This is the last post on Blogger. New posts will be hosted at Lexblog and reachable by our main domain address www.globaltort.com. We've even moved the archive over to the new locale!
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Thanks!
Thursday, February 25, 2010
CDG Wins For the Third Straight Time Against One Recalcitrant Insurer
A brief self-promotional note for Childress Duffy Goldblatt. Yesterday my partner Mike Duffy and his trial team won a first party insurance property damage verdict for $ 2.85 million after allowing for the deductible. This is the third recent seven-figure trial verdict against the same recalcitrant insurer that refuses to pay fair values to its insureds. You may recall this prior post regarding that situation; the following is the key excerpt from an interview of my partner Mike Childress.
"We tried a seven-figure case last year after the insurance lawyer said that, if he could not win that particular trial, he should just return the rest of the files involving claims against that insurer. We have twelve cases against that same insurer, all of which involve the same type of loss. Our client won full damages at trial, but the insurer is still refusing to settle the remaining cases. In fact, it is the second case we have tried against this insurer and won. So, we will try the rest of the cases."
"We tried a seven-figure case last year after the insurance lawyer said that, if he could not win that particular trial, he should just return the rest of the files involving claims against that insurer. We have twelve cases against that same insurer, all of which involve the same type of loss. Our client won full damages at trial, but the insurer is still refusing to settle the remaining cases. In fact, it is the second case we have tried against this insurer and won. So, we will try the rest of the cases."
GlobalTort is Moving to a New Platform
As of later today or tomorrow, GlobalTort is moving to a new Internet home with LexBlog. A new home is needed because this platform lacks a reliable spell checker and various other "back end" utilities that make writing easier. I'm also told some browsers could not reliably hit the site.
Your browser should make the change without you having to do anything, but if you have a problem, please let me know at khartley@cdglawyers.com. The subscription options also will be broader.
Your browser should make the change without you having to do anything, but if you have a problem, please let me know at khartley@cdglawyers.com. The subscription options also will be broader.
Tuesday, February 23, 2010
Actual Great Results from New Cancer Therapies Tailored to Particular Genomes !!!!!
God love smart scientists and doctors ! Back in February, this post covered some of the ground on medical treatments aimed at individual genomes. In August, this post reported on Abbbott and Pfizer working in creating a gene chip to screen patients with a specific type of cancer for specific genomic changes so that a clinical trial can be run using people with that specific genomic defect. In this week of focus on health care, it is just plain wonderful to read that similar approaches are starting to produce the "miracles" needed for some of the almost 1.5 million Americans who will be diagnosed with cancer this year.
The specifics ? Now coming on line are humane therapies - pills !- tailored to particular changes in individual genomes. These therapies are actually shrinking tumors, and are doing so without the incredible brutality of chemotherapy and bone marrow transplants. There are still issues and uncertainties ahead, but these types of results prove the merit to treating specific genomes.
Here are the absolute key quotes from an article this morning in the NYT:
"The trial of PLX4032 offers a glimpse at how doctors, patients and drug developers navigate a medical frontier as more drugs tailored to the genetic profile of a cancer are being widely tested on humans for the first time.
Throughout the fall, the only two patients on the trial whose tumors continued to grow were the ones who did not have the particular gene mutation for which the drug had been designed. They were removed from the trial. By late December, tumors in the 11 patients who did have the mutation had shrunk. Those involved in the trial held their collective breath waiting to see how long the remissions would last. "
The entire article is here; addtional key excerpts on the science are pasted below. The entire article is well worth reading for the human side of the story.
_____________________________________________________________________________
February 23, 2010
Target CancerAfter Long Fight, Drug Gives Sudden Reprieve
By AMY HARMON
For the melanoma patients who signed on to try a drug known as PLX4032, the clinical trial was a last resort. Their bodies were riddled with tumors, leaving them almost certainly just months to live.
But a few weeks after taking their first dose, nearly all of them began to recover.
Lee Reyes, 30, of Fresno, Calif., who had begun using a feeding tube because of a growth pressing against his throat, bit into a cinnamon roll.
Rita Quigley, who had been grateful just to find herself breathing each morning since learning she had the virulent skin cancer, went shopping for new clothes with her daughters at a mall in Huntsville, Ala.
Randy Williams, 46, who drove 600 miles from his home in Jonesboro, Ark., to the M.D. Anderson Cancer Center in Houston to get the experimental drug, rolled out of bed. “Something’s working,” he thought, “because nothing’s hurting.”
It was a sweet moment, in autumn 2008, for Dr. Keith Flaherty, the University of Pennsylvania oncologist leading the drug’s first clinical trial. A new kind of cancer therapy, it was tailored to a particular genetic mutation that was driving the disease, and after six years of disappointments his faith in the promise of such a “targeted” approach finally seemed borne out. His collaborators at five other major cancer centers, melanoma clinicians who had tested dozens of potential therapies for their patients with no success, were equally elated.
In a kind of “pinch me” exercise, the six doctors sent one another “before and after” CT scans of their patients.
One was of Mark Bunting, 52, an airline pilot in Sandy, Utah. His initial scan in early October showed the cancer in his bones, an incursion considered virtually impossible to reverse. After two months on the drug, it had all but disappeared.
“Holy Cow!” Dr. Flaherty typed in reply to the slide from Dr. Antoni Ribas at the University of California, Los Angeles, that Dec. 17.
The trial of PLX4032 offers a glimpse at how doctors, patients and drug developers navigate a medical frontier as more drugs tailored to the genetic profile of a cancer are being widely tested on humans for the first time.
Throughout the fall, the only two patients on the trial whose tumors continued to grow were the ones who did not have the particular gene mutation for which the drug had been designed. They were removed from the trial. By late December, tumors in the 11 patients who did have the mutation had shrunk. Those involved in the trial held their collective breath waiting to see how long the remissions would last.
It was a far cry from where they had been a year earlier, when a previous incarnation of the drug had no effect. Urged on by Dr. Flaherty and Dr. Chapman, the companies that owned it had spent months devising a new formulation that could be absorbed at higher doses.
But the new drug, still in the earliest phase of testing, had to pass several more hurdles before federal regulators would determine whether it was safe and effective enough for widespread use.
In December, as the doctors added more patients to the Phase 1 trial, looking for the highest dose they could give without intolerable side effects, they scrambled to prepare slides with graphs and statistics to convince the Food and Drug Administration that the drug should be tested in a larger Phase 2 trial. The agency required a summary of any and all side effects — there had been only a few — and any deaths of patients on the study; thankfully, there had been none since the drug was reformulated. In a matter of days they needed to submit their findings for a prestigious meeting of clinical oncologists in June.
The trial in Bethesda, run by the National Cancer Institute, involved coaxing immune cells to grow in a test tube in a procedure that worked for only a small fraction of patients, Dr. Flaherty knew.
But there would be no point in Mr. Nelson taking PLX4032 if his tumor did not carry the right mutation. For now, the doctor had a slot for only one more patient on the trial, and he and his collaborators had agreed it was almost unethical to give the drug to people without that mutation.
He wished, not for the first time, that he could snap his fingers and know the genetic profile of his patient’s cancer cells. But getting a hospital that had operated on a patient months earlier to retrieve a tumor sample from storage could take days or weeks; the test for the gene mutation could take even longer. To speed the process, Mr. Nelson drove his tumor sample himself from Robert Wood Johnson University Hospital in New Brunswick, N.J., where it had been removed from his lymph nodes, to the laboratory at the University of Pennsylvania.
Once unleashed, however, any cancer seemed to rely on the protein made by a particular mutated gene to fuel its wild growth. In all of the PLX patients, that gene was B-RAF. And whatever the cause, they came to consider themselves, so far as it was possible with what has always been a virtually untreatable cancer, charmed.
Dialing Back
The side effects struck at the 1,120-milligram dose.
Many patients had been taking the reformulated drug for five months with no signs of relapsing. The doctors had hoped that by pushing up the dose they could shut down the cancer more effectively. Some patients were taking as many as 28 pills a day.
Ms. Adams, in Oklahoma City, woke up one morning covered in a rash. Frightened that she would be dropped from the trial, she tried to ignore it. But at work, her boss was horrified and insisted that she call the doctor. Another woman’s hand swelled up, and she could not make a fist. A Philadelphia patient had horrible nausea and diarrhea, and Mr. Bunting’s joints grew so stiff that he had to hand jars to his wife to remove the lids, even when they had already been opened.
Maybe the drug, designed to turn off only the defective B-RAF protein, was, at high doses, also affecting its role in healthy cells. Or perhaps it was interfering with other proteins the body needed to function properly. On their next conference call, the doctors agreed that they had to dial back the dose.
As the side effects began to subside, many of the patients began to believe they had beaten their cancer. One evening, Mr. Bunting performed what had become his pill-taking ritual as his wife puttered around the kitchen.
One Step Forward ...
When Mr. Nelson strolled into the University of Pennsylvania for a scheduled day of blood work and monitoring in mid-March, Ms. Redlinger greeted him as if he had risen from the dead.
Gazing out the window of the clinic room, he spied a hot dog stand.
He had never seen a melanoma patient who had been that sick improve that much. He was not sure he had ever seen a melanoma patient that sick who improved at all.
The first patient to respond in the trial, Elmer Bucksbaum, had been admitted to the hospital. The cancer had spread to his brain.
Dr. Flaherty stopped walking.
The drug, Dr. Flaherty knew, was powerless in the brain. But had the drug held off the cancer elsewhere in Mr. Bucksbaum’s body? Or would other patients, too, begin to relapse?
Mr. Bucksbaum died a few days later.
Wednesday: The Next Hurdle.
The specifics ? Now coming on line are humane therapies - pills !- tailored to particular changes in individual genomes. These therapies are actually shrinking tumors, and are doing so without the incredible brutality of chemotherapy and bone marrow transplants. There are still issues and uncertainties ahead, but these types of results prove the merit to treating specific genomes.
Here are the absolute key quotes from an article this morning in the NYT:
"The trial of PLX4032 offers a glimpse at how doctors, patients and drug developers navigate a medical frontier as more drugs tailored to the genetic profile of a cancer are being widely tested on humans for the first time.
Throughout the fall, the only two patients on the trial whose tumors continued to grow were the ones who did not have the particular gene mutation for which the drug had been designed. They were removed from the trial. By late December, tumors in the 11 patients who did have the mutation had shrunk. Those involved in the trial held their collective breath waiting to see how long the remissions would last. "
The entire article is here; addtional key excerpts on the science are pasted below. The entire article is well worth reading for the human side of the story.
_____________________________________________________________________________
February 23, 2010
Target CancerAfter Long Fight, Drug Gives Sudden Reprieve
By AMY HARMON
For the melanoma patients who signed on to try a drug known as PLX4032, the clinical trial was a last resort. Their bodies were riddled with tumors, leaving them almost certainly just months to live.
But a few weeks after taking their first dose, nearly all of them began to recover.
Lee Reyes, 30, of Fresno, Calif., who had begun using a feeding tube because of a growth pressing against his throat, bit into a cinnamon roll.
Rita Quigley, who had been grateful just to find herself breathing each morning since learning she had the virulent skin cancer, went shopping for new clothes with her daughters at a mall in Huntsville, Ala.
Randy Williams, 46, who drove 600 miles from his home in Jonesboro, Ark., to the M.D. Anderson Cancer Center in Houston to get the experimental drug, rolled out of bed. “Something’s working,” he thought, “because nothing’s hurting.”
It was a sweet moment, in autumn 2008, for Dr. Keith Flaherty, the University of Pennsylvania oncologist leading the drug’s first clinical trial. A new kind of cancer therapy, it was tailored to a particular genetic mutation that was driving the disease, and after six years of disappointments his faith in the promise of such a “targeted” approach finally seemed borne out. His collaborators at five other major cancer centers, melanoma clinicians who had tested dozens of potential therapies for their patients with no success, were equally elated.
In a kind of “pinch me” exercise, the six doctors sent one another “before and after” CT scans of their patients.
One was of Mark Bunting, 52, an airline pilot in Sandy, Utah. His initial scan in early October showed the cancer in his bones, an incursion considered virtually impossible to reverse. After two months on the drug, it had all but disappeared.
“Holy Cow!” Dr. Flaherty typed in reply to the slide from Dr. Antoni Ribas at the University of California, Los Angeles, that Dec. 17.
The trial of PLX4032 offers a glimpse at how doctors, patients and drug developers navigate a medical frontier as more drugs tailored to the genetic profile of a cancer are being widely tested on humans for the first time.
Throughout the fall, the only two patients on the trial whose tumors continued to grow were the ones who did not have the particular gene mutation for which the drug had been designed. They were removed from the trial. By late December, tumors in the 11 patients who did have the mutation had shrunk. Those involved in the trial held their collective breath waiting to see how long the remissions would last.
It was a far cry from where they had been a year earlier, when a previous incarnation of the drug had no effect. Urged on by Dr. Flaherty and Dr. Chapman, the companies that owned it had spent months devising a new formulation that could be absorbed at higher doses.
But the new drug, still in the earliest phase of testing, had to pass several more hurdles before federal regulators would determine whether it was safe and effective enough for widespread use.
In December, as the doctors added more patients to the Phase 1 trial, looking for the highest dose they could give without intolerable side effects, they scrambled to prepare slides with graphs and statistics to convince the Food and Drug Administration that the drug should be tested in a larger Phase 2 trial. The agency required a summary of any and all side effects — there had been only a few — and any deaths of patients on the study; thankfully, there had been none since the drug was reformulated. In a matter of days they needed to submit their findings for a prestigious meeting of clinical oncologists in June.
The trial in Bethesda, run by the National Cancer Institute, involved coaxing immune cells to grow in a test tube in a procedure that worked for only a small fraction of patients, Dr. Flaherty knew.
But there would be no point in Mr. Nelson taking PLX4032 if his tumor did not carry the right mutation. For now, the doctor had a slot for only one more patient on the trial, and he and his collaborators had agreed it was almost unethical to give the drug to people without that mutation.
He wished, not for the first time, that he could snap his fingers and know the genetic profile of his patient’s cancer cells. But getting a hospital that had operated on a patient months earlier to retrieve a tumor sample from storage could take days or weeks; the test for the gene mutation could take even longer. To speed the process, Mr. Nelson drove his tumor sample himself from Robert Wood Johnson University Hospital in New Brunswick, N.J., where it had been removed from his lymph nodes, to the laboratory at the University of Pennsylvania.
Once unleashed, however, any cancer seemed to rely on the protein made by a particular mutated gene to fuel its wild growth. In all of the PLX patients, that gene was B-RAF. And whatever the cause, they came to consider themselves, so far as it was possible with what has always been a virtually untreatable cancer, charmed.
Dialing Back
The side effects struck at the 1,120-milligram dose.
Many patients had been taking the reformulated drug for five months with no signs of relapsing. The doctors had hoped that by pushing up the dose they could shut down the cancer more effectively. Some patients were taking as many as 28 pills a day.
Ms. Adams, in Oklahoma City, woke up one morning covered in a rash. Frightened that she would be dropped from the trial, she tried to ignore it. But at work, her boss was horrified and insisted that she call the doctor. Another woman’s hand swelled up, and she could not make a fist. A Philadelphia patient had horrible nausea and diarrhea, and Mr. Bunting’s joints grew so stiff that he had to hand jars to his wife to remove the lids, even when they had already been opened.
Maybe the drug, designed to turn off only the defective B-RAF protein, was, at high doses, also affecting its role in healthy cells. Or perhaps it was interfering with other proteins the body needed to function properly. On their next conference call, the doctors agreed that they had to dial back the dose.
As the side effects began to subside, many of the patients began to believe they had beaten their cancer. One evening, Mr. Bunting performed what had become his pill-taking ritual as his wife puttered around the kitchen.
One Step Forward ...
When Mr. Nelson strolled into the University of Pennsylvania for a scheduled day of blood work and monitoring in mid-March, Ms. Redlinger greeted him as if he had risen from the dead.
Gazing out the window of the clinic room, he spied a hot dog stand.
He had never seen a melanoma patient who had been that sick improve that much. He was not sure he had ever seen a melanoma patient that sick who improved at all.
The first patient to respond in the trial, Elmer Bucksbaum, had been admitted to the hospital. The cancer had spread to his brain.
Dr. Flaherty stopped walking.
The drug, Dr. Flaherty knew, was powerless in the brain. But had the drug held off the cancer elsewhere in Mr. Bucksbaum’s body? Or would other patients, too, begin to relapse?
Mr. Bucksbaum died a few days later.
Wednesday: The Next Hurdle.
Sunday, February 21, 2010
Sovereigns and Their Roles Related to Commercial Activities Involving Substances that Present Health Risks
Here's an invitation for readers to guest blog or comment on a question related to mass tort litigation, governments and substances that are extracted and exported despite known health risks and the absence of complete certainty regarding health effects. Feel free to reframe the question, but I see it as:
when, if ever, should government agencies and/or officials be held liable for statements or other actions taken in support of commercial mining, extracting, distributing or manufacturing of substances known to have some health risks. For example, mining , exporting and manufacturing involving chrysotile asbestos fibers.
Obviously various sovereign immnunity doctrines already exist and tend to draw lines between tradtional government activties, discretionary functions, and commercial activities. Those lines and these issues seem to me likely to face renewed scrutiny over the next few years due to increased globalization and explicit government outreach to and involvement in commercial activities with international impacts. For some context for the question, consider this prior post regarding "aiding and abetting" claims asserted against two goverments for assisting the Stanford ponzi scheme. Consider also a recent article regarding Canadian physicians accusing Canadian officials of issuing misleading statements about the absence or presence of health hazards from chrsyotile asbestos fibers. The text pasted below is from this February 12, 2010 article by Michelle Lalonde from the Canadian Gazette.
__________________________________________________________________________________
On hot seat over asbestos
Physicians attack Premier; Damning report rebuts his contention mineral can have benign uses
By MICHELLE LALONDE, The GazetteFebruary 12, 2010
Just as a group of prominent Canadian physicians accuse Premier Jean Charest of lying to the public about asbestos, another damning report on the mineral will be published today in the American Journal of Industrial Medicine.
Charest recently returned from a trade mission in India, where anti-asbestos protesters accused his government of hypocrisy for exporting the cancer-causing mineral to developing countries while removing it from Quebec schools and public buildings because of health concerns.
On the trade mission, the premier was quoted in La Presse as saying "Chrysotile (asbestos) can be used in a safe manner; this is what WHO reports say. It is not a banned substance. It is up to the government of India to put the necessary laws in place."
In fact, the World Health Organization has said that all types of asbestos, including the type mined in Quebec (chrysotile) cause asbestosis, mesothelioma and cancer of the lung, and recommends against continued use of any form of asbestos. The International Labour Organization adopted a resolution in 2006 urging the elimination of use of all forms of asbestos and of materials containing asbestos.
A group of 14 Canadian physicians, including McGill University's Abby Lippman and Dick Menzies of the Montreal Chest Institute, sent a letter to Charest yesterday expressing their "shock" at his statements and accusing him of misrepresenting the position of the World Health Organization.
"Premier Charest, you have the right to oppose the WHO position. However, and especially because of the public trust in your position, you do not have the right to misrepresent the WHO position as being what you perhaps wish it were, instead of what it is," the letter says.
Menzies, a respiratory physician at the Montreal Chest Institute and one of the signatories of the letter, said selling asbestos to countries that clearly lack the resources to enforce workplace safety standards is like selling guns to children. You can say that you warned them about the danger, but it is still morally unacceptable.
"They simply do not have the same workplace safety standards we do here. To argue that it is not a carcinogen is ludicrous. To argue that it's dangerous, but it is their responsibility to handle it safely is a moral question."
The physicians have asked for a meeting with the premier on the issue, and also urged him to clarify his statement. Calls by The Gazette to the premier's office were not returned.
Meanwhile, a report to be published today in the March issue of the American Journal of Industrial Medicine shows the devastating impact Quebec's asbestos is having on the health of workers in Mexico who come into contact with the mineral.
The researchers looked at 472 Mexican workers, 119 of whom had been found to have pleural mesothelioma, a fatal lung disease. More than 80 per cent of those with the disease had been exposed to asbestos on the job.
"Our results show a clear relationship between industrial use of all types of asbestos and malignant pleural mesothelioma, and in Mexico the major type of asbestos is chrysotile imported from Canada, confirming that asbestos is a carcinogenic agent that has been recognized as such by the IARC (International Agency for Research on Cancer) since 1977," the report says.
The cost of medical attention for each mesothelioma case during the first year of treatment was estimated at $8,238 U.S.
"The social and economic impact of these diseases and asbestos-related deaths should be absorbed by the industries that have generated the damage and not by the health institutions, as it occurs at present," the authors conclude.
mlalonde@thegazette.canwest.com
© Copyright (c) The Montreal Gazette
Read more: http://www.montrealgazette.com/health/seat+over+asbestos/2553167/story.html#ixzz0gBdvY3kv
when, if ever, should government agencies and/or officials be held liable for statements or other actions taken in support of commercial mining, extracting, distributing or manufacturing of substances known to have some health risks. For example, mining , exporting and manufacturing involving chrysotile asbestos fibers.
Obviously various sovereign immnunity doctrines already exist and tend to draw lines between tradtional government activties, discretionary functions, and commercial activities. Those lines and these issues seem to me likely to face renewed scrutiny over the next few years due to increased globalization and explicit government outreach to and involvement in commercial activities with international impacts. For some context for the question, consider this prior post regarding "aiding and abetting" claims asserted against two goverments for assisting the Stanford ponzi scheme. Consider also a recent article regarding Canadian physicians accusing Canadian officials of issuing misleading statements about the absence or presence of health hazards from chrsyotile asbestos fibers. The text pasted below is from this February 12, 2010 article by Michelle Lalonde from the Canadian Gazette.
__________________________________________________________________________________
On hot seat over asbestos
Physicians attack Premier; Damning report rebuts his contention mineral can have benign uses
By MICHELLE LALONDE, The GazetteFebruary 12, 2010
Just as a group of prominent Canadian physicians accuse Premier Jean Charest of lying to the public about asbestos, another damning report on the mineral will be published today in the American Journal of Industrial Medicine.
Charest recently returned from a trade mission in India, where anti-asbestos protesters accused his government of hypocrisy for exporting the cancer-causing mineral to developing countries while removing it from Quebec schools and public buildings because of health concerns.
On the trade mission, the premier was quoted in La Presse as saying "Chrysotile (asbestos) can be used in a safe manner; this is what WHO reports say. It is not a banned substance. It is up to the government of India to put the necessary laws in place."
In fact, the World Health Organization has said that all types of asbestos, including the type mined in Quebec (chrysotile) cause asbestosis, mesothelioma and cancer of the lung, and recommends against continued use of any form of asbestos. The International Labour Organization adopted a resolution in 2006 urging the elimination of use of all forms of asbestos and of materials containing asbestos.
A group of 14 Canadian physicians, including McGill University's Abby Lippman and Dick Menzies of the Montreal Chest Institute, sent a letter to Charest yesterday expressing their "shock" at his statements and accusing him of misrepresenting the position of the World Health Organization.
"Premier Charest, you have the right to oppose the WHO position. However, and especially because of the public trust in your position, you do not have the right to misrepresent the WHO position as being what you perhaps wish it were, instead of what it is," the letter says.
Menzies, a respiratory physician at the Montreal Chest Institute and one of the signatories of the letter, said selling asbestos to countries that clearly lack the resources to enforce workplace safety standards is like selling guns to children. You can say that you warned them about the danger, but it is still morally unacceptable.
"They simply do not have the same workplace safety standards we do here. To argue that it is not a carcinogen is ludicrous. To argue that it's dangerous, but it is their responsibility to handle it safely is a moral question."
The physicians have asked for a meeting with the premier on the issue, and also urged him to clarify his statement. Calls by The Gazette to the premier's office were not returned.
Meanwhile, a report to be published today in the March issue of the American Journal of Industrial Medicine shows the devastating impact Quebec's asbestos is having on the health of workers in Mexico who come into contact with the mineral.
The researchers looked at 472 Mexican workers, 119 of whom had been found to have pleural mesothelioma, a fatal lung disease. More than 80 per cent of those with the disease had been exposed to asbestos on the job.
"Our results show a clear relationship between industrial use of all types of asbestos and malignant pleural mesothelioma, and in Mexico the major type of asbestos is chrysotile imported from Canada, confirming that asbestos is a carcinogenic agent that has been recognized as such by the IARC (International Agency for Research on Cancer) since 1977," the report says.
The cost of medical attention for each mesothelioma case during the first year of treatment was estimated at $8,238 U.S.
"The social and economic impact of these diseases and asbestos-related deaths should be absorbed by the industries that have generated the damage and not by the health institutions, as it occurs at present," the authors conclude.
mlalonde@thegazette.canwest.com
© Copyright (c) The Montreal Gazette
Read more: http://www.montrealgazette.com/health/seat+over+asbestos/2553167/story.html#ixzz0gBdvY3kv
Saturday, February 20, 2010
Even Newer Uses of Social Media as a Marketing Tool for Law Firms Seeking Mesothelioma Clients
By now I trust everyone is used to many of he marketing approaches to reach mesothelioma victims. Here's a new one for me - some members of the asbestos plainiff's bar are now marketing themselve using social media and a "cause" to ask other people to go out and ceate videos to promote asbestos awareness. Go here to see the online version of the press release pasted below.
________________________________________________________________________________
"Nationwide Video Search Kicks off Ban Asbestos Campaign
Students Can Submit Videos for Chance to Win Trip to LA Film Festival
WELLESLEY, Mass., Feb. 10 /PRNewswire/ -- "Ban Asbestos Now," a campaign to build awareness of the continued use of asbestos in the United States, today launched the Ban Asbestos Now Video Search, asking students across the United States to use their creativity to draw national attention to the toxic, and often deadly, substance considered "the largest manmade public health crisis in history" according to the Asbestos Disease Awareness Organization (ADAO).
Each year, 2000-3000 people are diagnosed with mesothelioma, a rare form of cancer which is almost always caused by exposure to asbestos. Asbestos has been banned in some 50 countries, however it still exists potentially everywhere throughout the United States, including the ceilings and floors of building that were built before 1980, duct tape, caulking, textured paints, car brakes and automotive parts, and even children's toys.
To help eliminate this deadly killer, the "Ban Asbestos Now" Campaign asks students at colleges, universities and film schools across the United States to submit videos that drive attention to the national asbestos problem and compel Americans to join the movement to "Ban Asbestos Now." To enter the search, students, in teams of no more than 4, need to create a 90-120 second video vignette that addresses such questions such as, "Did You Know Asbestos Is Still Legal in the US?", "Where Can You Find It?", and "Do You Know What Diseases It Can Cause?"
The winning individual or team will be sent to the world famous 2010 Los Angeles Film Festival in Westwood Village, with $1000 cash per team member, and the winning video may become the viral platform of the "Ban Asbestos Now" campaign at www.BanAsbestosNow.com. The winner will be announced on May 19th, 2010 by a select judge's panel chosen by Sokolove Law.
Please visit www.BanAsbestosNow.net to view our Ban Asbestos Now Video Search Toolkit, which includes contest rules, video creation and submission guidelines, and promotional materials. You may also contact Sean Galliher at sgalliher@sokolovelaw.com.
About Ban Asbestos Now
The Ban Asbestos Now campaign is designed to generate awareness that asbestos is toxic, deadly and still legal in the United States, despite being banned in some 50 countries. Each year, 2000-3000 people continue to be diagnosed with mesothelioma, a rare form of cancer which is almost always caused by exposure to asbestos. The Ban Asbestos Now campaign urges Americans to draw attention to the national asbestos problem by joining the movement to ban the deadly substance in the United States. Learn more about Ban Asbestos Now at www.BanAsbestosNow.com.
About Sokolove Law
For nearly 30 years, Sokolove Law has reinvented how people obtain legal services. Our mission is to provide equal access to the civil justice system while ensuring superior quality legal representation. As a pioneer in legal advertising, Sokolove Law has grown to be the largest marketer of legal services in the country. Our proven business model matches particular client needs to the more than 400 law firms that we work with. The result is success for our clients and co-counsel. Sokolove Law operates as a limited liability company in all states except Virginia, California, Michigan, and Tennessee, where it operates as a limited liability partnership. Learn more about Sokolove Law at www.sokolovelaw.com.
SOURCE Sokolove Law
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________________________________________________________________________________
"Nationwide Video Search Kicks off Ban Asbestos Campaign
Students Can Submit Videos for Chance to Win Trip to LA Film Festival
WELLESLEY, Mass., Feb. 10 /PRNewswire/ -- "Ban Asbestos Now," a campaign to build awareness of the continued use of asbestos in the United States, today launched the Ban Asbestos Now Video Search, asking students across the United States to use their creativity to draw national attention to the toxic, and often deadly, substance considered "the largest manmade public health crisis in history" according to the Asbestos Disease Awareness Organization (ADAO).
Each year, 2000-3000 people are diagnosed with mesothelioma, a rare form of cancer which is almost always caused by exposure to asbestos. Asbestos has been banned in some 50 countries, however it still exists potentially everywhere throughout the United States, including the ceilings and floors of building that were built before 1980, duct tape, caulking, textured paints, car brakes and automotive parts, and even children's toys.
To help eliminate this deadly killer, the "Ban Asbestos Now" Campaign asks students at colleges, universities and film schools across the United States to submit videos that drive attention to the national asbestos problem and compel Americans to join the movement to "Ban Asbestos Now." To enter the search, students, in teams of no more than 4, need to create a 90-120 second video vignette that addresses such questions such as, "Did You Know Asbestos Is Still Legal in the US?", "Where Can You Find It?", and "Do You Know What Diseases It Can Cause?"
The winning individual or team will be sent to the world famous 2010 Los Angeles Film Festival in Westwood Village, with $1000 cash per team member, and the winning video may become the viral platform of the "Ban Asbestos Now" campaign at www.BanAsbestosNow.com. The winner will be announced on May 19th, 2010 by a select judge's panel chosen by Sokolove Law.
Please visit www.BanAsbestosNow.net to view our Ban Asbestos Now Video Search Toolkit, which includes contest rules, video creation and submission guidelines, and promotional materials. You may also contact Sean Galliher at sgalliher@sokolovelaw.com.
About Ban Asbestos Now
The Ban Asbestos Now campaign is designed to generate awareness that asbestos is toxic, deadly and still legal in the United States, despite being banned in some 50 countries. Each year, 2000-3000 people continue to be diagnosed with mesothelioma, a rare form of cancer which is almost always caused by exposure to asbestos. The Ban Asbestos Now campaign urges Americans to draw attention to the national asbestos problem by joining the movement to ban the deadly substance in the United States. Learn more about Ban Asbestos Now at www.BanAsbestosNow.com.
About Sokolove Law
For nearly 30 years, Sokolove Law has reinvented how people obtain legal services. Our mission is to provide equal access to the civil justice system while ensuring superior quality legal representation. As a pioneer in legal advertising, Sokolove Law has grown to be the largest marketer of legal services in the country. Our proven business model matches particular client needs to the more than 400 law firms that we work with. The result is success for our clients and co-counsel. Sokolove Law operates as a limited liability company in all states except Virginia, California, Michigan, and Tennessee, where it operates as a limited liability partnership. Learn more about Sokolove Law at www.sokolovelaw.com.
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Friday, February 19, 2010
Schemes of Arrangement - CSR's Demerger Effort Thwarted by Objections Regarding Its Potential Asbestos Obligations
What a great legal term of art - "scheme of arrangement." The term has multiple but related nuanced meanings and applications because "schemes" are essentially corporate law opportunities to end or alter the business life or structure of a corporation. Depending on the nation and the particualr use, schemes may have varying outcomes when used in the diverse ways that are possible in the various nations that arise from the former British Empire.
This post focuses on an attempted "scheme" under Australian corporate law. In this instance, the scheme consists of the efforts of a public company, CSR, to move forward with a "demerger" (a "spin-off" in the US) that would split one public company into two "more focused" public companies. Only one of the emerging companies would, they hope, be liable for asbestos bodily injury or property damage claims that will or may arise from past ownership of a crocidolite mine and sales of various asbestos-containing products. Thus, by dividing the ompany into two peices. the proposed demerger would reduce the amount of corporate assets available to pay the current and potential future asbestos claims that arise from past business operations. The opinin explains the numbers as follows: "In its financial statements for the half year ended 30 September 2009 CSR has recognised a provision of A$446.8 million for current and future asbestos liabilities. This comprises 10% of CSR’s total assets as at 30 September 2009 but, based on the pro forma balance sheet produced by CSR as at 30 September 2009, would comprise 18% of New CSR’s assets at that date."
To date, the scheme has not succeeded because the trial judge hearing the petition agreed with objections involving the ability to pay future asbestos claim expenses. Who were the objectors ? According to the opinion, " The proposed capital reduction has prompted considerable interest in, and opposition to, the Scheme. This was evidenced by the Australian Securities and Investments Commission (ASIC) and a number of objectors seeking, and being given, leave to intervene in the proceeding when it first came before the Court on 17 December 2009. The matter was then adjourned to allow the objectors and ASIC time to obtain expert assistance in reviewing the Scheme. The objectors were [underlying case co-defendants ] James Hardie Industries NV and James Hardie 117 Pty Limited (together “James Hardie”), the Asbestos Injuries Compensation Fund Limited (under NSW administered winding up), AMACA Pty Limited (under NSW administered winding up) and AMABA Pty Limited (under NSW administered winding up) (together “AICF”) and the Attorney-General for the State of New South Wales (NSW). The objectors all opposed the Scheme and argued against the Court making the orders sought by CSR. ...ASIC and the objectors were concerned only with potential prejudice to asbestos claimants, that is persons who now have, or in the future may have, a claim for compensation from CSR for injury sustained from exposure to asbestos." The trial court opinion rejecting the scheme certainly was less enjoyable for management than a succesful 2003 scheme,
The CSR scheme is interesting on a comparative law basis and a social basis. Thus, in the US, companies have often enough spun off liability-laden entities without the SEC and other entities seeking to block the spin-off, and instead simply reacting later, as was done with Tronox. In contrast, the objections here were a subject of popular media coverage as to objections of the Australian Securities and Investment Comission, regional Australian governments, and the various James Hardie interests that arise from James Hardie entities being co-defendants in underlying asbestos cases. The objections by codefendant Hardie entities arlso are noteworthy in view of Hardie previously undertaking to create a foundation to manage and pay for its own asbestos litigation and then moving from Australia to the Netehrlands as part of it's own asbestos-related scheme, a move more recently followed by Hardie moving from the Netherlands to tax-haven Ireland. Moreover, some of Hardie's officers and directors recently were convicted of criminal securities law violations arising from public statements on estimates of future asbestos expenses (this prior post links to the opinion/judgment) because the trial judge appears not to have believed the testimony of the directors. And as described yesterday, Hardie and CSR apparently now are quarreling over their respective obligations in particular asbestos cases.
Another noteworthy part of the opinion revolves around certainty. Thus, the opinion refers to a suggestion that the 2d demerger entity provide a guarantee for the entity holding the asbestos liabilities. See paragraphs 37-38. That suggestion was rejected, and thus the trial judge wrote: " I understand that CSR did not regard the suggestion as attractive. Its submissions in reply noted that the proposal “would significantly alter the commercial characteristics of the proposed demerger”. In particular it was said that the proposal would subject Sucrogen “to a contingent liability over which it had no effective control, which had no correlation to its business revenue and which offered no commercial return or benefit”. Thus, CSR's response seesm to illustrate a reality I mentioned yesterday in the context of entities emerging from bankruptcy : bankers and investors will always want and seek a predictable free cash flow to sell at a multiple.
The other side of that coin, however, is that the court was unwilling to give the business entities the certainty they want. Why? Because past conduct created enormous uncertainties for exposed persons, and unless science can change the outcomes, thousands of the currently uncertain individuals will in the future suffer painful deaths from mesothelioma, a point raised explicitly by counsel for the New South Wales region. Thus, the trial judge explained:
"There is one last issue to be addressed, namely the submissions made for NSW. Mr Oakes SC who appeared for NSW stated that from his client's point of view the central issue is:
[W]ho in the future should bear the risks if asbestos claims projections are too low, or that actual cash flow is too low because of the inherent uncertainties in long-term earnings and cash flow forecasts ... ? So the question is: should the risks be borne by the businesses that currently comprise the CSR group and, thus, indirectly by the CSR shareholders, or should the risks be borne by the current and future asbestos claimants? Our submission is the risks shouldn’t be borne by the current and future asbestos claimants ...
A final point. The opinion is frustrating because it alludes to various expert future expense predictions submitted by the parties, but does not go into detail, deeming the information confidential. As a lawyer for corporations, I understand the desires and arguments for secrecy. That said, the law develops through precedent, and it’s much harder to apply and learn from precedent when crucial facts are not on the public record and are not explicitly addressed in the opinion. Courts and companies face difficult issues ahead in trying to balance the competing considerations as to secrecy. Set out below are the statements the court did put on the record regarding the predictions of future expenses.
“Analyses of expert reports
31. It is not possible to give detailed analysis of the confidential reports, however, the flavour of the debate is reflected in submissions made on behalf of those commissioning the various reports. For example, the written submissions for ASIC contain 12 pages of detailed analysis of the actuarial material concerning asbestos liabilities and financial stress testing. The submissions analyse the CSR actuarial material including the expert reports and advice provided by Taylor Fry and Navigant, the expert reviews of that material by KPMG and Ernst & Young as well as the response of the CSR advisers. The submissions set out ASIC’s conclusions in relation to the actuarial material as follows:
First it is self evident that there is considerable uncertainty surrounding any process of actuarially assessing future asbestos liabilities. Notwithstanding that CSR ceased involvement in asbestos related activities in 1977 both [Taylor Fry] and Navigant have continually being [sic] revising their central estimates upwards from 2004 based on new information that emerges.
Second, as described above, there are limitations on the scope of the actuarial assessments which have the potential to under estimate the overall valuations.
Third, within the actuarial assessments there are significant matters of judgement over which reasonable minds may differ and which have considerable potential to adversely and materially affect the valuations. This is exemplified by the differences in professional opinion between KPMG and Taylor Fry in relation to both the central estimate and the 95th percentile estimate of the Australian liabilities.
Fourth, ASIC submits that in determining this application the Court need not embark upon the task of determining which expert is “correct” or to be preferred. Instead it should note the differences of professional opinion but, in the context of determining the application based on the approach outlined above, it should afford significant weight to the views expressed by KPMG at least so far as they affect the 95th percentile estimate provided by [Taylor Fry]. KPMG have significant expertise in the area and they have provided a detailed rationale for their opinion on these issues. Their views at least so far as they affect the 95th percentile estimates are supported by [Ernst & Young] and, in some limited respects, by Finity.
32. The submissions also analyse the financial stress testing that CSR had undertaken and the Ernst & Young review of this stress testing. The conclusion is stated as follows:
A review of the material concerning the financial analysis and stress testing undertaken by and on behalf of CSR reveals that there are a number of aspects of uncertainty surrounding such an exercise mainly:
(i) The obvious uncertainties that arise from any exercise of financial modelling the future performance of any business especially in the context of measuring its ability to meet long tail liabilities such as those that arise from asbestos use;
(ii) The limited external scrutiny of the assumptions and workings of the 5 year and 20 year financial models prepared by CSR management, the inputs to which most always primarily originate from CSR's management;
(iii) The judgements involved in identifying the various risks to the business, the relevant parameters for the “shock testing” and the exclusion of other forms of risk ...; and
(iv) The absence of any testing of the combination of a prolonged downturn and the high case estimates and the related questions of judgement as to whether it would be feasible for New CSR to respond to the various risks to the business under the shock scenarios that were stress tested.
33. CSR's submissions in reply make the following comments about the submissions made by ASIC:
In its written and oral submissions, ASIC ... sought to stress the uncertainties and limitations inherent in actuarial analyses of future events. Such a submission should not be taken too far.
By definition, any assessment of possible future events involves uncertainty and any attempt to actuarially assess such events will be subject to limitations. As the Court noted in argument, such uncertainties and limitations are equally applicable to CSR in its current structure as they are to CSR post-demerger. Provided that the advice provided to the CSR Board has been shown to be reasonable, the fact that the advice is subject to uncertainties does not warrant a conclusion that the advice should be rejected or lacks persuasive force.
Further, ... the doubts and uncertainties and the differences between the actuarial experts are of no relevance in circumstances where CSR's analysis has taken account of the full range of actuarial opinion. Cash outflows associated with the asbestos-related claims have been projected having regard to all “reasonable hypotheses”. Further, no party has sought to demonstrate a flaw in the other principal aspects of that analysis, namely the projection and “stress testing” of future cash inflows from CSR's de-merged business operations. That aspect of the analysis has been reviewed by PWC. It has also been reviewed on behalf of ASIC by [Ernst & Young] without unfavourable comment. In the light of the above, and as there is no correlation between risks attending the projected business cash inflows and the risks of under-estimation of the asbestos related cash outflows, the analysis provides a very high level of comfort that asbestos claims will be met.
ASIC's submissions should be read with this in mind. Its submissions are open to the criticisms that:
• they fail to reflect the conclusions of their own expert;
• they place undue focus on limitations and uncertainties that no actuary (including KPMG) can avoid without regard to the conclusions ultimately stated by the experts;
• they overstate the significance of the limitations and uncertainties ...
34. In addition to these criticisms CSR made detailed submissions in tabular form responding to the submissions made by AICF. Those submissions confirm that there is a genuine dispute between the experts as to the appropriate way to assess New CSR’s ability to meet future asbestos claims. The submissions made on behalf of James Hardie echoed the submissions of ASIC and AICF as well as making some additional criticisms of the provision made for New CSR to meet future asbestos claims.
35. In summary, the expert evidence presented by CSR, ASIC, and the other intervening parties brings into sharp relief the inherent uncertainty involved in any actuarial estimate of future asbestos-related claims and in particular the limitations and qualifications expressed in the actuarial reports relied on by CSR. In addition, specific issues raised by the experts retained by ASIC and AICF point to particular limitations in the material supplied by CSR’s experts in relation to future asbestos claims that cannot be reliably estimated at this time. The starting point in considering whether these flaws should lead to my not being satisfied that the provisions made in respect of asbestos-related claims following demerger are consistent with public policy or commercial morality must be:
(a) that New CSR will be the repository of all CSR's liabilities in respect of asbestos-related claims both present and future; and
(b) that it will suffer a significant reduction in the capital available to meet such claims.
36. The significance of those two factors increases with the uncertainty of the actuarial estimates and other expert opinion and is such that I cannot be satisfied that the provisions made are consistent with commercial morality or that the Scheme, if given effect, would not involve an unfair or oppressive result. Moreover, these same issues lead me to conclude that the material in the explanatory statement cannot provide adequate disclosure to CSR shareholders of New CSR's ability to meet these future liabilities. For both these reasons I have concluded that I should decline to make the orders for convening the Scheme meeting. In the circumstances, it is not necessary that I should consider the aspects of the Scheme that might otherwise be addressed at the first hearing.”
This post focuses on an attempted "scheme" under Australian corporate law. In this instance, the scheme consists of the efforts of a public company, CSR, to move forward with a "demerger" (a "spin-off" in the US) that would split one public company into two "more focused" public companies. Only one of the emerging companies would, they hope, be liable for asbestos bodily injury or property damage claims that will or may arise from past ownership of a crocidolite mine and sales of various asbestos-containing products. Thus, by dividing the ompany into two peices. the proposed demerger would reduce the amount of corporate assets available to pay the current and potential future asbestos claims that arise from past business operations. The opinin explains the numbers as follows: "In its financial statements for the half year ended 30 September 2009 CSR has recognised a provision of A$446.8 million for current and future asbestos liabilities. This comprises 10% of CSR’s total assets as at 30 September 2009 but, based on the pro forma balance sheet produced by CSR as at 30 September 2009, would comprise 18% of New CSR’s assets at that date."
To date, the scheme has not succeeded because the trial judge hearing the petition agreed with objections involving the ability to pay future asbestos claim expenses. Who were the objectors ? According to the opinion, " The proposed capital reduction has prompted considerable interest in, and opposition to, the Scheme. This was evidenced by the Australian Securities and Investments Commission (ASIC) and a number of objectors seeking, and being given, leave to intervene in the proceeding when it first came before the Court on 17 December 2009. The matter was then adjourned to allow the objectors and ASIC time to obtain expert assistance in reviewing the Scheme. The objectors were [underlying case co-defendants ] James Hardie Industries NV and James Hardie 117 Pty Limited (together “James Hardie”), the Asbestos Injuries Compensation Fund Limited (under NSW administered winding up), AMACA Pty Limited (under NSW administered winding up) and AMABA Pty Limited (under NSW administered winding up) (together “AICF”) and the Attorney-General for the State of New South Wales (NSW). The objectors all opposed the Scheme and argued against the Court making the orders sought by CSR. ...ASIC and the objectors were concerned only with potential prejudice to asbestos claimants, that is persons who now have, or in the future may have, a claim for compensation from CSR for injury sustained from exposure to asbestos." The trial court opinion rejecting the scheme certainly was less enjoyable for management than a succesful 2003 scheme,
The CSR scheme is interesting on a comparative law basis and a social basis. Thus, in the US, companies have often enough spun off liability-laden entities without the SEC and other entities seeking to block the spin-off, and instead simply reacting later, as was done with Tronox. In contrast, the objections here were a subject of popular media coverage as to objections of the Australian Securities and Investment Comission, regional Australian governments, and the various James Hardie interests that arise from James Hardie entities being co-defendants in underlying asbestos cases. The objections by codefendant Hardie entities arlso are noteworthy in view of Hardie previously undertaking to create a foundation to manage and pay for its own asbestos litigation and then moving from Australia to the Netehrlands as part of it's own asbestos-related scheme, a move more recently followed by Hardie moving from the Netherlands to tax-haven Ireland. Moreover, some of Hardie's officers and directors recently were convicted of criminal securities law violations arising from public statements on estimates of future asbestos expenses (this prior post links to the opinion/judgment) because the trial judge appears not to have believed the testimony of the directors. And as described yesterday, Hardie and CSR apparently now are quarreling over their respective obligations in particular asbestos cases.
Another noteworthy part of the opinion revolves around certainty. Thus, the opinion refers to a suggestion that the 2d demerger entity provide a guarantee for the entity holding the asbestos liabilities. See paragraphs 37-38. That suggestion was rejected, and thus the trial judge wrote: " I understand that CSR did not regard the suggestion as attractive. Its submissions in reply noted that the proposal “would significantly alter the commercial characteristics of the proposed demerger”. In particular it was said that the proposal would subject Sucrogen “to a contingent liability over which it had no effective control, which had no correlation to its business revenue and which offered no commercial return or benefit”. Thus, CSR's response seesm to illustrate a reality I mentioned yesterday in the context of entities emerging from bankruptcy : bankers and investors will always want and seek a predictable free cash flow to sell at a multiple.
The other side of that coin, however, is that the court was unwilling to give the business entities the certainty they want. Why? Because past conduct created enormous uncertainties for exposed persons, and unless science can change the outcomes, thousands of the currently uncertain individuals will in the future suffer painful deaths from mesothelioma, a point raised explicitly by counsel for the New South Wales region. Thus, the trial judge explained:
"There is one last issue to be addressed, namely the submissions made for NSW. Mr Oakes SC who appeared for NSW stated that from his client's point of view the central issue is:
[W]ho in the future should bear the risks if asbestos claims projections are too low, or that actual cash flow is too low because of the inherent uncertainties in long-term earnings and cash flow forecasts ... ? So the question is: should the risks be borne by the businesses that currently comprise the CSR group and, thus, indirectly by the CSR shareholders, or should the risks be borne by the current and future asbestos claimants? Our submission is the risks shouldn’t be borne by the current and future asbestos claimants ...
A final point. The opinion is frustrating because it alludes to various expert future expense predictions submitted by the parties, but does not go into detail, deeming the information confidential. As a lawyer for corporations, I understand the desires and arguments for secrecy. That said, the law develops through precedent, and it’s much harder to apply and learn from precedent when crucial facts are not on the public record and are not explicitly addressed in the opinion. Courts and companies face difficult issues ahead in trying to balance the competing considerations as to secrecy. Set out below are the statements the court did put on the record regarding the predictions of future expenses.
“Analyses of expert reports
31. It is not possible to give detailed analysis of the confidential reports, however, the flavour of the debate is reflected in submissions made on behalf of those commissioning the various reports. For example, the written submissions for ASIC contain 12 pages of detailed analysis of the actuarial material concerning asbestos liabilities and financial stress testing. The submissions analyse the CSR actuarial material including the expert reports and advice provided by Taylor Fry and Navigant, the expert reviews of that material by KPMG and Ernst & Young as well as the response of the CSR advisers. The submissions set out ASIC’s conclusions in relation to the actuarial material as follows:
First it is self evident that there is considerable uncertainty surrounding any process of actuarially assessing future asbestos liabilities. Notwithstanding that CSR ceased involvement in asbestos related activities in 1977 both [Taylor Fry] and Navigant have continually being [sic] revising their central estimates upwards from 2004 based on new information that emerges.
Second, as described above, there are limitations on the scope of the actuarial assessments which have the potential to under estimate the overall valuations.
Third, within the actuarial assessments there are significant matters of judgement over which reasonable minds may differ and which have considerable potential to adversely and materially affect the valuations. This is exemplified by the differences in professional opinion between KPMG and Taylor Fry in relation to both the central estimate and the 95th percentile estimate of the Australian liabilities.
Fourth, ASIC submits that in determining this application the Court need not embark upon the task of determining which expert is “correct” or to be preferred. Instead it should note the differences of professional opinion but, in the context of determining the application based on the approach outlined above, it should afford significant weight to the views expressed by KPMG at least so far as they affect the 95th percentile estimate provided by [Taylor Fry]. KPMG have significant expertise in the area and they have provided a detailed rationale for their opinion on these issues. Their views at least so far as they affect the 95th percentile estimates are supported by [Ernst & Young] and, in some limited respects, by Finity.
32. The submissions also analyse the financial stress testing that CSR had undertaken and the Ernst & Young review of this stress testing. The conclusion is stated as follows:
A review of the material concerning the financial analysis and stress testing undertaken by and on behalf of CSR reveals that there are a number of aspects of uncertainty surrounding such an exercise mainly:
(i) The obvious uncertainties that arise from any exercise of financial modelling the future performance of any business especially in the context of measuring its ability to meet long tail liabilities such as those that arise from asbestos use;
(ii) The limited external scrutiny of the assumptions and workings of the 5 year and 20 year financial models prepared by CSR management, the inputs to which most always primarily originate from CSR's management;
(iii) The judgements involved in identifying the various risks to the business, the relevant parameters for the “shock testing” and the exclusion of other forms of risk ...; and
(iv) The absence of any testing of the combination of a prolonged downturn and the high case estimates and the related questions of judgement as to whether it would be feasible for New CSR to respond to the various risks to the business under the shock scenarios that were stress tested.
33. CSR's submissions in reply make the following comments about the submissions made by ASIC:
In its written and oral submissions, ASIC ... sought to stress the uncertainties and limitations inherent in actuarial analyses of future events. Such a submission should not be taken too far.
By definition, any assessment of possible future events involves uncertainty and any attempt to actuarially assess such events will be subject to limitations. As the Court noted in argument, such uncertainties and limitations are equally applicable to CSR in its current structure as they are to CSR post-demerger. Provided that the advice provided to the CSR Board has been shown to be reasonable, the fact that the advice is subject to uncertainties does not warrant a conclusion that the advice should be rejected or lacks persuasive force.
Further, ... the doubts and uncertainties and the differences between the actuarial experts are of no relevance in circumstances where CSR's analysis has taken account of the full range of actuarial opinion. Cash outflows associated with the asbestos-related claims have been projected having regard to all “reasonable hypotheses”. Further, no party has sought to demonstrate a flaw in the other principal aspects of that analysis, namely the projection and “stress testing” of future cash inflows from CSR's de-merged business operations. That aspect of the analysis has been reviewed by PWC. It has also been reviewed on behalf of ASIC by [Ernst & Young] without unfavourable comment. In the light of the above, and as there is no correlation between risks attending the projected business cash inflows and the risks of under-estimation of the asbestos related cash outflows, the analysis provides a very high level of comfort that asbestos claims will be met.
ASIC's submissions should be read with this in mind. Its submissions are open to the criticisms that:
• they fail to reflect the conclusions of their own expert;
• they place undue focus on limitations and uncertainties that no actuary (including KPMG) can avoid without regard to the conclusions ultimately stated by the experts;
• they overstate the significance of the limitations and uncertainties ...
34. In addition to these criticisms CSR made detailed submissions in tabular form responding to the submissions made by AICF. Those submissions confirm that there is a genuine dispute between the experts as to the appropriate way to assess New CSR’s ability to meet future asbestos claims. The submissions made on behalf of James Hardie echoed the submissions of ASIC and AICF as well as making some additional criticisms of the provision made for New CSR to meet future asbestos claims.
35. In summary, the expert evidence presented by CSR, ASIC, and the other intervening parties brings into sharp relief the inherent uncertainty involved in any actuarial estimate of future asbestos-related claims and in particular the limitations and qualifications expressed in the actuarial reports relied on by CSR. In addition, specific issues raised by the experts retained by ASIC and AICF point to particular limitations in the material supplied by CSR’s experts in relation to future asbestos claims that cannot be reliably estimated at this time. The starting point in considering whether these flaws should lead to my not being satisfied that the provisions made in respect of asbestos-related claims following demerger are consistent with public policy or commercial morality must be:
(a) that New CSR will be the repository of all CSR's liabilities in respect of asbestos-related claims both present and future; and
(b) that it will suffer a significant reduction in the capital available to meet such claims.
36. The significance of those two factors increases with the uncertainty of the actuarial estimates and other expert opinion and is such that I cannot be satisfied that the provisions made are consistent with commercial morality or that the Scheme, if given effect, would not involve an unfair or oppressive result. Moreover, these same issues lead me to conclude that the material in the explanatory statement cannot provide adequate disclosure to CSR shareholders of New CSR's ability to meet these future liabilities. For both these reasons I have concluded that I should decline to make the orders for convening the Scheme meeting. In the circumstances, it is not necessary that I should consider the aspects of the Scheme that might otherwise be addressed at the first hearing.”
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