Punitives in Toxic Dispute Tossed Out by L.A. Court

By Mike McKee

The Recorder
February 22, 2000

Executives at five major oil companies are likely celebrating today following a court ruling last week that threw out about $7.5 million in punitive damages in one phase of a massive toxic tort case involving Lockheed Corp.'s secretive Skunk Works plant.

The unpublished ruling by the Second District Court of Appeal not only reversed the damages awarded to a group of Lockheed employees, but also took the far-reaching step of finding in favor of the oil companies on that issue and ordering that it not be retried.

The appellate holding in Arnold v. Ashland Chemical Co., B121434, possibly foreshadows more bad news for plaintiffs, who, in a subsequent phase of the Skunk Works case, were awarded hundreds of millions of dollars in punitives. That phase of the case is pending before the Second District.

While sympathizing with the plaintiffs in Arnold -- 28 former or current Lockheed employees claiming injuries from chemicals supplied to the company by oil companies over a 40-year span -- the court pointed out that punitive damages can only be imposed for malice or despicable acts. That wasn't the case here, the court held.

"Plaintiffs suffered these injuries while involved in some of the most sensitive work in our nation's defense industry. In part by reason of their labors, this nation and its people remain free to this day," Presiding Justice Paul Turner wrote for the unanimous court.

"However, there is absolutely no evidence that any vile, base, contemptible, miserable, wretched or loathsome conduct that would be despised by ordinary decent people was engaged in by any defendant or its employees."

Turner was joined in the ruling by Justices Margaret Grignon and Ramona Godoy Perez.

Arnold was the fourth of a series of related cases in the so-called Lockheed Litigation Cases, JCCP 2967, brought by 627 Lockheed employees who claim they suffered a wide range of ailments, from cancer to brain damage, after working around oil company solvents for years at Lockheed's top-secret Skunk Works plant in Palmdale. Several oil companies are named, and are accused of failing to warn Lockheed about the dangers of their chemicals.

The Arnold case only involved claims against Exxon Corp., Ashland Chemical Co., Shell Oil Co., E.I. du Pont de Nemours & Co. and Union Oil Co. But it was the first case of the five in which jurors awarded punitive damages.

The fact that the Second District threw out punitive damages completely and even refused to let them be reconsidered on retrial could indicate that the court will look equally unfavorably on the $760 million in punitive damages -- later cut in half by a lower court judge -- awarded by jurors after the fifth trial in August 1998.

Lawyers on both sides of the case either didn't return telephone calls on Friday or declined to comment because of further proceedings pending before both the appeal court and the trial court.

But considering that the underlying circumstances in each case are nearly identical, the court could toss out punitives in the next case for the same reason it did on Friday -- that the oil companies' actions did not rise to the level that would justify punitive damages.

"Substantial evidence supports the jurors' repeated conclusions in all the completed trials to date that defendants' actions constituted tortious acts under California law," Justice Turner wrote, "but they did not involve despicable conduct."

The Arnold jury had also awarded $7.7 million in compensatory damages, but the Second District on Friday ordered a retrial, taking the position that the oil companies never got a chance to argue a defense during the original trial.

The justices ruled that Los Angeles County Superior Court Judge Richard Hubbell had erred in holding that the jurors in Arnold were essentially bound by previous jury findings that the oil companies' warnings about harm were inadequate.

"In prior cases, there has been conflicting evidence as to the adequacy of warnings given at a particular point in time and as to a particular injury," Turner wrote. "A jury considering such evidence could reasonably find a warning adequate as to some plaintiffs but inadequate to others."

>Not being able to point that out, he wrote, hindered the oil companies' case.

"Had defendants ... not been prevented from presenting their full defense to the jury," he added, "it is reasonably probable a result more favorable to these manufacturers or distributors would have been reached."

The plaintiffs were represented by L.A.'s Girardi & Keese and the Law Offices of Jeffrey McIntyre in Calabasas. The defendants were represented by Encino's Horvitz & Levy and the L.A. office of Steptoe & Johnson.

This article republished with permission from law.com.
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