BABY STEPS OR SEISMIC SHIFTS?

1. BABY STEPS OR SEISMIC SHIFTS? RECENT DEVELOPMENTS IN TOXIC TORT LAW CROWELL & MORING LLP WASHINGTON, DC THURSDAY, JUNE 9, 2011

2. Introduction & Welcome

3. Scott Winkelman Scott Winkleman is a partner in Crowell & Moring LLP’s Washington, DC office, where he is chair of the firm’s Torts Practice. He litigates class actions, multidistrict proceedings, and other complex litigation nationwide in products and commercial matters. His tort practice involves representations in a range of industry sectors, including automotive, computer, aviation, food, alcohol, chemical, rail, and information technology. Mr. Winkelman also co-chairs the firm's Product Risk Management Practice, representing clients in proceedings before the National Highway Traffic Safety Administration, the Consumer Product Safety Commission and related regulatory bodies. Mr. Winkelman is a Six Sigma “black belt” and advises clients on process improvements in the practice of law. Mr. Winkelman is co-author of “Recent Developments in Toxic Torts and Environmental Law” to be published later this year in the Tort Trial & Insurance Practice Law Journal.

4. Beth M. Kramer Beth M. Kramer is a partner in Crowell & Moring LLP’s Torts Group. Her environmental and toxic tort practice has developed over the past decade through her defense of companies facing personal injury and property damage claims resulting from alleged environmental and occupational exposures as well as through her litigation of environmental insurance coverage claims. For the past several years she has been defending neighborhood tort claims arising from groundwater contamination at the site of a former beryllium machining plant in Florida as well as personal injury and medical monitoring claims arising from alleged exposure to airborne beryllium from the same site. Other environmental tort matters she has defended recently include personal injury and property damage claims filed by neighbors of a former wood-treating facility in Florida, medical monitoring claims brought by persons alleging exposure to an air plume emanating from a train derailment fire in Ohio, and a medical monitoring case brought under the Clean Air Act. Ms. Kramer is a Vice-chair of the TIPS Toxic Torts & Environmental Law Committee and co-author of “Recent Developments in Toxic Torts and Environmental Law” published in the Winter 2010 Tort Trial & Insurance Practice Law Journal. She is co-author of an article of the same title to be published later this year in the Tort Trial & Insurance Practice Law Journal.

5. Gloria Martinez Trattles Gloria Martinez Trattles is a counsel in Crowell & Moring LLP’s Torts Group. For more than a decade, her torts practice has concentrated on representing companies with respect to asbestos-related litigation. Her asbestos work has included representation of companies facing premises liability and product liability claims and insurance companies handling defense and indemnity of asbestos claims. She also serves as national coordinating counsel for a multinational corporation in connection with the company's national and international asbestos litigation docket. Ms. Martinez Trattles is a co-author of “Recent Developments in Toxic Torts and Environmental Law” published in the Winter 2010 Tort Trial & Insurance Practice Law Journal. She is co-author of an article of the same title to be published later this year in the Tort Trial & Insurance Practice Law Journal.

6. Jennifer E. Schlosser Jennifer E. Schlosser is a counsel in Crowell & Moring LLP’s Washington, DC office, where she practices in the Torts and Product Risk Management groups. Ms. Schlosser represents clients involved in complex commercial and tort litigation in a broad range of industries, including information technology, transportation, chemicals, and consumer products. Ms. Schlosser counsels clients on issues involving preserving privileged communications, negotiating contractual disputes, Consumer Product Safety Commission (CPSC) compliance, and early litigation risk assessment. Her litigation experiences include tort class actions, fraud and RICO litigation, international arbitration, and defending personal injury cases alleging work-place exposure to chemicals. Ms. Schlosser is co-author of “Recent Developments in Toxic Torts and Environmental Law” to be published later this year in the Tort Trial & Insurance Practice Law Journal.

7. AGENDA • Scientific Evidence • Medical Monitoring • Asbestos Household Exposure Cases and Duty to Warn of Third Party’s Product • Experts and Arbitration at the Class Certification Stage • Class Action Fairness Act

8. Use and Admissibility of Scientific Evidence Recent Developments

9. Daubert: Developments • 2011 Wisconsin Act 2 • Wisconsin, via statute, adopted a standard similar to Daubert. • Wisconsin Supreme Court had previously rejected Daubert (and Frye). • Wisconsin courts had been applying their own relevancy standard for expert testimony: • The testimony is relevant; • The witness is qualified based on his or her “specialized knowledge;” and • The testimony will help the trier of fact in determining an issue of fact. • Act also added punitive damage cap

10. Daubert: Developments • Arizona Rev. Stat. 12-2203 • By legislation, Arizona adopted a modified Daubert standard of admissibility. • Courts shall consider whether the expert’s testimony or technique can be tested and has been subject to peer review; the potential rate of error of the expert opinion; and whether the opinion is generally accepted in the field. • Arizona Supreme Court had not adopted Daubert, and instead continued to adhere to the Frye standard.

11. Daubert: Developments BUT WAIT . . . • Lear v. Fields, 245 P.3d 911 (Ariz. Ct. App. 2011) • The standard on admissibility of expert evidence is a procedural rule and within the Arizona Supreme Court’s jurisdiction. • § 12-2203 invalid on separation of powers grounds. • The Arizona Supreme Court has yet to rule.

12. Daubert: Developments Tamraz v. Lincoln Electric Co., 620 F.3d 665 (6th Cir. 2010) • 6th Circuit overturned a $20.5 million jury verdict upon concluding that the testimony of a medical expert for plaintiff should have been excluded. • The expert had testified that manganese exposure caused plaintiff’s Parkinson’s disease.

13. Daubert: Developments • 6th Circuit: expert’s differential diagnosis “suffers from a lack of foundation both for why manganese could cause Parkinson's Disease and why manganism caused this case of Parkinson's Disease.” • Too many “speculative jumps” in the “chain of causation” • Expert’s “efforts to ‘rule in’ manganese exposure as a possible cause or to ‘rule out’ other possible causes turned on speculation, not a valid methodology.” • Remanded

14. Daubert: Developments Pluck v. BP Oil Pipeline, No. 09-4572, 2011 WL 1794293 (6th Cir. May 12, 2011) • Toxic tort case alleging benzene exposure • Plaintiff appealed district court’s exclusion of his specific-causation expert, who had opined that the benzene caused plaintiff’s Non-Hodgkin's lymphoma (“NHL”).

15. Daubert: Developments • 6th Circuit: Daubert requires an inquiry to determine whether the testimony is reliable, and “whether the reasoning or methodology underlying the testimony is scientifically valid.” • Differential diagnosis is an “appropriate method” for determining causation for an “individual incidence of disease.” • Differential diagnosis: “‘a standard scientific technique of identifying the cause of a medical problem by eliminating the likely causes until the most probable one is isolated.’”

16. Daubert: Developments • 6th Circuit rejected expert testimony because: • Expert could not “reliably ‘rule in’ benzene as the cause of [Plaintiff's] NHL” • Did not determine or know level of benzene exposure, or • Whether exposure levels exceeded EPA safety regulations • Not enough to show existence of toxin; must offer “proof that level of exposure could cause . . . symptoms.” • Failed to “rule out” alternative causes for the NHL (differential diagnosis requirement)

17. Scientific Evidence Lone Pine

18. Lone Pine • Derives from Lore v. Lone Pine Corp., a 1986 New Jersey Superior Court case • In Lore, state court required that plaintiffs provide (1) evidence of exposure, and (2) medical expert evidence showing that the toxins caused the injury at the outset of the case. • Plaintiffs unable to provide information • Court dismissed • Used as case management tool to require a prima facie showing of injury, causation, and/or damages.

19. Lone Pine Avila v. Willits Environmental Remediation Trust, 633 F.3d 828 (9th Cir. 2011) • Trial court required – as part of its case management order – that plaintiffs who never lived in the town where the defendant operated, or who lived there after the machine shop ceased operations make a prima facie showing of exposure and causation.

20. Lone Pine • Ninth Circuit finds Lone Pine order permissible: • District courts have “broad discretion to manage discovery and to control the course of litigation.” • Rule 16(c)(2)(L): courts can adopt “‘special procedures for managing potentially difficult or protracted actions that may involve complex issues, multiple parties, difficult legal questions, or unusual proof problems.’”

21. Lone Pine • Upheld the use of this Lone Pine order • Order narrowly tailored • Case raised difficult issues of proof on exposure and causation • Case had been pending for 5 years • Upheld district court’s dismissal of plaintiffs who did not complete Lone Pine requirements by extended deadline.

22. Medical Monitoring

23. Typical Elements of Medical Monitoring • exposure greater than normal background levels • to a proven hazardous substance • caused by defendant's tortious conduct • as a proximate result of the exposure, plaintiff has a significantly increased risk of contracting a serious latent disease • a monitoring procedure exists that makes early detection of disease possible • the prescribed monitoring regime is different from that normally recommended absent exposure • the prescribed monitoring regime is reasonably necessary according to contemporary scientific principles

24. Injury or No injury? • Jurisdictions generally permitting medical monitoring claims absent injury • AZ, CA, CO, DC, FL, GM, MA, MO, NJ, OH, PA, UT, VT, WV • Jurisdictions not permitting medical monitoring claims absent injury • Federal common law, AL, AR, CT, GA, KS, KY, LA, MI, MN, MS, NE, NV, NC, ND, OK, OR, RI, SC, TN, TX, VA, VI, WA • Jurisdictions with no apparent decisions or unclear/ divided decisions • AK, DE, HI, ID, IA, IL, IN, ME, MD, MT, NH, NM, NY, PR, SD, WI, WY

25. The Realpolitik of Medical Monitoring • Lawsuits without injury • Monitoring happens all the time – but should it be court-ordered? • A task better suited to legislatures? • Balancing benefits and risks • Scaring the community • Court supervision -- for decades • The exercise of equitable discretion

26. A Claim v. A Form of Relief? • Some jurisdictions recognize medical monitoring as a stand-alone claim • Bower v. Westinghouse Elec. Corp., 522 S.E.2d 424, 431 (1999) (“We . . . conclude that a cause of action exists under West Virginia law for the recovery of medical monitoring costs . . .) • Redland Soccer Club, Inc. v. Dep't of the Army & Dept. of Def. of the U.S., 696 A.2d 137 (1997) (Pennsylvania law) (same) • Hansen v. Mountain Fuel Supply Co., 858 P.2d 970 (Utah 1993) (Utah law) (same)

27. A Claim v. A Form of Relief? • Others recognize medical monitoring as form of damages available upon proof of negligence or other tort • Potter v. Firestone Tire & Rubber Co., 863 P.2d 795, 823 (Cal. 1993) (“Recognition that a defendant's conduct has created the need for future medical monitoring does not create a new tort. It is simply a compensable item of damage when liability is established under traditional tort theories of recovery.”) • Ayers v. Jackson Twp.,525 A.2d 287, 312 (N.J. 1987) (“[W]e hold that the cost of medical surveillance is a compensable item of damages . . . .”) • Meyer ex rel. Coplin v. Fluor Corp., 220 S.W.3d 712 (Mo. 2007) (a form of damages)

28. A Claim: Massachusetts • Medical Monitoring as Stand-Alone Claim • Donovan v. Philip Morris USA, Inc., 914 N.E.2d 891 (Mass. 2009) • Massachusetts, for first time, recognizes claim of medical monitoring • “When competent medical testimony establishes that medical monitoring is necessary to detect the potential onset of a serious illness or disease due to physiological changes indicating a substantial increase in risk of harm from exposure to a known hazardous substance, the element of injury and damage will have been satisfied and the cost of that monitoring is recoverable in tort.” • Id. at 901.

29. A Claim: New York (?) • Caronia v. Philip Morris USA, Inc., No. 06-CV-224, 2011 WL 338425 (E.D.N.Y. Jan. 13, 2011) • EDNY predicts New York would recognize stand-alone medical monitoring claim • “The Court is persuaded that the New York Court of Appeals, given the opportunity, would likely permit asymptomatic plaintiffs to recover the sort of medical monitoring that the plaintiffs are requesting here: a defendant-created and maintained comprehensive monitoring program.” • Id. at *7.

30. Medical Monitoring & Punitives • Perrine v. E.I. du Pont de Nemours and Co., 694 S.E.2d 815 (W. Va. 2010) • Punitive damages not available in West Virginia in connection with medical monitoring claim • “‘Because the respondents have not asserted personal injury claims, as they have not suffered any actual, present physical injuries from their alleged exposure to petitioners' products, punitive damages simply should not be available . . . .’” • Id. at 880.

31. Medical Monitoring & Punitives • One other jurisdiction, E.D. Pa, has addressed the issue specifically • Hess v. A.I. DuPont Hospital for Children, No. 08-0229, 2009 WL 595602, at *13 (E.D. Pa. Mar. 5, 2009) (punitive damages unavailable for medical monitoring claim); Guinan v. A.I. duPont Hospital for Children, 579 F. Supp. 2d 517, 540 n.10 (E.D. Pa. 2009) (same) • But see Carlough v. Amchem Products, Inc., 834 F. Supp. 1437, 1460 (E.D. Pa. 1993) (suggesting that punitive damages are available for medical monitoring claims).

32. As Equitable Relief? • Xavier v. Philip Morris USA, Inc., No. C 10-02067, 2010 WL 3956860 (N.D. Cal. Oct. 8, 2010) • ND CA refused to allow stand-alone medical monitoring claim where purely equitable relief was sought • Plaintiffs tried to distinguish California Supreme Court decisions denying stand-alone claims by arguing plaintiffs in those cases sought only money for monitoring

33. As Equitable Relief? • The court said this misconstrued applicable law • “Plaintiffs ask too much. With Potter, California joined the minority of jurisdictions endorsing recovery in tort without present physical injury. . . . True, the Court did not rule out equitable medical monitoring as a stand-alone claim. But there is no indication that it was the legal nature of the lawsuit in Potter that prevented the Court from characterizing its decision as one creating a new tort.” • Id. at *3

34. How Much Risk Is “Significant”? • Element 4: “as a proximate result of the exposure, plaintiff has a significantly increased risk of contracting a serious latent disease” • [A] plaintiff must not only show exposure, but must prove that he was exposed beyond what would normally be encountered by a person in everyday life, so that the plaintiff's risk of being injured from the exposure is greater, in some way, than the normal risks all of us encounter in our everyday lives. • Redland Soccer Club, Inc. v. Dep't of Army of U.S., 55 F.3d 827, 846 (3d Cir. 1995)

35. How Much “Risk” Is “Significant” • Is 1-in-1 million “significant”?

36. How Much Risk Is “Significant”? • Thus, even assuming there were a million members in this class who had been exposed to this level of dioxin over their entire lives, and assuming causation, presumably only one of them would develop cancer because of the exposure. Plaintiffs seek to commence medical monitoring based on this one in a million risk. While Plaintiffs, without citing any authority, contend that whether the risk is significant is a question for the jury, courts have found risks higher than in the instant matter to be insignificant as a matter of law. • Mann v. CSX Transp., Inc., No 1:07-CV-3512, 2009 WL 3766056 (N.D. Ohio Nov. 10, 2009)

37. How Much Risk Is “Significant”? • Other courts reach similar conclusions • O’Neal v. Dep’t of the Army, 852 F. Supp. 327, 336 (M.D. Pa. 1994) (finding 0.3% increased risk insignificant) • Pohl v. NGK Metals Corp., No. 733, 2003 WL 24207633 (Pa. Com. Pl. July 9, 2003) (rejecting risk that 1% of population of 200,000 might develop future disease)

38. Asbestos Household Exposure Cases and Duty to Warn of Third Party’s Product

39. Asbestos – Household Exposure Premises Owner’s or Employer’s Duty in Household Exposure Cases Does a premises owner have a duty to warn its contractor’s employees about the dangers of household exposure to asbestos? Does an employer owe a similar duty to warn its own employees of hazards posed to household members?

40. Asbestos – Household Exposure • High courts of 7 states have ruled • Delaware, Georgia, Iowa, Michigan, New Jersey, New York, Tennessee. • The majority (Delaware, Georgia, Iowa, Michigan and New York) held no duty. • Tennessee held an employer had a duty to prevent household contamination by its employees. • New Jersey held a duty runs from premises owner to family members of contractor employees.

41. Asbestos – Household Exposure State Legislation Ohio and Kansas have enacted legislation that appears to bar all household exposure claims against premises owners in asbestos cases. Ohio Rev. Code 2307.941(A)(1) (2004); Kan. Stat. Ann. 60-4905(a) (2006). In 2010, the Ohio Supreme Court confirmed that its legislation completely bars all household exposure claims against a premises owner, regardless of the theory of liability. Boley v. Goodyear Tire & Rubber Co., 929 N.E.2d 448 (Ohio 2010).

42. Asbestos – Household Exposure Courts tend to divide into two camps: • Camp 1: Foreseeability of harm as dominant consideration • Camp 2: Relationship between premises owner/employer and plaintiff is dominant • Concerned by possibility of limitless liability

43. Asbestos – Household Exposure DELAWARE Delaware Supreme Court is revisiting the question in Price v. E. I. du Pont de Nemours & Co. The court is to decide whether such a claim stated as a claim of misfeasance (affirmative misconduct), as opposed to nonfeasance, is viable. This question was left open by the court’s prior decision in Riedel v. ICI Americas, Inc., 968 A.2d 17 (Del. 2009), in which the court found that an employer did not owe a duty to warn of household exposure dangers when the claim was stated as one of nonfeasance – that is, a claim grounded on the employer’s failure to act.

44. Asbestos – Household Exposure ILLINOIS The Illinois Supreme Court is addressing the issue for the first time in Simpkins v. CSX Corp. The court is reviewing a 2010 decision of the Fifth District appellate court that held that an employer did owe a duty. Simpkins v. CSX Corp., 929 N.E.2d 1257 (Ill. App. 2010). Simpkins is in conflict with the decision of the Second District appellate court in Nelson v. Aurora Equipment Co., 909 N.E.2d 931 (Ill. App. 2009), which held that the employer, lacking a “special relationship” with its employee’s wife, owed no duty. The Illinois Supreme Court denied review of Nelson.

45. Asbestos – Manufacturer Duty to Warn Does a manufacturer of equipment (e.g., a valve or pump) have a duty to warn of hazards posed by asbestos-containing products manufactured by another party that might be used in conjunction with or as a component of the manufacturer’s product?

46. Asbestos – Manufacturer Duty to Warn Washington State Supreme Court Braaten v. Saberhagen Holdings, 198 P.3d 493 (Wash. 2008) Simonetta v. Viad Corp., 197 P.3d 127 (Wash. 2008) In a pair of cases, the Washington court holds there is no duty, under either negligence or strict liability principles, where the manufacturer did not “manufacture, sell, or supply the asbestos[-containing product]” used by the purchaser in conjunction with the manufacturer’s product.

47. Asbestos – Manufacturer Duty to Warn Issue has been addressed by a handful of trial and intermediate appellate courts in asbestos cases around the country, including courts in Delaware (applying Idaho law), New York, Ohio, Pennsylvania, and the Texas MDL court. Majority have held that there is no duty to warn where . . . • The manufacturer did not place the asbestos-containing product in the stream of commerce in any way • The manufacturer did not specify or require that asbestos-containing components be used with its product • The manufacturer’s product did not need an asbestos-containing component in order to function for its “intended purpose” (i.e., other non-hazardous products could have been used) • The manufacturer did not know that components used in conjunction with its own product would “necessarily be made from asbestos”

48. Asbestos – Manufacturer Duty to Warn California Supreme Court to Address the Issue Four cases are currently on appeal before the court: Merrill v. Leslie Controls, Inc., 101 Cal. Rptr. 3d 614 (Ct. App. 2009) O’Neil v. Crane Co., 99 Cal. Rptr. 533 (Ct. App. 2009) Hall v. Warren Pumps LLC, 2010 WL 528489 (Cal. Ct. App. Feb. 16, 2010) Walton v. William Powell Co., 108 Cal. Rptr. 3d 412 (Ct. App. 2010) Supreme Court to consider and decide O’Neil first. O’Neil is at odds with an earlier appellate decision – Taylor v. Elliot Turbomachinery Co., 90 Cal. Rptr. 3d 414 (Ct. App. 2009) – in which the Supreme Court denied review.

49. Asbestos – Manufacturer Duty to Warn Taylor v. Elliot Turbomachinery The plaintiff sued several manufacturers of valves and pumps used in the propulsion system of the Navy ship on which he served. At the time of the plaintiff’s exposure, the valves and pumps contained asbestos components (e.g., gaskets and packing) manufactured and sold/supplied by third parties. The plaintiff argued that a manufacturer should have a duty to warn of all hazards arising from foreseeable uses of its own product, including hazards of incorporated products that, although manufactured and supplied by a third party, are part of the normal and intended use of the manufacturer’s own product.

50. Asbestos – Manufacturer Duty to Warn Taylor v. Elliot Turbomachinery The First District disagreed, holding that the defendant manufacturers had no duty to warn under strict liability or negligence principles. Strict liability would not attach because • Manufacturers have no duty to warn unless they are in the “chain of distribution” of the hazardous product. • Manufacturers have no duty to warn of defects in products supplied by others and used in conjunction with the manufacturer's product unless the manufacturer's product itself causes or creates the risk of harm. • Manufacturers or suppliers of nondefective component parts bear no liability when they simply build a product to a customer's specifications but do not substantially participate in the integration of their components into the final product.