Damages in Skunk Works Case Tossed

Rejecting one of the largest toxic pollution judgments ever rendered, a California appellate court Tuesday threw out $380 million in punitive damages against five oil and chemical companies accused of failing to warn hundreds of workers about health hazards at the Lockheed Skunk Works.

The three-judge panel of the 2nd District Court of Appeal ruled in Aguilar vs. Ashland Chemical Co. that there was no evidence of “despicable conduct� by Exxon, Unocal, Shell, Ashland and DuPont. Those companies were accused of failing to warn 29 past and present Lockheed employees about harmful effects from solvents, primers and epoxies used to build aircraft from the 1960s through the 1980s at the Burbank complex.

The judges also tossed out $25 million in actual damages against the companies in the case, but sent the case back to the trial court to reconsider actual damages.

The case is the second to have damages reversed on appeal among the half a dozen court actions brought by more than 600 employees against the companies. The workers’ cases were tried separately because groups of employees worked at the company at different times and may have suffered different consequences.

In August 1998, a jury awarded $760 million in punitive damages to the plaintiffs, but legal experts predicted it would be reduced or overturned on appeal because it was so large. Los Angeles Superior Court Judge Richard C. Hubbell, who presided over the trial, reduced the total by half, to $380 million, in November 1998.

Ellis Horvitz, an attorney representing the oil and chemical firms during the appeals process, said he was pleased by the court decision but declined to elaborate because the case was still pending.

Plaintiff attorney Thomas V. Girardi also said he was happy with the ruling.

“I’m very pleased with the decision,� Girardi said. “Punitive damages are rarely upheld by the courts of appeal and the important part of the decision is the finding that Exxon and Unocal have an obligation to the workers to warn of the potential side effects of the chemicals that workers use.�

Girardi added that he had entered into settlement negotiations with the oil companies in anticipation of the decision.

Although the case involved Lockheed workers, the aerospace giant had long since settled its portion of the lawsuit without going to trial. Lockheed paid all 627 plaintiffs a total of $33 million in 1992 to end its liability for the chemical exposure, leaving the oil and chemical companies to contest the workers’ claims.

Later, during the trial involving the 29 workers in the Aguilar case, the jury found that Lockheed was on average more responsible for the workers’ injuries than the oil and chemical companies, the appellate court noted.

Workers allegedly suffered brain damage, kidney problems and other ailments.

In its ruling, the appellate court found that the workers did not meet the legal standards for collecting punitive damages. To do so, they would have had to prove the oil and chemical companies did not provide adequate warnings about the health risks of using their products and show that the lack of warning helped cause the workers’ injuries.

“In the present case, there is no substantial evidence of despicable conduct on the part of any defendant,� the court wrote.

On a patriotic note, the justices mentioned that Lockheed, a major defense contractor, had manufactured planes that helped the United States win wars. “Their efforts have resulted in the development of technology and military hardware which provide this nation with its freedom and security,� the court wrote.

They also concluded that, as a result of that experience, the aircraft manufacturer should have known how to properly use these cleaning solvents without injuring its workers.

“However, there is absolutely no evidence that any vile, base, contemptible, miserable, wretched or loathsome conduct that would be despised by ordinary decent people was engaged in by any defendant or its employees,� the judges wrote.

Ruling in another part of the complex case involving a different group of employees, the same three Los Angeles-based judges found in February that 28 Lockheed employees were not intentionally harmed on the job.

The court overturned a $7.5-million punitive damage award and a $7.7-million compensatory damage award. It also ordered the oil and chemical companies and the Lockheed workers back to court to reargue the compensatory damages, while barring punitive damages for those workers.

Cancer-causing compounds were found in the water and soil beneath the company’s industrial sites in Burbank in 1980. Eight years later, after extensive monitoring and testing, federal, state and local agencies judged that the water and soil were chemically contaminated.

In 1992, Lockheed settled the employees’ lawsuit and, along with other companies, agreed to pay $265 million to clean up toxic compounds originally used as solvents, such as perchloroethylene and trichloroethylene.

At the same time, residents also were alleging that they suffered health problems and declining property values from the now shuttered facility’s discharge of carcinogens and other hazardous substances into the ground, air and water.

Lockheed reached a confidential $60-million out-of-court agreement with more than 1,300 current or former city residents in 1996, though about 3,000 others went to court alleging their health was harmed by Skunk Works toxics.

Lockheed Corp., a precursor of Lockheed Martin, was established in Burbank in 1928. At its peak, it employed nearly 100,000 and churned out aircraft for World War II and the Cold War, including the P-38 fighter, the U-2 and SR-71 Blackbird spy planes and the F-117A Stealth fighter. It was the home of the legendary Skunk Works, which designed advanced military planes.

Lockheed began closing its Burbank facility in the late 1980s and moved manufacturing to Palmdale and Marietta, Ga. The company merged with Martin Marietta Corp. in 1995 to become Lockheed Martin.

Over the past decade the company has sold off its holdings in Burbank, which have been converted into retail space and offices and identified for other uses.