Order allowing punitive damages in NYC asbestos cases violated state law, defendants say

NEW YORK (Legal Newsline) – Asbestos defendants opposing punitive damages in the New York City Asbestos Litigation court have requested a stay on the order in order to renew and reargue the issue.

Punitive damages had been deferred in all NYCAL cases since September 1996 until Justice Sherry 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 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.

As arguments over whether punitive damages are proper continue, the defendants filed an amended motion for leave to renew and reargue.

The motion, which was filed on June 9 but wasn’t provided online until Aug. 15, explains that arguments would be based on new facts that were not available in prior proceedings and should change the court’s decision on the matter.

The defendants argue that the court “misapprehended” New York law when it inappropriately issued the CMO without the parties’ consent. As a result, they believe leave to reargue the order is necessary.

They argue that despite their pleas, the court allowed punitive damages without providing them an opportunity to negotiate potential substantive changes to the CMO.

As a result, the defendants chose to withdraw consent of the order, causing the court to be in material violation of New York law, they say.

Furthermore, the CMO unlawfully contains numerous provisions altering the CPLR enacted by the New York State legislature, the defendants argue, which no judge has the authority to do.

Litigation practices since the order show that punitive damages claims in NYCAL is “fundamentally incompatible with ‘the ultimate objective of bringing about the fair, expeditious and inexpensive resolution to these cases,’” the motion states.

“Over night, the order has changed the nature of the litigation, created chaos and confusion amongst the trial judges and parties and threatened defendants’ due process rights,” it continued.

The defendants claim that rehashing the issue is proper because plaintiffs have attempted to seek punitive damages in virtually every case on trial or indicated that they plan to do so after all the evidence has been gathered, which detracts from the CMO’s assurance that punitive damages would be a “rare” occurrence.

The sudden introduction of punitive damages claims have also presented chaos and confusion in New York asbestos litigation, they add.

In fact, asbestos trial judges have handed down several diverse and inconsistent rulings as they attempt to work through the changes the CMO brought to their courtrooms, the defendants claim.

But the chaos and confusion stretch beyond NYCAL judges as plaintiffs have been inconsistent in regards to procedures and standards governing punitive damages claims and have made conflicting representations in court, the defendants claim.

Additionally, the defendants believe punitive damages claims in pending cases will interfere with their due process rights.

“Less than one month after the court issued its order, defendants’ worst fears were confirmed. As set forth, plaintiffs have pursued punitive damages claims against all defendants in all pending cases, including those in which discovery was substantially if not wholly complete, and the cases had been worked-up without consideration of punitive damages,” the motion explains.

The defendants previously warned that NYCAL is the only major asbestos docket in the country to permit both punitive damages claims and the consolidation of cases for trial, meaning it is likely that the two will be introduced.

“Defendants maintain that it is fundamentally unfair to allow claims for punitive damages to proceed in any consolidated cases, and that inherent prejudice is further exacerbated in cases where the issue of punitive damages was never considered when the decision to consolidate was made,” the motion states.

According to the motion, the CMO only permits punitive damages in “singularly rare cases” for the most egregious conduct and must be used as corrective action.

However, since lifting the deferral, the plaintiffs’ actions have extended beyond the “fundamental premise of the order,” the defendants argue, which reveals “either that plaintiffs misled the court when they evinced their intention not to abuse this opportunity, or now operating in the aftermath of the stay being lifted, plaintiffs simply cannot manage to adhere to, and indeed will not comply with, your honor’s clear admonition not to seek punitive damages indiscriminately.”

Because punitive damages have been introduced in pending cases, the defendants argue that they are incompatible with the continued operation of the CMO.

“The events that have transpired since the court issued its order have proven this view truer than ever,” the motion states.

The defendants also filed a reply supporting their motion for stay, which was available online on Aug. 15, requesting the court to stay application of the CMO with respect to all cases in clusters prior to October.

They believe stay is necessary because adequate time is needed to develop a protocol governing punitive damages claims that will protect defendants’ due process rights.

Time is also needed to set a protocol for discovery and motion practice as well as a roadmap outlining when and how punitive damages claims may be introduced.

Additionally, the defendants argue that a stay is appropriate while they prosecute an appeal of the CMO and challenge the court’s decision to remove the punitive damages ban.

A stay would also provide the court with enough time to amend the CMO so that it “no longer conflicts with the CPLR and to which all the parties have not consented.”

“In striking contrast to plaintiffs’ demand that the court unilaterally order their global discovery schedule, the path recommended by defense liaison counsel ‘could ultimately get the parties back to a place where they all felt that the CMO was a reasonable, consented-to document rather than an order that contains some but not all of the elements that led the parties to agree to the imposition of the CMO in the first place,” the defendants argue.

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