Mature Product Line: Asbestos
ASBESTOS LITIGATION: FIRE IN THE COURTS
Bankruptcies explode as the asbestos inferno rages on.
Last year, Trial Lawyers, Inc.’s asbestos juggernaut rolled on, racking up multi-million-dollar judgments for claimants with little or no in-jury and funneling billions of dollars into the pockets of the lawsuit industry. The longest-running mass tort in U.S. history and arguably the most unjust, asbestos litigation has so far bankrupted 67 companies and wrung $54 billion from helpless corporations. That’s more than the total bill for all Superfund sites, Hurricane Andrew, or the World Trade Center attacks.
An Avalanche of New Claims
The asbestos litigation nightmare is far from over. By current estimates, some 600,000 claimants, or fewer than a quarter of the potential plain-tiffs, have filed suit. Experts are fore-casting that total claims could reach 1.3 million to 3.1 million and that the final price tag could be $200 bil-lion to $275 billion.
Driving up the cost are the sky-rocketing number of claims—60,000 a year—often by people with little or no evidence of injury. Since cases of serious illness—mesothelioma and other cancers—have remained level at about 4,000 a year, Trial Lawyers, Inc.’s creative marketers have stepped up recruitment of ever more marginally impaired claimants. Such was the case with six former railroad workers in a Lexington, Mississippi, case decided in October 2001. The jury awarded them $25 million each, even though not one of them exhibited any form of asbestos-related disease.
The Search for New Defendants
Predatory lawsuits in cases where there are no observable health problems are surging even as cases of serious disease remain essentially flat.
Even as it files suits for claimants who are not injured, Trial Lawyers, Inc. is supporting its asbestos product line by targeting any solvent company that ever used a product containing asbestos, no matter how minute the amount. To date, 6,000 companies repre-senting 91% of the industries in the United States have been named as defendants.
The industry has targeted companies like AC&S, Inc., a tiny Lancaster, Pennsylvania, insulation contractor being sued in a rural, plaintiff-friendly county in Mississippi. Not only did AC&S never perform work at any of the sites where the six plaintiffs in the case worked, but it sold few products that contained asbestos. Those facts did not deter a jury from returning a judg-ment against the company for nearly $84 million. AC&S last year filed for bankruptcy.
Other defendants’ connection with asbestos is even more tenuous. Under siege are com-panies like Chiquita Brands, Sears Roebuck, and 3M, the last of which never made or sold asbestos but is accused of failing to warn users that its masks would not filter out asbestos dust if they were not used properly. Little more than bystanders, such companies are now bearing the brunt of asbestos litigation, paying out 60% of all claims.
Cases That Never Go to Trial
Faced with a seemingly bottomless pool of claimants, defendants are increasingly elect-ing to settle, abandoning any attempt to verify the claims pouring in or to defend them-selves at the risky mass trials in which evidence of illness or fault plays no discernible role. Between 1993 and 2001, only 1,598 out of hundreds of thousands of asbestos claimants have received jury verdicts.
One reason? The horde of asbestos claimants seems to be well coached by Trial Lawyers, Inc. In one noted case, defense attorneys discovered a memo from one of the lawsuit industry’s biggest asbestos litigation firms, Baron and Budd, coaching plaintiffs on their testimony. Among other things, the memo urged plaintiffs “to maintain that you NEVER saw any labels on asbestos products that said WARNING or DANGER.”
The Asbestos Litigation Victims
The avalanche of new claims has experts questioning whether there will be any money left to pay future claims. Often, nonmalignant claims have so drained the pot of money that seriously ill, more deserving claimants have been left to squabble over the crumbs. The widow of Dale Dahlke, a 53-year-old electrician and cost estimator at the Puget Sound Naval Shipyard who died last year of asbestos-induced meso-thelioma, can expect to get about $150,000 for her husband’s affliction, a meager 1% of the $25 million that each of the Mississippi railroad workers was awarded. Claimants suffering from deadly mesothelio-mas get a scant $10,000 from the trust set up by Johns-Manville to settle its asbestos claims.
Also left holding the bag are workers and shareholders of bankrupt and besieged companies, who have seen jobs and equity evaporate. Companies bankrupted by asbestos have slashed an estimated 60,000 jobs, failed to create 128,000 new jobs, and forgone an estimated $10 billion in investment, according to new studies by RAND and Sebago Associates. Workers’ retirement funds, many of which held substantial portions of company stock, have shrunk 25%. The damage will es-calate—if current estimates of the eventual payout prove accurate—to $33 billion in forgone investment and 423,000 jobs not created.
<<previous section | next section>>
67. Stephen J. Carroll et al., Asbestos Litigation Costs and Compensation: An Inter-im Report, viii (Rand Inst. for Civ. Just., 2002) [hereinafter “Rand Interim Re-port”], available at http://www.rand.org/publications/DB/DB397/DB397.pdf.
68. Lisa Girion, Firms Hit Hard as Asbestos Claims Rise, L.A. TIMES, Dec. 17, 2001, at A1; How to Minimize Casualties, CARVILL AM., http://www.carvill.com/news_casualties.htm [hereinafter “Carvill”]; see Asbestos Liability, INS. INFOR-MATION INST. (Aug. 2003), available at http://www.iii.org/media/hottopics/insurance/asbestos.
69. See Rand Interim Report, supra note 67, at vi, 51; Deborah Hensler et al., Asbestos Litigation in the U.S.: A New Look at an Old Issue 29 (Rand Inst. for Civ. Just., Aug. 2001) [hereinafter “Rand Report 2001”].
70. See Rand Interim Report, supra note 67, at vi, vii; Lorraine Woellert, Will a Chance for Asbestos Reform Be Missed? BUSINESSWEEK ONLINE, Jan. 13, 2003, http://www.businessweek.com:/print/magazine/content/03_.02/b3815036.htm.
71. See Rand Interim Report, supra note 67, at vi, 51.
72. See Doug Bandow, Asbestos Removal, NAT’L REV. ONLINE, Jan. 3, 2003, http://www.nationalreview.com/script/comment/comment-bandow010303.asp.
73. See Roger Parloff, Asbestos: The $200 Billion Miscarriage of Justice, FORTUNE, Feb. 17, 2002, at 154.
74. See Rand Interim Report, supra note 67, at vi, vii, 56.
75. See Parloff, supra note 73, at 154.
76. Asbestos Forever?, NAT’L L.J., Feb. 4, 2002, at 21.
77. See Parloff, supra note 73, at 154.
78. See Rand Interim Report, supra note 67, at 56.
79. See Walter Olson, Creative Deposition, No. 34 CIV. JUST. MEMO (Manhattan Inst. Center for Legal Pol’y, May 1998), available at http://www.manhattan-institute.org/html/cjm_34.htm; Walter Olson, Thanks for the Memories, REA-SONONLINE, June 1998, http://reason.com/9806/col.olson.shtml; Parloff, supra note 73, at 154.
80. See Albert B. Crenshaw, For Asbestos Victims, Compensation Remains Elusive, WASH. POST, Sept. 25, 2002 at E1.
81. See Susan Warren, Competing Claims: As Asbestos Mess Spreads, Sickest See Payouts Shrink, WALL ST. J., Apr. 25, 2002, at A1.
82. See Rand Interim Report, supra note 67, at 61.
83. See id. at 74.
84. See id. at 73, 74.
85. See Joseph Stiglitz et al., Sebago Associates, The Impact of Asbestos Liabilities on Workers in Bankrupt Firms 3 (Dec. 2002).
86. See Rand Interim Report, supra note 67, at 74.
87. See id. at 73, 74.