In recent months, silica litigation has developed two major trends, according to a report from Guy Carpenter & Co. As a large percentage of silica lawsuits have been filed in Texas and Mississippi, the study examines two decisions recently made in Texas courtrooms.
The risk and reinsurance firm's newest study is an update to its 2004 report, Silica: A Liigation Sandstorm. Although the 2004 report discussed the nature of silica claim exposure and the options for analyzing and responding to the risk, the update seeks to discern trends in the U.S. legal system, comments on the ultimate potential cost of silica litigation, and provides a review of the silica liability issue in Europe.
The Texas Supreme Court's ruling in Gomez v. Humble highlights one of the major trends. The court considered the bulk supplier defense, whether a supplier of an unreasonably dangerous product has a duty to warn a customer's employees. A lower appellate court had found that the supplier did have such a duty. The state's high court held that a duty to warn on the part of a silica supplier was dependent on whether the supplier could effectively reach its customers' employees. Because evidence on this issue was missing from the record, the court ordered a new trial.
The court further stated that the proper issue for it to decide was not whether Humble had a duty to warn Gomez, but whether silica flint suppliers had a general duty to warn their customers' employees. The court provided a list of factors to be considered as part of that question, including an evaluation of who best is able to prevent the harm. In remanding the case back for trial, the court concluded that the burden was on Humble to prove that a warning by the supplier could not reach its customers' employees effectively.
The ruling was not conclusive that the sophisticated user doctrine was a successful defense to Gomez' claims, but it did not shut the door on that possibility. "While this cannot be viewed as a complete victory for the bulk supplier defense, it did provide support for the doctrine in certain circumstances," the study's authors noted.
In the second decision, the Texas Supreme Court's Multi-district Litigation panel ordered pretrial consolidation of 71 cases filed in 55 district courts under the state's recently enacted Rule 13, which permits the panel to transfer civil actions involving common questions of fact. The transfer is based on the convenience of the parties and the promotion of "just and efficient conduct of related cases."
In many instances, consolidation of cases can be viewed as favorable to defendants, as it allows for more informed decisions on the part of an experienced jurist, the study noted. Eleven defendants opposed the consolidation, citing inconvenience and the fact that the current system has worked quite well, while 141 defendants remained silent on the issue. Only the actual rulings on the common issues will tell whether the consolidation represents a victory for Texas silica defendants, the study's authors predicted.
In terms of potential insured losses, Guy Carpenter has reviewed annual statements and other reports by major commercial lines insurance carriers and found little evidence on the size of the problem. Although silica frequently is mentioned as a cause for adding to loss reserves, no comprehensive data or size estimates were provided. Given the lack of information on industry losses, a review of health data constitutes a useful approach to gauging the size of the silica issue, according to the study.
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