Opinion ID: 785203
Heading Depth: 1
Heading Rank: 1

Heading: introduction

Text: 2 Prudential, a mutual insurance company, is one of the largest life, property, and casualty insurance underwriters in the world. It is also one of the largest real estate investors in North America, maintaining from the 1970s to the early 1980s the largest real estate portfolio of any company in the world with hundreds of commercial real estate properties. App. at 394a. Gypsum and USMP previously engaged in the manufacturing and sale of ACMs. Their products were widely used as construction materials throughout the United States. 3 Prudential contends that ACMs manufactured by both Gypsum and USMP, as well as other defendants not parties to this appeal, were used for fireproofing in at least eighteen of its buildings. 1 According to Prudential, it only began to appreciate the hazards associated with in-place asbestos in 1984 at the time it had to remove ACMs from one of its properties, the Chubb Building in Short Hills, New Jersey, before its demolition. The ACMs were removed at a cost of approximately one million dollars. In late 1984, Prudential established a task force to investigate the in-place ACMs in its buildings. A Prudential internal survey conducted between 1985 and 1986 discovered that most of the buildings involved in this litigation, as well as approximately 100 others, contained ACMs. As a result, Prudential incurred hundreds of millions of dollars in expenses relating to the maintenance, testing, and removal of ACMs in its buildings. It has refused to acquire or mortgage properties containing ACMs since 1986. 4 Asbestos had, however, already become a well-known and important public health and safety issue in the United States prior to 1984. In April 1973, the Environmental Protection Agency (EPA) established a National Emission Standard for Asbestos that severely restricted the manufacturing and application of ACMs, as well as the demolition of buildings containing fireproofing and insulation ACMs. 38 Fed. Reg. 8829 (Apr. 6, 1973). That standard regulated spray-on ACMs by limiting the concentration of asbestos in such ACMs and forbidding the visible emission of such materials to the outside air during the spraying process. Id. at 8830. It also required that [a]ny owner or operator of a demolition operation who intends to demolish any institutional, commercial, or industrial building ... which contains any boiler, pipe, or lead-supporting structural member that is insulated or fireproofed with friable asbestos material shall notify the EPA in advance of the demolition and follow proper ACM-removal procedures set forth in the standard. Id. at 8829. In 1975, the EPA expanded this National Emission Standard to cover renovation activities involving buildings containing ACMs by mandating specific notification and removal procedures for such in-place ACMs. 40 Fed.Reg. 48,299-,300 (Oct. 14, 1975). It further amended the standard in 1978 to extend coverage of the demolition and renovation provisions ... to all friable asbestos materials and extend the scope of the asbestos spraying provisions ... to all materials that contain more than 1 percent asbestos. 43 Fed.Reg. 28,372 (June 19, 1978). 5 The EPA also published various guidelines and regulations on asbestos management. One such EPA document from 1978, titled Hazard Abatement from Sprayed Asbestos-Containing Materials in Buildings: A Guidance Document that was prepared for those involved in the use, removal, and disposal of asbestos materials in the building trades, states that [a]sbestos in all its forms is considered a serious respiratory hazard.... Unlike most chemical carcinogens, the mineral fibers persist in the environment almost indefinitely and, when present in a building space open to its occupants, represent a continuous source of exposure. App. at 439a. The document also includes information on asbestos exposure, control, containment, and removal. App. at 480a-500a. The EPA issued a similar guidance document for ACMs in school buildings in 1979 and another report on controlling friable ACMs in buildings in March 1983. App. at 556a-626a, 736a-817a. 6 In addition, the Occupational Safety and Health Administration (OSHA) had issued regulations on construction workers' exposure to asbestos. The imposition of these regulations and the increasing public debate regarding the health hazards of asbestos led various asbestos manufacturers, including Gypsum, to disseminate additional information regarding the use and risks of ACMs. 7 As Gypsum correctly states in its brief: In sum, before October 20, 1983, not only had the federal government (OSHA and EPA) issued mandatory regulations regarding asbestos products in buildings, but the EPA had issued numerous guidance documents detailing for building owners the widespread use of asbestos-containing building materials, the association between asbestos exposure and disease, the potential risks of in-place asbestos-containing products, methods to detect asbestos, and recommendations for proper actions to be taken once asbestos-containing products are identified. 8 Appellee Gypsum's Br. at 13. 9 There is record evidence that various Prudential employees were aware of the existence of ACMs in at least some of Prudential's properties prior to 1984. Arcadius E. Zielinski, an architect formerly in Prudential's Corporate Services and Building Department, testified in a deposition that he surveyed filed specifications of Prudential's home office buildings to determine whether they contained ACMs. He stated that he told the Vice President of Prudential's Corporate Services and Building Department in May 1981 that such ACMs would not be hazardous so long as they were firm and remained in-place. An affidavit of David Holick, Jr., the director of architecture at Prudential's real estate investment department in Houston from 1979 to 1984, states that ACMs were a topic discussed among some of Prudential's employees. In addition, asbestos testings were conducted, either by or at the request of local tenants, in several of Prudential's buildings prior to 1984. For example, in 1979 IBM Corporation, as tenant, tested the airborne asbestos levels at Prudential's Jacksonville, Florida building and forwarded the results to Prudential. App. at 48a-49a, 1053a-1151a. Asbestos testing was also conducted at least twice on the premises of Five Penn Center in Philadelphia prior to 1981. Similar asbestos testings were also conducted in several Prudential buildings not at issue in this litigation. 10 Prudential initiated this action on October 20, 1987 in the United States District Court for the District of New Jersey, asserting a claim under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9601 et seq., and state claims under theories of absolute liability, strict liability, negligence, breach of express and implied warranties, fraud, misrepresentation, fraudulent concealment, unfair and deceptive trade practices, civil conspiracy, restitution, and indemnification. App. at 11,097a-11,153a. The District Court, upon motions by defendants, dismissed Prudential's CERCLA claim, but granted Prudential's motion for leave to amend its complaint to add claims under the RICO statute. Prudential Ins. Co. of Am. v. U.S. Gypsum Co., 711 F.Supp. 1244 (D.N.J.1989). Prudential's RICO claims thus form the sole basis for federal subject matter jurisdiction in this case. 11 In its First Amended Complaint, Prudential alleged that ACMs manufactured by defendants and used in its properties pose a potential health risk, and that it has expended and will continue to expend resources to inspect, monitor, maintain, and abate any problems caused by the presence of ACMs. It also asserted past and future damages resulting from actual property damages, diminution of property values, loss of rental income, and disruption to tenants' businesses. App. at 11,107a-08a. 12 After several years of discovery, Gypsum and W.R. Grace, another defendant, filed a motion for summary judgment in October 1991 to dismiss Prudential's RICO claims on both substantive and statutes of limitations grounds. They also sought to dismiss Prudential's state law claims based on statutes of limitations. Prudential, in turn, filed a motion to strike defendants' statute of limitations defenses. The District Court, in a published opinion dated July 21, 1993, denied defendants' motion for summary judgment to dismiss Prudential's RICO claims on substantive grounds and also denied Prudential's motion to strike defendants' statute of limitations defenses. Prudential Ins. Co. of Am. v. U.S. Gypsum Co., 828 F.Supp. 287 (D.N.J. 1993). Focusing on the causation requirement of a RICO claim, the District Court stated that it cannot rule as a matter of law that causation did not exist between defendants' alleged violations and Prudential's injuries. Id. at 296. It also ruled that there are disputed issues of fact as to whether Prudential actually knew of its injury prior to 1984; and ... the defendants are entitled to argue to a jury that Prudential should have known of its injury prior to 1984. Id. at 297. 13 On June 9, 1994, the District Court denied the motion for summary judgment by Gypsum and another defendant, Asbestospray Corporation, to dismiss Prudential's RICO claims on statute of limitations grounds, finding that disputed issues of material fact existed as to whether Prudential had knowledge of the elements of its RICO claims more than four years prior to filing the suit. Prudential Ins. Co. of Am. v. U.S. Gypsum Co., No. 87-4238 (D.N.J. June 9, 1994). Based on its 1993 ruling, the District Court also reserved the issue of what Prudential should have known for trial. The District Court then denied defendants' summary judgment motions dismissing Prudential's state law claims, although it did dismiss Prudential's breach of warranty claims. 14 The parties proceeded to complete pretrial discovery, and the District Court entered its Final Pretrial Order in 1996. Thereafter Gypsum, joined by W.R. Grace, filed summary judgment motions to dismiss Prudential's RICO claims on statute of limitations and substantive grounds. 2 USMP joined in these motions. After oral argument, the District Court on June 20, 2001 granted Gypsum's motion for summary judgment dismissing Prudential's RICO claims as barred by the statute of limitations. It also granted the motion with respect to USMP on July 12, 2001. Noting developments subsequent to its 1993 and 1994 opinions in both the Supreme Court and this court regarding when a civil RICO claim accrues, the District Court held that Prudential should have known of its injury before October 20, 1983, the relevant date for purposes of the four-year RICO statute of limitations. Prudential Ins. Co. of Am. v. U.S. Gypsum Co., 146 F.Supp.2d 643 (D.N.J. 2001). In stating that it should not have reserved the issue of what Prudential should have known [regarding its RICO claims] for trial in its 1994 opinion, the District Court explained: 15 While Prudential's 1993 motion for summary judgment raised the issue of whether Grace and Gypsum could provide evidence sufficient to show that Prudential should have known of its injuries, Grace and Gypsum's 1994 motion for summary judgment asked a different question: whether Prudential could provide evidence sufficient to refute the claim that it should have known of its injuries. 16 App. at 34a (emphasis in original). 17 The District Court then concluded that based on its reconsideration of the record and facts before it, and in light of changes in the law regarding the accrual period under RICO, Prudential did not satisfy its summary judgment burden with respect to that latter question. App. at 53a. Having thus dismissed Prudential's only federal claim, the District Court declined to exercise supplemental jurisdiction and dismissed Prudential's remaining state law claims against Gypsum and USMP without prejudice. Shortly thereafter, both Gypsum and USMP filed for bankruptcy. 18 Prudential timely appealed the June 20, 2001 order after securing a stay of Gypsum's and USMP's federal bankruptcy proceedings as well as certification by the District Court under Federal Rule of Civil Procedure 54(b). The only issue on appeal is whether the District Court erred in dismissing, on summary judgment, Prudential's RICO claims as time-barred. JURISDICTION AND STANDARD OF REVIEW 19 The District Court properly exercised jurisdiction over this action under 28 U.S.C. § 1331 based on Prudential's claims arising under RICO. The District Court also had supplemental jurisdiction over Prudential's state law claims pursuant to 28 U.S.C. § 1367. We have jurisdiction over the District Court's final judgment pursuant to 28 U.S.C. § 1291. 20 We exercise plenary review of a district court's grant of summary judgment. SEC v. Hughes Capital Corp., 124 F.3d 449, 452 (3d Cir.1997). Summary judgment may be granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c).