Products Liability: Punitive Damages

Posted in Products Liability on February 22, 2011

Stewart v. Union Carbide Corporation (Second District, November 16, 2010) 190 Cal.App.4th 23, 117 Cal.Rptr.3d 791, 10 Cal. Daily Op. Serv. 14,363, 2010 Daily Journal D.A.R. 17,352

A plumber and his wife filed a products liability action against Union Carbide, an asbestos manufacturer, alleging that he had contracted mesothelioma as a result of exposure to asbestos in products used on commercial and residential construction projects. The plaintiffs further alleged that Union Carbide had been aware of the dangers of asbestos but had failed to adequately warn customers who purchased asbestos for use in their products, and had responded to their questions by downplaying concerns.

Following a jury verdict in favor of the plaintiffs, which included an award for punitive damages, the Defendant appealed, contending that the evidence showed that it had an “honest conviction” that the use of its product was safe when appropriate precautions were taken. However, the court of appeal affirmed the verdict, stating:

“The jury could perhaps have interpreted the evidence in the manner Union Carbide suggests, but the evidence also supports a different interpretation; that Union Carbide did not share its knowledge of the dangers of asbestos with its customers or with individuals who would, predictably, be exposed to dust from its products, and that it instead sought to downplay the risk.
. . .
For instance, there was evidence that at some points, the warning Union Carbide gave its customers was weaker than the warnings given to employees at its mine and its mill. In 1964, Union Carbide prepared a toxicology report on the danger of asbestos and by 1968 had prepared a brochure specifically for the drywall industry. These were given to customers, but not to union halls, and Union Carbide made no effort to deliver the report, brochure, or other information to workers.
. . .
The president of Hamilton Materials testified that after he and other Union Carbide customers became concerned about the dangers of asbestos, and contractors began asking questions, a drywallers’ association sought information about those dangers from Union Carbide, and was told that “it was no big deal.” On another occasion, when Hamilton asked Union Carbide about the dangers of asbestos, the Union Carbide representative said that “it was going to blow over. It was no big deal.” As Union Carbide argues, there is no evidence on when this was said, but the testimony is nonetheless relevant to punitive damages.

In June of 1972, a Union Carbide manager, B.L. Ingalls, wrote a memo to other members of Union Carbide’s marketing department, suggesting a “basic format for handling inquiries from customers concerning the new OSHA regulations.” Far from suggesting a full and frank discussion of the danger of asbestos, Ingalls wrote that “Controlling the conversation is paramount.” He suggested ways to “soothe” the customer, then wrote “If the customer is persistent and threatens to eliminate asbestos-a certain amount of aggressiveness may be effective. Words and catch phrases such as ‘premature,’ ‘irrational’ or ‘avoiding the inevitable’ will sometimes turn the table. The main objective is to keep the customer on the defensive, make him justify his position.”
. . .
Union Carbide argues that the punitive damages award violates its federal due process rights. . . . Union Carbide’s argument is simply insufficient. Plaintiffs’ case was that Union Carbide profited from the sale of a dangerous substance, that it knew the dangers of its product, that it failed to warn consumers of those dangers, and [plaintiff] developed a fatal cancer as a result. Union Carbide’s mere assertion to the contrary cannot change the result.”