By Joe Ellis, Anne McLeod and Natalie Holden on January 17, 2018

In Goodyear Tire & Rubber Company v. Rogers, ___ S.W.3d ___ (Tex. App.– Dallas 2017), the Dallas Court of Appeals issued an important decision regarding the calculation of exemplary damages awarded under the Texas statute governing the exemplary damages cap to calculate a judgment amount in the case of an employer defendant found grossly negligent where the deceased employee claimed exposure to asbestos. Generally in Texas, the Texas Worker’s Compensation Scheme is an employee’s exclusive remedy for a work related injury. However, both the Texas Constitution and the Texas Labor Code create an exception—in the case of an employee death caused by the employer’s gross negligence, the wrongful death beneficiaries can recover exemplary damages (although still no recovery of actual or compensatory damages). This “worker’s comp bar” also does not apply to recovery of compensatory and exemplary damages in cases based on intentional tort. Exemplary damages, in contrast to compensatory damages, are meant not to compensate the Plaintiff but to punish the Defendant for his or her wrongdoing.

Texas has a punitive damages cap by statute which limits the amount of exemplary damages that is dependent in part on the economic damages. Following a three (3) week trial in late August and early September 2014, the Dallas County jury rendered a verdict for $18.6 million ($3.6 million in compensatory damages and $15 million in exemplary damages). The trial court, after applying the statutory punitive damages cap, entered a judgment in favor of Plaintiffs for $2.89 million. In interpreting and applying the statutory punitive damages cap to the jury findings and judgment of the trial court, the Dallas appellate court reached a decision that was favorable to defendants, holding that the “economic damages” prong of the statutory cap on exemplary damages is restricted to actual economic damages that can be proven to have a monetary value, and “only to the extent there is some evidence in this case showing an actual (existing and real) monetary loss associated with those components.” (emphasis added). As a result of the Dallas Court of Appeals decision, the damages were further reduced from $2,890,000 to $1,150,000.

Plaintiffs, in their appeal, unsuccessfully argued that their evidence of “pecuniary loss” was sufficient, based on the Texas Pattern Jury Charge definition of “pecuniary loss” (and the definition used in the charge in this case at the trial court level), as meaning loss of services “such as nurture, care, education, and guidance….” They claimed that the case law indicated that measurement of such losses were “an inherently speculative and imprecise undertaking” that was “best left to the jury’s common sense and sound discretion….” The Dallas Court of Appeals, however, distinguished the Plaintiffs’ cases supporting this position, as none involved the exemplary damages cap statute. Instead, they found support in Goodyear’s cited cases for their holding “that a fact finding of pecuniary losses must be supported by evidence of actual monetary losses… in light of the facts and circumstances concerning that decedent’s relationship with the claimant and that decedent’s actual financial contribution to that claimant, before those findings can be used as economic damages when calculating the exemplary damages cap.”

Notably, the court held that “[i]n the event of a retrial, it will be taken as established as a matter of law that Carl’s death did not cause the daughters any past or future actual pecuniary losses within the meaning of [the relevant statute.]” This narrowing of the definition (and requirement of proof) of pecuniary damages will of course only be relevant in cases in which it is found that the Defendant was grossly negligent, and perhaps, if a state has a statute with language similar to that of the Texas statute which specifically defines “economic damages” to mean “compensatory damages intended to compensate a claimant for actual economic or pecuniary loss.”

Although the portion of the opinion on the punitive damages cap was favorable for Defendants, the court looked at two other issues and ruled in favor of Plaintiffs. First, Goodyear argued that the evidence was legally insufficient to support a finding of gross negligence, pointing to the fact that although there was some evidence at the time indicating that asbestos could cause harm, there was no evidence to suggest that exposure at these doses could cause harm. Goodyear argued, instead, that his chance of developing mesothelioma was only one in 45,000 which could not be considered an extreme risk as a matter of law. The Court rejected this argument, finding that risk includes not only the chances of developing harm, but the magnitude of possible harm. The Court found that because the magnitude was “fast and certain death” and was so immense, the jury could have formed a firm belief that Goodyear’s acts and omissions involved the likelihood of Plaintiff’s serious injury and an extreme degree of risk. Goodyear also argued that there was not a sufficient showing of a subjective awareness of the risk involved and that Goodyear proceeded with conscious indifference, citing to its witness’s testimony that the company took measures to monitor and test for substances during the relevant time period. However, the court pointed out that this witness was impeached with contradictory deposition testimony and thus it was reasonable to conclude that they were not taking precautionary measures during the relevant time.

Goodyear’s second issue was that the Plaintiff did not sufficiently rule out radiation treatment as a plausible alternative cause of mesothelioma. Goodyear cited to Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 720 (Tex. 1997), which held that “if there are other plausible causes of the injury or condition that could be negated, the plaintiff must offer evidence excluding those causes with reasonable certainty.” The Court found that this argument was not properly preserved because it had not been raised at the trial court level. However, going beyond the failure to preserve error point, the court of appeals observed that appellees (the plaintiffs) obtained summary judgment in the MDL pre-trial court where the court effectively determined that the radiation was not a plausible alternative cause of mesothelioma. The Dallas court held it could not conclude evidence of causation was legally insufficient, given that their standard of review was to view evidence in the light most favorable to the finding.

There was one dissent by Judge Brown, agreeing with the court as to both the issues of liability but disagreeing with the resolution of the damages issue. He argued that the jurors were entitled to “use their knowledge and experience to estimate the value of his services without proof of their value or proof appellees were or would be out a specific sum of money due to the loss of those services.” He argued that instead of looking to the statute’s definition of economic damages, they should look to the jury instructions to define pecuniary losses, and noted that pecuniary loss as defined for the jury included loss of care, maintenance, support, advice, counsel, and reasonable contributions of a pecuniary value. Judge Brown also noted that in the wrongful death context, pecuniary damages has long included the value of the deceased’s advice and counsel to his surviving family members. He did not specifically address the opinion’s requirement for evidence of actual monetary value supporting pecuniary losses, except to say that “while the amount of damages awarded must be supported by evidence, a jury determining pecuniary loss may look beyond evidence of calculable financial contributions[,]” citing an appellate case out of Houston from 2011.

On December 11, 2017, the Court of Appeals denied appellant’s motion for rehearing. Goodyear has indicated that it will seek an appeal to the Texas Supreme Court.