Opinion
CIVIL ACTION No. 03-0398, C/W 03-0487, C/W 03-0770, C/W 03-0930 SECTION: E/5
May 9, 2003
RULING ON MOTIONS
Plaintiffs previously filed a motion before the Judicial Panel for Multidistrict Litigation (MDL Panel) to consolidate this action with other similar actions currently pending in this and other federal district courts, for consolidated pretrial proceedings as a multidistrict litigation. The MDL Panel has scheduled a hearing on the motion for May 29, 2003.
Plaintiffs have filed in this Court the following motions: (1) Motion for Appointment of Liaison Counsel and Plaintiffs' Committee (r.d. #16); (2) Motion to Certify Class Action (r.d. #55); and (3) Motion to Stay proceedings pending the MDL Panel's ruling on plaintiffs' motion to transfer and consolidate these "Welding Rod" cases (r.d. #64). Alternatively to their motion to stay, plaintiffs request leave of Court to amend their petition, if necessary.
Seventeen of the 24 named defendants have filed motions to dismiss pursuant to Fed. Rules Civ. P. 12(b)(6) and 9(b), as follows: Airgas-Gulf States, Inc. (r.d. #25); Union Carbide Corp. (r.d. #26); A.O. Smith Corporation (r.d. #27); Sandvik, Inc. (r.d. #28); Lincoln Electric Company (r.d. #29); Viacom, Inc. (r.d. #30); Allegheny Technologies Incorporated, fka TDY Industries, Inc., fka Teledyne Industries, Inc. (r.d. #31); Praxair, Inc. (r.d. #32); BOC Group, Inc., fka Airco, Inc.'s Motion to Dismiss (r.d. #33); ESAB Group, Inc. (r.d. #34); Hobart Brothers Company (r.d. #35); Eutectic Corporation (r.d. #36); Select Arc, Inc. (r.d. #37); Caterpillar Inc. (r.d. #44); General Electric Company #47); J.W. Harris Company (r.d. #56); Deloro Stellite Inc.'s Motion to Dismiss (r.d. #57).
All motions are opposed, and were submitted on the an earlier date.
Plaintiffs' Motion for Appointment of Class Counsel and Plaintiff's Committee was heard at oral argument at an earlier date, at which time the Court deferred ruling on plaintiffs' motion, and denied defendants' motions to dismiss the motion.
BACKGROUND
This is a purported class action personal injury claim for damages from inhalation of welding fumes containing manganese. At ¶ 1, the compliant describes the "purported class" of plaintiffs as follows:All persons and their spouses who reside, resided, work
and/or worked in the States of Louisiana, Mississippi, Alabama, Texas and Arkansas, and are or were exposed to welding fumes containing the air borne metal/chemical/ substance manganese, and who sustained direct and/or consequential personal injury, fear, fright, or other damage or compensable affect.
This group of plaintiffs filed suit in Civil District Court for Orleans Parish; defendants removed to federal court.
Several related (virtually identical) oases filed in this district have been transferred to Section "E" and consolidated with this lead case: Variste v. Lincoln Electric Co., et al, C.A. 03-0487; Alexander v. Lincoln Electric Co., et al, C.A. 03-0770; and Addison v. Lincoln Electric Co., et al, C.A. 03-0930. Defendants in these consolidated cases, the same defendants in the lead case, have filed a motion to adopt their Motions to Dismiss that are pending in this case, and for the court to apply its ruling to the similarly situated plaintiffs in the consolidated cases. R.d. #83. Because the complaints are virtually identical, in the interest of judicial economy and efficiency, the motion is granted.
All twenty-four named defendants are diverse. (There is a John Doe defendant, No. 25.) According to ¶ 13 of the complaint, "All of the Defendants are or were manufacturers, sellers, suppliers or large industrial consumers of welding products." Nevertheless, two of the named defendants are trade associations. One is the National Electric Manufacturers Association ("NEMA"), described by plaintiffs as "a trade organization comprised of manufacturers that has a section devoted to the manufacturer [sic] of welding products knows as `NEMA Electric Welding Section' or `NEMA Arc Welding Section'". Complaint, ¶ 2(F) 16; the Arc Welding Section is referred to in the complaint as "AWS". Second is The Ferroalloys Association ("TEA"), described as: "an association and industry advocacy group that includes the producers of chromium, manganese, silicone, and vanadium ferroalloys that sponsored a manganese subcommittee that includes representative [sic] from welding manufacturers, the AWS and the NEMA". Complaint ¶ 2(G) 17. paragraph 17 also alleges that the "TEA's membership included management representatives of companies that produce welding products and large consumers that purchase the products for use in their operations."
Plaintiffs' factual allegations state that beginning in 1937 to the present, acting through the trade associations and their committees that they controlled, "the Defendants undertook studies, issued product labels and other health and safety information, and issued specifications and standards for ventilation, safety equipment, and other precautionary measures." Complaint, ¶ 21. Plaintiffs allege that manganese welding fumes cause neurological injury, that defendants knew and concealed the dangers of manganese welding fumes from plaintiffs and other "similarly situated" workers like plaintiffs, and that as a result, those workers and their families suffered damages. Complaint, ¶¶ 4-62.
ANALYSIS
I. Plaintiffs' motions
The Court addresses plaintiffs' last filed motion first: the motion to stay all pretrial motions, including plaintiffs' motions to appoint liaison counsel and a plaintiffs' committee, and to certify a class action, pending the MDL Panel's ruling on their motion to transfer and consolidate these welding rod cases.
The purpose of 28 U.S.C. § 1407, the statute that established the Judicial Panel for Mulitdistrict Litigation, is "to permit the centralization in one district of all pretrial proceedings in civil actions involving one or more common questions of fact pending in different districts", and "to eliminate potential conflicting rulings by coordinate district and appellate judges." Falqoust v. Microsoft Corporation, 2000 WL 462919 at *1 (E.D.La. 4/19/2000) (citations omitted). The three factors courts apply to decide whether a stay should be granted are: (1) hardship and inequity on the moving party without a stay; (2) prejudice to the non-moving party with a stay; and (3) judicial economy. Id., at *2.
Plaintiffs argue that it would be in the interests of judicial economy and judicial efficiency to stay all pretrial proceedings pending a ruling by the MDL Panel on whether the matter should be transferred and consolidated for MDL pretrial proceedings. They claim that they will suffer hardship if they are required to participate in pretrial proceedings that may have to be duplicated before the MDL court, and that the defendants will suffer no prejudice from a stay. Defendants argue that their motions to dismiss are threshold motions which have been fully briefed and should be decided without awaiting a ruling of the MDL Panel. They argue that they would be prejudiced if their motions are stayed when it may not be necessary for them to litigate before the MDL court at all if those motions have merit.
As to plaintiffs' motions to appoint class counsel and a plaintiffs' committee, and to certify a class, the Court agrees that no party would be prejudiced or suffer hardship if these two motions are stayed pending a ruling by the MDL. Moreover, staying those motions would serve the interests of judicial economy and efficiency as the MDL Panel can determine if centralization of the cases on a nationwide basis is appropriate. Plaintiffs' motion to stay is granted as to their motions to appoint class counsel and a plaintiffs' committee, and to certify a class.
As to the defendants' motions to dismiss, the Court concludes otherwise. Plaintiffs have specifically alleged only state law claims. Any federal court considering those claims must apply Louisiana law.Guaranty Trust Co. of New York v. York, 326 U.S. 99, 112, 65 S.Ct. 1464, 1471 (1945); Erie R. Co. v. Tomokins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). This Court has jurisdiction to decide any issues presented to it, even pending an MDL ruling transferring the case. Rule 1.5, Rules of Procedure of the Judicial Panel on Multidistrict Litigation. Plaintiffs need not duplicate any of these pretrial proceedings at the MDL level if the threshold motions are decided here. But, defendants would be prejudiced by the delay of dismissal of plaintiffs' claims against them if dismissal is appropriate at this early stage of the proceedings. Moreover, judicial economy and efficiency will be served by disposing of those motions as a preliminary matter. Plaintiffs' motion to stay is denied as to defendants' motions to dismiss.
II. Defendants' motions to dismiss pursuant to Fed. Rules Civ. P. 12(b)(6) and 9(b).
Rule 9(b) motions to dismiss for failure to plead fraud with particularity are treated as Rule 12(b)(6) motions to dismiss for failure to state a claim. U.S. ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 901 (5th Cir. 1997). Dismissal of a complaint pursuant to F.R.Civ.P. rule 12(b)(6) is proper only if the pleadings on their face reveal beyond a doubt that the plaintiff can prove no set of facts that would entitle him to relief, or if an affirmative defense or other bar to relief appears on the face of the complaint. Conlev v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Garrett v. Commonwealth Mortq. Corp. of America, 938 F.2d 591, 594 (5th Cir. 1991). Moreover, the Court must assume that the allegations in plaintiff's complaint are true, and must resolve any doubt regarding the sufficiency of plaintiff's claims in his favor. Fernandez-Montes v. Allied Pilots Ass'n., 987 F.2d 278 (5th Cir. 1993). Nevertheless, a plaintiff must plead specific facts, not mere conclusional allegations, to avoid dismissal for failure to state a claim. Collins v. Morgan Stanley Dean Whittier, 224 F.3d 496, 498 (5th Cir. 2000).
Plaintiffs' complaint alleges four causes of action: (1) conspiracy and fraudulent concealment; (2) negligence; (3) negligence-Sale of product; and (4) strict liability-sale of an unreasonably dangerous product.
A. Plaintiffs' first cause of action for conspiracy and fraudulent concealment
In Williams v. WMX Technologies, Inc., 112 F.3d 175, 177 (5th Cir. 1997), the Fifth Circuit explained as follows:
Pleading fraud with particularity in this circuit requires "time, place and contents of the false representations, as well as the identity of the person making the misrepresentations and what [that person] gained thereby." Tuchman v. DSC Communications Corp., 14 F.3d 1061, 1068 (5th Cir. 1994); see also Medler v. Morris, 27 F.3d 1097, 1100 n. 5 (5th Cir. 1994); Sushany v. Allwaste, 992 F.2d 517, 520 (5th Cir. 1993)See also Thompson, 125 F.3d at 903 ("At a minimum, Rule 9(b) requires that a plaintiff set forth the `who, what, when, where, and how' of the alleged fraud.")
Although there is some variation among the individual defendants' memoranda, the essence of all motions to dismiss is that plaintiffs' claims alleging conspiracy and fraudulent concealment as to all defendants are not pled with the specificity required by Rule 9(b). Defendants' motions and memoranda at record documents 25 through 37 are virtually identical, and argue that all of plaintiffs' claims against them are premised on the allegation of fraud, and all must therefore be dismissed. This is not accurate. Plaintiffs' second and third causes of action allege simple negligence. At ¶¶ 76 and 86, the complaint alleges that "[t]he Defendants breached their duty of reasonable care and were negligent, without regard to whether the acts were intentional, knowing, or reckless." The fourth cause of action alleges strict liability, but in Louisiana is actually a products liability claim. The issues relating to these claims will be discussed infra.
Defendants' argue that plaintiffs have failed to identify a single one of them as a participant in any of the alleged fraudulent activity. While not identical, Deloro Stellite's memorandum makes substantially the same arguments. In addition to those arguments, General Electric's memorandum argues that Fifth Circuit jurisprudence requires that Rule 9(b) particularity must be pled on a defendant by defendant basis, citingUnimobil 84, Inc. v. Spurney, 797 F.2d 214, 217 (5th Cir. 1986). Caterpillar moves for dismissal only of plaintiffs' first and second causes of action against it. Caterpillar asserts essentially the same arguments made by the other defendants' in support of its motion to dismiss the fraudulent concealment claim.
The plaintiffs actually filed oppositions to only two of the motions to dismiss, those of General Electric and Caterpillar. The Court nevertheless construes the oppositions as inclusive of all motions to dismiss. Plaintiffs argue that their complaint meets the Rule 9(b) standard because it alleges that all defendants knew or should have known about the dangers that manganese welding rods posed to welders; that all defendants participated in the conspiracy to conceal those dangers from the welders using the rods; and, that those defendants who did not attend each trade association meeting received copies of written minutes as a regular practice.
At ¶¶ 25-40, plaintiffs' complaint alleges that from as early as 1937 to present, based on a 1932 medical article, a safety booklet published by an insurance company in 1937 that referenced the 1932 article, a 1944 claim of manganese poisoning by a welder, and in later years, various technical documents, literature, and studies related to the activities of various committees of NEMA and AWS, "many or all defendants" had "received notice" or had actual knowledge of the relationship between welding fumes containing manganese and neurological injury. At ¶¶ 41-62, the complaint identifies specific meetings of various NEMA and AWS committees or sections at which "Defendants in attendance agreed to and did intentionally, knowingly, and recklessly conceal known hazards of welding fumes" through various committee activities and publications.
The crux of plaintiffs fraudulent concealment claim is stated at ¶¶ 66, 67 and 68 of the complaint alleging that "the Defendants" (1) participated in furthering the conspiracy by delegating responsibility to and acting through the trade association committees; (2) committed overt and tortious acts; and (3) "[u]pon information and belief", committed other overt and tortious acts through letters, memoranda, publications, meetings, telephone conversations, and other forms of communication directly with the trade associations. Plaintiffs cite U.S. ex rel Russell v. Epic Healthcare Management, 193 F.3d 304 (5th Cir. 1999), as holding that when the facts relating to the alleged fraud are peculiarly within the perpetrator's knowledge, the Rule 9(b) standard is relaxed and fraud may be pled upon information and belief, provided the complaint sets forth the factual basis for his belief.
Russell was a False Claims Act suit. Russell argued that the information necessary to provide sufficient particularity was within the exclusive control of the defendants, and a confidentiality agreement prevented her from copying the information while she was employed. The Fifth Circuit reiterated the rule that fraud may be pled on information and belief provided the plaintiff sets forth the factual basis for that belief. Id., at 308. The Court next cited Thompson as warning that the exception to Rule 9(b)'s particularity requirement "must not be mistaken for license to base claims of fraud on speculation and conclusory allegations." Id. Because the Court found that the documents Russell required were also in the possession of other entities, she was not entitled to the relaxed standard. Id.
In Thompson, also a False Claims Act suit, Thompson's complaint alleged that defendants had submitted false claims for medically unnecessary services. His complaint alleged that "[i]n reasonable probability, based on statistical studies" approximately 40% of the claims submitted were not medically necessary. Thompson, 125 F.3d at 903. He failed to identify any specific physician who referred patients for medically unnecessary services, nor did he identify any specific claims for medically unnecessary services that were submitted by defendants. The Fifth Circuit found that Thompson's allegations amounted to "nothing more than speculation, and thus fail to satisfy Rule 9(b)." Id.
Plaintiffs further argue that Rule 9(b) notwithstanding, their complaint should be held to the "short and plain statement of the claim" requirements of Rule 8, and specifically, Rule 8(f)'s admonition that "[a]ll pleadings shall be so construed as to do substantial justice." Plaintiffs support their argument with a quote from Guidry v. U.S. Tobacco Co., Inc., 188 F.3d 619 (5th Cir. 1999), as follows in part:
As distinguished from conspiracy, Rule 9(b) expressly requires that "the circumstances constituting fraud or mistake shall be stated with particularity." Fed.R.Civ.P. 9(b). However, Official Form 13 demonstrates that even fraud may be pleaded without long or highly detailed particularity. 12A Wright Miller, App. D Form 13 ("Defendant C.D. on or about ___ conveyed all his property, real and personal [or specify and describe] to defendant E.F. for the purpose of defrauding plaintiff and hindering and delaying the collection of the indebtedness evidenced by the note above referred to.)Id., at 632. Reference to the quoted example offered in Form 13 does not support plaintiffs argument. In the example, each defendant is specifically identified ("C.D." and "E.F."), along with what specific act each did (C.D. conveyed all his property, E.F. received the property), and how that act contributed to the fraud (hindering and delaying the collection of the indebtedness)
In Guidry the plaintiff alleged a civil conspiracy. After stating that a civil action for conspiracy need only comply with the pleading requirements of Rule 8(a), the court observed that pleading "evidence" is not required. Id., at 631-32. The court then discussed at length whether plaintiffs' complaint, while meeting the Rule 8(a) requirements, was sufficient to make a prima facie showing of minimum contacts by defendants such that defendants were subject to personal jurisdiction.Id. The quote is a brief portion of that discussion. Rule 9(b)'s particularity requirement for pleading fraud was not an issue.
The Fifth Circuit observed in Williams that an allegation of fraud is an exception to the general rule that issues were to be defined by discovery, not pleading. Williams, 112 F.3d at 178.
Rule 9(b) demands a larger role for pleading in the
pretrial defining of such claims. . . . In short, we apply the rule with force, without apology. At the same time, we read Rule 9(b) as part of the entire set of rules, including Rule 8(a)'s insistence upon `simple, concise and direct' allegations.Id. Moreover, in Unimobil, plaintiff sued two officers of a corporation alleging that the defendants converted and diverted assets belonging to the plaintiff. Id., 797 F.2d at 215. The Fifth Circuit held that plaintiffs' general allegations, which did not state with particularity what representations each defendant made, did not meet Rule 9(b)'s particularity requirement. Id., at 217, citing 2A MOORE'S FEDERAL PRACTICE ¶ 9.03, pp 9-20-24 (2d ed. 1985).
Even assuming that the complaint's "upon information and belief" pleading is acceptable as to the alleged "other overt and tortious acts" unknown to plaintiffs at this time, the complaint did identify several specific instances of the "what, when, where and how", but not the "who". In the 54 paragraphs devoted to plaintiffs' factual allegations against defendants, not one defendant is identified as a member of NEMA, AWS or TFA. No employee, agent or representative of any defendant is identified as having been in attendance at any NEMA or AWS committee meeting, nor as having received notice or information relating the hazards of welding fumes, nor as having participated in any specific overt or tortious act. Plaintiffs have not explained why they cannot identify defendants, or their employees or representatives, who attended the specific meetings identified in the complaint, or participated in the specific activities identified in the complaint, much less even identify which defendants were or are actually members of NEMA, AWS or TFA.
Plaintiffs ask this Court to presume, based on each defendant's status as a manufacturer, seller, distributor or large consumer of welding products, that all must have been members of NEMA, AWS and/or TEA, and therefore all must have known about and participated equally in the alleged fraudulent concealment of the hazards of welding fumes. This is nothing more than speculation which does not meet the particularity requirement of Rule 9(b).
III. Plaintiffs' negligence causes of action.
At ¶ 81, the complaint identifies by name 16 of the defendants as having manufactured, sold or distributed welding products that were use at the plaintiffs' work sites. Caterpillar is not included in the list. Caterpillar's motion and memorandum describes itself as a "consumer" of such products, and as such, not a subject of plaintiffs' third and fourth causes of action. Caterpillar also argues that plaintiffs' second claim of negligence must be dismissed because Caterpillar owed no duty to plaintiffs.
In Louisiana, liability for negligence is determined pursuant to a duty-risk analysis. Smolensky v. McDaniel, 144 F. Supp.2d 611, 620 (E.D.La. 2001); Dave v. General Motors Corp, 720 So.2d 654, 659 (La. 1998). Plaintiffs allege that defendants made representations about the safety of the welding products plaintiffs used in their work, and that plaintiffs relied on those representations. Complaint, ¶¶ 70-74. The complaint states a claim for negligent misrepresentation. To succeed on a claim for negligent misrepresentation in Louisiana, a plaintiff must prove "`(1) a legal duty on the part of the defendant to supply correct information to the plaintiff, (2) a breach of that duty, and (3) damages to the plaintiff as a result of justifiable reliance on the misrepresentation." Smolensky, 144 F. Supp.2d at 621, citing LeMarie v. Lone Star Life Ins. Co., No. 00-0570, 2000 WL 1678009, at *7 (E.D.La. 2000) (emphasis in original) (citation omitted)
In the context of negligent misrepresentation claims, Louisiana courts have found that a duty to supply information may exist when third parties relied on misinformation supplied by the defendant. Smolensky, id., citing Commerce Indus. Ins. Co. v. Grinnell Corp., No. 97-803, 1999 WL 508357, at *2 (E.D.Lal 1999).
[The Louisiana Supreme Court in] Barrie extended a duty to a third party who was known to defendant as an intended user of its termite inspection reports. Although there was no privity between the homebuyer and the termite inspector, the homebuyer was a member of a "limited group for whose benefit and guidance the report was supplied."Smolensky, id., quoting Commerce Indus. Ins. Co., at id., citing Barrie v. V.P. Exterminators, Inc., 625 So.2d 1007, 1011 (La. 1993) (bold emphasis added by Smolensky). The question of duty, as part of the duty-risk analysis, is to be decided on a case by case basis. Id., at 621 (citation omitted). Liability for negligent misrepresentation "`is imposed by law based upon policy considerations due to the tortfeasor's knowledge of the prospective use of the information which expands the bounds of his reasonable care to encompass the intended user.'" Id., quoting Barrie, 625 So.2d at 1015. In Smolensky, the plaintiff claimed that she was injured because the defendant made false statements about her to the EEOC. The district court concluded that any duty it owed was to the EEOC, not to the plaintiff who did not rely on defendant's allegedly false statements to the EEOC.
Assuming that plaintiffs' allegations are true, as the Court must for purposes of Caterpillar's Rule 12(b)(6) motion, under Louisiana law plaintiffs have stated a cause of action against Caterpillar for negligence. However, as discussed earlier, other than describing its status as "a manufacturer, seller, distributor, or large industrial consumer of welding products", plaintiffs have not identified Caterpillar as a participant in the alleged negligent misrepresentation, nor described what Caterpillar is alleged to have done. Other than plaintiffs' broad allegations at ¶¶ 72 through 75 of the complaint that all defendants "assumed a duty" or "had a legal duty" to plaintiffs, and that all defendants knew or should have known of the hazards of their welding products, the complaint states no basis upon which Caterpillar individually, or any other defendant, could be held liable in negligence for plaintiffs' injuries.
Moreover, while none of the defendants directly addressed plaintiffs' third and fourth causes of action, the Louisiana Products Liability Act (LPLA) provides the exclusive theories of liability for manufacturers for damage caused by their products. La. R.S. 9:2800.52. Liability may be imposed upon the manufacturer only when a product is found to be unreasonably dangerous in construction or composition, design, because of an inadequate warning, or for non-conformity to an express warranty. La. R.S. 92800.54. Plaintiffs' fourth cause of action states a claim pursuant to the LPLA against the manufactures of welding rod products for failure to provide an adequate warning and for design defects, but they have not specifically identified the manufacturers. They must identify which defendants are manufacturers subject to the LPLA, and which are not, and are therefore subject to Louisiana's duty-risk negligence analysis.
In their opposition memoranda, plaintiffs ask alternatively that they be allowed amend to cure any defect in the complaint. A plaintiff's failure to meet Rule 9(b)'s pleading requirements should not automatically result in dismissal with prejudice to refiling. Hart v. Bayer Corp., 199 F.3d 239, 248 n. 6 (5th Cir. 1999) (citation omitted.) Unless the defect is simply incurable, or the plaintiff has failed to cure it after repeated opportunity to do so, leave to amend should be granted. Id. Fed.R.Civ.P. 15 (Leave to amend "shall be freely given when justice so requires.")
Accordingly,
IT IS ORDERED that plaintiffs' Motion to Stay (r.d. #64) is GRANTED as to plaintiffs' Motion for Appointment of Liaison Counsel and Plaintiffs' Committee (r.d. #16) and Motion to Certify Class Action (r.d. #55) and DENIED as to all defendants' Motions to Dismiss (r.d. ##25-37, 44, 47, 56 and 57); and,
IT IS FURTHER ORDERED that all defendants' Motions to Dismiss are DENIED at this time, with reservation of defendants' right to reurge the motions at a later date; and,
IT IS FURTHER ORDERED that plaintiffs may AMEND their complaint to plead fraud with particularity, and to specifically identify the status of each defendant, both as instructed in the body of this Order and Reasons, within thirty (30) days from the date of entry of this Order; and,
IT IS FURTHER ORDERED that this Order and Reasons applies to all complaints consolidated with this lead case.