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T & E Industries Inc. v. Safety Light Corp.

Decided: March 27, 1991.

T & E INDUSTRIES, INC., PLAINTIFF-RESPONDENT AND CROSS-APPELLANT,
v.
SAFETY LIGHT CORPORATION; USR INDUSTRIES, INC.; USR LIGHTING, INC.; USR METALS, INC.; USR CHEMICALS INC.; AND US NATURAL RESOURCES, INC., DEFENDANTS-APPELLANTS AND CROSS-RESPONDENTS



On certification to the Superior Court, Appellate Division, whose opinion is reported at 227 N.J. Super.. 228 (1988).

For modification, affirmance and remandment -- Chief Justice Wilentz, Justices Clifford, Handler, O'Hern and Stein, and Judges Bilder and A.m. Stein. Opposed -- None. The opinion of the Court was delivered by Clifford, J.

Clifford

[123 NJ Page 375] This appeal takes us once again over the unsettled waters of toxic-tort litigation. See, e.g., Report of the Supreme Court Committee on Environmental Litigation 10 (1990) (pointing out the unavoidably-complex nature of environmental law and regulation). At the storm center of this case is a radium-contaminated site that is now owned by plaintiff, T & E Industries, Inc. (T & E), but was once owned by United States Radium Corporation (USRC), the predecessor corporation of all the defendant corporations. The primary issue is whether an owner of radium-contaminated property can hold a distant predecessor in title that is responsible for the contamination strictly liable for damages caused by its abnormally-dangerous activity.

We hold that it can. We address as well several questions concerning damages.

I

A

Until 1943 USRC owned an industrial site on Alden Street in Orange. From around 1917 to 1926 it processed radium at that site. It extracted the radium from carnotite ore, which had been transported to USRC's plant from Utah and Colorado. USRC sold the radium for medical purposes and also used it to manufacture luminous paint for instrument dials, watches, and other products. It could, however, recover successfully only eighty percent of the radium from the ore. The unextracted radium was contained in "tailings," the solid by-products of the extraction process, which USRC discarded onto the unimproved portions of the Alden Street site.

Carnotite ore consists primarily of Uranium 238, radium, and vanadium. As the nucleus disintegrates, Uranium 238 decays into other elements, one of which is Radium 226. In turn Radium 226 emits gamma rays and decays into Radon 222, which is a naturally-occurring radioactive gas. Radon then decays into radon progeny or radon "daughters," which can adhere to walls, ceilings, dust particles, and, if inhaled, the tissue of the lungs. Gamma-ray exposure can cause bone cancer and leukemia, while radon inhalation can cause lung cancer.

It was not until the mid-1950s, however, that the scientific community engaged in any serious study of the epidemiological risks associated with radon. It did not generally accept the link between radon and lung cancer until the 1960s, and it was not aware of the problems generated by radioactive tailings until the late 1960s. The federal government, reflecting an unfortunate lag time, did not regulate the disposition of tailings until 1978.

Nevertheless, both the scientific community and USRC had suspicions about the hazards of radium at a much earlier date. In 1917 Florence Wall, an employee of USRC, calculated the amount of radium extracted from ore and measured its radioactivity. A graduate of Saint Elizabeth's College, Wall testified that she had learned very early that she should not touch radium and that she should wear protective clothing. For protection at work she wore a full-length lead-lined apron, much like a "mummy case."

Others too were concerned about handling radium. Wall recalled an incident involving Dr. Von Sochocky, the president of USRC, when radium lodged beneath his fingernail: he immediately "hacked" off his fingertip because he feared the effects of radium.

Another USRC employee, Gordon Cameron, who worked for the company from 1923 to 1926, extracted radium from the ore and removed the tailings from the plant. At work Cameron wore a rubber apron, rubber gloves, and rubber shoes. He also used rubber pails to carry the tailings. According to Cameron, he took those precautions primarily for protection from the harsh chemicals used in the extraction process, but he knew enough about the health hazards of radium "to keep away from it as much as possible."

In the early 1920s, USRC acquired still more evidence of the dangers of radium. Some of its employees applied the luminous paint to watch and instrument dials. After dipping their brushes into the paint, the dial-painters often sharpened the tip of the brush in their mouths, thereby ingesting a small amount of radium. Many of those employees eventually developed cancer. After discovering the problems associated with ingesting radium, USRC posted warnings cautioning its employees against sharpening the brushes in that fashion.

Radium processing at the Orange facility ceased in 1926, and USRC vacated the premises. Despite USRC's departure from Orange, the company retained ownership of that site and continued

to produce fluorescent compounds, albeit in New York. In the mid-1930s USRC leased the premises to various commercial tenants, eventually selling the property to one of those tenants in 1943. During that interim, the risks posed by radium became increasingly apparent.

In 1932 there appeared in the American Journal of Cancer an article entitled "Cancer of the Lung in the Miners of the Jackymon," which dealt with the dangers of inhaling radon. Eight years later Drs. Evans and Goodman, two experts in the field of radiation, published an article entitled "Determination of the Thoron Content of Air and its Bearing on Lung Cancer Hazards in Industry," concerning radon and lung cancer. That article discussed how the refining of radioactive material produces radon. The authors reported that the inhalation of the gas is "known to be hazardous." Because of those hazards, they recommended that exposure to radon be limited.

In 1941 the U.S. Department of Commerce published a handbook (H-27) entitled "Safe Handling of Radioactive Luminous Compound." That handbook included detailed information on the effects of ingestion or inhalation of solid radioactive luminous compound, on the results of inhalation of radon liberated from compound into the air, and on the consequences of exposure of the whole body to gamma radiation. According to the handbook, "[t]he continued inhalation of radon may produce carcinoma of the lungs." Recognizing that "serious injury and even death may result from the injudicious handling of [radioactive luminous] compound[s]," the handbook provided safety guidelines for the handling of such materials, and concluded that radon concentration in the workplace atmosphere must be limited. The participation of J.E. Paul, a representative from USRC, on the advisory committee that prepared the materials for the handbook suggests that USRC was aware of that publication's conclusions.

In a 1943 letter to the War Department the president of USRC, seeking to renegotiate a government contract, likewise

demonstrated knowledge of radium and radon hazards. Although he contended that "there is no exact formula by which it can be determined how much injury might be caused by any given amount of non-continuous exposure [to radioactive materials]," he admitted that "a hazard does exist." To support that conclusion, the letter referred to several case studies involving USRC employees. In each case the employee's death was attributed to radium exposure: some had inhaled radon, some had been exposed to gamma radiation, and some had suffered from the effects of both radon inhalation and gamma-ray exposure.

In that same year, 1943, USRC sold the Orange property to Arpin, a plastics manufacturer. Despite its suspicions about the harmful effects of radium, as recited above, USRC did not remove the discarded tailings from the site.

Arpin, unaware of the potential risks associated with the tailings, added to the plant a new section that rested on the discarded tailings. Since then the property has changed hands several times. Plaintiff, T & E, a manufacturer of electronic components, began leasing the premises in 1969 and purchased it in 1974.

B

The Uranium Mill Tailings Radiation Control Act, 42 U.S.C. § 7901 to § 7942 (1978), calls for the evaluation of inactive mill-tailing sites. In accordance with that Act, Jeanette Eng, a supervisor in the New Jersey Department of Environmental Protection (DEP), visited plaintiff's plant in March 1979. She found elevated gamma-radiation levels inside the building, on the vacant property behind the building, and in the parking lot.

Tests on air and soil samples verified that the levels of radon, radon progeny, and gamma radiation exceeded State regulations. The radon level of the soil samples taken from beneath the building exceeded federal standards as well. The most severe problem existed in the oven room, the portion of the

building added by Arpin. DEP instructed plaintiff "to begin immediate remedial action." It also informed plaintiff that such remedial action would serve only as an interim measure. DEP suggested that if funding for a full decontamination of the site could not be found quickly, plaintiff's options would be "limited to undertaking the cost of decontamination or consider[ing] abandoning the site."

In response to DEP's recommendations, plaintiff restricted employee access to the oven room and monitored the use of that room. It also retained a health physicist, Dr. Steidley, as a consultant. After confirming the State's findings, Steidley recommended that plaintiff seal all cracks, expansion joints, and drains in the oven room, and install fans to ventilate the plant. Steidley concluded, however, that decontamination of the site would ultimately require removal of the soil from beneath and around the building. Short of removing the soil, plaintiff complied with all of Steidley's recommendations.

Despite plaintiff's interim efforts, in 1981 the Environmental Protection Agency (EPA), at DEP's request, placed the property on the National Priorities List, consisting of those sites posing the most significant potential threats to human health because of their known or suspected toxicity. See 42 U.S.C. § 9605(8)(B) (1980) (current version at § 9605(a)(8)(B) (1986)). Although DEP did not order plaintiff to abandon the site, T & E moved its operations to another building in Orange and closed the Alden Street plant. Under the Environmental Cleanup and Responsibility Act (ECRA), N.J.S.A. 13:1K-6 to -13, T & E cannot sell the property until cleanup has been effected. See N.J.S.A. 13:1K-9 to -13.

C

In March 1981 T & E sued Safety Light Corporation; USR Industries; USR Chemical Products, Inc.; USR Lighting Products, Inc.; USR Metals, Inc.; U.S. Natural Resources, Inc.; GAF Corporation; and Mitsubishi Chemical Industries, all successor

corporations of USRC. The suit is based on nuisance, negligence, misrepresentation and fraud, and strict liability for an abnormally-dangerous activity. The trial court ordered separate trials and designated Safety Light Corporation as the defendant in the first trial. Thereafter the other defendants stipulated that any damages awarded against Safety Light would be binding on any defendant found liable in the second trial. "Defendant" as used hereafter in this opinion refers to Safety Light.

Finding that USRC had "placed hazardous wastes in the form of radium ore tailings" on the Alden Street property in Orange, the court granted plaintiff's motion for partial summary judgment. The court then denied defendant's motion for summary judgment on the strict-liability claim, holding that "as a matter of law, the principle of strict liability is applicable to a former owner of premises depositing thereon 'abnormally dangerous' substance(s) in an amount dangerous to health in an action against the former owner by a successor in title thereto unaware of the presence of the solid substance." It also ruled that radium is a per se "abnormally dangerous" substance "within the meaning of State v. Ventron, 94 N.J. 473, 468 A.2d 150 (1983), and the Restatement (Second) of Torts § 520 (1977), and that the depositing of the same in an amount dangerous to health and life is an 'abnormally dangerous activity' within the meaning of [those authorities]."

At trial plaintiff claimed that several factors had prompted the move from the Alden Street site: the perceived health threat posed by the contaminated site, the emotional welfare of employees, a possible increase in worker's compensation insurance costs, and the prospect of the State's compelling such a move.

The trial produced a spirited debate between the experts over the health risks from radiation exposure. Steidley, plaintiff's consultant and expert, surmised that as the amount of radiation exposure increases, health risks also increase. To support that

theory Steidley referred to an EPA statement, suggesting that "there is some finite risk to humans no matter how small the amount of absorbed radiation and that the risk at any given low level is directly proportional to the damages demonstrated at higher doses." He conceded, however, that empirical data have not been developed to validate that theory.

Defendant's expert, Dr. Auxier, challenged plaintiff's theory, contending that although it might have a legitimate use in the promulgation of health standards, it should not be used to predict actual risk. Although he admitted that the radioactivity of the site exceeded regulatory standards, Dr. Auxier insisted that T & E employees had not been exposed to a health hazard. He premised that conclusion on his belief that "the dose levels to which [T & E employees] have been or would be exposed on that site are less than those doses which large populations have gotten over many years and no harm has been evidenced."

When plaintiff's case concluded, the court reversed itself and granted defendant's motion to dismiss plaintiff's strict-liability claims. It ruled that strict liability arising from an abnormally-dangerous activity may be imposed only if the defendant knew at the time of performance that its activity was in fact abnormally dangerous. The court concluded that the scientific community had no knowledge of the danger when USRC disposed of the tailings. It also dismissed plaintiff's claims for fraud and misrepresentation and for punitive damages, allowing the case to proceed only on the negligence count.

At the close of the case defendant moved to dismiss the negligence claim, asserting that USRC had had no duty to warn purchasers about the dangerous tailings. Reserving decision on that motion, the court submitted the negligence claim to the jury. It instructed the jury to determine whether USRC had negligently failed to warn the purchaser (Arpin) in 1943 about the dangerous nature of the tailings, and whether USRC had negligently ...


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