Judge: Laura A. Seigle, Case: 22STCV07322, Date: 2022-10-24 Tentative Ruling

Case Number: 22STCV07322    Hearing Date: October 24, 2022    Dept: 15

[TENTATIVE] ORDER RE MOTIONS IN LIMINE

Defendants’ MIL No. 17

            Defendant Chattem, Inc. moves to exclude evidence about Chattem’s liability before it purchased Gold Bond in 1996 because the April 10, 1996 Asset Purchase Agreement states Chattem has liability only for claims “which arise from use of the Products and which occur on or after the Closing Date, regardless of when such Liability Claim is brought.”  (Asset Purchase Agreement, § 9.2.)  Plaintiff argues that Chattem also assumed certain liabilities for personal injuries arising from the use of products occurring before the closing date, citing to Chattem’s 1996 SEC filings.  The SEC filings state Chattem “assumed certain liabilities of approximately $500,000.”  The filing do not state what those liabilities were.  The court continued the hearing on this motion to allow further briefing.  Chattem filed a supplemental brief along with the Asset Purchase Agreement. 

By way of the Asset Purchase Agreement, Chattem acquired “those certain assets, tangible and intangible (the ‘Assets’) relating to the marketing, distribution and sale of the medicated skin care products consisting of” various Gold Bond products “and line extensions thereof relating to moisturizer, lotion and foot powder products.”  (Asset Purchase Agreement, § 1.1.)  Chattem assumed the liabilities “specifically set forth on Schedules 2, 4.5 and 6.6 “Assumed Liabilities.”  (Asset Purchase Agreement, § 2.1.)  Those schedules were not attached to the filed copy of the Asset Purchase Agreement.  Except for the Assumed Liabilities, Chattem did not assume liabilities “with respect to claims, actual or contingent, penalties and fines arising or based on occurrences or events existing on or prior to the Closing Date.”  (Asset Purchase Agreement, § 2.2.) 

            The Asset Purchase Agreement contained a Section 9 entitled “Product Liability Responsibilities,” which specifically addressed liability for personal injury claims.  Section 9.1. stated the Seller (not Chattem) “shall have sole responsibility and shall be liable for any and all demands, actions, claims, losses, damages and costs and expenses (including, without limitation, attorneys’ fees) (‘Liability Claim’) for personal injury, property damage or other events or circumstances which arise from use of the Products and which occur prior to the Closing Date, regardless of when such Liability Claim is brought.”  Section 9.2 stated Chattem “shall have sole responsibility and shall be liable for any and all demands, actions, claims, losses, damages and costs and expenses (including, without limitation, attorneys’ fees) (‘Liability Claim’) for personal injury, property damage or other events or circumstances which arise from use of the Products and which occur on or after the Closing Date, regardless of when such Liability Claim is brought.” 

            The Asset Purchase Agreement referred to a $500,000 cushion amount relating to the seller’s and purchaser’s indemnification obligations.  (Asset Purchase Agreement, § 11.5(b).)  That provision stated the indemnification obligations were not triggered until the indemnified amounts exceeded $500,000.  And it expressly stated the provision “shall not be applicable to the product liability of Seller or Purchaser pursuant to Section 9 hereof.”  (Ibid.)  There is no other reference in the Asset Purchase Agreement to Chattem assuming $500,000 in liabilities.  Because this provision expressly excluded product liability, it is irrelevant to this case.

            Section 9 makes the Seller responsible for claims for personal injury (1) which arise from use of Gold Bond products and (2) which occurred before the closing date, and makes Chattem responsible for claims for personal injury (1) which arise from use of Gold Bond products and (2) which occurred on or after the closing date.  Here the personal injury allegedly arose from use of Gold Bond products.  But neither party has addressed whether the alleged personal injury occurred before or after the closing date.  Did the personal injury occur when Plaintiff first used the product or did the personal injury occur at some later time?  Chattem argues that it is not “liable for any alleged exposure before April 10, 1996,” which equates exposure with personal injury.  (Supplemental Brief at p. 2.)  But Chattem cited no legal authority or evidence that the date of exposure to an alleged asbestos-containing product is also the date when the personal injury occurred. 

If the parties to the Asset Purchase Agreement had meant to allocate liability based on the date of exposure, the parties could have stated that “Chattem is liable for claims for personal injury which arise from use of the Products on or after the Closing Date,” in other words, where liability is triggered by the date of the use.  Instead, the agreement allocates liability based on the date the personal injury occurred. 

In addition, because the filed copy of the Asset Purchase Agreement did not contain the referenced schedules, the Court cannot determine the extent of the liabilities Chattem assumed under Section 2.1.  This is important because Section 9 does not determine assumption of liability alone.  Neither party addressed how Section 9 should be interpreted along with Sections 2.1 and 2.2. 

On October 24, 2022, the parties are to be prepared to discuss how to address (1) when a personal injury occurs as the term is used in the Asset Purchase Agreement, (2) how Section 9 should be interpreted along with Sections 2.1 and 2.2, and (3) the missing Schedules 2, 4.5 and 6.6.  

Defendants’ MIL No. 18

            Defendant Chattem, Inc. moves to exclude evidence that in 2020 it started using cornstarch instead of talc in Gold Bond as irrelevant and prejudicial.  Plaintiff alleges she was exposed through her husband’s use of the product from “[a]pproximately 1987-2010s.”  (Complaint at p. 33.)              The court continued the hearing on this motion so the parties could meet and confer on a stipulation about cornstarch being a feasible alternative to talcum powder.  The parties did not agree on a stipulation.

            Because Chattem’s switch to cornstarch occurred after Plaintiff’s exposure to Gold Bond, it is not evidence that Chattem knew about the alleged asbestos in talc or the danger of asbestos-containing talc at the time of Plaintiff’s exposure.  However, the switch may be evidence of feasibility.

            Therefore, the motion is granted in part as to arguments and evidence that Chattem’s switch to cornstarch proves it knew there was asbestos in the talc or that the talc was dangerous.  It is denied as to arguments and evidence that cornstarch was a feasible alternative.

            The moving party is to give notice.