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FELA RELEASES IN OCCUPATIONAL CL

VIEWS: 29 PAGES: 16

									               FELA RELEASES IN OCCUPATIONAL CLAIMS:


DO YOU ALWAYS GET WHAT YOU BARGAINED FOR OR HAVE THE
         RAILROAD’S RIGHTS BEEN PIRATED AWAY?




Presentation by:                                       Outline by:

Thomas E. Dover, Esq.                                  Thomas E. Dover, Esq.
Gallagher, Sharp, Fulton & Norman                      Kevin Alexandersen, Esq.
1501 Euclid Ave., 7th Floor Bulkley Bldg.              Holly M. Olarczuk-Smith, Esq.
Cleveland, Ohio 44115                                  Gallagher, Sharp, Fulton &
216-241-5310                                           Norman
tdover@gsfn.com                                        kalexanderson@gsfn.com
                                                       holarczuk-smith@gsfn.com



                     National Association of Railroad Trial Counsel’s
                                     Winter Meeting
                                    Orlando, Florida
                                   February 21, 2005
I.         Statutory Background Of 45 U.S.C. §55

        Prior to the enactment of the FELA, traditional common law rules made it difficult for
railroad workers to recover for work-related injuries. As a result, in 1908, the FELA “was enacted
because Congress was dissatisfied with the common-law duty of the master to his servant.” Rogers
v. Missouri Pacific RR. (1957), 352 U.S. 500, 507. The purpose of the FELA was to provide a
remedial statute to shift “part of the ‘human overhead’ of doing business” in the railroad industry
“from employees to their employers.” Consol. Rail Corp. v. Gottshall (1994), 512 U.S. 532, 542-
543. As part of this purpose, Congress eliminated several common law tort defenses that had barred
recovery by injured workers, including the fellow servant rule, contributory negligence and
assumption of the risk. Gottshall at 542-543; 45 U.S.C. §§ 51, 53-55.

      In addition, the FELA sought to prevent employers from contracting out of liability with their
workers by enacting 45 U.S.C. § 55, which reads as follows:


                   “Any contract, rule, regulation, or device whatsoever, the purpose or
                   intent of which shall be to enable any common carrier to exempt itself
                   from any liability created by this act [45 U.S.C. § 51 et seq], shall to
                   that extent be void[.]”


        Specific to the topic at hand, the validity of a release in a FELA action raises a substantive
federal question to be determined by federal rather than state law. Maynard v. Durham S. Ry. Co.
(1961), 365 U.S. 160; Dice v. Akron C & Y.R. Co. (1952), 342 U.S. 359, 361. “One who attacks a
settlement must bear the burden of showing that the contract he has made is tainted with invalidity,
either by fraud practiced upon him or by a mutual mistake under which both parties acted.” Callen
v. Pennsylvania RR. Co. (1948), 332 U.S. 625, 630.

        As discussed later in this handout, it is quite common within the railroad industry for an
employer to execute a general release with an employee which encompasses both the employee’s
present and future work-related claims. However, in light of the recent decision rendered by the
Court of Appeals of Ohio, Eighth Appellate District, in Anderson v. A.C. & S., Inc. (2003), 154 Ohio
App.3d 393, the railroad industry may need to re-evaluate the language contained in such a general
release.1




     1
         A copy of this decision is attached to this handout at Tab A.

                                                     -1-
       Furthermore, the split between the federal circuits, as well as state courts, has caused much
confusion in determining the validity of a general release. The FELA was enacted to avoid such
divergent outcomes by promoting the uniform resolution of employee injury claims across the
country:


                “One of the purposes of the Federal Employers' Liability Act was to
                ‘create uniformity throughout the Union’ ***. H. R. Rep. No. 1386,
                60th Cong., 1st Sess., 3 (1908). See also Dice v. Akron, C. & Y. R.
                Co., 342 U.S. 359, 362; Brady v. Southern R. Co., 320 U.S. 476, 479;
                Hill, Substance and Procedure in State FELA Actions -- The
                Converse of the Erie Problem?, 17 Ohio St. L. J. 384 (1956).”

Norfolk & W. Ry. Co. v. Liepelt (1980), 444 U.S. 490, 493, fn.5

        The FELA “must be given that uniform application throughout the country essential to
effectuate its purposes.” Dice at 361. However, the split that exists among the jurisdictions on the
validity of a general release undermines the legislative goal of uniformity and predictably in
resolving work-related claims under the FELA.


II.       Anderson v. A.C. & S., Inc. (2003), 154 Ohio App.3d 393

          A.    Factual Background

                1.     The First Lawsuit & Covenant

        From 1940 until 1961, Lester Anderson was employed as a sheet metal worker and pipe fitter
for the Nickel Plate Railway Company. Afterwards, Mr. Anderson was employed by the New York
Central Railroad Company from 1961 through 1964 as a sheet metal and maintenance worker.

        In 1984, twenty years after Mr. Anderson’s employment for the railroads ended, he and his
wife filed their first lawsuit against the railroads in the Cuyahoga County Court of Common Pleas.2
Mr. Anderson claimed that he developed asbestosis due to his alleged exposure to asbestos during




      2
    Norfolk was sued as successor in interest to the Nickel Plate Railroad Company. American
Financial Group, Inc., fka American Premier Underwriters, Inc., fka The Penn Central Corporation
was also sued as a successor in liability and/or interest to Penn Central Transportation Company,
Pennsylvania Railroad, New York Central Railroad, Lehigh Valley Railroad Company and/or Erie
Lackawanna, Inc.

                                                -2-
his employment with the railroads.3 In 1986, with the advice and consent of counsel and in
consideration for receiving settlement funds in the amount of $50,000, both Mr. and Mrs. Anderson
executed a covenant not to sue and to cease suing the railroads.

        The covenant specifically provided that “this agreement *** constitutes a compromise in
settlement of a disputed claim.” As contained in many agreements, the covenant included a general
release of claims against the railroads arising from Mr. Anderson’s employment. The covenant also
contained the following provision:


               “IT IS FURTHER AGREED AND UNDERSTOOD without
               limitation on the foregoing that this agreement includes on behalf of
               LESTER ANDERSON his successors and assigns any claim,
               demand, right or cause of action for injuries, losses and damages
               resulting from or relating in any manner to exposure to or ingestion
               of any substance whatsoever including but not limited to asbestos
               dust or fiber and any diseases resulting therefrom as well as
               asbestosis or asbestos-related disease, illness or injury including any
               and all forms of cancer or mesothelioma, claimed to be related to
               asbestos or any other substances whether or not presently alleged or
               manifested.”


(Emphasis added.)

         When the release was signed, Mr. Anderson had asbestosis and was aware of his potential
risk of developing mesothelioma.4 Mr. Anderson received valid consideration to release his risk for
developing mesothelioma. This is evidenced by the fact that in 1986, the railroads usually did not
offer $50,000 to settle only asbestosis claims. As such, the covenant not only terminated the 1984
litigation and disposed of Mr. Anderson’s existing claim for asbestosis, but also attempted to dispose
of any future claims for any asbestos related injury against the railroads, specifically including any
claim for mesothelioma.




  3
    Asbestosis is a noncancerous scarring of the lungs caused by breathing asbestos fibers. Mosby
Medical Encyclopedia (Revised Ed. 1996). See, also, Norfolk & W. Ry. Co. v. Ayers (2003), 538
U.S. 135, 142, fn. 2.
  4
     Mesothelioma is a rare cancer of the lining of the lung or abdominal cavity caused by exposure
to asbestos fibers. Miller-Keane Medical Dictionary (2000). See, also, Ayers at 142.

                                                 -3-
               2.      Mesothelioma & The Second Lawsuit

        Many years after the release was executed in 1986, Mr. Anderson contracted mesothelioma
and died in April 1998. In 2000, the surviving spouse filed a second lawsuit under the FELA in the
Cuyahoga County Court of Common Pleas. In particular, Mrs. Anderson alleged both a wrongful
death and survivorship claim against the railroads claiming that Mr. Anderson developed
mesothelioma due to his occupational exposure to asbestos. This lawsuit was brought despite the
fact that the executed covenant released the railroads from any injury sustained as a result of Mr.
Anderson’s asbestos exposure, specifically including mesothelioma. In other words, Mrs. Anderson
brought a second lawsuit based on the same alleged tortious conduct against the railroads as was
asserted in the 1984 lawsuit, to-wit: occupational exposure to asbestos.

        Because Mrs. Anderson was seeking compensation for the same alleged tortious conduct as
asserted in the 1984 lawsuit, the railroads filed for summary judgment arguing that they were entitled
to judgment as a matter of law based upon the prior executed release. The trial court determined
that the release precluded the survivorship claim as a matter of law but permitted Mrs. Anderson to
proceed with the wrongful death claim. In support of its decision, the trial court specifically found
that the release was executed after the Andersons’ consulted with counsel and at a time when Mr.
Anderson was aware of the potential risks of contracting other lung diseases and cancer.

        Counsel for Mrs. Anderson appealed as a matter of right to the Court of Appeals of Ohio,
Eighth Appellate District, challenging the trial court’s grant of summary judgment in favor of the
railroads on the survivorship claim. The railroads also filed a cross-appeal seeking review of the trial
court’s ruling that the wrongful death claim was not barred by the prior executed release.


       B.      Straying From The Legal Mainstream: An In-depth Analysis Of The Ohio
               Court Of Appeals Decision In Anderson

        The Ohio Court of Appeals concluded that the release was void under 45 U.S.C. §55 to the
extent that it applied to the mesothelioma claim because that claim was unaccrued and unknown at
the time the release was executed. Anderson v. A.C.&S., Inc. (2003), 154 Ohio App.3d 393,402, 404.
Under this logic, the release did not bar the wrongful death and survivorship claims based on
mesothelioma because this claim had not yet accrued when the release was executed. Id. According
to the court, “under FELA, a release is valid only where it disposes of an accrued claim for a known
injury.” Anderson at 402 (emphasis added). As explained below, this decision conflicts with two
landmark United States Supreme Court cases where the validity of a general release has been upheld
regardless of whether the released claim has accrued.




                                                  -4-
               1.      Callen v. Pennsylvania RR. Co. (1948), 332 U.S. 625

         In Callen v. Pennsylvania RR. Co. (1948), 332 U.S. 625, the plaintiff-employee sustained an
injury and entered into a settlement with the employer-railroad. Id. at 626-627. This settlement
included a general release of his claims arising out of the accident, which caused the injury, in
exchange for $250. Id. Significant is the fact that at the time of the settlement, plaintiff was not
diagnosed with and was unaware that he sustained a permanent back injury. Id. Plaintiff later
brought a FELA action against the railroad seeking recovery for his permanent injury. As a defense,
the railroad argued that the general release executed by plaintiff relieved the railroad of “all claims
and demands which [plaintiff has] or can or may have against [the railroad].” Id. at 626.

        Upon consideration, the Supreme Court of the United States upheld the general release even
though the plaintiff was unaware he had a permanent injury at the time of execution. In rejecting the
plaintiff’s argument that the release “violates §§ 5 of the Federal Employers’ Liability Act[,]” the
Court stated:


               “It is obvious that a release is not a device to exempt from liability
               but is a means of compromising a claimed liability and to that extent
               recognizing its possibility. Where controversies exist as to whether
               there is liability, and if so for how much, Congress has not said that
               parties may not settle their claims without litigation.”


Callen at 631 (emphasis added).

         The fact that the employee did not know he had a permanent back injury did not affect the
validity of the release. In Callen, there existed a specific injury claim, a compromise of that claim,
and the release of all future claims known or unknown. Such a settlement and release of a claimed
liability and all future claims arising from past wrongful conduct is valid under the FELA. Callen
at 630-631.

        The release executed by the Andersons seemingly fell within the scope of Callen. With the
advice of counsel, the Andersons executed the release with the railroads that settled a specific injury
claim, that is, a claim for exposure to asbestos that led to asbestosis. The release also disposed of
any future claims of either Mr. Anderson or his heirs (including his wife) for any asbestos related
injury or any other causes of action against the railroads, which specifically included any claims for
mesothelioma. Pursuant to Callen, such a release did not appear to violate 45 U.S.C. § 55 because
there existed a specific claim for an alleged wrongful act, a compromise of that claim, and the release
of future claims.




                                                 -5-
       However, the Ohio Court of Appeals found otherwise: “because [Mr. Anderson] did not
have mesothelioma when he signed the release [in 1986], his claim had not yet accrued and,
therefore, he could not release it.” Anderson at 402. In so holding, the state appellate court
misconstrued Callen to hold that a release is valid only as to accrued claims:

               “‘While such language [in Callen] seems to indicate that parties may
               indeed settle FELA claims via a release, it is clear that this only
               applies to claims which have arisen at the time the release is signed;
               the release is valid only ‘where controversies exist,’ i.e, where it
               disposes of an accrued FELA claim. Thus, while one can contract to
               settle or waive actual FELA claims, one may not similarly contract to
               waive all FELA rights with respect to claims which have not yet
               arisen.’”

Anderson at 401-402 (emphasis sic).


               2.     Mellon v. Goodyear (1928), 277 U.S. 335

        In Mellon v. Goodyear (1928), 277 U.S. 335, the railroad employee sustained personal
injuries and brought a FELA claim. Id. at 336-337. He settled with his employer for those specific
injuries and executed a general release “for all claims and demands for all damages resulting from
the injuries” that may have been brought by him or his estate. Id. at 337. Subsequent to executing
the release, the employee died. While the claim for wrongful death had not yet accrued, it was
released by the parties. Nevertheless, the surviving spouse brought a wrongful death action under
the FELA against the railroad.

       Upon consideration, the Supreme Court of the United States held that the release barred the
subsequent unaccrued wrongful death lawsuit because the subsequent lawsuit was based upon the
same alleged tortious conduct for which the railroad had been released:

               “By the overwhelming weight of judicial authority, where a statute of
               the nature of Lord Campbell’s Act in effect gives a right to recover
               damages for the benefit of dependents, the remedy depends upon the
               existence in the decedent at the time of his death of a right of action
               to recover for such injury. A settlement by the wrongdoer with the
               injured person, in the absence of fraud or mistake, precludes any
               remedy by the personal representative based upon the same wrongful
               act.”

Mellon at 344 (emphasis added).




                                                -6-
        The Supreme Court in Mellon went on to offer the following before ruling in favor of the
railroad and upholding the release:


               “The position taken by the courts is fairly summed up as follows:
               Whether the right of action is a transmitted right or an original right,
               whether it be created by a survival statute or by statute creating an
               independent right, the general consensus of opinion seems to be that
               the gist and foundation of the right in all cases is the wrongful act,
               and for such wrongful act but one recovery should be had, and if the
               deceased had received satisfaction in his lifetime, either by settlement
               and adjustment or by adjudication in the courts, no further right of
               action existed.”


Id. at 344-345 (emphasis added).

       The Supreme Court of the United States further stated:


               “Under the Federal Employers’ Liability Act, a full settlement and
               release, executed advisedly and in good faith between a railroad
               carrier and an injured employee, discharges not only the claim of the
               employee for personal loss and suffering resulting from the injury
               while he lived, but also the claim of his dependents for pecuniary
               damages resulting from his ensuing death.”


Id. at paragraph one of the syllabus.

         Pursuant to the dictates of Mellon, an employee can execute a general release of all future
claims arising from a past wrongful act. Such a release, however, bars a subsequent action related
to that same wrongful conduct. Thus, the holding of Mellon is that only one recovery may be had
for a wrongful act. Mellon at 344-345.

         Again, the Anderson case seemed to fall squarely within the purview of Mellon. The
wrongful act alleged is Mr. Anderson’s exposure to asbestos while employed by the railroads. It
is this act of alleged negligence which formed the basis of Mr. Anderson’s lawsuit in 1984, and
formed the basis of the wrongful death and survivorship action brought by Mrs. Anderson in 2000.
Pursuant to Mellon, it appeared that Mrs. Anderson’s subsequent lawsuit was barred because the
basis of the wrongful death and survivorship action was the same alleged tortious conduct that had
been previously released. However, the Ohio Court of Appeals did not agree.



                                                 -7-
        Despite the fact that mesothelioma stems from the same alleged wrongful act as the settled
asbestosis claim, the Ohio Court of Appeals reasoned that because Mr. Anderson’s claim for
mesothelioma had not yet accrued in 1986 at the time the release was executed, such a claim could
not be released. Anderson at 402. In its opinion, the state appellate court did not even mention the
Mellon case.

        Instead, the Anderson Court focused on the separate disease rule in determining that Mrs.
Anderson is permitted to bring the wrongful death and survivorship claims based on Mr. Anderson’s
death from mesothelioma. Anderson at 403-404. It is true that under the separate disease rule, a
plaintiff can bring a suit for mesothelioma even though he has already recovered for asbestosis.
Ayers at 152, fn. 12. However, under Mellon, a general release of all future unaccrued claims should
preclude a subsequent action for that same wrongful conduct, irrespective of the separate disease
rule.


                 3.     Split Between The Federal Circuits And State Courts

        Despite the clear mandate of Callen and Mellon, a split in the federal circuits, as well as in
the state courts, has emerged over how to analyze a general release of future claims under the FELA,
resulting in confusion as to the validity of such a release.

                        a.      The “Known Claim” Rule Of The Sixth
                                Circuit

        In Babbitt v. Norfolk & W. Ry. (6th Cir. 1997), 104 F.3d 89, the employees accepted a buy-
out or severance package from the railroad and signed an agreement releasing the railroad from any
and all claims they may have against the company, known and unknown. Id. at 90-91.
Subsequently, the employees brought a FELA claim for hearing loss. Id. at 90. Instead of
recognizing the distinction between a severance agreement and a settlement agreement, the United
States Court of Appeals for the Sixth Circuit created a stringent rule to determine the validity of a
general release under the FELA. Specifically, the Sixth Circuit held that the release at issue could
not bar the subsequent claims for occupational hearing loss filed by the employees unless the
employees knew about these claims when the release was executed:

                 “To be valid, a release must reflect a bargained-for settlement of a
                 known claim for a specific injury, as contrasted with an attempt to
                 extinguish potential future claims the employee might have arising
                 from injuries known or unknown by him.”

Babbitt at 93.




                                                 -8-
         The approach adopted by the Sixth Circuit is referred to as the “known claim” rule.
However, this rule conflicts with the precedent of Callen and Mellon by severely limiting the scope
of a release to a known, existing claim. Despite that fact, other courts have endorsed this rule. See,
e.g, Wilson v. CSX Trans., Inc. (6th Cir. 1996), 83 F.3d 742 (release ineffective to shield employer
from liability for new injury after re-employment); Stephens v. Alabama State Docks Terminal Ry.
(Ala. Civ. App. 1998), 723 So.2d 83, 86-87 (general release does not apply to a new injury or the
aggravation of the old injury); Fannin v. Norfolk & W. Ry. Co. (1995), 106 Ohio App.3d 401, 405-
408 (release executed by the employees as part of buy-out package did not bar subsequent claim for
cancer and release was void under 45 U.S.C. § 55 because it was executed prior to the diagnosis of
asbestos-related cancer).

       In holding that the release executed in 1986 violated 45 U.S.C. §55, the state appellate court
in Anderson relied heavily on Babbitt and Fannin:

               “The record in this case reflects that Lester Anderson was not
               diagnosed with mesothelioma until January 9, 1998, some twelve
               years after he signed the release at issue. Thus, Anderson's claim for
               mesothelioma had not yet accrued in 1986 when he signed the release
               and, accordingly, in light of Babbitt and Fannin, the release cannot
               bar this non-accrued claim for an unknown injury.”

Anderson at 402.

         However, unlike the Babbitt and Fannin factual scenario, there was no buy-out or severance
agreement involved in the Anderson case. Rather, with the advice and in the presence of their
counsel, both Mr. and Mrs. Anderson executed a release with the railroads to settle an actual
controversy, to wit: a claim for asbestos exposure that led to asbestosis. At the time the release was
executed, Mr. Anderson knew of his potential risk for developing mesothelioma, and he received
valid consideration to release his risk of developing mesothelioma. Despite these distinguishing
facts, the Ohio Court of Appeals still applied the “known claim” rule of Babbitt:

               “Although the majority of courts have not so found, ‘the Sixth Circuit has
               adopted a bright-line rule that a release may be valid only with regard to
               injuries that are known at the time the release is executed.’ *** Thus,
               although Anderson may have been aware of the risk of developing
               mesothelioma as a result of his exposure to asbestos, because he did not have
               mesothelioma when he signed the release, his claim had not yet accrued and
               therefore, he could not release it.”

Anderson at 402.




                                                 -9-
                       b.      The “Known Risk” Rule Of The Third And
                               Eleventh Circuit

        On the other side of the spectrum is the Third and Eleventh Circuits, which have expressly
rejected the “known claim” rule created by the Sixth Circuit. Case in point is Wicker v. Consol. Rail
Corp., (3d Cir. 1998), 142 F.3d 690, where the employees had each negotiated a settlement of their
work-related injuries with the railroad and executed a general release to settle all claims for all past
and future injuries. Subsequent to the signing of the releases, the employees became aware of other
injuries. The employees brought suit under the FELA alleging various injuries because of exposure
to hazardous and toxic substances during the course of their employment with the railroad. Wicker
at 692-694.

        Upon consideration, the Third Circuit held that a FELA plaintiff may release claims relating
to any known risk, even in the absence of present manifestation of the injury:

               “[I]t is entirely conceivable that both employee and employer could
               fully comprehend future risks and potential liabilities and, for
               different reasons, want an immediate and permanent settlement. The
               employer may desire to quantify and limit its future liabilities and the
               employee may desire an immediate settlement rather than waiting to
               see if injuries develop in the future. To put it another way, the parties
               may want to settle controversies about potential liability and
               damages related to known risks even if there is no present
               manifestation of injury.

                                               ***

               [W]e hold that §§ 5 of FELA allows an employer to negotiate a
               release of claims with an employee provided the release is limited to
               those risks which are known by the parties at the time the release is
               negotiated.”

Wicker at 700-702 (emphasis added).

        The Wicker court reasoned that a rule allowing parties to release claims related to known
risks rather than known injuries reflects the FELA’s remedial purpose. Id. at 701. As a result, the
Third Circuit held that a release does not violate 45 U.S.C. § 55 “provided it is executed for valid
consideration as part of a settlement, and the scope of the release is limited to those risks which are
known to the parties at the time the release is signed. Claims relating to unknown risks do not
constitute ‘controversies,’ and may not be waived under §5 of FELA.” Id. at 701 (emphasis added).




                                                 -10-
        The majority of courts have adopted the “known risk” rule, including the Eleventh Circuit.
In Sea-Land Serv., Inc. v. Sellam (11th Cir. 2000), 231 F.3d 848, the employee injured his back and
brought a claim against the employer for total disability. The employer paid the employee for his
entire work-life expectancy in exchange for a release of liability. During the settlement negotiations,
the employee had received medical advice relative to the risk of re-injuring his back. Pursuant to
the release agreement, if the employee returned to work on any vessel belonging to the employer,
then he would do so at his own risk. “The [a]greement was designed to make sure that a totally
disabled seaman would not work for Sea-Land as a seaman under the Jones Act.” Sea-Land at 851.
Despite this, the employee regained employment and then filed a claim in state court against the
employer for re-injury to his back. To preclude the employee’s state court action, the employer
commenced a declaratory judgment action in federal court seeking to find the release agreement to
be valid and enforceable. In turn, the employee claimed that the agreement violated 45 U.S.C. §55
of the FELA. Sea-Land at 849-852.

       Consistent with the Wicker holding, the Eleventh Circuit enforced the agreement:

               “The Agreement was intended to prevent the very risk at issue here.
               Further, under the Agreement Sellan [the employee] was paid both for
               his current expenses and for his entire work-life expectancy. The
               Agreement was intended both to prevent Sellan from suffering re-
               injury and for Sea-Land [the employer] to avoid paying again what
               had already been paid, a work lifetime of compensation.

                                               ***

               *** The settlement agreement properly left the risk of future injury
               with Sellan should he breach the Agreement by returning to work.”

Sea-Land at 852-853 (emphasis added).

         State courts have also followed the “known risk” rule. Loyal v. Norfolk S. Corp. (Ga. Ct.
App. 1998), 507 S.E.2d 499, 503-504 (general release barred subsequent claim for hearing loss
which was a known risk to the employee at the time he signed the release); Wolf v. Consol. Rail
Corp. (Pa. Super. Ct. 2003), 840 A.2d 1004, 1007 (release does not violate 45 U.S.C. § 55 provided
that it is executed for valid consideration as part of a settlement and the scope of the release is
limited to those risks which are known to the parties at the time the release is signed).

        Joining the minority, the Ohio Court of Appeals rejected the “known risk” rule because
“[t]his is not the rule in the Sixth Circuit[.]” Anderson at 402. Had the Ohio Court of Appeals
followed the “known risk” rule set forth in Wicker, the railroads would have prevailed. Under the
“known risk” rule, a valid release can include an injury that is not necessarily present at the time of
execution if the possibility or risk of such an injury is known. Even though the actual disease of
mesothelioma was not present, Mr. Anderson knew of his risk of developing mesothelioma at that


                                                 -11-
time the release was executed. Valid consideration was received for that risk. Therefore, under the
Wicker rule, the release should have blocked Mrs. Anderson’s wrongful death and survivorship
claims resulting from Mr. Anderson’s death from mesothelioma.

III.    Impact Of The Anderson Decision On The Railroad Industry

        A.      Status Of The Anderson Case

        In November 2003, the railroads filed a discretionary appeal to the Supreme Court of Ohio,
urging the Court to exercise jurisdiction over the Anderson matter. In a 4-3 decision, the Supreme
Court of Ohio declined jurisdiction. The railroads filed a motion for reconsideration which was
denied by the same 4-3 voting block.

        In July 2004, the railroads filed a petition for a writ of certiorari in the Supreme Court of the
United States. However, on October 12, 2004, the Supreme Court of the United States denied the
petition for certiorari. Presently, the Anderson case is scheduled to proceed to trial on both the
wrongful death and survivorship claims in April 2005.

        B.      Impact On Settlement Negotiations And The Viability Of General
                Releases

        “Asbestos claims have created an increased amount of litigation in state and federal courts
that the United States Supreme Court has characterized as ‘an elephant mass’ of cases.” Ohio Am.
Sub. H.B. No. 292, Section 3(A)(1). See, also, Ayers at 166; Amchem Products Inc. v. Windsor
(1997), 521 U.S. 591, 597; Ortiz v. Fireboard Corp. (1999), 527 U.S. 815, 821. “The extraordinary
volume of nonmalignant asbestos cases continue to strain federal and state courts.” Ohio Am. Sub.
H.B. No. 292, Section 3(A)(3). “[I]t is estimated that there are more than two hundred thousand
active asbestos cases in court nationwide. According to a recent RAND study, over six hundred
thousand people have filed asbestos claims for asbestos-related personal injuries through the end of
2000.” Ohio Am. Sub. H.B. No. 292, Section 3(A)(3)(a).

         Given these overwhelming numbers, it would be impossible to conduct trials on all these
asbestos claims. As such, there is no question that settlements are important to manage the asbestos
litigation. The railroad industry generally resolves nonmalignant asbestos-related claims through
settlements. The 1986 release discussed herein is a typical release used by the railroad industry in
settling asbestos-related claims. The settlement of an asbestosis claim often involves a release of
all asbestos-related claims, including future claims for lung cancer and mesothelioma. The same is
true with regard to settling non-asbestos work-related claims, such as carpal tunnel, back, and
hearing loss injuries. Typically, the general release encompasses not only the accrued work-related
injury arising from the alleged tortious conduct but also future claims, whether known or unknown,
arising out of the same alleged wrongful conduct.

        It is often in the interest of both the employee and the railroad to secure a settlement of all


                                                  -12-
work-related claims through the use of a general release. By executing a general release, the
employee receives a substantially higher settlement amount than if he/she had released only the
current injury claim. “Persons who sign general releases tend to receive larger settlements, and ***
defendants are willing to pay higher sums to settle claims under a general release.” Wicker at 695.
At the same, the railroad is “buying its peace” by “[putting] to rest all present and future claims.”
Wicker at 695. Also, both the employee and the railroad have a great interest in avoiding protracted
litigation over work-related disputes. “Clearly, in an industry, such as the railroad industry, that has
a number of known occupational risks and diseases, it is important for both the employer and
employee to be able to settle potential claims regarding injuries or diseases prior to actual discovery.”
Loyal at 502. See, also, Wicker at 700-701.

        However, the Anderson decision, in conjunction with the “known claim” rule of the Sixth
Circuit, may substantially diminish the incentive of parties to enter into settlement agreements.
Employees may be unwilling to settle existing claims because the railroad will not be able to offer
the same large settlements if future claims cannot be released. At the same time, employers may be
unwilling to settle work-related injuries if that employer would remain exposed to another lawsuit
in the future for the same alleged tortious conduct that was previously released.

        The “known claim” rule also promotes forum shopping. Given the liberal venue rules of the
FELA, plaintiffs have the option to sue in any jurisdiction where the railroad operates. Currently,
Norfolk Southern operates in 23 jurisdictions, including the Third, Sixth and Eleventh Circuits. A
plaintiff who has previously released all his work-related claims but later develops an injury can
simply choose to sue Norfolk Southern in the Sixth Circuit or the State of Ohio to ensure the receipt
of a favorable determination.

        In short, the “known claim” rule adopted by the Sixth Circuit and the Ohio state appellate
courts potentially voids thousands of existing settlements reached with employees where valid
consideration was received for the release of future claims. Claims settled years, if not decades ago,
may be revived. This may foster a climate for plaintiffs to file countless lawsuits involving work-
related claims which have already settled, thereby needlessly congesting trial court dockets with
unnecessary litigation.




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IV.    Suggestions On How To Deal With The Anderson Case

       Pursuant to the Ohio state appellate court’s decision in Anderson, a release is only valid
under the FELA as to known accrued claims that exist at the time the release is executed. To
possibly deal with the unduly stringent holding of Anderson, keep the following suggestions in mind
when drafting a release of work-related claims:

       (1)     Incorporate a provision which states that the release shall be construed in
               accordance with the applicable provisions of the FELA and in accordance
               with federal law establishing the “known risk” rule;

       (2)     Include language that completely releases and forever discharges not only the
               accrued injury claim but also the alleged wrongful conduct committed against
               the employee;

       (3)     Include a provision which states that the employee is aware of the risk for
               future development of all other diseases, conditions or injuries resulting from
               or relating to the wrongful act, regardless of whether the employee currently
               suffers from such injury, condition or disease, and that the employee
               knowingly waives and releases such claims;

       (4)     Include language which states that the employee understands that the injury,
               condition or disease from which he/she suffers from, or from which there
               exists a risk that he may suffer from in the future may worsen or may
               aggravate a pre-existing medical condition. Further explain that the
               employee voluntarily accepts the risk of future worsening of his conditions,
               or the aggravation of a pre-existing condition, and knowingly waives and
               releases any and all claims for the same;


       (5)     Include a provision which states that the settlement amount paid reflects
               consideration both for all present occupational diseases, conditions and
               injuries, as well as for the risk of developing any such future diseases,
               conditions and injuries;

       (6)     At the end of the instrument, explain that the employee has read and fully
               understands the release, has been fully advised by his/her attorney as to the
               legal effect of the release and has signed the release voluntarily. Include a
               space for the employee, as well as the employee’s attorney, to sign.




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