Pfeifer v. John Crane, Inc.

220 Cal.App.4th 1270

164 Cal.Rptr.3d 112

Anne PFEIFER, Individually and as Personal Representative, etc., Plaintiff and Appellant,

v.JOHN CRANE, INC., Defendant and Appellant.

B232315

Court of Appeal, Second District, Division 4, California.

Filed October 29, 2013

As Modified on Denial of Rehearing November 27, 2013

See 6 Witkin, Summary of Cal. Law (10th ed. 2005) Torts, § 1174A.

APPEAL from an order of the Superior Court of Los Angeles, Amy Hogue, Judge. Affirmed as modified. (Los Angeles County Super. Ct. No. BC416536)

Simon Greenstone Panatier Bartlett, Long Beach, and Brian P. Barrow for Plaintiffs and Appellants William Pfeifer and Anne Pfeifer.

Farella Braun & Martel, San Francisco, John L. Cooper, Racheal Turner and Deborah K. Barron for Defendant and Appellant John Crane, Inc.

MANELLA, J.

William and Anne Pfeifer asserted claims for negligence, strict liability, and loss of consortium against John Crane, Inc. (JCI), alleging that its asbestos-laden products caused William Pfeifer's mesothelioma. During the trial, the court rejected JCI's proffered instructions regarding its “sophisticated user” defense, and directed a verdict on the defense. After the jury returned a verdict in the Pfeifers' favor, a judgment was entered awarding them compensatory and punitive damages. The trial court subsequently entered orders, inter alia, crediting JCI with an offset for pre-verdict settlements, and awarding expert fees to the Pfeifers. JCI appealed from the judgment and certain related orders, and the Pfeifers cross-appealed.

Regarding JCI's appeal, we conclude that the trial court correctly declined to give JCI's requested instructions on its “sophisticated user” defense, which stated that employees of a sophisticated user are deemed to be sophisticated users. We hold that when a manufacturer provides hazardous goods to a “sophisticated” intermediary that passes the goods to its employees or servants for their use, the supplier is subject to liability for a failure to warn the employees or servants of the hazards, absent some basis for the manufacturer to believe the ultimate users know or should know of the hazards. With respect to JCI's other contentions, we conclude there was sufficient evidence to support the jury's findings regarding comparative fault, and that the award of punitive damages was supported by the evidence and was not excessive in amount. We dismiss JCI's appeal insofar as it challenges an award of expert fees to the Pfeifers, as JCI filed no notice of appeal from the award. Regarding the Pfeifers' cross-appeal, we affirm the trial court's determination of JCI's credit for the pre-verdict settlements.

We otherwise find no error in the judgment and related orders, with the exception of an error both sides acknowledge regarding the determination of the Pfeifers' net recovery of economic damages. We therefore dismiss JCI's appeal in part, modify the judgment to reflect the correct determination of the Pfeifers' net economic damages, and affirm the judgment and related orders, as modified.

RELEVANT FACTUAL AND PROCEDURAL BACKGROUND

A. Pretrial Proceedings

Beginning in 1917, JCI manufactured and sold packing used in valves and pumps, and distributed gaskets used in flanges and pipe systems. Some of these products contained asbestos. JCI sold packing and gaskets containing asbestos to the United States Navy and to the United States government. From 1963 to 1971, William Pfeifer served in the Navy. After leaving the Navy, he worked for the United States government as a boiler technician until 1982. In 2009, he was diagnosed with pleural mesothelioma, a type of cancer usually caused by exposure to asbestos.

On June 25, 2009, the Pfeifers filed their complaint for negligence, strict liability, and loss of consortium against approximately 31 suppliers of asbestos-laden products. The complaint alleged that William Pfeifer's mesothelioma resulted from his exposure to asbestos from the defendants' products. The Pfeifers sought compensatory and punitive damages.

B. Trial

Prior to trial, the Pfeifers entered into settlements with several defendants. At a result of the settlements and other dispositions, on November 1, 2010, at the commencement of jury selection, JCI was the sole remaining defendant in the action. Trial was bifurcated with respect to punitive damages.

1. First Phase of Trial

a. The Pfeifers' Evidence

William Pfeifer testified that after he entered the Navy in August 1963, he served as an apprentice fireman and boiler tender aboard destroyers. His responsibilities included removing and replacing gaskets and packing containing asbestos. The air he breathed often became dusty when he scraped away old gaskets and packing and replaced them. The Navy neither supplied him with a respirator nor provided training regarding dusty environments. From 1971 to 1982, after leaving the Navy, Pfeifer worked as a boiler technician at several land-based United States government sites. During that period, he replaced gaskets and packing; in addition, he sometimes repaired boilers with an asbestos-based JCI product that he did not encounter in the Navy, namely, a rope-like gasket that released dust when he put it in place. In May or June 2009, he learned that he had mesothelioma.

According to Pfeifer, JCI was a key supplier of the gaskets and packing he encountered in the Navy and as a boiler technician. Among the JCI products he frequently used were “2150 sheet gaskets.” Pfeifer estimated that JCI supplied 75 percent of the gaskets he removed, 70 percent of the materials from which he made replacement gaskets, and 90 to 95 percent of the packing he removed and replaced.James R. Millette, an environmental scientist, testified that he examined JCI products identical or similar to those William Pfeifer encountered. According to Millette, JCI's products showed exposed asbestos fibers, even though the products embedded the fibers in graphite or other materials. In addition, Millette opined that the cutting, scraping, and other operations that Pfeifer performed on the products released asbestos fibers into the air.

Dr. Carl Andrew Brodkin, a specialist in asbestos-related diseases, opined that Pfeifer's exposure to asbestos substantially contributed to his mesothelioma. Brodkin further testified regarding the evolution of medical knowledge concerning asbestos-related diseases. According to Brodkin, as early as 1927, researchers knew that exposure to asbestos dust caused the noncancerous lung disease called “asbestosis.” In the 1940's, 1950's, and 1960's, research studies linked asbestos to certain cancers, namely, lung cancer and mesothelioma. By 1960, it was generally accepted that exposure to asbestos caused mesothelioma. At the time, the hazards of asbestos were reported in medical journals and the popular media, including magazines such as Newsweek.

George Springs, a retired JCI vice president, testified as JCI's designated representative regarding its response to the hazards of asbestos. He stated that from 1931 to 1985, JCI sold gaskets and packing containing asbestos. During that period, JCI conducted no research into whether its asbestos-laden products were hazardous.

Springs further testified that JCI first became aware of asbestos's health hazards in 1970, when it learned that handling raw asbestos enhanced the risk of lung problems for workers who smoked. In 1975, to comply with regulations propounded by the federal Occupational Safety and Health Administration (OSHA), JCI began monitoring the air in its factories for asbestos particles, and used engineering controls to help keep dust levels down. In 1981, pursuant to the OSHA regulations, JCI created a safety data sheet regarding the 2150 gaskets, which stated that overexposure to asbestos caused asbestosis and cancer. Because JCI prepared the safety data sheet for the benefit of its employees, customers received a copy only when they asked for it. In 1983, JCI began placing warnings on its products regarding the hazards of asbestos.

According to Springs, the absence of warnings on JCI's products was consistent with the then-effective OSHA regulations, which required no labels when the asbestos fibers in a product were encased in bonding materials such as graphite, grease, oil, or rubber, unless it was reasonably foreseeable that their use would release concentrations of asbestos fibers exceeding certain defined limits. Springs acknowledged that JCI knew that its customers sometimes replaced gaskets using methods that created asbestos dust or fragmented old gaskets. He stated that JCI recommended other methods which, if properly applied, released little dust. Springs also acknowledged that JCI never tested its products to determine whether the bonding agents prevented the release of asbestos fibers.

David Todd Fractor, an economist, estimated that William Pfeifer's lost earnings, benefits, and household services totaled $1,508,335. The parties stipulated that William Pfeifer's past medical expenses were $1,054,469.47, and Dr. Robert Cameron, a thoracic surgeon who treated William Pfeifer, opined that asbestos exposure caused Pfeifer's mesothelioma, and that his future medical expenses ranged from $500,000 to “several” million dollars. Anne Pfeifer testified regarding the Pfeifers' non-economic injuries.

b. JCI's Evidence

James Paul Delaney, who served as an apprentice fireman and machinist's mate in the Navy, testified regarding the Navy's procedures for replacing gaskets and packing. He stated that the Navy required personnel to wear respirators in dusty environments, that the Navy began an asbestos abatement program in the 1970's, and that warning labels first appeared on asbestos-laden products bought by the Navy in the 1980's. According to Delaney, the Navy's specifications for a product regulated the words placed on the product.

Dr. Allan Feingold, a lung specialist, opined that William Pfeifer's mesothelioma arose from his exposure to...