SAN FRANCISCO (Legal Newsline) - A California appeals court has ruled that a $4.5 million punitive damages award in an asbestos lawsuit was not excessive.
Justice Ignazio Ruvolo wrote April 19 for the First Appellate District that the figure was justified because the conduct of ArvinMeritor, the successor of brake shoe manufacturer Rockwell, was "highly reprehensible."
The brake shoes made by Rockwell were fitted with asbestos-containing linings produced by other companies. ArvinMeritor did not dispute its liability for the acts of Rockwell and Ruvolo referred to both companies as "ArvinMeritor" in the opinion.
"By the 1960s, ArvinMeritor knew that workers exposed to asbestos dust were at risk of developing asbestos-related diseases," Ruvolo wrote. "Indeed, in 1973 and again in 1975, it wrote letters to (Pneumo Abex) and other manufacturers complaining about the presence of asbestos dust in the brake linings it was receiving from them.
"Nonetheless, ArvinMeritor did not place any warnings on its products until the early 1980s, and continued to market asbestos-containing brakes until its inventory of them was exhausted sometime in the early 1990s."
Ruvolo said the company did not include an express reference to cancer on its products until 1987. Gordon Bankhead had worked at automotive maintenance facilities from 1965-1999 and died of mesothelioma in 2009.
A jury found ArvinMeritor 15 percent at fault for Bankhead's death and suffering, putting it on the hook for $375,000 of a $2.5 million noneconomic damages award. The company was joint and severally liable for all of the $1.47 million in compensatory damages.
A separate trial resulted in the $4.5 million punitive damages award. The company said the award was excessive, considering the company's financial state.
The company said it had a net worth of negative-$1.023 billion, but Ruvolo said that figure was not accurate. He says the company, at the end of 2010, had $343 million in cash and cash equivalents and its outstanding stock had a total market value of almost $2 billion.
The company also argued the size of the award exceeded federal constitutional limits applicable to state court punitive damages awards.
"Here, the jury's award resulted in an amount of punitive damages equal to approximately 2.4 times the $1.845 million share of compensatory damages for which ArvinMeritor was held liable," Ruvolo wrote.
"This single-digit ratio is well within the range for comparable cases and is not extraordinarily high."
From Legal Newsline: Reach John O'Brien by e-mail at email@example.com.