Hardy v. Johns-Manville Sales Corp.

Brief Fact Summary.

Insulators, pipefitters, carpenters, factory workers and others exposed to asbestos suffering from asbestos-related diseases sued various manufacturers, sellers and distributors of asbestos. Plaintiffs asserted causes of action including negligence, breach of implied warranty, and strict liability.

Synopsis of Rule of Law.

Collateral estoppel may not be applied to a claim where the previous judgment is ambiguous on key issues to be resolved in the claim.

Facts.

Plaintiffs were exposed to asbestos and brought suit against Defendants. The district court entered a collateral estoppel order, finding that some issues in Plaintiffs’ case had been decided in Plaintiffs’ favor by a separate judgment for unrelated plaintiffs in a different asbestos case, Borel v. Fibreboard Paper Products Corp. (1973). Borel, the plaintiff in that case, was an insulation worker who had been exposed to insulation products from 1936 to 1969. The jury in Borel found that Borel would have avoided the danger of asbestos in the insulation if proper warning had been given. Borel found that no one in the insulation industry had provided warnings prior to 1964; that Johns-Manville started to place warnings on its products in 1964; and that Fibreboard started to place warnings on its products in 1966. Defendants appealed, arguing that Borel did not necessarily decide that asbestos-containing insulation products were unreasonably dangerous because of the failure to warn. The special interrogatories answered by the Borel jury were general and not specifically directed toward the failure to warn.

Issue.

Does collateral estoppel always apply when the claim involves the same subject matter and is against the same defendants as the prior judgment?

Held.

No. The court reversed the decision and remanded the case for trial, holding that collateral estoppel may not be applied to a claim where the previous judgment is ambiguous on key issues to be resolved in the claim.

Discussion.

Collateral estoppel may not be applied to a claim where the previous judgment is ambiguous on key issues to be resolved in the claim. Additionally, collateral estoppel requires that a person against whom the conclusive effect of a judgment is invokes must be a party or a privy to the prior judgment. Federal courts have deemed several types of relationships sufficiently close to justify preclusion because the nonparty to the prior judgment has in effect had his day in court. Privity is not established based on having similar interest in the same question or in proving the same state of facts.

Here, the trial court violated due process when it failed to distinguish between the non-Borel defendants and the Borel defendants. The court noted that because the non-Borel defendants did not have the types of relationships that federal courts had deemed as those that would justify preclusion, the non-Borel defendants were not in privity with the Borel defendants and could not be precluded from the subsequent action. With respect to the Borel defendants, the Borel decision was ambiguous on several key issues, such as when a duty to warn would attach. As a result, because collateral estoppel only applied to issues actually decided, it did not apply in this case because the court couldn’t be sure that the defendants knew of the dangers at the relevant times. Moreover, even if the decision were unambiguous and on point, applying collateral estoppel would still be unfair to the Borel defendants because they may have had little incentive to defend vigorously in the first action where the requested damages were nominal and the risk of future lawsuits was not foreseeable. Therefore, the district court was reversed and the matter was remanded for trial.