On September 11th, 2019, the New Jersey Superior Court ruled that defendants sued in mass tort asbestos litigation may offer into evidence statements of settled co-defendants’ as statements against interest in establishing a prima facie case for apportionment of fault.
Reversing the Appellate Division and reinstating the trial court’s holding, a unanimous New Jersey Superior Court ruled for the sole remaining defendant of an asbestos claim, allowing answers to interrogatories and corporate representative depositions of co-defendants who settled prior to trial to be entered into evidence. These statements, along with additional evidence, sufficiently established prima facie showing that each of the eight settling defendants bore some fault.
The decision issued by New Jersey’s highest Court arose out of an asbestos products liability action naming several defendants. In accordance with New Jersey civil procedure rules, defendants served certified answers to interrogatories and plaintiff’s counsel deposed corporate representative. Prior to the commencement of trial, eight of the nine defendants agreed to settle, leaving only one defendant to proceed to trial. During the trial, the lone defendant offered evidence from settled defendants’ interrogatory answers and deposition testimony of their corporate representatives. Over the plaintiff’s objections, the Court instructed the jury to reduce the plaintiff’s recovery by the percentage of fault allocated to settled defendants. Although the jury ultimately returned a verdict in the plaintiff’s favor, they found the non-settled defendant only 20% at fault.
On appeal, the plaintiff argued that the settled defendants’ statements were inadmissible hearsay and thus improperly admitted by the trial judge. Agreeing with this notion, the Appellate Division reversed the decision and remanded a new trial. Unsurprisingly, the reversal was met with harsh criticism.
It is a well-established practice in mass tort asbestos litigation for plaintiffs to name multiple defendants in a single suit. As a result, for the last four decades, the same corporate defendants have been repeatedly sued based on the same causes of action throughout the country. While every case has different facts, asbestos litigation typically involves claims concerning products that have not been sold or manufactured for more than forty years. Consequently, all the relevant information needed for discovery that is available has already been established.
Although asbestos containing products have been banned for decades, the volume of cases being filed alleging exposure remains vast. To manage these large caseloads and streamline efficiency, procedures such as standardized pleadings, uniform case management protocols and routine interrogatories and depositions for both parties have been implemented in courts across the country. However, the Appellate Division’s decision to bar defendants from introducing the statements of settled co-defendants would not only undermine these procedures but it would also have detrimental effects on asbestos case management going forward.
The ability to prove the share of other entities is critical in asbestos cases, particularly since plaintiffs assert and claim exposure to products of numerous companies. Some of the companies may have been sued by a plaintiff, while others may be bankrupt or never sued by the plaintiff. A remaining defendant has the burden of proving the shares of these other “fault sharers.” A defendant must not only show exposure to a company’s product, but also the negligence of that company. Further, defendants have the burden of proving proximate cause and the allocation among the parties found liable. Where juries hear proofs against all potential fault sharers, their allocation reflects the testimony of exposure and negligence. Where they do not hear proofs about other fault sharers, the trial defendant often is assessed a sizeable percentage higher than any other company even though the exposure proofs were the same.
In proving a case against the trial defendants, plaintiffs rely on corporate representative transcripts or live witnesses, documents and interrogatories to prove the liability of those defendants who remain at trial. The Appellate Division’s decision deemed this same evidence that plaintiffs use to be inadmissible when a trial defendant seeks admission of the same documents. There must be a fair mechanism to allow a jury to hear about other companies, rather than permitting plaintiffs to solely focus on the trial defendants. First, barring these statements unduly forces corporate representatives to testify about topics that have already been discussed, under oath, decades ago by individuals with first-hand knowledge. Secondly, barring these statements take away incentives to settle. For defendants, the goal of settling is to end the case, however, if their corporate representatives are forced to testify regardless of settlements, defendants no longer have the finality incentive. Furthermore, this decision directly contradicts both the Joint Tortfeasor Contribution Act and the Comparative Negligence Act. By denying defendants the ability to establish allocation of fault the risk of plaintiffs obtaining windfall recoveries from both the settled defendants and few or sole defendants who proceed with trial is substantial. Finally, having to depose every single defendant will undoubtably cause significant delays in the process. Not only are most of the plaintiffs elderly and suffering from life threatening diseases, it also deprives plaintiffs of their constitutional right to a speedy trial.
Fortunately, the Supreme Court rejected this argument and reinstated the trial court’s decision holding that the excerpts from the settling defendants’ interrogatory answers and corporate representative depositions were admissible as statement against interest under N.J.R.E. 8-3(c)(25). Pursuant to N.J.R.E. 803(c)(25), the Court reasoned “[a]t the time that the settling defendants made those statements, each statement was ‘so far contrary’ to those defendants’ ‘pecuniary, proprietary, or social interest[s],’ and ‘so far tended to subject’ to defendants ‘to civil… liability,’ that a reasonable person in [defendants’] position would not have made the statement unless the person believed it to be true.” The Court concluded that because these statements were made when each declarant was a defendant in this case or another asbestos products liability case, they were inherently adverse to the settling defendants’ litigation position.
As a result of this decision, we are likely to see a slight shift in the way both plaintiffs and defendants approach New Jersey asbestos. Although arguably beneficial for both sides, some plaintiffs’ counsel who have repeatedly fought against the allocation will say it leans in the defendant’s favor. On one hand, plaintiffs will now have to fully analyze the risks of pursuing settlements. On the other hand, non-settling defendants in New Jersey can be at ease knowing they can freely rely on N.J.R.E. 803(c)(25) to share fault with settled defendants for purposes of liability apportionment at trial.
By Alexa Gomez