State Supreme Court Revises "Two-Injury" Rule

The traditional single claim rule requires a plaintiff to bring at one time a suit for all the injuries arising from the same accident or incident, or risk being barred.  In the toxic tort context, the issue is complicated by the fact that an exposure may put a plaintiff at risk for different diseases that have different latency periods, meaning different time periods before the injuries will manifest themselves.  Courts have to consider the impact of the statute of limitations, res judicata, and the pros and cons of encouraging premature filings relating to the mere risk of future disease or of allowing a plaintiff to, in a sense, split a cause of action into separate claims arising from the same product, same exposure, and same alleged conduct of the defendant.

Last week, the Pennsylvania Supreme Court modified its rules on these issues, holding that plaintiffs seeking damages for certain asbestos-related health problems can file separate lawsuits for distinct cancers they may develop. See Daley v. A.W. Chesterton Inc., et al., No. J-98-2010 (Pa. 2012).

In 1989, plaintiff/appellee Herbert L. Daley was diagnosed with pulmonary asbestosis and squamous-cell carcinoma of the right lung.  He sued several defendants, and the case eventually settled.  A decade later, Daley was diagnosed with malignant pleural mesothelioma.  He sued a dozen asbestos defendants. Plaintiffs conceded that the mesothelioma was caused by the same asbestos exposure that resulted in his lung cancer and pulmonary asbestosis for which he
sought and obtained compensation in the 1990's.  Defendants (who had not been in the first case, presumably because of the terms of the releases) filed motions for summary judgment, contending that, because Daley previously filed an action for a malignant asbestos-related condition in 1990, Pennsylvania’s “two-disease” rule did not allow him to file an action for a second malignant asbestos-related disease – here, mesothelioma.

Pennsylvania had been one of the states to adopt a two-disease rule, which under certain circumstances created an exception to Pennsylvania’s single cause of action rule, and allowed certain second actions without running afoul of the two-year statute of limitations or the notion of res judicata.  Specifically, the courts had adopted, for purposes of asbestos litigation, a two-disease rule, allowing plaintiffs to bring one action based on a nonmalignant asbestos disease
and a subsequent action for any separately diagnosed malignant disease.  The court determined that malignant and nonmalignant asbestos-related injuries constituted separate claims.  Here, though, the issue was a little different: was plaintiff limited to one cause of action for a malignant asbestos-related disease and one cause of action for a nonmalignant asbestos-related disease? 

Defendants argued, with compelling logic, that the rule clearly arose in the context of malignant vs. non-malignant disease.  (Readers of MassTortDefense know the great administrative burdens, ethical questions, and significant policy issues, that the non-malignant asbestos claims have created.) Moreover, allowing plaintiffs to bring more than one lawsuit for asbestos-related diseases of the same category would cause the judicial system to be burdened with more piece-meal litigation.  Residents of other states would seek to benefit by this expansion of the two-disease rule by filing suits in Pennsylvania. Allowing a plaintiff to bring separate lawsuits for separate malignant diseases, such as lung cancer and mesothelioma, would also make the determination of an appropriate award of damages more difficult due to an inability to segregate the damages for each of the separate diseases.

However, the state supreme court said that defendants were reading the asbestos precedents too narrowly; the decision to allow a plaintiff to file one cause action for a nonmalignant asbestos-related disease, and a subsequent cause of action for a malignant asbestos-related disease, arose from a recognition that requiring a plaintiff to seek recovery for all present and future asbestos-related diseases, including malignant and nonmalignant diseases, upon first experiencing symptoms of any asbestos-related disease, was likely to result in anticipatory lawsuits, protracted litigation, evidentiary hurdles, speculative damages, and excessive or inadequate compensation.  While the separate disease rule initially developed from, and has since been applied in, cases involving a cause of action for a nonmalignant disease, followed by a cause of action for a malignant disease, the concerns that the rule was designed to address
were, said the court, not limited to situations where a plaintiff suffers one nonmalignant asbestos-related disease and one malignant asbestos-related disease. The court emphasized that with regard to mesothelioma, the estimated latency period for is 30 to 50 years, whereas the estimated latency period for asbestosis and most lung cancers is 10 to 20 years. Thus, it was unlikely a plaintiff would be diagnosed with mesothelioma until long after he had been  diagnosed with, and the statute of limitations had expired for, lung cancer. Requiring a plaintiff to seek damages for a potential future diagnosis of mesothelioma at the time he is diagnosed with lung cancer not only imposes nearly insurmountable evidentiary hurdles on the plaintiff, said the majority, but also may subject a defendant to payment of damages for a serious disease which a vast majority of plaintiffs will not actually develop.

In view of these circumstances, the court concluded that a plaintiff who is diagnosed with a malignant disease, and later diagnosed with a separate and distinct malignant disease caused by the same asbestos exposure, may benefit from the separate disease rule. The court did note that relevant factors for "separate and distinct" may include evidence that the diseases: developed by different mechanisms; originated in different tissue or organs; affected different tissue or organs; manifested themselves at different times and by different symptoms; progressed at different rates; and carried different outcomes.

The decision was 6-1;  time will tell whether the defendants were correct in predicting the rule change will lead to more asbestos filings, or the majority was right in predicting fewer.

Supreme Court Declines To End Multiple Class Action Mischief

The second of our Supreme Court trilogy for the week.  The Court ruled last week in Smith v. Bayer Corp., No. 09-1205, that a federal district court was prevented by the the Anti-Injunction Act from enjoining a state court from entertaining plaintiff's motion to certify a class action even when that federal court had earlier denied a similar motion to certify an overlapping class in a closely related case.

Generally, the Anti-Injunction Act bars a federal court from granting injunctions to stay proceedings in state courts except where specifically authorized by Congress, or "where necessary in aid of its jurisdiction, or to protect or effectuate its judgments."  Most of our readers hoped that the Court would agree with the lower courts' ruling that this was just such an exception.

The Smith case involved the issue whether a federal court can enjoin class members from bringing a product liability class suit in a state court after the federal court declined to certify a similar class. Specifically, the Baycol MDL court in Minnesota had denied class certification, and the court of appeals upheld the injunction barring plaintiffs from bringing virtually the same suit in West Virginia state court. The federal court of appeals in fact unanimously affirmed, holding that the injunction was authorized by the All Writs Act and the re-litigation exception to the Anti-Injunction Act, and that petitioners did not have a due process right to re-litigate class certification.

The Supreme Court, unfortunately, reversed, in a decision that may encourage forum shopping.

-The decision encourages "creative" case structuring strategies by the plaintiffs' bar to give themselves a second bite at the apple (or more) in class claims, even after the federal court properly denies certification, and even when the state class law mirrors Federal Rule 23; here, the Court found that an application of West Virginia's Rule 23 did not present the same exact issue as the application of the federal rule version, even though the language of the rules is nearly identical.

-The decision highlights the double-edged sword that is federalism; now, the preclusive effect of a certification denial, if any, will be decided by state courts applying the notions of res judicata rather than by the enjoining court.  This comports with the general notion that the second court looking back decides the impact, not the first court looking forward.  But readers are well aware of the hard-to-fathom preclusion decisions some state courts have fashioned in the class action context.  E.g., the Engle class in Florida. And, as plaintiffs told Justice Ginsburg in oral argument of the case, a state has the right to apply and interpret a rule of civil procedure "as it sees fit to manage its own docket and administrate its own docket as it sees fit."

-As a practical matter, it invites "if at first you don't succeed, try, try again," with plaintiffs seeking to bring similar cases again and again, shopping for a forum or judge that will finally agree to certify something. Plaintiffs will recruit a new named plaintiff, and recreate the risks associated with class certification, even after the defendant has seemingly won that important battle. Justice Alito asked petitioners at oral argument whether after a class certification denial is entered in one federal court, a plaintiff's attorney could simply substitute the name of a new named plaintiff and file the same complaint in another federal court. Plaintiffs answered that an attorney could do that.

-Note that petitioners had not been foreclosed from seeking relief on their individual claims, but only from seeking to represent other people through a class action. Whether a class should be certified had been fully and fairly litigated in proceedings that ought to be binding on petitioners and in which petitioners’ interests were adequately represented by an identically situated named plaintiff -- one whom plaintiff's counsel promised was an adequate representative, was typical, with common claims and no adverse interests. The Court apparently did not consider the possible argument that an absent class member who is adequately represented might be in sufficient privity with the named plaintiff such that he can be precluded from litigating the certification decision a second time.

-Even though in dicta, the Court discouraged the application of preclusion to absent class members.   It may be of little comfort to defendants faced with the costs and risks of serial class claims that, as the Court put it, the "legal system generally relies on principles of stare decisis and comity among courts to mitigate the sometimes substantial costs of similar litigation brought by different plaintiffs."

-The Court agreed that the policy concerns were the defendant's "strongest argument, " and seemingly recognized the mischief it was permitting, because the opinion noted that nothing in this holding forecloses legislation to modify established principles of preclusion should Congress decide that CAFA does not sufficiently prevent re-litigation of class certification motions. Nor does the opinion at all address the permissibility of a change in the Federal Rules of Civil Procedure pertaining to this question.  The Court said the trial court could not call on the "heavy artillery" of an injunction, but perhaps an even mightier weapon is needed.