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A woman born with birth defects can sue IBM and chemical manufacturers for fraud even though she was not even born when the semiconductor manufacturer allegedly lied to her mother about workplace safety, a divided appeals court has found. The majority of a 3-2 panel of the New York Appellate Division, 2nd Department, said it did not matter that the woman herself could not, as a fetus, have possibly relied on allegedly deceptive statements made by IBM. The court said in Ruffing v. Union Carbide Corp., 2001-07927, that under numerous holdings in New York, fraud could exist where a false representation was made to a third party, resulting in an injury to a plaintiff. In this case, the court said, allegations that IBM told the mother that her unborn child would not be harmed by chemicals in its East Fishkill, N.Y., plant was enough to sustain a fraud claim by the child, who is now 22 years old. In a dissenting opinion, two judges said a state Supreme Court justice in Westchester was correct to dismiss the claim, since it is impossible under state law to recover damages for defrauding an unborn child. Both the majority and the dissent agreed that the mother, Heather Curtis, could not herself assert fraud claims against IBM. Curtis’ negligence claims have been ruled time-barred, and the court said she could not use fraud allegations to circumvent the statute of limitations. Curtis and her daughter, Candace, are just two of more than 200 plaintiffs in New York, California and Minnesota who have sued IBM over workplace safety at its plants. More than half of those claims have been consolidated and are pending before Westchester Supreme Court Justice Joan B. Lefkowitz, with the first trial date set for March. So far, IBM and its chemical suppliers have settled one birth defect case stemming from the East Fishkill plant for an undisclosed amount, though the companies did not admit any wrongdoing. IBM and its suppliers maintain the claims against them are baseless. Curtis began working at the East Fishkill plant in 1980 and alleges that she told superiors she was pregnant. She claims she kept her job at the semiconductor plant, where she worked around chemicals, after she was assured that no harm would be done to her unborn child. Candace was born with profound defects. She has no knees and suffers from microcephaly, meaning that her skull is too small for her brain, according to her lawyer, Steven J. Phillips of Levy Phillips & Konigsberg. As a result, she is severely retarded. In August 2001, Supreme Court Justice John P. DiBlasi said Candace could not bring a fraud claim against IBM for alleged falsehoods told to her mother. (Justice DiBlasi has since recused himself from the IBM suits, after a chemical company with which he had a relationship was brought into the litigation, Phillips said.) In reversing that ruling this week, the 2nd Department cited what it called limited but “relatively well settled” case law in New York, including medical malpractice suits involving prenatal injuries. “In sum, the weight of the limited amount of authority that is addressed at all to questions similar to those posed in this case supports the conclusion that a surviving child injured in utero as the result of a fraudulent statement relied upon by his or her mother does, in fact, possess a valid fraud claim cause of action,” the majority wrote. In a dissent, Justice Sandra J. Feuerstein said she disagreed. “The proposed fraud claims require proof that a misrepresentation was made to the plaintiff and that the plaintiff reasonably relied upon such misrepresentation,” she wrote. “Here, there was no misrepresentation made to the infant plaintiff, nor could she have relied on any representation made by IBM, because she was not born yet.” Phillips said the ruling could open the door to punitive damages against IBM, as well as aid the cases of about 20 other women with similar circumstances. Also, he said, it would put employers on notice that “there are very severe legal consequences that they face — uninsurable legal consequences” — when it comes to workplace safety for pregnant employees. Michael J. Templeton of Jones Day, who represents IBM, said his firm was reviewing the decision and further appellate options. “In our view these claims are completely meritless,” he said. Presiding Justice A. Gail Prudenti and Justices Myriam J. Altman and Thomas A. Adams were in the majority. Justice Reinaldo E. Rivera concurred with Feuerstein’s dissent.

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