Recently in Asbestos Category

StlToday.com reports:

Judge Clarence Harrison dealt a swift blow to the Madison County asbestos litigation system by ordering all 2013 asbestos cases to be set on a "case-by-case basis." The order came just three days after Harrison heard arguments for and against a previous judge's order allowing certain law firms to reserve trial dates in 2013, even though many of the cases weren't on file with the court.

Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform (ILR), issued a statement applauding Madison County Circuit Judge Clarence Harrison's decision to end the pre-assignment of asbestos trials to plaintiffs' law firms. After recent controversy involving Judge Barbara Crowder, who was removed from the asbestos docket after her campaign committee received $30,000 from plaintiffs' lawyers shortly after she awarded their firms most of the court's 2013 trial times, asbestos trials will now be set on a case-by-case basis.

Fed. R. Civ. Proc. 53 permits a judge to appoint a "special master" to resolve complicated pretrial matters that the judge does not have time to do; most state courts have similar procedures. Such special masters are typically experienced attorneys who charge the full billing rate of experienced attorneys; rather than being put out for competitive bid, judges often pick a friend for the lucrative assignment. The existence of a rule as a safety valve allows courts to handle heavier dockets, but that in itself has its own distorting effects. A judge has reduced incentive to narrow the scope of discovery; heck, the privilege log disputes alone can generate hundreds of thousands of dollars, and create unreasonable standards that add tremendous expense to litigation beyond what is paid to the special master.

A recent scandal in New York reported by the Daily News suggests other possible problems: in 1999, Manhattan Supreme Court Justice Sherry Klein Heitler appointed Laraine Pacheco special master in a series of asbestos cases, and in 2005, Pacheco was making $368,000 a year overseeing settlement discussions. Pacheco lost her lucrative position last week when it was learned that she had overbilled parties—including city and state taxpayers—$400,000. Pacheco had previously come under fire for wanting to hold these settlement discussions near her vacation home in Tucson, Arizona, inviting lawyers to do so as a junket (and suggesting they shop at her daughter's jewelry store).

This is an area that merits much more study by the legal reform community.

A website owner plans to make a lot of money by renting out its well-situated domain names to asbestos plaintiffs' firms. The existence of the market demonstrates the effective cartelization of asbestos plaintiffs' practice: if asbestos firms competed on price, instead of consistently overcharging clients with riskless "contingency" fees, there would be no incentive for third parties to try to grab a share of the rent-seeking through the race to elbow one's way to the top of the search results for asbestos litigation websites. (See also the phenomenon of "chicken catchers" and "chicken pluckers.") Money that should end up in injured plaintiffs' pockets is instead finding its way into website-owners' pockets, via lawyers' excessive fees. I'm quoted in the LNL coverage. Earlier on POL.

In the mid-1960s, Lt. Patrick O'Neil served on the USS Oriskany, a 1940s-era aircraft carrier. O'Neil's work in the boiler-room exposed him to asbestos insulation manufactured by Johns Manville, and, decades later, he contracted mesothelioma. O'Neil isn't allowed to sue the Navy; Johns Manville is bankrupt from previous asbestos litigation. So O'Neil sued innocent third parties that happened to sell products to the Navy that didn't contain asbestos on the theory that they should have warned users about the risks of asbestos from other products that might be used in conjunction with their harmless products. O'Neil also sued a company that sold a part in 1943 that did contain asbestos (pursuant to Navy requirements), but whose asbestos components had been replaced by the time O'Neil encountered them.

Fortunately, in last week's O'Neil v. Crane, the California Supreme Court unanimously rejected this attempt to expand tort law beyond all moorings. When "the consequences of a negligent act must be limited to avoid an intolerable burden on society, policy considerations may dictate a cause of action should not be sanctioned no matter how foreseeable the risk." Unfortunately, in the absence of federal law on the subject, this means that future plaintiffs are simply going to forum-shop their asbestos litigation to other states that have not so dispositively rejected such expansive theories, so innocent manufacturers who happened to sell products to the Navy are not going to be off the hook yet. But good precedent is good precedent, and it's important that the California Supreme Court is willing to acknowledge that the fact that there are some injured plaintiffs who don't have recovery does not require courts to invent theories to permit collection from distant defendants. And as Beck points out, the decision has consequences for intermediate California courts that have held that pharmaceutical manufacturers can be held liable for the sales of similar products by generic manufacturers. [Jackson; Beck; Wajert; PLF; PLF amicus; Stier; Cal Biz Lit via @walterolson; LNL; Recorder/law.com; Ruskin]

Once the subject of an inspiring tale of recovery in the context of civil justice reform, Madison County, Illinois has found itself yet again featured in the American Tort Reform Association's annual 'Judicial Hellholes' report. Ranked fifth on ATRA's list, Madison County has unfortunately reclaimed its reputation as the nation's "epicenter" for asbestos litigation.

ATRA's report cites some alarming statistics:

In 2003, asbestos filings in the county peaked at 953. After Judicial Hellholes reporting spurred public scrutiny of the magnet jurisdiction, judges became more serious about transferring cases that belonged in other areas. By 2006, asbestos filings in Madison County reached a low point of 325. Since then, however, the number of such filings has increased each year to 455 in 2007, 639 in 2008, 814 in 2009, and 840 in 2010, as documented by Illinois Lawsuit Abuse Watch (I-LAW). Only about 1 in 10 of Madison County's asbestos cases are filed by people who actually live or work there, or have any other connection to the area, according to an Illinois Civil Justice League study. According to one local defense lawyer, asbestos claims account for nearly 60 percent of Madison County suits seeking more than $50,000, eclipsing the claims of local residents.

Defendant companies and other legal observers note that plaintiffs' lawyers flock to Madison County because the court sets aside about 500 trial dates for asbestos cases. The trial dates provide a steady stream of business for favored local law firms, with whom out-of-state lawyers must work to pursue their cases. Defendants are placed at a disadvantage given the expedited treatment of cases and the power given to plaintiffs' lawyers to set the trial schedule. Because defendants may not know which cases will go to trial until the last minute, they often prepare for multiple cases simultaneously, pay for expert reports they do not need, and must travel across the United States to take depositions.

Judge Crowder denied a connection between the donations and her "activities on the bench", but, there was no denying the appearance of impropriety especially in light of Madison County's notoriety with regard to asbestos litigation. Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform, called on the court to "fix the fundamental flaw of Madison County's asbestos docket calendar system that in effect puts court time up for sale."

The Chamber's Institute for Legal Reform called for this and more in a report in 2010 focusing solely on reforming Madison County's warped asbestos litigation system, concluding even then:

The solution to this problem is simple: apply the law as written. If venue rules are enforced, fair procedures for trial allocation and scheduling adopted, discovery of the bankruptcy trusts provided and the Lipke rule regarding alternative cause implemented as mandated by the Illinois Supreme Court, the jurisdiction would return to normal and appropriate operations.

It was hoped that Judge Crowder would clean up the asbestos litigation abuse mess when she took over last year, however, it seems that fundamental procedural changes have to be implemented to effectively repair Madison County's civil justice system.

A House Judiciary subcommittee explored the problem of asbestos fraud and asbestos bankruptcy trusts on September 9. Professor Lester Brickman's testimony presents a good summary of the issue. Businessman Mike Carter testified about the effect on job creation from his family business being repeatedly sued (104 times by 2223 individual plaintiffs) as a tertiary defendant—despite never manufacturing an asbestos product or ever facing a workers' compensation claim for asbestos-related injury. (See also ILR.) Moody's has said that "[r]ecent disclosures by three insurance companies regarding increased asbestos claims are a 'warning flag' for those companies and the U.S. property and casualty industry as a whole." [LNL; LNL; Main Justice; RAND]

Some might consider it cutesy when a judge threatens to shame lawyers over breaches of civility; it's the second time in a week that a judge has engaged in a well-publicized shaming of attorneys. But I have a serious problem with the way this judge handled it. Perhaps both parties are equally guilty of abusive behavior in this case, but I more frequently find that one party is dragging everyone down in the muck. Leave that to one side, though: the problem here is that the court, by ordering on Thursday that every lawyer show up in Delaware on the Sunday of Labor Day weekend for a possible overnight session of lectures unless the parties settle before then is abusively creating a conflict of interest between the attorneys and their clients. It's hard to say that any attorneys forced to settle under these circumstances are settling on terms best for their clients, when the attorneys' personal interests at avoiding humiliation are so much at stake. Indeed, if one takes Delaware Professional Conduct Rule 1.7 seriously, any attorney at risk of sanctions for not settling now has to get permission in writing to continue representation of their client.

Sunday's Pittsburgh Post-Gazette covers CSX's lawsuit against Robert Peirce & Associates, a Pittsburgh law firm that allegedly engaged in fraudulent mass screenings as part of its strategy in asbestosis litigation, a subject covered in more detail in Lester Brickman's Lawyer Barons. Peirce recently dismissed with prejudice over 1300 lawsuits against CSX when the company made it clear they would actually put them to proof rather than engage in quick settlement.

Thomas Brown, who has shortened breath, sued Union Carbide, claiming he came down with asbestosis from exposure to drilling mud, but his own physicians denied it. Nor did he have any evidence of lost wages. Never mind, said a Smith County, Mississippi, jury after some fishy rulings by Judge Eddie Bowen: they compounded a ridiculous $11 million for future medical expense and $11 million for fear of future disease with an even more ridiculous $300 million in punitive damages. Now Union Carbide seeks to throw out the verdict on the grounds that the judge failed to disclose, much less recuse himself over, the fact that the judge's father sued and settled an asbestos case against Union Carbide. Nearly 9% of the adult population of Smith County has filed asbestos claims, but the motion to move the trial out of county was denied. [Fisher @ Forbes; Clarion Ledger; LNL; ILR]

S. Todd Brown @ SSRN looks at a problem that has been largely ignored outside of the work of Brickman and Nagareda. Abstract:

Few problems are more disruptive to the efficient operation of comprehensive mass tort settlements than over-subscription, which, at times, appears to be fueled primarily by specious claims. In settlements with opt out rights, a flood of claims can generate a market for lemons, with the weakest claims submitting to the settlement and the strongest opting out and seeking recovery at trial or in private settlement. In binding settlements, they may result in a commons problem, requiring dramatic reductions in payment that effectively transfer recoveries from those with intrinsically strong claims to those with weak claims.

This Article evaluates the history of three mass torts where specious claim practices were uncovered and identifies common themes that reflect broader lessons about the potential for over-subscription. In particular, although commentators often focus on the incentives that drive claim recruiting, this Article explains that over-subscription has its origins in claim development incentives, which may be distorted by fixed settlement criteria and encourage practices that lend themselves to specious claim filings. This dynamic is particularly likely to generate specious claim markets for low or negative expected value claims. Moreover, the manner in which this process unfolds presents special difficulties for ethical enforcement and deterrence, suggesting that other mechanisms for controlling specious claim markets may be necessary.