SAN FRANCISCO (Legal Newsline) - The head of an industry-sponsored group that advocates for legal reform in California says a recent state appeals court decision against Kaiser Gypsum Company Inc. -- awarding the plaintiffs nearly $4 million in punitive damages alone -- continues to tarnish the state’s civil justice reputation.
Kim Stone, president of the Civil Justice Association of California, said in an interview with Legal Newsline this week that the Jan. 21 decision by the First Appellate District, Division Four, cements the state’s title as the nation’s No. 1 “Judicial Hellhole.”
“There are many, many asbestos cases being filed in California,” Stone said. “They’re usually complex, have multiple defendants, multiple alleged exposures, etc. This case was no different.
“But in this case, it felt like the jury nailed them (Kaiser Gypsum) a little bit more than what they really deserved.”
Kaiser Gypsum, a former manufacturer of building products, including drywall, joint compounds and cements, appealed to the First Appellate District from a judgment entered in favor of plaintiffs John Casey and Patricia Casey on claims for personal injuries and loss of consortium stemming from John Casey’s alleged bystander exposure to a Kaiser Gypsum product containing asbestos and subsequent diagnosis with mesothelioma -- a disease typically associated with asbestos exposure.
Following a two-and-a-half-month-long trial, the jury returned special verdicts finding Kaiser Gypsum 3.5 percent comparatively at fault for the plaintiffs’ injuries and awarding the plaintiffs nearly $21 million in compensatory damages.
The jury, however, could not reach a verdict with respect to whether Kaiser Gypsum acted with malice, oppression or fraud.
The trial court -- San Francisco Superior Court -- then ordered a limited retrial on the issue of malice, oppression or fraud, and, if necessary, the amount of punitive damages.
The second jury awarded the plaintiffs $20 million in punitive damages, which the trial court reduced to just under $4 million.
On appeal, Kaiser Gypsum argued reversal was required because the trial court committed evidentiary and instructional errors; improperly limited the scope of the retrial; and miscalculated the amount of settlement credits.
Kaiser Gypsum also claimed the evidence of malice or oppression was insufficient to support an award of punitive damages.
On cross-appeal, the plaintiffs challenged the trial court’s reduction of the amount of punitive damages.
The First Appellate District not only upheld the nearly $4 million in punitive damages, but also almost $1.6 million in compensatory damages.
By definition, punitive damages -- sometimes referred to as exemplary damages -- are those intended to reform or deter a defendant and others from engaging in conduct similar to that which formed the basis of the lawsuit. Punitive damages often are awarded where compensatory damages are deemed an inadequate remedy.
Justice Timothy Reardon authored the appeals court’s 56-page opinion. He was joined by Presiding Justice Ignazio Ruvolo and Associate Justice Maria Rivera.
The panel seemed to believe the awards were warranted.
“For a 10-year period, Kaiser Gypsum took various precautions to protect its employees. By contrast, Kaiser Gypsum did nothing to inform its customers that its joint compound contained asbestos, to provide guidance for minimizing risk to the tradesmen working for them,” Reardon explained in the court’s decision. “As a result, tradesmen, as well as bystanders like Mr. Casey, were utterly unprotected, with no air monitoring, no respirators, and no cleanup precautions.”
The judge continued, “The evidence showed that as late as 1973, Kaiser Gypsum refrained from giving its sales staff any warnings to convey to customers about the known hazards of asbestos. We conclude that the evidence was sufficient to show malice, that is, despicable conduct coupled with a conscious disregard for the safety of others.”
Reardon, pointing to the company’s compliance with the OSHA regulations regarding its own workplace, said Kaiser Gypsum “fully understood” that asbestos dust endangered workers.
“Indeed, although Kaiser Gypsum informed its employees that breathing in asbestos dusts was hazardous to their health, customers were unaware of such risks,” the judge wrote.
Stone, after reading the appeals court’s decision, countered that the facts in the case didn’t make Kaiser Gypsum look “particularly reprehensible.”
“It’s kind of like a defendant’s worst nightmare,” she said of the court’s ruling.
“Here, (Kaiser) didn’t feel like they were that responsible, so they went to trial.”
Unfortunately, that’s why most companies choose to settle, Stone said. Especially those that are the targets of asbestos litigation, she said.
“California is home to a large number of asbestos cases. The San Francisco and Los Angeles dockets are pretty heavy,” Stone explained. “We already have known problems with asbestos trust issues, with the lack of transparency. Plus, California is the No. 1 ‘Judicial Hellhole.’
“We have a civil justice system that is found to be the least fair in the country and decisions like this support that belief.”
The state’s courts ranked as the “most unfair” in the nation in their handling of civil litigation, according to the American Tort Reform Association’s 2015-16 report.
“... A lengthy book could be written each year about the state’s irrepressibly plaintiff-friendly lawmakers and judges, and its often preposterous lawsuits and sometimes incredible court decisions that only encourage still more litigation,” the report states.
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.