Opinions of the United 1995 Decisions States Court of Appeals for the Third Circuit
6-6-1995
In Re: School Asbestos Lit. Precedential or Non-Precedential:
Docket 94-1820
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Recommended Citation "In Re: School Asbestos Lit." (1995). 1995 Decisions. Paper 156. http://digitalcommons.law.villanova.edu/thirdcircuit_1995/156
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova University School of Law Digital Repository. It has been accepted for inclusion in 1995 Decisions by an authorized administrator of Villanova University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu. UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _________________________
No. 94-1820 _________________________
IN RE: SCHOOL ASBESTOS LITIGATION
SCHOOL DISTRICT OF LANCASTER; MANHEIM TOWNSHIP SCHOOL DISTRICT; LAMPETER-STRASBURG SCHOOL DISTRICT; and NORTHEASTERN SCHOOL DISTRICT
vs.
LAKE ASBESTOS OF QUEBEC, LTD.; THE CELOTEX CORPORATION; RAYMARK INDUSTRIES, INC.; UNION CARBIDE CORP.; ASBESTOSPRAY CORP.; SPRAYO-FLAKE COMPANY; NATIONAL GYPSUM CO.; SPRAYED INSULATION, INC.; ASBESTOS FIBRES INC.; DANA CORPORATION; U.S. GYPSUM; U.S. MINERAL PRODUCTS COMPANY; SPRAYON INSULATION & ACOUSTICS, INC.; SPRAYON RESEARCH CORP.; KEENE CORP.; WORBEN CO., INC.; WILKIN INSULATION COMPANY; W.R. GRACE & CO.; OWENS-CORNING FIBER-GLAS CORPORATION; STANDARD INSULATION, INC.; NORTH AMERICAN ASBESTOS CORPORATION; CASSIAR RESOURCES LTD.; BELL ASBESTOS MINES, LTD.; ASBESTOS CORPORATION LIMITED; SOUTHERN TEXTILE CORP.; OWENS-ILLINOIS, INC.; TURNER & NEWALL LIMITED; THE FLINTKOTE CO.; FIBREBOARD CORPORATION; GAF CORP.; UNIROYAL, INC., CAPE ASBESTOS; PFIZER, INC.; KAISER CEMENT CORPORATION; BES-TEX, INC.; GEORGIA-PACIFIC CORP.; KAISER GYPSUM COMPANY
Board of Directors of City Trusts,
Appellant
______________________________________
On Appeal from the United States District Court For the Eastern District of Pennsylvania (No. 83-CV-00268) _____________________
ARGUED: March 6, 1995
Before: BECKER, SCIRICA and WOOD, Jr.,* Circuit Judges.
(Filed June 6, l995)
DAVID A. GRADWOHL, ESQUIRE (ARGUED) JAMES E. MILLER, ESQUIRE One Liberty Place Thirty-Second Floor Philadelphia, PA 19103
Attorneys for Appellant
BARRY H. BOISE, ESQUIRE (ARGUED) ALAN KLEIN, ESQUIRE 2200 PSFS Building 12 S. 12th Street Philadelphia, PA 19107
Attorneys for Appellee
___________________________________
OPINION OF THE COURT ___________________________________
WOOD, Jr., Circuit Judge.
The Board of Directors of City Trusts [Board] appeals the
district court's order finding that the Board and Girard College
[College] were included in a certified class involving a
nationwide class action suit against Uniroyal and numerous other
defendants in regard to the presence of asbestos in public and
private schools. Because the district court found the appellants
*. The Honorable Harlington Wood, Jr., United States
Circuit Judge for the Seventh Circuit, sitting by designation. were members of the class, the Board was enjoined from pursuing
its own state asbestos lawsuit against Uniroyal. The district
court held that the Board, as a member of the class, was bound by
the Uniroyal settlement, and under the Anti-Injunction Act, 28
U.S.C. § 2283, it was necessary in aid of the court's
jurisdiction to enjoin the appellant's state court action. The
Board appeals.
I.
The Board was created by a Pennsylvania statute in June 1869
to act as a trustee in administering a number of estates and
trusts for the benefit of the City of Philadelphia.1 The estate
involved here is the Estate of Stephen Girard, which came into
existence in 1831. The Girard Estate is the largest estate and
1 The Board's powers are statutorily defined as follows:
All and singular the duties, rights and powers of the city of Philadelphia, concerning all property and estate whatsoever, dedicated to charitable uses or trusts, the charge or administration of which is now or shall hereafter become vested in or confined to the city of Philadelphia, shall be discharged by the said city through the instrumentality of a board composed of fifteen persons, including the mayor of said city, the presidents of the select and common councils for the time being, and twelve other citizens appointed as hereinafter provided, to be called directors of city trusts, who shall exercise and discharge all the duties and powers of said city, however acquired, concerning any such property appropriated to charitable uses, as well as the control and management of the persons of any orphans or others, the objects of such charity, to the extent that the same have been or hereafter may be, by statute law or otherwise, vested in or delegated to the said city for the officers thereof.
Act of June 30, 1869, P.L. 1276, 53 P.S. § 16365, repealed in part, Act of November 19, 1959, P.L. 1526. trust owned and administered by the Board. After making numerous
gifts to various institutions and individuals, Mr. Girard devised
and bequeathed his entire residuary estate to the City of
Philadelphia in trust for the creation of an "orphan
establishment." In furtherance of the deceased's wishes, Girard
College was established as an institution for orphan children in
Philadelphia. The Board acts as trustee in managing the Girard
Estate and the College. The Board also manages approximately 110
other estates and trusts, which it administers according to the
wishes of its benefactors.
Girard College initially admitted only white male orphans,
but has since expanded its admission criteria to include all
minorities and children not considered orphans in the traditional
sense (only one absent parent).2 The primary mission of Girard
College is to act as a guardian to orphaned children by providing
for their full development and nurturing needs. Pursuant to this
mission, the orphans not only receive food, clothing, health care
and a caring place to live, but in addition, the Board provides
them with an education at the College through grade twelve. Most
children live on the school grounds only through the school year,
while some remain all year. Except for Girard College, the Board
2 The Philadelphia Orphans' Court oversees certain aspects of
Girard College. Only children who qualify as orphans under the
definition established by the Orphans' Court may be admitted to
Girard College. See e.g., 20 Pa. Stat. §§ 711, 712, 722, 7142. does not own or operate any estate or trust which requires the
Board to provide educational services to children incident to its
primary mission of administering estates and trusts pursuant to
its statutory and fiduciary duties.
Therefore, due to the Board's unique status in reference to
Girard College, many regulatory statutes do not apply, including
the Pennsylvania Public School Code. The Board in the past,
however, has voluntarily chosen to follow various regulatory
standards to protect and benefit the orphan children. In 1988,
and in compliance with the Asbestos Hazard Emergency Response Act
[AHERA], 15 U.S.C. § 2641 et seq., the Board voluntarily
submitted an "Asbestos Management Plan." The Board submitted the
Plan on AHERA forms and listed Girard College as an "LEA."3
In 1983, the first case was filed in regard to asbestos in
public and private schools. In 1984, under the Federal Rules of
3 "LEA" stands for local educational agency, which is defined
as "a public board of education or other public authority legally
constituted within a State for either administrative control or
direction of, or to perform a service function for public
elementary or secondary schools in a city, county, township,
school district, or other public subdivision of a State, or such
combination of school districts or counties as recognized in a
State as an administrative agency for its public elementary or
secondary schools." 20 U.S.C. § 2891(12). Civil Procedure Rule 23(b)(3), the district court certified, and
the Third Circuit affirmed, the following class: All entities which own or operate in whole or in part any public educational facilities, as defined in Section 198(a)(10) of the Elementary and Secondary Education Act of 1965, 20 U.S.C. § 2854, throughout the United States; and all entities which own or operate in whole or in part any non-public, non-profit elementary or secondary educational facilities, including entities with religious affiliations, in the United States, to the extent that such non-profit entities are owned or operated by one or more non-profit corporations or associations no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private shareholder or individual.
Pretrial Order 20. See also In re Asbestos Litigation, 104 F.R.D. 422 (E.D. Pa. 1984), aff'd, 789 F.2d 996 (3d Cir.), cert. denied, 479 U.S. 852 (1986).
In 1988, the class definition was amended and limited to
exclude certain schools which were operated by the states: The definition of the litigation class certified in this matter is limited and excludes any elementary or secondary facilities owned or operated by Ohio or Maryland or any other state as a service incidental to the provision by the state of other substantial services.
Pretrial Order 110.
Shortly after the class was certified, a "Notice of Class
Action Relating to School Asbestos Claims" was mailed nationwide
to all schools included on a list generated by a market data
retrieval organization. The list was not modified to include
only the schools that were members of the certified class.
Girard College appeared on the list as a "private school." The
Board has no records indicating it received this notice or opted
out of the class. The Notice provided that if you did not opt out of the class by December 1, 1987, you would be bound by any
class judgment.
In September 1991, plaintiff members of the class and
Uniroyal entered into a Settlement Agreement releasing Uniroyal.
This notice was also sent to Girard College. In December 1991,
the district court entered final judgment approving the Uniroyal
Settlement.
In February 1994, the Board instituted a state court action
against Uniroyal as well as various architects, contractors and
engineers. The Board of Directors of City Trusts v. Ballinger &
Associates et al., January Term, 1994, No. 3346. The Board
sought recovery for property damages to certain buildings and
other structures it owns and operates caused by the presence of
asbestos products and materials. The buildings in the state
action include Girard College and other commercial buildings
located in Girard Square, a city block in Philadelphia. Uniroyal
moved for an order restraining the Board from litigating its
claims on the basis that the Board is bound by the Uniroyal
settlement. In a pretrial order, the district court granted the
motion and held that Girard College was a member of the certified
class and therefore enjoined under the Anti-Injunction Act, 28
U.S.C. § 2283,4 from maintaining a state action against Uniroyal.
The district court held:
4 Section 2283 provides:
A court of the United States may not grant an injunction to stay proceedings in a State except as expressly authorized by Act of Congress, or where In this Court's opinion, the Board of City Trusts is a local education agency. It is both public and private. By statute of the Commonwealth of Pennsylvania, it has been created as a City agency. The delegation of the supervision of the Board of City Trusts rests with the Orphans' Court. It is through the City of Philadelphia that that Trust was to be administered. . . .
It is public in the sense that its actions are actions of the -- are state action[s]. It is private in the sense that it was private money that caused the college or other charitable functions to be established and maintained. But it was through the public arm that that intent was to be carried out. So, it is a -- as private money going through a state- created agency for the education and the associated growth of young people into adulthood.
The Board of City Trusts has identified itself as a local education agency in the AHERA compliance document. It has identified itself in various briefs as an arm of the City. That statute which created the Board of City Trusts shows that it is -- it was created as an agency of Philadelphia. It has all the character of a local education agency.
The Board appeals the district court's finding that it is a
member of the certified class and is thereby enjoined from
pursuing its state court asbestos action against Uniroyal et al.
II.
The district court's application of the class certification
to the Board requires plenary review since it involves the
application of the law to the facts. Levendos v. Stern
Entertainment, 909 F.2d 747, 749 (3d Cir. 1990). Similarly, the
review of the district court's decision to enjoin the Board's
(..continued) necessary in the aid of its jurisdiction, or to protect or effectuate its judgments. state court action under the Anti-Injunction Act, 28 U.S.C. §
2283, is also a question of law that requires plenary review.
1975 Salary Retirement Plan v. Nobers, 968 F.2d 401, 405 (3d Cir.
1992); see also Carey v. Pennsylvania Enterprises, Inc., 876 F.2d
333, 337 (3d Cir. 1989); Ortiz v. Eichler, 794 F.2d 889, 891-92
(3d Cir. 1986).
III.
A class must be clearly defined and only members can be
legally bound by settlements or judgments in the class action.
In re School Asbestos Litigation, 789 F.2d 996, 1005 (3d Cir.),
cert. denied, 479 U.S. 852 (1986). The parties agree that the
initial class certification by the district court can be further
divided into two subclasses. Sub-section [1] of the
certification order includes all public educational facilities as
defined by Section 198(a)(10) of the Elementary and Secondary
Education Act of 1965; and Sub-section [2] includes non-public,
non-profit elementary or secondary facilities to the extent they
are owned or operated by one or more non-profit corporations or
associations.5 The district court found that Girard College was
5 As mentioned, Pretrial Order 110 amended the initial class
certification. The 1988 amendment excludes any "elementary or
secondary school facilities owned or operated by any state as a
service incidental to the provision by the state of other
substantial service." Because we find Sub-section [2] is the
relevant section, whether or not the Board is excluded under
Pretrial Order 110 need not be reached. a quasi-public and quasi-private educational facility because it
was created by the state but funded with private money. It is
not disputed, however, that Girard College is excluded from Sub-
section [1] of the class certification because it is not a public
school as defined by Section 198(a)(1) of the Elementary and
Secondary Education Act of 1965. Appellees argue that the Board
is a non-profit association that owns and operates Girard
College, a private educational facility within the definition of
Sub-section [2]. The Board contends, however, it is not a non-
profit association, but a state-created agency and Girard College
is a charitable trust created by the residuary estate of Stephen
Girard's Will. If the Board is a non-profit association, the
Board is within the class certification and enjoined from
pursuing its state court action. If, however, the Board is a
state-agency or at least not a non-profit "association", it is
not within the class and the Board may maintain its state court
action against Uniroyal. Both sides competently argued their
positions and attempted to aid this court in its determination of
this complicated issue.
The relevant part of the class certification, Sub-section
[2], states: [A]ll entities which own or operate in whole or in part any non-public, non-profit elementary or secondary educational facilities, including entities with religious affiliations, in the United States, to the extent that such non-profit entities are owned or operated by one or more non-profit corporations or associations no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private shareholder or individual.
Pretrial Order 20 (emphasis added). The center of the dispute focuses on the common usage of the
term "association." The Board argues it is a state agency
because it was created by a Pennsylvania statute in 1869.
Further, the Board contends that the United States Supreme Court
in Pennsylvania v. The Board of Directors, 353 U.S. 230, 231
(1957), previously found the Board to be a "state agency." That
case was a race discrimination claim brought against Girard
College. The Court held that for purposes of the Fourteenth
Amendment, the actions of the Board were state actions. Id. at
231. The appellees counter that the finding by the Supreme Court
that the Board is a state agency for state action purposes is
different from finding that the Board is an agent of the state in
the present asbestos litigation. The appellees also point out
that in the Board's briefs in previous cases, the Board has
labeled itself as an "arm of the City." The district court also
labeled the Board as a "City Agency" because it was created for
the City of Philadelphia and it is through the city that the
trust is to be administered. As a preliminary matter, we doubt
that the Board is a city agency. The Board was created by the
state for the purpose of administering charitable bequests left
to and for the benefit of Philadelphia. Although the Board
performs this function for the city, it is neither a part of the
city nor responsible to the city. The Board was designed merely
to independently carry out this service for the city whenever the
city is left sizable estates that require management. The
Philadelphia Home Rule Charter Section A-100(a)(3) also explicitly exempts the Board from any relationship with the
city.6 The Board of Directors of City Trusts appears, therefore,
not to be a city agency.
The issue then turns on whether the Board is a state agency
and if not, whether it can be labeled a non-profit association.
The appellees argue that the term "association" is broad enough
to include the Board of Directors of City Trusts. As defined by Black's Law Dictionary, association means "[t]he act of a number
of persons in uniting together for some special purpose." Black's Law Dictionary 121 (6th ed. 1990). The appellees view
the Board as a group of fifteen members united for the special
purpose of administering trusts bequeathed to the City. The
appellees contend that to find the Board is not an association
would be to contort the common usage of the term. The appellants
maintain it can not be an association because it is an agency of
the state. The composition of the Board is too unique to resolve
the issue by merely labeling it as an association.
We must look to state law in defining the structures and
powers of non-profit corporations. Federal Election Comm'n v.
National Right to Work Comm., 459 U.S. 197, 204 (1982). Under
Pennsylvania law, it remains unclear as to the meaning of a non-
6 Section A-100(a)(3) of the Philadelphia Home Rule Charter
provides that "[e]xcept as otherwise specifically provided, this
charter shall not apply to the Board of Directors of City Trusts
and to any institutions operated by it." profit association. The only statute that comes close to
defining the term is 42 Pa. Cons. Stat. Ann. § 8332.1, which
concerns non-profit associations in relation to a manager, coach,
umpire or referee negligence standard.7 The Board of Directors
of City Trusts would not seem to fit within this definition. At
all events, we find that for another reason the Board of
Directors of City Trusts cannot be an association. The appellees
want to label the Board an association while acknowledging that
Girard College is a charitable trust. However, in reality, the
two are not distinct legal entities. It is stretching the
contours of the framework in which the Board was established to
label the Board as an association when the Board is acting as a
trustee on behalf of a charitable trust. To call the Board an
association, would be really calling Girard College an
association, which it clearly is not. As is demonstrated in this
suit, to sue Girard College, you must sue the Board of Directors
7 The statute defines "nonprofit association" as:
An entity which is organized as a nonprofit corporation or nonprofit unincorporated association under the laws of this Commonwealth or the United States or any entity which is authorized to do business in this Commonwealth as a nonprofit corporation or unincorporated association under the laws of this Commonwealth, including, but not limited to, youth or athletic associations, volunteer fire, ambulance, religious, charitable, fraternal, veterans, civic, county fair or agricultural associations, or any separately chartered auxiliary of the foregoing, if organized and operated on a nonprofit basis.
42 Pa. Cons. Stat. Ann. § 8332.1(d). as its trustee. The Supreme Court appeared to use a similar
analysis when it found the Board to be a state agency. Although
it was Girard College which had discriminated against the
African-Americans in refusing to admit them to the orphanage, the
Court found the Board was acting as a trustee based on the power
and authority given to it by state law, and therefore responsible
under the Fourteenth Amendment for the College's action. Here
the Board is bringing the suit (rather than defending against
one), but it is still acting only as a trustee on behalf of
Girard College. The Board has the authority to sue and may be
sued pursuant to the state statute which created the Board.
Although the context of the present litigation is different from
the context of the previous Supreme Court suit, the Board acts
only as a trustee of Girard College and therefore the same
analysis is applicable. Finding that the Board is not an
association, it is not included within the certified class and
the appellants may proceed with their state court asbestos
litigation along with the many others who are also not included
in the class against Uniroyal et al. Therefore, the district
court must be REVERSED.
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