Central Wesleyan College v. W.R. Grace & Co.

Citations: 143 F.R.D. 628; 1992 U.S. Dist. LEXIS 14168; 1992 WL 218642Docket: Civ. A. No. 2:87-1860-8

Court: District Court, D. South Carolina; September 4, 1992; Federal District Court

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Plaintiff's motion to certify a voluntary class for colleges in an asbestos property damage lawsuit is under consideration by the Court. This action aims to recover costs incurred by colleges and universities for identifying, sampling, and remediating asbestos in their buildings, which is mandated for removal under federal law for friable asbestos. The potential costs of removal are substantial, potentially reaching hundreds of millions of dollars, and the lawsuit seeks to hold asbestos miners, millers, and manufacturers accountable for these expenses.

The Court notes that its decision is influenced by the broader national context of asbestos litigation, where the use of class actions has evolved. Initially, personal injury lawsuits were handled individually, with class actions being rejected due to the complexity of individual issues. However, as the volume of asbestos claims increased, courts began to adopt class actions and other consolidation methods to efficiently address common issues. Notable judicial efforts included a significant 1985 certification of 893 asbestos personal injury claims by Judge Robert M. Parker, which was upheld on appeal and recognized as a preferable alternative to repetitive litigation. This trend has continued, with various courts consolidating cases to resolve common issues, demonstrating a shift towards more collective legal approaches in asbestos-related litigation.

In West Virginia and Mississippi, most defendants settled their cases before or during trial. Judge Parker attempted a significant consolidation of approximately 3,000 personal injury cases in Cimino v. Raymark Industries, focusing on common issues like product defect and punitive damages in the first trial phase, while the second phase addressed exposure and damages for 169 plaintiffs. The court applied statistical methods to extrapolate findings to the entire class. A notable consolidation of 9,000 cases in Baltimore led to settlements from nearly all defendants and verdicts against four, awarding actual and punitive damages. The consolidation effort culminated in In re Asbestos Products Liability Litigation (No. VI), where a judicial panel reversed its long-standing position and ordered 26,639 federal asbestos cases to be consolidated for pretrial procedures, acknowledging the need for a streamlined approach to asbestos litigation. This shift was supported by Chief Justice Rehnquist's committee and experienced judges. The trend indicates a movement towards consolidated proceedings for asbestos personal injury cases, although defendants and plaintiffs diverge on the implications for property damage litigation. Property damage cases, emerging in the early 1980s, include a significant national schools class action that was certified and affirmed on appeal. This case involved around 14,000 school districts and demonstrated that common issues could be resolved in a class setting despite individual variances in liability and damages.

The School Asbestos panel highlighted the prevalence of redundant evidence in asbestos litigation, indicating that class actions could mitigate time and cost burdens associated with resolving common issues. Ongoing collateral appeals have delayed trials in related cases. A Philadelphia state court has certified a national class action for commercial buildings leased by the Federal Government, while a federal court in Texas consolidated asbestos claims from various cities and school districts, emphasizing that a case-by-case approach is inadequate. The Texas Court of Appeals affirmed a class certification for 67 school districts, stating that the class action process is superior to individual litigation due to significant efficiency gains. In contrast, a proposed national class action for hospitals was denied by a Wisconsin state court due to manageability issues, a ruling later upheld on appeal. Additionally, around thirty individual asbestos property damage cases have been tried, yielding mixed results for building owners and defendants. Each individual case typically requires one to five weeks for trial, and appeals can prolong the litigation by at least a year, resulting in an expected litigation lifespan of two to three years for each case.

Asbestos litigation has significantly impacted major defendants, with 11 of approximately 25 filing for bankruptcy, as noted by Chief Justice Rehnquist’s Ad Hoc Committee. Judge Robert Parker remarked on the diminished role of remaining defendants, indicating that several have entered bankruptcy since the Cimino case, including National Gypsum Co. and Celotex Corp. The financial burden of litigation is substantial, with defendants reportedly spending nearly 40% of their asbestos costs on legal fees. Celotex disclosed spending over $36 million on legal defenses while only paying $6.7 million in settlements, highlighting the risks of continued litigation leading to further bankruptcies.

In relation to class action litigation involving colleges and universities, a proposed national class action was initiated on August 1, 1986, followed by a related case in 1987. Both cases were initially overseen by Judge Houck, who dismissed the Clemson case in 1988 due to lack of diversity. After further discovery and a motion for class certification from Central Wesleyan in 1988, the case was reassigned after Judge Houck's recusal. Pretrial matters were referred to Magistrate Judge Carr, with supplemental class certification briefing completed by June 1991. The court has since sought to determine if existing procedural frameworks from previous asbestos litigations could expedite resolution. A notable discovery dispute arose regarding the identification of colleges using defendants' products, which is pivotal to these proceedings.

Defendants argue against providing evidence related to product identification beyond the class representative, claiming it is a 'merits' issue inappropriate for class certification discovery. They state their obligation is limited to the named representative, while Plaintiff’s counsel asserts that if Defendants challenge the adequacy of Central Wesleyan as a representative due to lack of proof about specific products in its buildings, they are entitled to evidence regarding other potential class representatives. The Plaintiff has shown that eight buildings contain asbestos materials but has only identified National Gypsum as a specific defendant. The Plaintiff lacks access to Defendants’ records to determine which defendants sold asbestos products to other educational institutions.

Regarding class action treatment in the Fourth Circuit, Defendants reference Windham v. American Brands, which denied class certification due to individual damages predominating. However, recent case law, particularly In re A.H. Robins, suggests a shift towards favoring class actions in mass tort cases, emphasizing that class actions can provide a more efficient and fair resolution. Judge Russell's opinion highlights concerns over the inefficiency of individual trials in mass tort litigation and endorses the class action as a preferable method for managing such cases, noting a trend toward greater receptiveness to class actions in these contexts.

Judge Russell's liberal interpretation of Rule 23 is supported by two asbestos-related cases: Jenkins v. Raymark Industries and In re School Asbestos Litigation. Defendants highlight that A.H. Robins involved a single product and was largely settled prior to certification, while Plaintiffs argue that the settlement anticipates jury trials for claimants nationwide opting out of the settlement, which will be governed by their respective state laws. This indicates a broader perspective on class certification than previously recognized.

To certify a proposed class action under Federal Rule of Civil Procedure 23, it must satisfy Rule 23(a) and one subdivision of Rule 23(b). The court evaluates Rule 23(a), which outlines four prerequisites: numerosity, commonality, typicality, and adequacy.

1. **Numerosity**: Rule 23(a)(1) requires that the class be so numerous that joining all members is impracticable. There are approximately 3,000 U.S. colleges and universities, with 16-35% potentially containing friable asbestos, thus meeting the numerosity requirement, which has previously been satisfied with as few as 18 members.

2. **Commonality**: Rule 23(a)(2) necessitates common questions of law or fact among class members. It does not require all issues to be common, just the presence of some. The court identifies significant common issues, including health risks associated with asbestos and defendants' knowledge of these hazards. The existence of different actions by some defendants does not undermine commonality, as the focus is on shared facts relevant to the class rather than the individual actions of each defendant. The court concludes that the commonality requirement is satisfied.

The requirements of typicality and adequacy under Rule 23(a) necessitate that the claims of representative parties reflect those of the class and that the representative effectively safeguard the class's interests. The Plaintiff argues that the presence of friable asbestos in its building, similar to that in other college buildings, will deteriorate, releasing asbestos fibers and necessitating federally mandated removal. The Fourth Circuit has dismissed arguments against the inevitability of such removal costs due to federal regulations. These regulations link the claims of all colleges with friable asbestos, regardless of specific materials involved. Central Wesleyan has evidence of both major types of asbestos relevant to the lawsuit. Claims are deemed typical if they arise from the same conduct and share legal theories, which Central Wesleyan asserts they do, aligning on negligence, strict liability, breach of warranty, and conspiracy.

Defendants argue that Central Wesleyan cannot represent the class without proving the presence of each Defendant's asbestos products in its buildings. Central Wesleyan counters that its conspiracy claim negates this requirement at this stage, and highlights that Defendants have restricted discovery of relevant information regarding the colleges they supplied. It asserts that access to this information would enhance the class's ability to address Defendants' product identification challenges. Central Wesleyan is deemed an adequate representative due to its proactive approach and competent legal counsel, with no challenges to its representation from any other college or university. A survey indicated minimal opt-out interest among colleges, further supporting Central Wesleyan's adequacy as a representative.

Defendants' challenge relates to standing and subject matter jurisdiction, emphasizing that courts are not obligated to make immediate jurisdiction determinations. The trial judge has the discretion to delay such assessments until trial, as affirmed by case law (Sterling v. Velsicol Chemical Corp., In re School Asbestos Litigation). Central Wesleyan argues that the postponement of product identification aligns with prior judicial instructions to defer merits discovery until after class certification. The Supreme Court has upheld district courts' authority to allow jurisdiction-related discovery (U.S. Catholic Conference v. Abortion Rights Mobilization).

While Defendants concede that their products may be present in some academic institutions, they dispute Central Wesleyan's inclusion, refusing to provide necessary discovery information. Regarding conspiracy claims, if plaintiffs assert injury from a conspiracy involving non-dealing defendants, they have standing to sue these parties (Brown v. Cameron-Brown Company). However, with merits discovery on hold pending class certification, the record remains incomplete. Conspiracy claims have been recognized in asbestos cases (Nicolet, Inc. v. Nutt).

Given Defendants' resistance to product identification discovery, the court will postpone its decision on class representation until after this discovery phase. For conditional certification purposes, Central Wesleyan has sufficiently alleged a conspiracy to proceed as a class representative, with a final decision on representation reserved until product identification is complete. Defendants argue that allowing additional intervenor colleges as class representatives would be futile due to South Carolina's 'door closing statute,' citing Proctor. Schwartz, Inc. v. Rollins. However, the Fourth Circuit has indicated that federal courts may bypass state statutes when significant federal considerations, such as promoting efficient multi-party actions, are at stake, as noted in Szantay v. Beech Aircraft Corp. These considerations have influenced recommendations from judicial authorities regarding the consolidation of asbestos litigation across federal courts.

The document addresses a significant legal action involving the consolidation of asbestos litigation, which has faced rejection by various courts over the past 12 years. It emphasizes the necessity of a federal approach to consolidate these cases into a single forum. The applicability of the 'door closing' statute in the context of class actions is questioned, with reference to the Supreme Court's ruling that allows absent class members to intervene as formal parties. A key treatise indicates that independent jurisdictional grounds are not needed for class members to intervene, supporting the Court's decision to allow conditional certification and the possibility of additional non-resident plaintiffs intervening later.

The defendants argue against the court's jurisdiction over asbestos property claims from out-of-state colleges based on the 'local action' doctrine, which traditionally restricts courts from affecting property rights in other states. However, several courts have deemed asbestos property damage claims as transitory torts that do not invoke this doctrine. The Court aligns with this perspective, stating that the claims are not tied to real property interests, thus rejecting the local action argument.

The Court confirms that the prerequisites of Rule 23(a) for class certification are satisfied and proceeds to evaluate Rule 23(b) requirements. Under Fed. R. Civ. P. 23(b)(3), certification is warranted if common legal or factual questions predominate and if a class action is the superior method for resolving the controversy. Key considerations include the interest of class members in individual actions, existing litigation related to the claims, the appropriateness of the forum, and potential management challenges of a class action. The analysis reveals strong support for certification, particularly highlighted by a survey indicating that only 15 out of approximately 2,000 potential class members wish to opt out, demonstrating a strong preference for unified proceedings.

The document addresses several critical points regarding the litigation context and forum suitability for a proposed class action involving colleges. First, there is a consensus that few individual lawsuits have been filed by colleges, with defendants suggesting a lack of claims or interest, while the plaintiff argues this is due to the ongoing national coordination of the class action, deterring individual actions. The inquiry into pre-existing litigation aims to establish whether it would render the class action unproductive, with the conclusion that this is not the case.

Regarding forum desirability, defendants argue that litigants would face travel difficulties, which is a common concern in national class actions. They also invoke the 'local action' doctrine, which has previously been deemed inapplicable by this and other courts for national class actions involving out-of-state properties. Additionally, concerns about the 'South Carolina door-closing' statute are addressed; the court finds it inapplicable since the named plaintiff is a South Carolina resident, thus validating subject matter jurisdiction based solely on the citizenship of the named plaintiff without considering absent class members.

Finally, the issue of manageability is discussed, with defendants citing the School Asbestos class action as evidence of potential unmanageability. The plaintiff counters that the lengthy duration of that case was expected due to its pioneering nature and delays in discovery. The document notes that only a small number of individual cases have progressed to trial. Courts facing manageability challenges have adopted various approaches, including outright denial of class action certification based on these concerns.

In Sisters of Saint Mary et al. v. AAER Sprayed Insulation et al., the court examined the manageability of class actions, particularly in relation to asbestos litigation. Rather than viewing class certification as an "all or nothing" scenario, some courts have opted to certify specific issues and create subclasses to address manageability concerns. This approach focuses on repetitive factual issues, such as defendants' knowledge and testing, which often lead to redundant testimony and evidence across multiple claims. A Texas federal court highlighted the problem of repetitive proceedings in asbestos cases, emphasizing that many claims involve the same witnesses and factual determinations. The National Schools class action illustrated that redundant evidence is common in asbestos litigation, suggesting that class actions could minimize time and costs associated with resolving shared issues. The Third Circuit endorsed limited issue certification under Fed. R. Civ. P. 23(c)(4)(A), indicating that resolving a few common issues could significantly advance litigation, even if individual damage assessments are necessary. Judge Russell in A.H. Robins reinforced this by stating that courts should utilize the class treatment provision to narrow disputed issues, noting that separate issues may be certified even if they are not the main focus of the case. Overall, there is a judicial consensus that addressing common issues can facilitate the judicial process in asbestos-related claims.

The court has decided to utilize its discretion under Federal Rule of Civil Procedure 23(c)(1) to conditionally certify specific issues for a Phase One certification process, focusing on topics such as hazard knowledge, conspiracy, testing, warnings, and intentional or reckless conduct. The case will move forward with discovery and evidence presentation on the common issues outlined, while notice of this limited certification will be provided to the class, including their right to intervene. Plaintiff's counsel is tasked with submitting a proposed notice to defense liaison counsel within 45 days.

As part of the Phase One proceedings, Plaintiff’s counsel is permitted to conduct "product identification" discovery against all Defendants to ascertain which colleges or universities possess the Defendants' asbestos-containing products. Colleges and universities may also intervene as additional class representatives. A decision on the standing of Central Wesleyan and any other potential class Plaintiffs will be deferred until after the product identification discovery is concluded.

The common issues for Phase One certification include:

1. Defendants' awareness of the health hazards associated with asbestos.
2. Determining if specific asbestos products are "friable" as defined by federal regulations.
3. Whether Defendants' products can release asbestos fibers during foreseeable use.
4. Participation of Defendants in conspiratorial activities.
5. Adequacy of testing conducted by Defendants on their products for fiber release potential.
6. Failure to warn about the risks of asbestos fiber release and contamination.
7. Breach of duty of care in selling friable asbestos products for college use.
8. Justification for punitive damages against Defendants.

The court will postpone any further certification of additional issues or subclasses until the Phase One proceedings are complete. Additionally, the court will address outstanding motions, including jurisdictional motions to dismiss filed by Canadian Defendants Atlas Turner, Inc. and Bell Asbestos Mines, Ltd., which are based on a lack of personal jurisdiction.

A motion to compel jurisdictional discovery has been filed by the Plaintiff, seeking an order under Fed. R. Civ. Pro. 37(a) to compel three Canadian Defendants—Asbestos Corporation Ltd., Bell Asbestos Mines, Ltd., and Atlas Turner, Inc.—to fully respond to jurisdictionally relevant discovery requests. The court does not view the Plaintiff's efforts as a frivolous fishing expedition, acknowledging the necessity of discovery to address personal jurisdiction issues. The Plaintiff's right to such discovery is supported by precedents indicating that when claims are not frivolous, courts should allow jurisdiction-related discovery to help the Plaintiff meet their burden of proof.

The Canadian Defendants assert that the Quebec Business Concerns Records Act (QBCRA) prohibits them from complying with the discovery requests without risking criminal penalties. They cite a provision of the QBCRA that prevents the removal or sending of documents relating to a business concern outside the province without authorization. However, the Plaintiff argues that foreign nondisclosure laws do not exempt Defendants from responding to U.S. discovery requests and do not limit the court's authority to compel such responses. The QBCRA allows for exemptions in routine business operations and grants the provincial Attorney-General the power to seek court orders to prevent document removal when necessary.

Criminal penalties are established for violations of judicial orders under section 4 of the relevant statute. The purpose of the Quebec Business Corporation Records Act (QBCRA) remains unclear, though it appears to mandate that Quebec corporations maintain their business records within the province. A court found that compliance with a plaintiff's discovery requests may not necessarily violate the QBCRA. In a similar case, Lyons v. Bell Asbestos Mines, Judge Joe F. Anderson, Jr. determined that defendants did not sufficiently demonstrate the QBCRA's applicability to the plaintiff's discovery demands. He further concluded that even if the QBCRA applied, producing documents outside Quebec or inspecting documents within Quebec would not contravene the statute, and responding to interrogatories would not involve removing documents from the province. The current court agrees with this analysis, finding that the defendants have not adequately shown that the QBCRA applies to the plaintiff’s requests or would obstruct any approved discovery. Additionally, it was noted that provincial legislative acts, such as the QBCRA, lack the comity afforded to international laws, as they do not constitute sovereign states under international law principles. Consequently, the QBCRA does not limit the court's authority to compel responses to discovery requests under federal rules, preventing litigants from evading local discovery obligations by citing foreign law.

The Court grants the Plaintiffs' motion to compel discovery, aligning with the precedent set in Clemson University v. W.R. Grace. Consequently, the motions to dismiss by Defendants Atlas Turner, Inc. and Bell Asbestos Mines, Ltd. are denied, as jurisdictional discovery must occur prior to any ruling on these motions, which would be deemed premature at this stage. Defendants may renew or submit new motions to dismiss after the discovery process is complete.

Regarding Defendant United States Gypsum's motion for summary judgment, the Court finds it premature to resolve this motion until discovery, particularly about product identification and conspiracy allegations, is finished. The Court acknowledges that the conspiracy allegations are not frivolous and deems it inappropriate to grant summary judgment before completing discovery. Thus, United States Gypsum's motion is denied but allows for future motions post-discovery.

Defendant Kaiser Gypsum's motion to dismiss, linked to a motion to deny class certification, is also denied. The Court notes that Judge Houck previously limited merits discovery until after the class certification issue is resolved, indicating that the statute of limitations defense raised by Kaiser Gypsum necessitates factual discovery for each Plaintiff. Given the approval of class certification, the Court concludes that adjudicating this motion at this time would be premature, allowing for renewal after discovery completion.

Additionally, the Plaintiff has filed a motion for preliminary approval of a class settlement with Defendant Certainteed Corporation.

The Court has assessed the proceedings and materials related to the case, agreeing with Judge Houck's view that there is no justification for delaying the granting of the Plaintiff's motion for preliminary approval of a class settlement. This preliminary approval is seen as a necessary step for the Court to evaluate the fairness of the settlement while ensuring no prejudice to the other Defendants. Consequently, the motion for preliminary approval is granted, but further proceedings regarding the “Certainteed Settlement” are stayed until a status conference can be scheduled to address issues like the notice form.

The Plaintiff’s class certification motion is conditionally granted, while all pending motions to dismiss and for summary judgment are denied, allowing for renewed motions post-discovery. The Plaintiff’s motion to compel is approved, and counsel must meet within 45 days to devise a plan for Phase One discovery. If an agreement cannot be reached, they should contact the Court for a scheduling conference. Counsel is also required to discuss the proposed notice form and other related concerns after an initial draft is prepared by the Plaintiff. 

The Court encourages consent orders and allows parties to seek immediate appeal regarding this decision under 28 U.S.C. 1292(b), staying all further proceedings until the appeal time has elapsed or the Fourth Circuit rules on the appeal. Additionally, a compilation of asbestos property damage trials revealed a high appeal rate in prior cases, and several universities have expressed support for the class certification motion, offering to intervene if necessary.

Class certification is deemed the most cost-effective approach for asbestos litigation, despite historical challenges in this area. The court references various legal precedents, including the necessity of removing asbestos-containing materials during building renovations, and discusses the absence of strict liability claims in South Carolina for products sold before 1974. However, it notes that proving negligence may suffice for establishing strict liability due to their overlapping nature. The court also addresses concerns about subject matter jurisdiction related to foreign corporations, clarifying that such issues pertain to a corporation's capacity to sue rather than the court's jurisdiction. Furthermore, the court expresses skepticism about whether the current stage is appropriate to tackle door-closing statute issues, indicating that prior rulings have not effectively reconciled federal interests with state statute limitations. It concludes that if federal concerns regarding asbestos litigation resolution do not outweigh state statutes, it remains unclear what constitutes a significant federal interest.

Efforts are underway to provide remedies for plaintiffs entangled in prolonged asbestos litigation in federal courts and to mitigate the financial strain on defendants, which could further impact the judicial system. This situation is framed as a significant consideration for addressing the challenges highlighted by Chief Justice Rehnquist regarding asbestos litigation. Professor Miller's recent arguments during class certification discussions have shifted from his prior published views, which raises questions about their reliability. 

Judge Russell’s remarks in *Stott v. Haworth* about class certification indicate that it is valid only when a crucial issue overshadows others. This implies that the possibility of “total certification” in *Stott* does not undermine Judge Russell’s prior statements on partial certification in *Robins*, which could aid in resolving specific aspects of the larger controversy. Defendants argue that issues should be confined to their awareness of asbestos-related health risks linked to their products; however, courts have recognized the relevance of knowledge regarding asbestos hazards in various contexts, including occupational exposure. 

The court acknowledges that factual inquiries related to these issues do not preclude limited certification despite the defendants’ references to differing state laws. Other courts have determined that variations in state law do not pose insurmountable barriers to certification. The court has also been informed of several motions that have been resolved or are moot, including a motion to strike class allegations by United States Gypsum and a motion to dismiss by Ohio Lime Company, both of which have been rendered moot or withdrawn.

Kaiser Gypsum's motion to compel, filed on November 5, 1987, is deemed moot until discovery begins, with the court allowing a future motion if necessary. Similarly, the plaintiffs' counsel's motion to compel from July 27, 1988, is also considered moot. The court has instructed its docketing clerk to mark the earlier motion from July as moot and superseded by a new motion to compel filed by the plaintiff on November 14, 1988. Among the Canadian defendants, only Bell Asbestos Mines Ltd. and Atlas Turner have filed motions to dismiss due to lack of personal jurisdiction; Asbestos Corporation, Ltd. has not filed such a motion. Atlas Turner and Bell Asbestos have submitted Canadian court orders that they believe prohibit violations of the Quebec Business Corporations Act (QBCRA), but the court finds these orders do not impact its conclusions. The defendants claim they have not received specific discovery requests; however, the plaintiff contends that prior discovery orders from a related case will apply. The court clarifies that defendants can object to future discovery requests. The motion to dismiss by the English defendants is denied with permission to renew after discovery. Issues pending include subject matter jurisdiction, product identification, and conspiracy allegations. The court notes varying approaches to the statute of limitations defense, referencing past cases where such defenses were deferred or considered on a case-by-case basis.