TMI, In re, C--C

• Decision Date: 17 October 1995
• Docket Number: C--C,Nos. 94-7600,No. 94-7602,s. 94-7600,94-7602
• Citation: 67 F.3d 1119
• Parties: Nuclear Reg. Rep. P 20,572, 26 Envtl. L. Rep. 20,014 In re TMI. Metropolitan Edison Company ("Met Ed"); Pennsylvania Electric Company; Jersey Central Power & Light Company; General Public Utilities Corp.; Babcock & Wilcox Co.; McDermott, Inc.; Dresser Industries, Inc.; UE &atalytic, Inc. (Raytheon); Burns & Roe Enterprises, Appellants/7601, and Metro Edison Company ("Met Ed"); Pennsylvania Electric Company; Jersey Central Power & Light Company; General Public Utilities Corp.; Babcock & Wilcox Co.; McDermott, Inc.; Dresser Industries, Inc.; UE &atalytic, Inc. (Raytheon); Burns & Roe Enterprises, Appellants to 94-7602.
• Court: U.S. Court of Appeals — Third Circuit

Page 1119

67 F.3d 1119

Nuclear Reg. Rep. P 20,572, 26 Envtl. L. Rep. 20,014

In re TMI.

Metropolitan Edison Company ("Met Ed"); Pennsylvania

Electric Company; Jersey Central Power & Light Company;

General Public Utilities Corp.; Babcock & Wilcox Co.;

McDermott, Inc.; Dresser Industries, Inc.; UE &

C--Catalytic, Inc. (Raytheon); Burns & Roe Enterprises,

Appellants Nos. 94-7600/7601,

and

Metro Edison Company ("Met Ed"); Pennsylvania Electric

Company; Jersey Central Power & Light Company; General

Public Utilities Corp.; Babcock & Wilcox Co.; McDermott,

Inc.; Dresser Industries, Inc.; UE & C--Catalytic, Inc.

(Raytheon); Burns & Roe Enterprises, Appellants No. 94-7602.

Nos. 94-7600 to 94-7602.

United States Court of Appeals, Third Circuit.

Argued May 1, 1995.

Decided Oct. 17, 1995.

Alfred H. Wilcox (argued), Ellen Kittredge Scott, Pepper, Hamilton & Scheetz, Philadelphia, PA, for Appellants.

Arnold Levin (argued), Laurence S. Berman, Fred S. Longer, Levin, Fishbein, Sedran & Berman, Philadelphia, PA, Lee C. Swartz, Sandra L. Meilton, Hepford, Swartz & Morgan, Harrisburg, PA, William R. Wilson, Jr., Jackson, MS, for Appellees, Dorothy L. Aldrich, et al.

Louis M. Tarasi, Jr., Tarasi & Johnson, Pittsburgh, PA, for Appellees, Estate of Henrietta Adams, et al.

Before: SCIRICA, McKEE, AND SAROKIN, Circuit Judges.

OPINION OF THE COURT

McKEE, Circuit Judge.

In this interlocutory appeal we are asked to determine whether persons who claim to have been injured by radiation from a nuclear reactor can recover punitive damages under state law. For the reasons that follow we conclude that plaintiffs here may recover punitive damages under Pennsylvania law and we will therefore affirm the decision of the district court.

I. PROCEDURAL HISTORY

These actions were begun in the aftermath of the March 28, 1979 nuclear accident at the Three Mile Island nuclear reactor in Dauphin County, Pennsylvania ("TMI"). Appellants--corporations which owned, operated, or supplied materials or services to TMI--are the defendants in personal injury actions brought by (or on behalf of) more than 2,000 individuals who resided in the vicinity of TMI at the time of the accident. Plaintiffs attempt to recover both punitive and compensatory damages for illnesses allegedly resulting from exposure to radiation released during the accident. Because these actions seek damages on account of the hazardous properties of special nuclear material, they are "public liability actions" arising under the Price-Anderson Act, as amended by the Amendments Act of 1988. See The Price-Anderson Amendments Act of 1988, Pub.L. No. 100-408, 102 Stat. 1066 (1988) (codified at 42 U.S.C. Sec. 2014(hh)) [hereinafter the "Act" or the "Amendments Act"].

The history of the several cases that have been litigated in this circuit as a result of the TMI accident is as long as it is complex, and we will only detail those proceedings that bear upon the issue currently before us. ¹ Plaintiffs seek punitive damages against defendants General Public Utilities Corporation and Metropolitan Edison Company [hereinafter "defendants"] for defendants' alleged willful, wanton and reckless indifference to information concerning faulty plant equipment and design at TMI. Plaintiffs rest their claim for punitive damages upon assertions that defendants were aware of such information yet failed to take proper precautions to guard against the potentially dangerous effects of the equipment. Plaintiffs also assert that defendants falsified leak rate tests and reports submitted to the Nuclear Regulatory Commission and knowingly operated TMI in violation of technical specifications. ²

Early in the course of the TMI litigation, the district court recognized the difficulty posed by the question of plaintiffs' right to recover punitive damages under the Price-Anderson Act. In order to prevent the litigation from being held up while that issue was addressed, the court bifurcated the damages claims and deferred consideration of the punitive damages claims until after resolution of the claims for compensatory damages. In re TMI Litig. Personal Injury Claims, No. 79-0906 (M.D.Pa. order entered Dec. 30, 1982); App. at 162.

While these and companion TMI cases were being litigated in state and district court, the Supreme Court decided Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 104 S.Ct. 615, 78 L.Ed.2d 443 (1984), which held in part that states are precluded from regulating the safety aspects of nuclear energy but that states still had authority under the Act to control nonregulatory aspects of nuclear facilities. Id. at 240-41, 256, 104 S.Ct. at 617-18, 625-26. Following the decision in Silkwood, the district court denied defendants' motion for summary judgment that had been filed following a Rule 16 conference. See In re Three Mile Island Litig., 605 F.Supp. 778, 784 (M.D.Pa.1985) (holding that punitive damages are recoverable under the Price-Anderson Act, to the extent that damages assessed under the Act would not be paid from federal monies) [referred to herein as "TMI I "]. Shortly thereafter, defendants successfully petitioned this court for interlocutory review of that ruling. We ruled that the Price-Anderson Act provided no basis for federal jurisdiction, vacated the district court's order denying summary judgment, and remanded the matter back to the district court for remand to state court. See Kiick v. Metropolitan Edison Co., 784 F.2d 490 (3d Cir.1986).

Meanwhile, Congress enacted the Amendments Act of 1988 which became effective on August 20, 1988. The Amendments Act created a federal cause of action, the "public liability action," and mandated that federal courts shall have both original and removal jurisdiction over such actions. 42 U.S.C. Sec. 2210(n)(2). This provision retroactively conferred "arising under" jurisdiction by way of public liability actions over these cases. See In re TMI Litigation Cases Consolidated II, 940 F.2d 832 (3d Cir.1991), cert. denied sub nom., Gumby v. General Public Utils. Corp., 503 U.S. 906, 112 S.Ct. 1262, 117 L.Ed.2d 491 (1992) ["TMI II "]. The Amendments Act also placed a "limitation," (more accurately described as a prohibition) on punitive damages awards in public liability actions where the United States is obligated to make indemnification payments on behalf of a particular defendant. 42 U.S.C. Sec. 2210(s).

Defendants eventually moved for partial summary judgment on plaintiffs' claims for punitive damages. Defendants argued before the district court that Pennsylvania's allowance of punitive damages was inconsistent with the compensatory nature of the Amendments Act as well as that Act's prohibition against state regulation of the safety aspects of nuclear reactors. The district court denied partial summary judgment and held that punitive damages are available in these cases so long as the money to pay such awards does not come from the United States Treasury. In re TMI Litig. Consol. Proceedings, Nos. 1:cv-88-1452, 1:cv-88-1551, 1:cv-88-1558, slip op. at 9 (M.D.Pa. Feb. 18, 1994). Thereafter, the district court certified a number of issues for interlocutory appeal, including defendants' right to recover punitive damages. We here only address defendants' right to recover punitive damages. In companion opinions we address the remaining issues that were certified for appeal.

II. DISCUSSION

The question of law certified for appeal by the district court for this interlocutory appeal is:

Whether Pennsylvania's rules of decision relating to punitive damages are inconsistent with the provisions of the federal Price-Anderson Act, as amended, and therefore may not serve as rules of decision to be applied in a "public liability action" under the Price-Anderson Act.

In re TMI Litig. Consol. Proceedings, Nos. 1:cv-88-1452, 1:cv-88-1551, 1:cv-88-1558, slip op. at 6 (M.D.Pa. July 13, 1994). In holding that punitive damages awards under Pennsylvania law do not violate the Price-Anderson Act or its Amendments, the district court stated:

Defendants argue in great detail that the award of punitive damages in this case is inconsistent with the overall scheme adopted by Congress in the Price-Anderson Act. However, the Supreme Court addressed essentially this same argument in Silkwood and decided that punitive damages were consistent with applicable federal statutes and regulation. In addressing the government's conflict preemption argument, the Supreme Court explicitly found that 'exposure to punitive damages [does not] frustrate any purpose of the federal remedial scheme.' 464 U.S. at 257 (emphasis added).... the Court clearly considered the Price-Anderson Act to be part of the relevant federal remedial scheme. By implication, then, the Silkwood court concluded that punitive damages were not inconsistent with the Price-Anderson Act.

Id. at 5. The district court concluded that none of the 1988 amendments to the Price- Anderson Act had changed the Supreme Court's conclusion. The court reasoned that Sec. 2210(s) of the Amendments Act, limiting punitive damages, has no retroactive application, and therefore "that limit does not govern this case." Id. at 7. In addition, the district court properly observed that this "court did not interpret the Act as excluding punitive damages altogether[ ]" in TMI II. Id. at 8. Finally, the court noted that the indemnity agreement providing for coverage for punitive damages, which is available to insureds under the Amendments Act, 10 C.F.R. Sec. 140.91, Appendix A, p 2(c), p. 489 (1993), is still unchanged. Id. at 8-9. Based upon this analysis the district court concluded that plaintiffs could recover punitive damages and denied defendants' motion for partial summary judgment. Id.

Because the issue certified for review is purely a question of law, our review is plenary. Buzzard v. Roadrunner Trucking, Inc., 966 F.2d 777, 779 (3d Cir.1992). Our consideration of this issue is informed by statutory language, legislative history and the...