Estate of Blakely v. Asbestos Corp.

• Decision Date: 31 May 1991
• Docket Number: No. LR-90-678.,LR-90-678.
• Citation: 766 F. Supp. 721
• Parties: In the Matter of the ESTATE OF Donald BLAKELY, Deceased, by Mary BLAKELY, His Wife, Special Administratrix and Individually, Plaintiff, v. ASBESTOS CORP., LTD., et al., Defendants.
• Court: U.S. District Court — Eastern District of Arkansas

766 F. Supp. 721

In the Matter of the ESTATE OF Donald BLAKELY, Deceased, by Mary BLAKELY, His Wife, Special Administratrix and Individually, Plaintiff, v. ASBESTOS CORP., LTD., et al., Defendants.

No. LR-90-678.

United States District Court, E.D. Arkansas, W.D.

May 31, 1991.

Edward O. Moody, Little Rock, Ark., for plaintiff.

William L. Owen, Carol Lockard Worley, Little Rock, Ark., Floyd M. Thomas, Jr., El Dorado, Ark., for defendant.

ORDER

EISELE, Chief Judge.

Pending before the Court in this asbestos diversity suit is defendant W.R. Grace & Co. — Conn.'s Motion to Dismiss for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). The complaint sounds in strict product liability, breaches of warranty and negligence. Plaintiff has responded and the parties have filed a round of replies. Defendant has also filed a Motion for Protective Order in which it requests a ruling by the Court on its motion to dismiss before providing certain items of discovery. For the reasons given the motion to dismiss will be denied.

FACTS

Plaintiff's decedent was employed by defendant Grace in its Zonolite Expanding Plant in North Little Rock, Arkansas, in various capacities from 1963 to 1985. Paragraph IV of the Complaint reads in part as follows:

Plaintiff will show that the Deceased ... worked as an employee of a plant making asbestos products in and around the State of Arkansas where he was exposed to, on numerous occasions products produced and sold by Defendants and, in so doing, inhaled and was otherwise exposed to great quantities of asbestos fibers.

More specifically, plaintiff contends that her decedent was exposed to a fireproofing material manufactured by defendant which was sprayed on the ceiling of the North Little Rock plant by an outside contractor. Plaintiff has submitted the affidavit of Lawrence Cavender, an individual supervised by Mr. Blakely, who affirmed that Monokote, a product manufactured by Grace, was used to fireproof the ceilings of the plant in 1970 by an outside contractor named Robert Mosely. Exhibit 1 to Response to Motion. According to Mr. Cavender, Mr. Mosely was not provided with the Monokote by Grace but purchased it at Fisher Lime and Cement Company, also in North Little Rock. Plaintiff thus seeks to show that the decedent was harmed by defendant's defective product in a manner typical of asbestos-related injuries: through incidental exposure to the product at a jobsite, rather than regular use of defendant's product. Plaintiff views as happenstance or "coincidence" the single identity of decedent's employer and the manufacturer of the fireproofing material Monokote. Brief in Support of Response to Motion at 4 (unnumbered original).

Defendant's motion challenges the actual existence of subject matter jurisdiction rather than the sufficiency of the allegations of jurisdiction contained in the complaint. See e.g. KVOS, Inc. v. Associated Press, 299 U.S. 269, 57 S.Ct. 197, 81 L.Ed. 183 (1936). In diversity actions such as this one the district court must apply the law of the forum state, here, Arkansas. Defendant's argument for dismissal can be summarized in a sentence: plaintiff's sole and exclusive remedy against Grace is provided in the state Worker's Compensation Act. The Act applies solely to claims for "injuries and death based upon accidents." Ark.Code Ann. § 11-9-103(b). And the Defendant points specifically to the following statutory language:

The rights and remedies granted to an employee subject to the provisions of this chapter, on account of injury or death, shall be exclusive of all other rights and remedies of the employee, his legal representative, dependents, next of kin, or anyone otherwise entitled to recover damages from the employer ... on account of the injury or death.

Ark.Code Ann. § 11-9-105(a). Nor, according to Defendant, does Arkansas recognize any form of alternative source of duty owed by a manufacturer to an individual who is also an employee (the so called "dual capacity" and "dual persona" doctrines).

THE STANDARD ON 12(b)(1) MOTIONS TO DISMISS

The burden to prove subject matter jurisdiction always falls on the party asserting it. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 56 S.Ct. 780, 80 L.Ed. 1135 (1936). Under a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction which challenges the actual basis for jurisdiction (such as the motion before the Court) or, which challenges the sufficiency of the jurisdictional allegations, the complaint is to be construed broadly and liberally in conformity with Rule 8(f). But where the motion challenges actual jurisdiction argumentative inferences in favor of the allegations in the complaint will not be drawn. C. Wright & A. Miller, 5A Federal Practice and Procedure § 1350, p. 218-19 (2d ed. 1990). Rule 8(f) advises that pleadings are to be construed so as to do "substantial justice."

DISCUSSION

The legal issue before the Court is whether the exclusive language of the Workers' Compensation Act precludes an Arkansas court from recognizing legal obligations owed by employers to their employees when acting in distinctly different legal roles than that of employer. Put another way, does the Act immunize an employer against all liability in connection with the injury or death of an employee no matter how that injury or death occurred? This Court answers both questions in the negative.

A. A Case of First Impression?

Defendant disputes plaintiff's assertion that the issue is one of first impression under Arkansas law. This dispute centers around an 18 year old decision, Lewis v. Gardner Engineering Corp., 254 Ark. 17, 491 S.W.2d 778 (1973). In Lewis, the Arkansas Supreme Court affirmed summary judgment granted in favor of one member corporation in a two party joint venture against an employee of the joint venture. The joint venture had been formed for the purpose of constructing a lock and dam on the Arkansas River. Ralph Lewis, appellant, was injured by a steel piling which came unhitched from a pile driver manufactured by Gardner Engineering.

The Court applied the Arkansas rule of joint ventures, which does not treat the joint venture as a distinct legal entity apart from its component corporations (as compared with partnerships). Smith v. Rodgers, 251 Ark. 994, 477 S.W.2d 831 (1972). Thus, "a joint venturer who is also an employer is immune from tort liability under the workman's compensation law." Lewis, 491 S.W.2d at 779. In summary fashion the court disposed of appellants' claim of individual liability: "It is nothing more than a coincidence that Gardner, one of the joint venturers, happens to have manufactured the defective pile hoist." Id. 491 S.W.2d at 780. And as for appellants' claim that the exclusivity language should not provide blanket immunity to Gardner, the court simply "found no merit in the argument." Id.

This relatively short majority opinion prompted a relatively long dissent by Justice Fogelman. He noted the majority's failure to squarely address the possibility, suggested in Smith v. Rodgers, that an employer may have liability in a capacity other than that of employer. The dissent outlined in detail the factual circumstances surrounding the distribution and use of the hoist by the joint venture. For Justice Fogelman, the case presented an opportunity to consider and apply the "dual capacity" doctrine which asks whether an employer's "second function generates obligations unrelated to those flowing from the first, that of employer." Id. 491 S.W.2d at 782 (Fogelman, J., dissenting and quoting 2 Larson, Workmen's Compensation Law, § 72.80).

The Court concludes that Lewis does not control the present case. That case focussed narrowly on the unitary legal status of joint ventures and their component parts. Yet the court stopped short of an analysis of the differing legal personalities which an entity may have, thus dodging the more difficult problem of the status of employers who act as third-party tortfeasors.

While defendant here properly points to recent Arkansas Supreme Court cases reaffirming the general principle of the exclusivity of the Workers' Compensation Act, the facts of these cases do not involve products liability claims and speak in the most general of terms. See e.g. Roy Horton Tomato Co. v. Home Ins. Co., 683 F.Supp. 714 (E.D.Ark.1988) (employee's federal claim of fraudulent cancellation of worker's compensation insurance policy barred by Workers' Compensation Act's exclusive remedy language); Smith v. Rockwood Ins. Co., 684 F.Supp. 607 (E.D.Ark. 1988 (similar)); Fore v. Circuit Court of Izard County, 727 S.W.2d 840 (Ark.1987) (motion to dismiss in negligence suit against employer's supervisor improperly denied where no allegation of intentional or willful act was presented). The Arkansas Supreme Court has never definitively addressed and analyzed the issues raised by a dual theory of employer liability in a product liability case such as this. To this task the Court, acting as it believes the Arkansas Supreme Court would, now turns.

B. Theories of Dual Liability

The parties argue either for the underlying validity of, or the disgraced state of, the so called "dual capacity" doctrine. Defendant has the better of this contest. As Professor Larson supra at § 72.81(c) explains, this doctrine had a limited popularity, primarily in California and Ohio, for a span of perhaps ten years from 1973 to 1983, after which California abolished it and the Ohio Supreme Court abandoned it for a more limited "dual persona" doctrine. See Assembly Bill No. 684 sec. 6 amending § 3602 of the Labor Code (1982); Freese v. Consolidated Rail Corp., 4 Ohio St.3d 5, 445 N.E.2d 1110 (Ohio 1984). In its most extreme expression the California Supreme Court declared that the workman's compensation law was an exclusive remedy for work related injuries only when the duty arose solely from the employment relationship. Bell v....