On April 8, 2014, Justice Sherry Klein Heitler issued a decision permitting asbestos plaintiffs in New York County to seek punitive damages in asbestos trials — a departure from decades of prior practice in New York City Asbestos Litigation (NYCAL). For almost 20 years, the NYCAL Case Management Order (CMO) deferred indefinitely any trial of punitive damages in asbestos cases, until this past year, when plaintiffs’ attorneys moved to modify the CMO to remove that deferral.
The decision this week profoundly impacts industries embroiled in asbestos litigation by potentially offering plaintiffs an unfair advantage, and it should signal defendants to implement a plan to preclude punitive damage claims in a case before it gets to trial.
In 1996, there were compelling reasons for deferring punitive damages in NYCAL cases. First, it served no public purpose to punish companies for wrongs committed 20 and 30 years ago. Second, the imposition of punitive damages depleted resources otherwise available to compensate other claimants with viable asbestos exposure claims. Lastly, since punitive damages were not available in some states and in the federal court multidistrict litigation (MDL), imposition of punitive damages would result in disparate treatment among plaintiffs. (Helen E. Freedman, “Selected Ethical Issues in Asbestos Litigation,” 37 S.W. U. L. Rev. 511, 527-28). These reasons are as compelling today as they were in 1996.
Nevertheless, Justice Heitler rejected these arguments, concluding that punitive damages shall be considered on a case by case basis by the assigned trial judge. Of particular concern, Justice Heitler seems to implicitly preclude any defendant from moving to dismiss a punitive damage claim prior to trial. The modification to the CMO states:
Applications for permission to charge the jury on the issue of punitive damages shall be made on a case by case basis to the Judge presiding over the trial(s) of the action(s) at issue, who shall determine such application(s) in his or her discretion and in accordance with the particular trial schedule established by such Judge. Such applications shall be made at the conclusion of the evidentiary phase of the trial upon notice to the affected defendant(s), to which such defendant(s) shall have an opportunity to respond. Should the trial Judge, in his or her own discretion, permit such charge, and the jury determines that punitive damages are warranted, the trial Judge shall hold a separate trial before the same jury solely on the issue of the amount of punitive damages to be awarded.
By granting plaintiffs the option to request punitive damages during trial after all evidence has been presented, plaintiffs are now permitted to present evidence relevant to punitive damages claims that may not be relevant to compensatory damage claims, only to have plaintiffs opt at the close of evidence not to apply for punitive damages. This will mean that every jury may be hearing and considering prejudicial evidence it otherwise would not be entitled to consider. This is only one of many possible prejudicial consequences of this decision. Moreover, plaintiffs are now positioned to use this unfair advantage as leverage to potentially and improperly extract larger settlements with the threat of punitive damages in every trial.
In addition to a an obvious appeal of this decision, defendants will need to work quickly with their counsel to develop a litigation strategy for precluding punitive damage claims before the case goes to trial. Plaintiffs should be required to lay bare their proof to support a punitive damages claim, in the first instance, to the court, before the jury hears any evidence. We will continue to keep you apprised of further developments.
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