RECENT DECISIONS

Expert's Testimony Excluded for Failure to Provide Basis for Opinion

The U.S. Firth Circuit Court of Appeals upheld a decision of the a Mississippi Federal District Court to exclude an expert’s testimony in a maritime toxic tort case because studies relied upon by the expert failed to give an adequate basis for his opinion.

In Knight v. Kirby Inland Marine, Inc., tankermen/plaintiffs developed different types of cancer as an alleged result of their on-the-job exposure to various chemicals, including benzene.  Plaintiffs filed suit against their employer/shipowner alleging their medical conditions were caused by their exposure to benzene.    Plaintiffs’ epidemiologist, relying upon over fifty studies for his conclusion, testified benzene was the cause of the plaintiffs’ cancers.  The District Court excluded all of the studies offered by plaintiffs’ epidemiologist, finding most of the studies he relied upon failed to isolate benzene as the cause of their cancer.  The other studies used by plaintiffs’ expert were found to be statistically insignificant, and therefore the Court concluded plaintiffs’ expert’s testimony failed to satisfy Daubert.

Under Daubert and Federal Rule of Evidence 702, a district court has broad discretion to determine whether a body of evidence relied upon by an expert is sufficient to support that expert’s opinion.  Notably, the court stated “…in epidemiology hardly any study is ever conclusive, and we do not suggest that an expert must back his or her opinion with published studies that unequivocally support his or her conclusions.”  The court went on to state, “Nonetheless, the expert’s testimony must be reliable at each and every step or else it is inadmissible. ‘The reliability analysis applies to all aspects of an expert’s testimony: the methodology, the facts underlying the expert’s opinion, the link between the facts and the conclusion, et alia.” (Knight v. Kirby Inland Marine, Inc. 482 F.3d 347, 2007 A.M.C. 743, (C.A. 5 (Miss.) 2007)).

MS Judge Cuts Punitive Damage Award in Hurricane Litigation

Judge L. T. Senter awarded a Biloxi, Mississippi couple $224,000.00 for the loss of their home in Hurricane Katrina. THe jury awarded the couple an additional $2.5 million in punitive damages against State Farm. Judge Senter cut the punitive damages award to $1 million. He believed the award had been too high given the damages the couple actually suffered. For more information, click here to read the Business Insurance article on the case (Broussard v. State Farm Fire & Cas. Co., 2007 WL  268344 (S.D. Miss.  2007)).

U.S. Supreme Court Relaxes Causation Standard and FELA and Possibly Jones Act

In Norfolk Southern Railway Co. v. Sorrell, the Supreme Court held the same relaxed causation standard, which applies to the plaintiff's Federal Employers' Liability Act negligence claim against his employer, applies to the employer's defense as to the plaintiff's contributory negligence. The court concluded FELA does not abrogate the common law approach and the same standard of causation applies to railroad negligence under Section 1 as to plaintiff contributory negligence under Section 3.

Since the Jones Act expressly incorporates by reference the FELA liability standard, this case's holding should apply with equal force to the contributory negligence defense asserted in Jones Act liltigation, whether in state or federal court.

While many maritime defense lawyers have successfully taken this position in jury charge conferences for years, until now there was not a U.S. Supreme Court decision which expressly articulated this concept. (Norfolk Southern Railway Co. v. Sorrell, 127 S.Ct. 799 Decided Jan. 10, 2007).

Ruling Pending on Questions on Coverage and Notice to Additional Insureds

The United States Fifth Circuit certified the following three determinative questions of law to the Supreme Court of Texas:

1. Where an additional insured does not and cannot be presumed to know of coverage under an insurer's liability policy, does an insurer that has knowledge that a suit implicating policy coverage has been filed against its additional insured have a duty to inform the additional insured of the available coverage?

2. If the above question is answered in the affirmative, what is the extent or proper measure of the insurer's duty to inform the additional insured, and what is the extent or measure of any duty on the part of the additional insured to cooperate with the insurer up to the point he is informed of the policy provisions?

3. Does proof of an insurer's actual knowledge of service of process in a suit against its additional insured, when such knowledge is obtained in sufficient time to provide a defense for the insured, establish as a matter of law the absence of prejudice to the insurer from the additional insured's failure to comply with the notice-of-suit provisions of the policy?

On October 13, 2006 the Texas Supreme Court accepted the certified questions and the case is now pending before the Texas Supreme Court in National Union Fire Ins. Co. v. Crocker, No. 06-0868.  You can view the briefs for both sides and the amicus brief filed by Complex Insurance Claims Litigation Association in support of National Union's position at:

 http://www.supreme.courts.state.tx.us/ebriefs/files/20060868.htm

Louisiana Federal District Court: Insurer Waived Policy Defenses by Defending Without Reserving Rights

In Underwriters Insurance Co. v. Offshore Marine Contractors, Inc., 2006 WL 2128653 (E.D.La. July 27, 2006), a jack-up barge called the L/B ATLAS departed Cameron, Louisiana, collapsed and sank in 60 feet of water and was declared a CTL. The captain notified the vessel owner, Offshore Marine, there were several problems with the vessel while in transit.

Offshore Marine reported the incident to Underwriters Insurance, which had issued Hull and Machinery and P&I policies. About two months later it filed this suit, seeking a declaratory judgment that there was no coverage due to the unseaworthy condition of the ATLAS, that Offshore Marine had breached the Hull and Machinery policy’s warranty of seaworthiness, and seeking reimbursement of the payments it had made.

The court found that under Louisiana law if an insurer has knowledge of facts indicating noncoverage under its policy yet assumes or continues the insured’s defense without obtaining a nonwaiver agreement to reserve its coverage defense, the insurer has waived its coverage defenses. The court found that with evidence of noncoverage in hand from the surveyor and lawyer it had appointed, Underwriters Insurance continued the lawyer’s joint representation of Offshore Marine without a nonwaiver agreement or a reservation of rights. The court found Underwriters Insurance had thereby waived its coverage defenses. The court did not accept the insurer’s argument that it lacked “facts” of noncoverge, that it only had in hand “allegations.” The court held an insurer “does not need to know to an absolute certainty that it has a coverage defense.”

U.S. Supreme Court Limits Punitive Damage Award

In a 5-4 opinion written by Justice Breyer, the U.S Supreme Court held that the Due Process Clause does not "permit a jury to base [a punitive damages] award in part upon its desire to punish the defendant for harming persons who are not before the court (e.g., victims whom the parties do not represent)."

In the state of Oregon negligence and deceit lawsuit, a jury found that Jesse Williams' death was caused by smoking and that petitioner Philip Morris, which manufactured the cigarettes he favored, knowingly and falsely led him to believe that smoking was safe. In respect to deceit, it awarded $821,000 in compensatory damages and $79.5 million in punitive damages to respondent, the personal representative of Williams' estate. The trial court reduced the latter award, but it was restored by the Oregon Court of Appeals. The State Supreme Court rejected Philip Morris' arguments that the trial court should have instructed the jury that it could not punish Philip Morris for injury to persons not before the court, and that the roughly 100-to-1 ratio the $79.5 million award bore to the compensatory damages amount indicated a "grossly excessive" punitive award. The decision was then appealed to the U.S. Supreme Court.

The Court reasoned that (i) "a defendant threatened with punishment for injuring a nonparty victim has no opportunity to defend against the charge, by showing, for example in a case such as this, that the other victim was not entitled to damages because he or she knew that smoking was dangerous or did not rely upon the defendant's statements to the contrary"; (ii) "to permit punishment for injuring a nonparty victim would add a near standardless dimension to the punitive damages equation" and "the fundamental due process concerns to which our punitive damages cases refer*risks of arbitrariness, uncertainty and lack of notice*will be magnified"; and (iii) "we can find no authority supporting the use of punitive damages awards for the purpose of punishing a defendant for harming others." The Court made clear that, notwithstanding this holding, juries can continue to consider harm to non-parties in gauging the degree of reprehensibility of the defendant's conduct. (Philip Morris USA v. Williams No. 05-1256 (Feb 2007)).