Justia U.S. 3rd Circuit Court of Appeals Opinion SummariesArticles Posted in Products Liability
In Re: W.R. Grace & Co.
For more than 30 years, Grace has defended itself against asbestos-related lawsuits filed by building owners seeking redress for costs involved in removing Grace products. AMH owns a hospital complex that used Grace products in its construction and filed a class action lawsuit in South Carolina state court. Before resolution of that litigation, Grace filed a petition for Chapter 11 protection. After about 10 years, most property damage claims against Grace had been settled, contingent on approval of an 11 U.S.C. 524(g) trust and an injunction channeling property damage claims against Grace to that trust for payment. AMH did not settle. The Bankruptcy Court confirmed Grace’s reorganization, including a trust and channeling injunction, over AMH’s objections. The district court and Third Circuit affirmed, rejecting arguments that the reorganization plan did not meet the requirements of section 524(g), which provides a mechanism for handling overwhelming asbestos-related liabilities in Chapter 11 proceedings; that the plan failed to provide equal treatment as required by 11 U.S.C. 1123(a)(4), (C) ; that Grace did not show that the Plan was proposed in good faith under 11 U.S.C. 1129(a) and did not show that the Plan is feasible. View "In Re: W.R. Grace & Co." on Justia Law
In re: W.R. Grace & Co.
Grace has manufactured and sold specialty chemicals and construction materials for more than 100 years. The company began facing asbestos-related lawsuits in the 1970s, based on several products and activities, including operation of a Montana vermiculite mine that released asbestos-containing dust into the atmosphere and sale of Zonolite Attic Insulation (ZAI). Montana and the Crown (Canada) have been sued for alleged failure to warn citizens of the risks posed by Grace’s products and activities. Montana settled its cases for $43 million in 2011. The Crown is a defendant in lawsuits arising from the use of ZAI. Montana and the Crown sought indemnification from Grace. Grace sought protection under the Bankruptcy Code, 11 U.S.C. 524(g), which allows a company to establish a trust to handle such liabilities. Montana and the Crown objected to confirmation of a Plan of Reorganization that will send all asbestos claims to two trusts, allowing protected parties to be “unconditionally, irrevocably and fully released.” The personal injury trust is funded by $ 1.5 billion from settlements with Grace’s insurers and former affiliates, an initial payment from Grace of $ 450 million, a warrant to acquire 10 million shares of Grace common stock at $ 17 per share, and annual cash payments from Grace of $100-110 million through 2033. The property damage trust is funded by an initial payment of 180 million dollars, and a subsequent payment of 30 million dollars. The two trusts have separate mechanisms for resolving claims. The bankruptcy court, the district court, and the Third Circuit confirmed the plan. View "In re: W.R. Grace & Co." on Justia Law
In re: Asbestos Prod Liab. Litig.
The 12 plaintiffs are represented by CVLO, which serves as counsel in approximately 2000 cases pending in multidistrict asbestos litigation. The CVLO cases represent the second largest land-based group of cases to remain in the litigation. The district court dismissed the plaintiffs’ cases, for failure to comply with orders requiring submission of medical reports and histories of exposure to asbestos in compliance with “generally accepted medical standards [that] call for information regarding duration, intensity, time of onset, and setting of exposure to asbestos.” The Third Circuit affirmed, characterizing the court orders as “typical … in the context of the management of multidistrict litigation.” In dismissing plaintiffs’ cases, the court considered and weighed the relevant factors, viewing the dilatory and prejudicial aspects as outweighing all others. The flaw in the submissions went to the very heart of the “meritorious” aspect, making the weighing of that factor impossible. View "In re: Asbestos Prod Liab. Litig." on Justia Law
In Re: Diet Drugs Prod. Liab. Litig.
Between 1994 and 1997 Wyeth’s predecessor sold fenfluramine and dexfenfluramine, prescription weight loss drugs. After the drugs were linked to valvular heart disease and an FDA public health advisory, Wyeth withdrew the drugs from the market in 1997. Thousands of individuals filed suit; the cases were consolidated. In 1999, Wyeth entered into a Settlement Agreement; in 2000, the court certified the class, approved the Agreement, and retained jurisdiction. The Agreement enjoins class members from suing Wyeth for diet drug-related injuries, but allows class members to sue Wyeth if they can demonstrate that they developed PPH (a condition that deprives the lungs of oxygen) at a specified level through the use of the diet drugs. In 2011, Cauthen sued, alleging that she developed PPH. She produced a pulmonary consultation prepared by Fortin, a cardiologist. Because Cauthen’s report showed that lung capacity of less than 60 percent of predicted at rest, Wyeth sought to enjoin the state court lawsuit for failing to satisfy the precondition provided by the Agreement. Dr. Fortin asserted that comparing individual lung capacity with average capacity of persons having a similar demographic profile is not determinative in diagnosing PPH. The district court enjoined the suit. The Third Circuit affirmed. View "In Re: Diet Drugs Prod. Liab. Litig." on Justia Law
Dewey v. Volkswagen
In 2007, two groups filed separate class action suits against Volkswagen. The cases were consolidated for pre-trial purposes because they raised substantially similar allegations: that several models of Volkswagen and Audi automobiles had defectively designed sunroofs that, when clogged by plant debris and pollen, allowed water to leak into the vehicle. While leakage could be prevented through regular cleaning and maintenance, Volkswagen allegedly failed to inform car owners of these preventive measures because such a disclosure would acknowledge a design defect, and would likely obligate Volkswagen to cover any resulting damage under their warranty program. The parties reached a settlement, under which a "reimbursement group" received the right to reimbursement for certain qualifying damages, paid from an $8 million fund. "Residual group" member were required to wait until the reimbursement group made its claims. The court certified a single class. The Third Circuit reversed, agreeing with objectors that the representative plaintiffs, all members of the reimbursement group, cannot adequately represent the interests of the class members in the residual group; the certification violated FRCP 23(a)(4). View "Dewey v. Volkswagen " on Justia Law
Banks v. Int’l Rental & Leasing Corp.
Barnabas rented a van from Budget and gave Dewindt permission to use it without listing her as an authorized driver on the rental agreement. Dewindt was driving down a steep hill when the brakes failed. Dewindt attempted to stop by driving onto an uphill driveway. The van crashed into a tree, injuring the passengers. Barnabas was not in the van. The district court entered summary judgment for Budget. The Third Circuit reversed and remanded on claims of strict liability, breach of warranty, and loss of consortium. The district court erroneously relied on cases decided under the Second Restatement of Torts which does not recognize strict liability claims against lessorss. Strict liability under the Third Restatement would reach Budget as lessor/distributor of the allegedly defective van. The Third Circuit had certified the question and the Supreme Court of the Virgin Islands responded that Virgin Islands local courts should apply sections 1 and 20 of the Third Restatement and allow lessors to be held strictly liable for injuries resulting from a defective product. The district court should also determine whether plaintiffs may rely on warranties in the rental agreement with Budget. View "Banks v. Int'l Rental & Leasing Corp." on Justia Law
Wright v. Owens Corning
Plaintiffs installed shingles manufactured by Owens Corning (debtor). They discovered leaks in 2009; shingles had cracked. Each sent warranty claims, which were rejected. They filed a class action alleging fraud, negligence, strict liability, and breach of warranty. In 2000, the debtors had filed Chapter 11 bankruptcy petitions; the Bankruptcy Court set a claims bar date in 2002 and approved a notice that appeared in multiple publications. Notices of the confirmation hearing for the Plan, in 2006, included generic notice to unknown claimants. At the time they filed the class action plaintiffs did not hold “claims” under 11 U.S.C. 1101. The Third Circuit subsequently established a rule that a claim arises when an individual is exposed pre-petition to a product or other conduct giving rise to an injury, which underlies a right to payment under the Bankruptcy Code. Based on that holding, the district court held that plaintiffs’ claims were discharged. The Third Circuit affirmed in part and remanded, agreeing that plaintiffs had “claims.” Both were “exposed” to the product before confirmation of the plan. Plaintiffs were not afforded due process by published notice, however, because they could not have known they had claims at the time of confirmation. View "Wright v. Owens Corning" on Justia Law
Covell v. Bell Sports Inc.
A 36 year-old schoolteacher sustained serious brain injuries when he was struck by a car while bicycling to work. His parents, appointed as his legal guardians, filed a products liability suit against the manufacturer of the bicycle helmet their son wore during the collision. The district court permitted the manufacturer to introduce expert testimony, based in part upon the United States Consumer Product Safety Commission's Safety Standard for Bicycle Helmets (16 C.F.R. 1203). Ultimately, experts for both sides agreed that the CPSC Standard forms the starting point for any bicycle helmet design, and that the helmet at issue satisfied the CPSC Standard in all respects. The court instructed the jury pursuant to sections 1 and 2 of the Restatement (Third) of Torts. The Court also instructed the jury that, in determining whether the helmet was defective, it could consider evidence of standards or customs in the bicycle helmet industry, including the CPSC Standard. The jury returned a verdict for the defense. The Third Circuit affirmed, holding that the jury instructions and admission of the CPSC standard represented Pennsylvania law.
Roth v. Noralfco, LLC
Plaintiff was unloading a railway tank car filled with sulfuric acid when its chemical contents exploded, spraying across his face and chest and inflicting severe burns. He sought damages under the common law, but the district court held that his lawsuit was preempted by the Hazardous Materials Transportation Act, 49 U.S.C. 5101–5128. The Third Circuit affirmed. The Act expressly preempts any common law requirement about the design of a package, container, or packaging component qualified for use in transporting hazardous materials in commerce. The tank car at issue is a container qualified for such use, regardless of whether what plaintiff was doing constituted transport or his employment status at the precise moment of his injury.