Asbestos Bankruptcy Report
Volume 12, Issue #7 · February 2013
RELIEF FROM STAY
TRUST CLAIMS DISCLOSURE
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CASES IN THIS ISSUE
In re: Global Industrial Technologies, Inc., et al., No. 02-21626, W.D. Pa. Bkcy.
Plant Insulation Company v. Fireman's Fund Insurance Company, et al., No. 06-448618, Calif. Super., San Francisco Co.
In re Resillo Press Pad Co., No. 13-02916, N.D. Ill. Bkcy.
In re: Specialty Products Holding Corp., et al., No. 10-11780, D. Del. Bkcy.
In Re: Plant Insulation Company (Fireman's Fund Insurance Company, et al., v. Plant Insulation Company, et al.), Nos. 12-17466 and 12-17467, 9th Cir.
In re Thorpe Insulation Co., No. 2:07-bk-19271, C.D. Calif. Bkcy.
In re Thorpe Insulation Co., No. 2:07-bk-19271, C.D. Calif. Bkcy.
In re: W.R. Grace & Co., et al., No. 01-01139, D. Del. Bkcy.
In re: G-I Holdings, Inc., et al., (f/k/a GAF Corporation), Nos. 01-30135 and 01-38790, D. N.J. Bkcy.
Thorpe Insulation Company Asbestos Settlement Trust v. Michael J. Mandelbrot and Mandelbrot Law Firm, No. 12-02183, C.D. Calif. Bkcy., J.T. Thorpe Settlement Trust v. Michael J. Mandelbrot and Mandelbrot Law Firm, No. 12-02182, C.D. Calif. Bkcy., Western Asbestos Settlement Trust v. Michael J. Mandelbrot and Mandelbrot Law Firm, No. 12-04190, N.D. Calif. Bkcy.
In re: Pittsburgh Corning Corporation, No. 00-22876, W.D. Pa. Bkcy.
In re: Durabla Manufacturing Co., No. 09-14415, D. Del. Bkcy.
In re: The Flintkote Co., et al., No. 04-11300, D. Del. Bkcy.
Phyllis Granville, Ronald Granville v. Domco Products Texas Inc., No. 12-2-02999-7, Wash. Super., King Co.
Joseph Bohazi, et al. v. Beazer East Inc., et al., No. CV-09-701166, Ohio Comm. Pls., Cuyahoga Co.
Natalie R. Dean, et al. v. Alcoa Inc., No. 2009-06951-ASB, Texas Dist, Harris Co.
International Energy Group Limited v. Zurich Insurance PLC UK Branch, No. (2013) EWCA Civ. 39, England and Wales App.
Docket No.: AC0376-12-54, Decision No.: 2013-0010, Alberta Wrks. Comp. App. Comm.
PITTSBURGH — A Pennsylvania federal bankruptcy judge on Feb. 13 reconfirmed on remand the Chapter 11 plan of reorganization for Global Industries Technologies Inc. (GIT), finding that concerns of the Third Circuit U.S. Court of Appeals about the legitimacy of a trust established by the plan to benefit silica claimants were "unfounded, mistaken, and without record support" (In re: Global Industrial Technologies, Inc., et al., No. 02-21626, W.D. Pa. Bkcy.; 2013 Bankr. LEXIS 594 Shepardize).
(Findings of fact and conclusions of law available. Document #48-130225-011Z.)
Facing nearly 300,000 asbestos personal injury claims, GIT and subsidiaries, including A.P. Green Industries Inc. (APG), filed for Chapter 11 bankruptcy protection in 2002 in the U.S. Bankruptcy Court for the Western District of Pennsylvania. GIT filed a third amended reorganization plan in 2005.
GIT's reorganization plan provides for the establishment of an APG Asbestos Trust for the payment of asbestos claims that will be funded with 21 percent of the shares of the reorganized debtor's common stock and proceeds from insurance settlements. The plan also provides for establishment of an APG Silica Trust for payment of silica personal injury claims that will be funded with proceeds from insurance settlements and rights to receive insurance proceeds under certain insurance policies.
A number of GIT's liability insurers objected to the reorganization plan, which also includes an injunction under U.S. Bankruptcy Code Section 105 barring silica-related personal injury claims against the reorganized entity and channeling them instead to the APG Silica Trust. The insurers argued that the creation of the silica trust involved improper collusion between GIT and asbestos tort claimants.
The insurers said an earlier version of GIT's reorganization plan did not include a silica trust and lacked the support of asbestos claimants, so it can be inferred that the trust was added to the plan to win the asbestos claimants' support. Also, the insurers said, a surge in the number of silica claimants from 169 before GIT filed for bankruptcy to the more than 4,600 who voted on the reorganization plan shows that collusion was involved in creating the silica trust.
The Bankruptcy Court dismissed the objections, holding in part that the insurers lacked standing to challenge the plan and that the plan's insurance neutrality provisions sufficiently protect the insurers' contractual rights. The U.S. District Court for the Western District of Pennsylvania affirmed the Bankruptcy Court's confirmation of the plan and its determination that the insurers lacked standing to challenge the plan.
The insurers — Hartford Accident and Indemnity Co., First State Insurance Co. and Twin City Fire Insurance Co. (collectively, Hartford); Century Indemnity Co. and Westchester Fire Insurance Co. (collectively, Century); and National Union Fire Insurance Co. of Pittsburgh, PA, Insurance Company of the State of Pennsylvania, Lexington Insurance Co., American Home Assurance Co. and other entities related to Chartis Inc. (collectively, Chartis) — appealed to the Third Circuit, arguing again that GIT sold them out by setting up a system in which they would pay for trumped-up silica claims in exchange for asbestos claimants casting their votes in favor of GIT's reorganization plan.
On May 4, 2011, in a 6-4 en banc opinion, a Third Circuit majority held that, based on the insurers' allegations of collusion between GIT and the asbestos and silica claimants' counsel in setting up the APG Silica Trust, the insurers had standing to object to the plan (In re: Global Industrial Technologies, Inc., et al., No. 08-3650, 3rd Cir.; See May 2011, Page 4). The Third Circuit remanded the case to the Bankruptcy Court to conduct "a more searching review of Hartford's and Century's allegations of collusion between the debtors and counsel for the silica claimants."
The Third Circuit majority said that the insurers' allegation of "ginned-up" silica claims "is a profoundly serious charge and not without record support."
'No Evidence Of Collusion'
But in her findings of fact and conclusions of law again confirming GIT's plan, Bankruptcy Judge Judith K. Fitzgerald said that not only did the Third Circuit majority fail to identify any evidence in the record to support the insurers' claims of collusion and fraud, the insurers' themselves, given a second chance on remand, also provided no such evidence.
"Nowhere in the record of this case, before or after the opinion of the Court of Appeals was issued, is there support for an inference of fraud, 'ginned-up claims,' or abuse of the bankruptcy system," the bankruptcy judge said. "There is no evidence that the [Asbestos Claimants Committee], [future claimants' representative], or counsel for either of them were involved in silica discussions. Likewise, there is no evidence of collusion between or among Debtors, their counsel, or counsel for the silica claimants."
Bankruptcy Judge Fitzgerald said that in response to the Third Circuit's remand order, she re-examined the record, solicited citations to the record from the insurers, conducted additional confirmation pretrial and trial proceedings and examined in detail the process that led to the silica trust.
After the insurers failed to provide citations supporting their allegations, they announced in June that they had settled the dispute with GIT in deals that will provide $3.8 million to the APG Silica Trust, the bankruptcy judge said. Then, in October, the bankruptcy judge held an additional one-day confirmation hearing at which GIT's attorney explained how the APG Silica Trust was created and how the number of claims increased. No one challenged his testimony or accepted the court's invitation to cross-examine him, the bankruptcy judge said.
The attorney testified that after he investigated other bankruptcies with silica claims, he learned that GIT could be expected to face more such claims after filing a Chapter 11 petition, so he conducted negotiations with law firms representing asbestos and silica claimants regarding establishment of a trust in GIT's case, Bankruptcy Judge Fitzgerald said.
Bankruptcy Judge Fitzgerald found that "the evidence conclusively and overwhelmingly establishes that there was no collusion, no fraud, and no improper solicitation of votes. Notice of the plan was proper and the increase in the number of claims is neither out of the ordinary (not only for the silica claims but for the asbestos claims as well) nor the result of improper conduct or motive by any party in interest. The GIT Plan and the Silica [trust distribution procedures] provide mechanisms to ensure that claims of disease are properly diagnosed by qualified medical personnel and that they are supported by medical (and exposure) evidence."
The bankruptcy judge said that confirmation of the plan, creation of the asbestos and silica trusts and issuance of the injunction regarding silica claims are in the best interests of GIT's estate and its creditors, are proper under the Bankruptcy Code, were proposed in good faith and were the result of arm's-length negotiations.
"The overwhelming support of creditors and the settlements with, inter alia, the formerly objecting insurers, stands in sharp contrast to the concerns expressed by the Court of Appeals, none of which are supported by the evidence," Bankruptcy Judge Fitzgerald held.
GIT is represented by Robert G. Sable, Sally E. Edison and Nicholas E. Meriwether of McGuire Woods in Pittsburgh and James J. Restivo, Paul M. Singer and David Ziegler of Reed Smith in Pittsburgh.
Hartford is represented by Craig Goldblatt, Danielle M. Spinelli and Seth P. Waxman of Wilmer Cutler Pickering Hale & Dorr in Washington, D.C. Century is represented by John D. Demmy of Stevens & Lee in Wilmington, Del. Chartis is represented by Michael S. Davis of Zeichner, Ellman & Krause in New York and Beverly Weiss Manne of Tucker Arensberg in Pittsburgh.
SAN FRANCISCO — A California judge on Jan. 31 sided with insurance companies in a long-running dispute with Chapter 11 bankruptcy debtor Plant Insulation Co. over insurance policy coverage for asbestos personal injury claims, finding that the "completed operations" and "products hazard" definitions of the policies apply only where the bodily injury in a given policy period occurs after the operations have been completed or possession of the product has been relinquished (Plant Insulation Company v. Fireman's Fund Insurance Company, et al., No. 06-448618, Calif. Super., San Francisco Co.).
(Tentative statement of decision available. Document #48-130225-001Z.)
Plant sold, installed and repaired asbestos, brick, cement, concrete, stone and other types of fireproofing and insulating materials. Beginning in 1978, the company was subjected to thousands of asbestos bodily injury, wrongful death and loss of consortium claims and lawsuits for damages allegedly caused in whole or in part by exposure to asbestos-containing materials installed or supplied by Plant.
The company maintained comprehensive general and excess liability insurance policies issued by various insurers through 1985. Pursuant to the policies, the insurers defended and indemnified Plant for more than 20 years, paying in excess of $125 million to resolve asbestos claims against Plant.
Plant's insurers then began telling the company and others insurers that the policies had been exhausted and that they would no longer defend or indemnify Plant. Each of Plant's insurers eventually professed exhaustion, until by 2001, all of the company's insurers said that they would no longer defend or indemnify Plant against asbestos cases.
In 2006, Plant filed a declaratory relief action in the San Francisco County Superior Court to ascertain its rights under the policies issued by its solvent insurers. Plant sought declaratory relief in the form of policy interpretations, including declarations as to how the policies applied to asbestos injury and wrongful death claims asserted against Plant. Some of the insurers filed cross-claims in the declaratory action.
The action was bifurcated in tried into three phases. A final decision was entered on the Phase I issues in January 2009, and shortly before the date was set for the Phase II trial, Plant in May 2009 filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of California.
The Bankruptcy Court determined that the automatic stay of the bankruptcy applied to the declaratory action but modified the stay to permit the Phase II trial to proceed. In May 2010, a final decision was entered in the Phase II trial in which the court rejected application of the affirmative defenses asserted by the insurers and denied the insurers all the relief they sought.
The Bankruptcy Court then lifted the automatic stay to permit the declaratory action to proceed to a final adjudication on the merits in Phase III. A key issue in the coverage litigation is whether Plant's insurers — who claim that their policies' aggregate limits were exhausted by the prepetition payment of claims against Plant — are obligated to provide additional coverage on the theory that the claims against Plant are "operations claims" not subject to the policies' aggregate limits.
Statement Of Decision
Some of the original defendant insurers have settled with Plant. In April 2012, the remaining defendants — American Home Assurance Co., Insurance Company of the State of Pennsylvania, Granite State Insurance Co., Insurance Co. of the West, OneBeacon Insurance Co., Transport Indemnity Co., Safety National Casualty Corp., United States Fidelity and Guaranty Co. and United States Fire Insurance Co. — filed a joint stipulation with Plant, putting various issues before the court for resolution. The court held a trial on the issues that lasted 15 days in two sessions and included testimony from 26 witnesses and more than 300 exhibits.
In his tentative statement of decision on the Phase III issues, Judge John E. Munter said that under Plant's interpretation of the completed operations issue, once a claim is considered an operations claim under one policy — the policy in effect at the time the operations took place — the claim must be considered an operations claim under every subsequent policy, including policies issued long after the operation were completed. The judge found that the definition is "not reasonably susceptible to Plant's interpretation" because the plain and unambiguous definition of bodily injury under the policies limits its application to "during the policy period."
Judge Munter said that in the context of "long-tail injuries, such as those in the underlying asbestos suits here, the fact that some of the bodily injury may have occurred before or after the operations were completed is made irrelevant by the clear and unambiguous definition of the completed operations hazard."
Timing Of Injury
The judge agreed with the insurers that the relevant issue for the completed operations provision is the timing of the bodily injury during a given policy period. He said that Plant's interpretation of the completed operations hazard would conflict with its construction of the term "bodily injury" proposed for analysis of trigger of coverage. The judge relied on several of the insurers' cited cases, including In re Wallace & Gale Co. (385 F.3d 820, 833-34 Shepardize [4th Cir. 2004]; 2004 U.S. App. LEXIS 20877 Shepardize; See October 2004, Page 11).
Judge Munter then found that, as with the completed operations provision, the policies' products hazard definition is clear and unambiguous, and the focus of the inquiry is on the timing of the injury, as the insurers contended.
"The plain and unambiguous terms of the policies provide that a claim for bodily injury falls within the products hazard if: (1) it arises out of the Named Insured's Products; (2) the bodily injury that occurs during the policy period occurs away from premises owned or rented by the named insured; and (3) such bodily injury occurs after physical possession of the products was relinquished to others," the judge said in rejecting Plant's interpretation of the products hazard, adding that "the source or cause of the bodily injury during the policy period" are irrelevant.
Proof, Medical Trigger
Judge Munter also sided with the insurers on the issue of burden of proof, holding that Plant, as the insured, has the burden of proving that an asbestos bodily injury claim asserted against it is not subject to aggregate limits. This showing requires Plant to establish that Plant's operations were not completed and its products were not relinquished by the time of the bodily injury that occurred during the policy period, the judge said.
However, regarding the issue of medical trigger, Judge Munter sided with Plant, finding that bodily injury occurs upon exposure to asbestos. The judge said that human exposure to asbestos "starts a battle between the body's immune system" and the asbestos fibers, and despite the fact that the body can often repair injuries caused by exposure, individuals suffering from asbestos-related disease have already lost that battle.
Judge Munter held that it is not scientifically or practically feasible for individuals suffering from asbestos-related disease, or anyone, to track various asbestos fibers or exposures. "In those individuals where the [immune] battle has been lost, the most that can be said is that exposure to asbestos led to their diseases," the judge said.
Judge Munter performed an injury-in-fact analysis and concluded that despite recent advancements in medicine, the persuasive evidence establishes that in people who develop asbestos disease, the inhalation of asbestos led to that disease.
Plant is represented by Peter J. Benvenutti, Tobias S. Keller, Michaeline H. Correa and Ryan T. Routh of Jones Day in San Francisco.
The insurers are represented by Mark D. Plevin and M. Kay Martin of Crowell & Moring in San Francisco; Cynthia L. Kendrick, Leslie A. Davis and Tacie H. Yoon of Crowell & Moring in Washington, D.C.; Lynn H. Murray of Grippo & Elden in Chicago; Andrew T. Frankel, Kathrine A. McLendon and Craig S. Waldman of Simpson Thacher & Bartlett in New York; Deborah L. Stein of Simpson Thacher in Los Angeles; Philip A. O'Connell Jr. of SNR Denton US in Boston; Robert B. Millner of SNR Denton in Chicago; Paul E.B. Glad and Joel T. Muchmore of SNR Denton in San Francisco; Richard Goetz and Jaclyn Blankenship of O'Melveny & Myers in Los Angeles; Patricia B. Hsue of O'Melveny & Myers in San Francisco; Tancred V. Schiavoni of O'Melveny & Myers in New York; Alan S. Berman of The Berman Law Group in Woodland Hills, Calif.; Lawrence A. Tabb of Musick, Peeler & Garrett in Los Angeles; Chad A. Westfall of Musick, Peeler & Garrett in San Francisco; Philip R. Matthews and Ray L. Wong of Duane Morris in San Francisco; Jeff Carlisle, Randall J. Peters, David K. Morrison and Rosemary H. Do of Lynberg & Watkins in Los Angeles; Michael S. Davis of Zeichner Ellman & Krause in New York; and Valerie A. Moore and Eugenie Gifford Baumann of Haight, Brown & Bonesteel in Los Angeles.
CHICAGO — A company that calls itself the "world's largest exclusive manufacturer of press pads" for the commercial laundry and dry-cleaning industry on Jan. 25 filed a voluntary petition for Chapter 7 bankruptcy in Illinois federal bankruptcy court, due in part to pending asbestos litigation (In re Resillo Press Pad Co., No. 13-02916, N.D. Ill. Bkcy.).
(Chapter 7 petition available. Document #48-130225-002X.)
23 Asbestos Claimants
Resillo Press Pad Co. of Lincolnwood, Ill., filed a Chapter 7 petition in the U.S. Bankruptcy Court for the Northern District of Illinois. In the petition, the company estimates that it has 50 to 99 creditors, $50,001 to $100,000 in assets and $500,001 to $1 million in liabilities.
The company further estimates that, after any exempt property is excluded and administrative expenses are paid, there will be no funds available for distribution to unsecured creditors. Resillo lists personal property worth $56,722.30 as its total assets and $863,240.36 as its total liabilities, with $99,493.94 owed to creditors holding secured claims and $763,746.42 owed to creditors holding unsecured nonpriority claims.
In its schedule of creditors holding unsecured nonpriority claims, Resillo lists 23 claimants with pending asbestos litigation, all with "unknown" dollar amounts.
The company lists Leo Pearl as its president and Lois Pearl as its secretary, with both owning 50 percent of the stock.
According to Resillo's website, the company last year marked its 71st anniversary of manufacturing press pads for the fabricare industry. Founder Morris Rosenthal began constructing his own steel press pads in Chicago during the Depression at his family's Sheridan Laundry, and after he discovered that the pads were selling well to neighboring laundries, he formed Resillo in 1933, according to the website. By 1948, the company had a nationwide sales and service network in place and by 1956 moved to a 30,000-square-foot facility in Lincolnwood, where it continued to operate until last year.
The website says that over the years, Resillo worked hand-in-hand with press manufacturers to produce pads that fit the needs of their users. The company says that it was the original manufacturer of the Blue Pad, which was used by more dry-cleaners than any other pad on the market.
The bankruptcy case has been assigned to Judge Timothy A. Barnes.
Resillo is represented by Miriam R. Stein of Chuhak & Tecson in Chicago.
WILMINGTON, Del. –– By looking at the merits of asbestos personal injury claims filed against Specialty Products Holding Corp. and Bondex International Inc. and using a scientific method for forecasting liability, the legal responsibility of the companies for current and future asbestos claims can be estimated as low as $110 million, the Chapter 11 debtors say in a post-trial brief filed Feb. 8 in Delaware federal bankruptcy court (In re: Specialty Products Holding Corp., et al., No. 10-11780, D. Del. Bkcy.).
(Debtors' amended post-trial brief available. Document #48-130225-013B.)
But representatives for the asbestos claimants say in their Feb. 6 post-trial brief that the debtors' asbestos liability can be estimated as high as $1.84 billion, based on their experts' established method of determining what the victims of the debtors' asbestos-containing products would have received if the companies had remained in the tort system.
(Official Committee of Asbestos Personal Injury Claimants and future claimants' representative's post-trial brief available. Document #48-130225-014B.)
Nature Of Claims
Specialty Products and subsidiary Bondex filed voluntary Chapter 11 bankruptcy petitions in the U.S. Bankruptcy Court for the District of Delaware in 2010 due to thousands of asbestos personal injury lawsuits filed against the companies. The debtors' asbestos liability estimation hearing was held Jan. 7 through Jan. 11, 2013.
The debtors say in their brief that the proper estimation of their liability for asbestos claims, as conducted by their expert, Charles H. Mullin, requires an examination of the nature of the claims filed against the debtors and the debtors' history, including their experience in the state tort system.
The debtors say that even though they produced only a small amount of asbestos-containing joint compound after their 1966 acquisition of The Reardon Co., by 2003 they were being sued by almost half of all people filing mesothelioma lawsuits. On top of this "nonsensical" result, the debtors say, their products contained only chrysotile asbestos, which they say is significantly less potent than other types of asbestos and for which there is "substantial evidence" that it does not cause mesothelioma at all. In addition, the debtor's joint compound was mainly used by the do-it-yourself market, so the potential dose associated with the products was extremely small, the debtors say.
"Without an understanding of these facts and the Debtors' litigation history (which, among the estimation experts, only Dr. Mullin attempted to do), it is simply not possible to predict what the claims against the Debtors will look like in the future," the debtors argue.
As to their litigation history, the debtors say that from 2006 to 2010 when they filed for bankruptcy, they paid one large settlement to claimants represented by three law firms without examining the underlying claims "to reduce the total amount spent for both case resolutions and defense costs." With other cases, the debtors paid smaller settlements in some and got 70 percent of those that were evaluated individually dismissed, the debtors say. Of the 30 or so cases that proceeded to trial, the debtors prevailed more than 60 percent of the time, the debtors say.
"A simple mathematical extrapolation of the Debtors' tort system settlement payments is . . . not appropriate because: (i) the evidence made clear that every dollar the Debtors paid to resolve a claim did not reflect their liability; (ii) there is simply no basis to adopt an approach to estimation that completely ignores the merits of the claims; and (iii) the extrapolations, which utilize widely disparate assumptions and involve ad hoc judgments, are totally subjective and are, therefore, unreliable," the debtors argue.
'The Proper Way'
The Official Committee of Asbestos Personal Injury Claimants and the future claimants' representative (FCR) counter that the debtors' approach to estimating their liability is an unprecedented attempt to accomplish what the debtors failed to achieve in the tort system –– resolve their pending and future asbestos liabilities at a fraction of what they paid historically.
"The Debtors' evidence was intended to create a fictionalized tort system where payments to victims were, among other things, merely 'implicit defense costs' and in which the Debtors overpaid for claims based on an unsubstantiated assertion that they were paying for other defendants' liabilities. The Debtors' tactic, however, is inconsistent with what this Court has recognized as the proper way to estimate claims. That is, that '[t]he validity of a claim is determined by reference to the state law governing the substance of that claim and those state interests are analyzed no differently . . . than if the interested parties were not in bankruptcy,'" the Official Committee and FCR say, quoting In re W.R. Grace & Co. (346 B.R. 672, 674 n.10 [Shepardize Bankr. D. Del. 2006]).
The committee and FCR say that, contrary to the debtors' claims, the payments that the companies made to asbestos disease sufferers before filing for bankruptcy were in direct proportion to the debtors' liability for their conduct. For example, attorneys for asbestos personal injury plaintiffs were able to show in court that "the Debtors made a conscious decision to encourage others to continue to sell their asbestos-containing products despite the Debtors' knowledge of the dangers associated with the asbestos contained in their products and despite the Debtors' ability to easily reformulate a non-asbestos containing joint compound," the asbestos claimants' proponents say.
The committee and FCR say that the debtors are using the same flawed tactics now that they used in the tort system in an attempt to minimize their liability to asbestos personal injury claimants. These strategies include obscuring the extent of liability through untruths and omissions about the products they manufactured and pursuing unsuccessful defenses such as the chrysotile defense and the market share defense. The committee and FCR say that the debtors also resolved claims in the past to avoid discovery of intentional tortious conduct and tried to avoid discovery of their corporate structure and various conveyances of assets and liabilities.
The committee and FCR criticize Mullin's methodology, saying that he "persists in rewriting the Debtors' history in the tort system, ignores a substantial portion of the cases actually resolved in that history, artificially and improperly deflates the value of those cases, and, finally, makes untenable assumptions that fly in the face of the evidence and long-accepted estimation practice. In so doing, he substantially understates the Debtors' liability arising from asbestos personal injury claims."
By contrast, the committee and FCR say, their experts, Mark A. Peterson and Thomas Vasquez, used "an almost universally employed and legally accepted extrapolation" to estimate the debtors' asbestos liability. In addition, Peterson and Vasquez have participated in every significant asbestos bankruptcy case and use a method that predicts current and future liability had the debtors remained in the tort system, which is required by the law, the committee and FCR say.
"Common sense and 30 years of experience tell us that the agreed settlement values, established at arms' length and reflecting all of the factors considered by both the plaintiffs and the defendants, is the best and only truly reliable indicator of what pending and future claims would have been resolved for had the Debtors remained in the tort system," the committee and FCR say.
The debtors are represented by Daniel J. DeFranceschi, Paul N. Heath and Zachary I. Shapiro of Richards, Layton & Finger in Wilmington and Gregory M. Gordon and Dan B. Prieto of Jones Day in Dallas.
The committee is represented by Natalie D. Ramsey and Davis Lee Wright of Montgomery, McCracken, Walker & Rhoads in Wilmington, Mark B. Sheppard and Lathrop B. Nelson III of the firm's Philadelphia office and Nathan D. Finch of Motley Rice in Washington, D.C. The FCR is represented by James L. Patton Jr., John T. Dorsey, Edwin J. Harron and Sharon M. Zieg of Young Conaway Stargatt & Taylor in Wilmington.
SAN FRANCISCO — Nonsettling insurance companies in Plant Insulation Co.'s Chapter 11 bankruptcy case are not entitled to full compensation for their contribution claims against settling insurers, so the injunction in Plant's plan of reorganization protecting the settling insurers is proper, Plant says in a Jan. 11 brief on the nonsettling insurers' plan confirmation appeal in the Ninth Circuit U.S. Court of Appeals. The nonsettling insurers respond in their Jan. 25 reply brief that provisions of the plan protecting settling insurers from contribution claims are not supported by evidence or the case record (In Re: Plant Insulation Company [Fireman's Fund Insurance Company, et al., v. Plant Insulation Company, et al.], Nos. 12-17466 and 12-17467, 9th Cir.; See January 2013, Page 9).
Plant filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in 2009 in the U.S. Bankruptcy Court for the Northern District of California. The company's reorganization plan provides two ways for compensating asbestos personal injury claimants: from a trust funded in part by more than $183 million in payments from the settling insurers and by preserving the claimants' right to file tort actions against Plant and the insurers that have not settled their coverage disputes with Plant.
Bankruptcy Judge Thomas E. Carlson confirmed the plan in March 2012, overruling the many objections filed by the nonsettling insurers. The bankruptcy judge held that the plan was proposed in good faith because Plant's merger with affiliated company Bayside Insulation and Construction Inc. is necessary for the plan's success. The bankruptcy judge found that the injunction barring the assertion of contribution claims against the settling insurers also is necessary to the success of the plan.
The bankruptcy judge's confirmation order provides for the establishment of the asbestos trust and authorizes the Bayside merger agreement, under which Plant will merge into Bayside, with reorganized Bayside the surviving corporation.
The nonsettling insurers appealed the confirmation order to the U.S. District Court for the Northern District of California. While the nonsettling insurers said that the reorganization plan illegally sets up a sham company that will be funded by the asbestos trust, plan proponents Plant, the Official Committee of Unsecured Creditors and the future claimants' representative (FCR) countered that the insurers were merely seeking to continue to avoid asbestos injury claims in the tort system that had been put on hold by the bankruptcy.
On Oct. 9, Judge Richard Seeborg overruled all of the insurers' objections and affirmed confirmation of the plan, finding that the plan's proposed injunctive relief for Plant, Bayside and the settling insurers does not violate the nonsettling insurers' rights under the U.S. Constitution, exceed the authorization provided by the Bankruptcy Code, interfere with the nonsettling insurers' common-law and contractual rights under state law or contravene general principles of equity (In re Plant Insulation Co. [Fireman's Fund Insurance Company, et al., v. Plant Insulation Co., et al.], No. 12-1887, N.D. Calif.; 2012 U.S. Dist. LEXIS 146071 Shepardize; See October 2012, Page 7).
Nine nonsettling insurers — OneBeacon Insurance Co., American Home Assurance Co., Granite State Insurance Co., Insurance Company of the State of Pennsylvania, Insurance Company of the West, Safety National Casualty Corp., Transport Indemnity Co., United States Fidelity and Guaranty Co. and United States Fire Insurance Co. (U.S. Fire) — appealed to the Ninth Circuit, with U.S. Fire filing a separate appeal.
'Requirements Have Been Met'
After the Ninth Circuit consolidated the appeals, the insurers filed a consolidated opening appellant brief under seal. U.S. Fire joined in the consolidated brief and filed its own opening brief to make an additional argument.
In their appellee brief, Plant and the other plan proponents say that, in addition to the reorganization plan's injunction being legal, fair and equitable, the plan itself meets all requirements of Bankruptcy Code Section 524(g), contrary to the nonsettling insurers' arguments.
"As found by the courts below, all statutory requirements have been met," Plant says. "The Reorganized Debtor will conduct business in the future. It has made the necessary contribution to the Trust. The Trust is funded by securities of the Reorganized Debtor, and the Trust is entitled to own a majority of the Reorganized Debtor's shares upon the occurrence of 'specified contingencies.'"
As to the injunction itself, Plant argues that the six insurance companies that are paying $183.6 million to the trust to benefit asbestos disease sufferers should receive the protection they bargained for from contribution claims of the insurers that have chosen to continue to litigate asbestos actions.
"The statute provides that parties who make contributions to a trust for the benefit of asbestos victims may be relieved from further litigation if their contributions are fair and equitable to victims," Plant says. "Each of the settled insurers made contributions that met that fairness standard, and each is entitled to the protections of §524(g)."
But the nonsettling insurers argue that the bankruptcy judge's finding that provisions of the reorganization plan protecting settling insurers from contribution claims are necessary to the plan, fair and equitable is not supported by admissible evidence and was based on a now-obsolete record regarding Plant's settlements with insurers.
The nonsettling insurers say that the court based its finding on the testimony of three of Plant's own lawyers. The attorneys should not have been allowed to testify as "experts" because they offered only their self-interested, conclusory opinions that were not backed by required methodology, the insurers say.
"Indeed, the bankruptcy court did not mention any evidence other than testimony of these three witnesses to support its findings concerning the effect of the Plan on Appellants' Contribution Rights," the insurers say. "Likewise, the only evidence actually cited by Appellees on these issues was testimony of the same three witnesses."
The nonsettling insurers further argue that the bankruptcy judge's finding that any concentration of defense and indemnity costs on nonsettling insurers due to the barring of their contribution claims was minimal because so few insurers had settled was based on an incomplete record.
At the time of the ruling, Plant had settled with only four insurers for trust payments totaling only $61.6 million, but after plan confirmation, the bankruptcy judge approved two large settlements with two more insurers, tripling the amount of trust funding.
"Obviously the percentage of available coverage that has settled has changed materially from the time of the bankruptcy court confirmation opinion, thereby increasing the obligations of the remaining Appellants given the injunctions barring Appellants from obtaining contribution from now-settled insurers," the nonsettling insurers argue. "Although Plan Proponents assert that additional settlements would generate offsetting 'direct and indirect' benefits in favor of Non-Settled Insurers, there is no record evidence as to how the post-confirmation settlements, and consequent loss of Contribution Claims against additional Settling Asbestos Insurers, affect Non-Settled Insurers. The bankruptcy court accepted this proposition without record support."
Oral argument is scheduled for April 19.
Plant is represented by Peter J. Benvenutti and Ryan T. Routh of Jones Day in San Francisco. The Official Committee of Unsecured Creditors is represented by Michael H. Ahrens and Steven B. Sacks of Sheppard, Mullin, Richter & Hampton in San Francisco and Peter Van N. Lockwood of Caplin & Drysdale in Washington, D.C. The FCR is represented by Gary S. Fergus of Fergus Law Office in San Francisco.
The nonsettling insurers are represented by Mark D. Plevin and M. Kay Martin of Crowell & Moring in San Francisco; Cynthia L. Kendrick, Leslie A. Davis and Tacie H. Yoon of Crowell & Moring in Washington; Lynn H. Murray of Grippo & Elden in Chicago; Andrew T. Frankel, Kathrine A. McLendon and Craig S. Waldman of Simpson Thacher & Bartlett in New York; Deborah L. Stein of Simpson Thacher in Los Angeles; Philip A. O'Connell Jr. of SNR Denton US in Boston; Robert B. Millner of SNR Denton in Chicago; Paul E.B. Glad and Joel T. Muchmore of SNR Denton in San Francisco; Richard Goetz and Jaclyn Blankenship of O'Melveny & Myers in Los Angeles; Patricia B. Hsue of O'Melveny & Myers in San Francisco; Tancred V. Schiavoni of O'Melveny & Myers in New York; Alan S. Berman of The Berman Law Group in Woodland Hills, Calif.; Philip R. Matthews and Ray L. Wong of Duane Morris in San Francisco; Jeff Carlisle, Randall J. Peters, David K. Morrison and Rosemary H. Do of Lynberg & Watkins in Los Angeles; Michael S. Davis of Zeichner Ellman & Krause in New York; Clinton E. Cameron and Seth M. Erickson of Troutman Sanders in Chicago; Lawrence A. Tabb of Musick, Peeler & Garrett in Los Angeles; Chad A. Westfall of Musick, Peeler & Garrett in San Francisco; and Valerie A. Moore and Eugenie Gifford Baumann of Haight, Brown & Bonesteel in Los Angeles.
documents available: U.S. Fire's appellant reply brief. Document #48-130225-021B.
U.S. Fire's appellant brief. Document #48-130128-010B.
Ninth Circuit's Nov. 8 order. Document #48-130128-011R.
Nonsettling insurers' notice of filing under seal. Document #48-130128-012X.
District Court's order denying motion for stay. Document #48-121126-006R.
Order denying appeal from confirmation. Document #48-121022-012R.
Order granting motions to dismiss. Document #48-121022-013R.
Order affirming plan confirmation. Document #48-121022-014R.
Amended and restated second amended plan of reorganization. Document #48-120423-009X.)
LOS ANGELES — Reorganized Chapter 11 debtor Thorpe Insulation Co. and its asbestos trust received approval Feb. 6 from a California federal bankruptcy judge of a settlement with three insurance companies that have opposed Thorpe's reorganization. The deal covers three insurance policies and includes a $36 million payment by the insurers to the asbestos trust (In re Thorpe Insulation Co., No. 2:07-bk-19271, C.D. Calif. Bkcy.).
Thorpe Insulation Co., formerly known as Plant Insulation Co., operated as a union subcontractor whose primary business was to install and repair insulation on mechanical systems at commercial industrial sites. From 1948 to 1992, Thorpe distributed insulation products, and from 1957 to 2000, Thorpe was the distributor for Johns-Manville products in southern California. Before approximately 1972, the insulation material distributed and installed by Thorpe contained asbestos. After 1972, Thorpe's operations involved asbestos and lead abatement. Pacific Insulation Co. was incorporated by Thorpe in 2000, and Thorpe transferred its insulation distribution business to Pacific.
Thorpe purchased comprehensive general liability insurance from various insurers from 1948 to 1984 that provided coverage for asbestos personal injury claims. Among the policies are three issued by Century Indemnity Co., successor to Cigna Specialty Insurance Co. f/k/a California Union Insurance Co., Central National Insurance Company of Omaha and Motor Vehicle Casualty Co. (collectively, the Century insurers), covering the periods Oct. 1, 1976, to Feb. 1, 1978, and Oct. 1, 1979, to Oct. 1, 1980.
In 2005, when certain insurers asserted that coverage for the asbestos claims against Thorpe had been exhausted or was approaching exhaustion, Thorpe filed a declaratory judgment action in the San Francisco County, Calif., Superior Court, seeking to determine its coverage rights and obligations for present and future asbestos personal injury claims. The Century insurers were among the defendants in the case.
In 2007, Thorpe filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Central District of California. Pacific filed a bankruptcy petition the same year due to its alleged asbestos liability and the failure of Thorpe's insurers to pay asbestos claims asserted against Thorpe. The cases are jointly administered.
Thorpe and Pacific's plan of reorganization was confirmed by the Bankruptcy Court in 2010. The plan establishes the Thorpe Insulation Co. Asbestos Settlement Trust to pay a portion of the asbestos-related claims asserted against the companies, provides for an injunction channeling all such claims to the trust and provides an opportunity for all claimants to obtain a judgment against Thorpe and seek the balance of their recovery through direct action lawsuits against insurers that choose not to settle with Thorpe. The plan also offers protection under Bankruptcy Code Section 524(g) to various nondebtor parties, including insurers who elect to resolve their coverage disputes with Thorpe.
After the plan confirmation was affirmed by the U.S. District Court for the Central District of California, nonsettling insurers — including the Century insurers — appealed to the Ninth Circuit U.S. Court of Appeals, which in April 2012 affirmed in part and reversed in part. The Ninth Circuit remanded the case to the Bankruptcy Court for consideration of equitable plan modifications in the event the court determines that any of the nonsettling insurers' preserved plan objections on issues where the nonsettling insurers were not granted standing have merit. The confirmation remand proceeding is ongoing.
On Jan. 9, Thorpe and the Thorpe trust moved for approval of a settlement with the Century insurers. Thorpe said the Ninth Circuit's remand authorizes the Bankruptcy Court to approve reorganization plan modifications that, through implementation of the settlement, resolve the plan objections advanced by the Century insurers.
"By resolving those objections (at least as to the Century Insurers), the Settlement Agreement accomplishes that task and accordingly the Plan modifications provided for in the Settlement Agreement fall within the scope of the remand," Thorpe said.
Bankruptcy Judge Sheri Bluebond agreed, finding that approval of the modified plan in connection with the pending confirmation remand proceeding is appropriate because the approval falls within the scope of that proceeding.
Settling Asbestos Insurers
Under terms of the settlement, the Century insurers will buy back the three Thorpe policies for a $36 million payment to the Thorpe trust. Also, the parties will cease all litigation activities against each other in the state court coverage litigation, and the Century insurers "shall stay, suspend or adjourn" their objections to Thorpe's reorganization plan and cease any other litigation activity in the bankruptcy case.
In exchange for payment of the settlement amount, the Century insurers will be designated as settling asbestos insurers under Thorpe's reorganization plan and will be entitled to the protections of the settling asbestos insurer injunction.
"In light of the (a) uncertainty of outcome in the litigation between the parties, (b) complexity involved in that litigation, and the expense, inconvenience, and delay that necessarily attends such litigation, and (c) paramount interests of the creditors and deference to their reasonable views, the terms and conditions of the Settlement Agreement and the consideration to be paid thereunder, are fair and equitable, reasonable, and in the best interest of the Debtors, the Debtors' estate, and the Debtors' creditors," Bankruptcy Judge Bluebond held.
Thorpe and the Thorpe trust are represented by Kenneth N. Klee, Daniel J. Bussel, Thomas E. Patterson and David M. Guess of Klee, Tuchin, Bogdanoff & Stern in Los Angeles.
The Century insurers are represented by Richard B. Goetz and Jaclyn Blankenship of O'Melveny & Myers in Los Angeles; Tancred V. Schiavoni, Gary Svirsky and Abby Johnston of the firm's New York office; Jonathan Hacker of the firm's Washington, D.C., office; and Gregory T. LoCasale and Patricia B. Santelle of White & Williams in Philadelphia.
(Additional document available. Motion to approve settlement. Document #48-130225-005M.)
LOS ANGELES — A week after receiving approval for a $36 million settlement with three insurance companies, reorganized Chapter 11 debtor Thorpe Insulation Co. and its asbestos trust on Feb. 13 sought approval of two more settlements with insurers that have objected to Thorpe's reorganization that will provide $57 million more to the trust for payment of asbestos personal injury claims (In re Thorpe Insulation Co., No. 2:07-bk-19271, C.D. Calif. Bkcy.).
Thorpe Insulation Co., formerly known as Plant Insulation Co., installed and repaired insulation on mechanical systems at commercial industrial sites. From 1948 to 1992, Thorpe distributed insulation products, and from 1957 to 2000, Thorpe was the distributor for Johns-Manville products in southern California. Before 1972, the insulation material distributed and installed by Thorpe contained asbestos. After 1972, Thorpe's operations involved asbestos and lead abatement. Pacific Insulation Co. was incorporated by Thorpe in 2000, and Thorpe transferred its insulation distribution business to Pacific.
Thorpe purchased comprehensive general liability insurance from various insurers from 1948 to 1984 that provided coverage for asbestos personal injury claims. Among the policies are eight issued by National Fire Insurance Company of Hartford, as successor-by-merger to Transcontinental Insurance Co., and Continental Insurance Co., as successor-in-interest to certain policies issued by Harbor Insurance Co. (collectively, the Continental insurers). Thorpe also purchased one policy issued by Middlesex Insurance Co. and Sentry Mutual Co., as successors to Middlesex Mutual Insurance Co. (collectively, Middlesex/Sentry).
In 2005, after certain insurers asserted that coverage for the asbestos claims against Thorpe had been exhausted, Thorpe filed a declaratory judgment action in the San Francisco County, Calif., Superior Court, seeking to determine its coverage rights and obligations for present and future asbestos personal injury claims. The Continental insurers and Middlesex/Sentry were among the defendants in the case.
In 2007, Thorpe filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Central District of California. Pacific filed a bankruptcy petition the same year due to its alleged asbestos liability and the failure of Thorpe's insurers to pay asbestos claims asserted against Thorpe. The cases are jointly administered.
Thorpe and Pacific's plan of reorganization was confirmed by the Bankruptcy Court in 2010. The plan includes establishment of the Thorpe Insulation Co. Asbestos Settlement Trust to pay asbestos-related claims asserted against the companies. The plan also offers protection under Bankruptcy Code Section 524(g) to insurers who resolve their coverage disputes with Thorpe.
After the plan confirmation was affirmed by the U.S. District Court for the Central District of California, nonsettling insurers — including the Continental insurers — appealed to the Ninth Circuit U.S. Court of Appeals, which in April 2012 affirmed in part and reversed in part. The Ninth Circuit remanded the case to the Bankruptcy Court, and the confirmation remand proceeding is ongoing.
While Middlesex/Sentry did not participate in the Ninth Circuit appeal, it filed joinders to the statement of issues on remand filed by certain other insurers and contended that it has standing to pursue the remaining plan objections on remand.
On Feb. 6, Thorpe and its asbestos trust received approval from Bankruptcy Judge Sheri Bluebond for a settlement with three other insurance companies that opposed Thorpe's reorganization (See story, this issue). The deal covers three insurance policies and includes a $36 million payment by the insurers to the asbestos trust.
In separate motions, Thorpe and the Thorpe trust now seek approval of a $45 million settlement with the Continental insurers and a $12 million settlement with Middlesex/Sentry. As in the previous settlement, Thorpe says that the Ninth Circuit's remand authorizes the bankruptcy judge to approve reorganization plan modifications that, through implementation of the settlement, resolve the plan objections advanced by the insurers.
"By resolving those objections . . . the Settlement Agreement accomplishes that task and accordingly the Plan modifications provided for in the Settlement Agreement fall within the scope of the remand," Thorpe and the trust say.
Pursuant to the settlements' terms, the insurers will buy back the Thorpe policies, and the parties will cease all litigation activities against each other in the state court coverage litigation. Also, the insurers will end their objections to Thorpe's reorganization plan and cease any other litigation activity in the bankruptcy case.
In exchange for payment of the settlement amounts, the insurers will be designated as settling asbestos insurers under Thorpe's reorganization plan and will be entitled to the protections of the settling insurer injunction.
Thorpe and the Thorpe trust are represented by Kenneth N. Klee, Daniel J. Bussel, Thomas E. Patterson, David M. Guess and Korin A. Elliott of Klee, Tuchin, Bogdanoff & Stern in Los Angeles.
The Continental insurers are represented by David C. Christian II and M. Ryan Pinkston of Seyfarth Shaw in Chicago, Scott H. Olson of Seyfarth Shaw in San Francisco and Todd C. Jacobs of Grippo & Elden in Chicago.
Middlesex/Sentry is represented by Jeffrey C. Segal, Ilya A. Kosten and Bradford G. Hughes of Selman Breitman in Los Angeles.
WILMINGTON, Del. — W.R. Grace & Co. will clean up a federal Superfund site in Nashville, Tenn., and pay the Environmental Protection Agency more than $150,000 for past cleanup costs plus the agency's future cleanup costs, according to a notice of settlement and settlement agreement filed Feb. 13 in Grace's Chapter 11 case in Delaware federal bankruptcy court (In re: W.R. Grace & Co., et al., No. 01-01139, D. Del. Bkcy.).
The reorganization plan for W.R. Grace, which filed for Chapter 11 bankruptcy in 2001 in the U.S. Bankruptcy Court for the District of Delaware along with dozens of related companies (collectively, Grace), was confirmed by the Bankruptcy Court in 2011. The joint plan establishes two asbestos trusts to compensate personal injury claimants and property owners. The personal injury trust — one of the largest ever created to compensate asbestos victims — is to be funded with more than $3 billion in cash, stock, warrants, insurance proceeds and deferred payments from Grace, its insurers and third parties. The second trust will contain about $112 million for property damage claims to be paid in full on the plan's effective date.
Although the plan was approved by 99.51 percent of asbestos personal injury claimants, it still faced objections by 12 parties. But in January 2012, U.S. Senior Judge Ronald L. Buckwalter of the District of Delaware overruled all of the objections, affirmed the Bankruptcy Court's findings, confirmed the plan and issued an injunction channeling asbestos claims to the trusts.
After Judge Buckwalter denied a motion for reconsideration and entered an amended opinion and an order again confirming Grace's plan, eight parties appealed the rulings to the Third Circuit U.S. Court of Appeals. The judge and the Third Circuit both denied bids to stay plan confirmation until the appeals are decided, and three appeals were voluntarily dismissed after Grace resolved the parties' objections. The remaining appeals are pending.
Grace operated a vermiculite exfoliation plant on a 1.5-acre site in Nashville from 1963 until the plant closed in 1989. In 2010, the EPA collected outdoor air and soil samples at the site and analyzed the samples for the presence of asbestos based on the agency's national framework for evaluating asbestos at Superfund sites. The EPA conducted further testing in 2011 and announced that asbestos was found in the soil.
The EPA's Region 4 notified Grace of its status as a potentially responsible party for the Nashville site under Section 107(a) of the Comprehensive Environmental Response, Compensation and Liability Act and Section 7003 of the Resource Conservation and Recovery Act.
Grace says that the debtors and the EPA cooperated in preparing a settlement agreement to resolve the agency's claims and demands relating to the Nashville site.
The settlement agreement requires the debtors to perform and manage removal activities at the Nashville site, including excavation and removal of asbestos-containing soils at the site with disposal offsite at an approved facility.
"The EPA estimates that it will cost approximately $1.2 million to perform the remedial actions at the Nashville Site contemplated by the Nashville Settlement Agreement. The Debtors estimate that they will be able to perform the work for approximately $500,000," Grace says.
Also under the settlement, Grace has agreed to pay the EPA $159,757.36 for past response costs incurred through December 6, 2012. Grace's obligation to pay the past response costs is in the form of an allowed general unsecured claim under Grace's reorganization plan, and the costs are to be paid, with interest, within 30 days after the plan's effective date. The settlement agreement further provides that Grace will pay the EPA's future response costs.
Covenant Not To Sue
In return for the obligations to be assumed by Grace under the settlement agreement, the United States will provide Grace with a covenant not to sue for matters addressed under the agreement.
In addition, once the EPA issues a notice of completion of work and Grace pays all response costs and any other amounts required to be paid under the settlement, the Nashville site removal action will be considered a general unsecured claim that has been liquidated in the amount of $0 and to which the Bankruptcy Code Section 1141 discharge will apply, Grace says.
Grace is represented by Laura Davis Jones, James E. O'Neill, Kathleen P. Makowski and Timothy P. Cairns of Pachulski, Stang, Ziehl & Jones in Wilmington, John Donley and Adam Paul of Kirkland & Ellis in Chicago and Roger J. Higgins of Law Offices of Roger J. Higgins in Chicago.
The EPA is represented by Franklin E. Hill of the EPA in Washington, D.C.
NEWARK, N.J. — Reorganized Chapter 11 debtor G-I Holdings Inc. will pay $85,000 to settle a claim for cleanup at a former chemical facility in North Carolina, according to a stipulation and order issued Feb. 4 by a New Jersey federal bankruptcy judge (In re: G-I Holdings, Inc., et al., [f/k/a GAF Corporation], Nos. 01-30135 and 01-38790, D. N.J. Bkcy.).
(Stipulation and order available. Document #48-130225-008R.)
G-I and a subsidiary, ACI Inc. (collectively, G-I), filed voluntary petitions in 2001 in the U.S. Bankruptcy Court for the District of New Jersey for relief under Chapter 11 of the U.S. Bankruptcy Code. The cases have been jointly administered, and the debtors' eighth amended joint plan of reorganization was approved in 2009.
In 2001, Seaboard Group II filed a claim in G-I's bankruptcy case for $1,955,705 for costs related to the remediation of the former Seaboard chemical facility in Jamestown, N.C. In 2008 and 2011, Seaboard Group filed two more claims that are identical to the first claim.
In 2011 and 2012, reorganized G-I filed omnibus objections to environmental claims pursuant to 11 U.S. Code Section 502(b) and Federal Rules of Bankruptcy Procedure 3001 and 3007. The environmental objections included opposition to the Seaboard claims on various bases.
To avoid continued expense and the risk of prolonged litigation concerning the Seaboard claims, the parties negotiated and agreed to settle the claims, according to a stipulation and order signed by Bankruptcy Judge Rosemary Gambardella.
Under terms of the settlement, the reorganized debtors will pay Seaboard Group $85,000 in full and final satisfaction of the Seaboard claims. Once the settlement amount is paid, the claims will be expunged and removed from the claims register, and both parties will release all claims against each other.
G-I is represented by Dennis J. O'Grady and Mark E. Hall of Riker, Danzig, Scherer, Hyland & Perretti in Morristown, N.J., and Martin J. Bienenstock, Judy G.Z. Liu and Timothy Q. Karcher of Proskauer Rose in New York.
Seaboard is represented by Amos C. Dawson III and Holmes P. Harden of Williams Mullen in Raleigh, N.C.
LOS ANGELES — Three asbestos personal injury trusts alleging that a San Francisco asbestos plaintiffs' attorney submitted questionable evidence in support of claims have conspired against the attorney in order to put him out of business, the attorney says in an answer filed Feb. 1 in a California federal bankruptcy court to the trusts' complaints against him (Thorpe Insulation Company Asbestos Settlement Trust v. Michael J. Mandelbrot and Mandelbrot Law Firm, No. 12-02183, C.D. Calif. Bkcy.; J.T. Thorpe Settlement Trust v. Michael J. Mandelbrot and Mandelbrot Law Firm, No. 12-02182, C.D. Calif. Bkcy.; Western Asbestos Settlement Trust v. Michael J. Mandelbrot and Mandelbrot Law Firm, No. 12-04190, N.D. Calif. Bkcy.; See October 2012, Page 4).
(Answer to Thorpe Insulation Trust and J.T. Thorpe Trust complaints available. Document #48-130225-009W.)
Thorpe Insulation Co. filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in 2007 in the U.S. Bankruptcy Court for the Central District of California. J.T. Thorpe Inc. filed a Chapter 11 petition in the same court in 2002. Thorpe Insulation's plan of reorganization pursuant to Section 524(g) of the Bankruptcy Code was confirmed in 2010, and J.T. Thorpe's plan was confirmed in 2006. Western Asbestos Co. filed for bankruptcy in 2002 in the Northern District of California Bankruptcy Court, and its plan was confirmed in 2004.
Each company's reorganization plan established a trust under Section 524(g) containing millions of dollars contributed by the companies and their insurers for the payment of claims of present and future asbestos personal injury claimants.
The three trusts filed complaints in September 2012 in the respective bankruptcy courts, alleging that attorney Michael J. Mandelbrot and his firm have been "submitting unreliable evidence in support of claims for substantial amounts of money" from the trusts. The trusts allege that, based on their investigation of Mandelbrot, they believe that he may have submitted fraudulent information to the trusts. In order to continue the investigation, the trusts seek "entry of a declaratory judgment confirming that the [trusts'] Investigation to determine whether Defendants have engaged in a pattern or practice of submitting unreliable information to the [trusts] is authorized by law and appropriate under the circumstances."
The trusts say that Mandelbrot has submitted approximately 2,690 claims to the Western Trust on behalf of claimants, approximately 2,560 claims to the J.T. Thorpe Trust and approximately 670 claims to the Thorpe Insulation Trust.
Mandelbrot filed one answer to the Thorpe Insulation Trust and J.T. Thorpe Trust complaints and an identical answer to the Western Trust complaint. Mandelbrot denies all of the trusts' allegations and says that the trusts failed to treat his clients the same as all other claimants as required by each trusts' case evaluation matrix (CEM) and trust distribution procedures (TDP). Mandelbrot says that the trusts have "interpreted the CEM and TDP to create unique barriers to Mandelbrot clients" and "conspired with other competing claimants' counsel to treat Mandelbrot clients unfairly and to punish them for complaints made by Mandelbrot concerning improprieties of Trust personnel."
Regarding those trust personnel, Mandelbrot says that the relief the trusts seek is barred by the doctrine of unclean hands based on their relationship with John Lynch, a former employee of the trusts. Mandelbrot alleges that Lynch was fired by the trusts for "improper conduct" and that the trusts failed to warn Mandelbrot of the conduct.
In addition, Mandelbrot says, the trusts have made decisions regarding how they have dealt with him based in part on their "close association" with Alan Brayton, who Mandelbrot says has filed false claims with asbestos settlement trusts.
"Because defendant has complained to [the trusts] of these improper relationships, Mr. Brayton and the [trusts] have conspired against defendant and attempted to drive him out of business by, among other things, investigating frivolous matters, such as demanding and conducting depositions of claimants all over the country relating to claims having a distribution value of only a few hundred dollars, investigating claims which have already been withdrawn by defendant, delaying the processing of claims, making repeated and redundant requests for information that has already been provided or is already known not to exist, making and revoking offers to settle before they can be considered by sick and dying claimants, arbitrarily increasing the cost of defendant's claims administration, and failing to follow the requirements of due process," Mandelbrot says.
Failure To Warn
Mandelbrot asserts failure to mitigate damages as another affirmative defense. He says that he hired Lynch after he was fired by the trusts without knowing that he had been accused by the trusts of dishonest conduct.
"Plaintiff now asserts that the employee acted dishonestly and may have tainted some of the claims filed with plaintiff by defendant's clients," but the assertions fail because the trusts were aware of Lynch's conduct and did not warn Mandelbrot of the problem, the attorney says.
Mandelbrot further contends that the trusts' claims are barred by the doctrines of waiver and estoppel, the applicable statutes of limitation and the doctrine of laches. He asks that the complaints be dismissed with prejudice and that he be awarded his attorney fees and costs.
Mandelbrot says that the trusts have not acted properly or followed their own procedures and failed to conduct audits in conformity with due process and that he has been harmed by those acts.
Mandelbrot is represented by Dennis D. Davis of Goldberg, Stinnett, Davis & Linchey in San Francisco.
The trusts are represented by Eve H. Karasik and Gabriel I. Glazer of Stutman, Treister & Glatt in Los Angeles and Michael E. Molland, Benjamin P. Smith and Aaron S. Dutra of Morgan, Lewis & Bockius in San Francisco.
(Additional document available. Thorpe Insulation Company Asbestos Settlement Trust's complaint. Document #48-121022-003C.)
PITTSBURGH — The Ad Hoc Committee of Judgment Creditors in the Chapter 11 case of Pittsburgh Corning Corp. (PCC) on Jan. 17 requested payment of an administrative expense claim of more than $230,000 for making a substantial contribution to PCC's reorganization (In re: Pittsburgh Corning Corporation, No. 00-22876, W.D. Pa. Bkcy.).
(Motion available. Document #48-130225-010M.)
PCC, facing an estimated 235,000 current or future asbestos claimants, filed a voluntary petition in 2000 in the U.S. Bankruptcy Court for the Western District of Pennsylvania for relief under Chapter 11 of the U.S. Bankruptcy Code. The company's reorganization plan has been denied confirmation twice, and its latest plan still faces objections by two insurance companies and a fellow bankrupt asbestos products manufacturer. With briefing and negotiations on the objections completed, PCC awaits a decision on confirmation of its amended plan.
When PCC filed for bankruptcy, there were about 45 asbestos victims holding unsatisfied judgments against the company totaling approximately $100 million for wrongful death or personal injury. The Ad Hoc Committee of Judgment Creditors — consisting of 15 individuals representing themselves or as executors or administrators of deceased claimants' estates — joined together in October 2003 to represent the interests of the judgment creditors and their fully liquidated claims in the formulation of PCC's reorganization plan.
"The Ad Hoc Committee realized that the interests of the Judgment Creditors sharply diverged from the interests of the Official Committee of Asbestos Creditors and the Future Claims Representative and that the Judgment Creditors would need aggressive, zealous representation to protect their rights under Title 11 in connection with the Plan of Reorganization," the Ad Hoc Committee says in its motion seeking allowance and payment of an administrative expense claim.
PCC's reorganization plan includes establishment of a trust to resolve asbestos claims. The Ad Hoc Committee says that when the company first filed the trust distribution procedures (TDP), the document contained language prohibiting the allowance of claims for punitive or exemplary damages, which would illegally deprive many judgment creditors of the full amounts of their judgments. Such language was in violation of the Bankruptcy Code and the Alabama Wrongful Death Statute, which provides for punitive damages as the only remedy available to the claimant, the committee says.
Due in part to the proposed TDP, the Ad Hoc Committee objected to confirmation of PCC's reorganization plan, arguing that it failed to treat the claims of the judgment creditors — including the holders of judgments under the Alabama Wrongful Death Statute — in accordance with their rights. The Bankruptcy Court agreed with the Ad Hoc Committee and told PCC that its plan could not be confirmed without amending the TDP.
After PCC and the Ad Hoc Committee reached agreement on amendments to the TDP that provided for full recognition of prepetition judgments, including any portions attributable to punitive or exemplary damages, the committee withdrew its objections and supported confirmation of the plan.
Attorney Fees, Expenses
"Because of the efforts of the Ad Hoc Committee, the TDP now complies with applicable law and protects the rights of the Judgment Creditors and the rights of all asbestos victims whose claims arise under the Alabama Wrongful Death Statute," the committee says. "Furthermore, the amendments to the Pittsburgh Corning TDP have served as a template for use in other asbestos bankruptcies."
Therefore, the Ad Hoc Committee contends that it has made a substantial contribution to PCC's reorganization and is entitled to recover, as an administrative expense, its attorney fees of $212,774 and out-of-pocket expenses of $12,999.59, for a total of $235,773.59.
The Ad Hoc Committee is represented by Henry W. Simon Jr. and Robert A. Simon of Barlow Garsek & Simon in Fort Worth, Texas, Robert Shields III of Tanner Guin Crowell in Birmingham, Ala., and Scott E. Schuster of McGuirewoods in Pittsburgh.
PCC is represented by David Ziegler of Reed Smith in Pittsburgh.
WILMINGTON, Del. — Reorganized gasket distributor Durabla Manufacturing Co. on Feb. 13 asked a Delaware federal bankruptcy judge to close its Chapter 11 case (In re: Durabla Manufacturing Co., No. 09-14415, D. Del. Bkcy.).
(Motion for entry of final decree available. Document #48-130225-022M.)
Durabla, a company founded in 1911 in New York that cut and sold asbestos-containing gasket material, filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in 2009 in the U.S. Bankruptcy Court for the District of Delaware due to more than 100,000 asbestos personal injury claims filed against the company. Affiliate Durabla Canada Ltd. filed a Chapter 11 petition in 2010.
The companies' joint reorganization plan, which was confirmed in June 2012 and became effective Sept. 12, established the Durabla Asbestos Trust, funded in part by $2.2 million contributed by Durabla Canada and related entities Gasket Resources Inc., DFT Inc. (formerly Durabla Fluid Technology Inc.), Triangle Fluid Controls Ltd., Triangle Pump Components Inc. (formerly Durabla Pump Components Inc.) and Lionville Properties Inc. Other trust funding includes: $8 million in notes issued by DFT, Gasket Resources and Triangle Fluid Controls; $4.9 million in Canadian dollars from a settlement with Canadian insurers; and $1,574,660 from a settlement reached with Pennsylvania Property and Casualty Insurance Guaranty Association.
On the effective date of the plan, Durabla merged into Gasket Resources of Exton, Pa. Durabla Canada, which was founded in 1922 in Canada and is now Reorganized Durabla Canada, continues to operate.
Durabla and Durabla Canada say that since the effective date, the debtors have fulfilled all of their responsibilities and commitments under the plan. They say that the asbestos trust has been established and funded, and Durabla has been merged into Gasket Resources.
"Moreover, the Debtors have made distributions to all administrative, priority, and unsecured creditors, and interest holders in accordance with the applicable provisions of the Plan," the debtors say. "Furthermore, the Debtors have assumed the operation of their businesses."
The debtors say that there is no apparent reason why their bankruptcy cases would have to be reopened. They say that entry of a final decree will save administrative costs and, therefore, is in the best interest of creditors. In addition, all contested matters have been resolved, and the plan confirmation order has become a final order and is not subject to any pending appeals.
Although the debtors say that all U.S. trustee fees through the end of 2012 have been paid and that the fee for the first quarter of 2013 will be paid by the time the hearing on their motion is held, Trustee Roberta A. DeAngelis on Feb. 19 filed a limited objection to the motion, stating that some fees may still have to be paid.
(Limited objection available. Document #48-130225-023X.)
DeAngelis says that the debtors' post-confirmation reports are still due for the final quarter of 2012 and first quarter of 2013 and that, "based upon the amount of disbursements reported for those quarters, there may be a corresponding amount of Quarterly Fees that are also due and owing."
"Prior to the entry of a final decree, all Post-Confirmation Reports and the proper amount of Quarterly Fees must be paid in the case," DeAngelis says.
Durabla and Durabla Canada are represented by Thomas J. Francella Jr. of Whiteford Taylor Preston in Wilmington.
DeAngelis is represented by Richard L. Schepacarter of the U.S. Department of Justice in Wilmington.
documents available: Notice of effective date of reorganization plan.
District Court's order affirming plan confirmation. Document #48-120924-034R.
Bankruptcy Court's findings of fact, conclusions of law and order. Document #48-120723-011Z.
Plan of reorganization. Document #48-120723-012X.
Second amended disclosure statement. Document #48-110926-024X.)
COLUMBIA, Md. — W.R. Grace & Co. on Jan. 24 announced in a press release that it will increase the amount of recorded asbestos-related liability against it to more than $2 billion.
W.R. Grace said it will increase the amount of its recorded asbestos-related liability from $1.7 billion to $2,065,000,000.
W.R. Grace said it will report a $365 million noncash, pretax charge in its fourth-quarter 2012 earnings, which will not impact adjusted earnings before interest and tax (EBIT) or adjusted earnings per share. W.R. Grace said the increased adjustment is necessary to reflect an increased estimate of settlement values and the deferred payment obligation payable to the asbestos personal injury trust that was created under W.R. Grace's reorganization plan.
W.R. Grace estimates the warrant value, or the maximum value under the company's cash settlement agreement with the asbestos trust, is $490 million. The cash settlement agreement was approved in December 2012 by the U.S. Bankruptcy Court for the District of Delaware (In re: W.R. Grace & Co., et al., No. 01-01139, D. Del. Bkcy.; See December 2012, Page 11).
W.R. Grace said it now estimates that its deferred payment obligation is $547 million, which reflects its improved borrowing costs and the expected time of its emergence from bankruptcy. W.R. Grace said the cost of settling its asbestos-related liability will be based on the value of consideration transferred to the asbestos trusts at the end of the bankruptcy case.
available: Bankruptcy Court's Dec. 11 order approving cash-settled
collar agreement. Document #48-121218-012R.
Bankruptcy Court's Dec. 11 order approving qualified settlement fund. Document #48-121218-013R.)
WILMINGTON, Del. — A federal bankruptcy judge in Delaware on Feb. 4 granted an insurance company relief from the automatic stay in The Flintkote Co.'s Chapter 11 case so the insurer can file a declaratory judgment action against Flintkote to determine how much coverage is available to the debtor in its reorganization (In re: The Flintkote Co., et al., No. 04-11300, D. Del. Bkcy.; See January 2013, Page 19).
(Order available. Document #48-130225-006R.)
The bankruptcy judge also granted the insurer relief to participate in Flintkote's own declaratory judgment action to determine whether the insurer must continue mediating its insurance coverage dispute with the debtor.
Facing more than 150,000 asbestos personal injury claims, Flintkote and Canadian affiliate Flintkote Mines Ltd. (collectively, Flintkote), filed for Chapter 11 protection in 2004 in the U.S. Bankruptcy Court for the District of Delaware. Flintkote's plan of reorganization, which creates a trust under U.S. Bankruptcy Code Section 524(g) to process and pay asbestos claims, was confirmed Dec. 21, 2012.
Insurance company Aviva PLC subscribed severally to insurance policies placed in the London insurance market when the company was known as Commercial Union Assurance Co. Ltd. (CU U.K.). Flintkote sought coverage under the policies for its asbestos claims. In 1985, Flintkote and certain London market insurance companies entered into an agreement called the Wellington Agreement to resolve coverage disputes, and in 1989, Flintkote entered into a shadow Wellington agreement with CU U.K. to resolve how policies to which CU U.K. subscribed would apply to Flintkote's asbestos claims.
Aviva filed a motion Dec. 28 in Flintkote's bankruptcy case for relief from the automatic stay to pursue declaratory relief regarding the ongoing coverage disputes, saying that the shadow Wellington agreement includes a provision under which disputes between Flintkote and CU U.K. about the agreement will be resolved by litigation and not arbitration. Aviva said that the parties have reached an impasse after negotiating for more than six years to settle the disputes, so it should be allowed to pursue a declaratory judgment action in the U.S. District Court for the Northern District of California to determine its rights and obligations.
However, Flintkote said in a Jan. 18 response that the Wellington agreement requires that disputes over insurance coverage be resolved through an alternative dispute resolution (ADR) process and that, even though the shadow agreement does not require CU U.K. to abide by the ADR process, the insurer has consented to and actively participated in the ADR proceeding for the past six years while never attempting to exercise any contractual right to resolution through litigation.
Flintkote said that because of CU U.K.'s participation in the ARD process, it had waived its right to seek a judicial determination of its disputes with Flintkote. The debtor said that it had filed its own complaint in the U.S. District Court for the District of Delaware seeking to enforce CU U.K.'s consent to participate in a binding arbitration proceeding under the Federal Arbitration Act as part of the ARD process.
Flintkote said that if the District Court rules that CU U.K. did not consent to arbitration, the complaint also seeks to resolve the merits of all of the issues and disputes raised by CU U.K.'s proposed complaint, plus certain additional issues. The debtor said that because the relief CU U.K. seeks is rendered moot by Flintkote's complaint, Aviva's motion should be denied.
Bankruptcy Judge Judith K. Fitzgerald granted a modified version of the motion. While allowing Aviva to filed its declaratory judgment action in the Northern District of California, the bankruptcy judge further granted relief from the stay "to fully participate (a) in the District Court proceeding that Flintkote has initiated by filing the Complaint and, in the event Flintkote is successful on the threshold issue of whether CU U.K. is bound to continue participating in the ADR Proceeding, (b) in the ADR Proceeding."
Aviva is represented by Kristi J. Doughty of Whittington & Aulgur in Middletown, Del., Michael A. Shiner of Tucker Arensberg in Pittsburgh and Fred L. Alvarez of Walker Wilcox Matousek in Chicago.
Flintkote is represented by Kevin T. Lantry, Jeffrey E. Bjork and Shawn C. Luna of Sidley Austin in Los Angeles and Laura Davis Jones, James E. O'Neill and Scotta E. McFarland of Pachulski, Stang, Ziehl & Jones in Wilmington.
JACKSON, Miss. — Mississippi legislation requiring asbestos tort plaintiffs to make disclosures regarding claims against bankruptcy trusts died in committee on Feb. 5, according to the state's website.
(Legislation available. Document #01-130220-004L.)
The bill, House Bill 529, was introduced Jan. 21 and referred to the Mississippi House of Representatives Judiciary Committee A. After receiving no action, the bill died Feb. 5.
The bill would have required plaintiffs to provide a sworn statement identifying each trust to which they have applied and all related materials within 30 days of the commencement of discovery. The bill also required claimants who file subsequent trust claims to also provide notice of such to the tort litigation parties.
Similar bills have been introduced in other states, though Ohio is believed to be the lone state to have passed the litigation. The U.S. Congress considered a similar bill last year, but it also failed to reach the floor.
WASHINGTON, D.C. — The United States imported 1,100 tons of asbestos through July 2011, an increase of almost 6 percent but unlikely to signify a return of the industry, the U.S. Geological Survey (USGS)'s January Mineral Commodity Summaries.
(Report available. Document #01-130206-030X.)
The USGS said the increase amounted to 60 tons and "unlikely to represent any resurgence in the asbestos industry."
The five-year importation numbers are:
2011 — 1,100 tons
2010 — 1,040 tons
2009 — 869 tons
2008 — 1,460 tons
2007 — 1,730 tons
The July 2011 numbers represent the most recently available information.
The numbers are the lowest in the United States since 1909 and likely to remain flat, according to the USGS.
The roofing industry consumes approximately 60 percent of the asbestos imported into the United States, according to the USGS. The chloralkali industry consumes 35 percent, while the remaining 5 percent is used in unknown applications, the USGS said.
Canada was the largest supplier, providing the United States with 92 percent of the asbestos it imported. A small amount originated from Brazil and Africa. All of the imported asbestos was of the chrysotile variety.
SEATTLE — A Washington jury on Feb. 4 awarded $1.07 million to a woman with mesothelioma and her husband, who has asbestos-related pleural disease, sources told Mealey Publications (Phyllis Granville, Ronald Granville v. Domco Products Texas Inc., No. 12-2-02999-7, Wash. Super., King Co.).
Ronald Granville filed suit in the King County Superior Court in September. He eventually amended his complaint to allege that his wife suffered from mesothelioma, sources said. Sources said the Granvilles sued 13 companies whose conduct allegedly exposed them to asbestos.
Ronald Granville claimed that he was exposed while employed as a floor tile installer from 1947 to the mid-1980s, sources said. Phyllis Granville alleged that she was exposed to asbestos her husband carried home on his clothing, sources said.
The case proceeded to trial against Domco Products Texas Inc./Targett USA Inc., sources said. At trial, Domco argued that its tile products contained encapsulated asbestos and could not have led to the Granvilles' diseases, sources said.
The trial occurred over four weeks in January. The jury awarded $170,705 in medical expenses, $500,000 in noneconomic damages to Phyllis Granville and $400,000 in noneconomic damages to Ronald Granville. Judge John Erlick presided.
CLEVELAND — An Ohio jury on Jan. 30 awarded a man's estate $2.6 million for his death from asbestos-related mesothelioma, finding the lone remaining defendant 6 percent liable (Joseph Bohazi, et al. v. Beazer East Inc., et al., No. CV-09-701166, Ohio Comm. Pls., Cuyahoga Co.).
Joseph Bohazi's estate filed suit in the Cuyahoga County Court of Common Pleas against numerous companies whose conduct allegedly exposed Bohazi to asbestos. The estate claimed that the decedent was exposed while employed from 1951to 1986 as a boilermaker at the Youngstown Sheet & Tube plant in Campbell, Ohio. The estate claimed that the decedent contracted mesothelioma as a result of the exposures.
The case proceeded to trial, where only Ferro Engineering, a division of Oglebay Norton, remained.
Ferro Engineering argued at trial that its products were not used in proximity to the decedent and that other asbestos-containing products used at the decedent's worksite were the likely cause of his disease.
Jury selection began Jan. 23. Testimony began Jan. 24. The jury found Ferro 6 percent liable for the decedent's injuries. The jury apportioned the remaining liability to nonparty defendants.
(Judge's trial order available. Document #01-130206-020R.)
DALLAS — A Texas jury on Jan. 22 awarded $4,725,000 to three women whose father died after exposure to asbestos while employed with Alcoa Inc. (Natalie R. Dean, et al. v. Alcoa Inc., No. 2009-06951-ASB, Texas Dist, Harris Co.).
Sources told Mealey Publications that Natalie Dean, Rebecca Karlik and Deana Gaydos filed suit in the Harris County District Court, alleging that their father, Paul Gaydos, suffered exposure to asbestos and died of mesothelioma as a result.
The decedent's exposure allegedly came while he was employed at Alcoa's Point Comfort Aluminum Smelter. During the year he worked in the company's pot repair department, he used a jackhammer to remove asbestos and carbon linings from the pots, according to sources.
The jury awarded the plaintiffs $4,725,000, consisting of $1,500,000 for past and future loss of companionship and $3,225,000 for past and future mental anguish. Sources said the parties settled after the jury's initial award but before it could consider punitive damages.
SALT LAKE CITY — An expert's opinion that "every exposure" to asbestos contributes to mesothelioma demonstrates science's inability to establish a minimum exposure limit, a federal judge held Jan. 1 in excluding the testimony (Linda Smith, as personal representative on behalf of the legal heirs of Ronnie Smith, deceased v. Ford Motor Co., et al., No. 08-630, C.D. Utah; 2013 U.S. Dist. LEXIS 7861 Shepardize).
In excluding Samuel Hammar's testimony, U.S. Judge Dee Benson of the Central District of Utah said "Dr. Hammar's opinion is, as a matter of law, unsupported by sufficient or reliable scientific research data, investigations or studies, and is inadmissible under Rule 702."
Linda and Ronnie Smith relied on Hammar's testimony in an action originally filed in the Salt Lake County District Court in July 2008 against numerous companies whose conduct allegedly exposed Ronnie Smith to asbestos. The case was removed to the U.S. District Court for the Central District of Utah.
Ronnie Smith testified during his deposition to working with Ford Motor Co. parts while employed as a part-time service station attendant in Cedar City, Utah, from August 1966 to May 1968. Ronnie Smith testified that he worked with Ford brake products seven times at the facility and once for a personal vehicle. Smith testified that the use of an air hose blew dust into the air.
After Ronnie Smith died of mesothelioma in November 2009 Linda Smith continued the action. In support of her claim, Smith presented the expert testimony of Hammar for the theory that every exposure to asbestos contributed to mesothelioma. Ford moved to exclude Hammar's testimony, arguing that it was speculative, designed for litigation and inadmissible under Federal Rule of Evidence 702 Shepardize and Daubert v. Merrell Dow Pharmaceuticals Inc. (509 U.S. 579, 589  Shepardize).
"In reaching this conclusion, the court agrees with the growing number of published opinions from other courts that have reached a similar result: that the every exposure theory as offered as a basis for legal liability is inadmissible speculation that is devoid of responsible scientific support," Judge Benson said.
Judge Benson said it is questionable to even call the "every exposure" theory a theory. The general propositions relied on by Hammar fall short of supporting the legal liability he attempts to impose, Judge Benson said.
(Opinion available. Document #01-130206-003Z.)
LONDON — An England appeals court on Feb. 4 allowed an energy company's appeal of a decision that denied its claim for full indemnity against an insurer in relation to compensation it paid to settle a former employee's mesothelioma claim, finding that there was a causal link between the man's asbestos exposure at work during the policy period and his development of mesothelioma (International Energy Group Limited v. Zurich Insurance PLC UK Branch, No.  EWCA Civ. 39, England and Wales App.).
Alan Carré worked for Guernsey Gas Light Co. Ltd., the predecessor of International Energy Group Ltd. (IEG). During the last six years of Carré's employment, IEG was insured under a standard form of employer's liability policy by a company whose liabilities were acquired by Zurich Insurance PLC UK Branch. In July 2008, Carré was diagnosed with mesothelioma.
He sued IEG in the Royal Court of Guernsey, alleging that his mesothelioma was caused by IEG's negligence and breach of statutory duty in exposing him to asbestos at work. Carré settled his claim with IEG for 250,000 pounds, plus costs.
IEG filed a claim for indemnity against Zurich in the England and Wales High Court under the employer's liability policy. Justice Jeremy Lionel Cooke gave a reserved judgment in January 2012, finding that IEG was entitled to a full indemnity in relation to its costs in defending Carré's claim. However, Justice Cooke found that the common-law position taken by the court in Barker v Corus UK Ltd ( 2 AC 572) prevailed in the present case. Justice Cooke said Zurich offered to contribute toward International Energy's loss on a "time on risk" basis. Justice Cooke said the parties disputed whether Zurich's offer would be proper indemnity pursuant to the terms of the policy. Justice Cooke found that Zurich was not liable for the full amount paid to Carré.
In the alternative, Zurich argued that if it was wrong in its primary argument and was prima facie liable under the principles established in Fairchild v. Glenhaven Funeral Services Ltd. ( 1 AC 32[HL]), common law, statute or another mechanism, it was entitled to a payment from IEG for the periods in which Carré was exposed to asbestos that were not the subject of its insurance. However, Justice Cooke said that on the ordinary principles of insurance law, he could not construct a basis for an insurer receiving a liability payment from an insured for a liability that the insurer was bound to cover under the terms of the insurance contract.
IEG appealed the decision rejecting its claim for full indemnity to the England and Wales High Court of Appeal. Zurich cross-appealed, challenging Justice Cooke's award of defense costs. The appeals court noted that the decision in Durham v BAI (Run off) Ltd, et al. ([2012 UKSC 14] [Trigger litigation]) was made two months after Justice Cooke's decision and that the key issue to the question of whether the judge was correct on the primary issue was found in the Trigger litigation.
The appeals court noted that insurers have suffered because the liabilities due to asbestos exposure turned out to be greater than expected at the time the policies were written. However, the appeals court said it lacked the authority to adjust the consequences because they now seem unfair.
(Judgment available. Document #64-130219-002X.)
EDMONTON, Alberta — A Canadian commission on Feb. 5 reversed a board's decision to deny compensation for occupational exposure to a former steel worker, finding that the medical evidence supported a finding that exposures to dusts and chemicals at work contributed to his development of tongue and oral cancer (Docket No.: AC0376-12-54, Decision No.: 2013-0010, Alberta Wrks. Comp. App. Comm.).
A worker filed a claim with the Alberta Workers' Compensation Board (WCB), seeking compensation for squamous cell carcinoma of the tongue and mouth. The worker claimed that his cancer was caused by workplace exposure to chemicals, solvents and dusts. The WCB denied his claim. The worker appealed to a dispute resolution and decision review body (DRDRB), which affirmed the decision.
The worker appealed the DRDRB's decision to the Appeals Commission for Alberta Workers' Compensation.
The worker was employed as a mill wright in a steel factory, during which time he was exposed to various hazards, including asbestos, welding fumes and solvents. The DRDRB resolution specialist found that the worker did suffer occupational exposures, but found that the exposures did not cause his tongue cancer. The worker submitted that neither WCB policy nor legislation required the WCB to adhere to specific criteria when deciding whether to accept that an injury or disease arose out of employment.
The worker argued that when he began his employment at the factory, there was no knowledge of the dangers of exposure to toxic substances and very little protection was offered to workers.
The commission found that the worker was exposed to numerous hazards at the steel factory that presented a risk of injury. The commission said a medical consultant acknowledged that exposure to paint and gasoline fumes, asbestos and metal dust presented risk factors for carcinoma of the tongue. A specialist in occupational and environmental medicine submitted that exposure to metal dust, asbestos, chlorinated solvents and welding fumes increase the risk of developing oral cancers.
The commission found that the worker had an acceptable claim for tongue cancer and reversed the DRDRB's decision.
(Judgment available. Document #64-130219-004X.)
[Editor's Note:Elihu Inselbuch and Ann McMillan are members of and Andrew Sackett is a senior associate at Caplin & Drysdale, Chartered, in Washington, D.C. Copyright © 2013 by Elihu Inselbuch, Ann McMillan and Andrew Sackett. Responses are welcome.]
For more than eighty years corporations that produced and distributed asbestos-containing products — and their insurance companies — have attempted to avoid responsibility for the deaths and injuries of millions of American workers and consumers caused by those products. Since before 1930, they have hidden the dangers of asbestos and lied about their knowledge of those dangers, lobbied to make it harder for workers to sue for their injuries, fought to weaken protective legislation, and to this day continue to deny responsibility. Most recently, these asbestos litigation defendants have created a myth of plaintiff wrongdoing — which they call "double-dipping" — as a pretext for so-called settlement trust "transparency" legislation. This is not what it pretends to be — an effort to make the tort system more responsive — but merely their latest affirmative effort to evade responsibility for their own malfeasance.
It is a fundamental principle of American law that an injured person can recover damages from every entity that has harmed him, and as litigation progresses can settle his claim against one or another of the wrongdoers as he and they may agree. His compensation for his injury is, then, the sum of all the settlements reached. Only in the very rare case that goes to verdict, judgment, and payment (where the payment amount is reduced by an amount determined by the relevant state law to account for payments by settling co-defendants or bankruptcy trusts), is the victim's claim fully satisfied. Only if after verdict, judgment, and payment were a plaintiff to recover from a bankruptcy trust could he be overcompensated and be said to have "double-dipped." Out of the millions of trust claims filed and considered by trusts since 1988, defendants have identified just one case where a trust claim was filed by a plaintiff after judgment and paid by a trust. In that case the judgment was on appeal and had not yet been paid when the trust claim was filed. There is no "double-dipping" problem that needs to be fixed.
To fix this non-problem, front organizations for asbestos defendants have proposed "transparency" laws and regulations at both the federal and state levels. One such law was recently adopted in Ohio. While these proposals masquerade as mechanisms designed to advance evenhanded justice, they are, in fact, obvious efforts by asbestos litigation defendants to do an end-run around uniform rules of discovery in the tort system and reverse principles of tort law established hundreds of years ago, including the principle that the plaintiff is the master of his case and may choose which of multiple wrongdoers to sue and with which to settle.
These front organizations include the American Legislative Exchange Council ("ALEC") and the U.S. Chamber of Commerce Institute for Legal Reform. ALEC is funded by a variety of corporations, including those facing liability for injuries and deaths caused by their asbestos-containing products. ALEC is also busy advancing the interests of the tobacco industry, health insurance companies, and private prisons — the latter particularly through legislation requiring expanded incarceration of immigrants. While ALEC purports to be a nonprofit, it is little more than a group of corporate lobbyists who write model legislation and then fund free trips for state legislators to luxury resorts, seeking to have them introduce model anti-civil justice legislation in their home legislatures.1 Outrageously, ALEC is funded as a tax-exempt charity, although the IRS has recently received formal complaints challenging the group's nonprofit tax status on the basis that ALEC's primary purpose is to provide a vehicle for its corporate members to lobby state legislators and to deduct the costs of such efforts as charitable contributions.2
The supposed "transparency" sought by asbestos defendants is centered on claims plaintiffs make against trusts established to compensate asbestos victims. These asbestos personal injury trusts were created to resolve the bankruptcies of asbestos defendants overwhelmed by their provable tort liabilities to the people they injured. The trusts are crafted to distribute settlement payments to individuals injured by their bankrupt predecessors' products in amounts reflecting the historic tort system settlement share paid by the relevant predecessor. Because of the hopeless insolvency of their predecessors, the trusts are only able to pay a small percentage of that historical settlement share to each deserving claimant, present and future.
Supporters of these recent proposals claim that "transparency" is necessary to prevent "double-dipping" on the part of plaintiffs — that is, fraudulent multiple recoveries for the same injury, through lawsuits against remaining solvent defendants and trust claims. This assertion is deliberately misleading. Because of the ubiquitous presence of asbestos in industry, multiple companies are almost always at fault for asbestos-related diseases and deaths. Think of the shipyard worker, for example, assisting in the repair of countless U.S. Navy warships. The asbestos-containing products which were causes of his injury included boilers, pipe and thermal insulation, gaskets, and many others. A person so injured can legally recover from every company responsible, including both those he sues in the tort system and the trusts that stand in the shoes of bankrupt defendants. The current efforts by ALEC and its members are nothing more than an attempt to shift solvent defendants' share of responsibility to the insolvent defendants and leave the innocent victims with the resulting shortfall in recovery.
I. Tort System Asbestos Defendants And Their Insurers Come With Especially Unclean Hands
a. General Background — Asbestos Disease And Litigation
Asbestos is a naturally occurring mineral that was widely used during the twentieth century for industrial, commercial, and residential purposes.3 Because of its tensile strength, flexibility, durability, and acid- and fire-resistant capacities, asbestos was used extensively in industrial settings and in a wide range of manufactured goods.4 Diseases caused by exposure to asbestos kill thousands of Americans every year because asbestos is inherently dangerous. Whenever materials containing asbestos are damaged or disturbed, microscopic fibers become airborne, and can be inhaled into the lungs and cause disease.5 The most serious asbestos-related disease is mesothelioma, a virulent cancer of the lining of the lungs that can be caused by even a short period of exposure, and is inevitably painfully fatal, often within months of diagnosis.6 Other illnesses caused by asbestos include lung cancer, asbestosis, and pleural diseases.7 The bulk of asbestos liabilities are for mesothelioma and other asbestos-related cancers.
Tens of millions of American workers have been exposed to asbestos; more than 27 million people were occupationally exposed between 1940 and 1979.8 Millions of those exposed have fallen ill, or will fall ill in the future; many have died and many more will die as a result of their exposure. Manufacturers — but not workers — were for decades well aware of the significant health hazards posed by asbestos, but production and distribution of new asbestos-containing products continued virtually unabated until the 1970s,9 and in some cases until 2000.10 Asbestos diseases have long latency periods; a person exposed while working may not fall ill for forty years or fifty years, or even longer.11 Thus, even though asbestos production and use has declined, the epidemic of asbestos-related illnesses is expected to continue for decades into the future.
By the early 1900s, medical scientists and researchers had uncovered "persuasive evidence of the health hazards associated with asbestos."12 Manufacturers and insurers knew this, and even as evidence mounted they continued to hide these findings and deny responsibility. In 1918, a Prudential Insurance Company report revealed excess deaths from pulmonary disease among asbestos workers, and noted that life insurance companies generally declined to cover asbestos workers because of the "assumed health-injurious conditions of the industry."13 For decades, asbestos manufacturers were well aware of the dangers of asbestos, but did not protect their workers or the end-users of their products. In a thorough discussion of the history of asbestos use and litigation in the United States, District Judge Jack Weinstein noted:
Reports concerning the occupational risks of asbestos, including the incidence of asbestosis and lung cancer among exposed workers, have been substantial in number and publicly available in medical, engineering, legal and general information publications since the early 1930s. There is compelling evidence that asbestos manufacturers and distributors who were aware of the growing knowledge of the dangers of asbestos sought to conceal this information from workers and the general public.14
As workers and others who had been exposed to asbestos began to get ill in large numbers, litigation began in the 1960s. Of particular importance was evidence uncovered by plaintiffs' attorneys — "[t]hrough persistence, vigorous discovery and creative efforts" — establishing that "manufacturers . . . knew that asbestos posed potentially life-threatening hazards and [chose] to keep that information from workers and others who might be exposed."15 Angered by evidence that information about the dangers of asbestos had been suppressed, juries began awarding large punitive damages.16 As a result of the plaintiffs' success in asbestos suits in the tort system, and the overwhelming number of claims, the point was reached long ago where most workers who fall ill from exposure to asbestos "recover substantial sums through settlement or jury awards."17
b. Evolution Of Filings In The Tort System
Asbestos personal injury litigation began in earnest in 1973 after the Fifth Circuit's decision in the benchmark case of Borel v. Fibreboard Paper Products Corp.18 Borel established that manufacturers and distributors of asbestos products are liable to persons injured as a result of using their products because of their failure to warn regarding the danger of those products.19 Recognizing that many persons have been exposed to a variety of asbestos products made by a large number of manufacturers, under circumstances that make it impossible to ascribe resulting disease to one particular product or exposure, the Borel court found that each and every exposure to asbestos could constitute a substantial contributing factor in causing asbestos diseases, and that each and every defendant who contributed to the plaintiff's aggregate asbestos exposure is legally responsible for the plaintiff's asbestos-related injuries.20 The overwhelming majority of courts throughout the country have accepted the legal principles set out in Borel.21
With this development in the law, the thousands of people killed and maimed by exposure to asbestos and asbestos-containing products began to sue the manufacturers and distributors of those products. So many people had been injured or killed by asbestos that twenty-five thousand lawsuits were commenced in the next decade,22 and the number of lawsuits continued to rise dramatically through the 1990s.23
c. Trust Formation
Epidemiology makes clear that thousands of people each year for decades to come will fall ill as a result of asbestos exposure, and experience teaches us that most will seek compensation from the manufacturers of the asbestos products that caused their injuries. Attempts to achieve settlements that would provide for the treatment and payment of these future claims are hampered by the difficulty of ensuring that any such settlement agreements would "provide for all future claimants who come forward, so that all who are eligible for compensation are properly compensated and all who are required to pay compensation have taken into account this responsibility in their business planning."24 The overwhelming numbers of people who have been made sick and who are dead or dying from asbestos exposure and the large numbers of future claims have led dozens of asbestos manufacturers to choose bankruptcy to deal with these claims. Asbestos personal injury trusts were created during these bankruptcies to ensure that the tens of thousands of people who are currently sick and dying and the tens of thousands more who science tells us will sicken and die in the future as a result of their asbestos exposure can receive some compensation for their injuries.
The Johns-Manville Corporation was the largest manufacturer and distributor of asbestos products in the twentieth century. Manville officers and directors knew of the dangers of asbestos since at least 1934, and kept this knowledge secret to prevent workers from learning that their exposure to asbestos could kill them. As evidence of Manville's responsibility became known, it was faced with tens of thousands of lawsuits, and, to deal with this liability, filed its Chapter 11 petition for reorganization in August of 1982.25 To solve the problem of future claims, the Manville plan of reorganization pioneered the use of a trust dedicated to the resolution and payment of asbestos claims. The Manville Trust assumed the debtors' present and future asbestos liabilities, and all asbestos claims against the debtors (including those in the future) were directed to the Trust by an injunction — a "cornerstone" of the plan26 — channeling all asbestos claims from the reorganized Manville Corporation to the Manville Trust. The channeling injunction was issued pursuant to the bankruptcy court's general equitable powers.27
2. Congress Acts
A substantial portion of the assets conveyed to the Manville Trust from which it would pay claims were equity and debt interests in the reorganized Manville Corporation, which, shorn of its asbestos liabilities, was a profitable forest products and industrial company. The public markets were skeptical about the validity of the channeling injunction, depressing the value of the Trust's holdings. To alleviate concerns about the Manville injunction, and to foster reorganization of asbestos debtors, in 1994 Congress enacted Bankruptcy Code Section 524(g), which statutorily validates the trust and channeling injunction mechanisms pioneered in the Manville case.28 As Senator Brown explained, "[w]ithout a clear statement in the code of a court's authority to issue such injunctions, the financial markets tend to discount the securities of the reorganized debtor. This in turn diminishes the trust's assets and its resources to pay victims."29
Section 524(g) obviates due process concerns with respect to future claimants by providing for appointment of a legal representative to protect their interests.30 The statute gives a debtor the right to propose and have confirmed a plan that will create a trust to which all of the debtor's present and future asbestos personal injury liabilities will be transferred, or channeled, for post-confirmation claims evaluation and resolution.31 The debtor is freed of asbestos claims, in return for funding the trust, and present and future asbestos claimants have recourse to the assets of the trust.
There were not many other asbestos-driven bankruptcies of note in the 1990s — the largest was likely the bankruptcy of the Celotex Corporation and Carey Canada Incorporated (a subsidiary that had been engaged in the mining, milling, and processing of asbestos fiber), which filed for bankruptcy protection in 1990. The Celotex Asbestos Settlement Trust was formed in 1998.
This changed in the next decade, however. In 2000 there were sixteen asbestos personal injury trusts; by 2011, there were nearly sixty, with trusts formed by many large asbestos defendants, including Armstrong World Industries, the Babcock & Wilcox Company, Halliburton (Dresser Industries), Owens Corning, and United States Gypsum.32
3. Status Of Corporations Following Bankruptcies
ALEC and its members would like people to believe that the asbestos reorganizations have crippled businesses and put thousands out of work, suggesting that if the claims of victims are not somehow reduced, more corporate disasters will follow. Nothing could be further from the truth. Chapter 11 asbestos bankruptcies rarely result in lost jobs or diminished pensions. Instead, the Chapter 11 bankruptcy procedures allow a company to receive an "automatic stay," which stops all payments to creditors (including payments owed through settlements) and all pending lawsuits, and lets the company reorganize and then prioritize payments.33
Under Chapter 11 and section 524(g), therefore, a company can stop all pending asbestos lawsuits against it and set up a fund to settle all present and future asbestos claims. The automatic stay provision and the injunction available under section 524(g) can also extend to parent and subsidiary companies and protect them from future asbestos lawsuits derived from their affiliated debtor's torts.34 This protection has enabled most companies that have sought bankruptcy protection due to asbestos liabilities to recover and remain economically healthy. For example:
· Owens-Corning filed for bankruptcy protection in 2000, emerged from bankruptcy in 2006, and by 2011, it had sales of $5.3 billion and 15,000 employees in 28 countries on five continents.35
· The Babcock & Wilcox Company, which also sought bankruptcy protection in 2000 and confirmed a plan of reorganization in 2006, is now a company specializing in engineering, manufacturing and construction solutions in the renewable energy, clean coal, nuclear power and national security areas, employs approximately 12,000 people, as well as approximately 10,000 joint venture employees, and had 2011 revenues of almost $3 billion.36
· Halliburton, which formed the DII Industries, LLC, Asbestos PI Trust in 2004, when it emerged from bankruptcy protection, is "one of the world's largest providers of products and services to the energy industry," has more than 70,000 employees in roughly 80 countries, and had $25 billion in annual revenue in 2011.37
· Armstrong World Industries, Inc. is a global leader in the design and manufacture of floors, ceilings and cabinets. AWI exited bankruptcy protection in 2006, and by last year had consolidated net sales of approximately $2.9 billion and had approximately 9,300 employees worldwide.38
· Even Johns-Manville remains an active company. Owned by Berkshire Hathaway, it is a "leading manufacturer and marketer of . . . products for building insulation, mechanical insulation, commercial roofing, and roof insulation, as well as fibers and nonwovens for commercial, industrial and residential applications." It has annual sales of approximately $2.5 billion, "employs approximately 7,000 people and operates 45 manufacturing facilities in North America, Europe and China."39
II. Asbestos Trusts And Victim Compensation
According to the GAO, as of 2011 there were sixty asbestos personal injury trusts.40 Most of these trusts work the same way. Pursuant to the mandate of 11 U.S.C. § 524 Shepardize(g), an asbestos trust must treat all similar claimants in substantially the same manner.41 When it is formed, therefore, a trust will project the number of claims it expects to receive and determine the historic settlement value of those claims — what its predecessor would have paid to settle the claims had they been brought in the tort system.42 The trust has fixed assets that will be insufficient to pay the full historic settlement value of all claims; it therefore sets a payment percentage, and each present and future claimant is paid the liquidated value of his or her claim discounted by the payment percentage.43 The functioning of the trusts approximates the process through which lawsuits in the tort system are settled.
An asbestos trust is governed by a document containing a series of trust distribution procedures ("TDP"), approved by the bankruptcy court when confirming a plan of reorganization providing for creation of the trust.44 The TDP sets forth procedures for the administration of the trust and establishes a process for assessing and paying valid claims. The TDP also includes the settlement amounts that the trust will offer a claimant with an asbestos-related disease who meets the exposure and medical criteria set out in the TDP, and thus can presumptively establish the trust's liability.45 Claimants who believe that they are entitled to a larger payment from a trust because, for example, they have higher than normal damages, or manifested illness at an early age, can reject the standard settlement and seek "individual review" of their claims, which may or may not result in a higher settlement.46 In either case, the trust is designed to value claims at the tort-system settlement share of its debtor — not the joint and several total value of the claim against all responsible parties that would be fixed by a jury.
For a claimant to recover from an asbestos trust, he or she must provide medical evidence demonstrating that the claimant has an asbestos-related disease, and evidence satisfactory to the trust that it has responsibility for the claimant's injuries.47 The evidence required depends on the nature of the claimant's disease. A claimant with mesothelioma, for example, must provide a diagnosis of that disease by a physician who physically examined the claimant, or a diagnosis by a board-certified pathologist or a pathology report prepared at or on behalf of an accredited hospital, as well as appropriate evidence of product identification as noted above.48
These criteria are combined with audit programs to ensure that the trusts do not pay fraudulent claims.49 The trusts do not pay every claim that is filed, but routinely reject those that are deficient.50 And while there is no guaranteed method to completely prevent attempts to abuse the trust system, there is simply no evidence that such practices are widespread. Moreover, the simple fact that a claimant sues a solvent defendant while filing claims against (and potentially receiving payment from) multiple trusts is not significant. Most asbestos victims were exposed to asbestos-containing products from multiple defendants and, unless there is an adjudication of liability and award and payment of damages, each defendant or trust remains responsible.
The asbestos personal injury trusts replace insolvent defendants, and are a settlement vehicle. The trusts are not tort defendants; rather, they settle claims created by the liability of their insolvent predecessors. Unlike solvent defendants, a trust does not contest liability when a plaintiff proves exposure to products for which the trust is liable.
Given the fact that the trusts pay a percentage of the settlement value of a claim, the amounts being paid to claimants vary widely from trust to trust, but are low compared to results in the tort system. The GAO survey found the median payment percentage across trusts is 25%.51 The scheduled values for a claim, which reflect each defendant's historical settlement averages, vary widely as well, reflecting the share of total settlements paid by each defendant in the tort system. The following table shows some of these results.
(Table available. Document #01-130220-199X.)
As shown, the trusts do not have the funds to pay the full scheduled value to all present and future claimants, and most recoveries are quite small. For example, recovering from all of the trusts listed above would yield a claimant roughly $155,000, a very small portion of the damages routinely awarded by juries to mesothelioma victims.
III. Asbestos Trust Transparency Legislation —Unnecessary And Unfair
Asbestos defendants and insurance companies, under the guise of creating increased "transparency," are introducing proposed legislation around the country to grant solvent asbestos defendants new rights and advantages to be used against asbestos victims in court. Some of these bills would also burden the asbestos trusts with unnecessary reporting requirements, slowing their ability to pay claims, and further draining them of the resources needed to make their already diminished payments. In general, the bills are an attempt to change the rules of the tort system to provide defendants with an advantage, using the existence of the trusts and claims of a lack of "transparency" as a subterfuge.
The "tort reform" community began attacking asbestos plaintiffs through the asbestos bankruptcy trust system in 2005, when Victor Schwartz and Mark Behrens coauthored a law review article claiming there was rampant fraud in the system.52 While no systemic fraud has ever been found, more papers were published by these authors and others. The U.S. Chamber Institute for Legal Reformreleased a report criticizing asbestos litigation in Madison County, Ill., and submitted a proposed new bankruptcy rule to "reform" the trust system to the Judicial Conference (the rule was rejected).53 These so-called studies were also used to support proposed federal action on the asbestos bankruptcy trust system, which included the "Furthering Asbestos Claim Transparency (FACT) Act of 2012," which was introduced in the U.S. House of Representatives. In addition, ALEC drafted the "Asbestos Claims Transparency Act," which has been introduced in some state legislatures.54
Before analyzing these bills, it is helpful to understand how the tort system works on the ground. This understanding makes the flaws in and underlying motivations for the bills easier to see.
1. The Tort System And State Laws Are Functioning Properly
Asbestos victims are usually exposed to asbestos from the products of many manufacturers. In the tort system, a plaintiff is entitled to recover from any defendant whose products were a "substantial contributing factor" to his illness or injury.55 Accordingly, plaintiffs often sue numerous defendants, and can assert claims against, and recover from, multiple asbestos trusts. The litigation and the trust resolutions usually proceed side-by-side.
The so-called problem of "double-dipping," therefore, as defined by the proponents of trust transparency, does not exist. When an asbestos victim recovers from each defendant whose product contributed to his or her disease, that victim is not "double-dipping," but recovering a portion of his or her damages from each of the corporations that caused the harm. In the case of asbestos litigation, some of those defendants will be held responsible through the tort system and others, now insolvent, will address their responsibility through the operation of their trusts. Until there is a paid jury verdict, a plaintiff's claim is not satisfied.
In the tort system, if a party wants to assign liability for wrongdoing to another, it has to prove that liability – that is, it bears the burden of proof. The plaintiff has the burden of proof only against defendants it sues. And if a defendant believes another entity such as a bankrupt is also at fault, and this matters to that defendant in the way the verdict might be apportioned, that defendant has the freedom to assert and the burden to prove this additional alleged fault.
2. Liability Regimes And Insolvent Defendants
States have different tort liability regimes, a situation not caused by or related to the existence of asbestos trusts. The principal difference between so-called several-only and joint-and- several jurisdictions is whether the plaintiff or defendant bears the risk of another responsible tortfeasor's inability to pay. An individual defendant's share of the liability for an injury is its "several" liability. In states that apply several-only liability rules, when a responsible defendant cannot pay, the plaintiff cannot recover that defendant's liability share from co-defendants; the plaintiff bears the loss.56 With joint-and-several liability, each defendant the jury finds at fault can be required to pay the entire judgment and then seek contribution from others jointly responsible, whether another tort system defendant or a trust, bearing the risk that one or more of those jointly responsible cannot pay. The nature of each state's regime is a public policy choice of its legislature.
Underlying all of these systems is the fact that each defendant is assigned a share of liability. When verdicts are molded, courts typically reduce the verdict amount before entering judgment so as to reflect settlement payments a plaintiff has recovered from other tort system defendants and trusts.57
b. Defendants Have Created A Fictional Narrative In Which The Existence Of Trusts Is Somehow Unfair To Them And Requires A Legislative Solution
In recent bankruptcy filings, such as the Garlock case, and in sweeping statements that purport to justify the need for trust "transparency" defendants have created a narrative in which the existence of trusts is somehow unfair to them while presenting asbestos victims with an opportunity to commit fraud. Repeatedly invoking one case58 (out of hundreds of thousands of asbestos claims filed) and the fact that asbestos victims seek compensation from solvent defendants in the tort system and insolvent defendants through the trusts they formed, asbestos defendants have justified these legislative initiatives on the grounds that this may somehow "result in businesses . . . being unfairly penalized and deprived of their rights."59
1. Federal Legislation — The FACT Act
An example of one such bill on the federal level was last year's H.R. 4369, the misleadingly-named "Furthering Asbestos Claim Transparency (FACT) Act of 2012." The "FACT Act" would have forced trusts to report publicly highly private, individual claimant data. This would have included "the name and exposure history of, a claimant and the basis for any payment from the trust made to such claimant."60 In addition, it would have required the trusts to "provide in a timely manner anyinformation related to payment from, and demands for payment from, such trust, subject to appropriate protective orders, to any party to any actionin law or equity if the subject of such action concerns liability for asbestos exposure."61 Section 3 of the bill made the bill's provisions retroactive so that a trust would have had to report on every claim it had ever paid.62 Asbestos trusts have paid more than 2.4 million claims since 1988; in 2010 alone asbestos trusts paid more than 461,000 claims.63 This bill would have hobbled the trusts in order to provide defendants with information that, in the aggregate, they had no right to, and which they could get when needed on a case-by-case basis (albeit at their own expense) through normal everyday discovery in the tort system.
This bill has not been enacted. However, asbestos defendants and their allies, under the purview of organizations such as ALEC, are attempting to pass equally troublesome legislation at the state level. So far, the proponents have not sought disclosure of the same information (or "transparency") from their co-defendants in the tort system.
2. State Efforts – Ohio Asbestos Claims Transparency Act
In Ohio, the legislature recently enacted Ohio H.B. 380 (originally drafted by ALEC), which shifts control of key elements of the plaintiff's case to defendants while simultaneously shifting significant burdens to the plaintiff. This new Ohio law requires plaintiffs to identify all trust claims and material pertaining to those claims, and update those identifications when new claims are made.64 Defendants can delay trial and force plaintiffs to make claims against other trusts.65 Then, trust claims are presumed to be relevant and discoverable and can be introduced to prove causation and allocate responsibility.66
By forcing plaintiffs to make all trust claims and turn over that information, then making it presumptively admissible and relevant, the new Ohio law shifts the burden for a defendant seeking to claim that another party is liable from that defendant to the plaintiff. While not all judges will admit the trust claim information, when one does allow a jury to see the claims (which may or may not provide proof of exposure) the jury may well assign fault to the insolvent defendants.
Responsibility for liability between joint tortfeasors in Ohio is limited; unless a tortfeasor is more than 50% liable it will not have to pay the several share of other entities which were allocated responsibility.67 Under the circumstances created by the new Ohio law, it is less likely that a guilty tortfeasor — already found liable of causing the injury and maybe death of the plaintiff — will have to bear the risk of its co-defendants' insolvency; instead, an innocent asbestos victim will not be able to recover fair compensation.
So, in addition to delay — which is always helpful to defendants — a defendant can force the plaintiff to file trust claims, even with limited information. The defendant can use those filed claims as evidence that the plaintiff was exposed to other sources of asbestos — even if the trusts deny the claims — and potentially reduce the defendant's share of liability.68 And, as Ohio has a hybrid system of liability, even if each trust claim reduces a defendant's liability incrementally, the defendant can limit the plaintiff's recovery by at least those amounts and, if its liability falls below 50%, significantly.
Whether a solvent defendant found liable for a victim's injuries is liable for the shares of other tortfeasors is a question of public policy. So if a state's legislature wants to have open debate and change a fundamental rule of public policy, it can, of course, do so. Trust "transparency" subverts that process. Rather than making an informed decision, the Ohio legislature has changed public policy under the guise of so-called transparency, on the basis of largely anecdotal and unproven allegations only for asbestos plaintiffs. It is an effort to facilitate the defense against asbestos claims by forcing plaintiffs to assist in the defendant's efforts to shift responsibility to other entities.
3. Defendants Could Utilize Discovery To Obtain The Information They Seek, But Do Not
The pretextual nature of these bills is particularly clear when one considers that the information that "transparency" legislation seeks to make public is already available to defendants who need it. Asbestos personal injury litigation has been going on for more than thirty years. Many of the same lawyers are still involved; those that represent defendants have witnessed all the discovery that plaintiffs — hundreds of thousands of plaintiffs — have produced, and have been at the trials. It is highly likely that there are very few job sites for which defendants do not have a library of data demonstrating which other defendants' products were present.
Often, this information does not come from plaintiffs. An individual plaintiff rarely knows what corporation provided the asbestos products present at a site where he worked. He is usually a sick or dying worker, or the widow of such a person, and he (or his widow) will only know where he worked and the kinds of materials he worked with, though not necessarily the materials his co-workers worked with. Proof of the identity of the supplier of the asbestos at those locations usually comes through discovery of suppliers and sales records, and depositions of co-workers, not the plaintiffs' memories. And the evidence is widely available. Without it, plaintiffs' lawyers would not have proved liability so many times that corporations worth billions of dollars had to file for bankruptcy protection.
For defendants to claim that transparent claim filings would solve a problem, therefore, is false. Should a defendant wish to lay off liability on an absent insolvent tortfeasor, the tort system allows it to do so. In addition to their institutional knowledge, the remaining defendants in the tort system have the same discovery devices available to them as plaintiffs do, and can prove the fault of the absent insolvent tortfeasors as easily as plaintiffs originally could. Defendants can obtain, for example, the plaintiffs' work history, employer records, and depositions of the plaintiffs and co-workers to determine the asbestos-containing products to which the plaintiffs were exposed. Defendants can also consult the trusts' websites, which generally contain searchable lists of sites where the products for which the trusts have responsibility were concededly used, and which are easily compared to a plaintiff's work history.69
4. Defendants Are Trying To Change The Rules Of Litigation Without Admitting That Is Their Purpose
Under the rubric of arguing that "transparency" is necessary to prevent supposed fraud, defendants are trying to change the law to receive whatever benefit they can from the existence of the trusts. With a law like Ohio's H.B. 380, defendants shift their burden — to prove fault on the part of other entities — to plaintiffs, while simultaneously lessening plaintiffs' control of their own lawsuits. The plaintiff now has to make claims at a defendant's behest, and then produce claims forms and supporting materials to that defendant, who may be able to use it to get insolvent entities on the verdict sheet. This reduces both the work required by the defendant to acquire evidence and the amount of that evidence it needs to limit its liability. It has nothing to do with reducing fraud; instead, it is a gift to the asbestos industry, which continues to try and avoid accountability and decrease compensation to the victims of its past wrongs — wrongs that it successfully hid for decades, causing years of unwitting worker exposure.
Laws that seek to enforce disclosure and regulate the timing of trust claims, such as Ohio H.B. 380, are unjust and unfair to asbestos victims. These laws are not designed — or intended — to address fraud in the trust system. Indeed, there is not a scintilla of evidence of any such problem. The real purpose of these laws is to allow solvent defendants to take advantage of the bankruptcies of their co-tortfeasors by shifting to plaintiffs the burdens of the shortfalls caused by the bankruptcies, as well as the burdens of discovery and proof of the bankrupt tortfeasors' responsibility. These laws are simply the latest stratagem by corporations that produced and distributed asbestos-containing products to avoid responsibility for the deaths and injuries of millions of Americans caused by those products. Legislators should not allow public policy to be hijacked by special interests, and should be vigilant to protect the rights of injured workers and their families.
1. Am. Ass'n for Justice, ALEC: Ghostwriting the Law for Corporate America 3 (May 2010), http://www.justice.org/cps/rde/xbcr/justice/ALEC_Report.pdf.
2. Letter from Marcus S. Owens, Clergy VOICE, to Douglas Shulman, Comm'r. of the IRS, Regarding Violations of the Internal Revenue Laws by the Am. Legis. Exch. Council (EIN: 52-0140979), (June 18, 2012), http://www.scribd.com/doc/98828514/ALEC-IRS-Complaint; Submission to the Internal Revenue Service Under the Tax Whistleblower Act, 26 U.S.C. § 7623 Shepardize(b) Regarding Underreporting of Lobbying and Operation in Furtherance of Private Corporate Interests in Contravention of 26 U.S.C. § 501 Shepardize(c)(3) Tax-Exempt Charitable Status, Common Cause (Apr. 20, 2012), http://www.commoncause.org/atf/cf/%7Bfb3c17e2-cdd1-4df6-92be-bd4429893665%7D/ALEC_FINAL_SUBMISSION_IRS_WHISTLEBLOWER.PDF.
3. U.S. Government Accountability Office, GAO-11-819, Asbestos Injury Compensation: The Role and Administration of Asbestos Trusts 6 (September 23, 2011) ("GAO Report").
4. Agency for Toxic Substances & Disease Registry, U.S. Department of Health & Human Services, Asbestos Fact Sheet 1 (2001).
5. EPA, Learn About Asbestos, http://www.epa.gov/asbestos (last visited Jan. 8, 2013).
6. National Cancer Institute, NIH, Malignant Mesothelioma, http://www.cancer.gov/cancertopics/types/malignantmesothelioma (last visited Jan. 11, 2013).
7. See Antti Tossavainen et al., Consensus Report: Asbestos, asbestosis, and cancer: the Helsinki criteria for diagnosis and attribution, 23 Scandinavian Journal of Work Environment & Health 313 (1997) ("All 4 major histological types [of lung cancer] (squamous, adeno-, large-cell and small-cell carcinoma) can be related to asbestos."); World Health Organization, Elimination of Asbestos-Related Diseases 1-2 (2006) ("All types of asbestos cause cancer in humans . . . . No threshold has been identified for the carcinogenic risk of chrysotile."). See also American Thoracic Society, Diagnosis and Initial Management of Nonmalignant Disease Related to Asbestos, 170 American Journal of Respiratory and Critical Care Medicine 692, 697 (2004).
8. See William J. Nicholson et al., Occupational Exposure to Asbestos: Population at Risk and Projected Mortality — 1980-2030, 3 American Journal of Industrial Medicine 259, 259 (1982); see also American Thoracic Society, The Diagnosis of Nonmalignant Diseases Related to Asbestos, 134 American Review of Respiratory Disease 363, 363 (1986).
9. See In re Joint E. & S. Dist. Asbestos Litig., 129 B.R. 710, 737-38 Shepardize (E. & S.D.N.Y. 1991), vacated, 982 F.2d 721 Shepardize (2d Cir. 1992), modified, 993 F.2d 7 Shepardize (2d Cir. 1993) ("Manville I").
10. See Enpro Industries Inc. Form 10-K (Mar. 3, 2009) at 84.
11. Muriel L. Newhouse & Hilda Thompson, Mesothelioma of Pleura and Peritoneum Following Exposure to Asbestos in the London Area, 22 British Journal of Industrial Medicine 261, 265 (1965) (latency period can be as long as 55 years); C. Bianchi et al., Latency Periods In Asbestos-Related Mesothelioma of the Pleura, 6 European Journal of Cancer Prevention 162, 162 (1997) (the latency period in one case was 72 years).
13. Barry I. Castleman, Asbestos: Medical and Legal Aspects 5-6 (Aspen Pub. 5th ed. 2005). See also ManvilleI, 129 B.R. at 737 (internal citation omitted).
14. Manville I, 129 B.R. at 737-38 Shepardize (internal citation omitted). See also id. at 739 (noting that reports of mesothelioma among asbestos workers had emerged in journals of industrial medicine and hygiene in the late-1940's).
21. See, e.g., Rutherford v. Owens-Illinois, Inc., 941 P.2d 1203, 1214 Shepardize (Cal. 1997) (plaintiff may meet the burden of proving exposure to defendant's product caused lung cancer by showing that in reasonable medical probability it was a substantial factor contributing to the plaintiff's or decedent's risk of developing cancer); Jones v. John Crane, Inc., 350 Cal. Rptr. 3d 144, 151 Shepardize (Ct. App. 2005) ("The testimony of the experts provided substantial evidence that Jones's lung cancer was caused by cumulative exposure, with each of many separate exposures having constituted substantial factors contributing to his risk of injury."); John Crane, Inc. v. Linkus, 988 A.2d 511, 531 Shepardize (Md. Ct. Spec. App. 2010) ("We conclude that lay testimony describing the amount of dust created by handling the products in question, coupled with expert testimony describing the dose response relationship and the lack of a safe threshold of exposure (above ambient air levels), was sufficient to create a jury question [as to whether the plaintiff's mesothelioma was caused by defendant's asbestos-containing products]."); John Crane, Inc. v. Wommack,489 S.E.2d 527, 532 Shepardize (Ga. Ct. App. 1997) ("Expert testimony showed that it is universally agreed that asbestos fibers are intrinsically dangerous and that the respiration of each fiber is cumulatively harmful . . . ."); Blancha v. Keene Corp., Civ. A. No. 87-6443, 1991 WL 224573, at *6 (E.D. Pa. Oct. 24, 1991) (every occupational exposure to asbestos "is a substantial factor in bringing about mesothelioma");Held v. Avondale Indus., Inc., 672 So. 2d 1106, 1109 Shepardize (La. Ct. App. 1996) (medical evidence showed "no known level of asbestos [exposure] which would be considered safe . . . any [asbestos] exposure, even slight exposures, to asbestos . . . [found to be] a significant contributing cause of the [decedent's] malignant pleural mesothelioma"); Mavroudis v. Pittsburgh-Corning Corp.,935 P.2d 684 Shepardize (Wash. Ct. App. 1997) (any exposure to asbestos above background contributes to development of mesothelioma); Kurak v. A.P. Green Refractories Co., 689 A.2d 757, 766 Shepardize (N.J. Super. Ct. App. Div. 1997) ("Where there is competent evidence that one or a de minimis number of asbestos fibers can cause injury, a jury may conclude the fibers were a substantial factor in causing a plaintiff's injury."); ACandS, Inc. v. Abate, 710 A.2d 944, 989 Shepardize (Md. Ct. Spec. App. 1998), abrogated by, John Crane, Inc. v. Scribner, 800 A.2d 727 Shepardize (Md. 2002) (expert medical witness testified that "each and every [asbestos] exposure that [the decedent] had was a substantial contributing factor in the causation of his disease"); Caruolo v. ACandS, Inc., No. 93 Civ. 3752 9RWS, 1999 WL 147740, at *9 (S.D.N.Y. Mar. 18, 1999) aff'd in part, vacated in part, 226 F.3d 46 Shepardize (2d Cir. 2000) (expert medical witness testimony that "[T]here is no way one can say [each asbestos exposure] didn't contribute. To the contrary. All of his exposures contributed to his mesothelioma, including this one.").
22. Brodeur at 73.
23. Jennifer L. Biggs et al., American Academy of Actuaries, Overview of Asbestos Claims Issues and Trends, Mass Tort Subcommittee at 3 (Aug. 2007) available at http://www.actuary.org/pdf/casualty/asbestos _aug07.pdf.
24. Stephen J. Carroll et al., RAND Institute for Civil Justice, Asbestos Litigation 46 (2005) ("RAND Asbestos Litigation Study").
27. See id.
28. See, e.g., In re Combustion Eng'g, Inc.,391 F.3d 190, 235 n.47 Shepardize (3d. Cir. 2004). See also H.R. Rep. No. 103-835 at 3 (1994) (explaining that Section 524(g) is intended to emulate the "creative solution to help protect the future asbestos claimants, in the form of a trust into which would be placed stock of the emerging debtor company and a portion of future profits, along with contributions from [the debtor's] insurers" devised in the Manville case). Section 524(h), which was enacted at the same time, makes clear that the channeling injunction in Manville is deemed retroactively to comply with Section 524(g), and thus is valid.
30. See 11 U.S.C. § 524(g)(4)(B)(i).
31. See id.
32. GAO Report at 3.
33. See11 U.S.C. § 362 Shepardize(a)(1); 2William L. Norton, Jr. & William L. Norton, III, Norton Bankruptcy Law & Practice § 43:5 (3d ed 2012); 5 William L. Norton, Jr. & William L. Norton, III, Norton Bankruptcy Law & Practice § 91:1 (3d ed. 2012).
35. SeeInvestor Relations Home, OwensCorning.com, http://investor.owenscorning.com (last visited Jan. 4, 2013).
36. SeeCorporate Profile, The Babcock & Wilcox Company, http://phx.corporate-ir.net/phoenix.zhtml?c=236851&p=irol-IRHome (last visited Jan. 4, 2013); Babcock & Wilcox Company Form 10-K at 38, filed Feb. 29, 2012.
37. SeeCorporate Profile, Halliburton.com, http://www.halliburton.com/AboutUs/default.aspx?navid= 966&pageid=2458 (last visited Jan. 4, 2012).
38. SeeOverview, Corporate Profile, Armstrong World Industries, Inc., http://phx.corporate-ir.net/phoenix.zhtml?c=98651&p=irol-IRHome (last visited Jan. 4, 2012).
39. SeeAbout Us, JM.com, http://www.jm.com/corporate/263.htm (last visited Jan. 4, 2012).
40. GAO Report at 3. This number may not be accurate, as some trusts are dormant and other bankruptcy cases which were expected to lead to new trusts are still active.
41. See 11 U.S.C. § 524(g)(2)(B)(i)(III).
42. See, e.g., Owens Corning v. Credit Suisse First Boston, 322 B.R. 719, 722 Shepardize (D. Del. 2005); see also United States Gypsum Asbestos Personal Injury Settlement Trust, Trust Distribution Procedures §§ 2.3, 4.2 (revised Mar 29, 2010), http://www.usgasbestostrust.com/files/USGTDP.pdf ("USG TDP").
44. See, e.g., In re Burns & Roe Enters., Inc., 08-4191(GEB), 2009 WL 438694, at *32, *37 (D.N.J. Feb. 23, 2009).
45. See, e.g., USG TDP § 5.3(a).
48. See, e.g., id.
49. GAO Report at 29.
50. GAO Report at 19.
51. GAO Report at 21.
52. Victor E. Schwartz et al., Defining the Edge of Tort Law in Asbestos Bankruptcies: Addressing Claims Filed by the Non-Sick, 14 J. Bankr. L. & Prac. 61 (2005).
53. See James L. Stengel, U.S. Chamber Inst. For Legal Reform, Litigating in the Field of Dreams: Asbestos Cases in Madison County, Illinois, (Oct. 2010), available at http:// ; Letter from Lisa A. Rickard, U.S. Chamber Inst. for Legal Reform, to Peter G. McCabe, Sec'y of Comm. on Rules of Practice & Procedure, Judicial Conference of the U.S. (Nov. 22, 2010), available at http://www.uscourts.gov /uscourts/RulesAndPolicies/rules/BK%20Suggestions%202010/10-BK-H-Suggestion-Rickard.pdf.
54. The Asbestos Claims Transparency Act has been introduced in Louisiana, Ohio, Oklahoma, Texas, and West Virginia. H.B. 477, 2012 Leg., 38th Reg. Sess. (La. 2012); Amended Substitute H.B. 380, 129th Gen. Assem., 2012 Sess. (Ohio 2012); S.B. 1792, 53d Leg., 2d Reg. Sess. (Okla. 2011); H.B. 2034, 82d Leg. (Tex. 2011); S.B. 1202, 82d Leg. (Tex. 2011); S.B. 43 & 56, 80th Leg., Reg. Sess. (W.Va. 2011). The Ohio bill is the only one to have been enacted and is discussed later in this paper.
55. See supra notes 18-21 and accompanying text.
57. See Paul D. Kheingold, Litigating Mass Tort Cases § 10:65 (2012).
58. Kananian v. Lorillard Tobacco Co., No. CV 442750 (Ct. Com. Pl., Cuyahoga Cnty. Ohio, 2001).
59. Amended Substitute H.B. 380 § 4(G).
60. Furthering Asbestos Claim Transparency (FACT) Act of 2012, H.R. 4369, 112th Cong. § 2(8)(A)(i) (2012).
61. Id. § 2(8)(B).
62. Id. § 3(b).
63. GAO Report at 16-17.
64. Amended Substitute H.B. 380 § 1 (amending § 2307.952(A)(1)(a)).
65. Id. (amending § 2307.953(A)).
66. Id. (amending § 2307.954(B)).
68. Amended Substitute H.B. No. 380 § 4(I).
69. See, e.g., USG Approved Site List, usgasbestostrust.com (updated June 7, 2012), http://www.usgasbestostrust.com/files/USG%20Site%20List%206-7-12.xls.
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