01 Apr 2002 Asbestos Lawsuits: Putting Retirements at Risk
The terrorist attacks on America last September 11 left behind more than just carnage and rubble – they also left behind a long line of personal injury lawyers filing thousands of lawsuits with an estimated potential liability of some $60 billion.
While the media has provided excellent coverage of the litigation stemming from Al Qaeda’s acts of treachery, it’s given short shrift to another horde of lawsuits that could remove three times as much – more than $200 billion – from the U.S. economy.1
This dearth of coverage is amazing, and perhaps, irresponsible, because the tidal wave of asbestos lawsuits that began in the 1970s should have ended in the early 1980s when Johns Manville and most of the other asbestos manufacturers and distributors were sued into bankruptcy.2
Insurers already have paid out more than $20 billion to alleged asbestos victims and individual companies have paid added billions.3
Today’s personal injury lawyers want more than the proverbial pound of flesh, however. Now they are mustering thousands of patients who are not sick and in many cases have had no exposure to asbestos in order to file suit against companies that never manufactured or distributed the material, but may have used it in various products before its dangers became widely known.4
As a result, the latest wave of asbestos cases has the potential to do far more damage to America’s economy than the September 11 terrorist attacks and the collapse of Enron combined. Yet, they are receiving the media coverage of neither.
With 50,000 new claims filed by personal injury lawyers in each of the last three years, Wall Street analysts now estimate a total potential corporate asbestos lawsuit payout of more than $200 billion.5 That money they say eventually will be divided among 2.5 million plaintiffs and a handful of personal injury lawyers.6
With the lawyers raking off 30 percent of the awards for fees and another 33 percent in litigation expenses,7 it doesn’t take a genius at the New Math to understand the plaintiffs will wind up with a fistful of dollars at best. Individual trial lawyers, however, are enriching themselves greatly.
Nearly 50 companies already are bankrupt because of asbestos litigation, including such illustrious corporate names as Owens-Corning, W.R. Grace, U.S. Gypsum and GAF.8
A host of other companies with only peripheral connections to asbestos – they relied on the experts of the day in handling the material – are now under full-scale attack.
Asbestos, it should be noted, was once considered an industrial godsend. Because certain varieties do not burn, conduct heat or electricity and are resistant to chemicals, they were once widely used for making fireproof materials, electrical insulation, roofing and a number of filtering devices.
Users included the Big Three auto makers (asbestos was once the mainstay of brake linings), most of the nation’s electric utilities, shipbuilders, oil refineries, construction firms, textile mills and even such far removed companies as Gerber, Campbell Soup and Gallo.
A study last year by the RAND Corporation, the California-based think-tank, found that more than 1,000 companies have already been sued. RAND projects that more than half of all U.S. industries will wind up in asbestos courtrooms if lawsuits continue to be filed at their current rates.9
Worse, many of the damage awards in asbestos-related cases to date appear to be without merit, or, at the very least, wildly excessive. A prime example was a $150-million verdict returned by a rural jury in Lexington, Mississippi last October in a case against three companies, Halliburton’s Dresser Industries, Minnesota Mining & Manufacturing (3M) and AC&S, a former pipe-insulation contractor.10 The money was divided among six plaintiffs and, of course, their lawyers.
None of the six workers had ever manufactured asbestos or even distributed it. Indeed, they only handled products containing asbestos occasionally in jobs as laborers, janitors, maintenance men or plant workers.
Four doctors who examined them found no signs of any asbestos-related disease or condition in the men, and none of them claimed they incurred any medical expenses or ever lost a day of work due to asbestos exposure.
Such outrageous cases of jackpot justice ought to concern every American with money in an individual retirement account, a 401k or a pension fund. The chances are overwhelming that their retirement nest egg includes stock in a number of companies already on the hit list of the asbestos lawyers.
This year alone, the so-called “asbestos liability” already has sent the stock prices of such respected companies as Viacom, 3M and Halliburton plummeting.11 If personal injury lawyers are allowed to continue their lawsuit binge, few American companies will be immune.
The prospects of meaningful reform legislation passing a divided Congress anytime soon are slim at best. But judges and juries can help thwart the pending economic disaster, by standing up to personal injury lawyers’ attempts to enrich themselves by huckstering bad science and junk medicine.
In the end, they’ll earn the thanks of every American with a 401k or IRA account.
Amy Ridenour is the president of The National Center for Public Policy Research, a non-partisan Washington, D.C. think tank.
Footnotes:1 Eryn Gable, “Manufacturers, Lawyers Ask Congress To Control Spiraling Lawsuits,” Greenwire, Environment and Energy Publishing, LLC, March 14, 2002.
3 Peter Ferrara, “Asbestos – Killing Your Job?” United Press International, February 8, 2002.
4 Susan Warren, “Claims Hit Wider Set of Firms; Most Cases Settle Out of Court, But Larger Numbers of Companies Find Themselves Dealing with the Issue,” Contra Costa Times, April 13, 2000.
8 Eric Roston with reporting by Laura Bradford, “The Asbestos Pit: An Old Issue Is Back, And The Lawsuits Are Killing Shares,” Time (Bonus Section: Inside Business/Litigation), March 11, 2002.
10 Christopher Edmonds, “Asbestos Verdict Tarnishes Halliburton’s Future,” TheStreet.com, October 31, 2001, downloaded from http://www.thestreet.com/comment/chrisedmonds/10003273.html on April 26, 2002.