Fraudulent Concealment: The Essence of a Toxic Tort Case

by Raphael Metzger, Esq.

Toxic tort cases are essentially products liability cases.  The causes of action usually pled in products liability cases are strict liability based on failure to warn, strict liability for design defect, and negligence (failure to warn).

However, strict liability and failure to warn claims may not be viable causes of action with respect to certain toxic products.

For example, design defect strict liability claims may not be asserted against manufacturers of prescription drugs.  Brown v. Superior Court (1988) 44 Cal.3d 1049, 245 Cal.Rptr. 412.  Strict liability claims for failure to warn are also not viable if the drug manufacturer adequately warned the prescribing physician, even if the physician did not give the warning to the patient. Id.

Strict liability and negligence claims based on inadequate labeling may also not be available against pesticide manufacturers, because claims that pesticides contained inadequate warning labels have been held preempted by the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA").  See, e.g., Louisiana-Pacific Corp. v. Koppers Co. (1995) 32 Cal.App.4th 599, 38 Cal.Rptr.2d 257.

Given the uncertain outcome of strict liability and negligence claims with respect to different types of chemical products governed under different regulatory schemes, the attorney litigating a toxic tort case should consider including other potentially viable causes of action in the complaint such as ultrahazardous activity, breach of implied warranty, and battery.

The essence of the typical toxic tort case is that the manufacturer concealed the toxic hazards of its chemical product from the plaintiff, thereby causing the plaintiff's toxic injury.  Thus, the very nature of the case suggests a fraudulent concealment claim.

Fraudulent concealment is rarely pled as a cause of action in toxic tort complaints, despite its unique suitability to such cases.

The rarity of the cause of action in toxic tort cases may be due to the widely held belief that the cause of action is only available when the defendant owes a fiduciary duty to the plaintiff.  This belief is, unfortunately, a common misconception.

A fiduciary relationship is not a required element of the cause of action.  A fiduciary relationship is often pled in fraudulent concealment cases, because it readily establishes a duty on the part of the defendant to make disclosure.  However, a fiduciary duty is not the exclusive means by which a duty of disclosure may be established.

A duty of disclosure may also be established by federal and state statutes and regulations, as well as the common law.  Indeed, there are numerous federal and state laws which mandate some type of disclosure of toxic chemical hazards.

Regulations promulgated under the federal and California OSHA Acts require chemical manufacturers and suppliers to disclose information regarding the toxic hazards of their chemicals to their customers, who must provide the information to their employees.  See 29 C.F.R. § 1910.1200 ("the Hazard Communication Standard").  The purpose of the regulations is "to ensure that the hazards of all chemicals produced or imported are evaluated, and that information concerning their hazards is transmitted to employers and employees."  29 C.F.R. § 1910.1200(a).

While the Hazard Communication Standard does not require chemical manufacturers to disclose toxicity hazard information to customers' employees, California law does.  In 1986, the voters adopted Proposition 65 which states:  "No person in the course of doing any business shall knowingly and intentionally expose any individual to a chemical known to the state to cause cancer or reproductive toxicity without first giving clear and reasonable warning to such individual...."  California Health & Safety Code § 25249.6.

"Proposition 65 requires that warnings be given to individuals."  California Labor Federation, AFL-CIO v. California Occupational Safety and Health Standards Board, 221 Cal.App.3d 1547, 1556, 271 Cal.Rptr. 310 (1990).  (emphasis in original).  "All employees are individuals and thus are entitled to Proposition 65 warnings in the workplace absent an exemption in the law."  Id. "Although public employers and employers with fewer than 10 employees are exempt from Proposition 65, the proposition contains no exemption for all other persons doing business who expose their employees to carcinogens or reproductive toxins."  Id.

The federal Hazard Communication Standard, Proposition 65, other environmental laws, as well as the common law, may be alleged to establish a duty by a chemical manufacturer to disclose toxic hazards of its products to the plaintiff.  Such allegations should suffice to establish the duty of disclosure required to state a cause of action for fraudulent concealment, in the absence of a fiduciary relationship among the parties.

The elements of a fraudulent concealment action are: (1) The defendant must have concealed or suppressed a material fact; (2) The defendant must have been under a duty to disclose the fact to the plaintiff; (3) The defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff;  (4) The plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact; and (5) As a result of the concealment or suppression of the fact the plaintiff must have sustained damage.  Marketing West, Inc. v. Sanyo Fisher (USA) Corp. (1992) 6 Cal.App.4th 603, 612-613.

The first element (concealment) is established by the manufacturer's concealment of the toxic hazards of its product.  The second element (duty to disclose) has been discussed.  The third element (intent to defraud) may be satisfied by alleging that the manufacturer concealed the toxic hazard of the product to induce the plaintiff to use it. The fourth element (ignorance of the hazard) is easily alleged, as are the remaining elements.

The fraudulent concealment cause of action has three advantages.  First, it is well suited to the usual theme of the case in toxic tort cases.  Second, proof of the cause of action itself establishes a claim for punitive damages.  Third, the cause of action may be viable with respect to certain chemical products for which strict liability and negligence claims may not be available due to various preemptive federal statutes and various preclusive common law doctrines.

This article was published in the Los Angeles Daily Journal on October 7, 1996 under the title "Cover Charges: Establishing Fraudulent Concealment Claims.”