NYCAL Justice Ends Deferral of Punitive Damages, Keeps CMO Intact

 NEW YORK — (Mealey’s) Continued deferral of punitive damages in New York City Asbestos Litigation (NYCAL) unfairly prejudices plaintiffs, and fears of runaway verdicts bankrupting defendants appear overblown in light of the standard necessary for such awards, a New York justice held today.  The justice also denied a cross-motion by various defendants seeking to withdraw from the case management orders (In re:  New York City Asbestos Litigation, Nos. 190293/11, 190311/11, 190294/11, 190262/11, 190215/11, 190299/11, N.Y. Sup., New York Co.).

In a brief filed in July in the New York County Supreme Court, plaintiffs in a consolidated trial group asked the court to allow them to seek punitive damages.  The plaintiffs argued that the deferral actually operates as a ban because no NYCAL jury has heard a punitive damages claim since the deferral began in 1996.  The plaintiffs argued that with the circumstances in NYCAL now drastically different than in 1996, they should once again be able to pursue punitive damages when conditions warrant.  But continued deferral “emboldens certain defendants to resist engaging in reasonable settlement offers,” the plaintiffs argued.  All asbestos suits filed in New York County are subject to the NYCAL case management orders (CMOs).

In response, the defendants argued that punitive damages serve no purpose in asbestos litigation since asbestos is no longer used.  The defendants argued that ending deferral of punitive damages would be a “profound” change that would erode the effectiveness and joint consent behind the CMO.  As such, the defendants warned that if the deferral of punitive damages is ended, they would remove their consent to the CMO.

Punitives: High Bar

Justice Sherry Klein Heitler said that given New York’s high bar for punitive damages, the defendants’ fear of large awards may be exaggerated.  Likewise, the defendants’ fear of punitive damages bankrupting companies and depleting resources may also be unwarranted, Justice Heitler said.  While the litigation has bankrupted numerous companies, defendants present no evidence that the bankruptcies resulted from punitive damages awards rather than mass filings, Justice Heitler said.

Constitutional limitations on punitive damage awards are not intended to deter the seeking of such awards but to ensure that they are applied in appropriate circumstances, Justice Heitler said.


“While the argument could be made that priority should be given to compensatory claims over punitive damages awards, I am mindful that in this state the decision to deny plaintiffs the opportunity to seek punitive damages lies with the legislature,” Justice Heitler said.  “What I cannot ignore is the fact that victims of asbestos exposure are permitted to apply for punitive damages in every New York state court except this one,” Justice Heitler said.

“I for one cannot justify a situation in which an asbestos plaintiff is permitted to apply for punitive damages in Buffalo but not in this court,” Justice Heitler said.

Justice Heitler reiterated that punitive damages should be sought only in the most serious cases but said NYCAL plaintiffs should have the same opportunity for such recovery as similar plaintiffs in the rest of the state.

CMO Withdrawal

Turning to the defendants’ cross-motion to withdraw from the CMO, Justice Heitler held that although the CMO historically involved cooperation between the parties, she had the power to issue orders absent consultation or consent.  Justice Heitler said CMO Section XVII’s punitive damages deferral is but one part of the larger, negotiated order and prejudices plaintiffs.  As such, the CMO will continue to govern NYCAL cases, Justice Heitler said.

Justice Heitler said her punitive damages ruling does not extend to railroad defendants sued under the Federal Employers’ Liability Act, which limited recovery to pecuniary losses.

The motions were filed in cases brought by Charles L. Chidester, Joseph Milazzo, William L. Moritz, Roberto Roman, Edward Sadowski and George W. Smith.

The moving defendants in those cases are Crane Co. (Chidester, Milazzo, Moritz, Roman, Sadowski, Smith), Cleaver Brooks Co. Inc. (Sadowski, Smith) and Domco Products Texas LP (Sadowski).

Alani Golanski and Perry Weitz of Weitz & Luxenberg represent the plaintiffs.  Jonathan Kromberg of Darger, Errante, Yavitz & Blau is co-liaison counsel for the defendants with Robert C. Malaby of Malaby & Bradley.  All are in New York.

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