No Punitive Damages For Workers In Asbestos Case

The Celanese Fiber Plant in Salisbury, N.C., made polyester and was owned by HNA Holdings Inc. It was built in 1966 with asbestos insulation. Daniel Construction Co. built the plant and it and its successor, Fluor Daniel, provided for its maintenance until Becon Construction Co. took over the contract in 1992.

From 1975 to 1995, Gary Ray Schenk, Jr. worked periodically for Daniel Construction, then for Fluor Daniel and Becon as a pipe fitter and welder. Schenk said he was exposed to insulation containing asbestos through his work handling pipes and from being around people working with the insulation at the plant.

Donald Lee Bell intermittently worked at the Celanese plant from 1973 to 1981, from 1988 to 1992 and from 1992 to 1995, and said he was exposed to asbestos dust in his work insulating pipes. Schenk and Bell sued HNA Holdings, the owner of the plant, for damages for exposure to asbestos dust and fibers from insulation at the plant, claiming compensatory and punitive damages.

The North Carolina jury ruled for the plaintiffs, finding that the maintenance and construction work they performed was an inherently dangerous activity, and that HNA was negligent in exposing them to asbestos. The plaintiffs were awarded damages to compensate them for their injuries, but the trial judge dismissed their claims for punitive damages.

Schenk and Bell appealed to the North Carolina Court of Appeals. That court noted there must be evidence that the company acted recklessly, willfully or intentionally to damage the plaintiffs, and that the officers, directors or managers of the corporation had to participate in or condone the activities for a company to be liable for punitive damages. It concluded that HNA was not liable for punitive damages.

At trial, James Whitlock, an asbestos removal specialist who worked for a subsidiary of Fluor Daniel, testified that in 1990 he observed areas in the plant where asbestos insulation was hanging from pipes and laying on the floor, and saw unauthorized people handling and removing asbestos. He testified that he sent a memo with his findings to the HNA plant industrial hygienist and to the plant engineer, John Winter.

Whitlock said that Winter told him to destroy the letters, and that he, Winter, said he wanted to know about asbestos conditions at the plant, but that Whitlock was not to put anything in writing again.

According to the court, the conduct described by Whitlock did not amount to willful or reckless conduct by HNA, and the court said Winter was not an officer or manager of HNA, and that the asbestos removal by HNA was "done properly and within the regulations."

Schenk v. HNA Holdings Inc., 613 S.E.2d 503 (N.C.App. 2005), Court of Appeals of North Carolina, June 7,2005.
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