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July 2016: Appellate Victory Knocks Out Hundreds of Asbestos Claims

July 2016

In a unanimous published decision, the Maryland Court of Special Appeals affirmed summary judgment for Quinn Emanuel’s client Pfizer in an asbestos case alleging that Pfizer was the "apparent manufacturer" of products made by its former subsidiary, Quigley Company, Inc. By holding that Pfizer was not an "apparent manufacturer" as a matter of Maryland law, this decision effectively ends more than 500 cases pending in Maryland state court that are based on this same theory of liability.

This appeal has a long history that dates back to Quigley's declaration of bankruptcy in 2003. Quigley had manufactured specialized industrial products, particularly for the steel mill industry, since 1916. A few of these products contained relatively small amounts of asbestos. After the health effects of asbestos became known, plaintiffs filed tens of thousands of lawsuits against Quigley, many of which also named Pfizer—which had purchased the company in 1969—as a co-defendant. The majority of these suits were concentrated in Maryland and Pennsylvania where Quigley products had been used in steel mills for many decades.

The bankruptcy reorganization plan that was ultimately confirmed contained a “channeling injunction” that channeled all asbestos claims against Quigley and Pfizer (if they involved a Quigley product) to a $965 million trust fund set up and funded by Pfizer to compensate asbestos claimants. Despite the injunction, one of the largest asbestos plaintiffs' firms in the country—the Peter G. Angelos Law Firm—sued Pfizer in state court alleging that Pfizer was the "apparent manufacturer" of Quigley's products, and that the channeling injunction did not enjoin "apparent manufacturer" claims. Under the apparent manufacturer doctrine, a company can be held liable for a defective product that it does not manufacture if it holds itself out to the purchasing public as the manufacturer through its advertising or product labeling. Angelos argued the channeling injunction did not bar apparent manufacturer claims against Pfizer because they did not depend on Pfizer’s prior ownership of Quigley. The district court agreed and the Second Circuit affirmed, potentially opening up a floodgate of asbestos claims that were supposed to have been resolved in the bankruptcy proceeding.

Angelos picked Stein as his test case and brought it on his home turf, the Circuit Court for Baltimore City. Cherry-picking documents from decades of litigation against Quigley and Pfizer, Angelos argued that Pfizer was an apparent manufacturer of Quigley products because the Pfizer logo appeared next to the Quigley logo on the packaging and promotional materials for Quigley products. Summary judgment on substantive issues is a rarity in asbestos cases in Baltimore City, but Quinn Emanuel moved for it anyway. After extensive briefing and argument, the trial court granted Pfizer’s motion for summary judgment, holding that the fact that Pfizer’s logo was affixed to Quigley product brochures did not establish that Pfizer was an apparent manufacturer of Quigley products. The parties agreed to stay the hundreds of other apparent manufacturer cases against Pfizer while the Stein case was being appealed.

Last year, Quinn Emanuel partner Sheila Birnbaum argued this appeal before the Maryland Court of Special Appeals in a two-hour session. During argument, the judges demonstrated extensive knowledge of the long and winding history of common law apparent manufacturer jurisprudence, which has its roots in cases from the early 20th century. On the one year anniversary of that argument, the court issued a published, 40-page opinion affirming the trial court's order and adopting Quinn Emanuel's positions in full. The well-researched, comprehensive opinion accepted, affirmed that Pfizer was not an apparent manufacturer of Quigley products as a matter of law.

This is a major victory for Pfizer. The ruling effectively ends over 500 current apparent manufacturer cases against Pfizer in Maryland. It also makes it significantly less appealing for other plaintiffs’ attorneys to bring apparent manufacturer claims against Pfizer in other parts of the country.