Tuesday, April 05, 2005

Some Asbestos Common Sense

A Wall Street Journal editorial tells of some judicial common sense in the bankrupsy hearing of Owens Corning, one of the companies druiven into bankruptcy by asbestos litigation. Link.
its creditor banks -- which are competing with the lawyers for Owens Corning money -- took the brave step of fighting the tort bar in court.

Their fortitude paid off last week when Judge Fullam ruled on Owens Corning's total liabilities to tort claimants. The lawyers had demanded $11.1 billion to pay off their clients, while the banks placed the sum at closer to $2 billion on grounds that many claims were bogus or had been inflated at the state level. Judge Fullam split the baby, ordering Owens Corning to pay $7 billion.

More important, however, was the judge's legal reasoning. Most federal judges have refused to challenge the methods or "facts" put forward by asbestos litigators, but Judge Fullam took aim at their unethical practices. He pointed out their penchant for "venue shopping," or filing cases in states famous for "runaway jury verdicts." He noted the mass screenings that "attorneys" and "labor unions" have used to round up plaintiffs, as well as their habit of hiring "biased" and "unreliable" X-ray readers (who detect disease even when there is none).

The judge also described "group lawsuits" in which lawyers lump the very sick with perfectly healthy patients, resulting in "higher verdicts," and he noted that companies often settle with healthy people simply to avoid defense costs. And -- the guy was rolling -- he repudiated the methodology for estimating claims that has been used by a trial lawyer "expert" witness, one Dr. Mark Peterson, in many bankruptcy cases. The lawyers usually get about 30% of any settlement, so by reducing this one by $4 billion Judge Fullam cut their windfall by $1.3 billion.
Asbestos litigation is probably the single worst insidence of tort bar excesses. While some people have been seriously harmed by exposure to asbestos, most of the "victims" in these suits, which have driven more than 40 companies into bankrupcy, are not ill. They sued on the grounds that they had been exposed to asbestos, and therefore they will become ill in the future. And even this little bit of sanity involves paying the lawyers "only" a little more than $2 billion, rather than the $3.3 billion they were asking for.


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