Juzwin v. Amtorg Trading Corp.

• Decision Date: 09 March 1989
• Docket Number: Civil No. 87-3876.
• Parties: Stephen JUZWIN and Mary Juzwin, his spouse, Plaintiffs, v. AMTORG TRADING CORP., et al., Defendants. AMTORG TRADING CORP., Defendant-Third Party Plaintiff, v. LEONARD J. BUCK, INC., Flintkote Mines, Ltd., National Gypsum Company and Turner & Newall, PLC., Third Party Defendants.
• Court: U.S. District Court — District of New Jersey

705 F. Supp. 1053

Stephen JUZWIN and Mary Juzwin, his spouse, Plaintiffs, v. AMTORG TRADING CORP., et al., Defendants.

AMTORG TRADING CORP., Defendant-Third Party Plaintiff, v. LEONARD J. BUCK, INC., Flintkote Mines, Ltd., National Gypsum Company and Turner & Newall, PLC., Third Party Defendants.

Civil No. 87-3876.

United States District Court, D. New Jersey.

March 9, 1989.

Garruto, Galex & Cantor, Francis A. Tomes, East Brunswick, N.J., for plaintiffs.

Budd Larner Gross Picillo Rosenbaum Greenberg & Sade, P.C., John J. Catino, Short Hills, N.J., for defendant-third party plaintiff Amtorg Trading Corp.

McCarter & English, Honora M. Keane, Charles F. Rysavy, Newark, N.J., for defendant Carey Canada, Inc.

Goldfein & Joseph, P.C., David A. Katzenstein, Scott I. Fegley, Princeton, N.J., for defendants Asbestos Corp. Ltd. and Bell Asbestos Mines, Ltd.

Bressler, Amery & Ross, Gladys W. Orr, Morristown, N.J., for defendant, Metropolitan Life Ins. Co.

O'Donnell, Kennedy, Vespole & Piechta, Leon B. Piechta, West Orange, N.J., for defendant, Leonard J. Buck, Inc.

OPINION

SAROKIN, District Judge.

In this asbestos-related products liability action, defendants move that the court strike plaintiffs' punitive damages claims on the ground that they are unconstitutional.

I. INTRODUCTION

Punitive damage awards have played a traditional role in our system of jurisprudence. They provide a means by which private citizens are afforded the opportunity to penalize persons or entities whose conduct has been so offensive and outrageous as to permit punishment of the wrongdoer in civil litigation. Such awards have been accepted and justified under the same rationale which guides much of sentencing in criminal matters.

The wrongdoer is punished and thus deterred from other similar conduct in the future. Others, likewise, are deterred who might be inclined to act in a similar fashion. The punitive damage award, and in particular the amount of such an award, affords a jury the unique opportunity to express the community's outrage at the particular conduct being penalized. Such awards frequently fill a void where the conduct is not defined as criminal, or if criminal, is not prosecuted.

The policy and purpose of punitive damage awards are well served in products liability cases in which manufacturers have knowingly placed dangerous or defective products into the marketplace with no or inadequate warnings. Civil penalties serve to remind manufacturers of consumer expectations regarding business ethics and standards. Therefore, there can be little doubt that the availability and even the threat of punitive damage awards serves the public interest and provides a strong inducement to the business community to act in a reasonable and responsible manner.

Punitive damage awards have their deficiencies, however, some of which inhere in all such awards and some of which are unique to mass tort claims. Common to all is the fact that the amount of the fine can be excessive in respect to the conduct involved or the person or entity assessed. No limits are imposed. Certainly, no criminal statute would be tolerated which left to a judge or a jury the unfettered discretion to determine what penalty would be appropriate in any given case. No standard or uniformity exists. Different juries hearing the identical evidence as to the same defendant might award vastly different sums or none at all.

The court in a criminal matter may consider the defendant's ability to pay in determining the fine to be imposed, but no statute would be permitted which failed to set the maximum possible penalty faced by a defendant. Although the penalty imposed in a civil matter may far exceed that provided for under a criminal statute for the same conduct, none of the same safeguards are provided. The standard of proof for the imposition of such penalties is lesser in civil matters, even though the exposure may be far greater. Privileges such as the right against self-incrimination are usually inapplicable.

Substantial punitive damage awards have the ability to financially destroy an individual, a business, or an entire industry. Such insolvency may be warranted or justified because of the nature of the conduct involved, but it is an awesome power to place in the hands of a jury without limitations or guidelines.

Fines paid in criminal matters go to the public treasury. Punitive awards go to the fortuitous plaintiff. In many instances, it is a windfall.

All of the foregoing defects are exacerbated in mass tort litigation. Defendants can be held liable over and over again for the same conduct, a result which would be barred by virtue of the right against double jeopardy in a criminal matter. Although an award in an individual case may be fair and reasonable, the cumulative effect of such awards may not be. Nor is the cumulative effect of such awards reviewable by a single court, since the matters are permitted to proceed and be reviewed separately and independently.

Payment to individual plaintiffs rather than to a fund or a class raises special problems in mass tort litigation. There is a decided risk that the earlier claimants will deplete the available assets to pay later claimants. Such a risk may exist even as to compensatory damages, but it would seem inappropriate to impose repeated penalties on a company if the result is to deny compensatory damages to subsequent claimants. If there is a limited fund, priority should be given to compensating those who have been injured rather than conferring windfalls on those who have already been compensated.

Although recognizing the nature of a corporation as a continuing legal entity, the fact is that punitive damage awards, if imposed decades after the wrongful conduct, frequently punish officers who did not participate in such conduct and shareholders who did not benefit from it. Furthermore, if the successive fines serve to render companies insolvent, innocent employees and trade creditors are injured as well.

It may be that the conduct of a particular defendant has been so outrageous and egregious that a jury wishes by the size of its award to prevent that company from continuing to function. Even assuming that a jury should have the awesome power to mete out such drastic punishment, it should do so intentionally, and not inadvertently by unknowingly combining its verdict with those in the past and those yet to come.

None of the foregoing, standing alone, may be sufficient to constitute a violation of the constitutional rights of these manufacturers, but taken in combination they do infringe upon their right to due process.

II.

Having set forth the potential defects and dangers of successive punitive damage awards, the court next considers the solutions suggested as potentially available to provide a cure.

It has been suggested that one of the means available to a defendant to combat the cumulative effect of successive punitive damage awards against it is to offer evidence as to the prior awards and ask the jury to offset their own verdict to the extent of those earlier awards. This alternative, although valid in concept, is unrealistic in practice. It requires a defendant to advise the jury that prior juries hearing the same evidence have already found that the defendant's conduct was so egregious as to warrant punitive damage awards. To require a defendant to present such prejudicial evidence to a jury as its only alternative is to place it between Scylla and Charybdis.¹

Individual awards are also justified on the basis that each plaintiff who has been injured is entitled to seek punishment of the offender. However, such an argument totally ignores the fact that each jury is told how many persons have been injured or have died or are likely to do so as the result of the defendant's conduct. Those statistics undoubtedly play a substantial role in the jury's decision to award punitive damages and in determining the amount to be imposed. Therefore, it is totally unrealistic to suggest that each award is predicated solely on the conduct of the defendant manufacturer as it relates only to the plaintiff on trial. The amount of the award is the product of injuries to many persons not before the court. The same statistics form the basis for all such claims. Therefore, prior punitive awards may have already factored in the injury to the plaintiff on trial.

Another suggestion for blunting the potential of multiple punitive damage awards is a preemptive class action by the manufacturer to establish a single punitive damage award binding upon all present or potential claimants. The availability of this option is undoubtedly as comforting to the defendant manufacturers as the ability to tell the jury that others had found them guilty of willful, wanton and reckless conduct. If the existence of this alternative serves to deny defendants so situated the right to claim that successive punitive damage awards for the same wrongful conduct are unconstitutional, then manufacturers would be placed in an unenviable dilemma as soon as a second suit was instituted. Should any manufacturer at that juncture be required to notify and invite all of its customers and users to file claims against it? Furthermore, even if a defendant were inclined to adopt this suicidal course, there is some doubt whether it would be successful. See, e.g., In re School Asbestos Litigation, 789 F.2d 996, 1006 (3d Cir.1986), cert. denied, Celotex Corp. v. School District, 479 U.S. 852, 107 S.Ct. 182, 93 L.Ed. 2d 117 (1986) and cert. denied, National Gypsum Co. v. School District, 479 U.S. 915, 107 S.Ct. 318, 93 L.Ed.2d 291 (1986) (noting the difficulties in expanding a class to "confront effectively the punitive damage issue in the entire asbestos area"); see infra at 1062-64. In any event, it is not a life preserver likely to be grasped by a manufacturer.

It has also been suggested that the risk of excessive awards is obviated by the ability...