Yesterday, the Court of Appeal issued this published opinion reversing a $3 million punitive damages award against a talc supplier, on the ground that the plaintiff failed to introduce sufficient evidence of malice, oppression, or fraud as required by California Civil Code section 3294.

The plaintiff claimed he developed mesothelioma from exposure to various asbestos-containing products.  He claimed that one source of exposure was Old Spice talcum powder, which included talc supplied by defendant Whittaker, Clark & Daniels.  Plaintiff claimed Whittaker’s talc was contaminated with trace amounts of asbestos.

The case proceeded to trial with Whittaker as the sole defendant.  A jury awarded $1.75 million in compensatory damages, allocated 42 percent fault to Whittaker, and added an additional $3 million in punitive damages.  Whittaker appealed, challenging only the punitive damages award.

The Court of Appeal (Second District, Division Eight) agreed with Whittaker that plaintiff’s evidence was insufficient to establish that Whittaker acted with malice, oppression, or fraud.  The 52-page opinion recites the plaintiff’s evidence in great detail but ultimately concludes that none of that evidence, even construed in the light most favorable to the plaintiff, could support the conclusion that the defendant’s executives knew, during the relevant time period, that trace levels of asbestos contamination in talc created a risk of “probable dangerous consequences,” as required for an award of punitive damages.  This passage captures the essence of the court’s reasoning:

Yes, defendant knew asbestos was an “unsafe ingredient” if there were enough of it in the talc—meaning amounts experts would consider “significant enough to, over time, produce  injury or illness.” But no one knew exposure to talcum powder could cause mesothelioma until 1994—years after plaintiff’s exposure to talc ended in 1980. Medical or scientific developments years after plaintiff’s injury cannot establish defendant’s executives knew of “probable dangerous consequences” of contaminated talc before plaintiff’s injury.

The opinion rests on well-established law, but it is nevertheless very significant for California products liability and toxic torts litigation.  Plaintiffs in such cases often argue that, if a defendant is aware that a substance in its product represents a possible health hazard at some level of exposure, that shows the defendant acted with malice by including that substance in its product.  That shouldn’t be enough, because as this opinion points out, California law requires an awareness of “probable dangerous consequences.”  A defendant might be aware that high levels of exposure to a substance are potential harmful, and yet be unaware of any probable dangerous consequences from lower levels of exposure.  Many, many substances can be toxic if the dose is high enough.

We see this issue often in California products liability litigation, and many courts are willing to let plaintiffs seek punitive damages based on the sort of evidence presented here.  This opinion may help to remind trial courts that punitive damages should be imposed only when the evidence shows the defendant was aware of probable dangerous consequences associated with its product and  deliberately did nothing to avoid those consequences.

Justice Wiley issued a dissenting opinion.  In his view, the jury’s award of punitive damages was supported by evidence that Whittaker knew about the presence of trace amounts of asbestos in its talc in 1972, and knew by 1976 that asbestos was dangerous.  The dissenting opinion also argues that punitive damages are necessary to promote consumer safety.  But the dissenting opinion doesn’t confront the point made by the majority opinion—that Whittaker might have known in the 1970s that high levels of asbestos exposure could be dangerous, but Whittaker had no knowledge that trace amounts of asbestos in talc presented any similar risk.