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Overview

In a case governed by Texas law, the judge presiding over the federal asbestos multidistrict litigation ("MDL") recently granted a motion by Wilson Elser to dismiss 85 claims against two of the firm's clients. The plaintiffs had failed to comply with Chapter 90 of the Texas Civil Practice & Remedies Code, which requires asbestos claimants to file medical reports establishing that they satisfy criteria for impairment and causation. The court held, contrary to the plaintiffs' argument, that these criteria constitute a substantive legal rule that must be applied in a federal action governed by Texas law. This ruling carries significance beyond Chapter 90 and the federal asbestos MDL. For example, it will be useful in urging the federal MDL Court to apply similar criteria enacted by other states.

Background

In 1995, an asbestos lawsuit, King v. EI Dupont de Nemours & Co. et al., was filed in Jefferson County, Texas, on behalf of more than 100 plaintiffs. Defendants removed the lawsuit to the U.S. District Court for the Eastern District of Texas based on federal enclave jurisdiction, U.S. Const. Art. I. § 8 cl. 17, and, alternatively, federal officer jurisdiction.  28 U.S.C. §1442. The case was transferred to the federal asbestos MDL in the Eastern District of Pennsylvania. That court severed each claim into a separate action.

In 2005, the Texas Legislature enacted Chapter 90 of the Civil Practice & Remedies Code.  Chapter 90 establishes "medically accepted standards for differentiating between individuals with non-malignant asbestos related . . . disease causing functional impairment and individuals with no functional impairment." Chapter 90 enforces these standards by requiring asbestos plaintiffs to file medical reports establishing that they satisfy criteria for impairment and causation. When a plaintiff fails to file a complying report in a case filed after Chapter 90 took effect, the court must dismiss the claim. In cases filed before Chapter 90 took effect, claims by plaintiffs who have not filed complying reports are transferred to an inactive docket, where they remain until the plaintiffs file reports.

In October 2009, the MDL Court began entering docket control orders for the King plaintiffs. Two of Wilson Elser's asbestos clients moved to dismiss, or alternatively stay, these claims because the plaintiffs failed to provide reports complying with Chapter 90. The fact that the federal MDL does not maintain an inactive docket presented a special challenge, given that the King plaintiffs filed suit before Chapter 90 was enacted.

A court exercising federal enclave jurisdiction is to follow the Erie¹ doctrine by applying the substantive law of the state surrounding the enclave, in this case Texas. Wilson Elser argued that Chapter 90 was substantive, therefore it required dismissal of the plaintiffs' claims. The plaintiffs opposed the motion, attempting to characterize Chapter 90 as a nonsubstantive procedural docket control measure that was inapplicable under Erie.

Decision

On August 25, 2010, U.S. District Judge Eduardo Robreno granted the motion by dismissing 85 of the 100-plus asbestos claims in King. The court ruled that Chapter 90 is a substantive legal rule that must be applied in a federal action.

The MDL Court followed a two-part Erie analysis, asking first, whether Chapter 90 conflicts with a Federal Rule of Civil Procedure, and second, whether the Erie goals of preventing forum shopping and avoiding inequity support applying Chapter 90.

Finding no conflict between Chapter 90 and a federal procedural rule, the court concluded that the Erie goals required it to apply Chapter 90 to the King plaintiffs' claims. The court reasoned that failing to apply Chapter 90 would make the result in cases governed by Texas law turn on whether the claim was pending in state or federal court. Cases subject to Texas law filed in Texas state court would be dismissed, while cases subject to Texas law and pending in federal court could proceed to verdict.

Conclusion

This ruling carries significance beyond Chapter 90 and the federal asbestos MDL.  Other states, such as Ohio, Florida, Kansas, South Carolina, Georgia, Maryland and New York, have enacted variations of impairment criteria or an inactive docket system. This decision may be useful in urging the MDL Court to dismiss cases governed by the laws of those states. Bankruptcy defendants may also cite this decision to urge denial of claims by plaintiffs who do not meet state impairment criteria. Additionally, this decision should be persuasive in urging state courts outside Texas to apply Chapter 90 in cases governed by Texas law.

For further reference, see King v. EI Dupont de Nemours & Co. et al., 2:07-cv-72297-ER (E.D.Pa.).

1)Erie R.R. v. Tompkins, 304 U.S. 64 (1938) (Requiring federal courts to apply state law in actions based on diversity of citizenship.)