Williams v. Basf Catalysts LLC

765 F.3d 306

Kimberlee WILLIAMS, individually, as personal representative of the Estate of Charles L. Williams, deceased on behalf of said estate, and as representative of others similarly situated; Nancy Pease, individually, as personal representative of the Estate of William Clark, deceased on behalf of said estate, and as representative of others similarly situated; Marilyn Holley, as personal representative of the Estate of Kathryn Darnell, deceased on behalf of said estate, and as representative of others similarly situated; and; Donna Ware, individually, as personal representative of the Estate of Jennifer Graham, deceased on behalf of said estate, and as representative of others similarly situated; Donnette Wengerd, individually, as personal representative of the Estate of Jennifer Graham, deceased on behalf of said estate, and as representative of others similarly situated; Rosanne Chernick, Appellants

v.BASF CATALYSTS LLC; Cahill Gordon and Reindel LLP; Cahill Gordon and Reindel, A Partnership including a Professional Corporation; Thomas D. Halket; Arthur A. Dornbusch, II; Glenn Hemstock; Howard G. Sloane, a/k/a Peter Sloane; Ira J. Dembrow; Scott A. Martin; John Doe Business Entities 1 to 100, are fictitious coporations, partnerships, or other business entities or organizations that BASF Catalysts LLC is responsible or liable for and whose identities are not presently known, which entities may have mined, milled, manufactured, sold, supplied; John Doe Business Entities 101 to 200, are the fictitious firms, corporations, partnerships, limited liability companies/associations or other business entities or organizations whose indentities are not presently known, and who may have perpetrated, or are responsible for, are the alter egos; John Doe Lawyers 1 to 500, are the fictitious names of lawyers and law firms, legal professional corporations, legal professional partnerships, or other professional business business entities or organizations, or their agents, employees, or servants, acting within the course and; John Doe 1 to 500, are the fictitious names of individuals whose identities are not presently known, who may have perpetrated, aided and abetted, conspired with, acted in concert with and/or are secondarily responsible or liable under law for the conduct or activities of.

No. 13–1089.

United States Court of Appeals, Third Circuit.

Argued March 13, 2014.

Filed: Sept. 3, 2014.

Michael Coren, Esq, Harry M. Roth, Esq., Cohen, Placitella & Roth, P.C., Philadelphia, PA, Christopher M. Placitella, Esq., Cohen, Placitella & Roth, P.C., Red Bank, N.J., Jeffrey M. Pollock, Esq., [argued], Fox Rothschild LLP, Lawrenceville, N.J., Attorneys for Appellants.

Stephen M. Orlofsky, David C. Kistler, Blank Rome LLP, Princeton, N.J., Eugene F. Assaf, Esq., [argued], Daniel A. Bress, Esq., Peter A. Farrell, Esq., Michael F. Williams, Esq., Kirkland & Ellis LLP, Washington, D.C., Attorneys for Appellee BASF Catalysts LLC.

Robert E. Ryan, Esq., Marc D. Haefner, Esq., Craig S. Demareski, Esq., Connell Foley LLP, Roseland, N.J., John K. Villa, Esq., David S. Blatt, Esq., Kannon K. Shanmugam, Esq, [argued], Matthew B. Nicholson, Esq., Richard A. Olderman, Esq., Williams & Connolly LLP, Washington, D.C., Attorneys for Appellees Cahill Gordon & Reindel LLP, Howard G. Sloane, Ira J. Dembrow, and Scott A. Martin.

Eric Tunis, Esq., [argued], Greenbaum, Rowe, Smith & Davis, Iselin, NJ, Olivier Salvagno Esq., Greenbaum, Rowe, Smith & Davis LLP, Woodbridge, N.J., Attorneys for Appellee Thomas D. Halket.

Walter F. Timpone, Esq., Walter R. Krzastek, Jr., Esq., Michael B. Devins, Esq., McElroy, Deutsch, Mulvaney & Carpenter, LLP, Morristown, N.J., Attorney for Appellee Glen Hemstock.

Kevin H. Marino, Esq., John A. Boyle, Esq., Marino, Tortorella & Boyle, P.C., Chatham, N.J., Attorneys for Appellee Arthur A. Dornbusch, II.

Before: McKEE, Chief Judge, and AMBRO and FUENTES, Circuit Judges.

OPINION

FUENTES, Circuit Judge.

This putative class action lawsuit alleges that BASF Catalysts LLC and Cahill Gordon & Reindel conspired to prevent thousands of asbestos-injury victims from obtaining fair tort recoveries for their injuries. Decades ago, BASF's predecessor, Engelhard Corp, discovered that its talc products contained disease-causing asbestos. Plaintiffs allege that, rather than confront the consequences of this discovery, Engelhard, with the help of its attorneys from Cahill, elected to pursue a strategy of denial and deceit. According to the complaint, Engelhard and Cahill collected the tests and reports that documented the presence of asbestos in Engelhardtalc and they destroyed or hid them; when new plaintiffs focused on Engelhard's talc as a possible cause of their disease, Engelhard represented that its talc did not contain asbestos and that no tests had ever said otherwise.

As pleaded, this lawsuit concerns years of purported deceit by Engelhard and Cahill. This action is not itself an asbestos injury case, but rather an action about Engelhard and Cahill's conduct when they confronted asbestos injury cases in state courts around the country. The alleged scheme outlived most of the original plaintiffs, whose diseases have since taken their lives. It did not last forever. Spurred by recent testimony that Engelhard's talc contained asbestos and that the company knew it, survivors and successors of the original asbestos-injury suits have brought new claims against Cahill and BASF, Engelhard's successor. The crux of their complaint is that BASF and Cahill defrauded them in their initial lawsuits and caused them to settle or dismiss claims that they would otherwise have pursued.

The District Court dismissed plaintiffs' complaint in its entirety. Analyzing the claims individually, the District Court determined that each was inadequately pled or barred by law. Analyzing the various declarations and injunctions requested by plaintiffs—ranging from an injunction against the future invocation of res judicata based on past state court judgments to a declaration that BASF and Cahill committed fraud—the District Court dismissed them as beyond its power to grant. The Court did, however, reject defendants' argument that the Rooker–Feldman doctrine deprived it of jurisdiction. Plaintiffs have appealed the dismissal of three claims: fraud, fraudulent concealment, and violation of the New Jersey Racketeer Influenced and Corrupt Organizations Act. Plaintiffs also defend their requested relief.

We conclude that the District Court erred when it dismissed the fraud and fraudulent concealment claims. The Amended Class Action Complaint properly alleges the elements of fraud and fraudulent concealment—namely that BASF and Cahill lied about and destroyed the asbestos evidence to plaintiffs' detriment. Neither the New Jersey litigation privilege nor pleading requirements stand in the way of these claims.

The District Court did not err in dismissing the New Jersey RICO claim. Plaintiffs, obliged to plead an injury to their business or property, have not done so. They have alleged an injury to the prosecution of their earlier lawsuits which, under New Jersey law, does not constitute an injury to their property.

Lastly, the District Court correctly discerned that it could not grant plaintiffs all of their requested relief. To the extent that plaintiffs attempt to have the District Court decide, at this point, the statute of limitations, laches, and preclusion issues that will likely arise in future cases, plaintiffs fail to present at Court with a whole or ripe controversy. Plaintiffs may, however, seek injunctive and declaratory relief aimed at resolving the claims alleged.

Accordingly, we reverse in part, affirm in part, and remand for further proceedings.

I. Background of the Case

We accept as true the Amended Class Action Complaint's well-pled allegations. That complaint alleges a sustained plot by BASF and its law firm, Cahill Gordon, to mislead actual and potential asbestos-exposure plaintiffs into believing that BASF's talc products did not contain asbestos. In truth, plaintiffs contend, BASF's own tests and records proved that its talc products contained asbestos.

Defendants in this case include both Engelhard's successor, BASF, and Engelhard's former employees and attorneys. For much of the events of the case, the relevant BASF companies operated under the Engelhard label.¹ Thomas D. Halket was BASF's in-house counsel assigned to asbestos claims. Glenn Hemstock was BASF's Vice President of Research and Development. Hemstock supervised those scientists who “tested or conducted research on Engelhard's talc.” Compl. ¶ 42. Arthur A. Dornbusch II was BASF's General Counsel. We refer to these BASF defendants as “BASF” or “Engelhard.”

Cahill Gordon & Reindel LLP represented BASF and its predecessors in asbestos litigation from 1983 to 2010. During that time, Howard G. Sloane, Scott A. Martin, and Ira J. Dembrow worked for BASF as lawyers at Cahill. We refer to these Cahill defendants as “Cahill.”

The six named plaintiffs in this action represent the interest of a deceased spouse or relative who had worked in proximity to asbestos and died of asbestos disease. These plaintiffs—for whom we will often use Kimberlee Williams as a representative—assert fraud, fraudulent concealment, and New Jersey RICO claims on behalf of their deceased relatives.

A. Engelhard mined talc containing asbestos.

From 1967 to 1983, Engelhard operated a talc mine in Johnson, Vermont. “Talc is a naturally occurring mineral that is mined and then processed or used in manufacturing by companies in numerous parts of the United States.” Compl. ¶ 68. Engelhard processed the talc from the Johnson Mine into products, such as “Emtal talc” and “G & S Talc.” Compl. ¶ 73. These products found use in wall board, joint compound, auto body “filler,” dusting agents, and children's balloons. Compl. ¶ 74.

Emtal talc and other Engelhard talc products “contained chrysotile asbestos...