Indiana Supreme Court: Elimination of Statute of Repose Defense in Asbestos Product Cases


March 4, 2016

In a 3-2 decision on March 2, 2016, the Indiana Supreme Court eliminated the Product Liability Statute of Repose defense in all asbestos-related cases, finding it violated the Equal Privileges and Immunities Clause of the Indiana Constitution (a copy of the decision is attached). Three cases involving plaintiffs Myers’ and Geyman’s asbestos claims were consolidated for appeal. In these cases dealing with the Indiana Product Liability Act, and presumably future asbestos products matters, “asbestos victims,” as the Court characterized them, can now bring suit for injuries allegedly caused by exposure to asbestos-containing products, with the only limitation being the two-year statute of limitations codified at Ind. Code 34-20-3-1.

Since the Court’s 2003 decision in Allied Signal v. Ott, Indiana courts have interpreted Indiana Code 34-20-3-2 (“Section 2”) to apply solely to defendants who both mined and sold raw asbestos, applying 34-20-3-1 (“Section 1”) to all other asbestos defendants, including those who sold asbestos-containing products but did not mine the mineral. However, Indiana’s constitution requires any statute that treats two groups of people differently to comply with the two-element standard established in Collins v. Day. This Collins analysis demands that (1) the disparate treatment be “reasonably related to inherent characteristics which distinguish the unequally treated classes” and (2) “the preferential treatment must be uniformly applicable and equally available to all persons similarly situated.” According to the Court in Myers-Geyman, the asbestos Statute of Repose failed both elements, rendering the Act unconstitutional on two independent bases.

The two Plaintiffs who brought the constitutional challenge convinced the Court that the Product Liability statute unconstitutionally drew a distinction between two types of asbestos plaintiffs—those injured by defendants who both mined and sold raw asbestos and those injured by all other asbestos defendants. Specifically, Mrs. Geyman, a woman suing on behalf of her deceased husband, argued that her claim was arbitrarily barred based on the fact that her husband was exposed to asbestos by a defendant who manufactured—but did not also mine—asbestos. Agreeing with Mrs. Geyman, the Court rejected Defendants’ arguments that the Act intended to distinguish between the two types of defendants rather than the types of plaintiffs, a classification that likely could have withstood the Collins analysis.

The Court reasoned that it is the classification raised by the challenger that must be assessed, not any conceivable classification, and the classification raised by the plaintiffs could not satisfy Collins.

The Court held that Section 2 of the Act was not based on any characteristic belonging to the plaintiffs, “inherent or otherwise.” Further, though unnecessary after determining that Section 2 of the Act failed the first element of Collins, the Court chose to go on and analyze the second element, finding Section 2 also unconstitutional because the two groups of asbestos plaintiffs are similarly situated, but the Act only allowed those injured by defendants who both sold and mined asbestos to sue for their injuries after the 10-year repose period had run. As a result, the Court invalidated Section 2 as unconstitutional.

The Court then determined that notwithstanding the existence of Section 1, the Product Liability Act Statute of Repose could not be applied to asbestos cases. Reviving precedent previously overturned by the Court, it reintroduced a “discovery rule,” which gives plaintiffs additional time to discover their injuries when the product at issue involves “protracted exposure to an inherently dangerous foreign substance.” As a substance that causes injury after a long latency period, the Court found asbestos to fall under this classification and remanded the cases for trial.

We are continuing to analyze the decision and its implications. We believe the Defendants in Geyman/Myers have thirty days to seek a rehearing with the Indiana Supreme Court – something that, if sought by the defendants, is unlikely to occur and overturn this decision. We suspect filings in Indiana will increase given that this defense is no longer available. Additionally, we believe that in other jurisdictions where entities sought to apply Indiana law and utilize the repose defense, those efforts will now undoubtedly be compromised.

Potential Impact on Contractors and Property Owners

The Construction Statute of Repose—a limitation on the time for bringing suit for defective design, planning, supervision, or construction of an improvement to real property—bars plaintiffs’ actions against asbestos construction defendants arising out of such deficiency. In light of the Indiana Supreme Court Ruling in Myers-Geyman, we anticipate two distinct attacks to Indiana’s Construction Statute of Repose (Ind. Code 32-30-1-5) by asbestos plaintiffs.

First, under the Court’s holding for Myers-Geyman, which essentially brings back a discovery rule for long latency disease claims, plaintiffs will argue that injury caused by exposure to asbestos used in the process of making improvements to real property ultimately stems from “protracted exposure to an inherently dangerous foreign substance which is visited into the body,” making the Construction Statute of Repose inapplicable to asbestos litigation involving contractors and property owners. Second, plaintiffs will likely argue that application of a Statute of Repose to defendants who utilized asbestos in their construction work would treat asbestos plaintiffs injured by construction defendants differently than asbestos plaintiffs injured by product liability defendants in violation of the state’s Equal Privileges and Immunities Clause. Their argument would likely track the Court’s analysis in Myers-Geyman, claiming the distinction is not based on any inherent characteristic belonging to the plaintiffs and although the two plaintiffs are similarly situated, only one has the ability to recover for injuries accruing after the Statute of Repose has run.

Though it is difficult to predict how the Court will treat these challenges to the Construction Statute of Repose given its recent unexpected reinstatement of overturned case law, we believe there are several viable defenses to such arguments by plaintiffs. In Covalt v. Carey Canada, the previously overruled case now applied to asbestos product liability actions, the Court emphasized that its holding was “limited to product liability actions in which the theory of liability is negligence or strict liability in tort.” The Court drew a distinction between statutes that accomplished the primary purpose of a statute of repose—“recognizing the improvements of product design and safety that come with time”—and those that did not. It rationalized that the exemption of asbestos product liability cases from the Statute of Repose was justified because they do not align with its primary purpose; the level of danger imposed by asbestos itself cannot be diminished with time. However, it admitted that other types of actions involving asbestos may be amenable to a statute of repose given that working conditions and protections for those who  handle asbestos may improve over time, serving the intended purpose.

Even more convincing, in Foster v. Spriggs, a case decided 14 years after Covalt, the Indiana Court of Appeals explicitly upheld a challenge to the Construction Statute of Repose. It noted that many other jurisdictions had similar construction statutes of repose, and they uniformly extend to defendants who install asbestos. The Court underscored that “[t]he purpose of the construction statute of repose is to protect engineers, architects, and contractors from stale claims and to eliminate open-ended liability for defects in workmanship.” Excluding contractors from statute of repose protection solely because asbestos was part of their design defect
would frustrate the statute’s purposes of encouraging improvements and shielding construction defendants from indefinite liability exposure.
As for an Equal Privileges and Immunities challenge by plaintiffs, we believe the Court will not be required to address the Collins analysis, as the statute does not draw a distinction between two groups of similarly situated people. Because all contractors and property owners who utilized asbestos in the course of construction necessarily obtained the mineral from a manufacturer or supplier, all asbestos plaintiffs can recover damages under the product liability statute, and no asbestos plaintiffs are permitted to recover damages under the construction statute at the close of the repose period. Granting no asbestos plaintiff privileges and immunities greater than any other, it will not be necessary or appropriate for the Court to reach the Collins analysis.

Despite the aforementioned potential challenges by plaintiffs, we believe the two statutes are not amenable to comparison by the Court. Not only were these two distinct statutes enacted by the legislature to serve different purposes, there are significant reasons to provide contractors and property owners with protection beyond that given to product defendants. As the entities most intimately involved with the production and packaging of raw asbestos material and asbestos-containing products, product manufacturers traditionally have not been relieved of liability once products leave their possession, but liability for harm to construction employees ends for contractors and property owners when workers leave the job site without injury. Furthermore, the Product Liability Statute of Repose distinguished between asbestos defendants and other product defendants on its face, signaling the legislature’s intent to apply different rules to these two groups of defendants. In contrast, the Construction Statute of Repose makes no such distinction between entities, mandating their equal treatment. Ultimately, a decision by the Court pertaining to product liability law does not mean it can be cut and pasted into a different area of law and expected to fit simply because they have one common component; these two areas of law possess many more differences than similarities.