Asbestos: State Solutions
Phil Goldberg
Shook, Hardy & Bacon L.L.P.
Where We Are Today

US Supreme Court: “asbestos-litigation crisis.”

300,000 pending claims.

$70B spent on claims through 2002.

Future costs: $130B-$195B (RAND, 2005).

73 bankruptcies – and counting.
Asbestos Bankruptcies

Snowball effect from “piling on” nature of liabilities.
– 37 filings in 1970s, 1980s & 1990s.
– 36 filings from 2000 to mid-2004.

Nobel Prize economist Joseph Stiglitz (2003)
– Bankruptcies = 60,000 layoffs between 1997 and 2000.
– 25% reduction in employee retirement assets.

Nat’l Economic Research Associates (2003)
– Workers, communities, and taxpayers will bear costs.
Peripheral Defendants

1982 = 300 defendants

2005 = 8,500 defendants

Richard Scruggs: “endless search for a
solvent bystander.”

W.S. Journal: “companies far removed from
the scene of any putative wrongdoing.”
Asbestos Litigation Phases




Establish Litigation (1970s-early 1980s)
Focus on cancer cases (mid 1980s-mid 1990s)
Recruit Unimpaireds (mid 1990s-2005)
Back to the Future?
Hallmarks of the
“Unimpaired” Phase
Most Claimants Are Not Sick

Up to 90% of claimants have little/no impairment.

Claimants with nonmalignant conditions account
for most of the growth in claims in recent years.

Mass Screenings:
– “Find out if YOU have MILLION DOLLAR
LUNGS!”
– A.G. Bell: driving “claims by healthy plaintiffs.”
Mass Screenings = Unreliable Claims

Dr. Lawrence Martin: “[C]hest x-rays are not read
blindly, but always with the knowledge that the lawyer
wants to file litigation on the worker’s behalf.”

Dr. Gitlin/Johns Hopkins Study: plaintiffs’ x-ray
readers found abnormalities in 95.9% of films used to
support legal claims; independent radiologists found
abnormalities in only 4.5% of the cases (2004).

Scholarship by Judy Pendell, AEI-Brookings Joint
Center.
Non-Sick Take From Sick



Manager of the federal asbestos docket: “Only a
very small percentage of the cases filed have
serious asbestos-related afflictions,” but they
“are prone to be lost in the shuffle with pleural
and other nonmalignant cases.”
Steven Hantler, DaimlerChrysler: “The tragedy is
that as plaintiffs’ lawyers enroll the healthy into
their lawsuits in order to line their own pockets,
less money is available for those who are actually
sick and dying.”
Manville Trust is paying just five cents on the
dollar to asbestos claimants; Celotex and EaglePicher trusts have reduced payments, too.
Lawyers for Cancer Victims Agree

Matthew Bergman, Seattle: “the genuinely sick and
dying are often deprived of adequate compensation
as more and more funds are diverted into settlements
of the non-impaired claims.”

Peter Kraus, Dallas: Non-sick are “sucking the money
away from the truly impaired.”

Randy Bono, Madison County: “Getting people who
aren’t sick out of the system, that’s a good idea.”

Terrence Lavin, IL State Bar President: “Members of
the asbestos bar have made a mockery of our civil
justice system and have inflicted financial ruin on
corporate America by representing people with
nothing more than an arguable finding on an x-ray.”
Asbestos Litigation Rulings
& Other Reforms
No Cause of Action for
Unimpaireds
 Maine (1986)
 Arizona (1987)
 Hawaii (1990)
 Delaware (1994)
 Pennsylvania (1996)
 NJ, CT, NC?
Inactive Dockets
RAND (2005): one of the “most significant
developments in asbestos processing” has been
the “reemergence of deferred dockets as a popular
court management tool.”

Massachusetts (1986)

Minnesota (2005)
(coordinated litigation)
(coordinated litigation)

Cook Co./Chicago (1991)

St. Clair Co., IL (2005)

Baltimore City (1992)
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Portsmouth, VA (2004)
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New York City (2002)
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Madison Co., IL. (2004)

Seattle, WA (2002)

Syracuse, NY (2003)
Medical Criteria Legislation
3 fundamental parts
Other factors
(1) Work history
(4) Latency
(2) X-ray
(5) Causation
(3) Pulmonary Function Test
(6) Doctor-Patient Relationship
States enacted
•
•
•
•
Ohio (2004)
Georgia (2005)
Florida (2005)
Texas (2005)
Addressing Unimpaired Asbestos
Claimant Filings
Mass Screenings: On Way Out




Federal Silica MDL Litigation: Judge Janis
Graham Jack dismissed nearly 10,000 claims
due to fraud.
Manville and Eagle-Picher Trusts: will no longer
accept screenings by doctors/ facilities in the
Jack opinion.
Federal prosecutors in Manhattan are
considering criminal charges and may be
investigating plaintiffs’ asbestos firms involved
in G-1 Holdings (GAF Corp.) bankruptcy case.
Congressional investigation (2005).
Other Tort Reforms

Joint Liability Reform

Noneconomic Damages Reform
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Punitive Damages Reform

Innocent Seller Reform

Appeal Bond Reform

Venue Reform

Trial Consolidation Reform
Compare with State Court Filings
Future Direction of
Asbestos Litigation
(1) Tort system: hostile to unimpaired claims
(2) Bankruptcy courts: too long, failure of pre-packs
(3) Congress: still no action
(4) State legislation: creating solutions
(Medical criteria bills in Mississippi & California?)
Future Direction of
Asbestos Litigation

Back to the Future: Focus on cancer cases

Number of claims ; Value of claims 

Have lawsuit will travel to ___ (DE, CA?)

Searching for the “next asbestos”?
– Silica (unlikely after Judge Jack’s opinion)
– Welding rods; Benzene; Pharmaceuticals
– But “next asbestos” is probably asbestos
Asbestos: State Solutions
Phil Goldberg
Shook, Hardy & Bacon L.L.P.
Addendum: Solutions

Joint Liability Reform

Noneconomic Damages Reform

Punitive Damages Reform

Innocent Seller Reform

Appeal Bond Reform

Venue Reform

Trial Consolidation Reform
Joint Liability Reform

Problem: piling on of claims through joint liability can
force existing defendants into bankruptcy and fuel the
spread of the litigation to “peripheral defendants.”

Most states have abolished or modified the doctrine of
full joint liability, but not all states have enacted reforms
and loopholes remain in some states.

Reform: minimally at-fault defendants should not have
to pay more than their “fair share” of the harm.

Juries could be instructed as to the effects of joint
liability on defendants.
Noneconomic Damages Reform

Problem: pain and suffering is increasingly being used
as a surrogate for punitive damages, increasing such
awards and allowing for larger punitive damages
awards based on ratio of punitive to compensatory
damages.

Reform: require that pain and suffering awards serve
their true compensatory purpose and are reasonable
under the circumstances.

ALEC’s Full & Fair Noneconomic Damages Act requires
heightened judicial review of noneconomic damages; it
does not cap pain and suffering.

Ohio enacted the ALEC approach in 2004.
Punitive Damages Reform

Problem: punitive damages can strip defendants of their
assets and jeopardize recoveries for later-filing
claimants. Plaintiffs can use threat of punitive damages
verdict at trial as a “wild card” to produce inflated
settlements.

Reform: ensure proportionality between punitive and
compensatory damages or prevent repetitive
punishment based on same act or course of conduct.

Managers of the federal asbestos docket and New York
City asbestos litigation, among others, have deferred,
severed, or stayed punitive damages claims.

Florida abolished punitive damages in asbestos and
silica cases in 2005.
Innocent Seller Reform

Problem: plaintiffs’ lawyers name innocent seller
defendants to oust federal courts of diversity-ofcitizenship jurisdiction and stay in state court.

Reform: product sellers (e.g., retailers, distributors,
and wholesalers) should only be subject to liability if
they are directly at fault for the plaintiff’s harm.

Innocent seller reforms have been enacted in a
number of states.

Florida enacted innocent seller reform legislation for
asbestos and silica cases in 2005.
Appeal Bond Reform

Problem: Exorbitant appeal bond requirements can
prevent defendants from appealing unfair rulings
and judgments that are excessive and potentially
unconstitutional.

Reform: modify appeal bond rules to preserve
defendants’ access to appellate courts.

Most jurisdictions have enacted legislation or
changed court rules to limit bond requirements.

Some reforms apply to all civil defendants, while
others are limited to tobacco Master Settlement
Agreement signatories and their successors and
affiliates.
Venue Reform

Problem: litigation tourists file claims in “magic
jurisdictions” or “Judicial Hellholes.” Often, the claims
have little or no logical connection to the forum.

Reform: provide that a claim may only be filed in the
state and county where the plaintiff lives or was
exposed.

Alabama, Florida, Georgia, Mississippi, South Carolina,
Texas, and West Virginia, among other states, have
enacted venue reform.
Trial Consolidation Reform

Problem: disparate claims are joined for trial, either in
mass consolidations or in clusters. The sick and nonsick are lumped together at trial, forcing defendants to
settle because they lack any real ability to defend the
cases.

Reform: permit consolidation of claims at trial only if all
parties consent.

Georgia and Texas enacted trial consolidation reform for
asbestos and silica cases in 2005.
Beyond Legislation

Tort reform in the courts: Many reforms may require
legislation, but some have been and can be achieved in
state courts. The courts should not be overlooked;
even in states that have enacted civil justice reforms,
the courts make most of the law.

Courts should be encouraged to apply sound science
and traditional principles of causation in mass tort
litigation.

Defendants should support public and judicial
education efforts.
Asbestos: State Solutions
Phil Goldberg
Shook, Hardy & Bacon L.L.P.