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Date: April 10, 2024

Summarizing “ILR Briefly: The Asbestos Over-Naming and Trust Transparency Problem: A Philadelphia Case Study”

by Foley Mansfield
Date: April 10, 2024
by Foley Mansfield

Summarizing “ILR Briefly: The Asbestos Over-Naming and Trust Transparency Problem: A Philadelphia Case Study”

Introduction

Asbestos litigation has become a cornerstone of the American legal landscape, spanning over four decades, and involving more than a million individual personal injury claims across state and federal courts. In 2012, a commentary titled “The Philadelphia Story: Asbestos Litigation, Bankruptcy Trusts, and Changes in Exposure Allegations from 1991-2010” addressed the disparity between named defendants and exposure allegations by examining lawsuits filed between 2006 and 2010 in the Philadelphia Court of Common Pleas, after several principal asbestos defendants filed for bankruptcy. This new study provides updates to its prior analysis by examining claims filed in Philadelphia between 2017 and 2021.

The widespread historical use of asbestos in various industries has created a vast pool of potential defendants, leading to lawsuits that typically name dozens of companies. The enduring nature of these suits continues to impose substantial financial burdens on named defendant companies, with billions spent annually on verdicts, settlements, and legal defense fees. This study finds that despite numerous potential defendants, a notable disparity exists between named defendants and the actual sources of exposure. More often than not, only half of the defendants named in lawsuits are identified during discovery, and several companies responsible for asbestos-containing products are frequently conspicuously absent from litigation. Most responsible defendant companies have filed for bankruptcy, and are thus absent from traditional tort lawsuits, leaving peripheral defendants to shoulder the burden of liability. While asbestos bankruptcy trusts have amassed significant funds to indemnify claims, the integration of trust compensation into tort lawsuits has yet to be effectively reconciled. This disconnect inflates the perceived liability of solvent defendants while primary defendants, now bankrupt entities, evade accountability in tort lawsuits.

Over-Naming

First, the study examined the issue of over-naming in asbestos litigation. Over-naming is where numerous defendant companies are included in lawsuits despite a lack of legitimate exposure claims against them. This practice not only incurs significant costs for defendants but also leads to judicial inefficiencies, with courts struggling to efficiently resolve cases due to the excessive number of defendants involved. This study delves into an analysis of cases filed in West Virginia, which reveals high dismissal rates for defendants, with nearly an average of 40% of named companies in West Virginia asbestos lawsuits eventually being dismissed without payment. Additionally, there were instances with dismissal rates as high as 70%. However, the financial toll on defendant companies is significant, especially to those dismissed defendants, with defense costs estimated to reach at least $20,000 per case through the summary judgment phase alone. To further illustrate this problem, the article conducted an additional sample analysis of lawsuits filed in Philadelphia, comparing the frequency of named defendant companies with the frequency of their identification in a plaintiff’s exposure allegations. The findings show that, on average, half of the defendant companies named in each case were not subsequently identified in a plaintiff’s exposure allegations. Even among the few defendant companies positively identified as sources of asbestos exposure, their collective identification in exposure allegations remained relatively low.

Shifting Exposure Allegations

The second issue addressed in the study is the shifting of exposure allegations. Between 2000 and 2004, a substantial number of primary asbestos defendants, particularly those involved in manufacturing thermal insulation and refractory products, filed for bankruptcy. This wave of bankruptcies altered the landscape of asbestos litigation, shifting the focus toward peripheral defendants. With primary defendants under bankruptcy protection, tort claims against them were halted, leading to a notable decrease in the identification of their products in exposure allegations. Consequently, litigation intensified against peripheral defendants such as those in the pumps, valves, gaskets, and packing sectors, leading to even more defendants declaring bankruptcy. As the link to primary defendants diminishes over time, plaintiffs are expanding their search for defendants even wider and more tenuously, impacting more companies and potentially resulting in further bankruptcies due to escalating legal pressures and costs.

Trust Transparency: Proof of Concept

Finally, the study delves into the significance of bankruptcy trust transparency. Bankruptcy trust transparency is fundamental in asbestos litigation because these trust funds operate independently from the tort system, annually disbursing billions of dollars to claimants based on qualifying exposures which often are omitted from tort proceedings. An additional study examined product identification alleged in tort lawsuits and presumptive trust qualifications based on claimants’ potential connections to approved jobsite where it has been established that the company had products or operations present. The findings revealed a substantial gap between disclosed and potential trust claims, further highlighting the significance of undisclosed exposure and compensation shares.

Over-Naming and Transparency Reforms

Efforts to tackle over-naming and transparency in asbestos lawsuits have gained traction in various states. For example, legislation enacted in states such as West Virginia, Iowa, North Dakota, and Tennessee mandate that plaintiffs provide detailed specifics about their claims against each defendant early in the discovery phase of tort actions. These legislative measures seek to promote transparency in the legal process by requiring plaintiffs to outline the products involved, dates, locations, frequency, and proximity supporting their allegations of asbestos exposure. By doing so, the laws aim to reduce unnecessary legal expenses for defendants without relevant connections to the case and streamline court proceedings, benefiting both plaintiffs and defendants alike. Furthermore, emphasizing the timely disclosure of trust claims and compensation entitlements during tort claims is crucial to prevent unnecessary litigation, and avoid the perpetuation of asbestos-related bankruptcies.

By implementing similar legislative reforms and emphasizing timely disclosures, states can aim to foster a more efficient and equitable legal system, ultimately benefiting all parties involved in asbestos litigation.

Foley Mansfield has decades of experience defending companies in asbestos litigation as local, national, and trial counsel in jurisdictions nationwide. We understand the complex science and medicine involved in these cases and are well-versed in the latest alternative causation and exposure data.

Contacts:

Noor Maarfi

Michael Posavetz

Related Practices:

Toxic Tort / Mass Tort

Talc Litigation

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