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Article: September 2020: Product Liability Litigation Update

September 23, 2020

New Jersey Supreme Court Rules on Statements Against Interest by Settling Defendants

In Rowe v. Bell & Gossett Co., 239 N.J. 531 (2019), the Supreme Court of New Jersey spoke on an evidentiary issue that parties often confront in tort actions where the plaintiff sues multiple defendants and then settles with some portion of those defendants prior to trial.  In Rowe, the Court held that statements by the settling defendants in the form of certified interrogatory responses and corporate representative deposition testimony were admissible over a hearsay objection as “statements against interest” under New Jersey Rule of Evidence 803(c)(25).  Rowe, 239 N.J. at 540.  Those statements could therefore be considered in allocating fault to the settling defendants, who were not present at trial.  Id. at 539-41.

Plaintiffs Ronald and Donna Rowe alleged that Ronald Rowe had contracted mesothelioma as a result of exposure to asbestos-containing products manufactured and sold by defendants or their alleged predecessors-in-interest.  Rowe, 239 N.J. at 539, 542.  Plaintiffs initially sued 27 defendants.  Id. at 542.  Prior to trial, Plaintiffs settled with eight defendants, then proceeded to trial against only one remaining defendant, Universal Engineering Co.  Id. at 543-44.

At trial, Universal offered excerpts of the settling defendants’ answers to interrogatories and corporate representative deposition testimony, “contending that the evidence was admissible as testimony in a prior proceeding under N.J.R.E. 804(b)(1), statements by a party-opponent under N.J.R.E. 803(b)(1), and statements against interest under N.J.R.E. 803(c)(25).”  Id. at 545.  The trial court admitted certain interrogatory responses, “[e]vidently relying on N.J.R.E. 803(b)(1)” (statements by a party-opponent), and admitted certain corporate representative deposition excerpts of out-of-state settling defendants as “the prior testimony of unavailable declarants.”  Id.  Universal’s counsel thus read to the jury those interrogatory and deposition excerpts.  Id. at 546.  The jury rendered a verdict for Plaintiffs, but allocated only twenty percent of the fault to Universal.  Id. at 547.  The jury allocated the remaining eighty percent to the eight settling defendants, in varying proportions.  Id. 

The New Jersey Appellate Division reversed the trial court’s decision admitting the settling defendants’ interrogatory responses and corporate representative deposition testimony.  Id. at 548-49.  The New Jersey Supreme Court granted Universal’s petition for certification, and the applications of multiple entities to appear as amici curiae.  Id. at 549.  Plaintiffs and the New Jersey Association for Justice (as amicus curiae) argued, among other things, that the interrogatory responses and corporate representative deposition testimony of the settling defendants were not “statements against interest” under N.J.R.E. 803(c)(25) because they were admitted against plaintiffs, not the settling defendants who made the statements—who were not at trial.  Id. at 551.

The New Jersey Supreme Court held that the interrogatory responses and deposition testimony were admissible as statements against interest.  Id. at 563.  The court explained that “to be admissible as a statement against interest, a statement must have been contrary to the declarant’s interest at the time that it was made,” but the declarant “need not be a party to the action in which the statement is admitted.”  Id. at 559.  The court recognized that “[w]hen the relevant statements were made, each declarant was a defendant in [the Rowe] case or in other asbestos product liability cases.”  Id. at 560.  The court found that the settling defendants’ statements were sufficiently contrary to the settling defendants’ “‘pecuniary, proprietary, or social interest[s],’ and ‘so far tended to subject’ the defendants ‘to civil . . . liability,’ that ‘a reasonable person in [defendants’] position would not have made the statement unless the person believed it to be true.’”  Id. at 540 (quoting N.J.R.E. 803(c)(25)) (interlineations in Rowe).  The Court accordingly reversed the Appellate Division and reinstated the judgment entered by the trial court.  Id. at 541, 564.