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SEALOVER v. CANADA

April 3, 1992

ALMA M. SEALOVER, individually, and in her capacity as Administratrix of the Estate of Donald Sealover, deceased Plaintiff
v.
CAREY CANADA, et al., Defendants


McClure, Jr.


The opinion of the court was delivered by: MCCLURE

MEMORANDUM

 April 3, 1992

 BACKGROUND

 Plaintiffs Alma M. Sealover and Donald E. Sealover filed this products liability action against defendants W.R. Grace Company, ("W.R. Grace"), United States Gypsum Company ("U.S. Gypsum") *fn1" among others. Plaintiffs alleged that as a result of Donald Sealover's exposure to asbestos during his sojourn in the Merchant Marines and during his forty-year career as a carpenter, he contracted mesothelioma, *fn2" asbestosis and other asbestos-related diseases which ultimately led to his death on May 2, 1988. Alma Sealover, acting both individually and as Administratrix of her husband's estate, sought to recover for her husband's illness and for his death.

 The trial was bifurcated with the first phase on strict liability only. The first phase of the trial concluded with the jury awarding compensatory damages of $ 400,000 to the estate and $ 210,000 to Alma Sealover. The negligence and punitive damage claims have yet to be tried. Defendants W.R. Grace and U.S. Gypsum have moved to defer indefinitely trial of plaintiff's punitive damage claim.

 Before the court are: (1) a motion (Record Document No. 234, filed October 29, 1991) by U.S. Gypsum to bar plaintiffs from proceeding with their punitive damage claim or, in the alternative, to defer indefinitely the trial on punitive damages; (2) a motion (Record Document No. 238, filed November 15, 1991) by W.R. Grace for summary judgment on the punitive damage claim; (3) and a motion by U.S. Gypsum to exclude evidence on punitive damages. *fn3" For the reasons set forth below, the court will grant all three motions and direct entry of summary judgment in defendants' favor on the punitive damage claims. *fn4"

 DISCUSSION

 Summary judgment standard

 The parties have agreed that the court should treat the motions to bar plaintiff from trying the punitive damage claim as a motion for partial summary judgment. We will, therefore, apply the summary judgment standard in determining the sufficiency of plaintiff's evidence.

 Summary judgment is appropriate if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. " Fed.R.Civ.P. 56(c) (Emphasis supplied).

 
. . . The plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, an on which that party will bear the burden of proof at trial. In such a situation, there can be 'no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial. The moving party is 'entitled to judgment as a matter of law' because the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof.

 Celotex vs. Catrett, 477 U.S. 317, 323-24, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).

 Issues of fact are "genuine only if a reasonable jury, considering the evidence presented, could find for the non-moving party. Childers vs. Joseph, 842 F.2d 689, 694 (3d Cir. 1988), citing Anderson vs. Liberty Lobby, Inc., 477 U.S. 242, 249, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Material facts are those which will affect the outcome of the trial under governing law. Anderson, supra, 477 U.S. at 248. In determining whether an issue of material fact exists, the court must consider all evidence in the light most favorable to the non-moving party. White vs. Westinghouse Electric Company, 862 F.2d 56, 59 (3d Cir. 1988).

 Evidentiary issues

 Defendants contend that: (1) plaintiff will be unable to meet the high standard of proof Pennsylvania law requires for an award of punitive damages; (2) plaintiffs in personal injury asbestos actions have in the past been unable to muster such evidence and the Pennsylvania courts *fn5" have consistently precluded plaintiffs from proceeding to trial on punitive damage claims; and (3) the plaintiff in this case has offered no new evidence which would warrant this court reaching a different conclusion.

 In Martin v. Johns-Manville Corp., 508 Pa. 154, 494 A.2d 1088, 1096 (1985), the Pennsylvania Supreme Court held that to recover punitive damages, a plaintiff must show, by a preponderance of the evidence, *fn6" that the defendant's conduct met the requirements of Section 908(2) of the Restatement (Second) of Torts :

 
(2) Punitive damages may be awarded for conduct that is outrageous, because of the defendant's evil motive or his reckless indifference to the rights of others. In assessing punitive damages, the trier of fact can properly consider the character of the defendant's act, the nature and extent of the harm to the plaintiff that the defendant caused or intended to cause and the wealth of the defendant.

 The court's holding was stated in a plurality opinion written by Justice Hutchinson. Justice Hutchinson rejected a constructive knowledge (i.e. reasonable man) standard in favor of a standard requiring actual knowledge of the hazard on the part of the defendant. Although a majority of the other justices joined in the result, they did not specifically adopt the actual knowledge standard endorsed by Hutchinson, generating confusion as to the appropriate standard.

 In Burke v. Maasen, 904 F.2d 178, 181 (3d Cir. 1990), the Third Circuit analyzed in considerable detail the state of Pennsylvania law on punitive damages:

 
. . . [the plurality in Martin ] held that a jury may award punitive damages only where the evidence shows the defendant knows, or has reason to know, of facts which create a high degree of risk of physical harm to another, and deliberately proceeds to act in conscious disregard of, or indifference to, that risk . . . . (Citation omitted.) . . . . It is not sufficient to show that a reasonable person in the defendant's position would have realized or appreciated the high degree of risk from his actions . . . . (Citation omitted.) . . . . The Martin plurality opinion rejects Restatement § 500's general definition of 'reckless disregard of safety' as the standard for imposition of punitive damages. That section states, 'In order that an actor's conduct may be reckless, it is not necessary that he himself recognize it as being extremely dangerous. . . . It is enough that he knows or has reason to know of circumstances which would bring home to the realization of the ordinary reasonable man the highly dangerous character of his conduct.' . . . Restatement § 500, comment c. Instead, Martin requires the more culpable mental state of conscious indifference to another's safety as the test for mental state of conscious indifference to another's safety as the test for 'reckless indifference ' under Restatement § 908. There must be some evidence that the person actually realized the risk and acted in conscious disregard or indifference to it. . . . (Citation omitted.) . . .
 
The opinion announcing the judgment of the court in Martin is not clearly the law of Pennsylvania on this issue. Only Justices Hutchinson and Flaherty joined in the reasoning of the plurality opinion. . . . Thus, a majority of the Supreme Court has not decided whether punitive damages may be awarded only where there is proof of conscious disregard of a known risk, or whether disregard of a risk that would be obvious to a reasonable person would suffice. . . . In subsequent cases, Pennsylvania's Superior Court has not applied a 'reasonable man' standard, but followed the lead of Justices Hutchinson and Flaherty, adopting and applying the 'conscious disregard' formulation. . . . (Citations omitted.). . . . The rule of the opinion announcing the judgment of the court in Martin furthers the purpose of punitive damages, which is to punish and deter 'conduct involving some element of outrage similar to that usually found in crime.' . . . . In sum, we predict the Pennsylvania Supreme Court would adopt the standard set forth in the Martin plurality opinion were it to confront the issue today.

 Burke, supra, 904 F.2d at 181 (Emphasis original). Accord: Villari v. Terminix International, Inc., 663 F.Supp. 727, 734 (E.D.Pa. 1987).

 The only post-Martin Pennsylvania Supreme Court decision on this issue is SHV Coal, Inc. v. Continental Grain Co., 526 Pa. 489, 493, 587 A.2d 702, 704-05 (1990). There, the Court excerpted the portion of the Hutchinson opinion in Martin, supra, which adopts the actual knowledge standard. SHV Coal, coupled with the Third Circuit's analysis in Burke, supra, leave no doubt that the actual knowledge standard applies to this case. See also: Tunis Brothers Company, Inc. v. Ford Motor Company, 952 F.2d 715, 740 (3d Cir. 1991).

 Thus, to recover, Sealover must prove that W.R. Grace and U.S. Gypsum were aware, prior to Donald Sealover's exposure, that the exposure of construction workers to asbestos released during the installation of their products was a health hazard and failed to warn of that risk.

 In Smith v. Celotex Corp., 387 Pa. Super. 340, 564 A.2d 209, 211-13 (1989), the Pennsylvania Superior Court discussed the quantum of evidence necessary to prove such knowledge. Using Martin as the foundation for its analysis, the court stated:

 
The evidence deemed insufficient in Martin was testimony by two doctors concerning what the medical profession knew of the risks posed to appliers of finished asbestos products and when they knew it. . . . Justice Hutchinson . . . emphasized that plaintiff had not produced sufficient evidence of the awareness of the defendants of the specific risks associated with application of finished asbestos products, as opposed to risks associated with the manufacture of asbestos products. Justice Hutchinson distinguished those cases where the plaintiffs were employees of manufacturers of asbestos products and produced evidence of the specific knowledge of the defendants as to the risks posed to manufacturing employees such as the plaintiffs long before the defendants took any measures to protect the employees. See, e.g. Neal v. Carey Canadian Mines, Inc., 662 F.Supp. 64, 70-71 (E.D.Pa. 1987).
 
here, the evidence submitted . . . did not establish either that the management of appellant knew or had reason to know of facts indicating that appellant's conduct posed a substantial risk of physical harm to an applier of finished products like plaintiff. . . . There is no [medical] testimony specifically relating to knowledge by the medical profession as to the risks posed by finished asbestos products to those who installed or applied them. We, therefore, conclude that Dr. Sturgis offered no testimony in any way probative of outrageous conduct by appellant vis-a-vis plaintiff.

 Smith, supra, 564 A.2d at 211. (Emphasis supplied.) The court dismissed as immaterial evidence of workmen's compensation claims filed against the manufacturer, explaining that:

 
The existence of those claims alone, with no evidence demonstrating anything relating to how they were ultimately resolved, does not indicate anything regarding appellants knowledge of the risks posed to appliers of asbestos products for numerous reasons. Most importantly, we note that the claimants were manufacturing employees and not appliers. Thus we do not see how the mere fact that these workers' compensation claims were made is relevant to plaintiff's punitive damages claim.

 Smith, supra, 564 A.2d at 212 (Emphasis supplied.). See also: Catasaugua Area School District v. Raymark Industries, Inc., 662 F.Supp. 64, 70-71 (E.D.Pa. 1987) (evidence of punitive damages insufficient where plaintiff failed to demonstrate defendant's awareness of risks associated specifically with the installation of finished asbestos products in schools)

 In Moran v. G.& W.H. Corson, Inc., 402 Pa. Super. 101, 586 A.2d 416, 422-26 (1991), the outcome was the same. The Pennsylvania Superior Court overturned a verdict assessing punitive damages against Corson, finding insufficient evidence that Corson, an asbestos supplier, was aware of the hazard asbestos posed to construction workers prior to the exposure of plaintiff's husband. There was, the court stated, "no support in the record for the assertion that officials or managerial employees of G. & W.H. Corson were aware in the mid 60's that exposure to asbestos fibers could result in cancer." Plaintiff had attempted to prove such knowledge through: (1) testimony from G. & W.H. Corson Vice President John Evans about general discussions he had, prior to 1969, with business colleagues about the hazards of asbestos; (2) Evans's testimony that he took no action to relay this information to his customers or warn them of the potential danger, but relied instead on the manufacturer, Baldwin Hill, to take such action; (3) Evans's testimony that he had never discussed the issue of asbestos with Baldwin Hill; and (4) articles about the hazards of asbestos published in medical and trade journals circulated in Europe and the United States since the turn-of-the-century. Noting, among other things, the absence of any proof that "anyone at Corson knew or had reason to know of these articles or any medical research studies on the risks involved in the use of insulation materials containing asbestos", the Superior Court found that such evidence did not prove knowledge on the part of Corson that asbestos exposure posed a threat to Moran. Moran, supra, 586 A.2d at 425.

 Pennsylvania is not unique in adhering to the "actual knowledge" standard. Missouri follows the same standard and its courts have likewise rejected punitive damage claims against asbestos suppliers and manufacturers in cases in which there was insufficient evidence that the defendant actually knew that even exposure to relatively moderate levels of asbestos posed a serious health risk. In Angotti v. Celotex Corp., 812 S.W.2d 742 (Mo. Ct. App. 1991), the Missouri Court of Appeals found insufficient evidence ...


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