Mobil Oil Corporation v. Ellender
968 S.W.2d 917 (1998)
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Rule of Law:
A corporation can be held liable for gross negligence and punitive damages when it has actual, subjective awareness of an extreme risk of serious harm but proceeds with conscious indifference, which can be demonstrated by a corporate policy of not warning or protecting a class of workers, such as independent contractors, from that known risk.
Facts:
- Between 1968 and 1977, Eli Ellender worked as an independent contractor millwright at Mobil Oil Corporation's Beaumont refinery.
- In his role, Ellender was frequently exposed to benzene while repairing, servicing, and cleaning equipment.
- Testimony indicated that workers, including Ellender, were furnished benzene by Mobil and used it to wash their hands and tools.
- Since at least the 1940s and 1950s, Mobil was aware through its membership in industry groups like the American Petroleum Institute that benzene exposure was extremely hazardous and could cause leukemia.
- Mobil had a safety program to monitor its own employees for benzene exposure and provide them with protective gear.
- Mobil also had an "unwritten practice or policy" not to monitor, warn, or provide protective gear to independent contractors like Ellender who performed identical work.
- In 1989, Eli Ellender was diagnosed with acute myelogenous leukemia and died.
Procedural Posture:
- Eli Ellender’s surviving family sued Mobil Oil Corporation and other defendants in a Texas trial court.
- All defendants except Mobil settled with the Ellenders for $500,000 just before trial; the settlement agreement did not allocate the amount between actual and punitive damages.
- Before the case was submitted to the jury, Mobil elected to receive a dollar-for-dollar credit for any settlement.
- The jury found Mobil grossly negligent and malicious, awarding the Ellenders $622,888.97 in compensatory damages and $6,000,000 in punitive damages.
- The trial court entered judgment on the verdict and denied Mobil's request for a $500,000 settlement credit.
- Mobil appealed to the Texas court of appeals.
- The court of appeals affirmed the gross negligence finding and the denial of the settlement credit, but it modified the punitive damages calculation.
- Mobil sought review from the Supreme Court of Texas.
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Issue:
Is there legally sufficient evidence of gross negligence to hold a corporation liable for punitive damages where the corporation knew of the extreme health risks associated with benzene exposure but maintained a policy of not monitoring, warning, or providing protective equipment to independent contractors working on its premises?
Opinions:
Majority - Baker, J.
Yes, there is legally sufficient evidence to support the jury’s finding that Mobil’s conduct was grossly negligent. A finding of gross negligence requires proof of two elements: (1) an objective element, that the defendant's act or omission involved an extreme degree of risk of serious injury, and (2) a subjective element, that the defendant had actual, subjective awareness of the risk but proceeded with conscious indifference. The court found that the objective element was met because Mobil knew for decades that benzene exposure presented an extreme risk of serious illness like leukemia. The subjective element was met because Mobil's corporate policy of monitoring and protecting its own employees, while deliberately choosing not to provide the same warnings or protections to contract workers doing identical work, constituted legally sufficient circumstantial evidence for a jury to find that Mobil knew of the peril but demonstrated it did not care about the safety of its contractors.
Analysis:
This case clarifies the application of the gross negligence standard to corporate actors, emphasizing that a discriminatory safety policy—protecting employees but not contractors from the same known hazard—can serve as powerful evidence of conscious indifference. It reinforces that exercising 'some care' does not preclude a finding of gross negligence. Furthermore, the decision establishes a significant new procedural rule in Texas tort law regarding settlement credits: the settling plaintiff now bears the burden of allocating settlement funds between actual and punitive damages in the agreement itself. Failure to do so entitles a non-settling defendant to a credit for the entire settlement amount against the actual damages award, preventing plaintiffs from shielding settlement money from offsets by leaving it unallocated.
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