Owens-Corning Fiberglas Corp. v. Mayor of Baltimore City

SALMON, Judge. The Mayor and City Council of Baltimore (City), appellee, filed this lawsuit in 1984 against numerous defendants, including appellant, Owens-Corning Fiberglas Corporation (Owens-Corning), to recover the costs of discovering, maintaining, and removing asbestos-containing products installed in City buildings between 1957 and 1972. The City asserted claims of negligence, strict liability, and breach of express and implied warranties. Prior to trial, the Circuit Court for Baltimore City split the action into three separate proceedings, grouped according to product type.

This appeal is from the Group II trial, involving thermal insulation products. The Group II trial began on January 4,1993. By the end of the trial, only appellant, Owens-Corning, and Keene Corporation (Keene) remained as defendants. The jury found in favor of Owens-Corning and Keene on the negligence claim, and in favor of the City on its strict liability and breach of implied and express warranty claims.

The jury awarded the City $4,448,665.04 in compensatory damages against Keene and Owens-Corning. In addition, the jury awarded $2,600,000 in ⁶ punitive damages against Owens-Corning. An award of punitive damages was also made against Keene, but Keene subsequently filed for bankruptcy and is not a party to this appeal. After a motion for new trial was denied, Owens-Corning filed this timely appeal.

It presents the following questions, which have been re-phrased and re-ordered for clarity: 1. Did the trial judge err in denying Owens-Corning’s motion for judgment on the issue of punitive damages? 2. Did the trial judge commit reversible error by failing to grant a new trial based on juror Delores Torbit’s misconduct? 3. Did the trial judge err in ordering Owens-Corning to produce certain documents? 4.

May punitive damages be awarded in a non-intentional tort case involving only property loss? 5. May an award of punitive damages stand against Owens-Corning in light of the jury’s conflicting verdict that Owens-Corning was not negligent in failing to test for or warn of the dangers of its product? I. PUNITIVE DAMAGES Owens-Coming, a Delaware corporation, is primarily engaged in the business of manufacturing and distributing fiberglass insulation products. It acquired, in 1953, the distribution rights to asbestos-containing Kaylo pipe and boiler insulation from Owens-Illinois Glass Company (Owens-Illinois). 1 Kaylo is a heat insulation product made in both block and molded form.

In 1958, Owens-Corning bought the Kaylo manufacturing process from Owens-Illinois and then began to manufacture and sell the Kaylo product. Asbestos-containing Kaylo (sold by Owens-Corning) was installed in numerous City buildings between 1957 and 1972. ⁷ Owens-Corning changed the Kaylo manufacturing process in 1972 and began to manufacture asbestos-free Kaylo. No asbestos-containing Kaylo was installed in City buildings after 1972. Pursuant to Environmental Protection Agency (EPA) regulations, the City forbade custodial workers from working with asbestos materials after 1979.

The City, at the time it instituted suit in 1984, planned to repair, remove, and maintain the asbestos in their buildings in order to protect ordinary users of City buildings. Those users included librarians, library users, school teachers, students, and others who worked in and used City buildings but who did not directly handle asbestos products. The City sought recompense for the cost of repair, maintenance, and removal from Owens-Corning and other defendants. Owens-Corning contends that the trial judge erred in denying its motion for judgment regarding the claim for punitive damages.

In addressing the merits of that contention, we find three recent product liability cases to be of particular importance, viz: Owens-Illinois v. Zenobia, 325 Md. 420 , 601 A.2d 633 (1992); U.S. Gypsum v. Baltimore, 336 Md. 145 , 647 A.2d 405 (1994); and ACandS, Inc. et al. v. Godwin, 340 Md. 334 , 667 A.2d 116 (1995). All three cases discuss, inter alia, punitive damage issues and concern defendants who manufactured or supplied asbestos. The following principles, relevant to the issue here presented, are: 1. Proof of negligence alone, no matter how gross, wanton or outrageous, is not sufficient to prove punitive damages.

Zenobia, supra, 325 Md. at 463 , 601 A.2d 633 ; Godwin, supra, 340 Md. at 360 , 667 A.2d 116 . 2. In order to justify a punitive damage award in a non-intentional tort case, a plaintiff must prove that the defendant acted with actual and not just implied malice. Zenobia, supra, 325 Md. at 460 , 601 A.2d 633 ; U.S. Gypsum, supra, 336 Md. at 188 , 647 A.2d 405 . 3. To prove actual malice in a products liability case, plaintiff must prove: a) that the defendant actually knew of the defective and dangerous condition of the ⁸ product at the time it left the defendant’s possession or control, and b) “armed with this actual knowledge, the defendant consciously or deliberately disregarded the potential harm to consumers.” Zenobia, supra, 325 Md. at 462-63 , 601 A.2d 633 ; U.S. Gypsum, supra, 336 Md. at 188 , 647 A.2d 405 ; Godwin, supra, 340 Md. at 361 , 667 A.2d 116 .

Phrased differently, plaintiff must prove “a bad faith decision [on defendant’s part] to market a product, knowing of the defect and danger, in conscious or deliberate disregard of the threat to the safety of the consumer.” Id. 4. Actual knowledge includes a defendant’s willful refusal to know or become aware of the defective nature of its product. Zenobia, supra, 325 Md. [at] 462 n. 23, 601 A.2d 633 . “[Constructive knowledge,” “substantial knowledge,” or “should have known,” however, does not constitute the actual knowledge required to support a punitive damage award. Godwin, supra, 340 Md. at 360 , 667 A.2d 116 . 5.

The actual knowledge component has a temporal element. Plaintiff must prove that, at the time the asbestos left the control of the defendant, the defendant actually knew that the asbestos-containing product “presented a serious health risk to” consumers. U.S. Gypsum, supra, 336 Md. at 188 , 647 A.2d 405 . Proof of post-sale knowledge is not sufficient.

Id. at 190 n. 22, 647 A.2d 405 ; Godwin, supra, 340 Md. at 360 , 667 A.2d 116 . 6. Courts, when examining “actual knowledge” evidence, are required to make risk distinctions. Proof, for instance, that asbestos was known to be dangerous to a narrow class of unprotected persons in occupational settings is insufficient to prove actual knowledge when the persons potentially endangered were not within that class. U.S. Gypsum, supra, 336 Md. at 188-89 , 647 A.2d 405 . 7.

Actual malice, to justify an award of punitive damages, must be proved by clear and convincing evidence. Zen ⁹ obia, supra, 325 Md. at 469 , 601 A.2d 633 ; U.S. Gypsum, supra, 336 Md. at 188 , 647 A.2d 405 . 8. To meet the “clear and convincing burden,” plaintiff must persuade the trier of fact “that the truth of a contention is not merely probable but highly probable.” Godwin, supra, 340 Md. at 374 n. 11, 667 A.2d 116 . In sum, to be entitled to punitive damages against Owens-Corning, the City was required to prove by clear and convincing evidence that 1) before the last date asbestos-containing Kaylo was supplied by Owens-Corning to a City building, Owens-Corning had actual knowledge that its product, when installed in City buildings, presented a serious health risk to ordinary users of those buildings, and 2) armed with this knowledge, Owens-Corning consciously or deliberately proceeded to market Kaylo in bad faith, disregarding the potential harm to ordinary users. 2 Zenobia, supra, 325 Md. at 463 , 601 A.2d 633 .

A. OVERVIEW As of 1972, it was generally recognized “that exposure to asbestos of high enough intensity and long enough duration [was] causally related to asbestosis and cancers.” Godwin, supra, 340 Md. at 366 , 667 A.2d 116 , quoting the U.S. Secretary of Labor’s promulgation (in 1972) of the first non-emergency asbestos dust standard, 37 Fed.Reg. 11,318. As stated ¹⁰ in Godwin, supra, 340 Md. at 365 , 667 A.2d 116 , between the late 1950’s and 1972 a respectable body of opinion considered that asbestos-caused disease, principally asbestosis, could generally be avoided if dust in the work environment could be kept below a certain limit, the threshold limit value (TLV). One of the groups holding that view was the American Conference of Governmental Industrial Hygienists (ACGIH). It was not a governmental body, but was composed primarily of local, state and federal health officials.

ACGIH had begun to issue TLVs in 1946. B. Castleman, Asbestos: Medical & Legal Aspects, at 257 (3d ed. 1990) (Castleman). Drawing in part on what some states had been using as a maximum allowable concentration, ACGIH chose a TLV for asbestos of five million particles of dust per cubic foot (MPPCF). Id.

This is a measurement of dust of all kinds. “Though it may sound like a high concentration, 5 MPPCF of dust in air is not even visibly dusty.” Castleman at 250. For comparison purposes, Castleman refers to the reported analysis of air samplings taken in the courtrooms of a courthouse in Rochester, New York in 1935 where the dust levels were measured at 30-43 MPPCF. Id. & n. 54. In 1968 and in 1970 ACGIH published notices of an intended change, under which the safety standard for asbestos would measure exposure to asbestos fibers, but ACGIH’s TLV was not officially changed until ... [July 7, 1972, when] an OSHA standard was [first placed] in effect.

Id. at 271. In 1972, it was generally recognized that asbestos was not a health hazard if exposure could be kept below a certain level. Godwin, supra, 340 Md. at 366 , 667 A.2d 116 . The dispute in 1972 concerned how to best determine a specific level below which exposure is safe.

Various studies attempting to establish quantitative relations between specific levels of exposure to asbestos fibers and the appearance of adverse biological manifestations, such as asbestosis, lung cancers, and mesothelioma, have given rise to controversy as to the validity of the measuring techniques used and the reliability of the relations attempted to be estab ¹¹ lished. Because of the long lapse of time between onset of exposure and biological manifestations, we have now evidence of the consequences of exposure, but we do not have, in general, accurate measures of the levels of exposure occurring 20 or 30 years ago, which have given rise to these consequences. There are also controversies concerning the relative toxicity of the various kinds of asbestos, and varying hazards in different workplaces. Godwin, supra, 340 Md. at 366 , 667 A.2d 116 (quoting 37 Fed.Reg. 11,318).

B. THE CITY’S PROOF OF OWENS-CORNING’S KNOWLEDGE PRIOR TO DECEMBER 31, 1972 An Owens-Corning intra-company memo dated January 7, 1942 suggested that Owens-Corning should gather a file of existing medical literature discussing the hazards posed by asbestos. The file would be kept as a “weapon-in-reserve” for possible use in a public relations battle Owens-Corning was waging with the Asbestos Workers Union. In 1942, workers in the insulation industry were demanding wage premiums for working with Owens-Corning fiberglass materials because of health concerns. Due to this threat, and because Owens-Corning did not then manufacture or distribute asbestos-containing products, Owens-Corning planned to use its medical literature file to promote dissension among the membership of the Asbestos Workers Union by alerting them to the dangers of asbestos.

The memorandum stated that Owens-Corning was in possession of two bibliographies covering medical literature to 1938, citing references to scores of publications in which the lung and skin hazards of asbestos were discussed. This file would cover five or six hundred pages, which can be microphotographed in the library of the Surgeon General in Washington or in some other medical library. ¹² It is unclear, however, from the record presented to us, exactly what was said in the 600 pages of literature or whether this was ever used by Owens-Corning. An internal Owens-Corning memorandum, sent in December 1943, discussed the possibility of mixing fiberglass and asbestos. The memo noted certain hazards of exposure to asbestos, such as asbestosis (an incurable and progressive lung disease).

It did not mention the Kaylo product specifically but concerned asbestos generally. The memorandum stated: Admixture with Asbestos. In formulating our policy on admixture with asbestos, we should keep on the alert because otherwise we will run the risk of smearing Fiberglas with the hazards of exposure to asbestos. Fabrication of asbestos (in both textile and non-textile forms) is a dusty process, and exposure to asbestos fly involves the danger of asbestosis, a pathological lung condition somewhat like silicosis.

This hazard is minimized by use of hoods and exhaust systems and wearing of respirators. The Asbestos fabricating industry has learned by the hard way how to control it. More significant, fabrication of textile asbestos involves a skin hazard. To this handling asbestos yarns in carding, drafting, twisting and plying operations and in warping and weaving—whatever the material may pass through the fingers at high speed—may acquire skin lesions known as “asbestos corns” caused by the embedding of the snake-like asbestos fiber into the skin.

The asbestos manufacturing industry is well acquainted with these hazards, and its workers are conditioned to them and are supplied with adequate protective devices. It follows that any extensive Fiberglas asbestos cloth manufacturing program might well be subcontracted to establish asbestos fabricators. Such a course would avoid our having to set up asbestos fabricating facilities of our own and would prevent exposing our people to such hazards which might adversely affect our compensation ratings and disability experiences. My suggestion is therefore that the handling of asbestos in ¹³ combination with Fiberglas be dissociated from our own manufacturing.

(Emphasis added.) Owens-Corning committed itself to an effective corporate health program by at least 1943. A December 1943 memorandum stated that, since its inception, the health program had been built on five premises: maintaining awareness of medical and scientific data concerning health aspects of its products; getting this information published in the medical literature; making these facts available to employees of Owens-Corning and to the general public; handling all bona fide health inquiries promptly and fully; and cultivating and maintaining contacts with professional and technical groups knowledgeable about product hazards. In accordance with the 1943 memorandum, a former officer of Owens-Corning testified that Owens-Corning considered it important to know the facts about the possible hazards of products that the company manufactured and distributed. An article was published in the June 1944 issue of Heating and Ventilating, in which Owens-Corning advertised.

The authors reported that workers in the insulation industry, asbestos cloth industry, and other similar industries were commonly exposed to asbestos hazards. The authors stated that “[n]o minimal safe concentrations [of asbestos dust] have yet been set up.... ” The author conceded, however, that information was scant as to the conditions in those plants where hazards were known to exist. In the 1940’s and 1950’s, Saranac Laboratory conducted studies for Owens-Corning’s predecessor, Owens-Illinois, on the effects that Kaylo dust had on animals. The investigations revealed that the dust was capable of producing a condition typical of asbestosis.

A November 1948 letter sent by Saranac Laboratory to Owens-Illinois stated that Kaylo was capable of producing asbestosis and therefore must be regarded as a potentially hazardous material. A 1952 letter to Owens-Illinois reiterated that Kaylo dust could produce a condition typical of asbestosis and warned ¹⁴ that “every precaution should be taken to protect workers against inhaling the dust.” When Owens-Illinois sold its Kaylo division to Owens-Corning in 1958, the aforementioned letters were boxed and turned over to Owens-Corning. The City did not establish what became of these boxes after shipment, nor did the City establish whether Owens-Corning employees actually read the contents. It was established that, prior to Owens-Corning’s acquisition of the Kaylo line, Owens-Illinois employees worked with Owens-Corning employees to advise them about the Kaylo product, but no evidence was presented by the City to show specifically what Owens-Illinois told Owens-Corning.

Prior to Owens-Coming’s purchase of the Kaylo division, a letter was sent in 1956 by the director of the Saranac Laboratory for the Study of Tuberculosis, Occupational Disease, and Industrial Hygiene to the director of Personnel and Industrial Relations at Owens-Corning. The letter stated, “I suppose you already know that asbestos is fairly well incriminated as a carcinogen and the [sic] asbestos causes lung damage____” The City proved that Owens-Corning did indeed know of this danger. For instance, John Thomas, vice-president of Owens-Corning Research and Development in the mid-1960’s and later its president and chief operating officer, testified at trial that he was aware by 1955 that Kaylo was potentially dangerous because it had asbestos in it. Dr. David Ozonoff, chairman of the Department of Environmental Health at the Boston University School of Public Health, testified that by 1960 the scientific community generally accepted the fact that asbestos was associated with mesothelioma, an aggressive and deadly form of cancer.

A September 1963 internal memorandum sent by the Owens-Corning Product Development Laboratory discussed the health risks of several insulation products, including Kaylo. The memo stated, “Asbestos (as found in Kaylo) when breathed into the lungs causes asbestosis which often leads to lung cancer.” ¹⁵ Several case studies were introduced by the City in an attempt to show when Owens-Corning acquired knowledge of the dangers of asbestosis. Dr. Ozonoff told the jury about a 1932 case study of a hospital maintenance worker who contracted moderate to severe asbestosis. Dr. Ozonoff stated that, to his knowledge, this was the earliest known case in which a worker in a building that contained asbestos contracted the disease of asbestosis.

This case was noted in a published report of a November 1932 conference entitled “The Effects of Dusts upon the Respiratory System.” The conference, held in Chicago, was not specifically devoted to asbestos illness but addressed effects of all nuisance dusts affecting workers. Dr. Ozonoff related that the relevant portion of the case study stated: [Tjhis is the X-ray of a man who had or has asbestosis. His occupation was that of cleaning and restoring the asbestos on pipes in one of our government hospitals. He had been working at the trade about six years, I think, and you will see he has fibrosis of both lungs---- He had disability, and the government compensated him for it.

The report did not provide any information as to the worker’s prior work or health history. Moreover, there was no proof that this case study or other such studies were widely distributed or that Owens-Corning otherwise had knowledge of these case studies at any time here relevant. In 1964, Dr. living Selikoff, a respected researcher in the field of occupational health, published a landmark article in the Journal of the American Medical Association. This 1964 article discussed the incidence of asbestosis and asbestos-related disease in workers exposed to asbestos under industrial conditions.

The study found that the death rate for certain types of cancer was much higher among asbestos industry workers than among the general population. This article was known to Owens-Corning no later than May 7,1964. The 1964 Selikoff article also hypothesized about the possibility of health problems associated with minimal exposure to asbestos, including environmental cancer. The study men ¹⁶ tioned the possibility of environmental exposure to persons who lived near asbestos mines or manufacturing plants but did not mention the risk of in-place asbestos to ordinary building .users.

Dr. Selikoff noted that “floating [asbestos] fibers do not respect job classifications----” He opined that “insulation workers undoubtedly share their exposure with their workmates in other trades; intimate contact with asbestos is possible for electricians, plumbers, sheet-metal workers, steamfitters, laborers, carpenters, boilermakers, and foremen; perhaps even the supervising architect should be included.” 3 Well before 1972, Owens-Corning was aware that asbestos caused asbestosis among its own employees who worked in plants where Kaylo was manufactured. Over 100 such eases of asbestosis were reported between 1958 and 1972. Owens-Corning internal correspondence discussed replacing asbestos as the reinforcing agent for Kaylo before 1972. A memorandum written in October 1966 by an Owens-Corning marketing division employee urged that, because of health hazards, Owens-Corning “should again investigate the use of other reinforcing materials in Kaylo.” A June 1967 memorandum showed that Mr. D.W. Ladd of the marketing division was cognizant of serious concerns over the potential health hazards of Kaylo.

Mr. Ladd suggested that the lab focus on improving the structural stability of Kaylo. He did not, however, urge the product lab to accelerate its effort to find a replacement for asbestos in the Kaylo product. An Owens-Corning memorandum written in May 1969 said, “Let’s get rid of asbestos in the insulation industry____ This should be our number one research program at this time.... ” C. OTHER EVIDENCE Although several pre-1972 memoranda mentioned the hazardous nature of asbestos, none addressed concerns about ¹⁷ dangers to persons exposed to in-place asbestos, such as ordinary building users. One of the City’s expert witnesses, Dr. Arthur Frank, chairman of the Department of Preventive Medicine in Environmental Health at the College of Medicine at the University of Kentucky, testified that no studies existed before 1972 concerning whether building occupants, such as teachers, students, or librarians, were exposed to any health hazards due to the presence of in-place asbestos.

Such studies were not available until 1987. Defense experts agreed. For instance, Dr. Edward Gaensler testified on behalf of Owens-Corning that he was not aware of any studies before 1987 examining the incidence of asbestos-related disease in persons whose only exposure came as a building occupant. In regard to what is presently known about the hazards of exposure to in-place asbestos, Dr. Frank testified that maintenance workers may dislodge asbestos-containing materials accidentally during the course of routine repairs, and “we think that, again, these peak exposures [caused by disturbing asbestos-containing products], which can occur irregularly, ... may be of particular concern.” Dr. Frank further testified that post 1972 studies have reported cases of mesothelioma in teachers, where the teachers’ only known exposure to asbestos was as building occupants.

David Mayer, former manager of the EPA’s national asbestos technical assistance program, testified that maintenance personnel face exposure to hazardous levels of asbestos through their normal work of cleaning and working around asbestos-containing materials. He did not testify as to when this information was either generally known or when it was known by Owens-Corning. The City introduced evidence that routine repairs conducted by building maintenance workers prior to 1979 often exposed them to asbestos materials such as Kaylo. 4 The record does ¹⁸ not disclose when Owens-Corning first gained knowledge of this fact. Studies published in 1987 and 1988, including one by appellee’s expert, Dr. Christine Oliver, director of occupational and environmental medicine at Massachusetts General Hospital, showed that the incidence of scarring of the lungs and restriction of breathing function of school custodians was strongly associated with the duration of work as a school custodian in buildings where there was asbestos-containing materials.

D. DISCUSSION The City clearly and convincingly proved that, prior to 1972, Owens-Coming actually knew that Kaylo was a product that was dangerous at certain levels to particular classes of individuals who were exposed to its dust. Those classes included asbestos miners and installers, asbestos insulators, and persons in the asbestos manufacturing process. Owens-Corning knew that the danger posed to persons in these occupations was of contracting cancer or asbestosis. The City also proved that, prior to 1972, Owens-Corning never warned consumers of the dangers of asbestos.

In this appeal, the major issue is whether the City presented sufficient evidence to show that Owens-Corning, prior to 1972, had actual knowledge of the serious risk posed by in-place asbestos to ordinary building users. The City established that studies published after 1972 showed that exposure at certain levels to in-place asbestos posed serious health hazards to ordinary building users. The City’s evidence, however, was insufficient to show such pre1972 knowledge. As the Missouri Supreme Court noted, Only by superimposing the twenty-twenty hindsight of regulatory law, medical science and technology arising after 1972 can one infer knowledge of any danger to KCI employees and patrons that would require removal of the product. ¹⁹ The evidence again is insufficient to show that defendant had knowledge of the defect and danger to KCI employees and patrons which in turn formed the basis of plaintiffs damages.

The trial court correctly sustained the motion for judgment notwithstanding the verdict regarding the punitive damages claim. Kansas City v. Keene Corp., 855 S.W.2d 360, 376 (1993). This statement applies with equal force to the case sub judice. To support its punitive damage claim, the City relies, inter alia, on City of Greenville v. W.R. Grace & Co., 827 F.2d 975, 980 (4th Cir.1987).

That case involved a suit by a municipality to recover its economic loss resulting from the installation of asbestos-containing products in City buildings. The City states in its brief that the W.R. Graze Court “has stressed [that] a jury may draw a proper legal inference concerning the risks associated with exposure to asbestos at relatively low levels in buildings by extrapolating from data showing the risks associated with high levels of exposure.” This is not precisely accurate. What the court actually said was that experts may legitimately draw inferences regarding the risks of low level exposure to asbestos to ordinary building users by extrapolating from data showing that high level exposures to asbestos caused serious health risks. 5 827 F.2d at 980 . Significantly, the Court did not say that a jury may infer actual knowledge on the part of a defendant based upon such an inference.

In W.R. Graze, the Court applied South Carolina law and held that the municipality was entitled to punitive damage. South Carolina has a more relaxed punitive damage standard than does Maryland. It allows for the recovery of punitive damages when a tortfeasor acts willfully, wantonly, or in reckless disregard of the rights of another. Id. at 983 . ²⁰ This standard was essentially the pre-Zenobia test in Maryland.

See