GlobalTort : Commentary from lawyers and experts on mass torts, law, insurance and science

Mass tort law today is badly flawed by the lack of connections between state court  tort systems and the parallel but disconnected compensation systems that have arisen through trusts or funds that hold billions of dollars intended to pay tort claims. BP's oil rig fund is a recent, well-known  example that highlights the growing importance of funds as a means for resolving massive tort claims. The new RAND study on asbestos bankruptcy trusts - at long last - highlights the importance of the $ 30 billion or so of asbestos bankruptcy trust funds created from asbestos litigation. A recent mandamus filing in the Supreme Court of Illinois illustrates the importance of forcing connections between trust fund payments and tort law claims.

In short, the defendants' papers ask the Court to require the Madison County trial court to modify asbestos docket orders to require pretrial and trial procedures that account for claims to asbestos trusts. The papers are on line here. 

The gist of the problem is plain, and boils down to plaintiff's splitting causes of action. At present, asbestos tort claims can proceed ahead to settlement  and trial without the claimants having to bring or account for asbestos trust claims they can and will bring. So, the claimants act economically rationally by delaying filing claims against the trusts. The result ? The tort system cases go to settlement and trial without the remaining defendants being able to obtain effective offsets or effective contribution claim rights regarding the monies that inevitably will be paid out by the asbestos trusts.

How much money are we talking about? Hundreds of thousands, or millions. Indeed, in one of the chapter 11 cases, well-known asbestos plaintiff's lawyer Peter Kraus submitted a declaration swearing to his understanding that  all clients of his firm would be paid not less than $ 700,000.  - by just one trust -   if each could in good faith assert that they worked with a product that included asbestos sold by Thompson-Hayward.  Go here to download the Kraus declaration and its exhibits. And, the record in the Illinois Supreme Court proceedings includes expert information from  Bates White indicating that an "average" asbestos claimant may obtain $ 600,000 from asbestos trusts, with some obtaining much more.

Should the Supreme Court of Illinois act in order to force rational and timely economic connections between its state court system and the trust fund compensation system ? Absolutely.

Will it act? Time will tell.

Should academics be paying attention to forcing connections between the two parallel and disconnected compensation systems? Absolutely. Are they ? Not in any meaningful way that I can find.

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The Supreme Court acted in unusual fashion yesterday on Chrysler, and the actions create some issues that need further thought as to their implications for underlying tort claimants and for due process. Specifically, in this order, the Court granted certiorari, but then immediately vacated the judgment and AND vacated as moot the Second Circuit's opinion that explained its reasons for affirming the district court. The Second Circuit's opinion was germane to mass tort claims and due process because of its language to the effect that future tort claimants would not be bound by the bankruptcy court rulings. See below for the exact wording of the order.

I'll readily admit that I'm not a Supreme Court scholar. That said, this all seems rather odd, and makes one wonder about the motivations and thoughts behind these actions. Are these actions unique to the odd facts and pressures of Chrysler? Are the actions related to Justice Robert's avowed interest in making a name for this Court by taking and resolving more "business issues" ? Do these actions in any way reflect hat the Court thinks it learned or held about bankruptcy court finality in its Travelers/Manville bankruptcy case ruling that remanded the Manville case back to the Second Circuit for further proceedings (which have been briefed and argued)?

I look forward to learning what others think. I think this means that everyone is now back to lower court orders which also include language suggesting that future claimants are not bound. For now, with a hat tip, here are excerpts from the commentary on LAW360, with quotes from Chrysler's counsel:

"The order makes clear the case is over," attorney Todd R. Geremia of Jones Day, which represents the Chrysler debtors, said Monday. "There's nothing for another day."

The high court's ruling vacated a 53-page ruling in the Second Circuit affirming the sale as legal under the Bankruptcy Code but declining "to delineate the scope of the bankruptcy court's authority to extinguish future claims" until a claim for injury caused by Old Chrysler could be brought under successor liability law.

While the court vacated the Second Circuit ruling, it did not necessarily disagree with it. The court invoked a precedent from a case known as United States v. Munsingwear Inc. that allows it simply to vacate and remand cases that become moot on their way up.

"Nothing in this order today reflects any disagreement with the Second Circuit," Geremia said. "It's an order that arises from the application of Munsingwear."

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The Supreme Court's order states:

" IN POLICE PENSION TRUST, ET AL. V. CHRYSLER LLC, ET AL.
The motion of Washington Legal Foundation, et al. for leave
to file a brief as amici curiae is granted. The petition for a
writ of certiorari is granted. The judgment is vacated, and the
case is remanded to the United States Court of Appeals for the
Second Circuit with instructions to dismiss the appeal as moot.
See United States v. Munsingwear, Inc., 340 U.S. 36 (1950).

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Here is an article from Japan this week that reports on finding Libby Mines vermiculite in buildings in Japan. The article claims the material was installed Zonolite. How can Judge Fitzgerald's orders in the WR Grace case bind these building owners if they were not given effective notice in a language they understand ?

Note also that the article indicates SEM (scanning electron microscopy) is now being used overseas to find fiber types.

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Highly toxic asbestos found in four buildings across Japan; current testing flawed

A widely-used building material has been found to contain asbestos in Tokyo, Hokkaido and Kagawa, in the first discovery of amphibole asbestos, the rarer and more dangerous variety of the toxic mineral, in buildings in Japan.

Asbestos fibers were found in at least four buildings: three community centers, one in Hokkaido and two in Kagawa Prefecture, and the ceiling of a private building in Tokyo. The latter three all used a vermiculite-based insulation called Zonolite. Measures to prevent the asbestos from scattering have already been taken at all the four buildings.

The findings were made by the Tokyo Occupational Safety and Health Center (TOSHC). Examining vermiculite containing relatively low-toxic serpentine asbestos using scanning electron microscopes, they found amphibole asbestos at concentrations of 0.1 to 1.5 percent -- enough to designate it an asbestos-containing material.

The center also found that trace impurities of aluminum and sodium matched those of a vermiculite sample taken from a mine in Libby, Montana. A study there found that 18 percent of residents of Libby tested after complaining about various health problems were suffering from chest-lining abnormalities.

A standard method of testing for asbestos used in construction materials was introduced in June last year, which local governments and other organizations have used to conduct their own studies. However, center expert Naoki Toyama points out, "We detected (asbestos) using the ISO method. Under the standard method, however, asbestos could be overlooked."

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