William and Anne Pfeifer asserted claims for negligence, strict liability, and loss of consortium against John Crane, Inc. (JCI), alleging that its asbestos-laden products caused William Pfeifer's mesothelioma. During the trial, the court rejected JCI's proffered instructions regarding its "sophisticated user" defense, and directed a verdict on the defense. After the jury returned a verdict in the Pfeifers' favor, a judgment was entered awarding them compensatory and punitive damages. The trial court subsequently entered orders, inter alia, crediting JCI with an offset for preverdict settlements, and awarding expert fees to the Pfeifers. JCI appealed from the judgment and certain related orders, and the Pfeifers cross-appealed.
Regarding JCI's appeal, we conclude that the trial court correctly declined to give JCI's requested instructions on its "sophisticated user" defense, which stated that employees of a sophisticated user are deemed to be sophisticated users. We hold that when a manufacturer provides hazardous goods to a "sophisticated" intermediary that passes the goods to its employees or servants for their use, the supplier is subject to liability for a failure to warn the employees or servants of the hazards, absent some basis for the manufacturer to believe the ultimate users know or should know of the hazards. With respect to JCI's other contentions, we conclude there was sufficient evidence to support the jury's findings regarding comparative fault, and that the award of punitive damages was supported by the evidence and was not excessive in amount. We dismiss JCI's appeal insofar as it challenges an award of expert fees to the Pfeifers, as JCI filed no notice of appeal from the award. Regarding the Pfeifers' cross-appeal, we affirm the trial court's determination of JCI's credit for the preverdict settlements.
We otherwise find no error in the judgment and related orders, with the exception of an error both sides acknowledge regarding the determination of the Pfeifers' net recovery of economic damages. We therefore dismiss JCI's appeal in part, modify the judgment to reflect the correct determination of the Pfeifers' net economic damages, and affirm the judgment and related orders, as modified.
Beginning in 1917, JCI manufactured and sold packing used in valves and pumps, and distributed gaskets used in flanges and pipe systems. Some of these products contained asbestos. JCI sold packing and gaskets containing
On June 25, 2009, the Pfeifers filed their complaint for negligence, strict liability, and loss of consortium against approximately 31 suppliers of asbestos-laden products. The complaint alleged that William Pfeifer's mesothelioma resulted from his exposure to asbestos from the defendants' products. The Pfeifers sought compensatory and punitive damages.
Prior to trial, the Pfeifers entered into settlements with several defendants. As a result of the settlements and other dispositions, on November 1, 2010, at the commencement of jury selection, JCI was the sole remaining defendant in the action. Trial was bifurcated with respect to punitive damages.
William Pfeifer testified that after he entered the Navy in August 1963, he served as an apprentice fireman and boiler tender aboard destroyers. His responsibilities included removing and replacing gaskets and packing containing asbestos. The air he breathed often became dusty when he scraped away old gaskets and packing and replaced them. The Navy neither supplied him with a respirator nor provided training regarding dusty environments. From 1971 to 1982, after leaving the Navy, Pfeifer worked as a boiler technician at several land-based United States government sites. During that period, he replaced gaskets and packing; in addition, he sometimes repaired boilers with an asbestos-based JCI product that he did not encounter in the Navy, namely, a rope-like gasket that released dust when he put it in place. In May or June 2009, he learned that he had mesothelioma.
According to Pfeifer, JCI was a key supplier of the gaskets and packing he encountered in the Navy and as a boiler technician. Among the JCI products he frequently used were "2150 sheet gaskets." Pfeifer estimated that JCI supplied 75 percent of the gaskets he removed, 70 percent of the materials from which he made replacement gaskets, and 90 to 95 percent of the packing he removed and replaced.
Dr. Carl Andrew Brodkin, a specialist in asbestos-related diseases, opined that Pfeifer's exposure to asbestos substantially contributed to his mesothelioma. Brodkin further testified regarding the evolution of medical knowledge concerning asbestos-related diseases. According to Brodkin, as early as 1927, researchers knew that exposure to asbestos dust caused the noncancerous lung disease called "asbestosis." In the 1940's, 1950's, and 1960's, research studies linked asbestos to certain cancers, namely, lung cancer and mesothelioma. By 1960, it was generally accepted that exposure to asbestos caused mesothelioma. At the time, the hazards of asbestos were reported in medical journals and the popular media, including magazines such as Newsweek.
George Springs, a retired JCI vice-president, testified as JCI's designated representative regarding its response to the hazards of asbestos. He stated that from 1931 to 1985, JCI sold gaskets and packing containing asbestos. During that period, JCI conducted no research into whether its asbestos-laden products were hazardous.
Springs further testified that JCI first became aware of asbestos's health hazards in 1970, when it learned that handling raw asbestos enhanced the risk of lung problems for workers who smoked. In 1975, to comply with regulations propounded by the federal Occupational Safety and Health Administration (OSHA), JCI began monitoring the air in its factories for asbestos particles, and used engineering controls to help keep dust levels down. In 1981, pursuant to the OSHA regulations, JCI created a safety data sheet regarding the 2150 sheet gaskets, which stated that overexposure to asbestos caused asbestosis and cancer. Because JCI prepared the safety data sheet for the benefit of its employees, customers received a copy only when they asked for it. In 1983, JCI began placing warnings on its products regarding the hazards of asbestos.
According to Springs, the absence of warnings on JCI's products was consistent with the then effective OSHA regulations, which required no labels when the asbestos fibers in a product were encased in bonding materials such as graphite, grease, oil, or rubber, unless it was reasonably foreseeable that
David Todd Fractor, an economist, estimated that William Pfeifer's lost earnings, benefits, and household services totaled $1,508,335. The parties stipulated that William Pfeifer's past medical expenses were $1,054,469.47, and Dr. Robert Cameron, a thoracic surgeon who treated William Pfeifer, opined that asbestos exposure caused Pfeifer's mesothelioma, and that his future medical expenses ranged from $500,000 to "several" million dollars. Anne Pfeifer testified regarding the Pfeifers' noneconomic injuries.
James Paul Delaney, who served as an apprentice fireman and machinist's mate in the Navy, testified regarding the Navy's procedures for replacing gaskets and packing. He stated that the Navy required personnel to wear respirators in dusty environments, that the Navy began an asbestos abatement program in the 1970's, and that warning labels first appeared on asbestos-laden products bought by the Navy in the 1980's. According to Delaney, the Navy's specifications for a product regulated the words placed on the product.
Dr. Allan Feingold, a lung specialist, opined that William Pfeifer's mesothelioma arose from his exposure to specific types of asbestos fibers not found in significant quantities in the relevant JCI products. According to Feingold, those types of asbestos fibers were present in thermal insulation and other items the Navy bought from other suppliers.
The jury returned special verdicts in favor of the Pfeifers on their claims for negligence, strict liability, and loss of consortium. The jury found that William Pfeifer had suffered $3,203,580.47 in economic damages, including $1,054,469.47 in past medical expenses, and $4 million in noneconomic damages. The jury also found that Anne Pfeiffer had suffered $1.05 million in noneconomic damages for loss of past and future consortium. The jury allocated JCI a 70 percent share of comparative fault, and found that it had acted with malice, oppression, or fraud.
Pursuant to a stipulation, the Pfeifers' counsel presented information to the jury regarding JCI's assets and liabilities for the 2009 and 2010 fiscal years derived from JCI's annual report and financial statement. The jury awarded the Pfeifers $14.5 million in punitive damages.
On February 3, 2011, a judgment was entered in favor of the Pfeifers awarding damages totaling $21,238,580.47. The trial court deferred determining the extent to which the Pfeifers' preverdict settlements required an adjustment of the jury's award of economic damages to William Pfeifer.
In early March 2011, Anne Pfeifer became the personal representative for William Pfeifer, who died on February 22, 2011. On March 9, 2011, the trial court granted JCI's motion to reduce the award to William Pfeifer for his past medical expenses from $1,054,469.47 (the amount stipulated at trial) to $545,703.29. The court later awarded JCI a settlement-based offset of $1,320,192 against the award of economic damages to William Pfeifer, as adjusted by its March 9 ruling, and denied JCI's motions for a new trial and judgment notwithstanding the verdict.
On April 13, 2011, JCI appealed from the judgment and certain related orders. On April 21, 2011, the Pfeifers noticed their cross-appeal from the judgment and the related orders. On the same date, the trial court granted in part and denied in part JCI's motion to tax costs, insofar as the Pfeifers sought an award of expert fees under Code of Civil Procedure section 998.
JCI contends (1) there was insufficient evidence to support the jury's findings regarding comparative fault; (2) the trial court erred in rejecting JCI's proffered instructions regarding its "sophisticated user" defense, and directing a verdict on the defense; (3) the award of punitive damages is unsupported by the evidence and is excessive in amount; and (4) the court erred in issuing an award of expert fees to the Pfeifers. For the reasons explained below, we reject JCI's first three contentions, and conclude that we lack jurisdiction to examine the remaining contention.
JCI contends that the jury's findings regarding comparative fault fail for want of substantial evidence. The immediate targets of JCI's challenge are the findings regarding JCI, William Pfeifer, the United States Navy, and Flexitallic, which manufactured a type of gasket known as a "spiral-wound" gasket. JCI further argues that because those findings are interwoven with the jury's other findings regarding liability, a new trial is necessary.
Here, the special verdict form asked the jury to determine whether William Pfeifer was "negligent in his work with [JCI's] gaskets or packing," and if so, whether his negligence was a substantial factor in causing his harm. The special verdict form also requested findings regarding the percentage of fault attributable to JCI, Pfeifer and several other parties, including the United States Navy, the manufacturers and suppliers of thermal insulation that Pfeifer encountered, and two manufacturers of asbestos-laden gaskets, namely, Garlock and Flexitallic. The jury found that although Pfeifer was negligent, his conduct was not a substantial factor in the causation of his injuries. The jury allocated fault as follows: 70 percent to JCI, 0 percent to Pfeifer, 12.5 percent to the Navy, 12.5 percent to the manufacturers and suppliers of thermal insulation, 5 percent to Garlock, and 0 percent to Flexitallic.
JCI challenges the finding allocating it a 70 percent share of fault for William Pfeifer's cancer, arguing that there was undisputed evidence that Pfeifer was exposed to asbestos from numerous sources, many of which were not listed in the special verdict form. Pfeifer testified that from 1963 to 1982, he encountered 800 to 1,000 gaskets, 70 percent of which were made by JCI, and 600 to 800 valve packings, 90 to 95 percent of which were made by JCI. However, Pfeifer also acknowledged that in 1987, he sued numerous manufacturers and suppliers of asbestos-based products other than JCI, and received compensation through settlements. In addition, the jury heard certain interrogatory responses from the Pfeifers listing the suppliers of asbestos-laden products that William Pfeifer had encountered. JCI contends this evidence required the jury to allocate a smaller share of comparative fault to it. We disagree.
Aside from the evidence regarding the potential comparative fault of the suppliers named in the special verdict, the record discloses no evidence quantifying Pfeifer's exposure to asbestos from the other sources identified in his 1987 complaint and the Pfeifers' interrogatory responses. In the absence of such evidence, the jury reasonably allocated a 70 percent share of comparative fault to JCI. (Stewart v. Union Carbide Corp. (2010) 190 Cal.App.4th 23, 33 [117 Cal.Rptr.3d 791] (Stewart) [despite plaintiff's admission that he was exposed to asbestos from many sources, jury reasonably allocated 85 percent share of comparative fault to asbestos product manufacturer that submitted no evidence detailing plaintiff's exposure from other sources]; Sparks, supra, 32 Cal.App.4th at pp. 477-479 [jury reasonably found that defendant's asbestos-based product was sole cause-in-fact of plaintiff's mesothelioma when defendant submitted no evidence specifying extent of plaintiff's exposure to asbestos from other manufacturers' products].)
JCI maintains the jury was required to find that William Pfeifer's share of fault exceeded 0 percent. Regarding this contention, the record establishes that Pfeifer sometimes removed JCI gaskets and packing with power wire brushes or compressed air. Those practices were contrary to JCI's recommendations and the Navy's training, as they increased the risk of damage to valves and eye injuries to workers. As JCI further notes, the Pfeifers' experts testified that the use of power wire brushes released far more asbestos dust than ordinary scraping, and that mesothelioma is a "cumulative dose-response disease," that is, each exposure to asbestos increases the risk of mesothelioma.
Under these principles, JCI's contention fails, as the trial evidence does not compel the inference that Pfeifer's use of power wire brushes and compressed air was a substantial factor in causing his cancer. Pfeifer testified that the air
Absent from the record is evidence establishing the extent to which Pfeifer's use of power wire brushes and compressed air contributed to his "aggregate dose" of asbestos particles. (Rutherford, supra, 16 Cal.4th at pp. 976-978, italics omitted.) There is no evidence regarding how often Pfeifer resorted to power wire brushes or compressed air, and no expert opined that Pfeifer's use of these tools was, by itself, a substantial factor in the causation of his cancer. The Pfeifers' experts opined only that Pfeifer's cumulative exposure to asbestos caused his cancer, and that his exposure to asbestos from JCI's products "substantial[ly] contribut[ed]" to that illness.
Because JCI bore the burden of proof at trial regarding Pfeifer's negligence and comparative fault, JCI was obliged to present evidence that the aggregate dose of asbestos particles arising from Pfeifer's use of power wire brushes and compressed air constituted a substantial factor in the causation of his cancer. This JCI did not do. Accordingly, the jury was not required to find that Pfeifer's share of fault exceeded 0 percent. (See Stewart, supra, 190 Cal.App.4th at p. 33; Sparks, supra, 32 Cal.App.4th at pp. 477-479.)
Pointing to William Pfeifer's testimony that Flexitallic supplied 20 percent of the gaskets he encountered, JCI contends the jury was obliged to find that Flexitallic's share of fault was greater than 0 percent. We disagree.
The evidence at trial established that Flexitallic manufactured a type of gasket called a "spiral-wound gasket." Unlike JCI's gaskets, which were made from flat sheets containing asbestos and used in low pressure systems, Flexitallic gaskets were designed for use in high pressure systems. They consisted of a spiral of coiled metal containing asbestos fiber material as a filler. Their flexible metal construction permitted them to provide a seal while absorbing the shocks to which warships were subject.
In view of this evidence, the jury was not compelled to conclude that Flexitallic gaskets were a substantial factor in causing Pfeifer's cancer. The testimony described above supported the reasonable inference that Pfeifer's cumulative exposure to asbestos from Flexitallic gaskets was far less than his cumulative exposure to asbestos from JCI's products. Moreover, JCI offered no expert testimony that Pfeifer's aggregate dose of asbestos from Flexitallic gaskets constituted a substantial factor in causing his cancer. Accordingly, the evidence did not mandate a finding that Flexitallic's share of fault exceeded 0 percent. (Sparks, supra, 32 Cal.App.4th at pp. 477-479.)
JCI contends the jury's allocation of a 12.5 percent share of fault to the Navy fails for want of substantial evidence, arguing that the Navy knew that JCI's products endangered Pfeifer, yet exposed him to those products while he served in the Navy from 1963 to 1971. We reject this contention.
To begin, we note that over half of William Pfeifer's exposure to asbestos from JCI's products occurred after he left the Navy. The Pfeifers predicated their claims on William Pfeifer's cumulative exposure to JCI's products from 1963 to 1982, a period that encompassed both Pfeifer's service in the Navy until 1971 and his later work as a civil boiler technician. Generally, the jury was permitted to consider the relative culpability of the parties in assessing comparative fault. (Scott v. County of Los Angeles (1994) 27 Cal.App.4th 125, 148 [32 Cal.Rptr.2d 643].) Accordingly, the jury could properly adjust its determinations of comparative fault to reflect Pfeifer's period of service in the Navy.
Furthermore, the jury was permitted to increase JCI's share of liability because it determined that JCI's misconduct was more egregious than the Navy's misconduct. (Scott v. County of Los Angeles, supra, 27 Cal.App.4th at p. 148.) As we explain further below, the evidence supported the inference that JCI was consciously indifferent to the dangers that its products posed to consumers (see pt. C.1.a., post), while the Navy was merely negligent
JCI contends the trial court improperly rejected its proposed instructions on what JCI characterizes as its "sophisticated user" defense, and directed a verdict on the defense. According to the proffered defense, JCI was not liable for its failure to warn William Pfeifer regarding the hazards of asbestos while he served in the Navy because the Navy allegedly had greater knowledge of those hazards than JCI. As explained below, we find no error in the trial court's ruling.
In Johnson, supra, 43 Cal.4th at page 61, our Supreme Court recognized the defense based on comment k accompanying section 388. There, a trained and certified heating, ventilation, and air conditioning (HVAC) technician suffered injuries due to his repeated exposure to R-22, a refrigerant. (Johnson, supra, at pp. 61-62.) The technician asserted claims for personal injury against several manufacturers and suppliers, alleging that they had failed to warn him of the dangers of R-22. (Id. at p. 62.) After one of the defendants obtained summary judgment on the ground that the technician was aware of the risks of R-22, the Supreme Court held that the sophisticated user defense, as reflected in comment k to section 338, was applicable in California. (Johnson, supra, at p. 61.)
In Stewart, the appellate court distinguished the defense recognized in Johnson from the defense reflected in comment n to section 388, which it called "the sophisticated intermediary doctrine." (Stewart, supra, 190
In affirming the ruling, the appellate court concluded there was no evidence to support any type of "sophisticated user" instruction. The court stated that no instruction was warranted under Johnson, as that decision "did not impute an intermediary's knowledge to the plaintiff, or charge him with any knowledge except that which had been made available to him through his training and which, by reason of his profession and certification, he should have had." (Stewart, supra, 190 Cal.App.4th at pp. 28-29.) The court further determined that the "sophisticated intermediary" defense reflected in comment n to section 388 was inapplicable, reasoning that the defendant had provided no warnings to the intermediary manufacturers. (Stewart, supra, at pp. 29-30.) The court also rejected any "sophisticated purchaser" defense predicated on the relationship between a "sophisticated user intermediary" and its employees, in view of the fact that the plaintiff was not an employee of the intermediary manufacturers. (Id. at p. 29.)
Prior to trial, JCI requested special instructions regarding its "sophisticated user" defense, which relied on William Pfeifer's relationship with the Navy during his naval service. The instructions stated that a defendant has no duty to warn a sophisticated user or its employees of the potential hazards of its products, and that the employees of a sophisticated user are "deemed" to be sophisticated users.
Following the presentation of evidence at trial, the Pfeifers sought a directed verdict on JCI's defense. They argued that under the circumstances of the case, JCI was obliged to show not only that the Navy, as an alleged sophisticated "intermediar[y]," knew or should have known of the dangers of asbestos, but that JCI reasonably relied on the Navy to pass that information to Pfeifer. In granting the motion, the trial court appears to have concluded that JCI's proposed instructions reflected no recognized defense, and that there was insufficient evidence to support instructions on any sophisticated
Our inquiry is focused on the defense recognized in Johnson, as it is undisputed that JCI provided no warnings to the Navy. In directing a verdict on JCI's proffered defense, the trial court declined JCI's request to instruct the jury that a defendant has no duty to warn a sophisticated user or its employees of the potential hazards of its products, and that the employees of a sophisticated user are "deemed" to be sophisticated users. On appeal, JCI does not suggest that William Pfeifer was a sophisticated user, that is, that he knew, or should have known, of the hazards of asbestos. Rather, JCI argues that "[t]he logical application of Johnson ... is that a manufacturer who sells its products to a sophisticated user has no duty to attempt to warn that sophisticated user's employees of hazards of its products." (Italics added.)
JCI's contention presents an issue not examined in Stewart, namely, the extent to which a defendant may assert the sophisticated user defense
There is a division of authority regarding this question in other jurisdictions. (See Mack, supra, 896 F.Supp.2d at pp. 339-342 [discussing division].) Some courts have held that the existence of an employer-employee relationship between the sophisticated intermediary and the plaintiff does not, by itself, screen defendants from liability for a failure to warn. Thus, in In re Brooklyn Navy Yard Asbestos Litigation (2d Cir. 1992) 971 F.2d 831, 836, workers in Navy shipyards sued manufacturers and suppliers of asbestos-laden products, alleging that their exposure to the products caused cancer and other illnesses. Like JCI, the defendants maintained that the Navy's superior knowledge of the dangers of asbestos shielded them from liability for their failure to warn the workers. (Id. at p. 838.) Noting comment n to section 388, the Second Circuit rejected the defendants' contention: "Given that the record supports neither a finding that defendants actually relied on the Navy to warn its workers, nor a finding that any such reliance would have been justifiable, the presence of the Navy as an alleged `sophisticated intermediary' or `knowledgeable user' does not call into question the jury's finding of defendants' duty to warn." (Brooklyn Navy Yard, at p. 838.)
Other courts have determined that an employer-employee relationship may preclude the supplier's liability for a failure to warn, provided that the relationship involved employee training or experience rendering both the intermediary and the employee sophisticated users. In Strong v. E.I. Dupont De Nemours Co., Inc. (8th Cir. 1981) 667 F.2d 682, 683 (Strong), a construction supervisor for a natural gas company died when a pipe carrying natural gas exploded as he inspected it. The Eighth Circuit concluded that the pipe's manufacturer was not liable for a failure to warn regarding dangers associated with the pipe, as the hazards were well known throughout the industry, and both the supervisor and his employer were aware of them. (Id. at pp. 687-688.)
Finally, some courts have concluded that a sophisticated intermediary's knowledge (or potential knowledge) of an item's hazards is properly imputed to its employees or servants. In Akin v. Ashland Chemical (10th Cir. 1998) 156 F.3d 1030, 1037 (Akin), workers at a United States Air Force base asserted claims against a manufacturer of chemical products, alleging that
Johnson does not directly resolve this division of opinion, as the case involved no "sophisticated user intermediary," and as noted in Stewart, the Supreme Court did not expressly authorize the imputation of an intermediary's sophistication to the ultimate user (Stewart, supra, 190 Cal.App.4th at pp. 28-30). Furthermore, an examination of Johnson establishes that the court recognized the issue now before us, but did not decide it.
The discussion in Johnson manifests the Supreme Court's awareness of the issue. The court referred to several out-of-state cases, including Akin and Strong, as well as a treatise stating that the defense "usually" precludes liability to a sophisticated purchaser and its employees. (Johnson, supra, 43 Cal.4th at pp. 65-66.) The court also noted that California law limits the duty to warn users in a situation not involving an employment relationship, remarking that manufacturers of prescription drugs need not warn patients of dangers "`readily known and apparent'" to their physicans. (Id. at p. 67, quoting Plenger v. Alza Corp. (1992) 11 Cal.App.4th 349, 362 [13 Cal.Rptr.2d 811] (Plenger).) Furthermore, the court discussed two cases applying California law in which the sophisticated user defense had been extended to employees, namely, Fierro v. International Harvester Co. (1982) 127 Cal.App.3d 862 [179 Cal.Rptr. 923] (Fierro) and In re Related Asbestos Cases (N.D.Cal. 1982) 543 F.Supp. 1142, 1152 (Asbestos Cases).
In discussing Fierro and Asbestos Cases, however, the Supreme Court signaled its intention not to decide the issue before us. In Fierro, a manufacturer sold a skeletal truck consisting of an engine, cab, and chassis to a packing company, which modified the truck by adding a refrigerator powered by the truck's battery. (Fierro, supra, 127 Cal.App.3d at p. 865.) Five years later, an employee of the packing company died when the truck caught fire during an accident. (Ibid.) After the employee's survivors asserted claims against the manufacturer for negligence and strict liability, a jury returned verdicts in favor of the manufacturer. (Ibid.) On appeal, the plaintiffs contended that the jury should have been instructed that the manufacturer had a duty to warn that attaching the refrigerator to the truck's battery could create a fire hazard. (Ibid.) The appellate court concluded that the plaintiffs had forfeited that contention by failing to raise it adequately at trial. (Id. at p. 867.) Nonetheless, the court stated that under the circumstances, the
In Asbestos Cases, shipyard workers employed by the Navy initiated an action against suppliers of asbestos-laden products, alleging that exposure to the products caused their injuries. (Asbestos Cases, supra, 543 F.Supp. at p. 1150.) In permitting the defendants to assert a sophisticated user defense based on the Navy's superior knowledge of the dangers of asbestos, the federal court predicted that our Supreme Court would recognize such a defense, with the qualification that the plaintiffs would be authorized to rebut it "by demonstrating that the defendants might have foreseen the Navy's alleged negligence." (Johnson, supra, 43 Cal.4th at p. 69.)
In Johnson, the Supreme Court addressed the qualification proposed in Asbesto Cases, stating: "The federal court's prediction that this court would adopt the sophisticated user defense on the condition that a plaintiff could negate it by showing that the sophisticated user's misuse of the product was foreseeable is not at issue here, and we do not address it at this time." (Johnson, supra, 43 Cal.4th at p. 69, fn. 5.) The Supreme Court thus declined to decide whether a plaintiff's employment or servant relationship with a sophisticated intermediary user necessarily shields the defendants from liability.
We therefore turn to that issue. In our view, to the extent Johnson provides guidance on the issue, it impliedly repudiates JCI's contention. As noted above (see pt. B.1., ante), the Supreme Court concluded that "under the sophisticated user defense, the inquiry focuses on whether the plaintiff knew, or should have known, of the particular risk of harm from the product giving rise to the injury." (Johnson, supra, 43 Cal.4th at p. 71, italics added.) Thus, in actions by employees or servants, the critical issue concerns their knowledge (or potential knowledge), rather than an intermediary's sophistication.
Notably absent is any evidence that JCI had reason to believe the Navy would issue warnings to Pfeifer regarding JCI's products while he served in the Navy, or that it was then "readily known and apparent" to the Navy that the amounts of dust released from JCI's products were hazardous (Plenger, supra, 11 Cal.App.4th at p. 362). During Pfeifer's period of service, the Navy studies appear to have classified JCI's gaskets and packing as "nondusty." Although the evidence at trial may have shown that the Navy, as a "sophisticated user intermediary," was negligent regarding JCI's products, the evidence supported no reasonable inference by JCI that the Navy would warn or otherwise protect Pfeifer from the dangers of JCI's products. Accordingly, JCI had "no reason" to believe that Pfeifer would "realize [their] dangerous condition." (§ 388(b).) In sum, the trial court properly declined to give JCI's proposed instructions and did not err in directing a verdict on its "sophisticated user" defense.
JCI challenges the award of punitive damages on several grounds, contending that there was insufficient evidence regarding JCI's egregious conduct
We begin with JCI's challenge to the jury's finding that JCI acted with malice, fraud, or oppression.
Under the statute, "malice does not require actual intent to harm. [Citation.] Conscious disregard for the safety of another may be sufficient where the defendant is aware of the probable dangerous consequences of his or her conduct and he or she willfully fails to avoid such consequences. [Citation.] Malice may be proved either expressly through direct evidence or by implication through indirect evidence from which the jury draws inferences. [Citation.]" (Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1228 [44 Cal.Rptr.2d 197].)
In addressing JCI's challenge, we "inquire whether the record contains `substantial evidence to support a determination by clear and convincing evidence....' [Citation]." (Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 891 [93 Cal.Rptr.2d 364].) Under that standard, we review the evidence in the light most favorable to the Pfeifers, give them the benefit of every reasonable inference, and resolve all conflicts in their favor, with due attention to the heightened standard of proof. (Ibid.)
We find guidance regarding JCI's contention from Stewart, supra, 190 Cal.App.4th 23. There, the evidence established that the defendant, a supplier of raw asbestos, was aware of the dangers of asbestos as early as 1964. (Id. at pp. 34-35.) The defendant warned its workers, but decided to minimize its disclosure of information regarding the dangers of its type of asbestos to customers and workers who used products containing it. (Ibid.) In affirming the jury's finding of malice, fraud, or oppression, the court concluded that the evidence showed that the defendant "did not share its knowledge of the dangers of asbestos with its customers or with individuals who would, predictably, be exposed to dust from its products, and that it instead sought to downplay the risk." (Id. at p. 34.)
The evidence below presented a similar situation. To begin, the evidence showed that during the 1970's, JCI knew that asbestos dust was hazardous, and it took action to protect its own employees from the hazards. George Springs, JCI's representative, testified that in 1970, JCI learned that handling raw asbestos was hazardous to certain workers. In 1972, OSHA promulgated regulations requiring manufacturers of asbestos-based products to monitor the concentrations of asbestos fibers in the air in their factories. In compliance with the regulations, JCI began monitoring the air in its factories for asbestos particles, and used engineering controls to suppress dust levels. Later, in 1981, pursuant to the regulations, JCI prepared a safety data sheet for the 2150 sheet gaskets warning its employees that exposure to asbestos caused asbestosis and cancer.
The evidence also supports the inference that JCI knew that its products were likely to pose a danger to users, whom it did not warn. Under the OSHA regulations, manufacturers were required to place warning labels on their products unless the asbestos fibers had been modified "by a bonding agent ... so that during any reasonably foreseeable use, ... no airborne concentrations of asbestos fibers in excess of [specified] exposure limits [would] be released." According to Springs, JCI knew that users replaced gaskets using methods that created asbestos dust or fragmented old gaskets, yet it never tested its products to determine whether those methods generated concentrations of asbestos fibers exceeding the regulatory limits. Millette, the Pfeifers' environmental scientist, testified that the bonding agents in JCI's products did not fully encapsulate the asbestos fibers; in addition, he stated that certain operations that Pfeifer performed on the products released concentrations of asbestos fibers "many thousands" greater than ordinary background levels.
We conclude that the evidence was sufficient to show malice, that is, despicable conduct coupled with a conscious disregard for the safety of
JCI maintains that there is insufficient evidence of malice or oppression, pointing to evidence supporting the inference that JCI sold its products with the good faith belief that they were safe. JCI argues that it reasonably believed that the bonding agents in the products fully encapsulated the asbestos fibers; that its manufacturing experience and the then effective OSHA regulations supported its belief that the products were safe; that no specific study showed that the products were unsafe; and that its failure to test the products was consistent with industrywide practices.
In so arguing, however, JCI "misapprehends our role as an appellate court. Review for substantial evidence is not trial de novo. [Citation.]" (OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 866 [68 Cal.Rptr.3d 828].) When there is substantial evidence to support the jury's actual conclusion, "it is of no consequence that the [jury] believing other evidence, or drawing other reasonable inferences, might have reached a contrary conclusion." (Bowers v. Bernards (1984) 150 Cal.App.3d 870, 874 [197 Cal.Rptr. 925], italics omitted.)
Here, the OSHA regulations effectively obliged JCI to determine whether its products were exempt from the OSHA warning requirement, as the requirement applied to any product during the "reasonably foreseeable use" of which "airborne concentrations of asbestos fibers in excess of [specified] exposure limits [would] be released." JCI knew that its customers used the
Prior to trial, the Pfeifers served requests on JCI under Code of Civil Procedure section 1987 to produce evidence at trial regarding its financial condition. The requests sought testimony from Springs and certain specified documents. JCI objected to the requests on the ground that they did not comply with subdivision (c) of Civil Code section 3295, which governs pretrial discovery regarding a defendant's financial condition.
After the jury returned its special verdicts in the first phase of trial, the Pfeifers asked the trial court to order JCI to produce the requested evidence, for purposes of the second phase. Relying on Mike Davidov Co. v. Issod (2000) 78 Cal.App.4th 597 [92 Cal.Rptr.2d 897] (Mike Davidov Co.), they argued that under subdivision (c) of Civil Code section 3295, a court may direct a defendant to produce evidence of its financial condition after a jury has found that it is subject to an award of punitive damages, even when the plaintiff made no pretrial efforts to obtain the evidence. Over JCI's objections, the court ordered it to produce Springs as a witness and two documents regarding JCI's financial condition, namely, a balance sheet and an income statement, both dated July 31, 2010.
JCI produced the financial documents, but not Springs. Regarding Springs's failure to appear, JCI's counsel informed the trial court simply that "Mr. Springs is not here." Jay Stuemke, the Pfeifers' counsel, argued that JCI's refusal to provide a witness frustrated his presentation of the financial documents to the jury, as they assigned $244 million to a undefined category described only as an "asbestos litigation set aside." In response, JCI's counsel agreed to stipulate that the funds be characterized to the jury as "set aside to pay for asbestos ... litigation," including "defense costs" and "asbestos liabilities." JCI's counsel further objected to the admission of the documents
Before Stuemke's presentation to the jury, JCI's counsel voiced a concern that the "set aside" for asbestos litigation should not be described as a "cash provision." According to counsel, the "set aside" was properly regarded as "a reserve against assets." In response to the trial court's inquiries, JCI's counsel explained that his concern focused on the use of the word "cash." The court directed Stuemke to refer to the "set aside" as "funds" or "money."
Stuemke then spoke to the jury, stating: "I'm going to write down numbers on this board for the year 2009 in this column and the year 2010 in this column. [JCI's] assets in 2009, $336,870,000. [For] 2010, $403,089,000 in assets. Cash on hand in 2009, $90,882,000. Cash on hand in 2010, $15,895,000.... Liabilities [for] 2009, $485,000,000. Liabilities [for] 2010, $528,613,000[.] Leaving their net worth for 2009 at negative $148,130,000, and for 2010, negative $125,524,000...."
Stuemke further stated: "Included in these liabilities is money that [JCI] has set aside for asbestos litigation like this, money they've set aside to pay lawyers and to pay verdicts and judgments. The money set aside in 2009, $246, 236,000. [For] 2010, money set aside for asbestos, $244,278,000.... So if you subtract from their liabilities the money they've set aside for asbestos in 2009, their net worth is a positive $98,106,000. And for 2010, positive $118,754,000."
JCI's counsel raised no objection to this presentation, and no other evidence was submitted to the jury during the second phase of trial. During closing arguments, Stuemke argued that JCI's "nerve endings" for feeling pain were in its bank account, where it had "set aside money to pay asbestos claims." JCI's counsel objected to this remark, contending that it suggested that the money set aside for asbestos litigation was in a bank account. The trial court sustained the objection and admonished the jury to disregard Stuemke's reference to money in an account, stating, "There's no evidence [of] that." Following Stuemke's rebuttal argument, which made no mention of cash or a bank account, the trial court repeated the admonishment.
JCI contends the trial court erred in ordering it to produce evidence under subdivision (c) of Civil Code section 3295 (subdivision (c)). That provision states in pertinent part: "No pretrial discovery by the plaintiff shall be
We find dispositive guidance on JCI's contention from Mike Davidov Co. There, the plaintiff conducted no discovery regarding the defendant's financial condition prior to the bench trial on the plaintiff's claims. (Mike Davidov Co., supra, 78 Cal.App.4th at pp. 602-603.) After the court found that the defendant had engaged in fraud and awarded compensatory damages, it asked whether the plaintiff had any evidence of the defendant's financial condition, for purposes of an award of punitive damages. (Id. at p. 603.) The plaintiff acknowledged that he had no such evidence, and requested a hearing and an opportunity to conduct discovery into the defendant's financial condition. (Ibid.) When the court ordered a hearing and directed the defendant to produce his financial records, the defendant raised only a single objection, namely, that the plaintiff had neither sought pretrial discovery into the records nor subpoenaed them for trial. (Ibid.) Later, the defendant failed to produce his records at the hearing, and the court issued an award of punitive damages to the plaintiff. (Id. at p. 604.)
On appeal, the defendant challenged the award of punitive damages on several grounds, including (1) that the plaintiff had presented no evidence of financial worth, and (2) that the plaintiff had not complied with the pretrial discovery procedure specified in subdivision (c) of Civil Code section 3295. (Mike Davidov Co., supra, 78 Cal.App.4th at pp. 607-610.) After concluding that the defendant had forfeited contention (1), the appellate court rejected contention (2). (Id. at p. 609.) The court stated: "[S]ubdivision (c) ... allows the trial court, `at any time,' to enter an order permitting the discovery of a defendant's ... financial condition, if the plaintiff has established that there is a substantial probability that he or she can prevail on a claim upon which an award of punitive damages can be based. While it is true that subdivision (c) states that such an order may be made `[u]pon motion by the plaintiff supported by appropriate affidavits and after a hearing,' that subdivision clearly presupposes that such motion procedure is required where the plaintiff has not actually prevailed on his or her claim at trial. However, once there has been a determination of liability by the trier of fact based on an actual weighing of the credibility of witnesses, this kind of affidavit-and-hearing
We conclude that JCI was properly ordered to produce evidence of its financial condition, even though the Pfeifers did not comply with the motion procedure specified in subdivision (c). As noted in Mike Davidov Co., that procedure was rendered superfluous by the jury's finding regarding JCI's malice, oppression, or fraud.
JCI's reliance on Adams, supra, 54 Cal.3d 105 and Amoco Chemical Co. v. Certain Underwriters at Lloyd's of London (1995) 34 Cal.App.4th 554 [40 Cal.Rptr.2d 80] (Amoco Chemical Co.) is misplaced. In Adams, our Supreme Court held that the plaintiff has the burden of proving the defendant's financial condition, for purposes of an award of punitive damages. (54 Cal.3d at pp. 119-123.) In so concluding, the court stated: "[U]nder ... subdivision (c), the plaintiff is allowed, on a proper showing, to `subpoena documents or witnesses to be available at the trial for the purpose of establishing the profits or financial condition' of the defendant. The plaintiff may also obtain pretrial discovery of that information.... We see no reason why it is even slightly unfair to require a plaintiff to use the procedures available." (Id. at p. 122.) However, the court did not mention the motion procedure or examine whether it applied to discovery after the trial on the defendant's liability for punitive damages. For this reason, Adams provides no guidance on the question before us. (Ginns v. Savage (1964) 61 Cal.2d 520, 524 & fn. 2 [39 Cal.Rptr. 377, 393 P.2d 689] ["Language used in any opinion is ... to be understood in the light of the facts and the issue then before the court, and an opinion is not authority for a proposition not therein considered."].)
The same is true of Amoco Chemical Co. There, the plaintiff initiated an action for breach of contract and bad faith against several insurers, seeking punitive damages. (Amoco Chemical Co., supra, 34 Cal.App.4th at pp. 555-556.) Throughout the litigation, the plaintiff never invoked subdivision (c) of Civil Code section 3295 to obtain discovery into the insurer's financial condition. (Amoco Chemical Co., supra, at p. 557, fn. 5.) Instead, prior to the trial, the plaintiff served requests on the insurers under Code of Civil Procedure section 1987 to produce evidence at trial regarding their financial condition, but the insurers did not respond to the requests and declined to produce the evidence after the trial court ordered them to do so. (Amoco Chemical Co., supra, at p. 556.) As a result, the court issued an award of sanctions against the insurers. (Id. at p. 558.) Later, following the trial, a jury awarded the plaintiff punitive damages. (Ibid.)
The appeal in Amoco Chemical Co. was limited to a single issue, namely, the propriety of the sanctions. (Amoco Chemical Co., supra, 34 Cal.App.4th at pp. 558-559.) After determining that the plaintiff had not complied with the procedural requirements of Code of Civil Procedure section 1987, the appellate court reversed the sanctions order. (Amoco Chemical Co., supra, at
JCI maintains that the Pfeifers' showing was inadequate to establish its financial condition. We reject this contention.
Our Supreme Court has prescribed no rigid standard for measuring the ability to pay. (Adams, supra, 54 Cal.3d at p. 116, fn. 7.) Although net worth is the most common measure, its application is not mandatory, as net worth "is subject to easy manipulation." (Lara v. Cadag (1993) 13 Cal.App.4th 1061, 1064-1065, fn. 3 [16 Cal.Rptr.2d 811].) Nonetheless, "[i]n most cases, evidence of earnings or profit alone are not sufficient `without examining the liabilities side of the balance sheet.' [Citations.] ... Normally, evidence of liabilities should accompany evidence of assets, and evidence of expenses should accompany evidence of income." (Baxter v. Peterson (2007) 150 Cal.App.4th 673, 680 [58 Cal.Rptr.3d 686].)
Under these principles, a defendant may have the ability to pay the award of punitive damages, even though the defendant's net worth is negative. In Zaxis Wireless Communications, Inc. v. Motor Sound Corp. (2001) 89 Cal.App.4th 577, 580 [107 Cal.Rptr.2d 308], the evidence showed that the defendant's total revenues exceeded $250 million per year for three successive years, but that it suffered a net loss of $6.5 million in each of the years. In addition, the evidence established that the defendant had $19 million in a banking account and the ability to borrow $50 million. (Id. at p. 583.) The
Here, the Pfeifers' showing presented a similar set of circumstances regarding JCI's ability to pay. According to that showing, in 2009 and 2010, JCI had hundreds of millions of dollars of assets (including considerable sums of cash) and a net worth exceeding $98 million, disregarding the funds that JCI itself had set aside for asbestos litigation. Moreover, the $14.5 million award of punitive damages constituted approximately 6 percent of the funds set aside for asbestos litigation costs and judgments in 2010. In view of JCI's large revenues and the funds set aside for absestos litigation, the award cannot be regarded as so high that it would destroy or cripple JCI.
JCI contends the award of punitive damages contravened applicable constitutional standards regarding such awards. As explained below, we disagree.
Under these standards of review, JCI's contention fails. As explained above (see pt. C.1.b., ante), there was sufficient evidence to support the jury's
JCI also contends that the amount of punitive damages was excessive under the applicable constitutional standards.
JCI maintains that its conduct was insufficiently reprehensible to support the $14.5 million punitive damages award.
In Bankhead, a worker was employed for thirty years in automobile maintenance facilities, where he handled a manufacturer's brake systems that
Similarly, in Stewart, a worker and his wife asserted claims for negligence, strict liability, and loss of consortium against a supplier of raw asbestos and other defendants. (Stewart, supra, 190 Cal.App.4th at p. 25.) In affirming a $6 million award of punitive damages, the appellate court rejected the supplier's contention that its conduct "was at the low end of ... reprehensibility," as the plaintiffs had shown that the supplier "profited from the sale of a dangerous substance, that it knew the dangers of its product, that it failed to warn consumers of those dangers, and [that the plaintiff ] developed a fatal cancer as a result." (Id. at p. 38.)
Although the award here is larger than in Bankhead and Stewart, it is comparable in amount to awards against other defendants whose conduct in marketing dangerous products displayed a high degree of reprehensibility. (Bullock, supra, 198 Cal.App.4th at pp. 556, 558-574 [affirming $13.8 million award against cigarette manufacturer]; Boeken v. Philip Morris, Inc. (2005) 127 Cal.App.4th 1640, 1690-1704 [26 Cal.Rptr.3d 638] [modifying judgment against cigarette manufacturer to reduce $100 million punitive damages award to $50 million, and affirming judgment as modified]; Romo v. Ford Motor Co. (2003) 113 Cal.App.4th 738, 755-764 [6 Cal.Rptr.3d 793], disapproved on another ground in Johnson v. Ford Motor Co. (2005) 35 Cal.4th 1191, 1205 [29 Cal.Rptr.3d 401, 113 P.3d 82] [affirming $23.7 million award against manufacturer of defective vehicle that caused death of plaintiffs' family members].) We therefore conclude that JCI's conduct was sufficiently reprehensible to support the amount of the award.
JCI maintains that the ratio of the punitive damages to the compensatory damages was impermissibly high. We reject this contention.
Instructive here are Bankhead and Stewart. In Bankhead, the jury awarded the plaintiffs $1.47 million in economic damages, $2.5 million in noneconomic damages, and $4.5 million in punitive damages. (Bankhead, supra, 205 Cal.App.4th at pp. 74, 76.) Following an adjustment reflecting the jury's determinations of comparative fault, the defendant was determined to be liable for $1.845 million of the damages, comprising $1.47 million in economic damages and $375,000 in noneconomic damages. (Id. at pp. 74, 90.) The award of punitive damages ($6 million) was thus approximately 2.4 times greater than the award of compensatory damages ($1.845 million). (Id. at p. 90.) Noting that the defendant's conduct was highly reprehensible, the appellate court concluded that the ratio was "well within the range for comparable cases" and "not extraordinarily high," even though the jury's award of compensatory damages contained a punitive component. (Ibid.)
In Stewart, the jury awarded the plaintiffs $2.2 million in economic damages, $1 million in noneconomic damages, and $6 million in punitive damages. (Stewart, supra, 190 Cal.App.4th at p. 27.) Following adjustments for the defendant's share of comparative fault, the defendant was responsible for compensatory damages totaling $3.05 million, comprising $2.2 million in economic damages and $850,000 in noneconomic damages.
JCI challenges an award of $75,145.76 to the Pfeifers for expert fees under Code of Civil Procedure section 998. Regarding the award, subdivision (d) of Code of Civil Procedure section 998 provides: "If an offer made by a plaintiff is not accepted and the defendant fails to obtain a more favorable judgment or award in any action ..., the court ..., in its discretion, may require the defendant to pay a reasonable sum to cover postoffer costs of the services of expert witnesses ..., in addition to plaintiff's costs." The Pfeifers maintain the fee award is beyond our review because JCI filed no notice of appeal regarding it. We conclude that we lack jurisdiction over JCI's contentions concerning the award.
The record discloses that on February 3, 2011, the trial court entered a judgment in favor of the Pfeifers awarding damages totaling $21,238,580.47. The judgment further provided that the Pfeifers were entitled to prejudgment interest "in the amount of $______," and costs "in the amount of $_______." On March 7, 2011, JCI filed a motion to tax costs, which challenged the Pfeifers' request for the expert fees described above. On April 13, 2011, while that motion was pending, JCI filed its notice of appeal, which specified that the appeal was from the judgment, the denial of its motions for a new trial and for judgment notwithstanding the verdict, and "[t]hose pretrial, intermediate and post-trial rulings ... involving the merits of the ... action and/or which necessarily affected the ... judgment...." The notice contained no reference to the motion to tax costs. On April 25, 2011, in ruling on JCI's motion to tax costs, the trial court denied JCI's challenge to the pertinent component of the Pfeifer's request for expert fees.
In Fish v. Guevara (1993) 12 Cal.App.4th 142, 146-148 [15 Cal.Rptr.2d 329] (Fish), the appellate court held that expert fee awards under Code of Civil Procedure section 998 fall outside the Grant exception. There, the defendants prevailed in the action, and a judgment was entered in their favor, stating that they were entitled to "`all costs, expenses and disbursements allowed by law....'" (Fish, supra, 12 Cal.App.4th at p. 144.) After the plaintiffs filed a notice of appeal from the judgment, the trial court denied the plaintiffs' motion to tax costs, which challenged the defendants' request for an award of expert fees pursuant to Code of Civil Procedure section 998. (Fish, supra, at p. 144.) The defendants noticed no appeal from the fee award. (Ibid.)
Fish is dispositive here. JCI's notice of appeal specified the judgment and other orders, but did not mention the pending motion to tax costs. Although the notice referred to orders "involving the merits of the ... action and/or which necessarily affected the ... judgment," the award of expert fees is not such a ruling. The notice of appeal thus did not subsume that award, notwithstanding the policy of construing notices of appeal liberally in favor of their sufficiency. (Colony Hill v. Ghamaty, supra, 143 Cal.App.4th at pp. 1171-1172.) Accordingly, the award is beyond the scope of our review.
The Pfeifers challenge the trial court's determinations related to JCI's credit based on the preverdict settlements by other defendants. As explained below, we reject the Pfeifers' contentions, but conclude that the court's determination of the Pfeifers' net recovery of economic damages must be modified to correct an error that both sides acknowledge.
Our inquiry is focused on the determination of the credit when, as here, the preverdict settlements were never found to be in good faith. (See Jones, supra, 132 Cal.App.4th at pp. 1006-1007.) As explained in Espinoza v. Machonga (1992) 9 Cal.App.4th 268, 275-277 [11 Cal.Rptr.2d 498] (Espinoza) and Greathouse v. Amcord, Inc. (1995) 35 Cal.App.4th 831, 839-841 [41 Cal.Rptr.2d 561] (Greathouse), the credit's determination is straightforward when the settlements address only the claims resolved at trial and the settlement funds are "undifferentiated," that is, the settlements do not apportion the funds between the claims resolved at trial. In such cases, the credit may be calculated in the following manner. First, the trial court determines what the parties before us call the "Greathouse ratio," that is, the ratio of the economic damages to the total compensatory damages, as awarded at trial. (Espinoza, supra, 9 Cal.App.4th at pp. 275-277; Greathouse, supra, 35 Cal.App.4th at pp. 839-841.) Second, the credit is determined by multiplying the amount of the settlement funds by the Greathouse ratio. (Espinoza, supra, 9 Cal.App.4th at pp. 275-277; Greathouse, supra, 35 Cal.App.4th at
If the court finds (1) that some portion of the settlement funds applies to claims not resolved at trial and (2) that the settlement does not govern the allocation of the remaining funds, the court must calculate the credit solely on the basis of the funds assignable to the claims resolved at trial. (Hackett, supra, 98 Cal.App.4th at p. 1244.) This calculation may be carried out by several mathematically equivalent methods. (Ibid., fn. 13; see Jones, supra, 132 Cal.App.4th at p. 1007, fn. 7.) These methods produce essentially the same result, except for slight differences caused by rounding. (Hackett, supra, at p. 1244, fn. 13; see Jones, supra, at p. 1007, fn. 7.)
The most straightforward method is to multiply the amount of the settlement funds assignable to the plaintiffs' claims by the ratio of the economic damages to the total compensatory damages (including the loss of consortium damages), as determined at trial. (Hackett, supra, 98 Cal.App.4th at p. 1244, fn. 13; see Jones, supra, 132 Cal.App.4th at p. 1007, fn. 7.) In effect, this method applies the Greathouse ratio. Thus, if the court has decided that all the settlement funds concern the claims resolved at trial, the method reduces to the calculation described in Espinoza and Greathouse.
The jury found that William Pfeifer had suffered $3,203,580.47 in economic damages, including $1,054,469.47 in past medical expenses, and $4 million in noneconomic damages; that Anne Pfeiffer had suffered $1.05 million in noneconomic damages for loss of consortium; and that JCI had a
On February 3, 2011, while JCI's motion was pending, the trial court conducted a hearing on the entry of a judgment and JCI's credit based on the preverdict settlements. On the same date, the court entered a judgment in favor of the Pfeifers awarding damages totaling $21,238,580.47, but deferred the determination of JCI's credit.
On February 14, 2011, JCI filed a motion for a credit. In opposing the motion, the Pfeifers maintained that although the settlement funds totaled $3.82 million, only $1.91 million of the funds were assignable to their claims at trial, as the settlements expressly allocated one-half of the funds to those claims and one-half to wrongful death claims by William Pfeifer's heirs.
On March 9, 2011, after granting JCI's motion to reduce the award to William Pfeifer for his past medical expenses, the trial court issued its ruling regarding the credit. In determining the credit, the court declined to adopt the allocation of funds stated in the settlements, and found that all the settlement funds were applicable to the claims resolved at trial. After noting that William Pfeifer's economic damages had been reduced to $2,694,814.29 through the adjustment to his past medical expenses, the court found that JCI was entitled to a credit of $1,320,192. In applying the credit, the court reduced the $2,694,814.29 award of economic damages by 70 percent (that is, JCI's percentage of comparative fault), and then applied the credit, resulting in a net recovery of $566,178 in economic damages.
The Pfeifers contend the trial court erred in setting aside the allocations stated in the settlements and in calculating the credit. They argue that only half the settlement funds — that is, $1.91 million — were properly assignable to their trial claims. They further argue that following the reduction of the medical expenses portion of the award of economic damages to William Pfeifer, the appropriate Greathouse ratio was 34.7 percent (the ratio of $2,694,814.29, the adjusted economic damages, to $7,744,814.29, the adjusted total compensatory damages). They maintain that the correct credit, calculated in light of their proposed Greathouse ratio, was $662,770, resulting in a net recovery of economic damages totaling $2,032,044.29 (that is, $2,694,814.29 minus $662,770).
We begin with the Pfeifers' challenge to the trial court's ruling regarding the allocation in the settlements. Courts "have wide discretion in allocating prior settlement recoveries to claims not adjudicated at trial." (Jones, supra, 132 Cal.App.4th at p. 1008.) Under this standard, we examine the court's findings, whether express or implied, for the existence of substantial evidence. (Roddis v. All-Coverage Ins. Exchange (1967) 250 Cal.App.2d 304, 309 [58 Cal.Rptr. 530]; see Wilson, supra, 81 Cal.App.4th at pp. 866-867.)
An instructive application of these principles is found in Jones. There, a Navy serviceman who was exposed to JCI's products developed mesothelioma following his naval career. (Jones, supra, 132 Cal.App.4th at pp. 996-997.) After he and his wife initiated an action against JCI for personal injury and loss of consortium, the jury awarded economic and noneconomic damages, including damages for the wife's loss of consortium claim. (Ibid.) In calculating JCI's credit for preverdict settlements, the trial court rejected the express allocation specified in the settlements for wrongful death claims. (Id. at p. 1008.) The appellate court affirmed the ruling, noting that the plaintiffs presented no evidence regarding the potential value of wrongful death claims by the ex-serviceman's heirs. (Id. at pp. 1008-1011.)
Here, the Pfeifers offered little or no evidence regarding the reasonableness of the allocation in the settlements other than the terms of the settlements themselves.
In contrast with Hackett, the Pfeifers maintain on appeal that the trial court was obliged to allocate one-half of the settlement funds to the wrongful death claims, as specified in the settlements. To establish this contention, they must identify evidence sufficient to require the trial court to accept that allocation. (See Wilson, supra, 81 Cal.App.4th at p. 866.) As explained above, the record discloses no such evidence. In sum, the trial court did not err in rejecting the allocation in the settlements.
The Pfeifers contend the trial court calculated JCI's credit by means of an incorrect method. We disagree. In calculating the credit, the trial court applied a method approved in Jones.
The Pfeifers contend the trial court erred in adjusting their recovery of economic damages to reflect JCI's 70 percent share of comparative fault. JCI does not dispute that the Pfeifers' net economic damages should be calculated without reference to JCI's comparative fault, but asserts that the Pfeifers have forfeited their contention by failing to raise it expressly in their opening brief in the cross-appeal.
Because the error here is clear and not in dispute, we conclude that the Pfeifers' net recovery of economic damages should be determined without any adjustment for JCI's share of comparative fault. Accordingly, we will modify the net award of economic damages to $1,374,622.29 (that is, the $2,694,814.29 award of economic damages, as reduced with respect to William Pfeifer's past medical expenses, minus JCI's $1,320,192 credit).
JCI's appeal with respect to the award of expert fees is dismissed. The judgment is modified to reflect that the Pfeifers' net recovery of economic damages is $1,374,622.29, and the judgment and related orders are affirmed in all other respects. The Pfeifers are awarded their costs on appeal.
Epstein, P. J., and Suzukawa, J., concurred.
Pointing to Persons, supra, 217 Cal.App.3d 168, CJAC also contends that JCI's proposed instructions were legally correct, arguing that Persons approved the application of the theory found in the instructions in "a similar context." We disagree. In Persons, the appellate court held that when a manufacturer supplies goods to an intermediary, the manufacturer is not required to accompany the goods with warnings if those warnings would be ineffective with respect to the ultimate user. (Persons, supra, 217 Cal.App.3d at pp. 177-178.) The situation before us is materially different, as no evidence was presented that warnings on JCI's products would have been ineffective with respect to users such as William Pfeifer.
We also observe that JCI's contention is not directed at the instructions JCI actually requested, and does not purport to show the legal correctness of those instructions. The theory of proximate causation underlying the contention has no direct bearing on whether employees of a sophisticated user are themselves sophisticated users as a matter of law, as asserted in JCI's requested instructions.
