CENTRAL WESLEYAN COLLEGE, Plaintiff-Appellee,
v.
W.R. GRACE & CO.; United States Gypsum Company; AC & S,
Incorporated; A.P. Green Refractories Company; Armstrong
World Industries, Incorporated; Fibreboard Corporation;
Flintkote Company; GAF Corporation; General Refractories
Company; Grant Wilson Inc.; Babcock & Wilcox Co.; Basic,
Incorporated; California Products Corporation; Crown Cork
& Seal Company, Incorporated; Dana Corporation; Dodson
Manufacturing Company; Keene Corporation; Lac D'Amainte Du
Quebec, Ltee; Ohio Lime Company; Owens-Corning
Fiberglas Corporation; Owens-Illinois, Incorporated;
Pfizer, Incorporated; Rock Wool Manufacturing Company,
Incorporated; Uniroyal Incorporated; United States Mineral
Products Company; Vimasco Corporation; Pittsburgh Corning
Corporation; Turner & Newall, Ltd.; Cassiar Mining
Corporation, Defendants-Appellants,
and
National Gypsum Company; Acoustics, Incorporated; Amchem
Products, Incorporated; American Asbestos Products,
Incorporated; American Energy Products, Incorporated;
Asbestos Corporation, Ltd.; Asbestos Corporation; Asbestos
Fibers, Incorporated; Asbestospray Corporation; Eagle
Picher Industries; Empire Ace Insulation Manufacturing
Corporation; Empire Asbestos Products, Incorporated;
Foster Wheeler Corporation; Forty-Eight Insulations, Inc.;
Garlock, Inc.; Georgia-Pacific Corporation; Grefco,
Incorporated; H & A Construction Corporation; Hamilton
Materials, Incorporated; H.K. Porter Company, Incorporated;
Highland Stucco & Lime Products, Incorporated; Hollywood
Stucco Products, Incorporated; Huxley Development
Corporation; IPA Systems, Incorporated; J.W. Roberts,
Ltd.; John Crane-Houdaille, Incorporated; Asten Group,
Incorporated; Atlas Turner, Inc.; Carey Canada, Inc.; The
Celotex Corporation; Certainteed Corporation; Charter
Consolidated Investments; Charter Industries; Chemrock
Corporation; Combustion Engineering, Incorporated; Kaiser
Refractories; Kaiser Aluminum and Chemical Corporation;
Kaiser Gypsum Company, Incorporated; Nicolet, Inc.;
Quigley Company, Inc.; Raymark Industries, Incorporated;
Ryder Industries, Incorporated; Sealtite Insulation
Manufacturing, Incorporated; Special Asbestos Company,
Incorporated; Sprayon Insulation & Acoustic, Incorporated;
Sprayed Insulation Corporation; Sprayon Research
Corporation; Starr-Davis Company, Incorporated; Standard
Insulations, Incorporated; Standard Asbestos Manufacturing
and Insulating Company; Vermont Asbestos Group; Western
Mineral Products Company, Incorporated; Asbestos Product
Manufacturing; Southern Textile Corporation, a Delaware
corporation; C.E. Thurston & Sons; Charter Consolidated,
Ltd.; Atlas Asbestos Corporation, Ltd.; Cape Industries,
Ltd.; TAF International, Ltd.; Turner Asbestos Fibres,
Ltd.; Charter Consolidated Services; California Products
International, Incorporated; Cape Asbestos Fibres, Ltd.;
Bell Asbestos Mines, Ltd., Defendants.
CENTRAL WESLEYAN COLLEGE, Plaintiff-Appellee,
v.
KAISER GYPSUM COMPANY, INCORPORATED, Defendant-Appellant,
and
W.R. Grace & Co.; United States Gypsum Company; AC & S,
Incorporated; A.P. Green Refractories Company; Armstrong
World Industries, Incorporated; Fibreboard Corporation;
Flintkote Company; GAF Corporation; General Refractories
Company; Grant Wilson, Inc.; Babcock & Wilcox Co.; Basic,
Incorporated; California Products Corporation; Crown Cork
& Seal Company, Incorporated; Dana Corporation; Dodson
Manufacturing Company; Keene Corporation; Lac D'Amainte Du
Quebec, Ltee; Ohio Lime Company; Owens-Corning Fiberglas
Corporation; Owens-Illinois, Incorporated; Pfizer,
Incorporated; Rock Wool Manufacturing Company,
Incorporated; Uniroyal Incorporated; United States Mineral
Products Company; Vimasco Corporation; Pittsburgh Corning
Corporation; Turner & Newall, Ltd.; Cassiar Mining
Corporation; National Gypsum Company; Acoustics,
Incorporated; Amchem Products, Incorporated; American
Asbestos Products, Incorporated; American Energy Products,
Incorporated; Asbestos Corporation, Ltd.; Asbestos
Corporation; Asbestos Fibers, Incorporated; Asbestospray
Corporation; Eagle Picher Industries; Empire Ace
Insulation Manufacturing Corporation; Empire Asbestos
Products, Incorporated; Foster Wheeler Corporation;
Forty-Eight Insulations, Inc.; Garlock, Inc.;
Georgia-Pacific Corporation; Grefco, Incorporated; H & A
Construction Corporation; Hamilton Materials, Incorporated;
H.K. Porter Company, Incorporated; Highland Stucco & Lime
Products, Incorporated; Hollywood Stucco Products,
Incorporated; Huxley Development Corporation; IPA Systems,
Incorporated; J.W. Roberts, Ltd.; John Crane-Houdaille,
Incorporated; Asten Group, Incorporated; Atlas Turner,
Inc.; Carey Canada, Inc.; The Celotex Corporation;
Certainteed Corporation; Charter Consolidated Investments;
Charter Industries; Chemrock Corporation; Combustion
Engineering, Incorporated; Kaiser Refractories; Kaiser
Aluminum and Chemical Corporation; Kaiser Gypsum Company,
Incorporated; Nicolet, Inc.; Quigley Company, Inc.;
Raymark Industries, Incorporated; Ryder Industries,
Incorporated; Sealtite Insulation Manufacturing,
Incorporated; Special Asbestos Company, Incorporated;
Sprayon Insulation & Acoustic, Incorporated; Sprayed
Insulation Corporation; Sprayon Research Corporation;
Starr-Davis Company, Incorporated; Standard Insulations,
Incorporated; Standard Asbestos Manufacturing and
Insulating Company; Vermont Asbestos Group; Western
Mineral Products Company, Incorporated; Asbestos Product
Manufacturing; Southern Textile Corporation, a Delaware
corporation; C.E. Thurston & Sons; Charter Consolidated,
Ltd.; Atlas Asbestos Corporation, Ltd.; Cape Industries,
Ltd.; TAF International, Ltd.; Turner Asbestos Fibres,
Ltd.; Charter Consolidated Services; California Products
International, Incorporated; Cape Asbestos Fibres, Ltd.;
Bell Asbestos Mines, Ltd., Defendants.
Nos. 92-2268, 92-2269.
United States Court of Appeals,
Fourth Circuit.
Argued April 1, 1993.
Decided Sept. 24, 1993.
Thomas W. Kirby, Wiley, Rein & Fielding, Washington, DC, argued (Joseph B.G. Fay, Morgan, Lewis & Bockius, Philadelphia, PA, for appellant U.S. Gypsum; Michael T. Cole, Wise & Cole, P.A., Charleston, SC, for appellant Pfizer; Allen S. Joslyn, P. Kevin Castel, Cahill, Gordon & Reindel, New York City, for appellant W.R. Grace & Co., on brief), for appellants.
Arthur R. Miller, Harvard Law School, Cambridge, MA, argued (Daniel A. Speights, Speights & Runyon, Hampton, SC; Edward J. Westbrook, Ness, Motley, Loadholt, Richardson & Poole, Charleston, SC, on brief), for appellee.
Before ERVIN, Chief Judge, WILKINSON, Circuit Judge, and HILTON, United States District Judge for the Eastern District of Virginia, sitting by designation.
OPINION
WILKINSON, Circuit Judge:
This case presents the question of whether conditional class certification was appropriate in a suit brought against a group of asbestos producers on behalf of those colleges and universities with friable asbestos in their buildings. The district court granted plaintiff's motion for certification on the condition that discovery be primarily limited to eight "common issues," which the court deemed to predominate at this stage of the litigation. Central Wesleyan College v. W.R. Grace & Co.,
I.
Plaintiff Central Wesleyan College is a small college in Central, South Carolina. As many as eight of the buildings on its eight or nine building campus contain asbestos products, including pipe insulation, hot water tank insulation, elbow insulation, spray insulation, and spray ceiling material. In July 1987, Central Wesleyan filed this lawsuit on behalf of itself and a class of all public or private colleges and universities in the United States that have suffered property damage due to the presence of friable asbestos in any of their facilities. "Friable" asbestos refers to asbestos products that "when dry, can be crumbled, pulverized, or reduced to powder by hand pressure." 40 C.F.R. Sec. 61.141. The district court estimated that some sixteen to thirty-five percent of America's colleges and universities were potential class members. The complaint seeks compensation for the costs of controlling and eventually removing the asbestos as required by federal law. See 40 C.F.R. Secs. 61.12(c), 61.145(c), 61.150. The complaint also seeks punitive damages.
A.
It is important at the outset to review the history of asbestos litigation as a background to the present lawsuit. Beginning in the late 1960s, numerous personal injury cases were filed after studies linked asbestos particle exposure to asbestosis and other diseases. See Borel v. Fibreboard Paper Prod. Corp.,
At the state level, large consolidations of personal injury cases have occurred. A consolidated trial of over 8,500 plaintiffs' claims before a state judge in Baltimore, Maryland has proceeded through four phases. In re Baltimore City Asbestos Litig., No. 89236704 (Md.Cir.Ct.); see Asbestos Litig.Rep. at 26571-72 (Dec. 18, 1992). The first phase dealt with liability issues common to all the claims and resulted in verdicts against six defendants. Asbestos Litig.Rep. at 26572. Mini-trials on causation and damages continue, id., and a number of other defendants have settled. See Central Wesleyan,
Asbestos property damage litigation began in the early 1980s as building owners confronted the costs of asbestos removal. Prominent among those trying to rid their buildings of asbestos were local school districts. At Congress' direction, the Attorney General investigated asbestos in the schools and in 1981 concluded that the districts had viable claims against asbestos manufacturers. In 1982, the Environmental Protection Agency required the districts to inspect their buildings for asbestos. In 1983, several school districts filed a proposed national class action in federal court in Philadelphia, and the district court certified both a mandatory class under Fed.R.Civ.P. 23(b)(1)(B) and a voluntary class under Fed.R.Civ.P. 23(b)(3). See In re Asbestos Sch.Litig.,
On appeal, the Third Circuit vacated the mandatory class but affirmed the (b)(3) certification. In re School Asbestos Litig.,
However, the Third Circuit's ongoing experiment in class certification has not been an unqualified success. Over ten years have passed since the filing of the lawsuit, and no trial has been held. The original district judge has been disqualified from hearing the case, see In re School Asbestos Litig.,
Other asbestos property damage litigation has been ongoing, and defendants estimate that approximately 500 cases have been filed since 1981. Among cases brought as individual suits, about thirty have gone to trial with results split between property owners and defendants. Several other suits brought as state class actions have been certified, see, e.g., National Gypsum Co. v. Kirbyville Indep. Sch. Dist.,
This history provides some tentative conclusions. First, a number of courts appear receptive to using consolidation and class certification in asbestos cases. This receptivity results from the sheer volume of litigation, the commonality of asbestos' properties and characteristics, and to some extent, the similar ways in which asbestos products have been marketed and utilized. Second, manageability concerns persist in this area. These concerns have given courts pause before granting requests to consolidate or certify, and in some instances, have resulted in denials of such requests. Finally, it is apparent to us that the verdict is still out on the utility of mass asbestos litigation procedures, particularly in the property damage context. Large class actions and the consolidated treatment of asbestos cases continue to offer hope for resolving large numbers of claims. The procedures, however, come with their own problems. It is with the caution befitting contemplation of any experimental mechanism that we consider the district court's decision.
B.
Central Wesleyan moved for class certification in this action on December 27, 1988. Prior to that motion, the district court had ordered limited discovery of only certification issues. Central Wesleyan,
In considering Central Wesleyan's certification motion, the district court conducted a straightforward analysis of the class certification requirements under Fed.R.Civ.P. 23(a) and 23(b)(3). For Rule 23(a)(1) numerosity, the court found that between sixteen to thirty-five percent of America's approximately 3,000 colleges and universities have at least some facilities with friable asbestos and that some 480 potential class members would easily satisfy the numerosity requirement. Central Wesleyan,
The district court dealt at greater length with Rule 23(a)(3)'s requirement that Central Wesleyan's claims be "typical of the claims ... of the class." Initially, the court observed that federal regulations requiring asbestos removal "unite[ ] the claims of all colleges with friable asbestos regardless of the exact product involved." Central Wesleyan,
The district court next turned to the Rule 23(b)(3) requirement that "questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action [be] superior to other available methods for the fair and efficient adjudication of the controversy." The court specifically addressed the four matters the Rule lists as pertinent to these findings. First, it found the colleges' interest in individual litigation slight in comparison to the consensus among potential class members for proceeding on a unified basis. Central Wesleyan,
The district court addressed at greater length the fourth matter: "the difficulties likely to be encountered in the management of a class action." Fed.R.Civ.P. 23(b)(3)(D). The court acknowledged that "[t]here are formidable problems in managing a class of this size," but determined that "certification of a limited number of issues, coupled with subclasses where required, can reduce manageability concerns." Central Wesleyan,
Accordingly, the district court exercised its discretion under Fed.R.Civ.P. 23(c)(1) and 23(c)(4)(A) to certify the class conditionally for a "Phase One certification procedure" on eight common issues. Id. at 642. The court identified these issues as (1) whether defendants knew or had reason to know of the health hazards of asbestos (the "state of the art" issue); (2) whether certain categories of asbestos products (fireproofing, acoustical ceiling sprays, thermal insulation) are friable, or are capable of becoming friable as defined by federal regulations, and therefore, must at some time be removed; (3) whether defendants' asbestos products can release asbestos fiber in the course of foreseeable use, including maintenance, renovation, and demolition; (4) whether defendants participated in conspiratorial activities, either industrywide or within segments of the industry; (5) whether defendants failed adequately to test their products for fiber release potential; (6) whether defendants failed to warn users of the potential hazards of their products; (7) whether defendants breached a duty of due care in selling friable asbestos products for use in colleges; and (8) whether defendants' conduct justifies the imposition of punitive damages. Id. at 643. The court characterized these questions as "primarily factual," but noted that if separate state laws needed to be applied to these questions, subclasses of plaintiffs could be formed. Id. at 643 n. 20.
Also as part of the Phase One proceedings, the district court ordered defendants to comply with plaintiff's requests for product identification discovery, and specifically allowed other colleges and universities the opportunity to intervene. Id. at 642. Until it could be determined which colleges and universities had buildings containing which defendants' products, the district court deferred "a final decision on the standing of Central Wesleyan or any additional class Plaintiffs to represent the class against each of the Defendants until after conclusion of product identification discovery." Id.
II.
Defendants argue that the district court committed multiple errors in conditionally certifying the class. These arguments stress three themes. First, defendants challenge the appropriateness of Central Wesleyan as a class representative because of problems with standing, adequacy, and typicality. Second, defendants maintain that individual issues will dominate this lawsuit, and that as a result, extreme manageability problems preclude class treatment. Third, defendants argue more generally that the class mechanism is simply not suitable to asbestos property damage litigation and that the ongoing difficulties in School Asbestos Litigation dramatically prove this point. While we are not unsympathetic to defendants' arguments, we are also not prepared to conclude that the district court abused its discretion in tentatively allowing this suit to go forward as a limited purpose class action.
District courts have "wide discretion in deciding whether or not to certify a proposed class," and their decisions "may be reversed only for abuse of discretion." In re A.H. Robins Co., Inc.,
Along with the discretion accorded district courts, we note that this circuit has embraced the view that "the mass tort action for damages may ... be appropriate for class action, either partially o[r] in whole." A.H. Robins,
Such an approach has its promise. First, the consolidation of recurring common issues may reduce litigation costs. "Experience shows that in the asbestos litigation arena redundant evidence is the rule rather than the exception." School Asbestos Litig.,
Second, we are aware that several asbestos manufacturers already have settled with the class, and that at least four defendants have settled since the district court handed down its decision. This circuit has held that settlement "should be a factor, and an important factor, to be considered when determining certification." A.H. Robins,
The tentative, limited nature of the conditional certification also counsels in favor of affirmance. While defendants challenge Central Wesleyan's standing, adequacy, and typicality as a class representative for the entire litigation, the district court made these findings only "for the purposes of conditional certification," Central Wesleyan,
For these reasons, we are reluctant to conclude that the district court abused its considerable discretion in conditionally certifying this class for limited Phase One discovery. The district court conducted a careful Rule 23 analysis, and supported each of its 23(a) and 23(b)(3) holdings with detailed findings. The limited certification adopted here was both authorized by the Rule and encouraged by circuit precedent as a valuable tool in addressing mass tort litigation. It would be premature to say that the plaintiff is not correct in its assessment of this lawsuit as an opportunity "to assist in resolving asbestos litigation nationwide" and to avoid some of the "enormous waste of resources" that could accompany individual litigation.
III.
While the district court has acted within its discretion and while limited certification of the class may yield significant benefits, it is acknowledged by all that this litigation is not without its difficulties. This enormous undertaking is fraught with potential problems that may well offset the advantages that the class mechanism might afford. Should such a situation develop, class certification may have to be reconsidered. See Stott v. Haworth,
Defendants complain that Central Wesleyan lacks standing to bring claims against all of them because the college has thus far identified only National Gypsum products in its facilities. Defendants therefore argue that Central Wesleyan has not "personally ... suffered some ... injury" from and has no "direct stake" in pursuing how asbestos producers allegedly harmed other colleges. See Valley Forge Christian College v. Americans United for Separation of Church and State, Inc.,
The matter, however, is not so simple. The Supreme Court has recognized the "inherent and legitimate authority of the [district] court to issue ... orders of discovery ... as necessary for the court to determine and rule upon its own jurisdiction, including jurisdiction over the subject matter." United States Catholic Conference v. Abortion Rights Mobilization, Inc.,
It was not an abuse of discretion to delay ruling on the standing issue until discovery of the relevant underlying facts was complete. See In re School Asbestos Litig.,
The district court must remain mindful, however, that standing is a threshold, jurisdictional issue, and courts should attempt to resolve such issues as soon as possible. "The rule in federal cases is that an actual controversy must be extant at all stages of review." Steffel v. Thompson,
Here, the parties appear to recognize two avenues by which standing may be achieved. First, additional class representatives who have been supplied with asbestos products by named defendants could intervene in the action. See, e.g., Harris v. Ballone,
In sum, the district court clearly contemplated further proceedings to determine whether Central Wesleyan can produce sufficient facts to support its conspiracy allegations and to determine which other colleges have which asbestos products in at least some of their facilities. Its decision properly recognized the need to resolve the standing issue as soon as the relevant discovery was complete. Contrary to defendants' contentions, the district court did not labor under the misapprehension that class action litigation was somehow liberated from Article III jurisdictional requirements. We believe with the district court that the plaintiff class is due a fair opportunity to establish standing in the record and that defendants are equally entitled to insist that Article III requirements be met.
B.
Finally, defendants have pointed to manageability problems in this litigation as a reason for denying class certification. We cannot say that their concerns are unfounded. Even assuming that resolution of the eight conditionally certified issues advances the litigation, a daunting number of individual issues still loom beyond the Phase One proceeding. To establish liability, each college and university must demonstrate that a defendant's product has caused, or will cause, the institution to incur the costs of asbestos maintenance and removal. Questions of comparative fault may need to be examined in light of the role professional engineers and architects at the various colleges played in purchasing, installing, and maintaining the asbestos. Different time bar defenses may need to be considered depending on when class members have removed asbestos from their buildings. Adjudication of damages alone presents an array of issues regarding costs of removal, including the nature of the asbestos product, its condition, location, accessibility, and even labor rates in varying locales.
While A.H. Robins and Rule 23(c)(4) make plain that district courts may separate and certify certain issues for class treatment, the "subclass" on each issue still "must independently meet all the requirements of [subsection 23(a) ] and at least one of the categories specified in [subsection 23(b) ]." A.H. Robins,
Both plaintiff and the district court also relied heavily on In re A.H. Robins Co., Inc.,
As this litigation proceeds, the district court must make certain that manageability and other types of problems do not overwhelm the advantages of conditional certification. Should such concerns render the class mechanism ineffective, the district court must be prepared to use its considerable discretion to decertify the class, see 7B Wright, Miller & Kane, Federal Practice and Procedure Sec. 1785, at 128-36 (1986), either on a defendant's motion, see In re School Asbestos Litig.,
IV.
Our acknowledgement of concern about the manageability of this litigation is not intended to forecast its demise. Rather it is to reinforce the point that the course of this litigation is not set and that the district court retains considerable discretion to react to events as they unfold. The course chosen by the district court deserves the chance to succeed in resolving issues of unquestioned importance in this litigation, and it is to be expected that counsel, who have ably argued this appeal, will proceed in that spirit. The district court for its part proceeded with caution in its conditional certification order, and accordingly, did not abuse its discretion in the limited step that it took. For the foregoing reasons, the judgment of the district court is
AFFIRMED.
Notes
To this point, Central Wesleyan has only identified the products of a single asbestos manufacturer in its buildings. That manufacturer, National Gypsum Company, is in bankruptcy and no longer a party to this litigation. Central Wesleyan responds, however, that it has not completed identification of all the sources of asbestos in its buildings
The district court observed that while "there have been relatively few individual college lawsuits filed," each side has different explanations for this sparsity. Central Wesleyan,
In addition to raising legitimate concerns, defendants have also responded to the problematic nature of this litigation with several exaggerated claims. Certain of the "problems" they identify do not strike us as such. For example, defendants argue that many of the colleges and universities in the class share state citizenship with one or more defendants, and therefore, that the complete diversity required for federal jurisdiction is not possible. The rule in federal class actions, however, is only that the citizenship of the named plaintiffs be diverse from that of the defendants. See Snyder v. Harris,
Defendants also claim that the district court's adoption of an indefinite class renders the certification invalid. Specifically, the class is defined as "all colleges and universities in the United States with friable asbestos containing materials who meet the jurisdictional minimum." Defendants merely assert, however, the unlikely proposition that colleges' claims may be less than the jurisdictional minimum ($10,000 when the action was filed in 1987). They certainly have not shown to the required "legal certainty" that any class members' claims will be less than that amount. A.H. Robins,
Defendants maintain that the "local action" doctrine bars this suit by requiring that claims for injury to real property be heard by a court sitting in the state where the property is located. Because asbestos property damage actions involve products liability claims, not claims to title or possession of real property, we believe that the claims here are transitory, not local, in nature. See In re School Asbestos Litig.,
Defendants also maintain that South Carolina's "door closing" statute, S.C.Code Ann. Sec. 15-5-150, blocks this suit by preventing any non-South Carolina colleges from suing non-South Carolina defendants in court in South Carolina. Central Wesleyan, however, is a South Carolina resident whose suits the statute does not bar. Id. Sec. 15-5-150(1). Even if non-South Carolina colleges were class representatives, it is doubtful that the statute would apply because of the current countervailing federal policy in favor of consolidating asbestos litigation. See Szantay v. Beech Aircraft Corp.,
We do note that the Panel on Multidistrict Litigation eventually altered its position on consolidating asbestos personal injury cases as the number of cases escalated. See In re Asbestos Prod. Liab. Litig. (No. VI),