Oral argument in the Rowe v. Hilco (Universal Supply) appeal took place on March 25, 2019 before the New Jersey Supreme Court in Trenton. The Appellate Division determined the trial court erred in permitting Hilco (“Universal”) to use Answers to Interrogatories and deposition transcripts of settled Defendants’ representatives to persuade the jury to allocate fault against those Defendants at trial. As a result, the Appellate Division remanded the case for a new trial as to apportionment of damages between Universal and eight settled Defendants where that evidence could not be used. Subsequently, Universal petitioned the Supreme Court to review the Appellate Division’s decision. In support of Universal’s Petition, McGivney, Kluger & Cook (“MKC”) submitted an Amicus Brief on behalf of numerous clients which are Defendants in the New Jersey Asbestos Litigation. The Supreme Court granted the Petition for Certification.
Universal made the following points during oral argument: i) deposition testimony and interrogatory evidence is admissible under the plain language of the Rules of Evidence because they fall within two hearsay exceptions (“statement against interest” and “statement by party opponent”); ii) the admission of this evidence satisfies the goals of the Comparative Negligence Act and the Joint Tortfeasors Act; and iii) in overturning the trial judge’s decision, the Appellate Division misunderstood the nature of mass tort litigation. Universal argued that the admission of such evidence not only satisfies the goals of justice, but also of judicial efficiency. That is, if the prior Interrogatory Answers and deposition testimony of settled Defendants were not admissible, then those parties would have to be called to testify through ‘live’ witnesses at every asbestos trial. Given that many Defendants have to rely on ‘historical’ information provided by former employees who are presently ‘unavailable’ to provide testimony, live testimony from current representatives whose knowledge is ‘second hand’ and less persuasive, would necessarily hamper the defense.
Universal further argued that the effect of this gross misapplication of the Rules of Evidence would afford a windfall gain for Plaintiffs. Future asbestos Plaintiffs could settle with a handful of Defendants prior to trial and then, because the remaining Defendants would be hamstrung in their ability to prove fault against the settled Defendants, Plaintiffs would recoup 100% of the verdict award from the remaining trial Defendants. This result would provide Plaintiffs with more than 100% recovery; which is contrary to the purpose of the rules permitting allocation of liability. That goal is to promote fairness to all parties while encouraging settlements. This would be undercut because the Appellate Division would essentially prevent trial Defendants from using accepted evidentiary means to prove a settled Defendant’s share. Universal further argued that the trial judge did not abuse her discretion, but only deemed certain proofs (i.e. deposition transcripts and Interrogatory Answers) admissible after evaluating and arriving at a reasoned decision related to each one of the proposed proofs.
Plaintiffs argued that prior deposition transcripts and Answers to Interrogatories are “hearsay” and the Appellate Division correctly ruled that Defendants should be required to subpoena live witnesses for trial testimony to prove allocation of liability against a settled Defendant at trial. Plaintiffs further argued that deposition transcripts and Interrogatory Answers do not fall within any exception to the hearsay rules and made three arguments against their admissibility: i) the “settled Defendants” were no longer “parties” to the litigation; ii) Defendants failed to establish true “unavailability”; and iii) the statements made were not “declarations against interest” in the true sense because, at trial, they were not being offered to obtain a recovery from the settled Defendant which made the statement.
The Justices, especially Justice Anne M. Patterson, Justice Lee A. Solomon and Justice Faustino J. Fernandez-Vina, asked questions and made comments which appear to weigh in favor of Universal’s position. Justice Patterson asked several questions which were derived directly from the policy arguments made in MKC’s Amicus brief. By way of example, Justice Patterson raised concerns about the logistics and efficiency of having trial Defendants obtain de bene esse depositions prior to settlement or trial in every case in order to have admissible evidence to prove allocations against settled Defendants. This could result in as many as eighty depositions in a single case. It was evident Justice Patterson was keenly aware and focused on the uniqueness of mass tort and the impracticality of the Appellate Division’s ruling. She also noted the inherent inequity in permitting Plaintiffs to use prior deposition transcripts and Interrogatories to prove their case-in-chief, but prohibiting a trial Defendant to use the very same proofs against a settled Defendant.
Several Justices also questioned Plaintiffs extensively regarding the technicalities of the hearsay exceptions in the Rules of Evidence, and why this evidence did not fall within these exceptions. Justice Solomon’s and Justice Barry Albin’s questioning suggested they agreed with Universal’s argument that a statement by a Defendant in an Interrogatory Answer or at a deposition,that it sold an asbestos product without a warning, was clearly “against that party’s interest”, and therefore, within that hearsay exception. Additionally, Justice Fernandez-Vina raised the point that if atrial Defendant was required to produce a live corporate representative at every trial, that witness would likely be relying on the testimony of a prior witness. As noted, that would happen because the corporate representative’s lack of personal knowledge of events which took place 30 to 40 years ago would require the witness to rely on other evidence. Therefore, the effect would be that the live witness would be testifying based on the very same hearsay the Appellate Division would exclude.
While Chief Justice Rabner seemed neutral in his questioning, inquired whether New Jersey Asbestos Litigation may benefit from an order similar to what governs New York City Asbestos Litigation (“NYCAL”). The governing NYCAL Case Management Order expressly provides: i) new depositions of a Defendant’s representative be limited to issues not previously addressed in earlier depositions; and ii) that any “nonparty” Defendant’s Answers to the NYCAL Standard Interrogatories, including those of settled Defendants, are admissible at trial to prove asbestos content of products and information regarding warnings. Universal stated that such an order could be issued by the trial court using the Supreme Court’s ultimate ruling in this case as a guideline.
In conclusion, we caution that the Justices’ questions at oral argument are not always a predictor of how they will “vote”. With that said, however, the majority of the Justices’ comments and colloquy with counsel suggest that some are leaning toward a reversal of the Appellate Division’s decision. The Justices had much tougher policy and efficiency questions for Plaintiffs. We expect a decision from the Court within two to three months.