Virginia’s Supreme Court Reverses $17 Million Verdict Against Ship Owner, Holds Punitive Damages as Unavailable

In Exxon Mobil Corp. v. Minton (No. 111775,Va. Sup.Ct.), the Virginia Supreme Court overturned a verdict of more than $17 million in favor of a shipyard worker on the grounds that the trial court improperly excluded evidence of the shipyard’s knowledge and conduct with respect to asbestos. Robert Minton worked for the Newport News Shipbuilding and Dry Dock Company (shipyard) from 1966 to 1977. During that time, Minton spent about half of his time aboard ships supervising and coordinating repairs. In 2009, he filed suit against several defendants, including Exxon, under the Longshore and Harbor Workers’ Compensation Act (LHWCA), alleging that his work aboard Exxon owned ships at the Shipyard caused him to be exposed to asbestos and eventually led to his diagnosis of mesothelioma. The jury found in favor of Minton and awarded him $12 million in compensatory damages, $430,963.70 in medical expenses, and $12.5 million in punitive damages, which the court reduced to $5 million. Exxon appealed on multiple grounds.

First, Exxon challenged the sufficiency of the evidence to establish that it violated its duty of care. The United States Supreme Court established in Scindia Steam Navigation Co. v. De Los Santos, 451 U.S. 156 (1981), that ship owners owe three separate duties to shipyard workers, the turnover duty, the duty of active control, and the duty to intervene. However, after a thorough analysis the court concluded that the evidence was sufficient for a reasonable jury to find that both the active control duty and the duty to intervene were owed to Minton and breached.

Exxon’s second challenge was to the sufficiency of the evidence presented to establish that Exxon’s breach caused Minton’s mesothelioma. The court affirmed the trial court on these grounds as well, based on evidence of daily exposure that would allow a reasonable jury to find that Exxon’s actions were a substantial contributing factor in Minton’s diagnosis of mesothelioma.

Exxon’s third challenge was to the lower court’s exclusion of evidence regarding the shipyard’s knowledge of the dangers of asbestos and its policies in place to protect the shipyard workers from the hazard. Exxon argued that the exclusion of such evidence gave the jury a false impression that Exxon had unique knowledge and was therefore the only actor with the ability to protect Minton. The court agreed.

The ship owner’s duty to intervene applies when a shipyard’s judgment is “obviously improvident,” and the ship owner both knew of the hazard and that it was continuing to be used and should have realized the hazard presented an unreasonable risk of harm to the men aboard the ship. The court reasoned that the duty to intervene relies in part on the acts or omissions of the plaintiff’s employer in improvidently allowing an unsafe condition to go unremedied. As such, a

jury must be able to consider evidence of the employer’s knowledge of the danger and ability to protect the employee. Until it is shown that the employer, who is presumed to have a higher level of expertise than the vessel owner, lacked the knowledge, intent, or ability to protect the employee, no duty to intervene can be attributed to the vessel owner, who ‘has no duty to anticipate inaction or carelessness of a ship repairer’.

Because the court could not determine from the record whether the jury found in favor of Minton based upon a violation of the duty to intervene the active control duty, the verdict was overturned.

Also of importance, the court held the LHWCA limits remedies under it to a negligence action and bars punitive damages. The court explained that punitive damages were available at common law and thus extend to maritime law claims absent congressional legislation to the contrary. However, the LHWCA grants exclusive remedies and therefore shows congressional intent to bar punitive damages.

The case offers good news for present and former ship owners. First of all, while the LHWCA does establish duties to warn, it is clear that theshipyard’s knowledge and actions to protect its own workers will be considered relevant to the ship owner’s potential liability. Second, the case very clearly indicates that punitive damages are not available against ship owners. With the unpredictability of that remedy, this will decision will be comforting to those in the shipping industry.