Litigation: The Asbestos Pit

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Ronald Huber spent 35 years as a steelworker, breathing in asbestos particles he never saw. In 1995, recruited by personal-injury lawyers he had never met, he joined a class action against 200 companies that made or distributed asbestos or products made with it. At the time, the only detail that really seemed to matter was that the lawyers were giving Huber a shot at what would become a $140 million settlement.

Yet Huber, who claims he is suffering from an asbestos-related illness, maintains that he never saw a dime. So on Feb. 7 he joined 2,644 other plaintiffs in another class action. This one charges six personal-injury attorneys and their firms in federal court in Pittsburgh, Pa., with fraud, malpractice and deception--or, as the complaint boldly states, "this case arises from corruption within the asbestos personal injury bar."

Welcome to the wild world of asbestos litigation. For all the lives asbestos has destroyed over the years, only now is it becoming clear how much additional ruin personal-injury lawyers caused by taking advantage of hapless plaintiffs and of the emotionally charged debate over corporate responsibility for unleashing the deadly substance. The first asbestos suits were filed in the 1970s and by 1982 had pushed Johns-Manville, the largest manufacturer, into bankruptcy. Wave after wave followed, forcing more than 50 companies into Chapter 11, including Owens-Corning and, last year, chemical and materials giant W.R. Grace.

Many of the lawsuits have been justified, aimed at redressing victims' unimaginable suffering. But some have appeared opportunistic, including a recent cluster filed on behalf of healthy plaintiffs against companies that have only peripheral connections to asbestos, among them media giant Viacom, baby-products maker Gerber (a subsidiary of Novartis) and Gallo Winery. If the cascade of litigation continues, according to a recent Tillinghast-Towers Perrin study, its financial toll could reach $200 billion, more than the damage attributed to the Enron debacle. "The liability--both projected and actual--is far in excess of Enron," says David Austern, general counsel for the Manville Trust, which was created from bankrupt asbestos maker Johns-Manville in 1988 to administer claims against the company. "Yet there seems to be very little congressional interest in this subject."

How did asbestos, the industrial scourge of the past century, bounce back into this one? In 1982 Johns-Manville declared bankruptcy, thwarting thousands of lawsuits on behalf of plaintiffs sickened by asbestos exposure. Two state supreme courts, New Jersey's in 1982 and Louisiana's in 1986, set crucial precedents by determining that defendant Manville was liable for asbestos-related illnesses even if the company had not been aware of the substance's danger. Two years later, the trust was established from the company's assets, and officials predicted that 80,000 to 100,000 people would file claims against it.

Instead, filing asbestos claims became a booming industry in its own right, and the estimated number of claimants has ballooned past 1.4 million people. Money-hungry lawyers took a connect-the-dots approach: drum up the standard legal precedents and then solicit clients through local ads or unions (which also sponsored mobile X-ray scans for asbestos-related illnesses). None of this required much investment, and the potential rewards were huge.