Fischer v. Johns-Manville Corp., JOHNS-MANVILLE

• Court: United States State Supreme Court (New Jersey)
• Writing for the Court: CLIFFORD; O'HERN
• Citation: 103 N.J. 643,512 A.2d 466
• Parties: , 55 USLW 2099, Prod.Liab.Rep. (CCH) P 11,092 James FISCHER and Geneva Fischer, Plaintiffs-Respondents, v.CORPORATION, Johns-Manville Products Corporation, Johns-Manville Sales Corporation, Canadian Johns-Manville Asbestos, Ltd., Canadian Johns- Manville Co., Ltd., Canadian Johns-Manville Mining Company, Ltd., Defendants- Appellants, and Bell Asbestos Mines, Ltd., Defendant.
• Decision Date: 31 July 1986
• Docket Number: JOHNS-MANVILLE

Page 643

103 N.J. 643 512 A.2d 466, 55 USLW 2099, Prod.Liab.Rep.
(CCH) P 11,092 James FISCHER and Geneva Fischer, Plaintiffs-Respondents,
v.
JOHNS-MANVILLE CORPORATION, Johns-Manville Products
Corporation, Johns-Manville Sales Corporation, Canadian
Johns-Manville Asbestos, Ltd., Canadian Johns- Manville Co.,
Ltd., Canadian Johns-Manville Mining Company, Ltd.,
Defendants- Appellants,
and
Bell Asbestos Mines, Ltd., Defendant. Supreme Court of New Jersey. Argued Nov. 5, 1984.
Decided July 31, 1986.

[512 A.2d 467]

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David R. Gross, Short Hills, for defendants-appellants (Budd, Larner, Kent, Gross, Picillo & Rosenblum, Short Hills, attorneys; David J. Novak, Short Hills, of counsel; Sebastian P. Lombardi, Short Hills, on brief).

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Karl Asch, Elizabeth, for plaintiffs-respondents (Ronald S. Suss, Elizabeth, on brief).

The opinion of the Court was delivered by

CLIFFORD, J.

Plaintiff James Fischer and Geneva Fischer, his wife, brought suit against multiple defendants seeking to recover damages for lung diseases suffered by James Fischer as a result of his exposure to asbestos. The complaint sought compensatory and punitive damages from defendants-suppliers of asbestos under negligence, breach of warranty, and strict products liability theories. Plaintiffs elected to press at trial only the strict liability cause of action for compensatory damages, while at the same time they sought punitive damages. There were dismissals of numerous defendants before and during trial, leaving at the close of trial only the Johns-Manville defendants ¹ (hereinafter Johns-Manville or [512 A.2d 468] defendant) and Bell Asbestos Mines, Ltd. (Bell).

The case was tried to a jury. At the close of trial, the jury awarded compensatory damages of $86,000 to James Fischer and $5,000 to Geneva Fischer. The jury found Johns-Manville eighty percent liable and Bell twenty percent liable. The jury also awarded James Fischer $300,000 in punitive damages, of which $240,000 was assessed against Johns-Manville and $60,000 against Bell. Both defendants appealed and the Appellate Division affirmed in its entirety the judgment of the trial court. 193 N.J.Super. 113, 472 A.2d 577 (1984).

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In the court below Johns-Manville did not dispute the award of compensatory damages, nor did it "challenge either the amount of the punitive damages allowed or the trial judge's instructions respecting the standards which the jury was to apply in considering an award of punitive damages." 193 N.J.Super. at 120, 472 A.2d 577. Rather the contentions were that punitive damages are "not allowable at all" in strict product liability actions, ibid, and that even if they are, the proofs were inadequate to meet the necessary standard of "outrageous conduct in deliberate disregard of the rights of others," ibid, both of which contentions the Appellate Division rejected.

We granted certification, 97 N.J. 598, 483 A.2d 137 (1984), after which defendant Bell withdrew its appeal. In addition to its general argument that the case before us is one of great public importance, Johns-Manville's petition urges that the Appellate Division's determination runs counter to decisions by New Jersey federal district courts and thus requires clarification. As well it repeats the arguments made below, that (1) punitive damages "cannot conceptually flow" from a claim based on strict liability for failure to warn, (2) punitive damages "serve no purpose" in asbestos mass litigation, and (3) the record does not support a finding of punitive damages against Johns-Manville. As did the Appellate Division, we reject those contentions. We therefore affirm.

I

A full understanding of the background of this case requires a fairly extensive repetition of the pertinent facts set out in Judge Pressler's comprehensive opinion for the Appellate Division.

James Fischer worked for Asbestos Limited in Millington, Morris County, from 1938 until 1942, and then again in 1945. During his employment his varied duties included bagging asbestos fiber, grinding asbestos ore into fiber, and mixing asbestos fibers with other materials for the manufacture of

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insulation materials. From 1942 through 1945 and from 1946 through 1947 Fischer toiled as a farm worker; in 1947 he took employment with National Starch Chemical Company in Plainfield. His only exposure to asbestos was while working at Asbestos Limited. During that time he received no cautionary warnings about any dangers of asbestos, nor was he instructed in the safe handling of asbestos by either his employer or the suppliers of asbestos materials, identified at trial as Johns-Manville and Bell.

Fischer suspected that he might be suffering from asbestos-related problems when in 1977 his pulmonary disease first manifested itself. His suspicions were confirmed in 1978, at which time he was given medication that ultimately produced such side effects as diabetes, rheumatoid arthritis, and osteoporosis. His progress thereafter continued downhill: in 1979 he entered the hospital for treatment of bronchitis with borderline pneumonia; although he returned to work thereafter, he experienced a heart attack in February 1980, when he was 61 years old. He has not worked since. His treating physician attributed his total disability as due 30% to chronic obstructive lung disease traceable to smoking, 60% to asbestos exposure and the side effects of the medication prescribed[512 A.2d 469] for pulmonary problems, and 10% to the heart condition.

The Appellate Division, focusing on what Johns-Manville knew and when it knew it, narrowed the issue to defendant's "actual knowledge." 193 N.J.Super. at 117, 472 A. 2d 577. It viewed the "essential controversy" as whether defendants "did in fact have knowledge of the hazards of asbestos during the time of plaintiff's exposure some 45 years ago"--"essential," because plaintiffs' punitive damage claim hinged on their contention that "defendants knew of these hazards as early as the 1930's and had made a conscious business decision to withhold this information from the public." Ibid. In particular, plaintiffs contended that defendants, "with full knowledge of the risks, deliberately chose not to give those warnings to users of the product, which might have enabled them to obtain protection

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from prolonged exposure." Ibid. It was this conduct that plaintiffs labelled as "outrageous and flagrant," in disregard of "the substantial health risks to which defendants subjected the public * * *." That conduct therefore "justified the imposition of punitive damages." Ibid.

The Appellate Division summarized the evidence in support of those allegations as follows.

Johns-Manville, in its answers to interrogatories, which were read to the jury, admitted that

t]he corporation became aware of the relationship between asbestos and the disease known as asbestosis among workers involved in mining, milling and manufacturing operations and exposed to high levels of virtually 100% raw asbestos fibers over long periods of time by the early 1930s. The corporation has followed and become aware of the general state of the medical art relative to asbestos and its relationship to disease processes, if any

In response to plaintiffs' requests for admissions, also read to the jury, it admitted that in the early 1940's it knew that asbestos "was dangerous to the health" of those industrial workers who were exposed to excessive amounts of the material. Plaintiffs, moreover, produced as a witness Dr. Daniel C. Braun, president of the Industrial Health Foundation, a research organization which develops, accumulates and disseminates information about occupational diseases. Dr. Braun testified that Johns-Manville has been a member of the Foundation since 1936. He also testified that since 1937 the Foundation has sent to its members a monthly digest of articles appearing in scientific journals which relate to occupational disease. Relevant portions of the digests, which were admitted into evidence, included references to eleven scientific articles published between 1936 and 1941 documenting the grave pulmonary hazards of exposure to asbestos and discussing measures which could be taken to protect workers. Plaintiffs also proved that as early as 1933 claims were being made against Johns-Manville by asbestos workers, and in November of that year the Executive Committee of its Board of Directors passed a resolution authorizing the president of the corporation

to enter into negotiations for the settlement of any actions now pending or which may be hereafter brought against the Corporation by former employees founded upon alleged injury or disease resulting from their employment by the Corporation and, in his discretion, to settle any such cases upon such terms as he shall, in his uncontrolled discretion, deem advisable and for the best interest of the Corporation.

In December of that year high-level representatives of Johns-Manville met with officials of Raybestos-Manhattan, another major asbestos supplier, to discuss steps which the industry as a whole might take to reduce employee risk. It appears, however, that Johns-Manville never did arrange for or participate in any industry-wide meetings on the subject. The minutes of that 1933 meeting [512 A.2d 470]

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also confirm the participants' view that at least for the time being "our past policy of keeping this matter confidential is to be pursued."

Perhaps most damning of all is the so-called Sumner Simpson correspondence of 1935 and 1941. Simpson was president of Raybestos. In October 1935, he received a letter from a Miss Rossiter, editor of the trade periodical Asbestos, suggesting that despite Simpson's earlier requests, made "for certain obvious reasons," that articles relating to asbestosis not be published, perhaps the time had come to print a positive article about industry efforts to reduce the risk in order "to combat some of the rather undesirable...