Ending Asbestos Lawsuit Abuse
Imagine you are a company that has been in business for decades and employ hundreds or even thousands of workers. You have never produced or sold any products containing asbestos. Today, you find yourself mired in litigation and on the brink of bankruptcy because you have paid out hundreds of millions of dollars to settle asbestos claims.
Your liability stems from the fact that more than a quarter century ago you purchased a small company, worth less than $10 million, that manufactured products containing asbestos years before you bought it. Making matters even worse is the fact that the vast majority of the claimants to whom you have paid hundreds of millions of dollars aren’t even sick.
Sound impossible? It is reality for dozens of companies across America, including several in Ohio. Trial lawyers have manipulated the civil liability system by flooding the courts with asbestos claims using some sick but mostly non-sick plaintiffs. Their claims are against a few companies that produced and sold products containing asbestos but mostly they target so-called “deep pocket” companies which never had anything to do with asbestos other than to buy small businesses that produced asbestos-related products decades earlier.
The Manhattan Institute estimates that more than 600,000 asbestos-related claims have been filed nationally and that the total number of claims will rise to more than 1.3 million in the next few years.[1] Linda Woggon of the Ohio Chamber of Commerce points out that “Ohio has become a haven for asbestos claims” which have forced at least five Ohio companies into bankruptcy. Woggon also notes that the unending flood of cases are being brought by individuals who may have been exposed to asbestos, but who are not sick and may never get sick.[2]
Griffin Bell, who served as U.S. Attorney General during the Carter Administration, states that innocent employees and shareholders of companies only peripherally related to asbestos have been harmed significantly by the financial collapse of their businesses due to asbestos liability.[3] Further, the growth of claims by non-sick plaintiffs threatens recovery for sick claimants by bankrupting defendants and exhausting asbestos reserves.[4]
Bell concludes that the most significant casualty of the asbestos litigation crisis is fairness itself.[5] Innocent companies are forced into bankruptcy in order to settle the asbestos claims of non-sick plaintiffs. Employees lose their jobs and shareholders lose their investments. Truly sick claimants will be left with little or no recovery because the non-sick plaintiffs forced defendants into bankruptcy. In the process, the trial lawyers reap enormous fees by aggregating hundreds of claims into huge settlements.[6]
What can be done to relieve the situation? Two major reforms of asbestos litigation are necessary. First, a plaintiff should be barred from bringing action unless he or she is sick. A plaintiff merely having a physical manifestation of exposure to asbestos without actual physical impairment, such as permanent damage to the respiratory system, should not be permitted to bring a lawsuit. Fundamental fairness demands that someone who has not been injured should not be permitted to force an entity into court or to settle the claim to avoid litigation.
Additionally, a successor company, with no connection to asbestos other than the fact that it bought a company that once produced asbestos-related products in the past, should only be liable up to the fair market value of the purchased company adjusted for inflation. In most instances, had the purchased company remained independent, asbestos liability would have exhausted all the assets and insurance proceeds of that company.[7] The assets of the innocent successor-company should not be put at risk merely because it bought a company that produced asbestos-related products years before the purchase.
By limiting asbestos claims to plaintiffs who are truly sick and limiting the liability of successor companies, the Ohio General Assembly can add fairness back into the asbestos litigation system and ensure that truly sick plaintiffs retain the right to recover for their injuries.
Footnotes:
[1] “Trial Lawyers Inc.: A Report on the Lawsuit Industry in American 2003,” (New York, N.Y.: Manhattan Institute, Center for Legal Policy, 2003), 10.
[2] “House Activity Report,” Gongwer News Service, 15 October 2003.
[3] Griffin B. Bell, “Asbestos Litigation and Judicial Leadership: The Court’s Duty to Help Solve the Asbestos Litigation Crisis,” (Washington, D.C.: National Legal Center for the Public Interest, 2002), 29.
[4] Id. at 26.
[5] Id. at 12.
[6] See Id. at 28; see also Walter Olsen, “Creative Deposition,” Litigation (Washington, D.C.: Federalist Society for Law and Public Policy Studies, Winter 1998).
[7] See Lester Brickman, “Asbestos Litigation: Malignancy in the Courts?” Civil Justice Forum (New York, N.Y.: Manhattan Institute, Center for Legal Policy, August 2002), 2.
David J. Owsiany is the senior fellow in legal studies for the Buckeye Institute.
