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Stein v. Pfizer Inc.

Court of Special Appeals of Maryland

May 31, 2016

HARRIETTE STEIN, PERSONAL REPRESENTATIVE OF THE ESTATE OF CARL STEIN, et al.
v.
PFIZER INC.

         Appeal from the Circuit Court for Baltimore City. John M. Glynn, JUDGE.

         ARGUED BY: Jeffrey J. Utermohie (Thomas P. Kelly, Craig M. Silverman, Law Office of Peter G. Angelos, PC on the brief) all of Baltimore, MD. FOR APPELLANT

         ARGUED BY: Sheila L. Birnbaum (Hayden A. Coleman, Quinn, Emanuel, Urquhart & Sullivan, LLP of New York, NY, Patrick C. Smith, DeHay & Elliston, LLP of Baltimore, MD.) all of the brief. FOR APPELLEE

         ARGUED BEFORE: Krauser, C.J., Graeff, Kehoe, JJ.

          OPINION

Page 280

          [228 Md.App. 75] Krauser, C.J.

         The issue before us is whether Pfizer Inc., appellee, may be deemed an " apparent manufacturer" of an asbestos-containing cement, " Insulag," which purportedly caused the illness and subsequent death of Carl Stein from mesothelioma. The product

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at issue was manufactured and sold to Mr. Stein's employer, Bethlehem Steel Corporation, by Quigley, Inc., both before and after it became a wholly-owned subsidiary of Pfizer.

         If Pfizer does not qualify as an " apparent manufacturer," then it is covered by the " channeling injunction" issued by the United States Bankruptcy Court for the Southern District of New York, in addressing Quigley's petition for Chapter 11 protection, that bars asbestos-related lawsuits against Quigley or Pfizer, such as the one before us, and directs such claims to a trust for consideration and, ultimately, compensation. If, on the other hand, Pfizer satisfies the criteria of such a designation, then Mr. Stein's family, appellants, may continue to [228 Md.App. 76] pursue their products liability claims against Pfizer in the Circuit Court for Baltimore City, where this matter was initially filed by Mr. Stein, before his death.

         The Baltimore City circuit court resolved this issue, by granting summary judgment in favor of Pfizer, after determining that it did not qualify as an " apparent manufacturer." We agree and shall affirm.

         I. The Stein Family's Lawsuit

         Carl Stein (the " decedent" ) worked, from 1949 through 1985, as a bricklayer for the Bethlehem Steel Corporation at its Sparrows Point plant. During his thirty-six years of employment at the Sparrows Point plant, the decedent purportedly used Insulag, an asbestos-containing cement, in the performance of his duties at that facility. After the decedent became ill, from his exposure to asbestos, he brought an action, in the Circuit Court for Baltimore City, against a number of business entities,[1] which had sold asbestos-containing materials to Bethlehem Steel, alleging negligence, breach of warranty, strict liability, fraud, and conspiracy. None of these entities is, however, a party to the instant appeal.

         Then, in April 2012, the decedent, who had, by that time, been diagnosed with mesothelioma, succumbed to that disease. Fifteen months later, in July of 2013, his widow, Harriette Stein, individually, and as the personal representative of his estate, together with his surviving children, Carl B. Stein, Jr.; Mark A. Stein; Robert B. Stein; and Patricia A. Robinson (all of whom we shall collectively refer to as " the Stein family" ), [228 Md.App. 77] filed an amended complaint, in the same action, adding Pfizer Inc., the appellee, as a defendant in that suit, as well as several new counts averring loss of consortium and wrongful death. The theory underlying the Stein family's claims against Pfizer was that the decedent's exposure to an asbestos-containing refractory cement, called " Insulag," which was supplied to his employer, Bethlehem Steel, by Pfizer's subsidiary, Quigley Company, Inc., was a substantial factor in bringing about his illness and resultant death from mesothelioma and that, because Quigley's invoices and marketing materials also bore Pfizer's trademarks, as well as its own, and because, in some instances, the words: " Manufacturers of Refractory Products,"

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appeared beneath the exhibition of those corporate designations, Pfizer had, in effect, held itself out as a " manufacturer" of Insulag and was therefore liable for the illness and death of Mr. Stein, as an " apparent manufacturer" of that product.

         II. Quigley's Relationships with Pfizer and Bethlehem Steel

         Quigley, founded in 1916, manufactured and sold refractory products, that is, products " that retain their strength at high temperatures," for use in steel mills, power plants, and refineries. In re Quigley Co., 449 B.R. 196, 198 (S.D.N.Y. 2011), aff'd, 676 F.3d 45, 48, 59 (2d Cir. 2012), cert. denied sub nom. Pfizer, Inc. v. Law Offices of Peter G. Angelos, 133 S.Ct. 2849, 186 L.Ed.2d 908 (2013). One of the products it manufactured and sold, beginning in the 1930's, was " Insulag," a heat-resistant cement, which contained asbestos.

         In August 1968, Pfizer acquired all of the stock of Quigley, thereby rendering that corporate entity a wholly-owned subsidiary of Pfizer. In re Quigley Co., 676 F.3d at 47. After its acquisition by Pfizer, Quigley continued to operate as a separate and distinct corporation, designing and manufacturing its products, and maintaining its own sales and distribution network, without any participation by Pfizer in those processes. Yet, its marketing and promotional materials, and its invoices, " began to include the Pfizer name, logo, and trademark." Id. (citation and quotation omitted).

          [228 Md.App. 78] Nor did its acquisition by Pfizer affect its relationship with Bethlehem Steel. It continued to directly supply Bethlehem Steel with Insulag, as it had done, periodically, since 1955, regularly shipping that asbestos-containing product to the decedent's place of employment, Bethlehem Steel's Sparrows Point plant, until 1974, when Quigley phased out its manufacture of Insulag, in favor of producing " Insulag AF," a non-asbestos containing cement.

         After the decedent became ill, as a result of his purported exposure to asbestos at the plant, he filed suit, in the Circuit Court for Baltimore City, against Bethlehem Steel and a number of other business entities. During the course of that litigation, he was deposed, and, though he testified in detail as to the products to which he was exposed while working at the Sparrows Point plant, he did not mention " Insulag," or, for that matter, either Quigley or Pfizer, which is not surprising as, in the complaint he filed, Insulag was not alleged to have been the cause of his illness, and neither Pfizer nor Quigley were named as " defendants." [2] Nonetheless, there is no dispute that Insulag was used at the Sparrows Point plant, by bricklayers (such as the decedent), from 1955 to 1974,[3] which overlapped with the time period, from 1968 to at least the filing of this suit, during which Quigley was a wholly-owned subsidiary of Pfizer. Nor is there any dispute that the decedent worked at that plant throughout the time period when Insulag was being used there, and there is no disagreement that that product was supplied by Quigley.[4]

         

Page 283

         [228 Md.App. 79] III. The Quigley Bankruptcy and the " Channeling Injunction"

         " After the health effects of asbestos became known," and more than 160,000 asbestos-related suits had been filed against Quigley (approximately 100,000 of which also named " Pfizer" as a defendant), Quigley filed, in 2004, a bankruptcy petition, under Title 11 of the United States Code (" Chapter 11" ), in the United States Bankruptcy Court for the Southern District of New York. In re Quigley Co., supra, 449 B.R. at 199. In its petition, Quigley sought court approval of a reorganization plan and, most relevant to the issue before us, " an injunction that would stop all asbestos-related lawsuits against itself and Pfizer." Id.

         At the outset of those proceedings, the bankruptcy court " preliminarily enjoined all asbestos-related claims from proceeding against both companies (including those arising from Pfizer's own products) during the pendency of Quigley's bankruptcy proceeding." Id. That injunction was subsequently amended, in accordance with 11 U.S.C. § 524(g),[5] to channel asbestos-related lawsuits against either Quigley or Pfizer or both to a trust, largely funded by Pfizer, for review and possible compensation of such claims.

         The amended injunction (hereafter the " channeling injunction" ) provided that

during the pendency of Quigley's chapter 11 case, all parties . . . are hereby stayed, restrained and enjoined from commencing or continuing any legal action against Pfizer alleging that Pfizer is directly or indirectly liable for the conduct [228 Md.App. 80] of, claims against, or demands on Quigley to the extent such alleged liability of Pfizer arises by reason of--
(I) Pfizer's ownership of a financial interest in Quigley, a past or present affiliate of Quigley, or a predecessor in interest of Quigley;
(II) Pfizer's involvement in the management of Quigley or a predecessor in interest of Quigley; or service as an officer, director or employee of Quigley or a related party;
(III) Pfizer's provision of insurance to Quigley or a related party;
(IV) Pfizer's involvement in a transaction changing the corporate structure, or in a loan or other financial transaction affecting the financial condition, of Quigley or a related party, including but not limited to--
(aa) involvement in providing financing (debt or equity), or advice to an entity involved in such a transaction; or
(bb) acquiring or selling a financial interest in an entity as part of such a transaction.

In re Quigley Co., supra, 676 F.3d at 48.[6]

         Because Pfizer fell " within the ring of fire created by asbestos litigation," In re Quigley Co., 449 B.R. at 202, the " channeling injunction" at issue, here, covered most, though not all asbestos-related

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claims against Pfizer, Quigley's parent company.[7]

         IV. The Scope of the " Channeling Injunction"

         After the " channeling injunction" was issued by the bankruptcy court, a controversy arose as to its scope when, " [b]eginning in 1999," The Law Offices of Peter G. Angelos, PC (the same law firm that represents the Stein family in this [228 Md.App. 81] appeal), " commenced lawsuits in Pennsylvania on behalf of plaintiffs who had been exposed to asbestos-containing products sold by Quigley and Pfizer, including Insulag." In re Quigley Co., 449 B.R. at 199. As in the instant case, the Pennsylvania asbestos claimants alleged that Pfizer was an " apparent manufacturer" of Insulag. And, as does the Stein family here, they claimed that Pfizer, by placing " its logo on Insulag packaging" and on advertisements, had " held itself out to consumers as a manufacturer of Insulag." Id. at 200.

         When, in response, Pfizer filed a motion, requesting that the bankruptcy court enforce the " channeling injunction" as to those claims, the bankruptcy court granted that motion, holding that the " apparent manufacturer" claims were enjoined by the " channeling injunction" and ordering the Angelos law firm to cease its prosecution of all of its " apparent manufacturer" lawsuits in Pennsylvania state courts. Id. at 198-200. The United States District Court for the Southern District of New York disagreed, however, and reversed that decision, holding that the " apparent manufacturer" claims did not fall within the scope of the " channeling injunction." 449 B.R. 196.

         That decision was, in turn, affirmed by the United States Court of Appeals for the Second Circuit. 676 F.3d 45. It avowed that a claim against Pfizer is subject to the " channeling injunction" only when Pfizer's alleged liability for " the conduct of or claims against" Quigley has arisen " as a legal consequence of" one of the four of the following: " (I) Pfizer's ownership of a financial interest in Quigley, a past or present affiliate of Quigley, or a predecessor in interest of Quigley" ; " (II) Pfizer's involvement in the management of Quigley or a predecessor in interest of Quigley; or service as an officer, director or employee of Quigley or a related party" ; " (III) Pfizer's provision of insurance to Quigley or a related party" ; or " (IV) Pfizer's involvement in a transaction changing the corporate structure, or in a loan or other financial transaction affecting the financial condition, of Quigley or a related party[.]" Id. at 48, 62.

          [228 Md.App. 82] Thus, as the Second Circuit observed, a claim against Pfizer, based upon a product manufactured by Quigley, that seeks the imposition of liability under such legal doctrines as " piercing the corporate veil," respondeat superior, or successor liability, is subject to the " channeling injunction," as the products liability it alleges " arise[s] as a legal consequence" of Pfizer's ownership, management, or control of Quigley. Id. at 49, 60. But that is not so, declared the Second Circuit, with respect to a claim that Pfizer was an " apparent manufacturer" of a product, actually manufactured by Quigley, because such a claim, explained that court, does not " in any legal sense" depend upon Pfizer's ownership, management, or control of Quigley. Id. at 62.

Page 285

         V. Cross-motions for Summary Judgment

         Predictably, the parties herein filed, in the circuit court, cross-motions for summary judgment as to the issue of whether Pfizer was an " apparent manufacturer" of Insulag. The Stein family claimed, in their motion, that Pfizer, as well as Quigley, had " put out the asbestos-containing Insulag to which [the decedent] was exposed" and that, though Quigley was the manufacturer of Insulag, Pfizer qualified as an " apparent manufacturer" of that asbestos-containing cement. Specifically, it cited advertisements and promotional materials for Insulag, as well as invoices, from sales of Insulag, issued by Quigley, from 1968 to 1974, which displayed both Pfizer's and Quigley's trademarks and, in some instances, stated, beneath those trademarks: " Manufacturers of Refractory Products." That reference to " Manufacturers," maintained the Stein family, was an allusion to both Pfizer and Quigley, and thus established that Pfizer had held itself out as a " manufacturer" of the asbestos-containing Insulag.

         Then, as further evidence that Pfizer qualified as an " apparent manufacturer" of Insulag, the Stein family noted that a 1971 end-of-year Pfizer sales report stated the sales price and cost of Pfizer's annual product sales to Bethlehem Steel (which presumably included sales of Insulag) but contained no mention of Quigley (or, for that matter, Insulag); and that each of [228 Md.App. 83] several filings (Forms 10-K), by Pfizer with the Securities and Exchange Commission (" SEC" ), during the 1990's, asserted that " [t]hrough the early 1970's, Pfizer (Minerals Division) and Quigley Company, Inc., a wholly-owned subsidiary, sold a minimal amount of one construction product and several refractory products containing some asbestos."

         The evidence proffered by Pfizer, and relied upon by the circuit court in granting summary judgment, included the following unrebutted testimonial statements and documents: the deposition testimony of Louis Killian, the former plant manager of Quigley's New Jersey factory where Insulag was manufactured, stating that, even after Pfizer acquired Quigley, it " had no role in running Quigley's business" and " had no input whatsoever" ; an affidavit of that same individual, asserting that, " [f]ollowing its acquisition by Pfizer, Quigley continued to operate as a separate and independent corporation, manufacturing, selling, and marketing Insulag as it had done prior to the stock purchase" of its shares by Pfizer; the deposition testimony of Terence Gallagher, a former Pfizer attorney and member of Quigley's board of directors, stating that Quigley, after its 1968 acquisition by Pfizer, " was a separate corporation and subsidiary of Pfizer," that no Quigley employees held positions with Pfizer, and that the only Pfizer employees, who held positions with Quigley, were several high-ranking Pfizer employees who sat on Quigley's board of directors; the deposition testimony of Susan M. Raterman, C.I.H., an industrial hygienist and an expert witness for the Stein family, stating that, to her knowledge, " Quigley was responsible for manufacturing" Insulag; and the deposition testimony of three Bethlehem Steel employees, who had worked in the Brick Department and were responsible for purchasing the supplies used at the Sparrows Point plant, collectively asserting that Insulag was manufactured and sold by Quigley.

         Moreover, in response to the Stein family's heavy reliance on and repeated references to the phrase: " Manufacturers of Refractory Products" and its placement on Quigley products beneath the trademarks of both Pfizer and Quigley, Pfizer [228 Md.App. 84] presented an assortment of Quigley invoices and

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sales brochures, all of which bore dates preceding Quigley's acquisition by Pfizer, which displayed only the Quigley trademark, and which, nonetheless, stated: " Manufacturers of Refractory Products."

         In ruling on the cross-motions for summary judgment, the circuit court, while acknowledging that the " documents that have been produced . . . do mention both names on the letterhead," stressed that " [t]hey don't say anything explicit about the manufacturer other than this phrase 'manufacturers of Insulag' . . . which is the logo ...


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