AAA Mass Tort

  1. Key features of asbestos litigation:
    • original claimants were compensated through WC, subject to limits
    • 1973 Borel v. Fibreboard was the first case where manufacturers were held liable
    • most workers were exposed to multiple products at multiple sites, increasing complexity
    • plaintiffs with different exposure are often joined to file claim against several defendants
    • disproportionate # of claims filed in perceived pro-plaintiff state courts (forum shopping)
    • many claims are filed against peripheral defendants
  2. Factors likely to increase defence costs in the future:
    • more defendants are involved, and defence is not longer routinely handled on joint basis
    • many defendants have abandoned settlement strategies
    • newer defendants are incurring significant discovery costs
    • coverage disputes between defendants and insurers, insurers and reinsurers may increase
  3. Changes in the litigation environment:
    • some jurisdictions now restrict non-malignancy claims or extent to which it's combined
    • venue reform and joint and several liability reform in some states
    • emerging information challenged validity of some X-rays used to justify non-malignancy
    • significant decrease in number of new non-malignancy claims
  4. Changes in the claims environment
    • more efforts to direct scare resources to the sickest claimants 
    • decrease in claim filing for more severe conditions
    • additional bankruptcies, but at lower rate as pre-packaged bankruptcies are challenged
    • heightened scrutiny of potentially fraudulent claims
  5. Suggested funding approach
    • no-fault trust fund to indemnify those meeting asbestos exposure and medical criteria
    • proposed fund size is $140b
    • would be funded by corporate defendants, insurers and existing bankruptcy trusts
  6. Criticisms of the funding approach
    • how many claims of different types will be filed?
    • will the medical criteria appropriately identify victims?
    • are the awards appropriate?
    • is the funding adequate?
  7. Complaints of each party
    • seriously injured claimants: short life expectancy so place high importance on resolving claim quickly; high transaction costs and non-malignancy claims diminish funds; those exposed to future serious condition face risk of insolvency
    • non-seriously injured and unimpaired claimants: if don’t proceed today, face insolvency / lack of funds / future health uncertainty and ongoing monitoring expenses
    • plaintiffs’ attorneys: those representing serious claimants have been more supportive of legislative changes; in 2003 medical criteria must be met
    • judges: trial docket pressures and fairness of results
    • major defendants: grouping of claimants makes it difficult and costly to assess validity of each case; cannot get fair trial; consolidation of claims results in disproportionally high awards to non-seriously injured; uninjured plaintiffs may be compensated; want finality
    • peripheral defendants: should not be held liable for encapsulated products; take on liability from bankrupt manufacturers; not same knowledge of accountability; named in suit last minute, so higher defence cost; want finality
    • insurers and reinsurers: interpretation of contract; policyholder paying claimants; want predictability of financial results
    • employees / retirees or firms with asbestos liabilities: lost wages and pensions
Card Set
AAA Mass Tort