Asbestos Litigation Is Bankrupting America

Published October 3, 2002

What does Bubble-Wrap™, the popular packing material that many kids (and more than a few adults) love to “pop,” have to do with asbestos?

If you answered “nothing,” you are right. If you said the company that produces Bubble-Wrap™ should be liable for up to a billion dollars for alleged injuries caused by a product it never manufactured or used, then you are probably a plaintiffs’ lawyer who stands to earn millions of dollars if your lawsuit, implausible though it may seem, is successful.

Sealed Air Corporation acquired the Cryovac division of W.R. Grace in 1997. Grace had been the subject of asbestos-related lawsuits for years but was solvent at the time of the sale. It recently declared bankruptcy due to a flood of asbestos cases filed against it. Its Cryovac division never made or sold asbestos products, and neither has Sealed Air Corporation.

That has not stopped plaintiffs from claiming that Grace made a fraudulent deal with Sealed Air Corporation to keep the assets from Cryovac hidden from asbestos judgments. Sealed Air Corporation may end up giving Grace more than a billion dollars to cover asbestos judgments.

Sealed Air’s attorneys think they have a strong case, but they are being drawn into the treacherous waters of class-action lawsuit abuse, where lax judges, poorly informed juries, and greedy lawyers have turned asbestos litigation into a giant game of chance that has little do with either science or justice.

Most of us recall the last “asbestos crisis,” which resulted in governments, businesses, and schools spending billions of dollars “remediating” buildings by removing asbestos during the 1980s and 1990s. Less well-known is the on-going litigation that has taken place since then.

Over 200,000 lawsuits are pending right now alleging a threat or potential threat to a person’s health due to exposure to asbestos. Some 40,000 new suits are filed each year. Some experts predict that up to two million people may eventually file suit and payments could reach $100 billion.

Sixty-five percent of the funds generated by asbestos litigation, according to a RAND Corporation study, doesn’t reach the people who are supposed to benefit, but finances instead a complex and adversarial system that rewards lawyers much more richly and consistently than victims. Congress has been repeatedly asked to remedy the situation, yet opposition from trial lawyers (who are major donors to the Democratic Party) has kept it from acting.

Exposure to asbestos was first recognized to be a threat to human health in the 1930s. Millions of workers were exposed to asbestos during the 1940s and 1950s, and when their symptoms became apparent between 20 and 40 years later, the lawsuits began. At first, sick workers sued the manufacturers of asbestos products, the most prominent of them being Johns-Manville. Johns-Manville filed for Chapter 11 bankruptcy protection in 1982, and was soon followed by the rest of the asbestos textile industry.

The second wave of lawsuits was filed on behalf of workers exposed to asbestos-containing products in their workplaces, such as shipyards, refineries, railroads, and power plants. Then workers in the construction industry began to sue, alleging harm caused by drywall products, fireproofing sprays, and other asbestos-containing construction materials.

The latest wave of litigants are people who have medical proof of exposure to asbestos but do not suffer from disease as a result of that exposure. Due to the low level of their exposure, most probably never will. Nevertheless, they file suits to be assured of getting benefits should the statute of limitations run out before they show symptoms of an asbestos-related disease. Some 90 percent of new asbestos cases are brought by individuals with no physical impairment.

The latest wave of lawsuits is preventing the real victims of asbestos – those suffering from mesothelioma, a type of lung cancer found mostly in people exposed to asbestos – from having their day in court. Many widows and orphans are being deprived of any monetary compensation at all just so people with better lawyers or more lenient judges can play the “litigation lottery” and win millions of dollars in undeserved awards.

Each new wave of litigation brings a new and larger circle of companies into the tort trap, including smaller and smaller businesses such as contractors, distributors, and the owners of premises where asbestos was found. Companies that acquired companies that manufactured or used products containing asbestos a half-century ago have also found themselves exposed to legal liabilities reaching millions and even billions of dollars. Companies that are several steps removed from any contact with asbestos, such as Sealed Air Corporation, are being named defendants in the lawsuits.

“Asbestos compensation through the tort system is broken – seriously, irreparably, and incontrovertibly,” said Law Professor Michael Green of University of Iowa before a Senate subcommittee in October 1999. “Everyone knows that the system is broken, judges know it, commentators know it, asbestos victims know it, their families know it, the experts who testify over and over and over again know it, and the lawyers who are litigating these cases know it.”

What is the solution? Judges should reject cases that fail to reach long-established legal standards of proof and liability, and jurors ought to vote against verdicts that give healthy alleged victims millions of dollars, to be paid for by workers (through lost jobs) and consumers (through higher prices). Lawyers should remember that they are first and foremost officers of the court and have an obligation to pursue justice, not just make the biggest possible profit for themselves and their clients.

Congress, finally, should act to rein in lawsuit abuse, particularly as it is occurring in the asbestos arena, by taking asbestos cases out of the courts and creating an administrative or regulatory remedy. In 1999, bipartisan federal legislation was introduced that would have created such a program, to be called the Asbestos Resolution Corporation, but the bill died in committee following rigorous opposition from the plaintiff’s bar and victim’s rights advocates.

With the stakes so high, plaintiffs and defendants have negotiated a new legislative solution, H.R. 1283. Action in the House is expected, but the pro-plaintiffs’ bar Senate is not expected to act on it. With every month that passes, more victims of exposure to asbestos die before they or their families receive even a single cent from the companies responsible for their plight.

Congress needs to move on reform legislation now, or risk facing the angry victims of asbestos and the asbestos litigation crisis in the next elections.

Joseph L. Bast is president of The Heartland Institute, a nonprofit research organization based in Chicago, Illinois. He can be contacted at [email protected].

For further information, contact Heartland Public Affairs Director Greg Lackner at 312/377-4000, 773/489-6447, email [email protected].