October 20, 2004 DEVELOPMENTS IN PREMISES LIABILITY LAW by Patrick M. Hanlon and Julie S. Lehrman1
I. II.
III.
IV.
Introduction ............................................................................................................................................................................. 1 The Law of Premises Liability ................................................................................................................................................ 2 A. Liability of Possessors of Land .............................................................................................................................. 2 B. Liability of Employers of Independent Contractors. .............................................................................................. 4 1. Retained Control ............................................................................................................................................ 4 2. Peculiar Risk .................................................................................................................................................. 5 a. Direct Liability ..................................................................................................................................... 6 b. Vicarious Liability................................................................................................................................ 6 c. Peculiar Risk: An Example................................................................................................................... 6 3. Negligent Hiring ............................................................................................................................................ 8 C. Take-Home Cases .................................................................................................................................................. 8 The Year That Was ................................................................................................................................................................. 9 A. Ohio Asbestos Legislation ..................................................................................................................................... 9 B. Mississippi Tort Reform ...................................................................................................................................... 12 C. The Debate Over the Scope of the Privette Doctrine in California ...................................................................... 14 1. The Theme: Privette and Toland.................................................................................................................. 14 2. Variations: Camargo, Hooker, and McKown............................................................................................... 17 3. Kinsman ....................................................................................................................................................... 19 D. Retained Control .................................................................................................................................................. 22 F. Duty of Care in “Take-Home” Cases................................................................................................................... 24 Where Now?.......................................................................................................................................................................... 24
I.
Introduction
Since the Manville bankruptcy in 1982, almost 75 companies have sought the protection of the federal bankruptcy laws. (The majority of those bankruptcies have occurred since January 1, 2000.) Sometimes, bankruptcies have resulted in the formation of trusts to pay asbestos claims. Only a handful of such trusts are currently paying claims, however, and those are paying pennies on the dollar. In effect, most trust assets are being reserved for future claimants and are not available for paying people who are sick (or who in any event have a claim) today. More trusts will be created when and if currently pending bankruptcies are consummated, but few of those will pay full value, and none of the assets of the bankrupt companies will be available for the payment of claims while the bankruptcy is pending. Thus, the net result of bankruptcies has been to suck a huge amount of money out of the asbestos litigation system.
Patrick M. Hanlon is a partner and Julie S. Lehrman is an associate at Goodwin Procter, LLP in Washington, DC. This paper sets forth the authors’ personal views, which are not necessarily those of their law firm or its clients. This paper was prepared for and will be included in the Study Materials for ALI-ABA’s Course of Study on Asbestos Litigation in the 21st Century, to be presented Nov. 11-12, 2004, in New Orleans, LA. Rights reserved.
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This loss of resources in the “center” of asbestos litigation has increased pressure on the “periphery,” as plaintiffs and their lawyers attempt to offset the loss of assets from insolvent defendants by bringing new defendants into the litigation. Current research from RAND indicates that, as of 2002, there were more than 8,400 companies named in asbestos cases, in practically every major industrial category in the country.2 The target of litigation is not the “asbestos industry” anymore. It is Main Street, America. One front in the current campaign to involve new defendants in the asbestos litigation involves what we will loosely call “premises liability.” Premises liability actions are brought by people who claim to have been injured by dangerous conditions on the defendant’s property. Because of the operation of workers’ compensation laws, these actions usually are brought by workers employed by an independent contractor hired by the defendant. Sometimes, however, employees who are exposed to asbestos at work bring dust home on their clothing, exposing their spouses and children. Those exposures can cause mesothelioma and arguably other asbestosrelated diseases years later, resulting in lawsuits against premises owners and employers. For the purposes of this paper we treat such “take-home” liability as an extension of premises liability. Although the trend seems to have moderated, plaintiffs in recent years have enjoyed some stunning successes with theories of premises liability. For example, in 2003, a Madison County, Illinois, jury returned a verdict of $250 million against U.S. Steel Corporation in favor of a U.S. Steel employee with mesothelioma. Fortunately for the company, the securities markets were closed for the weekend by the time the verdict was announced, and the case was settled before the markets reopened the following Monday. Had that not occurred, it is easy to imagine the market reaction causing greater harm to the company than the verdict itself. In Part II of this paper we briefly summarize the “black letter” law of premises liability. We shall then turn, in Part III, to a number of potentially significant developments in the area of premises liability in the last year. Finally, in Part IV, we shall hazard a few brave, perhaps foolhardy, guesses as to the direction in which these cases may be headed.
II. A.
The Law of Premises Liability Liability of Possessors of Land
A possessor of land owes a duty of care to people who come onto his premises. Note that the duty of care falls on the actual possessor of the land, not mortgagees, lessors and the like.3
S. Carroll, The Dimensions of Asbestos Litigation (Presentation at CRMC-Towers Perrin Joint Conference on Asbestos Litigation) at 13 (June 2004). According to Carroll, the RAND Corporation has found that by 2002 there were 8400 asbestos defendants, including at least one in each of 75 of the 83 SIC Codes used by the government to classify American industry. These defendants included both large and small companies. Moreover, by 1998 nontraditional asbestos defendants (i.e., defendants not in the asbestos manufacturing or building products industries) accounted for 60% of all asbestos litigation expenditures. Under the Restatement (Second) of Torts, a “possessor of land” is “(a) a person who is in occupation of the land with intent to control it or (b) a person who has been in occupation of land with intent to control it, if no other person has subsequently occupied it with intent to control it, or (c) a person who is entitled to immediate occupation of the
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Traditionally, the extent of the possessor’s duty depended on whether the person who came on to his land was a trespasser, licensee, or invitee. Today, however, the duty owed to a licensee (for example, a social guest) is not significantly different from the duty owed to an invitee (for example, a customer, an employee, or the employee of an independent contractor doing work on the premises). Both situations are broadly included in the law of negligence. The possessor’s duty to a trespasser is much more limited, but trespasser cases have not been — and aren’t likely to be — of much practical significance in asbestos litigation.4 The typical plaintiff in an asbestos premises case is an “invitee” – that is, a person that the possessor positively encourages to come onto the land, either as a “member of the public for a purpose for which the land is held open to the public” or as a “business visitor . . . who is invited to enter or remain on land for a purpose directly or indirectly connected with business dealings with the possessor of the land.” Restatement (Second) Torts § 332. Invitees include sales and repair personnel, the possessor’s own employees – and the employees of independent contractors. Under Restatement (Second) Torts § 343, a possessor of land is liable for harm to invitees caused by a condition on his land if (and only if): • • The possessor knew or should have known about the objectionable condition and that it imposed an unreasonable risk of harm, and The possessor should have expected that the invitee would fail to discover the danger.5
Section § 343A(1) reemphasizes that “[a] possessor of land is not liable to his invitees for physical harm caused to them by any activity or condition on the land whose danger is known or obvious to them” but adds an important qualification “unless the possessor should anticipate the harm despite such knowledge or obviousness.”
land, if no other person is in possession under Clauses (a) and (b).” Restatement (Second) of Torts § 328E (1965). The important thing to understand about this definition is that it does not denote any particular legal relationship. It is factual possession that counts. It is possible to imagine premises cases that put in issue the duty of a possessor of land to trespassers. For example, mining or manufacturing facilities could leave mounds of asbestos on their property knowing that children from the surrounding neighborhood typically climb the fence and play in it. Some of these trespassers could develop mesothelioma in later years, raising the question whether the possessor of the premises had a duty toward them. However, since the number of people who could be exposed to asbestos in this way is very limited, this category of cases is not likely to become very important. Section 343 states: “A possessor of land is subject to liability for physical harm caused to his invitees by a condition on the land if, but only if, he (a) knows or by the exercise of reasonable care would discover the condition, and should realize that it involves an unreasonable risk of harm to such invitees, and (b) should expect that they will not discover or realize the danger, or will fail to protect themselves against it, and (c) fails to exercise reasonable care to protect them against the danger.” In Gutteridge v. A.P. Green Services, Inc., 804 A.2d 643 (Pa. Super. Ct. 2002) (unpublished) appeal denied, 829 A.2d 1158 (Pa. 2003), a Pennsylvania appellate court reversed summary judgment for Philadelphia Electric Company against a mesothelioma claimant who was allegedly exposed to asbestos while working for AT&T on the defendant’s premises. The court held that a landowner acting solely in its capacity as a landowner owes a duty to warn an unknowing independent contractor of existing dangerous conditions on the landowner’s premises where such conditions are known or discernable to the owner.
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Although the employee of an independent contractor working on the site qualifies as an invitee, his ability to sue the premises defendant is subject to two important limitations. First, the possessor of land is not liable if the invitee – or the invitee’s employer – created or knew about the dangerous condition.6 This is a key principle in asbestos cases, where the plaintiff is often the employee of a contractor whose work on asbestos-containing materials is the cause of his exposure and who is likely to be knowledgeable regarding the dangers of asbestos. Second, some courts have ruled that an owner cannot be held liable under § 343 where it has relinquished possession and control of the premises to the independent contractor.7 B. Liability of Employers of Independent Contractors.
In the typical premises case, the plaintiff is the employee of an independent contractor hired by the defendant (who is often, but not always, the possessor of the premises). The general rule is that the hirer of an independent contractor is not liable for “physical harm caused to another by an act or omission of the contractor or his servants.” However, this general rule has been described as nothing more than the preamble to the catalog of its exceptions.8 The three most important of these exceptions are: a) negligent exercise of retained control, b) peculiar risk, and c) negligent hiring. 1. Retained Control
Under § 414 of the Restatement, an employer is not relieved of liability for its own negligence with respect to aspects of the work over which it retains control.9 The main question in many premises cases is whether the hirer retained sufficient control to be responsible for harm to the plaintiff.10 Comment c to § 414 provides the most commonly used test for determining whether an employee retained sufficient control:
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See Monk v. Virgin Islands Water & Power Auth., 53 F.3d 1381 (3d Cir. 1995) (premises defendant not liable under § 343 because dangerous power lines were known and obvious to both the contractor and the contractor’s employees). See also Glenn v. United States Steel Corp., 423 So. 2d 152, 154 (Ala. 1982) (open and obvious dangerous high voltage lines); Clemons v. Mitsui O.S.K. Lines, Ltd., 596 F.2d 746 (7th Cir. 1979) (boat owner and charterer not liable under § 343 when a longshoreman, employed by contractor, fell down a hatch inadvertently left open by his coworker).
Where possession and control of the premises is relinquished, the landowner is no longer the possessor of land and therefore not subject to liability. Galloway v. Bankers Trust Co., 420 N.W.2d 437, 441 (Iowa 1988).
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Comment b to Section 409 states that the exceptions “are so numerous, and they have so far eroded the ‘general rule,’ that it can now be said to be ‘general’ only in the sense that it is applied where no good reason is found for departing from it.” Restatement (Second) of Torts ' 409 cmt. b. Restatement (Second) of Torts § 414.
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Where the plaintiff could not remember ever having had any contact with the employees of defendant, and the contractor supplied all tools and materials, the burden shifted to plaintiff to present a triable issue of fact on the question whether the premises owner retained sufficient control over the premises to create a duty to employees of the contractor. See Purcell v. Varian Med. Sys. Inc., No. A100725, 2004 WL 639852 (Cal. App. Mar. 30, 2004) (premises owner met initial burden by providing evidence that it had given up complete control of the worksite to the contractor, since the only employee of premises owner on site was a security guard, and premises owner neither provided materials nor directed contractor’s work at the site.)
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