A Huge “Asbestos in Talc” Jury Verdict is Reversed on Appeal

Lanzo v. Cypress Amax Minerals Co., ___ N.J. Super. ___ (App. Div. 2021). This appeal arose out of plaintiffs’ claim that plaintiff Steven Lanzo III had contracted mesothelioma from his long-term use of Johnson Baby Powder and Johnson & Johnson’s Shower to Shower talcum powder. Those products, produced, marketed, and sold by two of the defendants, Johnson & Johnson (“J&J”) and Johnson & Johnson Consumer, Inc. (“JJCI”), contained their own talc or talc supplied by other defendants. Plaintiffs alleged that the talc contained asbestos.

Before and during trial, defendants moved to exclude the testimony of three of plaintiffs’ expert witnesses. The Law Division denied the motions as to two of the experts and granted the motion as to the third expert only in part.

One of the other defendants was Imerys Talc America, Inc. (“Imerys”). Imerys had failed to produce in discovery certain talc samples and test data, and had destroyed certain talc samples. Near the end of the trial, the Law Division, responding to a sanctions request by plaintiffs, decided to give the jury an adverse inference charge as a sanction for Imerys’s discovery violations and spoliation.

J&J and JJCI promptly moved to sever the claims against them from those brought against Imerys. They also sought a mistrial. The Law Division denied those motions.

Ultimately, after some or all claims against various defendants were dismissed before and during trial, the only defendants left in the case were Imerys and JJCI. The jury returned a verdict of $117 million in compensatory and punitive damages against those defendants. They both appealed. Today, in an opinion by Judge Yannotti, the Appellate Division reversed the jury verdict and remanded the case for separate new trials.

Though appellants raised a number of issues, the Appellate Division needed to address only three of them. First, the court ruled that the Law Division had abused its discretion in denying the defense motions to exclude plaintiffs’ experts. Judge Yannotti provided a lengthy and detailed description of the expert testimony and the circumstances surrounding it. The panel concluded that “the trial court misapplied the well-established judicial gatekeeping procedures our Supreme Court ‘reinforce[d]’ in In re Accutane Litigation (Accutane), 234 N.J. 340, 388 (2018).” [Disclosure: I represented the plaintiffs in the Appellate Division and the Supreme Court in Accutane]. This was an abuse of discretion, the applicable standard of review.

Judge Yannotti identified two overall flaws in the proceedings below: “The trial court did not conduct a Rule 104 hearing to perform the analysis required by Accutane and the prior decisions upon which it is based. The court also did not assess the methodology, or the underlying data used by the two experts to form their opinions.” He proceeded to elaborate the reasons for those conclusions in a fact-intensive analysis. Plaintiffs argued that the errors in this regard were harmless, but the Appellate Division did not agree.

JCII also argued that the case against it should have been severed from the claims against Imerys, since it “was unreasonable for the court to tell the jury it could infer that talc supplied to [JJCI] was contaminated, but then expect that the jury would not reach the same conclusion with respect to that very same talc that [JJCI] bottled and sold.” The abuse of discretion standard of review applied to this issue as well.

Judge Yannotti noted that the Law Division had tried to craft a jury instruction that would allow the jury to “infer that the missing evidence may have been helpful to the plaintiffs’ case to the detriment of defendant Imerys.” However, while the charge may have allowed the jury to draw an inference that leveled the playing field with regard to plaintiffs’ claims against Imerys, the instruction was unduly prejudicial to JJCI.” This was because “once the jury was permitted to draw an adverse inference that Imerys’ talc was contaminated with asbestos, it would be difficult, if not impossible, for the jury not to make the same finding as to JJCI,” who had used Imerys’ talc in JJCI’s product.

Accordingly, the panel ordered separate new trials as to JJCI and Imerys. But the court rejected Imerys’ attempt to overturn the adverse inference charge as to Imerys. Judge Yannotti offered an exhaustive analysis of spoliation and adverse inferences resulting from spoliation, and held that the adverse inference charge was proper here. Though the entire 70-page opinion is well worth reading in full, the panel’s discussion of this issue is particularly worthy of study, since there are not many published opinions regarding spoliation and the sanctions appropriate to redress it. Judge Yannotti’s opinion is likely to be the new standard resource on this issue.