James Leroy Jackson v. Johns-Manville Sales Corporation and Raybestos-Manhattan, Inc., Defendants

This Mississippi diversity case involves plaintiff Jackson's efforts to recover compensatory and punitive damages from Johns-Manville Sales Corporation, Raybestos-Manhattan, Inc., and H.K. Porter Company, all manufacturers of asbestos products. Jackson was injured as a result of his exposure to asbestos products during the course of his employment as a shipyard worker. The district court, after a lengthy trial, entered judgment in favor of Jackson against all defendants except H.K. Porter Company in the amount of $391,500 in compensatory damages and $625,000 in combined punitive damages. On appeal, a panel of this court affirmed in part, reversed in part, and remanded for a new trial. Jackson v. Johns-Manville Sales Corp., 727 F.2d 506 (5th Cir.1984) ("Jackson I"). We granted en banc rehearing, which had the effect of vacating the panel opinion. See Fifth Circuit Internal Operating Procedures, Rules of the United States Court of Appeals for the Fifth Circuit 98 (July 1983). Upon rehearing en banc, we certified to the Mississippi Supreme Court three significant questions of Mississippi law. Jackson v. Johns-Manville Sales Corp., 750 F.2d 1314 (5th Cir.1985) (en banc) ("Jackson II"). The Mississippi Supreme Court declined certification without discussion. Jackson v. Johns-Manville Sales Corp., 469 So.2d 99 (Miss.1985). The case is consequently back before us for resolution of the issues previously certified to the Mississippi Supreme Court.

The three issues left unresolved by this court's en banc opinion in Jackson II are as follows:

(1) whether a Plaintiff whose cause of action is based upon strict liability in tort can recover punitive damages against Defendants who have been or may be subjected to multiple awards of compensatory and punitive damages for the same wrongful conduct;

(2) whether a Plaintiff who does not presently have cancer can state a claim or recover damages in an action based upon strict liability in tort for mental distress resulting from his knowledge that he has an increased risk of contracting cancer in the future;

(3) whether a Plaintiff who does not presently have cancer can state a claim or recover damages in an action based upon strict liability in tort for the reasonable medical probability of contracting cancer in the future.

We now answer each question affirmatively, and affirm the judgment of the district court.

I. PROCEDURE FOR CONSTRUING MISSISSIPPI LAW.1

The en banc court determined that Mississippi law, and not federal common law, properly governs the resolution of these issues.2 Thus, we must interpret the law as would a Mississippi court. Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). In making an Erie-guess, "[i]t is our duty ... to view ourselves ... as an inferior state court and to reach the decision that we think a state court would reach." Dipascal v. New York Life Ins. Co., 749 F.2d 255, 260 (5th Cir.1985). Even "[i]n the absence of controlling precedent, we must ... decide ... issue[s] as we believe a Mississippi court would decide [them]." Green v. Amerada-Hess Corp., 612 F.2d 212, 214 (5th Cir.), cert. denied, 449 U.S. 952, 101 S.Ct. 356, 66 L.Ed.2d 216 (1980).

As a federal court, "it is not for us to adopt innovative theories of [state law], but simply to apply that law as it currently exists," Galindo v. Precision American Corp., 754 F.2d 1212, 1217 (5th Cir.1985), and to rule as we believe the state's highest tribunal would rule, Green, 612 F.2d at 214. We are emphatically not permitted to do merely what we think best; we must do that which we think the Mississippi Supreme Court would deem best. See, e.g., United States v. Little Joe Trawlers, Inc., 776 F.2d 1249, 1253 (5th Cir.1985) ("In our Erie role, we make no value judgments as to what [Mississippi] law ought to be."). If the law of Mississippi is to be changed, "[i]t is up to the Supreme Court of [Mississippi] and not this court to change the substantive law of that state." Cargill, Inc. v. Offshore Logistics, Inc., 615 F.2d 212, 215 (5th Cir.1980). Finally, "under Erie we cannot skirt the clear import of state decisional law solely because the result is harsh." Parson v. United States, 460 F.2d 228, 234 (5th Cir.1972).

The denial of certification does not give us a license to change Mississippi law. We are still to apply the law as it exists. The privilege (or duty) of changing the law belongs to the Mississippi courts or legislature.3 We certify questions in order to avoid having to make "unnecessary Erie guesses," Thompson v. Johns-Manville Sales Corp., 714 F.2d 581, 584 (5th Cir.1983) (Goldberg, J., dissenting), cert. denied, 465 U.S. 1102, 104 S.Ct. 1598, 80 L.Ed.2d 129 (1984), and to offer the state court the opportunity to alter existing law--in effect, to change direction. The denial of certification forces us to make the Erie-guess which we sought to avoid, but it does not enable us to alter existing law or to change direction. To paraphrase Judge Gee:

In matters of [Mississippi] substantive law, our relationship to the [Mississippi] Supreme Court is all but identical to that of a [lower Mississippi] court. Indeed, if it differs at all as regards substantive innovation, it is weaker instead of stronger than that of such a court. Even in the rare case where a course of [Mississippi] decisions permits us to extrapolate or predict with assurance where that law would be had it been decided, we should perhaps--being out of the mainstream of [Mississippi] jurisprudential developments--be more chary of doing so than should an inferior state tribunal.

Rhynes v. Branick Mfg. Corp., 629 F.2d 409, 410 (5th Cir.1980).

When making an Erie guess in the absence of specific guidance from the Mississippi Supreme Court, our prediction of state law looks to: (1) lower state court decisions and Supreme Court dicta, (2) the lower court ruling in this case, (3) the general rule on the issue, (4) the rule in other states looked to by Mississippi courts when they formulate the substantive law of Mississippi, and (5) other available legal sources, such as treatises and law review commentaries. See generally Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945); 19 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure Sec. 4507 (hereinafter Wright & Miller, Federal Practice ); 1A (pt. 2) J. Moore, Moore's Federal Practice, p 0.309. As Professors Wright and Miller explain:

In vicariously creating state law ..., the federal court may consider all available legal sources, including the Restatements of Law, treatises, law review commentaries, decisions from other jurisdictions whose doctrinal approach is substantially the same, and "the majority rule." The federal court must keep in mind, however, that its function is not to choose the rule that it would adopt for itself; it must choose the rule that it believes the state's highest court ... is likely to adopt in the future.

Wright & Miller, Federal Practice Sec. 4507, at 100-03 (emphasis added). Numerous decisions of this Circuit have repeated, in some form or another, the rule of law stated by Professors Wright and Miller. For example, we recently explained that where the Mississippi Supreme Court has not expressly addressed an issue, this court "must ... do what a lower Mississippi court would do, predict the course of the Mississippi Supreme Court.... In that effort, '[a]bsent evidence to the contrary, we presume that the Mississippi courts would adopt the prevailing rule if called upon to do so.' " Turbo Trucking Company v. Those Underwriters at Lloyd's London, 776 F.2d 527, 529 (5th Cir.1985) (quoting Hensley v. E.R. Carpenter Co., 633 F.2d 1106, 1109 (5th Cir.1980)) (citation omitted) (bracket in original). See also Nobs Chemical, U.S.A., Inc. v. Koppers Co., Inc., 616 F.2d 212, 214-15 (5th Cir.1980) (looking to treatises and decisions in other states for guidance when there was no state law "directly on point").

Further, although the district court did not squarely resolve the issues we certified to the Mississippi Supreme Court and which we now confront, it did overrule defendants' objections to the jury instructions, deny their motions for directed verdict and for judgment notwithstanding the verdict, and enter judgment on the verdict in question. It therefore must be noted that we also give "special weight ... to the determination of the district court judge who is familiar with local law." Green, 612 F.2d at 214. See also Acree v. Shell Oil Co., 721 F.2d 524, 525 (5th Cir.1983) ("district court's interpretation of state law will not be disturbed on appeal unless it is clearly wrong"); Smith v. Mobil Corp., 719 F.2d 1313, 1317 (5th Cir.1983) (reviewing court must "apply state substantive law" and extend "great weight" to legal conclusions of district judge); Avery v. Maremont Corp. 628 F.2d 441, 446 (5th Cir.1980) ("[W]hen state law is uncertain, we are hesitant to second guess the federal district court judge.").

With these principles in mind, we proceed to decide the issues presented as would a Mississippi court.

II. PUNITIVE DAMAGES.

Johns-Manville ("JM") and Raybestos-Manhattan ("Raybestos"), joined by the United States as amicus, argue that punitive damages should and would be disallowed by the Mississippi Supreme Court in this case. First, JM and Raybestos4 maintain that punitive damages are not available (or ought not be available),5 as a matter of law, in cases of strict liability. Second, pointing to the specific and well-defined policy goals which punitive damages are designed to serve under Mississippi law, the defendants and the United States urge that punitive damages are not available as a matter of law in the context of a mass tort,6 and that even if they are, the evidence was insufficient to submit the issue of punitive damages to the jury or to support the jury's verdict.

A. Punitive Damages and Strict Liability.

The defendants point out that the Mississippi Supreme Court has not expressly held that punitive damages are available in cases of strict liability. They then contend that punitive damages would not be allowed. The defendants reason that under Mississippi law, punitive damages require a showing of intentional misconduct or gross negligence by the producer, which is conceptually inconsistent with strict liability in tort since strict liability focuses on the product, not the producer.

This argument is fundamentally flawed. The fact that a plaintiff proceeds under a theory of strict liability does not bar that plaintiff from also introducing evidence of the defendant's gross and wanton misconduct, for which the defendant, under Mississippi law, deserves punishment in the form of punitive damages. As Judge Higginbotham, now a member of this court, wrote as a district judge in a Texas diversity case:

The meaning of the argument that strict liability and recovery of punitive damages are conceptually incompatible is not clear. Certainly one is said to be a no fault and the other a fault concept.... The bases of recovery for strict liability and exemplary damages are different. They are independent concepts. The purpose of one is compensation and the purpose of the other is deterrence. The focus of one is redistribution of loss and the focus of the other is punishment.... Because they are different concepts, their differences in premises and purposes are beside the point....

In sum, simultaneous pursuit of actual damages bottomed on principles of strict liability and exemplary damages bottomed on fault concepts are essentially matters of trial efficiency and presents no true substantive issues.

Maxey v. Freightliner Corp., 450 F.Supp. 955, 961-62 (N.D.Tex.1978), aff'd, 623 F.2d 395 (5th Cir.1980), on reh'g, 665 F.2d 1367 (5th Cir.1982), appeal after remand, 722 F.2d 1238 (5th Cir.), modified and reh'g denied, 727 F.2d 350 (5th Cir.1984).

A plaintiff who elects to proceed under a strict liability theory does so merely in order to facilitate a finding of liability for compensation. See, e.g., Jackson I, 727 F.2d at 511-15. It remains necessary, however, for the plaintiff to demonstrate much more before he is entitled, under Mississippi law, to punitive damages. The plaintiff must establish that the defendants' conduct was wanton, reckless, or indifferent to the rights of others. See, e.g., Sheffield v. Sheffield, 405 So.2d 1314 (Miss.1981); Standard Life Ins. Co. of Indiana v. Veal, 354 So.2d 239, 247 (Miss.1977). As another court has noted:

[T]here is no theoretical problem in a jury finding that a defendant is liable because of the defectiveness of a product and then judging the conduct of the defendant in order to determine whether punitive damages should be awarded on the basis of "outrageous conduct" in light of the injuries sustained by the plaintiff.... By dispensing with the need to prove fault for purposes of establishing liability under section 402A, the law of strict liability does not preclude consideration of "aggravated fault," if the plaintiffs can properly meet their burden of demonstrating sufficient evidence of the defendant's outrageous conduct.

Neal v. Carey Canadian Mines Ltd., 548 F.Supp. 357, 378 (E.D.Pa.1982), aff'd, 760 F.2d 481 (3d Cir.1985).

In this case, Jackson did demonstrate much more than was needed to recover compensatory damages under strict liability. See infra note 12. We do not believe that the Mississippi Supreme Court would regard this evidentiary showing as irrelevant, or deny Jackson the punitive damages to which the jury found him entitled on the basis of this evidence, merely because Jackson rooted his liability claim in a theory of strict liability.

Not a single Mississippi case supports the defendants' theory.7 On the contrary, virtually every court to have considered this matter has ruled that punitive damages are permissible in strict liability cases. For example, the following decisions have permitted punitive damage awards in strict liability, asbestos-related cases: Johns-Manville Sales Corp. v. Janssens, 463 So.2d 242 (Fla.App.1984), review denied, 467 So.2d 999 (Fla.1985); Froud v. Celotex Corp., 107 Ill.App.3d 654, 63 Ill.Dec. 261, 437 N.E.2d 910 (1982), rev'd on other grounds, 98 Ill.2d 324, 74 Ill.Dec. 629, 456 N.E.2d 131 (1983); Brotherton v. Celotex Corp., 202 N.J.Super. 148, 493 A.2d 1337 (1985); Moran v. Johns-Manville Sales Corp., 691 F.2d 811 (6th Cir.1982) (Ohio law); Thiry v. Armstrong World Industries, 661 P.2d 515 (Okla.1983); Martin v. Johns-Manville Corp., 322 Pa.Super. 348, 469 A.2d 655 (1983), vacated on other grounds, 494 A.2d 1088 (Pa.1985); Cathey v. Johns-Manville Sales Corp., 776 F.2d 1565, 1569 (6th Cir.1985) (applying Tennessee law). A New Jersey state court, considering precisely those issues before us now, concluded that in every jurisdiction where the argument that punitive damages are incompatible with strict liability had been raised, it was decided that punitive damages are in fact permitted. Fischer v. Johns-Manville Corp., 193 N.J.Super. 113, 472 A.2d 577, 582-83 (App.Div.), certif. granted, 97 N.J. 598, 483 A.2d 137 (1984). See also Owen, Punitive Damages in Products Liability Litigation, 74 Mich.L.Rev. 1257, 1269-71 (1976) (use of punitive damages in strict liability cases is "established," and "there is no sound reason for not allowing a plaintiff seeking punitive damages to show a greater culpability for that purpose than he must for his underlying theory of compensatory liability"). Given the principles which guide our inquiry, see supra Part I, it is germane "that the Hawaii, Indiana, Missouri, Pennsylvania, South Carolina, Tennessee and Virgin Island cases all reflect the prediction by federal courts in diversity actions that the state whose law governed and which had not yet itself addressed the issues would permit punitive damages in products liability actions." Id. at 583.8 We must assume that a Mississippi court would follow this rule that prevails by an overwhelming margin.

The position urged by the defendants would represent a significant development in principles of tort law. To carve out a strict liability exception to punitive damages would be to make new Mississippi law. That is not our role as a diversity court.

B. Punitive Damages in the Mass Tort Case.

The defendants attempted at two different points in the trial to convince the district court that this case was not appropriate for an award of punitive damages. First, pursuant to Fed.R.Civ.P. 51, they objected to any jury instruction on punitive damages as a matter of policy, contending that punitive damages should not be available in a "mass tort" product liability action. Further, they contended that even if punitive damages might be available as a matter of law, the evidence in this case was insufficient to entitle the plaintiff to have the issue submitted to the jury. The trial judge overruled the objections. Second, after the jury awarded the plaintiff punitive damages, the defendants moved for a judgment notwithstanding the verdict or for a new trial, Fed.R.Civ.P. 50, simply repeating their policy argument that punitive damages should not be available in a mass tort case as a matter of law--the same argument which had already been rejected by the district judge. The district judge again rejected the defendants' argument, and denied the motion. We conclude that the district judge properly overruled the defendants' objections to the punitive damages instruction, and that the defendants were not entitled to a judgment notwithstanding the verdict or a new trial. The trial court properly declined the defendants' invitation to construe the law of Mississippi to prevent an award of punitive damages in a mass tort case as a matter of law. Further, the evidence introduced at trial was sufficient to allow the issue of punitive damages to go to the jury and fully supports the jury's award.

1. Availability of Punitive Damages in a Mass Tort Case as a Matter of Law.

The defendants argued before the instructions were given that the punitive damages issue should not go to the jury as a matter of law, and, after failing in that, they contended that the punitive damages award should be vacated. The defendants offered the identical legal theory in support of their objections to the jury instruction on both occasions: The uniqueness of the factual context in a mass tort case makes punitive damages inappropriate as a matter of law. As in any appeal involving a challenge to the accuracy or sufficiency of jury instructions as a matter of law, the question that we review is whether the jury instructions were a fair and accurate description of Mississippi law on punitive damages, or whether the defendants' objection to the instructions pursuant to Fed.R.Civ.P. 51 should have been upheld. Bass v. International Brotherhood of Boilermakers, 630 F.2d 1058, 1062 (5th Cir.1980) (role of court reviewing legal sufficiency of jury instructions in diversity case is to examine applicable state law); Rohner, Gehrig & Co. v. Capital City Bank, 655 F.2d 571, 580 (5th Cir.1981) (in reviewing claim of error of law in jury instructions in diversity case, court evaluates accuracy of substance of charge under controlling state law); see generally 5A Moore's Federal Practice p 51.06 (no reversible error if jury is given full statement of applicable law).9

The defendants cite no Mississippi cases to support their contention that punitive damages are unavailable in what they state is a mass tort case.10 The defendants have not referred to any Mississippi decision which has even swayed in the direction of changing the rules in a mass tort case. In terms of suggesting how a Mississippi court would view their policy argument that is clearly at odds with settled tort principles, the defendants' silence is conspicuous and enlightening.

The focus of the defendants' argument is that the policies justifying punitive damages in Mississippi are not implicated in the mass tort case. They conclude that punitive damages should therefore be unavailable as a matter of law. The defendants note correctly that under Mississippi law, plaintiffs have no "right" to recover punitive damages. See, e.g., Tideway Oil Programs, Inc. v. Serio, 431 So.2d 454, 461 (Miss.1983). Rather, punitive damages are granted only in "extreme" cases, Snowden v. Osborne, 269 So.2d 858, 860 (Miss.1972), and they "should be allowed only with caution and within narrow limits," Standard Life Ins. Co. of Indiana v. Veal, 354 So.2d 239, 247 (Miss.1977). The law authorizes punitive damage awards somewhat reluctantly, because they alter the settled principle that a remedy in tort should simply make the plaintiff whole. However, greater societal concerns justify punitive damages in the exceptional case, because in extreme circumstances wrongdoers deserve punishment both as an expression of society's disfavor of their actions "and as an example so that others may be deterred from the commission of similar offenses." Snowden, 269 So.2d at 860. Further, punitive damages reward individuals who serve as "private attorneys general" in bringing wrongdoers to account. Veal, 354 So.2d at 247. Cf. Smith v. Wade, 461 U.S. 30, 103 S.Ct. 1625, 1639, 75 L.Ed.2d 632 (1983) (discussing purposes of punitive damages); Restatement (Second) of Torts Sec. 908(1) (exemplary damages punish outrageous conduct and deter actor and others from similar conduct in future).

Given these specific functions which punitive damages serve, the defendants and the United States insist that the Mississippi Supreme Court would not allow them here. As JM sums up Mississippi law:

Mississippi courts ... neither regard punitive damages as a right to which plaintiffs are entitled [citing Tideway ] nor demonstrate such a callous disregard for the results of punitive damages which result in the financial destruction of a defendant [citing T.C.L. Inc. v. Lacoste, 431 So.2d 918 (Miss.1983) ]. Rather, the Mississippi courts have recognized a duty for both trial and appellate courts to scrutinize carefully all punitive damages cases to be sure that societal interests are served and that punitive damages are not awarded except in the most extreme cases where the plaintiff is not motivated by vindictiveness, reprisal, or greed.

JM's Brief Following Denial of Certification at 15-16 (hereinafter "JM's brief").

The defendants' counsel asserted to the trial judge that punitive damages should not be awarded since multiple punitive damage awards might preclude future plaintiffs from recovering even compensatory damages.11 They pointed out to the trial judge that punitive damages serve to punish defendants, and contended that, as a result of the voluminous asbestos litigation, they have already been punished enough. They stated to the trial judge that punitive damages serve to motivate "private attorneys general" to bring suit, but argued that persons injured by asbestos have motivation enough to sue. Finally, they acknowledged to the trial judge that punitive damages deter wrongful conduct, but they insisted that the asbestos litigation is deterrence enough.

The defendants' analysis neglects to pay any attention to the heavy burden the plaintiff must meet--and, as we indicate infra, the burden Jackson did meet--before the punitive damage issue may properly be submitted to the jury and punitive damages may be awarded. That heavy burden is designed to take into account the interests of both society and defendants by ensuring that punitive damages are awarded in only the unusual case where the defendant must be made an example because of its especially egregious behavior.

In Mississippi, a jury may award punitive damages only if the plaintiff succeeds in demonstrating that the defendant was grossly negligent or that the defendant's conduct was especially opprobrious, see, e.g., Commodore Corp. v. Bailey, 393 So.2d 467 (Miss.1981); Sheffield v. Sheffield, 405 So.2d 1314 (Miss.1981), or if it finds that the defendant's behavior exhibited "gross disregard" for the rights of the plaintiff. National Mortgage Co. v. Williams, 357 So.2d 934 (Miss.1978). In Veal, the leading case on punitive damages, the Mississippi Supreme Court "recognize[d] that punitive damages are assessed as an example and warning to others and should be allowed only with caution and within narrow limits." 354 So.2d at 247. Then, before examining whether "the evidence support[s] an award for punitive damages," the court made plain that " '[p]unitive damages may be recovered for a willful and intentional wrong, or for such gross negligence and reckless negligence as is equivalent to such wrong.' " 354 So.2d at 247 (quoting Seals v. St. Regis Paper Co., 236 So.2d 388, 392 (Miss.1970)). In this case, the district court's charge to the jury clearly and accurately instructed that punitive damages could be returned only if the jury believed that the requisite misconduct had been demonstrated.12

Yet the defendants do not directly contend that the jury instructions inadequately or incorrectly summarized the existing legal rules, which is the usual issue in a Rule 51 objection to jury instructions. See Bass, 630 F.2d at 1062. They argue instead that "facts" not a part of this record mandate a drastic change in the law of remedies. They urge us to determine that when a defendant injures tens of thousands and manifests reckless disregard for the victims' lives and welfare, punitive damages should be unavailable as a matter of law.

We believe that the Mississippi Supreme Court would not deny to its own citizens the right to recover that which citizens of dozens of other states are already entitled to recover, and that the district court correctly charged the jury on the applicable legal principles. As Chief Judge Clark, dissenting in Jackson II, noted: "Despite the absence of clear controlling state court precedent as to whether punitive damages should be available in product liability actions ..., there can be no doubt that the Supreme Court of Mississippi would hold that Mississippi citizens should not be denied the right to claim punitive damages awards and to seek recovery for probable future diseases ... now accorded to citizens in other states." 750 F.2d at 1334 (emphasis added).

There appears to be no Mississippi case law directly on the issue of the availability of punitive damages in the mass tort context. Absent the controlling authority of the Mississippi Supreme Court or the guiding authority of lower Mississippi courts, we must look to the jurisprudence of other states in formulating substantive law, as a Mississippi court would. See, e.g., Hall v. Hilbun, 466 So.2d 856 (Miss.1985) (examining development of medical malpractice principles in other states); Lucas v. Mississippi Housing Authority No. 8, 441 So.2d 101, 106-07 (Miss.1983) (Walker, J., specially concurring) (reviewing negligence laws of numerous states).

The simple fact of the matter is that no appellate court has accepted the defendants' theory in a reported decision. In Oregon, for example, the Supreme Court recently ruled in a "mass tort" case that the "financial interests of the malicious and wanton wrongdoer must be considered in the context of societal concern for the injured and the future protection of society." State ex rel. Young v. Crookham, 290 Or. 61, 618 P.2d 1268, 1271 (1980). An Illinois court recently explained that it did "not believe that defendants should be relieved of liability for punitive damages merely because, through outrageous misconduct, they may have managed to seriously injure a