On August 18, 2010, the California Supreme Court granted Plaintiffs’ Petition for Review en banc in Greb v. Diamond International Corporation. Clapper, Patti, Schweizer & Mason represents the Plaintiffs in the underlying asbestos lawsuit and appeal.
Plaintiffs sued Diamond International alleging that Mr. Greb was employed as a sheetmetal worker and later as an acting foreman at the University of California in Davis, California from 1953 to 1983. While working at the University, Plaintiffs alleged that Mr. Greb worked with and was exposed to asbestos-containing materials and that Diamond International was one of the suppliers of those materials.
Although Diamond International actively did business in California during the time of Mr. Greb’s exposure to the asbestos-containing products it supplied, just over three years ago Diamond International dissolved. After being served with the Complaint, Diamond International filed a demurrer and argued that it should be dismissed from the case because it was a Delaware corporation that has been dissolved for more than three years.
Diamond International relied on a Delaware statute that precludes lawsuits against corporations that are dissolved for more than three years. In California, however, the relevant statute (Corporations Code section 2010) permits lawsuits against dissolved corporations indefinitely. The issue was whether the California statute applied to out-of-state corporations. If it did, then the California statute would apply and Diamond International would remain in the lawsuit. But if the California statute did not apply to out-of-state corporations, then the Delaware statute would apply and Diamond International would be dismissed from the lawsuit.
Plaintiffs relied on a Court of Appeal case, North Am. Asbestos Corp. v. Superior Court (1986) 180 Cal. App. 3d 902 (“North American Asbestos”), which under very similar facts as Greb, held that section 2010 applied to out-of-state corporations and allowed the lawsuit to proceed against the out-of-state dissolved corporation. Diamond International relied on another Court of Appeal case, Riley v. Fitzgerald (1986) 178 Cal. App. 3d 871 (“Riley”), which held that the California statute did not apply to out-of-state corporations and did not allow the lawsuit to proceed.
One difference between North American Asbestos and Riley was that North American Asbestos involved a lawsuit by a California resident against a dissolved out-of-state corporation and Riley involved a lawsuit by a dissolved out-of-state corporation (through its shareholders) against a California resident.
Plaintiffs argued that this difference was key and that under the set of facts before the trial court, it should rely on North American Asbestos and allow Plaintiffs’ lawsuit to proceed against Diamond International. The trial court judge chose to follow Riley and held that the Delaware statute precluded Plaintiffs’ lawsuit against Diamond International. Diamond International was dismissed from the lawsuit.
Plaintiffs appealed the decision to the Court of Appeal, First Appellate District, Division One. The Court disagreed with the prior Court’s reasoning in North American Asbestos and determined that the relevant California statute did not apply to out-of-state corporations. The Court reasoned that the language of section 2010 only applied to “corporations,” which were defined to include only California corporations unless expressly stated otherwise.
As section 2010 did not expressly include out-of-state corporations, then the Court reasoned that section 2010 did not apply to out-of-state corporations. The Court’s decision was published as Greb v. Diamond Internat. Corp. (2010) 184 Cal. App. 4th 15, but has since been depublished pending review by the California Supreme Court. Plaintiffs’ Opening Brief is due October 4, 2010.
The issue raised by Greb v. Diamond International Corporation is of great importance in asbestos lawsuits. There are many corporations which did business in California in the 1950’s through the 1980’s, but have since dissolved. And as asbestos-related diseases may take decades to manifest after exposure to asbestos and/or asbestos-containing products, it is not possible for plaintiffs to sue these corporations any earlier. If Riley and the Court of Appeal decision in Greb are upheld and followed, then corporations have every incentive to escape liability in asbestos lawsuits by dissolving, although their actions from decades ago are still causing injury to people.