Beverage v. Alcoa, Inc.

• Decision Date: 17 June 2022
• Docket Number: 19–1852
• Citation: 975 N.W.2d 670
• Parties: Larry C. BEVERAGE, Individually and as Personal Representative of the Estate of Charles E. Beverage, Deceased, and Linda K. Anderson, and Bonnie K. Valentine, Appellants, v. ALCOA, INC., a Pennsylvania Corporation, Iowa-Illinois Taylor Insulation, Inc., a successor in interest to Iowa Illinois Thermal Insulation, Inc., an Iowa Corporation, Appellees.
• Court: Iowa Supreme Court

975 N.W.2d 670

Larry C. BEVERAGE, Individually and as Personal Representative of the Estate of Charles E. Beverage, Deceased, and Linda K. Anderson, and Bonnie K. Valentine, Appellants,

v.ALCOA, INC., a Pennsylvania Corporation, Iowa-Illinois Taylor Insulation, Inc., a successor in interest to Iowa Illinois Thermal Insulation, Inc., an Iowa Corporation, Appellees.

No. 19–1852

Supreme Court of Iowa.

Submitted January 19, 2022

Filed June 17, 2022

Lisa W. Shirley (argued) of Dean Omar Branham Shirley, LLP, Dallas, Texas, and James H. Cook of Dutton, Daniels, Hines, Kalkhoff, Cook & Swanson, PLC, Waterloo, for appellants.

Kevin P. Horan (argued), Douglas M. Sinars, and Owen Blood of Sinars Slowikowski Tomaska, LLC, Chicago, Illinois, for appellee Iowa-Illinois Taylor Insulation, Inc.

Robert M. Livingston (argued) and William R. Hughes, Jr., of Stuart Tinley Law Firm, LLP, Council Bluffs, for appellee Arconic, Inc., f/k/a ALCOA, Inc.

Matthew McKinney and Thomas Story of Brown, Winick, Graves, Gross & Baskerville, P.L.C., Des Moines, and Mark Behrens of Shook, Hardy & Bacon L.L.P., Washington, D.C., for amici curiae Iowa Association of Business and Industry, Iowa Insurance Institute, NFIB Small Business Legal Center, and Coalition for Litigation Justice, Inc.

Oxley, J., delivered the opinion of the court in which Christensen, C.J., and Appel and McDonald, JJ., joined. Waterman, J., filed a dissenting opinion, in which Mansfield and McDermott, JJ., joined.

OXLEY, Justice.

In 2017, the Iowa General Assembly followed the lead of several other states in enacting detailed tort reform related to asbestos litigation, codified in three new chapters of the Iowa Code: chapters 686A, 686B, and 686C. As a general matter, the legislation requires plaintiffs bringing asbestos lawsuits to identify actual or potential claims they may have against an asbestos manufacturer's section 524(g) bankruptcy trust. This alerts defendants in the asbestos litigation to other possible sources of recovery for the plaintiff that can be used as a setoff against any recovery ordered in the litigation. The legislation also requires a plaintiff to file detailed medical and background information with their initial pleading to prioritize asbestos claims by plaintiffs with current physical conditions over those by plaintiffs who are not yet sick.

Iowa also added a provision not found in any other state's legislation: "A defendant in an asbestos action or silica action shall not be liable for exposures from a product or component part made or sold by a third party." Iowa Code § 686B.7(5) (2018). In this asbestos case, the district court read section 686B.7(5) to limit liability to manufacturers of the offending asbestos-containing product and granted summary judgment on plaintiffs’ premises liability claims against Alcoa and on their products liability claims against Iowa-Illinois Taylor Insulation for supplying, but not manufacturing, the asbestos-containing insulation in the Alcoa plant.

On our review of the statute, we conclude the district court failed to appreciate the legal significance of the legislature's use of the phrase "product or component part made or sold by a third party" to reference a products liability defense known as the "component parts defense," or "bare metal defense" as described in the specific context of asbestos litigation. Properly considering the context of the provision, we conclude section 686B.7(5) does not apply to the claims against Alcoa or Iowa Illinois-Taylor Insulation, and we reverse the district court's grant of summary judgment.

I. Background Facts and Proceedings.

Charles Beverage was diagnosed with malignant mesothelioma in September 2015 and passed away from the disease on October 7, 2015. His children, Larry Beverage, Linda K. Anderson, and Bonnie K. Valentine, and the executor of his estate, Larry Beverage, (collectively referred to as "Beverage") filed this action against two defendants, Alcoa, Inc.¹ and Iowa-Illinois Taylor Insulation, Inc. (IITI), on September 27, 2017.² In an amended petition, Beverage alleged claims for negligence, premises liability, strict liability, breach of express and implied warranties, and loss of consortium.

The claims stem from Charles's exposure to asbestos-containing insulation and other asbestos-containing products when he worked as an independent construction contractor inside Alcoa's aluminum plant in Bettendorf from the 1950s through the mid-1970s. IITI, a supplier and distributor of insulation products, supplied and installed much of the asbestos-containing insulation used in the Alcoa plant. IITI did not manufacture insulation, but it did, at Alcoa's direction, supply asbestos-containing insulation and install it at Alcoa's plant. There are no allegations that Alcoa manufactured or produced asbestos-containing products.

Both defendants moved for summary judgment based on recently-enacted Iowa Code section 686B.7(5), arguing the provision's protection against liability "for exposures from a product or component part made or sold by a third party" applied to each of them. Alcoa faced premises-type liability for failing to provide Charles with a safe environment and failing to warn him of the dangers of the asbestos dust he worked around inside its plant. IITI faced products liability claims of negligence and strict liability for its role in supplying and installing the insulation that was present in the Alcoa plant. The district court parsed the twenty-eight-word provision to conclude that the statute unambiguously granted immunity to any defendant who did not manufacture the offending asbestos-containing products. The district court traced the insulation at issue to manufacturers Johns Manville and Eagle-Pitcher, not Alcoa or IITI, and dismissed all claims against both defendants.

The court of appeals affirmed the district court's grant of summary judgment, agreeing with its interpretation of section 686B.7(5) as unambiguously granting immunity to Alcoa and IITI since the asbestos-containing insulation was manufactured by third parties. We granted Beverage's application for further review to address the meaning of the newly enacted statute.

II. Analysis.

Beverage does not dispute the factual basis for the district court's ruling, challenging only its legal interpretation of section 686B.7(5). We review both the grant of summary judgment and the interpretation of a statute for correction of legal error.³ Albaugh v. The Reserve , 930 N.W.2d 676, 682 (Iowa 2019). "Summary judgment is appropriate ‘if the record reveals only a conflict concerning the legal consequences of undisputed facts.’ " EMC Ins. Grp. v. Shepard , 960 N.W.2d 661, 668 (Iowa 2021) (quoting MidWestOne Bank v. Heartland Co-op , 941 N.W.2d 876, 882 (Iowa 2020) ).

A. Background of Asbestos Litigation. Iowa Code section 686B.7 was passed as part of a comprehensive bill enacting tort reform in asbestos litigation, so we start with an understanding of what was going on in asbestos litigation at the time. Asbestos was once considered a "magic mineral" due to its diverse uses. Timothy B. Mueller, Comment, Tomorrow's Causation Standards for Yesterday's Wonder Material: Reiter v. ACandS, Inc. and Maryland's Changing Asbestos Litigation , 25 J. Contemp. Health L. & Pol'y 437, 440 & n.24 (2009) [hereinafter Mueller]. In the early twentieth century, it became the material of choice for industries manufacturing products that needed the heat resistance, low electrical conductivity, flexibility, and high tensile strength that asbestos provided. Id. at 440–41. Asbestos has been used in thousands of products ranging from thermal insulation to roofing shingles, acoustic ceiling tiles, floor tiles, air conditioning systems, fireproofing, cigarette filters, and automobile brake parts.⁴ Id. It can be found in houses, schools, courthouses, factories, and industrial facilities throughout the United States.

But that miracle mineral is now considered "yesterday's mistake" given what is known about the harms of asbestos. Id. at 441. When asbestos fibers are released into the air, microscopic fibrous particles are ingested or inhaled by those in the vicinity. The fibers get stuck in the lungs, causing inflammation and irritability of the lung tissues. Id. at 442. Repeated exposure to high concentrations of asbestos in the ambient air over an extended period of time can result in lung scarring, pleural thickening, and tumors. Id. at 442 & n.36. Mesothelioma, "a rare tumor that affects the tissues lining the thoracic and abdominal cavities," was connected to asbestos exposure in the early 1960s. Id. at 442–43. Mesothelioma has a latency period that is measured in decades, so it is not detected until years after the exposure. See Ganske v. Spahn & Rose Lumber Co. , 580 N.W.2d 812, 813 n.1 (Iowa 1998) (describing mesothelioma's latency period between twenty and forty years). There is no cure for mesothelioma, and once its symptoms appear, it is a quick but painful way to die.

American "courts first began recognizing claims against asbestos manufacturers in the early 1970s." Michael D. Kelley, Boley v. Goodyear Tire & Rubber Co., 37 Ohio N.U. L. Rev. 901, 912 (2011) [hereinafter Kelley]. Asbestos litigation gained significant traction in 1973 when the United States Court of Appeals for the Fifth Circuit affirmed a judgment holding asbestos manufacturers jointly and severally liable under a theory of strict liability to an insulation worker. See Borel v. Fibreboard Paper Prods. Corp. , 493 F.2d 1076, 1096 (5th Cir. 1973). Asbestos litigation in the United States exploded, and by 2002—twenty years ago now—approximately 730,000 individuals had filed lawsuits related to asbestos exposure. See Kelley, 37 Ohio N.U. L. Rev. at 912.

B. Legislative Responses Bringing Tort Reform to Asbestos Litigation. Distinct issues related to asbestos litigation have led states to enact legislation regulating asbestos lawsuits. First is the increase in "unimpaired"...