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Pfizer has defeated an asbestos case involving a product made by a now-bankrupt subsidiary after a Maryland judge ruled that an exception to the shield that bankruptcy law provides to defendants doesn’t apply to the plaintiff’s case.
When Pfizer’s subsidiary Quigley Company, Inc., reorganized as part of its bankruptcy, all asbestos lawsuits against it now are channeled into an asbestos trust seeded initially with nearly $1 billion. But one plaintiff tried to argue that Pfizer Inc. was still liable in civil court by arguing Pfizer was the apparent manufacturer of a heat-resistant, refractory product known as Insulag that was designed, manufactured and sold by Quigley.
Baltimore City Circuit Court Judge John M. Glynn granted summary judgment against the plaintiff on the grounds that Pfizer was not the apparent manufacturer of the asbestos-containing product.
Plaintiff Carl Stein alleged he was exposed to asbestos while working at Bethlehem Steel Corporation’s Sparrows Point Plant. During oral argument before Glynn, Stein’s counsel, James W. Stoll, of Brown Rudnick LLP in Boston, pointed out that there were advertising materials and sales orders that had both Pfizer’s and Quigley’s trade names on them and that all those materials referred to both companies as manufacturers.
“Putting your name on the product has legal consequences,” Stoll said. “When it is an inherently dangerous product, you take on the non-delegable duty to warn. And you put your name on a product, that is a voluntary act … That creates direct liability against you.”
While Glynn acknowledged from the bench that there were corporate documents mentioning both companies’ names on the letterhead, those documents were “provided to sophisticated people involved in the industry” and “I do not believe that a reasonable person under all the circumstances provided to me in this case could come to the conclusion from the documents that Pfizer was the manufacturer of the product.”
Under Section 400 of the Restatement (Second) of Torts, apparent manufacturers are companies that are directly involved in the chain of distribution and sell or distribute as their own products products made by others.
Pfizer’s counsel, Sheila Birnbaum, of Quinn, Emanuel, Urqhart & Sullivan, LLP, argued during the hearing that the plaintiffs with “the substantial control theory that they have come up with, have in effect injected into this court elements that they cannot because they’re barred by the bankruptcy channeling order.” Any claim based on piercing the corporate veil or a theory that Pfizer was Quigley’s alter ego are barred by the bankruptcy because they have to do with Pfizer’s ownership, not with Pfizer’s direct behavior in terms of putting its name on the Quigley product, Birnbaum said.
Pfizer’s direct involvement with the Insulag product is relevant to determining whether it was the apparent manufacturer, Stoll said. For example, Pfizer was the party that redesigned Insulag to not include asbestos when the Occupational Safety and Health Administration came out with regulations that limited asbestos in workplaces, he said.
Birnbaum countered that there was no bags of Insulag that had Pfizer’s name on them.
The judge commented during the hearing that “what troubles me about this case is it smacks a lot of a piercing the corporate veil case.”
Stoll also argued that the question of whether Pfizer was the apparent manufacturer of the Quigley product was a jury question.
Pfizer bought Quigley in 1968.
Amaris Elliott-Engel contributes to law.com.