Mr. Chairman and members of the Committee, my name is Richard Middleton, Jr., and I am a practicing attorney from Savannah, Georgia. I am a senior trial attorney in the firm of Middleton, Mathis, Adams & Tate, P.C., with offices in Atlanta and Savannah, Georgia. I also have the very high honor of serving presently as the President of the Association of Trial Lawyers of America (ATLA). Mr. Chairman, thank you very much for this opportunity to present ATLA’s views in opposition to S. 758, the proposed asbestos compensation legislation.
ATLA believes that an objective evaluation of the history and present state of asbestos litigation will lead the Committee to conclude that:
1. Workers who have been injured by exposure to asbestos in the workplace are entitled to receive compensation in the court system. There is no basis for providing legal relief to the companies who are responsible for their injuries.
2. S.758 does not, as its proponents suggest, codify the settlement agreement in the Amchem litigation, and the bill is not supported by the parties who participated in that settlement.
3. S. 758 is a bad bill that would deny compensation to tens of thousands of workers with cancer and disabling lung disease from workplace asbestos exposure and
would provide a financial windfall to companies which willfully mislead the public about asbestos problems.
4. The courts are well equipped to handle the pending and future asbestos cases that will require trial. A litigation crisis, as that term is usually understood, does not exist. In 1998, only 55 asbestos trials, involving 125 individuals, were completed in all the states and federal courts, a 45% decline from 1997.
5. Both the state and federal courts, and the parties themselves, have, over time, devised a variety of mechanisms for processing and settling asbestos cases in a timely fashion. Over 25,000 cases were resolved last year by voluntarily negotiated settlement agreement, providing much needed relief to victims and their families.These private settlement agreements will continue to provide compensation to tens of thousands of victims each year and keep the docket burden of the courts to a minimum well into the future, unless Congress reduces or eliminates the incentive for defendant companies to settle.
6. S. 758 would negatively impact and, in many cases, overturn the various state laws that have induced settlements. The bill’s restrictive medical criteria would eliminate compensation for thousands of cases that are presently compensable under state laws. It would also delay the processing of all pending cases for many months, if not years, and bring all existing settlement activity to a standstill.
7. It would be a mistake to interpret the Supreme Court’s call last term in Ortiz v. Fibreboard for a “national asbestos dispute resolution scheme” as support for anything like S. 758. What the Court made reference to in Ortiz was a system modeled on the recommendations of the Judicial Conference’s Ad Hoc Committee on Asbestos Litigation. That panel suggested creation of an administrative compensation mechanism that would control all of the defendants’ available assets and apply principles of absolute liability in order to compensate claimants. Such a model bears no resemblance to the system proposed in S. 758, which provides no compensation to any asbestos victim.
8. There are serious 10th Amendment problems with any federal legislation which, like S. 758, rewrite selective portions of state tort law and eliminate a claimant’s existing right to seek compensation through the tort system without providing an alternative remedy. Although a constitutionally permissible comprehensive federal asbestos compensation program could be written, compensation levels approximating the value of litigated claims would require tax and spending decisions by Congress which it has been loath to undertake in the past.
Twenty years ago, thousands of injured claimants had difficulty obtaining relief in the courts because the asbestos industry was involved in a lengthy and complex legal struggle with plaintiffs over responsibility for the diseases caused by their products. The issues that animated that litigation have long ago been resolved in favor of the claimants. Liability of the defendant companies is no longer seriously disputed. Juries across this country have demonstrated time and again that they will find the defendant companies liable at trial and impose substantial damages for their conduct.
The last time Congress looked at this issue, in 1991-1992, the concept of a “litigation crisis” received support from a number of academic and official sources, notably from the Rand Institute of Civil Justice and later from the U.S. Judicial Conference Ad Hoc Committee on Asbestos Litigation. During the period in the 1980s that these groups studied asbestos litigation, the courts were, in fact, having difficulty handling the caseload or providing adequate and timely compensation for victims. This problem was caused by intense litigation over issues of causation, insurance coverage and apportionment of liability.
Today the problems which the courts confronted during the last decade have largely been eliminated and the industry and the claimants have by and large accommodated themselves to the risk of litigation. Most of the major defendants have entered into master settlement agreements, jurisdiction by jurisdiction, that establish criteria for settlement based on the law, the medical standards of proof in each jurisdiction and the historical record of trial success. Tens of thousands of cases are settled every year, providing compensation to victims and their families in a fraction of the time it would take to process claims under the labyrinth proposed in S. 758.
As a result, it is simply inaccurate to any longer claim that asbestos litigation is placing an undue burden on the courts. As the statistics clearly show, claims filed do not translate into cases tried. The vast majority of cases do not take up the time of the courts. Although many new cases are filed each year, large numbers are placed on inactive dockets and most other claims are settled under private agreements. In fact, according to Mealys Asbestos Litigation Reporter, during 1998 only 55 asbestos cases involving 125 individuals proceeded to verdict in the fifty states and all federal courts, a 45% decline from 1997 — and clearly a negligible number.
The best way to ensure the continued orderly processing of future asbestos cases is to leave matters to the parties and to the state and federal courts under existing law. The way to end progress, produce an administrative nightmare, and create new and lengthy delay for injured victims is to consolidate all asbestos claims in one federally mandated facility.
Unimpaired Claims
The lynchpin of the argument for the mandated medical criteria and other devices to limit access to the courts contained in S. 758 is that too many of the new claims filed each year involve conditions that have not yet met the defendants’ definition of impairment — a definition of impairment that is less favorable to workers than accepted medical standards and the standards that have been adopted by most of the state and federal courts. By seeking to classify all claims filed by asbestos workers diagnosed with pleural plaques, pleural thickening or pleural calcification, and even many cases of asbestosis as unimpaired, this argument inaccurately suggests that none of these claims are deserving of compensation. Adoption of the medical criteria in S. 758 is not medically justified and would do great injustice to a significant number of claimants.
Virtually all of the states permit recovery only by those asbestos workers who have been diagnosed with physical symptoms of disease. In Metro North Commuter Railroad Company v. Buckley (521 U.S. 424, 1997), the Supreme Court held that mere exposure to asbestos without manifesting injury would not support a recovery under federal law. More recently, the Texas State Supreme Court similarly ruled that compensation is not available without a physical injury. Temple—Inland Products v. Carter (1999 W.L. 254718). These courts identified only two jurisdictions where lower courts permit such claims.
Elsewhere, the courts, by local rule or otherwise, and the parties have consistently taken steps to prioritize and manage the asbestos cases on their dockets. In the federal courts, the area of primary responsibility of this Committee, all asbestos cases are consolidated before a single federal judge who has administratively resolved tens of thousands of cases and remanded only a nominal number back to transfer courts for trial. Obviously, these cases do not impose a burden on the federal courts. Finally, in many other jurisdictions claims by these workers are placed on inactive dockets or pleural registers which prevent them from becoming a drain on the resources of either the courts or the defendants.
S. 758 and the Amchem Settlement
S. 758 does not, as its proponents suggest, codify the settlement agreement in the Amchem litigation, and the bill is not supported by the parties who participated in that settlement. Amchem Products, Inc., et al. v. Windsor, et al., 117 S.Ct. 2231 (1997).
The basic consideration for the Amchem class action settlement was that if the settlement criteria were met, the claimant would receive prompt payment from the settling defendants. The defendants established a fund in excess of $1 billion to immediately pay claims to qualified claimants.
In contrast, S. 758 fails to ensure prompt payment of any money to asbestos victims. The bill provides no guarantee of any payment at all to any injured worker. Amchem required that every qualified asbestos claim be paid within nine months. S. 758, however, includes no time period guaranteeing any resolutions or prompt payment of claims. Furthermore, Amchem applied to only a small portion of defendants (less than 25%) who agreed to share liability. Joint and several liability remained available as to defendants not included in Amchem. But, S. 758 eliminates joint and several liability for all asbestos claims.
S. 758 is also less favorable to asbestos victims than Amchem and will unreasonably restrict access to the courts. In Amchem, plaintiffs waived the right to seek punitive damages in exchange for defendants’ waiver of all traditional defenses to asbestos claims. S. 758, on the other hand, eliminates plaintiffs’ right to seek punitive damages but provides plaintiffs nothing in exchange for these lost legal rights. Defendants retain the right to raise virtually all of their traditional defenses, including state of the art, comparative negligence, contributory negligence, intervening negligence, superseding negligence, employer fault, notice, and others. Amchem, in addition, applied only to those asbestos manufacturers and plaintiffs who agreed to it. Existing plaintiffs who did not agree to its terms were free to opt out of the settlement and to rely on the tort system for redress. Indeed, over 170,000 workers filed opt out notices from the settlement. S. 758 contains no such opt out provision. Its restrictions apply to all cases, both present and future. In fact, the bill applies retroactively to all cases pending in federal or state courts for which a final judgment has not been entered, including jury verdicts and unpaid settlements.
In short, S. 758 stands the Amchem settlement on its head. It eliminates all of the benefit of the bargain that was offered to claimants, but grants none of the benefit that was provided in that settlement.
S. 758 — The Fairness in Asbestos Compensation Act of 1999
The Fairness in Asbestos Compensation Act of 1999 is little more than an attempt by a small minority of the asbestos defendants to limit and, in most cases, eliminate their liability for payment of damages to both present and future victims of asbestos disease. S. 758 requires every claimant to meet the bill’s medical criteria before compensation may even be demanded and before he or she has the right to file a lawsuit in any jurisdiction in the United States, even though such claims may meet state law requirements. As such, the bill represents an unprecedented assault on American citizens’ common law right of access to state courts.
By design, this legislation would eliminate most of the pending claims in the United States, create procedural delays for those claims that remain, impose numerous legal obstacles in the path of any claimant who is bold enough to prosecute a claim, and would, at the same time, obliterate existing incentives for defendants to settle cases.
The bill creates the Asbestos Resolution Corporation, which is not a compensation board but simply a screening device to decide who may file law suits against asbestos defendants. Unless a claimant obtains a certificate of medical eligibility, access to the courts is completely foreclosed. Even when an individual receives a certificate of eligibility, no award or benefit is paid. That certificate merely entitles a claimant to participate in a lengthy and inconclusive mediation and arbitration procedure after which the claimant will likely be left with nothing — no money, no good faith, no timely settlement offer. The Corporation’s procedures are open-ended and certain to provide almost endless opportunity for delay.
The medical criteria themselves are arbitrary, do not represent mainstream scientific opinion, and would leave thousands of desperately ill individuals with no legal remedies whatsoever. Most draconian is Section 203, which requires 15 years of exposure to asbestos prior to 1979 for eligibility for non-asbestosis lung disease. OSHA standards did not adequately protect workers from significant asbestos cancer risk until 1994, and millions of workers continue to be exposed to this day. Yet the bill conclusively determines that asbestos exposures after 1979 are not harmful.
Lung cancer victims are denied eligibility unless twelve years have elapsed from their first exposure. In addition, a cancer victim must show either asbestos or bilateral pleural thickening before a certificate of eligibility is awarded. This is contrary to the mainstream medical literature on this issue. The consensus view is that asbestosis is not a precondition required before lung cancer can be attributed to asbestos. Numerous scientific studies indicate that less than five years latency to asbestos can cause asbestos-related lung cancer. A twelve year latency period is required to establish eligibility for non-malignant asbestos-related diseases. This is particularly unfair in light of the heavy exposures that have occurred in recent years as workers have removed asbestos from public buildings, and since the scientific literature has established that de minimis exposure to asbestos can cause the most lethal disease.
Finally, even victims who successfully run the gauntlet of the bill’s procedures and meet its medical criteria get nothing but the right to re-litigate their case in court under highly prejudicial procedural rules. Moreover, because the legislation applies to any case that has not gone to final judgment by the date of enactment, the bill would retroactively nullify awards in cases that have already been resolved by jury verdict or which are on appeal.
Taken together, the administrative labyrinth established under the bill and the highly prejudicial changes in tort law will make pursuing asbestos-related damage claims substantially more time consuming and expensive, will greatly reduced the number of claims that defendants face and will significantly reduce the value of those claims.
It is most important for this committee to realize that procedural changes in S. 758 inevitably will condemn the courts to relive the problems that created courthouse gridlock in the 1980s. In the early 1980s, the courts were unable to resolve asbestos cases because the industry used procedural tools available to it at that time to delay trials and avoid settlement. It is axiomatic that delay serves the interests of the industry defendants. It allows firms to pay very few claims and permits them to use their superior economic power to force claimants to accept discounted settlements. Backlogs of thousands of cases are the inevitable result when legislation tips the scale in favor of the defendants’ side of the bargaining table. By superimposing a bureaucratic, adversarial administrative mechanism on top of a reconstituted, pro-defendant court regime, S. 758 will recreate a court crisis which the parties themselves have already resolved. To cite but one of many concrete examples, by eliminating the risk of joint and several liability S. 758 will encourage each defendant to litigate its individual market share liability in individual cases, thereby greatly increasing the number and duration of litigated claims.
In short, S. 758 would eliminate any incentive for defendants to continue their negotiated settlement agreements. These agreements ensure prompt, voluntary payment to tens of thousands of presently-impaired victims. Although this year’s bill (in contrast to last year’s version) appears to preserve the ability of the parties to enter private settlements, it nevertheless destroys the incentives for defendants to do so.
Ortiz v. Fibreboard — The Supreme Court Did Not Ask Congress to Pass S. 758
Proponents of S. 758 suggest that the Supreme Court decision in Ortiz v. Fibreboard (No. 97-1704, June 23, 1999) constitutes an endorsement of their proposal.
What the court had in mind in asking Congress to consider “...creating a national asbestos dispute resolution scheme...” is a far cry from the legislation we are considering here today. In fact, a full reading of the opinion makes it clear that S. 758 is wholly inconsistent with the goals enumerated by the court.
In Ortiz, the court spelled out its views by reference to the report of the Judicial Conference Ad Hoc Committee on Asbestos Litigation, a panel of federal judges appointed by Chief Justice Rehnquist to study the problem. Among other things, that panel recommended consolidation of all asbestos claims and defendants assets before a single judicial forum, called for elimination of burdensome proof requirements and for imposition of absolute liability on the defendants — all in order to increase and accelerate plaintiff compensation. In contrast, S. 758 purposely creates new time-consuming procedural and bureaucratic hurdles, and erases existing legal rights — all in order to avoid paying compensation. Clearly, the administrative scheme proposed in S. 758 bears no resemblance to the Judicial panel’s recommendations or the goals of the Ortiz court.
Constitutional Problems
In Ortiz, the Supreme Court also made clear that it would not countenance any scheme that compromises America’s Seventh Amendment right to trial by jury or the sovereignty of the states under our federal system.
The peculiar structure of S. 758 requires this Committee carefully to consider its potential constitutional defects. The most serious areas of concern include the rewriting of state tort law and those provisions which eliminate the right to seek compensation through the courts without providing an alternative remedy such as a fund for the payment of claims. As the Supreme Court indicated in Duke Power Co. v. Carolina Environment Study Group, 428 U.S. 59, 86-87, 91-93 (1978), and in other decisions, the abolition of common law tort remedies without providing alternative means of redress for injury violates due process. That appears to be precisely what S. 758 does.
A second serious constitutional defect involves the rights of those asbestos victims who surmount the bill’s procedural obstacles, obtain a certificate of medical eligibility and file a civil action. When they finally arrive at state court, they will find that their state’s tort law has been rewritten specifically to limit their rights and that these changes were imposed by Congress, rather than their state courts or legislatures. While Congress may create a federal asbestos cause of action, it cannot write state tort law that must be applied by the states. As the Supreme Court Stated in Erie Railroad Co. v. Tompkins, 304 U.S. 64, 78 (1938), the cornerstone of federalism in our civil justice system:
“There is no federal general common law. Congress has no power to declare substantive rules of common law applicable in a State, whether they be local in their nature or “general,” be they commercial law or part of the law of torts.”