Winter Leadership Conference 2003 Wrap-up

A panel of experts dealt with current issues in pending asbestos legislation (FAIR Act) and how it is viewed by various constituencies. David Austern spoke on the current status of asbestos trusts and what will happen to them if the FAIR Act passes. Francis McGovern presented a power point on the terms of the FAIR Act. Sander Esserman and Jim Stengel did a point/counterpoint on the pros and cons of the Act. The presentation ended with a summary of the impact of legislative uncertainty on pending cases and negotiations and possibilities of future legislative initiatives concerning mass torts. Ted Freedman moderated the discussion.

2004 Annual Spring Meeting Preview

The Ethics, Mass Torts and Professional Compensation Committees are joining forces to present a special extended program at this year’s Annual Spring Meeting called, "Lord...Oh, My Fees!: A Trilogy of Issues Involving Ethical Considerations and Professional Fees in Mass Tort Cases." The program will cover ethical issues for attorneys representing mass tort claimants in bankruptcy proceedings, compensation issues relating to mass tort plaintiffs counsel and contingent fee issues for debtors, committee counsel and other professionals. To view the agenda, click on the link below.

Estimating Future Asbestos Claims

In In re USG Corp., 290 B.R. 223 (Bankr. D. Del. 2003), District Judge Alfred M. Wolin issued a memorandum opinion and order addressing the debtor's application for a case-management order seeking estimation hearings pursuant to §502(c), of the approximately 190,000 asbestos personal-injury claims pending against the debtor. The debtor contended that it possessed substantive defenses to many of the asbestos claims made and anticipated to be made in the future. The court noted that much had been written about the "so-called unimpaired" claimants who may have been exposed to asbestos, but who currently exhibit no outward symptoms interfering with their quality of life. The court observed that any equity may be extinguished to compensate those who they believe "suffered no tangible harm" and that the actual claimants' committee and the future claimants' representative both viewed a merit-based estimation hearing as unduly burdensome. The court identified an additional complication as the debtor is possibly insolvent even if one counts only the claims of the very sick or deceased victims of asbestos exposure. "This much is clear, however—if this subset of the very sick or deceased claimants represents valid claims in excess of the net worth of the debtor, small benefit will be gained for the immense cost of litigating the entire universe of claims, including the so-called 'impaired."

The court noted that the tension between the two positions concerning the proper method of valuing the debtor's asbestos liability reveals "the fundamental divide between them." The court believed that it was important to understand "with perfect clarity" its mandate, which is to provide a framework within which parties can litigate differences to a court-imposed result or a compromise based on the parties' expectation of a predictable outcome. However, the court can only do so within the context of binding law, and the claims before it. State law claims remain governed by state law, even after the debtor invokes federal bankruptcy protection. The end result was that the court found that it would be far more practical to estimate the universe of cancer claimants by themselves rather than undergo a merit-based estimation of all tort claimants. An estimation hearing would be held and the debtors would be permitted to present their defenses pursuant to a procedural device, which would be determined later, noting that Federal Rules of Evidence 702 and Daubert may be available or the debtor can move for summary judgment pursuant to the Federal Rules of Civil Procedure 42. The court also set forth detailed criteria that must be satisfied by all claimants submitting claims.

This article first appeared in the Benchnotes column of the December/January edition of the ABI Journal.