An Ill-Conceived New Wave Of Asbestos Liability

Monday, June 11, 2018
USS Bataan (LHD-5), a Wasp-class amphibious assault ship.
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Public Domain

The United States Supreme Court will hear Air and Liquid Systems v. Devries in its next term, a case which raises the important question of whether a manufacturer that sold equipment to the United States Navy with no asbestos can be held liable for asbestos-related injuries resulting from other suppliers adding in their own products containing asbestos. The Third Circuit held that suits against any “bare metal” supplier—one who made their products in accordance with Navy specifications—might indeed be proper because it was “foreseeable” to that supplier at the time of its initial sale that products containing asbestos could be added on by independent parties. This theory, which works against any one supplier, can be brought simultaneously against multiple manufacturers who, years before, supplied bare metal components for naval ships.

This novel legal theory is a third-best alternative that takes the law far beyond its current contours. The obvious defendants are either the U.S. Navy or the supplier of those asbestos-contaminated products. But the Navy is immune from tort suit, and the suppliers of the asbestos products have all been bankrupted by a succession of earlier suits. Standard legal theories of causation hold that one person should not be held responsible for the wrongful acts of an independent party, and thus these cases ought to have been dismissed.

To see why these bare metal cases should be tossed out of court, it is necessary to recount the history of asbestos litigation. Asbestos was, and remains, one of the most useful and most deadly substances known to man. It has no close substitute for its ability to insulate vital equipment from the ravages of fire. Thousands of tons of the material were used during World War II and thereafter in insulation, brake pads, fire blankets, fireproof clothing, thermal pipe insulation, and HVAC ducts, where it saved thousands of soldiers and sailors from death or serious injury. As early as 1924, a British medical journal published the first of many studies that documented the incidence of asbestos-related injuries. For every 1,000 workers exposed to asbestos, about 14 workers were killed by mesothelioma, asbestosis, or other similar diseases.

This raises two urgent questions of public policy: When, and to what extent, should asbestos be used; and who, if anyone, should bear the costs of asbestos-related deaths and injuries? Ideally, asbestos should be used until its marginal costs start to exceed its marginal benefits. The Navy used asbestos during World War II because the risk of immediate death at sea outweighed any long-term risk to production workers exposed to the substance. It continued to use asbestos for these reasons for decades afterwards. Starting with the key Supreme Court case of Feres v. United States (1950), recovery in tort against the U.S. government for deaths and injuries “incident to military service” has been barred for two reasons. First, the Navy already had in place its own limited compensation under the Veteran’s Administration program. Like private worker’s compensation plans, the VA covered all work-related injuries, without allowing any defenses based on the conduct of the injured plaintiff or the decedent. Second, the compensation law paid far less than any tort claims, which allow damages for pain and suffering, lost income, and medical expenses. The increased legal certainty under the VA program cut down administrative costs, but still gave the Navy the right incentives to trade-off both the damage caused and lives saved from asbestos use.

The tort/compensation differential, however, has long spurred efforts by plaintiff’s lawyers to circumvent the tort system by bringing suit against third parties not covered by Feres who supplied asbestos products for military or civilian use. Liability for these “remote” defendants expanded slowly before 1973. Nineteenth-century judges had sharply limited the instances in which an injured party could sue someone with whom he was not “in privity”—i.e., whom he had no direct relationship with.

But the situation was altered in two famous twentieth century cases. In MacPherson v. Buick (1916), New York judge Benjamin Cardozo held that an automobile manufacturer could be sued in negligence for subpar construction or design of its automobile tire, even though the customer who purchased the tire had no direct interaction with the manufacturer. By 1944, in Escola v. Coca-Cola Co., Judge Roger Traynor of California claimed that the manufacturer of a Coca-Cola bottle could be held strictly liable to a consumer for a defective bottle, even if the manufacturer had taken the utmost care in preparing it for sale. But both of these decisions put heavy burdens on the plaintiff. As Judge Traynor cautioned in Escola, “The manufacturer's liability should, of course, be defined in terms of the safety of the product in normal and proper use, and should not extend to injuries that cannot be traced to the product as it reached the market.”

This standard would block every lawsuit brought against the suppliers of asbestos products for use in the Navy or elsewhere, given the forms and mode of use—and hence the levels of exposure—were determined by the Navy or other workplace supervisors to be safe in combination with worker precautions like wearing respirators or masks. Indeed, the Escola rule governed without exception, until the epic 1973 Fifth Circuit decision in Borel v. Fibreboard Corp. blew past all of Traynor’s earlier restrictions, by holding that a manufacturer of asbestos had a “duty to warn industrial insulation workers of dangers associated with the use of asbestos.” Notwithstanding that the plaintiff knew of the risks, it was posited that some unspecified additional warning would have changed worker behavior.

Of course, asbestos suppliers knew of these risks, but so too did the plaintiff and the employer, as the basic information was publicly available. Borel ignored both the relevant trade-offs involved in asbestos use and the overall inefficiency of the tort system by concluding that “a true choice situation arises, and a duty to warn attaches, whenever a reasonable man would want to be informed of the risk in order to decide whether to expose himself to it.” At no point did the court explain why that information is better supplied by literally dozens of remote sellers instead of the employer who supervises the work. And at no point did it explain why workers’ compensation should not supply the sole remedy.

In time, Borel bankrupted virtually all the asbestos manufacturers, which is why plaintiffs now target these bare metal suppliers. In 2005, the Sixth Circuit in Lindstrom v. A-C Liability Trust had flatly rebuffed this proposal by adopting a bright-line rule that the bare metal supplier could never be held responsible for asbestos-containing products later added by others. But in Devries, the case before the Court next term, the Third Circuit opted to let a jury decide whether the facts and circumstances of each individual case permitted recovery if it was “reasonably foreseeable” that the bare metal item would eventually be equipped with some asbestos-containing product without which it could not function effectively. But foresight is a useless test to assign liability. Years later, the Navy continued to retain absolute control over what additional equipment will be added to its vessels and when; how it will be installed; and how it will be maintained. Nonetheless, the Third Circuit asserts that each of these multiple defendants has a “duty to warn,” without stating to whom that warning should be issued, and exactly what it should say. It is impossible of course to warn future unidentified sailors, and it is pointless to warn the Navy of what it already knows in the supposed effort to influence its decision over what equipment to purchase and how to install or maintain it thereafter.

Devries ultimately rests on the highly dubious assumption that, because all the obvious defendants cannot be sued, the courts should impose huge liabilities on reputable manufacturers that have done precisely what was asked of them. The test of so-called reasonable foresight does nothing to justify this extraordinary expansion of liability. It is all too foreseeable that downstream parties might misbehave horribly, but that knowledge hardly places a duty on remote suppliers to monitor the behavior of other individuals and firms over whom they have no control.

Nor did Devries take into account the special position of parties in the military. In Borel, liability rested on the view that workers could leave their jobs if they did not like its risks. That option is just not available in the military framework, where other extensive systems control the risks of employment. Nor is it possible to bolster these novel bare metal cases by insisting as the Third Circuit did, that courts pay “special solicitude” toward seamen, as announced in the important Supreme Court case of Moragne v. States Marine Lines (1970). No such solicitude was found in Feres. The Moragne case only applies to suits that commercial seamen bring against their employers and the owners of the ships on which they work. And even then, Moragne only allowed families of seamen killed during employment to bring wrongful death actions in cases where it had been clearly established that those seamen could secure a full recovery if injured on the job. It is odd to claim that Moragne’s solicitude permits courts to create out of whole cloth a radical new form of liability that could hold all makers of lawful products responsible for the asserted (and always foreseeable) misdeeds and mishaps of others.

Starting in the 1970s with Borel, there was a massive but unwise expansion of liability in asbestos cases. Next term, the Supreme Court should make sure we don’t go through a second such expansion, even more ill-conceived than the first.