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In a major defeat for asbestos plaintiffs in federal court, the 3rd U.S. Circuit Court of Appeals last week upheld the practice of Senior U.S. District Judge Charles R. Weiner that allows for trials only on compensatory damages claims and keeps punitive damages claims on hold indefinitely. A group of three asbestos plaintiffs represented by Dallas attorney Alan B. Rich of Baron & Budd petitioned the 3rd Circuit for a writ of mandamus directing the Judicial Panel on Multi-District Litigation to remand punitive damages claims for trial together with the remainder of personal injury claims arising from asbestos exposure. The appeal was directed at the MDL panel, but in practical fact targeted Weiner, who was assigned MDL 875, a case that includes all asbestos personal injury litigation in the federal courts. The plaintiffs couldn’t have been less lucky when the three-judge panel was assigned to hear the case, since it included Senior U.S. Circuit Judge Joseph F. Weis Jr., a longtime, outspoken critic of allowing punitive damages in asbestos cases. Weis was the lead dissenter in Dunn v. Hovic, a 1993 decision in which an en banc panel of the 3rd Circuit reviewed a Virgin Islands jury’s verdict of $20 million in punitive damages in an asbestos case which the trial judge had already reduced to $2 million. The 11-judge majority, led by then-Chief U.S. Circuit Judge Dolores K. Sloviter, reduced the punitives to $1 million. But Weis, in dissent, called for an end to punitives in all asbestos cases, saying they no longer made sense since asbestos manufacturers were going bankrupt one by one, and future plaintiffs would be left with nothing. Sloviter opined that a moratorium on punitives that was limited to the Virgin Islands would be unfair since the state courts in Pennsylvania, Delaware and New Jersey continued to allow punitives. Congress, not the courts, she said, could fix the problem that Weis had defined. But since then, it seems that Weis’ wish came true because Judge Weiner has effectively barred federal asbestos plaintiffs from seeking punitives through the power he wields as the MDL transferee judge. When the 3rd Circuit was asked to order Weiner to stop, it was Weis who authored the opinion that said the practice is perfectly legal. Some of Weis’ remarks in last week’s In Re: Mary Neil Collins are strongly reminiscent of his dissent in Dunn v. Hovic. “The resources available to persons injured by asbestos are steadily being depleted. The continuing filings of bankruptcy by asbestos defendants disclose that the process is accelerating. It is responsible public policy to give priority to compensatory claims over exemplary punitive damage windfalls; this prudent conservation more than vindicates the [MDL] panel’s decision to withhold punitive damage claims on remand,” Weis wrote in an opinion joined by U.S. Circuit Judges Maryanne Trump Barry and Max Rosenn. “It is discouraging that while the panel and transferee court follow this enlightened practice, some state courts allow punitive damages in asbestos cases. The continued hemorrhaging of available funds deprives current and future victims of rightful compensation,” Weis wrote. The petition was filed by four asbestos plaintiffs who complained that when Weiner remanded their cases for trial in their home districts, he withheld remand on the requests for punitive damages. Weis found that Weiner has, for more than a decade, maintained a practice of withholding remand of punitive claims while allowing the compensatory matters to proceed to trial. Rich argued that the MDL panel was overstepping its authority by attempting to preserve the assets available to satisfy asbestos claims by refusing to remand the punitive damages issue. Pointing to the statute that governs MDL litigation, he argued that Section 1407(a) permits the panel only to separate “claims”; requests for punitive damages, he said, do not have the characteristics of independent claims because a party cannot bring an action for such awards in isolation. The law, Rich said, treats punitive damages as a form of relief — not as a separate claim or cause of action. But lawyers for Owens-Illinois Inc. and the Center for Claims Resolution pointed out that while claims for punitive damages are dependent on factors justifying compensatory awards, they require separate elements of proof such as malice, fraud or gross negligence. Many courts, they said, require or permit evidence of a defendant’s wealth — a factor not generally permitted when only compensation is sought. Because such evidence is necessary for a jury to assess punitive damages, but irrelevant to the merits of other claims, the lawyers noted, many jurisdictions also require that the punitive damages counts be tried separately from proceedings that determine compensatory awards. Judge Weis found that Section 1407(a) provides that “civil actions involving one or more common questions of fact … may be transferred [by the MDL panel] to any district for coordinated or consolidated pretrial proceedings.” At the conclusion of the pretrial phase, or before, he found, the law calls for the panel to remand cases to the districts where they were originally filed. But Weis said the law specifically provides that “the panel may separate any claim, cross-claim, counter-claim, or third-party claim and remand any of such claims before the remainder of the action is remanded.” The petitioning plaintiffs, Weis said, “would have us construe ‘claim’ in Section 1407(a) to be synonymous with ’cause of action,’ and a request for punitive damages to be merely an ‘issue’ as that term is used in Federal Rule of Civil Procedure 42(b).” Weis rejected the argument, saying “as a term of art and in common parlance, the meaning of ‘claim’ is not so circumscribed … . Neither the statute’s language nor the snippets of legislative history cited to us provides a basis for adopting the petitioners’ crabbed reading of the word.” Instead, Weis said, the legislative history of Section 1407 shows that Congress “intended transferee courts to have broad pretrial authority.” Judge Weiner’s “expansive interpretation” of the term “claim,” he said, “is the more reasonable one and that which we endorse.” Beyond the law, Weis found that an “even more compelling reason” to endorse Weiner’s practice was that it embodies sound public policy. Weis quoted Weiner in a previous case as saying that before punitive awards should be allowed, “the sick and dying, their widows and survivors should have their claims addressed first.” Weis concurred, saying, “Punitive damages are a windfall to the recipients over and above compensatory damages to which they are entitled.” The Report of the Judicial Conference Ad Hoc Committee on Asbestos Litigation, he said, accurately appraised the problem. The report stated: “Although there may be grounds to support an award, multiple judgments for punitive damages in the mass tort context against a finite number of defendants with limited assets threaten fair compensation to pending claimants and future claimants who await their recovery, and threaten the economic viability of the defendants. To the extent that some states do not permit punitive damages, such awards can be viewed as a malapportionment of a limited fund. Meritorious claims may go uncompensated while earlier claimants enjoy a windfall unrelated to their actual damages.”

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