Johns-Manville Products Corp. v. Superior Court, JOHNS-MANVILLE

• Court: United States State Supreme Court (California)
• Writing for the Court: MOSK; BIRD; MANUEL; CLARK; RICHARDSON
• Citation: 27 Cal.3d 465,612 P.2d 948,165 Cal.Rptr. 858
• Parties: , 612 P.2d 948, 9 A.L.R.4th 758 PRODUCTS CORPORATION, Petitioner, v. CONTRA COSTA SUPERIOR COURT, Respondent; Reba RUDKIN, Real Party in Interest.
• Docket Number: S.F. 24086,JOHNS-MANVILLE
• Decision Date: 03 July 1980

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165 Cal.Rptr. 858 27 Cal.3d 465, 612 P.2d 948, 9 A.L.R.4th 758 JOHNS-MANVILLE PRODUCTS CORPORATION, Petitioner,
v.
CONTRA COSTA SUPERIOR COURT, Respondent;
Reba RUDKIN, Real Party in Interest. S.F. 24086. Supreme Court of California. July 3, 1980.
As Modified Aut. 28, 1980.

[27 Cal.3d 467]

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[612 P.2d 949] Moore, Clifford, Wolfe, Larson & Trutner, Oakland and Cyril Viadro, San Francisco, for petitioner.

Warren L. Hanna, Michael G. Lowe and Hanna, Brophy, MacLean, McAleer & Jensen, San Francisco, as amici curiae on behalf of petitioner.

No appearance for respondent.

Bryce C. Anderson, Martinez, George W. Kilbourne, Pleasant Hill, and Steven Kazan, Oakland, for Real Party in Interest.

Marrs A. Craddick, Craddick & Candland, Walnut Creek, Charles Bond, San Francisco, Judith M. Mears, Albany, Peter H. Weiner, San Francisco, Patricia M. Gates, Palo Alto, Robert E. Cartwright, San Francisco, Wylie Aitken, Santa Ana, Edward I. Pollock, Los Angeles, Glen T. Bashore, Stephen I. Zetterberg, Claremont, J. Nick DeMeo, Santa Rosa, Sanford M. Gage, Beverly Hills, Stephen L. Odgers, Harvey R. Levine, Claremont, Leonard Sacks, Encino, and Joseph Posner, Los Angeles, as amici curiae on behalf of Real Party in Interest.

MOSK, Justice.

Section 3600 of the Labor Code provides that an employer is liable for injuries to its employees arising out of and in the course of employment, and section 3601 declares that where the conditions of [27 Cal.3d 468] workers' compensation exist, the right to recover such compensation is the exclusive remedy against an employer for injury or death of an employee. ¹ The issue to be decided in

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[612 P.2d 950] this proceeding is whether an employee is barred by these provisions from prosecuting an action at law against his employer for the intentional torts of fraud and conspiracy in knowingly ordering the employee to work in an unsafe environment, concealing the risk from him, and, after the employee had contracted an industrial disease, deliberately failing to notify the state, the employee, or doctors retained to treat him, of the disease and its connection with the employment, thereby aggravating the consequences of the disease.

[27 Cal.3d 469] We conclude that while the workers' compensation law bars the employee's action at law for his initial injury, a cause of action may exist for aggravation of the disease because of the employer's fraudulent concealment of the condition and its cause.

Reba Rudkin, real party in interest (hereinafter plaintiff), brought an action against Johns-Manville Products Corporation, his employer for 29 years (defendant) and others, ² alleging as follows:

Defendant is engaged in mining, milling, manufacturing, and packaging asbestos. Plaintiff worked in its Pittsburg, California, plant for 29 years beginning in February 1946, and he was continuously exposed to asbestos during that period. As a result of the exposure, he developed pneumonoconiosis, lung cancer, or other asbestos-related illnesses.

The defendant corporation has known since 1924 that long exposure to asbestos or the ingestion of that substance is dangerous to health, yet it concealed this knowledge from plaintiff, and advised him that it was safe to work in close proximity to asbestos. It failed to provide him with adequate protective devices and did not operate the plant in accordance with state and federal regulations governing dust levels.

In addition, the doctors retained by defendant to examine plaintiff were unqualified, and defendant did not provide them with adequate information regarding the risk of asbestos exposure. It failed to advise these doctors of the development of pulmonary disease in plaintiff or of the fact that the disease was the result of the working conditions at the plant, although it knew that his illness was caused by exposure to asbestos. Finally, defendant willfully failed to file a First Report of Occupational Injury or Illness with the State of

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California regarding plaintiff's injury, as required by law. Had this been done, and if the danger from asbestos had been revealed, plaintiff would have been protected. [27 Cal.3d 470] Each of these acts and omissions was done falsely and fraudulently by defendant, with intent to induce plaintiff to continue to [612 P.2d 951] work in a dangerous environment. Plaintiff was ignorant of the risks involved, and would not have continued to work in such an environment if he had known the facts.

In a separate cause of action plaintiff alleged that defendant knowingly conspired with others to perpetrate the acts set forth above.

The complaint sought compensatory and punitive damages, including compensation for the cost of medical care which plaintiff was required to obtain in order to treat his illness.

Defendant filed an answer alleging, inter alia, that the action was barred under section 3601. It requested the trial court to take judicial notice of an application filed by plaintiff seeking workers' compensation benefits for disability caused by "(e)xposure to asbestos." Defendant moved for judgment on the pleadings on the ground that section 3601 bars the action. The trial court denied the motion. In this proceeding for a writ of mandate, defendant seeks to set aside the trial court's order.

According to a brief filed on plaintiff's behalf, he died of lung cancer after the petition for writ of mandate was filed. The issues presented are not moot, however, since an action for personal injuries survives the death of the plaintiff. (Prob. Code, § 573.) ³

For purposes of reviewing the trial court's denial of defendant's motion, we must accept as true the allegations of plaintiff's complaint. (Colberg, Inc. v. State of California (1967) 67 Cal.2d 408, 411-412, 62 Cal.Rptr. 401, 432 P.2d 3.)

The primary focus of the dispute between the parties centers upon the question whether section 4553 is intended to cover the intentional acts of employers which cause employee injuries. ⁴ The section provides [27 Cal.3d 471] that "compensation otherwise recoverable shall be increased one-half where the employee is injured by reason of the serious and willful misconduct" of the employer, not to exceed $10,000. Defendant urges that the penalty imposed upon employers by this section is a substitute for a common law right of action against an employer whose intentional misconduct results in injury, while plaintiff argues that such misconduct is distinguishable from the "serious and willful misconduct," described in section 4553, and therefore his complaint alleging intentional acts by defendant is cognizable in an action at law.

Defendant relies upon both the legislative history of the Workers' Compensation Act and cases interpreting the words "serious and willful misconduct" in support of its position.

Prior to 1917, the law allowed an employee a choice of remedies if an injury was caused by an employer's gross negligence or willful misconduct. He could either claim workers' compensation benefits or maintain an action at law for damages. (Stats. 1913, ch. 176, § 12(b), pp. 283-284.) In that year, however, this provision was deleted and a new section added specifying a one-half increase in compensation in the event of serious and willful misconduct by the employer. (Stats. 1917, ch. 586, § 6(b), p. 834.) This history, contends defendant, demonstrates that the right to seek additional compensation for injuries caused by the serious and willful misconduct of the employer was intended

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[612 P.2d 952] by the Legislature as a substitute for the right to seek damages in an action at law for such conduct.

Plaintiff claims that the reason for the amendment was a desire by the Legislature to equalize the treatment of employer and employee with regard to the commission of the acts of serious and willful misconduct. ⁵ However, the argument is not convincing because it does not account for the repeal of the provision allowing an employee to bring an action at law for the employer's willful misconduct.

[27 Cal.3d 472] We find the historical background cited by defendant to be persuasive. The clear implication is that the addition in 1917 of the "exclusive remedy" limitation and the provision for a penalty for the willful misconduct of the employer was a substitute for the previous right of an employee to bring an action at law.

Next, defendant contends that the term "serious and willful misconduct" as used in section 4553 has the same meaning as intentional misconduct, and plaintiff may not avoid the bar of section 3601 merely by characterizing defendant's conduct as intentional. Defendant relies on Mercer-Fraser Company v. Industrial Accident Commission (1953) 40 Cal.2d 102, 117, 251 P.2d 955, 962, in which the term "willful misconduct" as used in section 4553 was defined as conduct which " 'necessarily involves deliberate, intentional, or wanton conduct in doing or omitting to perform acts, with knowledge or appreciation of the fact . . . that danger is likely to result therefrom.' (P) 'Willfulness necessarily involves the performance of a deliberate or intentional act or omission regardless of the consequences.' " ⁶ This definition expressly includes intentional conduct within the purview of section 4553.

Plaintiff counters that the Legislature recognized a difference between intentional misconduct and serious and willful misconduct because it has provided that an employee who is guilty of the former is precluded from recovering workers' compensation (§ 3600, subd. (d), (e), (f), (g)), whereas if he is injured as the result of his own serious and willful misconduct he only suffers a one-half reduction in compensation benefits (§ 4551).

The contention misconstrues these provisions. The only intentional misconduct of an employee which excludes his right to compensation is the deliberate infliction of injury upon himself, his participation in an [27 Cal.3d 473] altercation in which he is the...