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Tuesday, February 25, 2020

Court rejects appeal of companies sweating new rules in NYC's controversial asbestos docket


By Dan Fisher | Sep 27, 2018

New York County Courthouse

NEW YORK CITY (Legal Newsline) - Asbestos defendants failed to convince New York’s highest court to intervene in a long-running fight over how the New York City asbestos court known as NYCAL does business, leaving them with few options as hundreds of lawsuits march toward trial in the plaintiff-friendly venue.

Hundreds of solvent companies including Ford Motor Co., Honeywell, Bayer Crop Sciences and Dow Chemical’s Union Carbide unit filed constitutional objections after NYCAL changed its rules in 2017, allowing plaintiffs to seek punitive damages and creating an “Accelerated Docket” forcing defendants to prepare for dozens of cases in less than six months. 

They filed appeals with the New York Court of Appeals – the state’s supreme court – after an intermediate appellate court rejected their complaint that the new Case Management Order violated their due process rights under the New York Constitution. 

That gambit failed earlier this month when the Court of Appeals also rejected the defendants’ appeal, saying NYCAL’s new Case Management Order “does not finally determine an action or proceeding within the meaning of the Constitution.” New York law allows defendants in civil cases to appeal court rulings all the way up to the state’s highest court under narrow circumstances, but the Court of Appeals frequently dismisses them with identical language, in effect rejecting the appeal as being too early.

In this case, defendant companies said the new CMO was final and had an immediate and damaging effect on their constitutional rights. They argued the CMO prevents them from mounting an effective defense since they don’t have the resources to simultaneously prepare dozens of cases for trial without knowing which ones will actually go before a jury. Each case requires expensive depositions, expert witness testimony and extensive background investigations to determine whether the plaintiff was actually exposed to a defendant’s products.  

The high court’s action leaves asbestos defendants with only a few options, none of them attractive. They can again petition the high court for review, arguing the Case Management Order strips them of their constitutional rights. The court considers these appeals the same way as the U.S. Supreme Court considers applications for certiorari, or review – and has a similarly low rate of acceptance. 

The other alternative is to take a case to trial, arguing each step of the way that the NYCAL rules deprive the defendant of its due process rights, and appeal the verdict. That exposes the defendant company to a potential jury verdict of tens of millions of dollars, including punitive damages to deter conduct that in virtually every case the company either never engaged in – many of the solvent defendants are named because they acquired businesses that once had a connection to the asbestos industry – or ceased decades ago. 

A month after the intermediate court of appeals refused to modify the case management order in March of this year, a New York City jury hit defendants with a $60 million verdict, including punitives. 

Plaintiff lawyers have targeted solvent companies with increasingly remote links to the asbestos industry as they have driven the primary manufacturers and distributors of the deadly fiber into bankruptcy. NYCAL is home to one of the country’s largest asbestos dockets and a primary battleground for the more than 300 solvent companies seeking to avoid the same fate as bankrupt manufacturers. The American Tort Reform Association has, in recent years, maintained the jurisdiction is a "Judicial Hellhole" in its annual report.

The new CMO was issued by Manhattan Supreme Court Justice Peter Moulton in 2017 after being in the works for nearly two years. Written at the urging of plaintiff lawyers, and over the objections of defendants, it restored punitive damages and created the Accelerated Docket, ostensibly to speed cases to trial for plaintiffs who are in danger of dying. 

Defendants complain the docket requires them to prepare for dozens of cases at a time without knowing which ones plaintiffs actually intend to take to trial. Plaintiff lawyers typically bundle cases that carry the risk of high potential damages with lower-value cases in an effort to negotiate bigger settlements. Since many solvent defendants are public companies, their executives have a fiduciary duty to consider the risk a large jury verdict could place on their share price, regardless of whether it survives through appeal. 

Lawyers for the defendant companies declined to comment, although it is likely they are considering their options for appealing this latest rejection back to the Court of Appeals. 

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Organizations in this Story

Honeywell InternationalWeitz and LuxenbergBelluck & Fox LLPBayer Crop ScienceFord Motor CompanyThe Dow Chemical CompanyNew York Court of AppealsUnion Carbide

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