The Effrontery Of The Asbestos Trust Transparency Legislation Efforts

For more than eighty years corporations that produced and distributed asbestos-containing products — and their insurance companies — have attempted to avoid responsibility for the deaths and injuries of millions of American workers and consumers caused by those products. Since before 1930, they have hidden the dangers of asbestos and lied about their knowledge of those dangers, lobbied to make it harder for workers to sue for their injuries, fought to weaken protective legislation, and to this day continue to deny responsibility. Most recently, these asbestos litigation defendants have created a myth of plaintiff wrongdoing— which they call "double-dipping"—as a pretext for so-called settlement trust "transparency" legislation. This is not what it pretends to be — an effort to make the tort system more responsive — but merely their latest affirmative effort to evade responsibility for their own malfeasance.

It is a fundamental principle of American law that an injured person can recover damages from every entity that has harmed him, and as litigation progresses can settle his claim against one or another of the wrongdoers as he and they may agree. His compensation for his injury is, then, the sum of all the settlements reached. Only in the very rare case that goes to verdict, judgment, and payment (where the payment amount is reduced by an amount determined by the relevant state law to account for payments by settling co-defendants or bankruptcy trusts), is the victim's claim fully satisfied. Only if after verdict, judgment, and payment were a plaintiff to recover from a bankruptcy trust could he be overcompensated and be said to have "double-dipped." Out of the millions of trust claims filed and considered by trusts since 1988, defendants have identified just one case where a trust claim was filed by a plaintiff after judgment and paid by a trust. In that case the judgment was on appeal and had not yet been paid when the trust claim was filed. There is no "double-dipping" problem that needs to be fixed.

To fix this non-problem, front organizations for asbestos defendants have proposed "transparency" laws and regulations at both the federal and state levels. One such law was recently adopted in Ohio. While these proposals masquerade as mechanisms designed to advance even-handed justice, they are, in fact, obvious efforts by asbestos litigation defendants to do an end-run around uniform rules of discovery in the tort system and reverse principles of tort law established hundreds of years ago, including the principle that the plaintiff is the master of his case and may choose which of multiple wrongdoers to sue and with which to settle.

These front organizations include the American Legislative Exchange Council ("ALEC") and the U.S. Chamber of Commerce Institute for Legal Reform. ALEC is funded by a variety of corporations, including those facing liability for injuries and deaths caused by their asbestos-containing products. ALEC is also busy advancing the interests of the tobacco industry, health insurance companies, and private prisons — the latter particularly through legislation requiring expanded incarceration of immigrants. While ALEC purports to be a nonprofit, it is little more than a group of corporate lobbyists who write model legislation and then fund free trips for state legislators to luxury resorts, seeking to have them introduce model anti-civil justice legislation in their home legislatures.1 Outrageously, ALEC is funded as a tax-exempt charity, although the IRS has recently received formal complaints challenging the group's nonprofit tax status on the basis that ALEC's primary purpose is to provide a vehicle for its corporate members to lobby state legislators and to deduct the costs of such efforts as charitable contributions.2

The supposed "transparency" sought by asbestos defendants is centered on claims plaintiffs make against trusts established to compensate asbestos victims. These asbestos personal injury trusts were created to resolve the bankruptcies of asbestos defendants overwhelmed by their provable tort liabilities to the people they injured. The trusts are crafted to distribute settlement payments to individuals injured by their bankrupt predecessors' products in amounts reflecting the historic tort system settlement share paid by the relevant predecessor. Because of the hopeless insolvency of their predecessors, the trusts are only able to pay a small percentage of that historical settlement share to each deserving claimant, present and future.

Supporters of these recent proposals claim that "transparency" is necessary to prevent "double-dipping" on the part of plaintiffs — that is, fraudulent multiple recoveries for the same injury, through lawsuits against remaining solvent defendants and trust claims. This assertion is deliberately misleading. Because of the ubiquitous presence of asbestos in industry, multiple companies are almost always at fault for asbestos-related diseases and deaths. Think of the shipyard worker, for example, assisting in the repair of countless U.S. Navy warships. The asbestos-containing products which were causes of his injury included boilers, pipe and thermal insulation, gaskets, and many others. A person so injured can legally recover from every company responsible, including both those he sues in the tort system and the trusts that stand in the shoes of bankrupt defendants. The current efforts by ALEC and its members are nothing more than an attempt to shift solvent defendants' share of responsibility to the insolvent defendants and leave the innocent victims with the resulting shortfall in recovery.

1. TORT SYSTEM ASBESTOS DEFENDANTS AND THEIR INSURERS COME WITH ESPECIALLY UNCLEAN HANDS

1. General Background — Asbestos Disease And Litigation

   Asbestos is a naturally occurring mineral that was widely used during the twentieth century for industrial, commercial, and residential purposes.3 Because of its tensile strength, flexibility, durability, and acid- and fire-resistant capacities, asbestos was used extensively in industrial settings and in a wide range of manufactured goods.4 Diseases caused by exposure to asbestos kill thousands of Americans every year because asbestos is inherently dangerous. Whenever materials containing asbestos are damaged or disturbed, microscopic fibers become airborne, and can be...