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Justices’ Asbestos Decision Poses Fair Notice Problem

The following article was written by Mitchell K. Morris and was published in Law360 on April 25, 2019. Click here to view the article on Law360’s Expert Analysis section.

What is the purpose of a “duty” announced a half-century after it was allegedly breached? A cynical observer — and at least three U.S. Supreme Court justices — might say, at least as to those parties whose alleged breaches occurred many years earlier, that it is less a duty of care, and more a duty to “pay.”[1]

Nevertheless, those are the circumstances of the most recent tort duty announced by a majority of the Supreme Court in Air & Liquid Systems Corp. v. DeVries. The case involved two former U.S. Navy sailors who were allegedly exposed to asbestos on Navy ships between 1957 to 1986.

The defendants were manufacturers of equipment delivered to the Navy in “bare metal” condition, to which asbestos materials were later added by the Navy. Departing from the traditional rule, applied by the district court, that a defendant is not liable for “harms caused by later-added third-party parts,” the Supreme Court announced a new test under which manufacturers may be liable for failing to warn about other companies’ products.[2]

This article analyzes what dissenting Justice Neil Gorsuch called the “fair notice problem”[3] posed by the majority’s decision — and discusses its implications for the recovery of punitive damages under the new rule, and the potential recognition at the state level of similarly expanded duties.

The Majority’s Holding

DeVries arose from the underlying manufacturer defendants’ successful assertion at the district court level of the so-called “bare metal defense” under federal maritime law. The U.S. Court of Appeals for the Third Circuit reversed, holding that the manufacturers could be held liable if they “could foresee that the product would be used with the later-added asbestos-containing materials.”[4]

The Third Circuit’s holding, in turn, conflicted with an earlier decision by the Sixth Circuit, which reached the diametrically opposite conclusion — that a manufacturer “cannot be held responsible for asbestos containing material that … was incorporated into its product post-manufacture.”[5] The Supreme Court “granted certiorari to resolve a disagreement among the Courts of Appeals about the validity of the bare-metal defense under maritime law,” ultimately settling on a test it described as “fall[ing] between th[e] two approaches” used by the Sixth and Third Circuits.[6]

Specifically, the majority held the manufacturers had a duty under federal maritime law to warn the sailors if (1) their product required incorporation of a part (i.e., asbestos insulation), (2) the manufacturers knew or had reason to know that the integrated product was likely to be dangerous for its intended uses, and (3) the manufacturers had no reason to believe that the product’s users would realize the danger.[7]

In other words, the court “resolved” the circuit split by announcing a duty the contours of which had not previously been articulated by any federal appellate court. The newly-announced duty also effectively overruled the Sixth Circuit’s decision in Lingstrom, which appears to have been the prevailing federal appellate precedent on the issue for at least the 12 years between its rendering in 2005 and the Third Circuit’s 2017 decision in DeVries.[8]

In reaching its holding, the majority “agree[d] with the manufacturers that a rule of mere foreseeability would sweep too broadly,” but also “agree[d] with the plaintiffs that the bare-metal defense ultimately goes too far in the other direction.”[9] The court stressed that “the product manufacturer will often be in a better position than the parts manufacturer to warn of the danger from the integrated product,” and dismissed the burdens associated with such a duty as either “not significant” or unsubstantiated.[10]

Finally, the court invoked the federal maritime law’s “special solicitude for the welfare of those who undertake to venture upon hazardous and unpredictable sea voyages.”[11]

The Fair Notice Problem

The duty announced by the DeVries majority presents an obvious problem that is at once both practical and deeply philosophical, but which the majority sidestepped entirely. It is, according to Gorsuch, with whom Justices Clarence Thomas and Samuel Alito joined in dissenting, the “fair notice problem.”[12] As Gorsuch elaborated:

Decades ago, the bare metal defendants produced their lawful products and provided all the warnings the law required. Now, they are at risk of being held responsible retrospectively for failing to warn about other people’s products. It is a duty they could not have anticipated then and one they cannot discharge now.[13]

It is this quandary — the inability of manufacturers of decades-old products to even attempt to comply with the duty announced by the majority — that led Gorsuch to quip that such manufacturers now “can only pay,” which, in his view, “may be the point” of the majority’s decision.[14] That is, the point may be to create an avenue of potential recovery against manufacturers who “may be among the only solvent potential defendants left.”[15]

While acknowledging the “unfortunate facts of this particular case,” the dissenting justices nonetheless questioned: “[H]ow were the [bare metal manufacturers] supposed to anticipate many decades ago the novel duty to warn placed on them today?”[16] Ultimately, this question appears to be one with which the majority was unconcerned. But it is one that cannot simply be ignored, nor should it be.

DeVries leaves open more question than it answers, including (1) whether plaintiffs will be permitted to seek punitive damages in cases alleging breaches of the newly-announced federal maritime duty, and (2) whether states who have yet to resolve the “bare metal” issue will follow the DeVries majority’s approach. The unresolved fair notice problem should inform litigants’ and courts’ treatment of these questions.

Punitive Damages Under DeVries

While the availability of punitive damages in certain maritime cases is a matter of ongoing debate,[17] there is no question that punitive damages are recognized under the general maritime law.[18] Therefore, a strong possibility exists that plaintiffs will seek, or already are seeking, the recovery of punitive damages in cases now governed by DeVries.

For its part, the majority opinion in DeVries neither approves nor disapproves of punitive damages for such claims — it is entirely silent on the matter. The fair notice problem identified by the dissent, however, provides a compelling reason for courts below to disallow punitive damages in such cases, at least insofar as they involve conduct predating the court’s decision.

Indeed, it is the concept of “fair notice” that has animated the Supreme Court’s jurisprudence imposing due process limitations on punitive damages awards generally.[19] Starting from the proposition that “punitive damages are imposed for purposes of retribution and deterrence,”[20] the Supreme Court years ago recognized that “a decision to punish a tortfeasor by” way of punitive damages “is an exercise of state power that must comply with the Due Process Clause of the Fourteenth Amendment.”[21]

In particular, the court has held that “[e]lementary notions of fairness enshrined in our constitutional jurisprudence dictate that a person receive fair notice … of the conduct that will subject him to punishment,” as well as “of the severity of the penalty that a State may impose.”[22]

So what, exactly, is “fair notice,” and what are its implications for punitive damages under DeVries? Gorsuch offers his view of the former in his DeVries dissent: “People should be able to find the law in the books; they should not find the law coming upon them out of nowhere.”[23] This view should be uncontroversial in a society, such as ours, predicated upon the rule of law.

It is certainly consistent with earlier pronouncements of the court, such as following language cited by the majority in its seminal State Farm Mutual Auto. Ins. Co. v. Campbell opinion: “[T]he point of due process — of the law in general — is to allow citizens to order their behavior.”[24]

Whatever the outer limits of constitutional “fair notice” may be, a relatively safe baseline would seem to be a requirement of some advance notice of proscribed conduct so that citizens have an opportunity to “order their behavior” and avoid punishment. As Gorsuch rightly observes, it simply cannot be said that manufacturers in the 1950s, 1960s, 1970s and 1980s had fair notice of any duty “to warn about other people’s products” first announced by the court in 2019.

While a majority of the Supreme Court declined to acknowledge this “fair notice problem” in the context of compensatory liability, “[e]lementary notions of fairness enshrined in our constitutional jurisprudence dictate” that it be taken into account with regard to punitive damages.[25] Therefore, courts should disallow punitive damages in cases governed by DeVries involving conduct that predates the court’s decision, because at the time of such conduct there was no fair notice of potential punishment for nonconforming behavior.

Nonconstitutional considerations also dictate the disallowance of punitive damages under DeVries for predecision conduct. Under federal maritime law and in general, punitive damages usually require that a defendant have acted with “willful and wanton disregard” for a legal “obligation.”[26] Thus, when “an issue is one of first impression or where a right has not been clearly established, punitive damages are generally unavailable.”[27]

The reason for this rule is because, under such circumstances, a defendant cannot be deemed to have “abrogate[d] any established legal duty toward” a plaintiff, “and therefore,” cannot be founded to have “exhibit[ed] willful and wanton misconduct.”[28] The so-called “first impression bar” provides an additional basis to disallow punitive damages under DeVries for predecision conduct.

Beyond DeVries: Implications for State Law

The DeVries majority itself makes clear that the decision does “not purport to define the proper tort rule outside of the maritime context.”[29] From the perspective of the dissenting justices, and presumably also of manufacturers “at risk of being held responsible retrospectively for failing to warn about other people’s products,” this is “a silver lining” that leaves courts “in other tort cases … free to use the more sensible and historically proven common law rule” of no liability for the products of others.[30]

Litigants before nonmaritime courts considering the viability of the bare metal defense would be wise to raise the fair notice problem identified by the DeVries dissent as a compelling reason not to depart from the traditional rule. In many states the analysis for “determining whether a duty exists” includes “public policies affecting the expansion or limitation of new channels of liability,” meaning that “courts must be mindful of the precedential, and consequential, future effects of their rulings, and limit the legal consequences of wrongs to a controllable degree.”[31]

The ability of affected persons to have anticipated and attempted to conform to a duty or obligation surely is a relevant consideration to whether such a duty or obligation should be recognized. After all, “the point of due process — of the law in general — is to allow citizens to order their behavior.”

At a minimum, the fair notice problem should cause state courts to limit the retroactive application of decisions imposing new duties contrary to traditional common law limitations like the bare metal defense. That is, any such decisions should be applicable only to cases arising from post-decision conduct.[32] In this vein, the Supreme Court long ago held:

A state in defining the limits of adherence to precedent may make a choice for itself between the principle of forward operation and that of relation backward. … The choice for any state may be determined by the juristic philosophy of the judges of her courts, their conceptions of law, its origin and nature.[33]

States have, thus, developed various tests for determining whether to retroactively apply civil judicial decisions.[34] A critical factor is often “whether the decision in question established a new principle of law either by overruling past precedent or deciding an issue of first impression, the resolution of which was not clearly foreshadowed.”[35]

Therefore, even in jurisdictions where courts may be inclined to abandon traditional doctrines like the bare metal defense or to announce newly expanded duties, defendants still can and should oppose the retroactive application of such decisions, on the grounds that they reasonably could not have anticipated them at the time of the allegedly tortious conduct.

Conclusion

Although Gorsuch was relegated to the dissent in DeVries, the fair notice problem he identifies implicates “[e]lementary notions of fairness enshrined in” American law, and should inform litigants and courts in all cases involving potential departures from established common law rules.

In particular, the fair notice problem should serve as a basis to disallow or limit punitive damages in cases governed by DeVries, and as a reason for state courts to hold differently than the DeVries majority when the same or similar questions come before them.


The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] Air & Liquid Sys. Corp. v. DeVries , 586 U.S. __ (2019), Slip Op. (Dissent) at 8.

[2] Id., Slip Op. (Majority) at 2-4.

[3] Id., Slip Op. (Dissent) at 7.

[4] Id., Slip Op. (Majority) at 4.

[5] Lindstrom v. A-C Prod. Liab. Tr. , 424 F.3d 488, 497 (6th Cir. 2005).

[6] DeVries, Slip Op. (Majority) at 4-6.

[7] Id. at 10.

[8] Indeed, the majority’s opinion does not identify any contrary circuit-level authority before or after Lingstrom until the Third Circuit’s decision in DeVries.

[9] DeVries, Slip Op. (Majority) at 7.

[10] Id. at 8-9.

[11] Id. at 9 (citations omitted).

[12] Id., Slip Op. (Dissent) at 7.

[13] Id. at 7-8.

[14] Id. at 8.

[15] Id.

[16] Id.

[17] Currently before the Supreme Court is The Dutra Group v. Batterton, Docket No. 18-266, which presents the specific question of whether punitive damages may be awarded to a Jones Act seaman (i.e., merchant marine) in a personal injury suit alleging a breach of the general maritime duty to provide a seaworthy vessel.

[18] See, e.g., Exxon Shipping Co. v. Baker , 554 U.S. 471 (2008); Atl. Sounding Co. v. Townsend , 557 U.S. 404 (2009).

[19] See, e.g., Philip Morris USA v. Williams , 549 U.S. 346, 354 (2007) (describing “lack of notice” as one of “the fundamental due process concerns to which our punitive damages cases refer”).

[20] Pac. Mut. Life Ins. Co. v. Haslip , 499 U.S. 1, 19 (1991).

[21] Honda Motor Co. v. Oberg , 512 U.S. 415, 434–35 (1994).

[22] BMW of N. Am. v. Gore , 517 U.S. 559, 574 (1996).

[23] DeVries, Slip Op. (Dissent) at 8.

[24] 538 U.S. 408, 418 (2003) (quoting Haslip, 499 U.S. at 59 (O’Connor, J., dissenting)).

[25] While BMW v. Gore and its progeny involved state action subject to the Fourteenth Amendment, insofar as the federal maritime law or courts are involved, the Fifth Amendment likewise proscribes federal deprivations of “life, liberty, or property, without due process of law.” As one Supreme Court justice long ago observed: “To suppose that ‘due process of law’ meant one thing in the Fifth Amendment and another in the Fourteenth is too frivolous to require elaborate rejection.” Malinski v. New York , 324 U.S. 401, 415 (1945) (Frankfurter, J., concurring in part, dissenting in part).

[26] Townsend, 557 U.S. at 424; see also Restatement (Second) of Torts § 908 (“Punitive damages may be awarded for conduct that is outrageous, because of the defendant’s evil motive or his reckless indifference to the rights of others”).

[27] Waits v. Frito-Lay Inc. , 978 F.2d 1093, 1104 (9th Cir. 1992), abrogated on other grounds, Lexmark Int’l, Inc. v. Static Control Components Inc. , 572 U.S. 118 (2014).

[28] Flores v. Carnival Cruise Lines , 47 F.3d 1120, 1127 (11th Cir. 1995)

[29] DeVries, Slip Op. (Majority) at 10.

[30] Id., Slip. Op. (Dissent) at 8.

[31] See, e.g., Holdampf v. A.C.&S. Inc. (In re N.Y.C. Asbestos Litig.), 840 N.E.2d 115, 199 (N.Y. 2005) (citations omitted).

[32] See, e.g., DiCenzo v. A-Best Prods. Co. , 897 N.E.2d 132, 134 (Ohio 2008) (limiting application of products liability decision to products sold after the decision).

[33] Great N. Ry. Co. v. Sunburst Oil & Ref. Co. , 287 U.S. 358, 365 (1932).

[34] See, e.g., DiCenzo, 897 N.E.2d 132, 136-140 (collecting cases); see also Selective Ins. Co. of Am. v. Rothman, 34 A.3d 769, 773 (N.J. 2012); Heritage Farms, Inc. v. Markel Ins. Co., 810 N.W.2d 465, 479–80 (Wisc. 2012); Atlanta Oculoplastic Surgery, P.C. v. Nestlehutt, 691 S.E.2d 218, 225 (Ga. 2010); Kruchowski v. Weyerhaeuser Co., 202 P.3d 144, 152 (Okla. 2008); Caperton v. A.T. Massey Coal Co., 690 S.E.2d 322, 351–52 (W. Va. 2009); BHA Investments, Inc. v. City of Boise, 108 P.3d 315, 320 (Idaho 2004); Mandel v. Sickles, 829 F.2d 1120 (Table) (4th Cir. 1987) (S.C. law).

[35] See, e.g., Nestlehutt, 691 S.E.2d at 225.