proper.

Punitive damages had been deferred in all NYCAL cases since September 1996 until Heitler issued her April 8 order. She held that New York law requires NYCAL plaintiffs to have the same opportunities to seek punitive damages as any other plaintiffs in the state.

The Weitz & Luxenberg law firm filed the motion requesting an order to lift the former deferral requirements for punitive damages in Section XVII of the NYCAL Case Management Order (CMO).

Opponents of the motion for allowable punitive damages include the NYCAL defendants' counsel, various members of the NYCAL defendants' bar and several individual defendants, as well as the Coalition for Litigation Justice, Inc.

While plaintiffs assert deferral is unethical, unconstitutional and prevents defendants from engaging in settlement discussions, opponents believe punitive damages will only deplete resources, punishing future asbestos victims and filling the pockets of plaintiffs' attorneys.

Several asbestos defendants objected to the punitive damages ruling and filed an April 28 letter brief outlining their arguments. The letter was submitted on behalf of the defendants by Judith Yavitz of the Darger, Errante, Tavitz & Blau law firm and Robert C. Malaby of the Malaby & Bradley law firm.

They sought a stay on the order until the parties had the opportunity to raise and discuss potential changes to the CMO with respect to punitive damages protocol, among other issues.

In response, Alani Golanski, an asbestos plaintiff attorney with the Weitz & Luxenberg law firm, filed a July 9 affirmation in joint opposition to the defendant's motion to reargue and motion for a stay on matters concerning punitive damages.

He added that asbestos defendants were never "entitled to permanent exemption from tort law's traditional and ongoing allowance of the punitive damages application."

"Tort plaintiffs, including those in New York, have long possessed a well-settled right to the punitive damages cause of action," Golanski wrote. "The April 8, 2014, Order did not alter the law, it merely lifted a deferral never guaranteed or intended to be permanent, and thereby rendered NYCAL's approach to punitive damages consistent with the law of New York."

Additionally, the defendants requested the stay in order to consider how the change will impact pending cases.

They argue that punitive damages should not be allowed in cases already set for trial, especially those that have been consolidated prior to the CMO.

"It would be fundamentally unfair to allow claims for punitive damages to proceed in any consolidated cases, but particularly where the issue of punitive damages was never considered when the decision to consolidate was made," they wrote.

In response to the defendants' letter, the court issued a May 5 Interim Order, precluding punitive damages applications for any cases that had already been consolidated for trial and permitting additional discovery connected to the possibility of punitive damages application for individual cases already assigned to trial.

The defendants added that plaintiffs should only be allowed to pursue punitive damages in newly filed cases or amend their current complaints according to the CPLR to have punitive damages added to their claims.

They explain that while court made it clear that punitive damages should only be charged "in the singularly rare, serious case involving the most egregious conduct by a defendant," the plaintiffs have asserted that they may pursue punitive damages in every asbestos case.

In fact, the defendants added, plaintiffs have sought punitive damages in cases where evidence submissions had been completed. They even sought punitive damages in one case on the eve of trial.

They stated that allowing the plaintiffs to pursue punitive damages this late in the case without a motion to amend would violate the defendants' due process rights.

"It would violate defendants' fundamental due process rights and notions of fairness if the revocation of the punitive damages ban was deemed immediately and automatically to amend every NYCAL complaint to contain a punitive damages claim without any regard to the procedural status of the case or the merits of the claim," they stated in their letter.

The defendants explained that because insurance coverage for punitive damages differs from compensatory damages, preparations for trial would be "significantly impacted."

However, Golanski argues that they fail to outline what process is due, or of which due process they may be deprived.

"Fortunately, a number of courts, including the U.S. Supreme Court, have addressed the procedural due process issue in the punitive damage context, and in the light of such analysis this affirmation shows that this court's April and May determinations clearly afford defendants due process," he wrote.

Golanski added that the defendants' due process arguments refer to procedural due process, which allows for claims to arise after a verdict depending on the size or nature of the punitive damages award.

In the defendant's letter, they also claim the punitive damages decision resulted in chaos and confusion.

"Overnight the order has fundamentally changed NYCAL litigation and has resulted in chaos," they wrote.

However, Golanski argued they "mistake reasoned discussion and normal courtroom colloquy for chaos and confusion."

Golanski said he is unconvinced of the chaos and confusion arguments, asserting that Weitz & Luxenberg will not seek punitive damages in in extremis cases prior to the October 2014 trial group.

"Far from confusion reigning as between the court," he wrote, "the trial justices and the parties, any issues arising from the termination of the deferral of punitive damages applications are reasonably and fairly being ironed out."

However, the defendants further argue that the court has abused its authority and violated the Civil Practice Law and Rules, or CPLR, when it issued the CMO without the parties' consent.

"Without the agreement of the parties, this court cannot so order the CMO because it contains numbers provisions that alter the CPLR," the defendants wrote. "No judge has the authority to modify the CPLR provisions, which are enacted by the New York State Legislature."

Golanski, on the other hand, stated that comparing the CMO with the CPLR is "wildly off base."

He claims the defendants' arguments are meritless because they cite their own prior memoranda submissions in support of their claim that the NYCAL CMO deviates materially from the CPLR.

Golanski added that the deferral provision the defendants seek to restore was also issued without the parties' consent.

"The court noted that the NYCAL deferral of punitive damages claims was an exception to the right of tort and asbestos plaintiffs to seek punitive damages in other settings, regions and jurisdictions, and the constitutional constraints limiting any such awards," he wrote.

"But more importantly," Golanski continued, "defendants are absolutely wrong in claiming that this court does not have the authority to issue or oversee a case management order."

The defendants argue that the CMO favors plaintiffs by not requiring them to plead with particularity.

The plaintiffs disagree, arguing there is "no deviation to be found."

The defendants also argue the CMO purports to require defendants to answer all interrogatories in full without the option to object.

While the interrogatories must be answered in full and verified by each individual plaintiff, Golanski points to a provision in the CMO that allows defendants the opportunity to object before the Special Master when they disagree with "standard product identification interrogatories with respect to particular worksites."

Ultimately, Heitler explained in her order that the CMO is designed to benefit all parties by eliminating transaction costs, discouraging repetitive discovery, requiring plaintiffs to produce proofs of claim prior to trial, and preventing the docket from becoming bogged down among other benefits.

She also expressed hope that all parties could continue litigating despite opposition to the reintroduction of punitive damages.

"From the inception of this litigation, plaintiffs' and defendants' counsel have zealously but respectfully litigated opposite each other under the CMO and all of its various modifications, ultimately with the ability in most instances to resolve their differences," she wrote. "It is my sincere hope that this will continue. I wish to thank the entire liaison committee for their professionalism and hard work over these past few years."

From Legal Newsline: Reach Heather Isringhausen Gvillo at asbestos@legalnewsline.com