Court Opinion

ID: 3014478
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Date Created: 2015-10-13 22:04:46.663994+00
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Opinions of the United
2004 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

2-20-2004

Prudential Ins Co v. US Gypsum Co
Precedential or Non-Precedential: Precedential

Docket No. 02-3837

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"Prudential Ins Co v. US Gypsum Co" (2004). 2004 Decisions. Paper 946.
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                  PRECEDENTIAL               The Prudential Insurance
                                               Company of America,
   UNITED STATES COURT OF                   PIC Realty Corporation and
APPEALS FOR THE THIRD CIRCUIT                745 Property Investments,

                                                                  Appellants
            NO. 02-3837

                                         On Appeal from the United States
   PRUDENTIAL INSURANCE                    District Court for the District
    COMPANY OF AMERICA;                            of New Jersey
      PIC REALTY CORP;                    (D.C. Civil Nos. 87-cv-04227
      745 PROPERTY INV                           and 87-cv-04238)
                                          District Judge: Hon. Harold A.
                 v.                                  Ackerman

   UNITED STATES GYPSUM
   COMPANY; W.R. GRACE &                     Argued September 3, 2003
   COMPANY; THE CELOTEX
CORPORATION; UNITED STATES             Before: SLOVITER, NYGAARD and
MINERAL PRODUCTS COMPANY;                      ROTH, Circuit Judges
KEENE CORPORATION; PFIZER,
     INC.; ASBESTOSPRAY                      (Filed: February 20, 2004)
  CORPORATION; JOHN DOE
 COM PANIES, fictitious names for
   presently unidentified entities
                                      Robert J. Gilson (Argued)
  (District of New Jersey Civil No.   Khaled J. Klele
              87-cv-4227)             Riker, Danzig, Scherer, Hyland &
                                             Perretti
                                      Morristown, NJ 07962
 THE PRUDENTIAL INSURANCE
         COMPANY                      David Boies
                                      Robin A. Henry
                 v.                   Boies, Schiller & Flexner
                                      Armonk, NY 10504
 NATIONAL GYPSUM COMPANY
                                            Attorneys for Appellants
  (District of New Jersey Civil No.
              87-cv-4238)
Kell M. Damsgaard                                  claims under the Racketeer Influenced and
Kevin M. Donovan (Argued)                          Corrupt Organizations Act (“RICO”), 18
Morgan, Lewis & Bockius                            U.S.C. § 1961 et seq., as time-barred by
Philadelphia, PA 19103                             the statute of limitations. Prudential
                                                   argues that the District Court erred in
       Attorneys for Appellee                      applying the “injury discovery rule” in
       US Gypsum Company                           ascertaining when Prudential’s RICO
                                                   claims began to accrue, that there exist
Nancy McDonald                                     disputed issues of material fact concerning
Meredith Walling                                   when Prudential knew or should have
McElroy, Deutsch & Mulvaney                        know of its injuries from ACMs in its
Morristown, NJ 07962                               properties, and that the statute of
                                                   limitations for Prudential’s RICO claims
       Attorneys for Appellee                      should have been tolled due to Gypsum’s
       US Mineral Products                         active and fraudulent concealment of
                                                   known health risks associated with ACMs.
      OPINION OF THE COURT                         We will affirm.

                                                              INTRODUCTION
SLOVITER, Circuit Judge.
                                                           Prudential, a mutual insurance
        This case, one of the myriad               company, is one of the largest life,
asbestos cases that have besieged the              pr op er ty, a nd c a sualty insurance
courts, both state and federal, comes to us        underwriters in the world. It is also one of
from a somewhat different perspective              the largest real estate investors in North
than most of the others. The plaintiffs,           America, maintaining from the 1970s to
The Prudential Insurance Company of                the early 1980s “the largest real estate
America, PIC Realty Corporation, and 745           portfolio of any company in the world”
Property Investments (hereinafter referred         with hundreds of commercial real estate
to collectively as “Prudential”), are owners       properties. App. at 394a. Gypsum and
and operators of buildings that installed          USMP previously engaged in the
asbestos-containing materials (“ACM s”)            manufacturing and sale of ACMs. Their
that sued asbestos manufacturers to                products were widely used as construction
recover the costs of monitoring and                materials throughout the United States.
remediation.       Prudential appeals the
District Court’s orders granting the                      Prudential contends that ACMs
motions of defendants United States                manufactured by both Gypsum and USMP,
Gypsum Company (“Gypsum”) and United               as well as other defendants not parties to
States Mining Company (“USMP”) for                 this appeal, were used for fireproofing in
summary judgment dismissing Prudential’s

                                               2
at least eighteen of its buildings.1                          demolition of buildings containing
According to Prudential, it only began to                     fireproofing and insulation ACMs. 38
appreciate the hazards associated with in-                    Fed. Reg. 8829 (Apr. 6, 1973). That
place asbestos in 1984 at the time it had to                  standard regulated spray-on ACMs by
remove ACM s from one of its properties,                      limiting the concentration of asbestos in
the Chubb Building in Short Hills, New                        such ACM s and forbidding the visible
Jersey, before its demolition. The ACMs                       emission of such materials to the outside
were removed at a cost of approximately                       air during the spraying process. Id. at
one million dollars.       In late 1984,                      8830. It also required that “[a]ny owner or
Prudential established a task force to                        operator of a demolition operation who
investigate the in-place ACMs in its                          intends to demolish any institutional,
buildings. A Prudential internal survey                       commercial, or industrial building . . .
conducted between 1985 and 1986                               which contains any boiler, pipe, or lead-
discovered that most of the buildings                         supporting structural member that is
involved in this litigation, as well as                       insulated or fireproofed with friable
approximately 100 others, contained                           asbestos material” shall notify the EPA in
ACM s. As a result, Prudential incurred                       advance of the demolition and follow
hundreds of millions of dollars in expenses                   proper ACM -removal procedures set forth
relating to the maintenance, testing, and                     in the standard. Id. at 8829. In 1975, the
removal of ACMs in its buildings. It has                      EPA expanded this National Emission
refused to acquire or mortgage properties                     Standard to cover renovation activities
containing ACMs since 1986.                                   involving buildings containing ACMs by
                                                              mandating specific notification and
       Asbestos had, however, already                         removal procedures for such in-place
become a well-known and important                             ACM s. 40 Fed. Reg. 48,299-,300 (Oct.
public health and safety issue in the United                  14, 1975). It further amended the standard
States prior to 1984. In April 1973, the                      in 1978 to “extend coverage of the
E nvironmental Protection A ge ncy                            demolition and renovation provisions . . .
(“EPA”) established a National Emission                       to all friable asbestos materials and extend
Standard for Asbestos that severely                           the scope of the asbestos spraying
restricted the manufacturing and                              provisions . . . to all materials that contain
application of ACMs, as well as the                           more than 1 percent asbestos.” 43 Fed.
                                                              Reg. 28,372 (June 19, 1978).

    1                                                                The EPA also published various
        Although Prudential’s initial claims
                                                              guidelines and regulations on asbestos
c o v e r e d a p p r o x i m a t e l y s i x ty -o n e
                                                              management. One such EPA document
buildings, that number was reduced to
                                                              from 1978, titled “Hazard Abatement from
eighteen buildings by the time the District
                                                              Sprayed Asbestos-Containing Materials in
Court entered a Final Pretrial Order in
                                                              Buildings: A Guidance Document” that
1996.

                                                          3
was prepared “for those involved in the                      asbestos products in
use, removal, and disposal of asbestos                       buildings, but the EPA had
materials in the building trades,” states that               issued numerous guidance
“[a]sbestos in all its forms is considered a                 documents detailing for
serious respiratory hazard. . . . Unlike most                b u i l d in g o w n e r s t h e
chemical carcinogens, the mineral fibers                     widespread use of asbestos-
persist in the environment almost                            containing building
indefinitely and, when present in a                          materials, the association
building space open to its occupants,                        between asbestos exposure
represent a continuous source of                             and disease, the potential
exposure.” App. at 439a. The document                        risks of in-place asbestos-
also includes information on asbestos                        c o n t a in i n g p r o d u c t s ,
exposure, control, containment, and                          methods to detect asbestos,
removal. App. at 480a-500a. The EPA                          and recommendations for
issued a similar “guidance document” for                     proper actions to be taken
ACMs in school buildings in 1979 and                         once asbestos-containing
another report on controlling friable ACMs                   products are identified.
in buildings in March 1983. App. at 556a-
626a, 736a-817a.                                      Appellee Gypsum’s Br. at 13.

       In addition, the Occupational Safety                   There is record evidence that
and Health Administration (“OSHA”) had                various Prudential employees were aware
issued regulations on construction                    of the existence of ACMs in at least some
workers’ exposure to asbestos.         The            of Prudential’s properties prior to 1984.
imposition of these regulations and the               Arcadius E. Zielinski, an architect
increasing public debate regarding the                formerly in Prudential’s Corporate
health hazards of asbestos led various                Services and Building Department,
asbesto s manufacturers, in cludin g                  testified in a deposition that he surveyed
Gypsum, to disseminate additional                     filed specifications of Prudential’s home
information regarding the use and risks of            office buildings to determine whether they
ACM s.                                                contained ACM s. He stated that he told
                                                      the Vice President of Prudential’s
         As Gypsum correctly states in its            Co rpora te Services and B uildin g
brief:                                                Department in May 1981 that such ACMs
                                                      would not be hazardous so long as they
         In sum, before October 20,                   were firm and remained in-place. An
         1983, not only had the                       affidavit of David Holick, Jr., the director
         federal government (OSHA                     of architecture at Prudential’s real estate
         and EPA) issued mandatory                    investment department in Houston from
         r e g u l a ti o n s r e g a r d i n g       1979 to 1984, states that ACM s were a

                                                  4
topic discussed among some of                         jurisdiction in this case.
Prudential’s employees.          In addition,
asbestos testings were conducted, either by                     In its First Amended Complaint,
or at the request of local tenants, in several        P r u d e n t ia l a l l e g e d t h a t A C M s
of Prudential’s buildings prior to 1984.              manufactured by defendants and used in its
For example, in 1979 IBM Corporation, as              properties pose a potential health risk, and
tenant, tested the airborne asbestos levels           that it has expended and will continue to
at Prudential’s Jacksonville, Florida                 expend resources to inspect, monitor,
building and forwarded the results to                 maintain, and abate any problems caused
Prudential. App. at 48a-49a, 1053a-1151a.             by the presence of ACM s. It also asserted
Asbestos testing was also conducted at                past and future damages resulting from
least twice on the premises of Five Penn              actual property damages, diminution of
Center in Philadelphia prior to 1981.                 property values, loss of rental income, and
Similar asbestos testings were also                   disruption to tenants’ businesses. App. at
conducted in several Prudential buildings             11,107a-08a.
not at issue in this litigation.
                                                               After several years of discovery,
        Prudential initiated this action on           Gypsum and W.R. Grace, another
October 20, 1987 in the United States                 defendant, filed a motion for summary
District Court for the District of New                judgment in October 1991 to dismiss
Jersey, asserting a claim under the                   Prudential’s RICO claims on both
Comprehensive Environmental Response,                 substantive and statutes of limitations
Compensation, and L iability A ct                     grounds. They also sought to dismiss
(“CERCLA”), 42 U.S.C. § 9601 et seq.,                 Prudential’s state law claims based on
and state claims under theories of absolute           statutes of limitations. Prudential, in turn,
liability, strict liability, negligence, breach       filed a motion to strike defendants’ statute
of express and implied warranties, fraud,             of limitations defenses. The District
misrepresentation, fraudulent concealment,            Court, in a published opinion dated July
unfair and deceptive trade practices, civil           21, 1993, denied defendants’ motion for
c o ns pi ra cy, r e s t it u t io n , a nd           summary judgment to dismiss Prudential’s
indemnification. App. at 11,097a-11,153a.             RICO claims on substantive grounds and
The District Court, upon motions by                   also denied Prudential’s motion to strike
defendants, dismissed Prudential’ s                   defendants’ statute of limitations defenses.
CERCLA claim, but granted Prudential’s                Prudential Ins. Co. of Am. v. U.S. Gypsum
motion for leave to amend its complaint to            Co., 828 F. Supp. 287 (D.N.J. 1993).
add claims under the RICO statute.                    Focusing on the causation requirement of
Prudential Ins. Co. of Am. v. U.S. Gypsum             a RICO claim, the District Court stated
Co., 711 F. Supp. 1244 (D.N.J. 1989).                 that it “cannot rule as a matter of law” that
Prudential’s RICO claims thus form the                causation did not exist between
sole basis for federal subject matter                 defendants’ alleged violations and

                                                  5
Prudential’s injuries. Id. at 296. It also          After oral argument, the District Court on
ruled that “there are disputed issues of fact       June 20, 2001 granted Gypsum’s motion
as to whether Prudential actually knew of           for sum mary jud gment dismissing
its injury prior to 1984; and . . . the             Prudential’s RICO claims as barred by the
defendants are entitled to argue to a jury          statute of limitations. It also granted the
that Prudential should have known of its            motion with respect to USMP on July 12,
injury prior to 1984.” Id. at 297.                  2001. Noting developments subsequent to
                                                    its 1993 and 1994 opinions in both the
        On June 9, 1994, the District Court         Supreme Court and this court regarding
denied the motion for summary judgment              when a civil RICO claim accrues, the
by Gypsum and another defendant,                    District Court held that Prudential “should
Asbestospray Corporation, to dismiss                have known” of its injury before October
Prudential’s RICO claims on statute of              20, 1983, the relevant date for purposes of
limitations grounds, finding that disputed          the four-year RICO statute of limitations.
issues of material fact existed as to               Prudential Ins. Co. of Am. v. U.S. Gypsum
whether Prudential had knowledge of the             Co., Nos. 87-4227, 87-4238 (D.N.J. June
elements of its RICO claims more than               20, 2001). In stating that “it should not
four years prior to filing the suit.                have reserved the issue of what Prudential
Prudential Ins. Co. of Am. v. U.S. Gypsum           should have known [regarding its RICO
Co., No. 87-4238 (D.N.J. June 9, 1994).             claims] for trial” in its 1994 opinion, the
Based on its 1993 ruling, the District Court        District Court explained:
also reserved the issue of what Prudential
should have known for trial. The District                  While Prudential’s 1993
Court then denied defendants’ summary                      mo tion for summary
judgment motions dismissing Prudential’s                   judgment raised the issue of
state law claims, although it did dismiss                  whether Grace and Gypsum
Prudential’s breach of warranty claims.                    could provide evidence
                                                           sufficient to show that
        The parties proceeded to complete                  Prudential should have
pretrial discovery, and the District Court                 known of its injuries, Grace
entered its Final Pretrial Order in 1996.                  and Gypsum’s 1994 motion
Thereafter Gypsum, joined by W.R. Grace,                   for summary judgment
filed    summary judgment motions to                       asked a different question:
dismiss Prudential’s RICO claims on
statute of limitations and substantive
grounds. 2 USMP joined in these motions.
                                                    voluntary relief pursuant to Chapter 11 of
                                                    the United States Bankruptcy Code. This
                                                    action therefore was automatically stayed
     2
       Subsequent to the filing of these            as to W.R. Grace pursuant to 11 U.S.C. §
motions, W.R. Grace filed a petition for            362(a).

                                                6
       whether Prudential could                     The District Court also had supplemental
       provide evidence sufficient                  jurisdiction over Prudential’s state law
       to refute the claim that it                  claims pursuant to 28 U.S.C. § 1367. We
       should have known of its                     have jurisdiction over the District Court’s
       injuries.                                    final judgment pursuant to 28 U.S.C. §
                                                    1291.
App. at 34a (emphasis in original).
                                                            We exercise plenary review of a
        The District Court then concluded           district court’s grant of summary
that based on its reconsideration of the            judgment. SEC v. Hughes Capital Corp.,
record and facts before it, and in light of         124 F.3d 449, 452 (3d Cir. 1997).
changes in the law regarding the accrual            Summary judgment may be granted “if the
period under RICO, Prudential did not               pleadings, depositions, answers to
satisfy its summary judgment burden with            interrogatories, and admissions on file,
respect to that latter question. App. at 53a.       together with the affidavits, if any, show
Having thus dismissed Prudential’s only             there is no genuine issue as to any material
federal claim, the District Court declined          fact and that the moving party is entitled to
to exercise supplemental jurisdiction and           a judgment as a matter of law.” Fed. R.
dismissed Prudential’s remaining state law          Civ. P. 56(c).
claims against Gypsum and USM P without
prejudice.       Shortly thereafter, both                         DISCUSSION
Gypsum and USM P filed for bankruptcy.
                                                            Although the RICO statute does not
       Prudential timely appealed the June          expressly provide a statute of limitations,
20, 2001 order after securing a stay of             the Supreme Court, by analogy to the
Gypsum’s and USMP’s federal bankruptcy              Clayton Act, has established a four-year
proceedings as well as certification by the         limitations period for civil RICO claims.
District Court under Federal Rule of Civil          Agency Holding Corp. v. Malley-Duff &
Procedure 54(b). The only issue on appeal           Assoc. Inc., 483 U.S. 143, 156 (1987).
is whether the District Court erred in              Prudential filed this action on October 20,
dismissing, on summary judgment,                    1987. Therefore, we may uphold the
Prudential’s RICO claims as time-barred.            District Court’s summary judgment order
                                                    only if the statute of limitations for
        JURISDICTION AND                            Prudential’s RICO claims did not begin to
      STANDARD OF REVIEW                            accrue before October 20, 1983.

       The District Court properly                  A.     Test for Accrual of Civil RICO
exercised jurisdiction over this action                    Claims
under 28 U.S.C. § 1331 based on
Prudential’s claims arising under RICO.                    In Malley-Duff, the Supreme Court

                                                7
left open the question of when the statute           statute of limitations begins to run when
of limitations for civil RICO claims begins          the plaintiff knew or should have known
to accrue. It has not resolved that issue but        that each element of a civil RICO claim
it has rejected several standards this court         existed: the injury, the source of the injury,
had used to determine when the RICO                  and the pattern of activities prohibited
statute of limitations period accrues.               under RICO causing the injury. Id. at 554.
Although most of the Courts of Appeals at            However, the Court did not “settle upon a
that time applied forms of an “injury and            final rule,” noting that among available
pattern discovery rule” for determining the          remaining alternatives were the injury
accrual of RICO claims, this court applied           discovery rule and the injury occurrence
a “last predicate act” exception under               rule. Id. at 554 n.2.
which “[if], as a part of the same pattern of
racketeering activity, there is further injury               After Rotella, we adopted the injury
to the plaintiff or further predicate acts           discovery rule in Forbes v. Eagleson, 228
occur, . . . the accrual period shall run from       F.3d 471 (3d Cir. 2000), holding that in
the time when the plaintiff knew or should           determining statute of limitations issues in
have known of the last injury or the last            civil RICO claims “we must determine
predicate act which is part of the same              when the plaintiffs knew or should have
pattern of racketeering activity. The last           known of their injury.” Id. at 484. In
predicate act need not have resulted in              addition to the injury, the plaintiffs must
injury to the plaintiff but must be part of          also have known or should have known of
the same ‘pattern.’” Keystone Ins. Co. v.            the source of their injury. Id. at 485. As
Houghton, 863 F.2d 1125, 1126 (3d Cir.               we explained in Forbes, “nothing more”
1988). In Klehr v. A.O. Smith Corp., 521             than these two requirements “was required
U.S. 179 (1997), the Supreme Court                   to trigger the running of the four-year
rejected the Third Circuit exception. The            limitations period [of a civil RICO
Court reasoned that such a test would                claim].” Id. (citations omitted).
result in a limitations period longer than
that which Congress could have                               Prudential does not dispute that the
contemplated, as well as would improperly            injury discovery rule is the governing legal
allow claimants to recover for injuries              standard in this case. It quarrels, rather,
outside of the limitations period by                 with that rule’s application in this case.
“bootstrapping” them onto a later and                Specifically, Prudential argues that, based
independent predicate act. Klehr, 521 U.S.           on the record of this case, it could not have
at 187-90.                                           known its injuries prior to October 20,
                                                     1983, and that in any event, the injury it
       A few years later, in Rotella v.              suffered must be an “actual” injury before
Wood, 528 U.S. 549 (2000), the Supreme               the statute of limitations is triggered.
Court also rejected the “injury and pattern
discovery rule” itself, under which the              B.     Whether Prudential Should Have

                                                 8
       Known of Its Injuries Prior to              that included both past and future harm to
       October 20, 1983                            Prudential.     More specifically, the
                                                   complaint alleges injuries that include
       To evaluate Prudential’s argument,          prospective damages for complying with
we start by looking to the injury it alleged       federal regulations concerning the
in its amended complaint.          App. at         renovation, alteration, or demolition of
11,097a-11,153a.      In that complaint,           buildings containing ACMs:
Prudential alleges injuries:
                                                         Because of the potential
       relating to abatement and                         health and contamination
       building monitoring actions,                      dangers, plaintiffs have been
       building survey and testing                       compelled to determine the
       costs, tenant relocation                          extent to which asbestos-
       c o s t s , opera t i o n s a n d                 containing materials are
       maintenance program costs                         present in their buildings
       for asbesto s-con tainin g                        and the extent to which the
       m a terials before their                          buildings and their contents
       removal from buildings,                           have been or may be
       substantial disruption to                         contaminated with asbestos
       their business, substantial                       fibers. Where such materials
       property damage to their                          or contamination have been
       property (such as carpeting,                      or are found, plaintiffs have
       ceilings, curtains, etc.), and                    adopted or will have to
       other costs associated with                       adopt, pursuan t to
       t h e c o n t a m i n a ti o n o r                governmental regulations
       potential contamination of                        and common-law duties,
       the buildings.          Plaintiffs                costly abatement measures
       have also suffered and will                       to remove and replace,
       suffer, among other                               enclose, encapsulate, or
       damages, the loss of rental                       repair such materials in
       income from the buildings                         order to eliminate the
       during          abatement                         potential asbestos health
       procedures or due to                              hazard created by such
       premature tenant departures,                      c o n t a mi n a t io n o f th e
       and the diminution in the                         buildings.
       commercial value of the
       properties.                                 App. at 11,107a. Prudential’s amended
                                                   complaint thus seeks recovery for both
App. at 11,108a (emphasis added). This             past and future injuries caused by the
language explicitly states broad injuries          presence of ACMs in Prudential’s

                                               9
properties.                                         incidents and tenant complaints in
                                                    Prudential’s own buildings should have
        In holding that Prudential has not,         also provided Prudential notice of the
and could not, produce evidence sufficient          ACM -related injuries it alleges in the
to refute the defendants’ claims that               amended complaint. At Five Penn Center
Prudential should have known of the injury          in Philadelphia, Prudential knew that the
it alleged in its amended complaint prior to        ACMs were used for fireproofing, and that
October 20, 1983, the District Court                the ACMs were sources of potential future
reviewed government regulations and                 hazards; it sent a letter on September 29,
publications as well as evidence pertinent          1976 to the building’s seller, giving formal
to Prudential’s own buildings and                   notice that the seller was in breach of the
employees regarding the hazards of ACMs             Agreement of Sale because, among other
and related precautions. Some of the                things, “it appears that the building was in
evidence examined by the District Court is          v i o l a ti o n of law pertain in g t o
recited in the introductory section of this         concentration of air-borne asbestos on and
opinion. In reviewing the effect of                 prior to the date of settlement under said
government information regard ing                   Agreement of Sale.”         App. at 936a.
asbestos on Prudential’s awareness of               Colonial Penn, a major tenant in the
ACM hazards, it is important to note that           building, complained in 1981that ACMs
Prudential is a very sophisticated company          fell from ceiling in one of its offices, and
that operates a large casualty insurance            Prudential incurred cleaning and
business and an extensive estate                    encapsulating expenses related to the
investment business.        Such a sizable          incident.
business operation not only provided
Prudential with more opportunities than an                 Similarly, Prudential was aware of
average plaintiff to access ACM-related             the presence of ACMs in the IBM
information, but it should have also given          Building in Jacksonville, Florida as early
Prudential a greater incentive to diligently        as 1979, when tenant IBM requested
research and investigate any potential              Prudential’s assistance in surveying the
injuries it may suffer through the presence         fireproofing material in the building.
of ACM s in its own properties. As the              Based on its own testing, IBM informed
District Court correctly pointed out,               Prudential in January 1980 that a sample
because Prudential’s liability exposure was         of the fireproofing material contained six
magnified by the large size of its real             percent of Chrysotile asbestos. App. at
estate portfolio, “prudence dictates that           1055a. At Prudential’s own request, IBM
Prudential should have remained informed            forwarded a copy of its asbestos and air
of its legal responsibilities.” App. at 43a.        sample analyses to Prudential in March
                                                    1980. These incidents and tenant
       Nor was Prudential obliged to rely           complaints, combined with government
solely on government warnings. Multiple             information, should therefore have

                                               10
provided Prudential inquiry notice                            We note, however, that the injury
regarding the potential hazards of ACMs              discovery rule in Forbes allows the
in its properties.3                                  limitations period of civil RICO claims to
                                                     accrue not only if Prudential actually knew
        Despite the facts supporting the             of its injuries, but also if Prudential should
District Court’s legal conclusion,                   have known of its injuries. Forbes, 228
Prudential argues that because these                 F.3d at 484. As the District Court
i n cidents did not reflect a c tual                 explained in its opinion, because Gypsum
contamination prior to 1984, they do not             and USMP in support of their motions for
show the same type of injuries for which             summary judgment provided sufficient
Prudential currently seeks damages. It               evidence that Prudential “should have
contends that pre-1984 government                    known” before October 20, 1983 of the
regulations and information were not                 injuries it alleged in the amended
directly related to in-place ACMs, and that          complaint, Prudential was required to
its actions with respect to building tenants         provide sufficient evidence to refute that
merely demonstrated business decisions to            claim in order to defeat summary
placate tenants rather than actual                   judgment. Given the above facts, we agree
awareness of potential hazards related to            with the District Court that:
ACM s. These contentions are to support
Prudential’s principal argument that it had                 Prudential’s         show ing
no reason to know of its ACM-related                        reg arding its actual
injuries until it took on the demolition of                 knowledge falls far short . .
the Chubb Building in 1984, when ACMs                       . of demonstrating why
in that building released sufficient asbestos               P r u d e n t ia l r em ai n ed
fibers so as to contaminate its building.                   unaware of the potential
                                                            hazard asbestos posed in its
                                                            holdings. While the court
  3                                                         may accept for the purposes
     As the proprietor of a large real estate
                                                            o f t h i s m o t i o n th a t
portfolio, Prudential should have also
                                                            Prudential was not aware of
become aware of ACM-related hazards
                                                            the EPA’s repea ted
through the existence of ACMs in other
                                                            warnings about the potential
Prudential properties not at issue in this
                                                            hazards of in-place asbestos
litigation. Evidence show, for example,
                                                            . . . such events should have
that Prudential was aware of the presence
                                                            triggered Prudential’s
of ACM s in Prudential Center, Boston as
                                                            inquiry into the hazards
early as 1978; it received multiple
                                                            posed by asbestos.
inquiries and from tenants, OSHA, and the
Massachusetts Office of Occupational
                                                     App. at 37a. For example, the EPA
Hygiene regarding ACM -related issues.
                                                     regulations on the removal of asbestos
App. at 50a-51a, 1006a-25a.

                                                11
during building d emo litions were                   regarding the timing of its awareness of
promulgated in the 1970s. Therefore even             ACM -related hazards, Prudential argues
if the demolition of the Chubb Building in           that the Forbes standard requires actual,
1984 was the first demolition of any of              rather than potential, harm to a civil RICO
Prudential’s buildings, it should have had           plaintiff. It asserts that it suffered no
prior awareness, as a major real estate              injuries either from its knowledge of the
investor, of the regulations and the ACM-            existence of in-place ACMs in its
related danger to which they were aimed.             properties or from the risk of injuries
As stated in an EPA training document                stemming from those ACMs. Prudential
from February 1983:                                  asserts that ACMs only cause injury when
                                                     they deteriorate and begin releasing
       A building owner might                        hazardous levels of asbestos fibers that
       choose to believe there is no                 contaminate buildings, and therefore it
       problem in his/her building,                  suffered injury only when actual
       but, as we have seen, it is                   contamination required it to address or
       clearly prudent to find out                   remedy the hazards such contaminations
       the facts. With the rising                    posed. Appellants’ Br. at 21-22.
       public awareness of asbestos
       hazards, most any building                            A s we        prev iously no ted,
       owner would be hard                           Prudential’s amended complaint clearly
       pressed to justify n o                        seeks damages for both past and future
       reasonable knowledge of the                   injuries. Consequently, Prudential cannot
       hazard.                                       also argue that the statute of limitations for
                                                     its RICO claims should not have begun to
App. at 46a.                                         run until those injuries became “actual”
                                                     injuries and it needed to take remedial
        Prudential also admits that some of          measures and incurred expenses for
its own employees “had some awareness                remediation. Such a legal rule would
of asbestos as an issue in certain of                place too much discretion in the plaintiff’s
Prudential’s buildings during the late               hands, and would be antithetical to the
1970s and early 1980s.” Appellants’ Br.              “basic policies of all limitations
at 34. We therefore agree with the District          provisions: repose, elimination of stale
Court that Prudential should have known              claims, and certainty about a plaintiff’s
of the injuries alleged in its complaint             opportunity for recovery and a defendant’s
prior to October 20, 1983.                           potential liabilities.” Rotella, 528 U.S. at
                                                     550. RICO’s provision of a civil remedy
C.     Pruden tial’s    “Actual     Injury”          was enacted to “turn [plaintiffs] into
       Argument                                      prosecutors, ‘private attorneys general,’
                                                     dedicated to eliminating racketeering
       In addition to its factual contentions        activity. . . . It would, accordingly, be

                                                12
strange to provide an unusually long basic          conjunction with the abatement of
limitations period that could only have the         asbestos-containing materials in their
effect of postponing whatever public                structures . . . .” Id. at 230. The injury
benefit civil RICO might realize.” Id. at           analysis in that case, therefore, turned on
557-58. Prudential’s proposed “actual               the interpretation of contract provisions
injury” standard would allow a civil RICO           rather than on any statute of limitations.
plaintiff to control when the relevant
limitations periods accrue through its                      Similarly, the plaintiff in MDU
timing of the assessment, investigation,            Resources Group v. W.R. Grace and Co.,
and correction of its injuries, thereby             14 F.3d 1274 (8th Cir. 1994), filed claims
producing precisely the long limitations            under North Dakota state-law theories of
periods frowned upon in Rotella.                    negligence, strict liability, failure to warn,
                                                    and breach of warranty, and only sought
        Prudential cites, as support for the        recovery for the costs of removing ACMs
“actual injury” standard it puts forth,             from one of its buildings. Id. at 1276. The
several federal and state cases supporting          MDU court, therefore, focused on actual
its argument that in-place ACMs only                asbestos contamination as the point when
cause injuries when they release hazardous          injury occurs, because under North
levels of asbestos fibers into buildings.           Dakota’s economic-loss doctrine MDU
Appellants’ Br. at 20-22.        We note,           could not have brought suit until the only
however, that it is Prudential itself that          injury it asserted – the ACM-removal costs
chose to pursue redress under RICO for              it already incurred – materialized. See id.
both monitoring and testing costs                   at 1279 n.8 (suggesting that the statute of
associated with potential contamination as          limitations could have begun to run earlier
well as costs for abatement and repair in           had MDU claimed different injuries).
its amended complaint. In contrast, the
plaintiffs in the cases cited by Prudential                 The different legal principles
confined their claims to costs of                   governing the claims and the limited
remediation, and pursued their redress              scopes of injury involved in these cases
through state-law claims that require               required different considerations for
different accrual analyses than used in             calculating statute of limitations periods
RICO cases.        The plaintiffs in Port           that are not applicable to Prudential’s
Authority of New York and New Jersey v.             broad RICO claims here. We therefore
Affiliated FM Insurance Co., 311 F.3d 226           join the District Court in rejecting
(3d Cir. 2002), for example, pursued their          Prudential’s “actual injury” concept as it
asbestos claims under New Jersey state              relates to the accrual of the statute of
law based on first-party insurance                  limitations for Prudential’s civil RICO
contracts rather than on RICO or tort               claims.
liability grounds.      They also sought
recovery only “for expenses incurred in             D.     Fraudulent Concealment

                                               13
        Finally, Prudential contends that the                ( 3) whe the r ther e is
statute of limitations should have been                      sufficient evidence to
equitably tolled because defendants                          support a finding that
fraudulently concealed from Prudential                       plaintiffs were not aware,
that it could be or had been injured by in-                  nor should they have been
place ACMs manufactured by defendants.                       a w a r e , o f t h e f a c ts
It argues that despite long-standing                         supporting their claim until
knowledge of the adverse health effects of                   a time within the limitations
asbestos, defendants did not publicly                        period measured backwards
disclose these risks and instead advertised                  from when the plaintiffs
their products as safe in pamphlets,                         filed their complaint.
brochures, direct mailing catalogs, and
other forms of advertisement. Prudential             Id. at 487 (emphasis in original).
contends that because of these efforts by
defendants to conceal hazards associated                       The Supreme Court has stated that
with ACM s, there exists a genuine issue of          to equitably toll the running of a
material fact regarding fraudulent                   limitations period in the civil-RICO
concealment that is sufficient to toll the           c o n t e x t b y c la i m i n g f ra u d u le n t
limitations period for its RICO claims.              conce alme nt, plaintiff s mu st have
Appellants’ Br. at 9-14.                             exercised “reasonable diligence” to
                                                     discover their claim. Klehr, 521 U.S. at
        In Forbes, we held that fraudulent           194. We also stated in Mathews v. Kidder,
concealment could be a basis for equitably           Peabody & Co., Inc., 260 F.3d 239 (3d Cir.
tolling the RICO limitations period. 228             2001), where we rejected an equitable
F.3d at 486-88. At the summary judgment              tolling claim after finding that the plaintiff
stage, a court must determine:                       should have known of its injuries, that
                                                     “[i]n order to avoid summary judgment,
       (1) whether there is                          there must be a genuine issue of material
       sufficient evidence to                        fact as to whether the Appellants exercised
       support a finding that                        reasonable due diligence in investigating
       defenda nts engaged in                        their claim.” Id. at 257.
       a f f i r m a t iv e a c t s of
       concealment designed to                               We conclude that Prudential has
       m i slead the pla intiffs                     failed to satisfy the Forbes standard for
       regarding facts supporting                    tolling the limitations period for its RICO
       their. . .claim, (2) whether                  claims. Even assuming, as the District
       there is sufficient evidence                  Court did, that Gypsum engaged in
       to support a finding that                     fraudulent concealment, Prudential had not
       p l a i n ti f f s e x e r c i s ed           demonstrated that it exercised reasonable
       reasonable diligence, and                     diligence in discovering or investigating its

                                                14
injuries. As the discussion above shows,             statute of limitations grounds and
irrespective of defendants’ attempts to              dismissing Prudential’s remaining state
conceal from Prudential the hazards posed            law claims without prejudice.
by ACM s in Prudential’s buildings,
Prudential had many other sources of
information sufficient to place it on
inquiry notice of such ACM-related
injuries. Prudential should have, for
example, given heed to government
warnings and regulations to undertake
surveys and testing of its buildings.
Moreover, as we noted in Mathews, “to
determine what constitutes ‘reasonable’
due diligence [for determining if a plaintiff
should have known of its injury], we must
consider the magnitude of the existing
storm warnings. The more ominous the
warnings, the more extensive the expected
inquiry.” 260 F.3d at 255. Here, given the
magnitude of Prudential’s commercial real
estate investments and the significance of
the threat ACMs posed to that investment,
a substantial and diligent investigation by
Prudential was called for prior to October
20, 1983. Its failure to have undertaken
such an investigation regarding ACM-
related hazards was, as a matter of law, the
failure to exercise due diligence. We
therefore conclude that the limitations
period for Prudential’s RICO claims was
not tolled under a fraudulent concealment
theory.

             CONCLUSION

       For the foregoing reasons, we will
affirm the District Court’s orders granting
Gypsum and USMP summary judgment on

                                                15