In re Joint East. & South. Dist. Asbestos Litig.
| Decision Date | 27 December 2002 |
| Docket Number | Nos. 82 B 11656(BRL) through 82 B 11676(BRL).,No. 90 CV 3973(JBW).,s. 82 B 11656(BRL) through 82 B 11676(BRL).,90 CV 3973(JBW). |
| Citation | 237 F.Supp.2d 297 |
| Parties | In re JOINT EASTERN AND SOUTHERN DISTRICTS ASBESTOS LITIGATION. In re Johns-Manville Corporation, et al., Debtors. Bernadine K. Findley et al., on behalf of themselves, and all others similarly situated as beneficiaries of the Manville Personal Injury Settlement Trust, Plaintiffs, v. Trustees of the Manville Personal Injury Settlement Trust, not individually but solely in their capacities as Trustees, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Caplin & Drysdale by Elihu Inselbuch, New York, NY, Ness Motley by Joe Rice, Esq., Mt. Pleasant, SC, for Selected Counsel for the Beneficiaries.
Paul, Weiss, Rifkind, Wharton & Garrison by Leslie Gordon Fagen, Jeffrey Nagel, New York, NY, for Legal Representative of Future Claimants.
RAND Corporation by Mark Peterson, Santa Monica, CA, for Special Advisor to the Trust.
Weitz & Luxenberg, P.C. by Perry Weitz, C. Sanders McNew, New York, NY, Levy Phillips & Konigsberg, LLP by Stanley J. Levy, Esq., New York, NY, Law Offices of Peter T. Nicholl by Timothy Hogan, Baltimore, MD, Goldberg, Persky, Jennings & While by Mark Meyer, Pittsburgh, PA, for Plaintiffs.
Kazan, McClain, Edises, Abrams, Fernandez, Lyons & Farrise by Steven Kazan, Oakland, CA, for Plaintiffs and Unofficial Committee of Select Asbestos Claimants.
Faricy & Roen, P.A. by James R. Harries, Minneapolis, MN, Law Offices of James J. Higgins by James J. Higgins, Florham Park, NJ, for MacArthur Subclass.
Debevoise & Plimpton by Roger E. Podesta, New York, NY, for Owens Corning and Co-defendant Subclass.
Pepper Hamilton, LLP by Francis J. Lawall, Philadelphia, PA, for Distributors Subclass.
Schiff, Hardin & Waite by Robert H. Riley, Chicago, IL, for Owens Illinois.
Goldfein & Hosmer by John A. Turlick, Philadelphia, PA, for Garlock Sealing Technologies LLC.
Orrick, Herrington & Sutcliff, LLP by James Lamont Stengel, New York, NY, Mayer, Brown & Platt by Michael O. Ware, New York, NY, McDermott, Will & Emery by Donald Pugliese, New York, NY, Law Offices of Peter G. Angelos by Paul M. Matheny, Towson, MD, for Interested Persons.
Table of Contents
I. Introduction ............................................... 300
II. Facts ...................................................... 301
A. History ................................................ 301
1. Asbestos Litigation Crisis.......................... 301
2. Manville Trust ..................................... 302
B. Post-1995 Developments ................................. 305
1. Proliferation of Asbestos Litigation and Claims .... 305
2. Functionally Unimpaired Claimants .................. 306
a. Diagnosing Asbestos-Related Disease ............. 308
b. Projecting Future Claims ........................ 310
c. Compensation Ratios ............................. 312
3. Manville Trust ..................................... 313
C. Trust Payments to Date.................................. 315
III. Law ........................................................ 315
A. Power to Amend the Trust Distribution Process .......... 315
B. Claims by Functionally Unimpaired Claimants ............ 317
IV. Application ................................................ 319
A. Amendment of the Manville Process ...................... 319
1. Changes in the 2002 Trust Distribution Process...... 319
a. Scheduled Disease Categories and Values ......... 320
b. Evidentiary Requirements ........................ 324
c. Pro Rata Share .................................. 324
d. Other Changes ................................... 325
e. Transition Provisions ........................... 326
2. Other Measures ..................................... 326
B. Criticisms of the 2002 Trust Distribution Process ...... 326
C. Future ................................................. 331
1. Required Research on National Medical Questions ..... 331
2. Alternative Solutions ............................... 335
V. Conclusion .................................................. 336
The district court for the Eastern District of New York and the bankruptcy court for the Southern District of New York (the "courts") write to give their imprimatur to the amended Trust Distribution Process ("2002 TDP") of the Manville Personal Injury Settlement Trust ("Manville Trust" or the "Trust").
It is not clear that the courts have the authority to approve or deny approval of these changes as agreed on by the Trust, the Selected Counsel for the Beneficiaries (the "SCB"), and the Legal Representative of Future Claimants (the "Legal Representative") after consultation with the Special Advisor to the Trust (the "Special Advisor") and other interested parties. It is apparent nonetheless that the courts have a continuing obligation to ensure that the Trust's terms and goals are properly effectuated. See In re Joint E. & S. Dists. Asbestos Litig., 120 B.R. 648, 652 (E. & S.D.N.Y.1990) (); Second Amended and Restated Plan of Reorganization for Johns-Manville Corporation Art. X (Nov. 28, 1988) (retention of jurisdiction); Trust Agreements §§ 6.12, 6.13 (same).
Periodic required reports submitted by the Trust are followed closely by the courts. They reveal the Trust's continuing problems. It is appropriate therefore for the courts to evaluate and approve the changes embodied in the 2002 TDP. There is thus currently no need to finally fix the courts' continuing authority to require future changes in the Trust's distribution process.
The asbestos problem and litigation crisis is "a festering wound on our society that is going to continue for some time." Transcript of Proceedings on September 4, 2002, at 35 ("Transcript Sept. 4, 2002"). Despite frequent expressions by the courts during the long course of Johns-Manville Corp. and Manville Trust litigation of their hope that some final resolution would be reached, periodic reevaluation has been necessary in order to ensure that administration of trust funds remains effective and equitable in light of changing conditions.
Amending the Manville Trust Distribution Process ("TDP") has been compelled by major developments in asbestos litigation. There has been a dramatic increase in the total and rate of filing of asbestos lawsuits and claims. Particularly noticeable is the involvement of more peripheral players — plaintiffs who are asymptomatic, those less seriously injured, and defendants who were not major manufacturers or distributors of asbestos.
In the last several years it became evident that the Manville Trust was threatened by a much higher than projected number of claims. A significant and growing percentage of these claims are brought on the basis of non-malignant asbestos-related conditions, that is for asbestosis or other less serious clinical or physical manifestations of asbestos exposure rather than for mesothelioma, lung cancer, or other cancers. It is expected, based on the best currently available data, that this trend will accelerate.
Were the Trust to continue operating under the procedures last established in 1995, there would be a substantial risk that its funds would be insufficient to provide decent compensation for all valid claims. It was widely believed that the TDP, even as modified in 1995, no longer treated all claimants equitably — a primary goal of the Trust. See In re Joint E. & S. Dists. Asbestos Litig., 2001 WL 1464362 (E.D.N.Y.2001).
Responding to current concerns expressed by the courts and others, interested parties engaged in extensive and lengthy negotiations. In September 2002, the Trust, the SCB, and the Legal Representative, after consultation with the Special Advisor and interested persons, announced that they had agreed to significant amendments to the Trust Distribution Process, in the form of the 2002 TDP. All interested parties were invited to submit written and oral comments to the courts.
After full hearings, the courts approve the 2002 TDP. It is a substantial step forward. It accords with developing tort asbestos litigation. While further changes may be necessary, the 2002 TDP is a significant improvement over the previous distribution processes.
The genesis and history of the asbestos litigation crisis and of the Manville Trust have been set out at length. See, e.g., In re Joint E. & S. Dists. Asbestos Litig., 129 B.R. 710 (E. & S.D.N.Y.1991) ("Findley I"); In re Joint E. & S. Dists. Asbestos Litig., 878 F.Supp. 473 (E. & S.D.N.Y. 1995).
1. Asbestos Litigation Crisis
Asbestos in its various forms are fibrous minerals, abundant, relatively inexpensive to mine and process, and versatile. Because of its strength, durability, and fire-retardant capabilities, asbestos has been used extensively in industrial and other settings for thousands of years. See Findley I, 129 B.R. 710, 734 (E. & S.D.N.Y. 1991); Stephen J. Carroll et al., RAND Institute for Civil Justice, Asbestos Litigation Costs and Compensation: An Interim Report 13 (2002) ("RAND Report 2002"); Barbara J. Peters and George A. Peters, Sourcebook on Asbestos Diseases: Medical, Legal and Engineering Aspects (1998). Unfortunately, however, asbestos is also dangerous. Workplace exposure to asbestos fibers risks injury,...
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