## Facts

- Numerous workers filed diversity product-liability suits alleging asbestos exposure and resulting disease.
- Plaintiffs asserted theories including negligence, breach of implied warranty, and strict liability against many asbestos-product manufacturers, sellers, and distributors.
- Individual complaints commonly named multiple manufacturers without attributing exposure to any specific defendant, citing the long latency of asbestos-related disease and difficulty identifying the responsible product.
- To manage the litigation, the district court entered an amended omnibus order that treated issues as conclusively established against defendants through nonmutual offensive collateral estoppel and judicial notice, drawing heavily from an earlier asbestos case.
- The omnibus order operated as partial summary judgment for plaintiffs on broad propositions such as asbestos product dangerousness, industry knowledge, duty-to-warn timing, and warning adequacy.
- Defendants pursued an interlocutory appeal under 28 U.S.C. § 1292(b) challenging the order’s preclusion and judicial-notice rulings.

## Issues

1. Whether nonmutual offensive collateral estoppel could be used to preclude defendants from litigating key liability issues based on a prior asbestos verdict when the prior judgment did not clearly and necessarily decide those issues.
2. Whether defendants who were not parties to, and not in privity with parties to, the prior action could be bound by that prior judgment consistent with due process.
3. Whether judicial notice could be used to establish broad propositions about asbestos hazards and industry knowledge that were disputed and central to liability.

## Decision

- The Fifth Circuit reversed the amended omnibus order and remanded.
- The court held collateral estoppel was improperly applied because the prior verdict did not unambiguously and necessarily decide the specific duty-to-warn and dangerousness issues the district court treated as settled.
- The court held it violated basic preclusion limits and due process to bind nonparties lacking privity merely because they operated in the same industry or sold similar products.
- The court held the district court abused its discretion by using judicial notice to establish contested scientific and historical facts central to liability.
- The court noted that the presence of other asbestos verdicts favorable to defendants further counseled against treating a single plaintiff’s verdict as conclusively establishing common issues for all cases.

## Legal Principles

- Issue preclusion applies only to issues that were actually litigated and necessarily decided in the prior action; ambiguity in the prior judgment defeats estoppel on the disputed point.
- Nonmutual offensive collateral estoppel cannot be imposed on a defendant who was not a party to, or in privity with a party to, the prior judgment; shared industry membership or similar litigation interests is insufficient to establish privity.
- Courts should not apply preclusion in a manner that effectively denies a party a full and fair opportunity to litigate dispositive issues.
- Judicial notice is limited to facts not subject to reasonable dispute; it cannot substitute for proof on complex, contested matters such as product characteristics, evolving scientific knowledge, and the timing and adequacy of warnings.
- Trial-management concerns in mass tort litigation do not justify procedural shortcuts that functionally impose industry-wide liability without individualized adjudication.

## Conclusion

The Fifth Circuit held that mass-tort efficiency measures cannot override due process and core limits on issue preclusion and judicial notice, reversing an order that attempted to bind asbestos defendants to broad liability facts and duty-to-warn determinations without clear prior findings or privity.


Hardy v. Johns-Manville Sales Corp., 681 F.2d 334 (5th Cir. 1982)