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
Showing posts with label Policy Issues. Show all posts
Showing posts with label Policy Issues. Show all posts
Sunday, February 21, 2010
Friday, January 22, 2010
Australia and Asbestos - The James Hardie Saga, Its Asbestos Claim Payment Foundation - A Viable Alternative to Ch. 11 ?
Now it's west (from Chicago) to Australia, asbestos and the public company fiber cement business commonly known as James Hardie.
The short story is that James Hardie and its officers and directors have been through a wringer as several were convicted of securities violations in connection with information disseminated regarding "asbestos liabilities" and a foundation set up by various former Hardie entities to manage and pay asbestos claims. The convictions are on appeal. For more specifics on the past, look to the left for prior posts indexed under the topic "James Hardie."
Rapid Global Movement Makes Local Policy Hard to Enforce: Hardies actions are noteworthy for multiple reasons other than the securities convictions. For one, note that Hardie's recent global corporate "citizenship" translocations from Australia to The Netherlands and now Ireland, all in just 9 years. The point? Money and ownership will move to wherever financial engineering offers a material opportunity to avoid taxes, achieve tax benefits, or avoid or limit liabilities. This point needs to be understood by policy makers, tort claimants, tort case co-defendants and insurers because of its implications for tort claiming and risk spreading. Simply put, parochial local approaches to tort law may be politically attractive at times (e.g. take action to save local jobs) but one should expect the tort system will be gamed just as some financiers play games with states in the US for financial incentives to relocate - for a few years - the corporate headquarters or a manufacturing facility. The wills of state legislatures, the long term abstractions of tort law professors, and the opinions of slow moving appellate courts are all much less relevant when, as now, ownership, the corporate "home" and money, can all be moved in a matter of months. (One wonders when an enterprising tropical island will enact legislation favorable to companies facing long tail tort claims. One might look to the precedent set in the UK with FSA legislation that helped the "the names" and the Lloyds insurance market run away from their insurance obligations. Or, one might also consider states that set up rules considered unduly favorable to one side or another - some might say that West Virginia, Texas, New York, South Dakota, and Delaware all provide classic examples of this approach ... )
Private Tort Claim Foundation as an Alternative to Chapter 11 ? By any reasonable standard, current and former Hardie entities Hardie entities face claims for at least a billion or two of claims, and maybe much more, depending on how one defines claims (do overseas claims count; what about property damages claims). In the US, the now-defined answer would be to file one or two subsidiaries file a Chapter 11 case in Delaware or New York. Then, via the parent company chipping in some money and/or rights related to some "shared insurance," the parent and all subsidiaries likely would end up with an injunction purporting to protect them against a future claim anywhere in the world. Thanks to the rampant lack of due process and the resulting lack of objectors in chapter 11 cases (highlighted most recently by GM and Chrysler), most such plans succeed, at least in the sense that confirmation is obtained.
Hardie, however, did not pursue that path and instead set up a private foundation to manage and pay claims, backed by some conditional promises of future cash flow from Hardie entities. The foundation has now been in place for almost a decade. Future posts will explore some specific aspects of the Hardie foundation. For now, for 213 pages of Hardie facts and history as narrated by KPMG as advisors, go here and read/skim through a 2006 liability estimate.
While reading, note, among other things, that Hardie entities have been selling asbestos products since the early 1900s, owned a chryotile asbestos mine in Australia, sold products internationally, participated in various international joint ventures, and sold a wide range of asbestos-containing products. Sales included a asbestos-cement building materials, pipe insulation, and friction products, as well as sales of raw chrysotile asbestos fiber. Note also that some of Hardie's cement and insulation products included one or both of two types of the highly lethal amphibole fibers, which are crocidolite (apparently mined in Australia at Wittenoom) and amosite from Cape or others in South Africa (amosite being a sort of a contraction for "asbestos from the mines of South Africa").
The short story is that James Hardie and its officers and directors have been through a wringer as several were convicted of securities violations in connection with information disseminated regarding "asbestos liabilities" and a foundation set up by various former Hardie entities to manage and pay asbestos claims. The convictions are on appeal. For more specifics on the past, look to the left for prior posts indexed under the topic "James Hardie."
Rapid Global Movement Makes Local Policy Hard to Enforce: Hardies actions are noteworthy for multiple reasons other than the securities convictions. For one, note that Hardie's recent global corporate "citizenship" translocations from Australia to The Netherlands and now Ireland, all in just 9 years. The point? Money and ownership will move to wherever financial engineering offers a material opportunity to avoid taxes, achieve tax benefits, or avoid or limit liabilities. This point needs to be understood by policy makers, tort claimants, tort case co-defendants and insurers because of its implications for tort claiming and risk spreading. Simply put, parochial local approaches to tort law may be politically attractive at times (e.g. take action to save local jobs) but one should expect the tort system will be gamed just as some financiers play games with states in the US for financial incentives to relocate - for a few years - the corporate headquarters or a manufacturing facility. The wills of state legislatures, the long term abstractions of tort law professors, and the opinions of slow moving appellate courts are all much less relevant when, as now, ownership, the corporate "home" and money, can all be moved in a matter of months. (One wonders when an enterprising tropical island will enact legislation favorable to companies facing long tail tort claims. One might look to the precedent set in the UK with FSA legislation that helped the "the names" and the Lloyds insurance market run away from their insurance obligations. Or, one might also consider states that set up rules considered unduly favorable to one side or another - some might say that West Virginia, Texas, New York, South Dakota, and Delaware all provide classic examples of this approach ... )
Private Tort Claim Foundation as an Alternative to Chapter 11 ? By any reasonable standard, current and former Hardie entities Hardie entities face claims for at least a billion or two of claims, and maybe much more, depending on how one defines claims (do overseas claims count; what about property damages claims). In the US, the now-defined answer would be to file one or two subsidiaries file a Chapter 11 case in Delaware or New York. Then, via the parent company chipping in some money and/or rights related to some "shared insurance," the parent and all subsidiaries likely would end up with an injunction purporting to protect them against a future claim anywhere in the world. Thanks to the rampant lack of due process and the resulting lack of objectors in chapter 11 cases (highlighted most recently by GM and Chrysler), most such plans succeed, at least in the sense that confirmation is obtained.
Hardie, however, did not pursue that path and instead set up a private foundation to manage and pay claims, backed by some conditional promises of future cash flow from Hardie entities. The foundation has now been in place for almost a decade. Future posts will explore some specific aspects of the Hardie foundation. For now, for 213 pages of Hardie facts and history as narrated by KPMG as advisors, go here and read/skim through a 2006 liability estimate.
While reading, note, among other things, that Hardie entities have been selling asbestos products since the early 1900s, owned a chryotile asbestos mine in Australia, sold products internationally, participated in various international joint ventures, and sold a wide range of asbestos-containing products. Sales included a asbestos-cement building materials, pipe insulation, and friction products, as well as sales of raw chrysotile asbestos fiber. Note also that some of Hardie's cement and insulation products included one or both of two types of the highly lethal amphibole fibers, which are crocidolite (apparently mined in Australia at Wittenoom) and amosite from Cape or others in South Africa (amosite being a sort of a contraction for "asbestos from the mines of South Africa").
Monday, January 11, 2010
Scottish Trial Court Upholds Legislation Reinstating Pleural Plaques Claiming for Scotland (Statute Also Applies to Asbestosis and Pleural Thickening)
A hat tip to Business Insurance for an email alert on Friday advising that a Scottish trial court had just issued an opinion rejecting insurer challenges to Scottish legislation reinstating claiming for pleural plaques. The article is here; it mainly says the insurers are not happy and may appeal. The opinion is online here at the court's website.
For those interested only in outcome, this is a potentially huge loss for both insurers and, in my view, for society. Set out below are some detailed comments on the opinion, and arguments apparently not made by the insurers. The short story is that the trial judge predictably upheld the law as a rational exercise of legislative judgment despite claims that the legislation violates Scottish law and EU law. Also bear in mind that the statute applies beyond pleural plaques and thus explicitly allows claiming compensation for "pleural thickening" and "asbestosis."
For more specifics on the opinion and some commentary see below. My personal view is that the legislation is misguided because societies have so many more pressing needs that we cannot afford to pay compensation for all biomarkers/conditions. Specifically, it seems to me lines must be drawn, and that societies and companies should not pay compensation for biomarkers/conditions that mark past "exposure" but do not impair day to day life, do not impair ordinary bodily function in general, and do not involve changes to the cellular mechanisms that actively regulate cells and, thus, regulate cancers and the endocrine system. Compensation instead should be reserved for the approaching waves of claims arising from new science and medical monitoring claims related to genetic alterations that really do matter.
On the topic of future claims and science, see Gary Marchant’s many papers, which are for the most part collected here. Mr. Marchant is a lawyer, scientist, and former Kirkland litigator. He is now a professor of law at Arizona State University. His roles there include: Executive Director & Faculty Fellow, Center for the Study of Law, Science, & Technology, and Lincoln Professor of Emerging Technologies, Law and Ethics. See especially Marchant, Personalized Medicine and the Law, 44 Ariz. Att'y 12 (2007). See also Gary Marchant See Gary E Marchant, Robert J Milligan, & Brian Wilhelmi, Legal Pressures and Incentives for Personalized Medicine, 3 Personalized Medicine 391 (2006)(related topics in terms of litigation pressures)(the article is available here).
Overview
The opinion by Lord Emslie is long -- it runs about 116 pages and consists of 248 numbered paragraphs. The first 70 pages are devoted to some procedural history, and a significant amount of analysis regarding standing, with the latter encompassing analysis under applicable EU directives and UK law. The opinion also includes some interesting history and analysis regarding the role of the Scottish Parliament as a result of changes in the structure between the UK countries and the advent of EU law. For a US lawyer, the discussion was educational.
The scope of the legislation needs to be understood. To that end, here are key excerpts from the opinion.
“I. Introduction
General background
“[1] In these proceedings for judicial review the petitioners are major insurance companies. Together they challenge the lawfulness of a recent Act of the Scottish Parliament which came into force on 17 June 2009. Both prospectively and retrospectively the Damages (Asbestos-related Conditions) (Scotland) Act 2009 bears to make pleural plaques and certain other asbestos-related conditions actionable for the purposes of claims of damages for personal injuries. According to the petitioners, this unfairly burdens them with additional liabilities under indemnity insurance policies to the extent of hundreds of millions - perhaps billions - of pounds, and they now seek declaratory and reductive orders from the court in that connection. This is resisted by the compearing respondents who are (first) the Lord Advocate as representing the Scottish Ministers, and (third to tenth) a number of individuals with diagnosed pleural plaques who seek, or at least intend to seek, damages on that account from their former employers. A First Hearing on the parties' competing contentions has now taken place before me over periods totalling 22 days.”
[11] So far as relevant for present purposes, the Damages (Asbestos-related Conditions) (Scotland) Act 2009 provides as follows:
"1. Pleural Plaques
(1) Asbestos-related pleural plaques are a personal injury which is not negligible.
(2) Accordingly, they constitute actionable harm for the purposes of an action of damages for personal injuries.
(3) Any rule of law the effect of which is that asbestos-related pleural plaques do not constitute actionable harm ceases to apply to the extent it has that effect.
(4) But nothing in this section otherwise affects any enactment or rule of law which determines whether and in what circumstances a person may be liable in damages in respect of personal injuries.
2. Pleural Thickening and Asbestosis
(1) For the avoidance of doubt, a condition mentioned in sub-section (2) which has not caused and is not causing impairment of a person's physical condition is a personal injury which is not negligible.
(2) Those conditions are -
(a) asbestos-related pleural thickening; and
(b) asbestosis.
(3) Accordingly, such a condition constitutes actionable harm for the purposes of an action of damages for personal injuries.
.....
3. Limitation of Actions
(1) This section applies to an action of damages for personal injuries -
(a) in which the damages claimed consist of or include damages in respect of -
(i) asbestos-related pleural plaques; or
(ii) a condition to which section 2 applies; and
(b) which, in the case of an action commenced before the date this section comes into force, has not been determined by that date.
(2) For the purposes of sections 17 and 18 of the Prescription and Limitation (Scotland) Act 1973 ... (limitation in respect of actions for personal injuries), the period beginning with 17 October 2007 and ending with the day on which this section comes into force is to be left out of account.
4. Commencement and Retrospective Effect
....
(2) Sections 1 and 2 are to be treated for all purposes as having always had effect.
(3) But those sections have no effect in relation to -
(a) a claim which is settled before the date on which subsection (2) comes into force (whether or not legal proceedings in relation to the claim have been commenced); or (b) legal proceedings which are determined before that date.”
[12] As regards Scotland only, therefore, the Act confers on pleural plaques and on two other asymptomatic asbestos-related associated conditions the status of non-negligible and thus actionable injury. It is true that this mirrors the position de facto conceded in many claims over the previous twenty years or more but, given the asymptomatic, non-disabling, non-disfiguring and non-causative nature of these conditions, the petitioners now challenge this development as an unwarranted contravention of the established need for real or material "damage" in order to complete a cause of action in negligence. In this respect, according to the petitioners, the Scottish Parliament in passing the Act has contrived to do the opposite of many foreign legislatures which, faced with an intolerable escalation of claims by "... the worried well", have brought in measures to negate the actionability of pleural plaques. And, it is said, the Parliament has done so by means of a blatant controversion of established (and indeed agreed) medical fact.”
Commentary
Insurers Held Back on Specifics
The opinion indicates the insurers held back on providing specifics on their policies, and on their estimates of the future amounts that will be paid as a result of this legislation. Thus, Lord Emslie explained as follows:
78] Another contention forcefully advanced by the respondents was to the effect that issues of locus standi could not be determined where the petitioners' position as insurers had not been the subject of detailed and precise averment, submission or vouching. Deficiencies in this area had, it was said, been flagged up months ago; calls for further specification had been made in the respondents' Answers; yet the petitioners had stubbornly declined to reveal their true hand. Even now only specimen policies had been produced (productions 6/65-68); there was no way of telling what policy terms would actually apply in any individual case; for the future, the petitioners had sought to reserve their position on the construction and application of policies; and, significantly, the proper law of relevant insurance contracts could not be ascertained. If such contracts were not subject to Scots law, so the argument ran, they might not even be engaged by the 2009 Act which had effect only in Scotland.
***
[218] Massive unresolved uncertainties as to cost levels: In the debate before me it was, I think, acknowledged on all sides that estimation of the overall costs associated with this legislation was far from straightforward. Given the long latency period for asbestos-related conditions including pleural plaques, it was hard to estimate the number of individuals who might have been exposed in past decades. Moreover no-one could predict what proportion would develop asbestos-related conditions, nor what percentage of asymptomatic conditions would actually come to light. Judging the number of pleural plaques claims which might emerge in future years was thus an inexact science with many uncertain variables. Even the approximate cost per claim was hard to pin down - understandable, perhaps, now that claims are apparently being intimated at levels several times higher than the pre-Rothwell average. Against that background, the Scottish Government's approach was largely based on evidence of the current situation as modified by actuarial and demographic considerations. The insurance industry, on the other hand, sought to rely on UK Government estimates (which were themselves uncertain) before taking a percentage which was said to represent Scotland. The latter approach may have allowed individual insurers to withhold commercially sensitive data which might be of value to competitors. In these circumstances, overall estimates ranged from perhaps £100 million, on the Government side, to the insurers' potential maximum of £8.6 billion. If the Scottish percentage were to be reduced, the figure of £8.6 billion would come down as well, but that would still leave an "order of magnitude" difference between the competing estimates. (emphasis added)
The Insurers Standard Approach Produced a Predictable Result
The opinion is a disappointment in the sense that there is really very little that is "new" in the opinion for persons familiar with the debate regarding whether compensation should be paid for pleural plaques, and so the legislation was not struck down. The trial judge, Lord Emslie, of course is not responsible for whether the parties present anything new or instead simply present the usual arguments. The absence of anything new in the opinion gives one the impression the insurers simply presented the usual arguments without attempting to present NEW evidence or argument on science and pleural plaques as it relates to the number of pleural plaques cases waiting to be identified, and the potential costs. Plainly, the insurers made a conscious decision not to present a comprehensive analysis of the potential loss, a decision one assumes is driven by concerns regarding public disclosures, financial statements, and general reticence to commit to a particular position on a particular topic.
I certainly will not claim expertise on Scottish law or EU law, and so my comments are worth the price you are paying for the analysis. That said, the opinion presents in essence a question that is familiar to US lawyers -- when will a court strike down a legislative act? The opinion uses some words and phrases different than we might use in the use in arguing that issue here, but makes plain the reality that deference is owed to the judgments of the elected legislative branch. Indeed, from the words and analysis, I took away the impression that UL law calls for even more deference than is shown under US law. I also was left with the opinion that the insurers merely put forth a pro forma challenge to delay a probably inevitable affirmance of the legislation, and so are managing the process so that litigation expenses are far less than the savings obtained from delaying or inhibiting the future onslaught of pleural plaques claiming.
What else might have been done by the insurers? From the perspective of this armchair quarterback, the insurers might have had a real chance to win – and might have done some societal good - if they presented a compelling case on the science to show that society cannot afford to pay for the presence of biomarkers (plaques) that are biologically inactive and instead are mere markers of a past exposure, much like a scar marks a past physical insult. On that basis, one could (I think) rightly distinguish pleural plaques from biomarkers that show actual cellular level changes that actually disrupt ordinary bodily functioning (e.g. genomic changes caused by chemical). One might also try to help the Court see that thousands of biomarkers out there, and to understand the differences between pure markers of past exposure, and genomic changes that disrupt cell function. A small part of that potential argument is laid out at section X (pages 31-33) of this paper I submitted in opposition to the pleural plaques Consultation in England.
The argument I would have pressed also would have shown that there are ample reasons to expect that pleural plaques claiming in the UK actually may be far worse than it is has been in the US. Why? In short, because the UK has had such a large shipbuilding industry that used so much asbestos, because amphiboles were widely used in the UK thanks to Cape Industries and T & N (among others), because EU use of asbestos vastly exceeded use in North America, because new CT scanners find 60% plaques far better than do x-rays, and because pleural plaques claiming is driven by lawyers and entrepreneurial behavior instead of science. Id at sections 2.2, 3.1-3.3, 7.10.1, 9.8.
Finally, the opinion (and thus, apparently, the insurers’ arguments) do not address the availability of payments from asbestos trusts (chapter 11 trusts, the T & N trust in the UK, or private trusts). Id. at sections 5.1-5.3.
For those interested only in outcome, this is a potentially huge loss for both insurers and, in my view, for society. Set out below are some detailed comments on the opinion, and arguments apparently not made by the insurers. The short story is that the trial judge predictably upheld the law as a rational exercise of legislative judgment despite claims that the legislation violates Scottish law and EU law. Also bear in mind that the statute applies beyond pleural plaques and thus explicitly allows claiming compensation for "pleural thickening" and "asbestosis."
For more specifics on the opinion and some commentary see below. My personal view is that the legislation is misguided because societies have so many more pressing needs that we cannot afford to pay compensation for all biomarkers/conditions. Specifically, it seems to me lines must be drawn, and that societies and companies should not pay compensation for biomarkers/conditions that mark past "exposure" but do not impair day to day life, do not impair ordinary bodily function in general, and do not involve changes to the cellular mechanisms that actively regulate cells and, thus, regulate cancers and the endocrine system. Compensation instead should be reserved for the approaching waves of claims arising from new science and medical monitoring claims related to genetic alterations that really do matter.
On the topic of future claims and science, see Gary Marchant’s many papers, which are for the most part collected here. Mr. Marchant is a lawyer, scientist, and former Kirkland litigator. He is now a professor of law at Arizona State University. His roles there include: Executive Director & Faculty Fellow, Center for the Study of Law, Science, & Technology, and Lincoln Professor of Emerging Technologies, Law and Ethics. See especially Marchant, Personalized Medicine and the Law, 44 Ariz. Att'y 12 (2007). See also Gary Marchant See Gary E Marchant, Robert J Milligan, & Brian Wilhelmi, Legal Pressures and Incentives for Personalized Medicine, 3 Personalized Medicine 391 (2006)(related topics in terms of litigation pressures)(the article is available here).
Overview
The opinion by Lord Emslie is long -- it runs about 116 pages and consists of 248 numbered paragraphs. The first 70 pages are devoted to some procedural history, and a significant amount of analysis regarding standing, with the latter encompassing analysis under applicable EU directives and UK law. The opinion also includes some interesting history and analysis regarding the role of the Scottish Parliament as a result of changes in the structure between the UK countries and the advent of EU law. For a US lawyer, the discussion was educational.
The scope of the legislation needs to be understood. To that end, here are key excerpts from the opinion.
“I. Introduction
General background
“[1] In these proceedings for judicial review the petitioners are major insurance companies. Together they challenge the lawfulness of a recent Act of the Scottish Parliament which came into force on 17 June 2009. Both prospectively and retrospectively the Damages (Asbestos-related Conditions) (Scotland) Act 2009 bears to make pleural plaques and certain other asbestos-related conditions actionable for the purposes of claims of damages for personal injuries. According to the petitioners, this unfairly burdens them with additional liabilities under indemnity insurance policies to the extent of hundreds of millions - perhaps billions - of pounds, and they now seek declaratory and reductive orders from the court in that connection. This is resisted by the compearing respondents who are (first) the Lord Advocate as representing the Scottish Ministers, and (third to tenth) a number of individuals with diagnosed pleural plaques who seek, or at least intend to seek, damages on that account from their former employers. A First Hearing on the parties' competing contentions has now taken place before me over periods totalling 22 days.”
[11] So far as relevant for present purposes, the Damages (Asbestos-related Conditions) (Scotland) Act 2009 provides as follows:
"1. Pleural Plaques
(1) Asbestos-related pleural plaques are a personal injury which is not negligible.
(2) Accordingly, they constitute actionable harm for the purposes of an action of damages for personal injuries.
(3) Any rule of law the effect of which is that asbestos-related pleural plaques do not constitute actionable harm ceases to apply to the extent it has that effect.
(4) But nothing in this section otherwise affects any enactment or rule of law which determines whether and in what circumstances a person may be liable in damages in respect of personal injuries.
2. Pleural Thickening and Asbestosis
(1) For the avoidance of doubt, a condition mentioned in sub-section (2) which has not caused and is not causing impairment of a person's physical condition is a personal injury which is not negligible.
(2) Those conditions are -
(a) asbestos-related pleural thickening; and
(b) asbestosis.
(3) Accordingly, such a condition constitutes actionable harm for the purposes of an action of damages for personal injuries.
.....
3. Limitation of Actions
(1) This section applies to an action of damages for personal injuries -
(a) in which the damages claimed consist of or include damages in respect of -
(i) asbestos-related pleural plaques; or
(ii) a condition to which section 2 applies; and
(b) which, in the case of an action commenced before the date this section comes into force, has not been determined by that date.
(2) For the purposes of sections 17 and 18 of the Prescription and Limitation (Scotland) Act 1973 ... (limitation in respect of actions for personal injuries), the period beginning with 17 October 2007 and ending with the day on which this section comes into force is to be left out of account.
4. Commencement and Retrospective Effect
....
(2) Sections 1 and 2 are to be treated for all purposes as having always had effect.
(3) But those sections have no effect in relation to -
(a) a claim which is settled before the date on which subsection (2) comes into force (whether or not legal proceedings in relation to the claim have been commenced); or (b) legal proceedings which are determined before that date.”
[12] As regards Scotland only, therefore, the Act confers on pleural plaques and on two other asymptomatic asbestos-related associated conditions the status of non-negligible and thus actionable injury. It is true that this mirrors the position de facto conceded in many claims over the previous twenty years or more but, given the asymptomatic, non-disabling, non-disfiguring and non-causative nature of these conditions, the petitioners now challenge this development as an unwarranted contravention of the established need for real or material "damage" in order to complete a cause of action in negligence. In this respect, according to the petitioners, the Scottish Parliament in passing the Act has contrived to do the opposite of many foreign legislatures which, faced with an intolerable escalation of claims by "... the worried well", have brought in measures to negate the actionability of pleural plaques. And, it is said, the Parliament has done so by means of a blatant controversion of established (and indeed agreed) medical fact.”
Commentary
Insurers Held Back on Specifics
The opinion indicates the insurers held back on providing specifics on their policies, and on their estimates of the future amounts that will be paid as a result of this legislation. Thus, Lord Emslie explained as follows:
78] Another contention forcefully advanced by the respondents was to the effect that issues of locus standi could not be determined where the petitioners' position as insurers had not been the subject of detailed and precise averment, submission or vouching. Deficiencies in this area had, it was said, been flagged up months ago; calls for further specification had been made in the respondents' Answers; yet the petitioners had stubbornly declined to reveal their true hand. Even now only specimen policies had been produced (productions 6/65-68); there was no way of telling what policy terms would actually apply in any individual case; for the future, the petitioners had sought to reserve their position on the construction and application of policies; and, significantly, the proper law of relevant insurance contracts could not be ascertained. If such contracts were not subject to Scots law, so the argument ran, they might not even be engaged by the 2009 Act which had effect only in Scotland.
***
[218] Massive unresolved uncertainties as to cost levels: In the debate before me it was, I think, acknowledged on all sides that estimation of the overall costs associated with this legislation was far from straightforward. Given the long latency period for asbestos-related conditions including pleural plaques, it was hard to estimate the number of individuals who might have been exposed in past decades. Moreover no-one could predict what proportion would develop asbestos-related conditions, nor what percentage of asymptomatic conditions would actually come to light. Judging the number of pleural plaques claims which might emerge in future years was thus an inexact science with many uncertain variables. Even the approximate cost per claim was hard to pin down - understandable, perhaps, now that claims are apparently being intimated at levels several times higher than the pre-Rothwell average. Against that background, the Scottish Government's approach was largely based on evidence of the current situation as modified by actuarial and demographic considerations. The insurance industry, on the other hand, sought to rely on UK Government estimates (which were themselves uncertain) before taking a percentage which was said to represent Scotland. The latter approach may have allowed individual insurers to withhold commercially sensitive data which might be of value to competitors. In these circumstances, overall estimates ranged from perhaps £100 million, on the Government side, to the insurers' potential maximum of £8.6 billion. If the Scottish percentage were to be reduced, the figure of £8.6 billion would come down as well, but that would still leave an "order of magnitude" difference between the competing estimates. (emphasis added)
The Insurers Standard Approach Produced a Predictable Result
The opinion is a disappointment in the sense that there is really very little that is "new" in the opinion for persons familiar with the debate regarding whether compensation should be paid for pleural plaques, and so the legislation was not struck down. The trial judge, Lord Emslie, of course is not responsible for whether the parties present anything new or instead simply present the usual arguments. The absence of anything new in the opinion gives one the impression the insurers simply presented the usual arguments without attempting to present NEW evidence or argument on science and pleural plaques as it relates to the number of pleural plaques cases waiting to be identified, and the potential costs. Plainly, the insurers made a conscious decision not to present a comprehensive analysis of the potential loss, a decision one assumes is driven by concerns regarding public disclosures, financial statements, and general reticence to commit to a particular position on a particular topic.
I certainly will not claim expertise on Scottish law or EU law, and so my comments are worth the price you are paying for the analysis. That said, the opinion presents in essence a question that is familiar to US lawyers -- when will a court strike down a legislative act? The opinion uses some words and phrases different than we might use in the use in arguing that issue here, but makes plain the reality that deference is owed to the judgments of the elected legislative branch. Indeed, from the words and analysis, I took away the impression that UL law calls for even more deference than is shown under US law. I also was left with the opinion that the insurers merely put forth a pro forma challenge to delay a probably inevitable affirmance of the legislation, and so are managing the process so that litigation expenses are far less than the savings obtained from delaying or inhibiting the future onslaught of pleural plaques claiming.
What else might have been done by the insurers? From the perspective of this armchair quarterback, the insurers might have had a real chance to win – and might have done some societal good - if they presented a compelling case on the science to show that society cannot afford to pay for the presence of biomarkers (plaques) that are biologically inactive and instead are mere markers of a past exposure, much like a scar marks a past physical insult. On that basis, one could (I think) rightly distinguish pleural plaques from biomarkers that show actual cellular level changes that actually disrupt ordinary bodily functioning (e.g. genomic changes caused by chemical). One might also try to help the Court see that thousands of biomarkers out there, and to understand the differences between pure markers of past exposure, and genomic changes that disrupt cell function. A small part of that potential argument is laid out at section X (pages 31-33) of this paper I submitted in opposition to the pleural plaques Consultation in England.
The argument I would have pressed also would have shown that there are ample reasons to expect that pleural plaques claiming in the UK actually may be far worse than it is has been in the US. Why? In short, because the UK has had such a large shipbuilding industry that used so much asbestos, because amphiboles were widely used in the UK thanks to Cape Industries and T & N (among others), because EU use of asbestos vastly exceeded use in North America, because new CT scanners find 60% plaques far better than do x-rays, and because pleural plaques claiming is driven by lawyers and entrepreneurial behavior instead of science. Id at sections 2.2, 3.1-3.3, 7.10.1, 9.8.
Finally, the opinion (and thus, apparently, the insurers’ arguments) do not address the availability of payments from asbestos trusts (chapter 11 trusts, the T & N trust in the UK, or private trusts). Id. at sections 5.1-5.3.
Friday, January 8, 2010
Conflict of Interests and International Tort Claims for Persons from Many Countries - The Libyan Terrorism Example
Here is an unexpected but interesting non-asbestos example of conflict of interest issues arising from efforts to resolve "mass torts" for various persons around the world. The example arises from the airplane crash and airplane hijacking blamed on Libyan terrorists. The article describes a recently filed lawsuit in which two victims of the crash object to the terms of the settlement with Libya. In brief, the two plaintiffs argue that the lawyers who represented the crash victims, Crowell & Moring, operated under conflicts of interest and that the agreement improperly commingles the interests of the various different categories of claimants, including US and non US claimants. The article includes a link to the complaint itself. The complaint, however, does not attach a copy of a "joint prosecution" agreement apparently signed by the plaintiffs and many others.
Here are excerpts from the article by Roger Alford:
"The facts as alleged in the complaint of Davé v. Crowell & Moring are complex. In brief, Libya has been implicated in terrorist activities on numerous occasions, most notably the hijacking of Pan Am Flight 73 in Karachi, Pakistan on September 5, 1986 and the bombing of Pan Am Flight 103 over Lockerbie, Scotland on December 21, 1988. In 2005, victims of these terrorist attacks and their heirs—including American and non-American victims—retained the law firm of Crowell & Moring—known for representing victims of terrorism—to pursue litigation against Libya. The Davés were among those who signed the Crowell & Moring retainer agreement. As part of retaining Crowell & Moring, every client was also required to sign a joint prosecution agreement (“JPA”), a provision of which provided that the proceeds recovered by any signatory to the JPA shall be shared on a sliding scale based on type of injury with all signatories to the JPA, without distinction as to nationality. Only 23% of the victims who signed the JPA were American. A Liaison Group consisting of one American and four non-Americans was established as agents for the victims in their dealings with litigation counsel. The Liaison Group was represented by Latham & Watkins. In 2008, the United States government entered into a bilateral treaty with Libya for an award of compensation for all U.S. nationals harmed by Libyan terrorism, including the victims of the Pam Am Flight 73 hijacking, which included plaintiffs Gargi and Giatri Davé. The treaty provided for distribution of these funds through the Treasury Department’s Foreign Claims Settlement Commission (“FCSC”). After the Davés successfully received notice of their entitlement to millions under the FCSC process, Crowell & Moring issued a demand letter to the Davés contending that under the retainer agreement and the JPA the funds secured by the United States government pursuant to the U.S.-Libya treaty on behalf of American victims are to be shared among all of the victims of Libyan terrorism, American and non-American alike. In other words, the vast majority of the funds secured by American nationals under the U.S.-Libya treaty are—approximately 90% according to Crowell & Moring—required to be paid to non-Americans pursuant to these private agreements."
Here are excerpts from the article by Roger Alford:
"The facts as alleged in the complaint of Davé v. Crowell & Moring are complex. In brief, Libya has been implicated in terrorist activities on numerous occasions, most notably the hijacking of Pan Am Flight 73 in Karachi, Pakistan on September 5, 1986 and the bombing of Pan Am Flight 103 over Lockerbie, Scotland on December 21, 1988. In 2005, victims of these terrorist attacks and their heirs—including American and non-American victims—retained the law firm of Crowell & Moring—known for representing victims of terrorism—to pursue litigation against Libya. The Davés were among those who signed the Crowell & Moring retainer agreement. As part of retaining Crowell & Moring, every client was also required to sign a joint prosecution agreement (“JPA”), a provision of which provided that the proceeds recovered by any signatory to the JPA shall be shared on a sliding scale based on type of injury with all signatories to the JPA, without distinction as to nationality. Only 23% of the victims who signed the JPA were American. A Liaison Group consisting of one American and four non-Americans was established as agents for the victims in their dealings with litigation counsel. The Liaison Group was represented by Latham & Watkins. In 2008, the United States government entered into a bilateral treaty with Libya for an award of compensation for all U.S. nationals harmed by Libyan terrorism, including the victims of the Pam Am Flight 73 hijacking, which included plaintiffs Gargi and Giatri Davé. The treaty provided for distribution of these funds through the Treasury Department’s Foreign Claims Settlement Commission (“FCSC”). After the Davés successfully received notice of their entitlement to millions under the FCSC process, Crowell & Moring issued a demand letter to the Davés contending that under the retainer agreement and the JPA the funds secured by the United States government pursuant to the U.S.-Libya treaty on behalf of American victims are to be shared among all of the victims of Libyan terrorism, American and non-American alike. In other words, the vast majority of the funds secured by American nationals under the U.S.-Libya treaty are—approximately 90% according to Crowell & Moring—required to be paid to non-Americans pursuant to these private agreements."
Thursday, January 7, 2010
Chapter 11 Cases Fail to Properly Deal with Future International Claims Against Multinationals Heavily Involved in Selling Asbestos Fibers or Products
The point of today's post is to focus attention on issues and topics that arise from relationships between insolvencies and multinationals heavily involved in selling asbestos fibers and/or asbestos-containing products, and their implications for present and future tort claiming and the ability to enforce bankruptcy court injunctions. To illustrate that the topic is well-grounded in fact, the text below provides a specific example, plus the names of books that describe some multinationals which, in addition to Eternit (see last Friday's post), were very heavily involved in global sales of raw asbestos fiber and/or other products containing large amounts of asbestos.
The topic of multinational relationships vis a vis asbestos claiming and insolvencies has been largely free of careful, public attention during chapter 11 cases. As a result, when chapter 11 trusts were created, little or no provision was made for future international claims, meaning claims to be asserted from overseas against an entity now subsumed by a chapter 11 trust. Such claims were at most handled in name only, with virtually no specific anticipation of the volume of or value of future claims from other nations. What’s my basis for saying that no one has ever publicly and specifically estimated the volume and value of overseas claims against US trusts? One basis is general knowledge from involvement in asbestos litigation for 25 years. But, more specifically, that also was the conclusion during an asbestos seminar panel discussion last year. The discussion was part of a March 2009 panel consisting of Steve Kazan (a senior member of the asbestos plaintiff’s bar and a lawyer who is very active in international asbestos claiming), Francine Rabinovitz (a wonderful economics and policy expert who advises many trusts, companies and others on future asbestos claiming), and me.
Despite the absence of formal, public estimates of overseas claims, some of the chapter 11 cases have included broad injunctive orders granting debtor entities (and non-debtor entities) the widest possible injunctive relief to protect them against any and all possible future claims, on a global basis. Such orders purport to channel all such claims to the trust created in chapter 11. Issuing global injunctions without meaningful notice and due process is a procedure that is deeply flawed for all concerned, and so will not bind all future claimants, thereby leading to endless claiming and wasted attorney's fees.
On a short-term view, the broad shotgun injunction no doubt appeals to debtors because they (usually) want to exit chapter 11 quickly, and also seek maximum future certainty by obtaining the broadest injunctive protection against any and all future claims. But, the short term approach should be tempered by the reality that the company will not be able to enforce an overbroad, unconstitutional injunction issued without meaningful notice and due process. See Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 812, n.24 (1985)(class action cannot bind persons who were not accorded due process); Stevenson v. Dow Chemical Co., 273 F.3rd 249 (2d Cir. 2001)(class action cannot bind persons who were not adequately represented). Thus, in fact, there is in fact uncertainty if a company is basing its future on an unenforceable injunction.
Overbroad injunctions issued without meaningful notice and due process procedures certainly are adverse for (and illegal as to) a future claimant whose claim may be enjoined when there was no person adequately representing the interest of the overseas claimants whose claims were not actually anticipated in and properly provided for in the insolvency proceedings . As described above, the chapter 11 cases to date have done nothing or very, very little to provide meaningful notice or fair compensation for future overseas claims or claims that arise from corporate interactions, such as joint ventures.
Recognize also that the future claimants also include other corporate entities that will or should be co-defendants in future underlying cases. Like future personal injury claimants, these entities also have not been given meaningful and timely prior notice of proceedings, much less an opportunity to be heard at a meaningful time. Accordingly, to my knowledge, there have not been any hearings to formally and publicly estimate the amount or value of contribution or indemnification claims that current and future co-defendants could or should assert against an insolvent multinational due to both allegedly contributing to the asbestos “exposures” that lead to “asbestos disease.”
What kind of corporate interrelationships exist that ought to be carefully, explicitly and publicly considered in the insolvency cases? Consider, for example, the following excerpt from this paper on Eternit (see also last Wednesday's post on Eternit entities.) Specifically, note the assertion that Eternit entities had tight ties to two major asbestos producers that have now been through insolvency - Johns-Manville and T& N/Turner & Newall. Thus, the Eternit paper asserts:
“1960 Eternit Belgium, Johns-Manville (US), T&N and Eternit France together form TEAM, under whose auspices many new [asbestos-cement] firms are established in Asia.
“70-90 Influenced by the debate around the dangers of asbestos, British and American firms are the first to begin to withdraw from the market. T&N and Johns-Manville transfer their interests in TEAM to Eternit Belgium. In addition, Eternit Switzerland withdraws, selling a growing proportion of its interests to Eternit Belgium. By 1989 almost everything which was originally divided between a number of other firms is in Belgian hands. This includes the US firm Eternit Inc.”
Want more? Plenty of facts on inter-corporate relationships are out there through books that describe extensive ties between multinational “asbestos companies.” In general, the ties consists of joint ventures, sharing knowledge on manufacturing techniques, and sharing information on asbestos health effects. Companies also interacted with each other through inter-company sales of raw asbestos fiber and other products containing asbestos. All of these actions are ones that may give rise to shared liabilities and/or aiding and abetting liability. Here are some examples of the available books; most of them include significant footnotes and bibliographies:
Blue Murder, by Ben Hills, describes in detail the situation related to the Wittenoom crocidolite mine in Australia, a mine owned for decades by CSR. The book discusses many things, including corporate fiber purchasers and uses.
Asbestos House - The Secret History of James Hardie Industries, by Gideon Harris, is a comprehensive account of that company. Numerous mentions are made of relationships between James Hardie, Turner & Newall, Cape Industries, Johns-Manville, and CSR.
The Way From Dusty Death, by Peter Bartrip, is a comprehensive discussion of Turner & Newall and asbestos regulations in the UK from the 1890s through 1970. This book also discusses interactions between various industry titans, including Cape Industries.
Jock McCulloch has written two books on asbestos, focused primarily on mines in South Africa that were the sources for all of the world’s amosite fiber, and much of the world’s crocidolite fiber. The mines were owned by Cape Industries entities and various other entities. One book is: Asbestos: It’s Human Cost, and was published in 1986. McCulloch’s second book was published in 2002, and is titled Asbestos Blues, Labour, Capital, Physicians and the State in South Africa.
Messrs. McCulloch and Tweedale combined to write a 2008 book, Defending the Indefensible, the Global Asbestos Industry and It’s Fight for Survival.
In addition, Mr. Tweedale also has written extensively regarding Cape Industries and Turner & Newall/T & N. One of his publications is the book titled Magic Mineral to Killer Dust, Turner & Newall and the Asbestos Hazard.
The topic of multinational relationships vis a vis asbestos claiming and insolvencies has been largely free of careful, public attention during chapter 11 cases. As a result, when chapter 11 trusts were created, little or no provision was made for future international claims, meaning claims to be asserted from overseas against an entity now subsumed by a chapter 11 trust. Such claims were at most handled in name only, with virtually no specific anticipation of the volume of or value of future claims from other nations. What’s my basis for saying that no one has ever publicly and specifically estimated the volume and value of overseas claims against US trusts? One basis is general knowledge from involvement in asbestos litigation for 25 years. But, more specifically, that also was the conclusion during an asbestos seminar panel discussion last year. The discussion was part of a March 2009 panel consisting of Steve Kazan (a senior member of the asbestos plaintiff’s bar and a lawyer who is very active in international asbestos claiming), Francine Rabinovitz (a wonderful economics and policy expert who advises many trusts, companies and others on future asbestos claiming), and me.
Despite the absence of formal, public estimates of overseas claims, some of the chapter 11 cases have included broad injunctive orders granting debtor entities (and non-debtor entities) the widest possible injunctive relief to protect them against any and all possible future claims, on a global basis. Such orders purport to channel all such claims to the trust created in chapter 11. Issuing global injunctions without meaningful notice and due process is a procedure that is deeply flawed for all concerned, and so will not bind all future claimants, thereby leading to endless claiming and wasted attorney's fees.
On a short-term view, the broad shotgun injunction no doubt appeals to debtors because they (usually) want to exit chapter 11 quickly, and also seek maximum future certainty by obtaining the broadest injunctive protection against any and all future claims. But, the short term approach should be tempered by the reality that the company will not be able to enforce an overbroad, unconstitutional injunction issued without meaningful notice and due process. See Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 812, n.24 (1985)(class action cannot bind persons who were not accorded due process); Stevenson v. Dow Chemical Co., 273 F.3rd 249 (2d Cir. 2001)(class action cannot bind persons who were not adequately represented). Thus, in fact, there is in fact uncertainty if a company is basing its future on an unenforceable injunction.
Overbroad injunctions issued without meaningful notice and due process procedures certainly are adverse for (and illegal as to) a future claimant whose claim may be enjoined when there was no person adequately representing the interest of the overseas claimants whose claims were not actually anticipated in and properly provided for in the insolvency proceedings . As described above, the chapter 11 cases to date have done nothing or very, very little to provide meaningful notice or fair compensation for future overseas claims or claims that arise from corporate interactions, such as joint ventures.
Recognize also that the future claimants also include other corporate entities that will or should be co-defendants in future underlying cases. Like future personal injury claimants, these entities also have not been given meaningful and timely prior notice of proceedings, much less an opportunity to be heard at a meaningful time. Accordingly, to my knowledge, there have not been any hearings to formally and publicly estimate the amount or value of contribution or indemnification claims that current and future co-defendants could or should assert against an insolvent multinational due to both allegedly contributing to the asbestos “exposures” that lead to “asbestos disease.”
What kind of corporate interrelationships exist that ought to be carefully, explicitly and publicly considered in the insolvency cases? Consider, for example, the following excerpt from this paper on Eternit (see also last Wednesday's post on Eternit entities.) Specifically, note the assertion that Eternit entities had tight ties to two major asbestos producers that have now been through insolvency - Johns-Manville and T& N/Turner & Newall. Thus, the Eternit paper asserts:
“1960 Eternit Belgium, Johns-Manville (US), T&N and Eternit France together form TEAM, under whose auspices many new [asbestos-cement] firms are established in Asia.
“70-90 Influenced by the debate around the dangers of asbestos, British and American firms are the first to begin to withdraw from the market. T&N and Johns-Manville transfer their interests in TEAM to Eternit Belgium. In addition, Eternit Switzerland withdraws, selling a growing proportion of its interests to Eternit Belgium. By 1989 almost everything which was originally divided between a number of other firms is in Belgian hands. This includes the US firm Eternit Inc.”
Want more? Plenty of facts on inter-corporate relationships are out there through books that describe extensive ties between multinational “asbestos companies.” In general, the ties consists of joint ventures, sharing knowledge on manufacturing techniques, and sharing information on asbestos health effects. Companies also interacted with each other through inter-company sales of raw asbestos fiber and other products containing asbestos. All of these actions are ones that may give rise to shared liabilities and/or aiding and abetting liability. Here are some examples of the available books; most of them include significant footnotes and bibliographies:
Blue Murder, by Ben Hills, describes in detail the situation related to the Wittenoom crocidolite mine in Australia, a mine owned for decades by CSR. The book discusses many things, including corporate fiber purchasers and uses.
Asbestos House - The Secret History of James Hardie Industries, by Gideon Harris, is a comprehensive account of that company. Numerous mentions are made of relationships between James Hardie, Turner & Newall, Cape Industries, Johns-Manville, and CSR.
The Way From Dusty Death, by Peter Bartrip, is a comprehensive discussion of Turner & Newall and asbestos regulations in the UK from the 1890s through 1970. This book also discusses interactions between various industry titans, including Cape Industries.
Jock McCulloch has written two books on asbestos, focused primarily on mines in South Africa that were the sources for all of the world’s amosite fiber, and much of the world’s crocidolite fiber. The mines were owned by Cape Industries entities and various other entities. One book is: Asbestos: It’s Human Cost, and was published in 1986. McCulloch’s second book was published in 2002, and is titled Asbestos Blues, Labour, Capital, Physicians and the State in South Africa.
Messrs. McCulloch and Tweedale combined to write a 2008 book, Defending the Indefensible, the Global Asbestos Industry and It’s Fight for Survival.
In addition, Mr. Tweedale also has written extensively regarding Cape Industries and Turner & Newall/T & N. One of his publications is the book titled Magic Mineral to Killer Dust, Turner & Newall and the Asbestos Hazard.
Wednesday, December 30, 2009
Eternit, Etex and Asbestos Cement - Global Scale, Decades Ago - How to Deal with Current and Future Claims ?
Monday's post (12/26) pointed out a variety of product liability, corporate law and compensation issues in the context of one nation (India) and a small group of apparently independent asbestos-cement companies. The point of today's post is to illustrate macro level complexities that arise due to the cross-border issues that arise from multinationals, globalization and immigration, among other factors. A few country-specific points also are noted.
Today's post focuses on the large number of Eternit, Etex and other related entities that for decades have comprised a literally global network of manufacturers of asbestos-cement. Today, some of these companies are in the news because of the recent start of an Italian trial to resolve combined civil and criminal charges involving over 2,500 injuries and deaths suffered by persons injured by asbestos inhaled at manufacturing facilities operated in Italy by Eternit entities. In the trial, individual officers and managers face Italian law charges that are more or less akin to reckless homicide, with the charges related to Italian laws requiring a safe workplace. Additional media stories exist because one of the defendants is a billionaire, and he is busy with actions that rightly or wrongly seek to portray Mr. Schmidheiny as a person who is both "green" and concerned about other people.
Global Scale, Decades Ago: What are sources for facts discussed in this post ? As to the entities in general, this substantial paper provides an extensive and apparently reasonably credible hundred year history of various Eternit entities sprawled around the globe (but note the paper is prepared by partisans plainly interested in causing Eternit entities to make compensation payments.) The paper can be skimmed in just a few minutes to obtain a basic grasp of the global scale and inter-connected nature of the operations. A basic summary is that the entities operated across Europe, Africa, South America and Asia. The paper also describes extensive transfers of business operations between and among entities. For more background and specifics on the trial in Italy, please look to the left for prior posts indexed under Eternit and/or go to this partisan website operated by persons who support the injured persons. Articles here and here relate to Mr. Schmidheiny and his image/actions.
The bottom line ? Actions of Eternit and Etex entities, and their officers and managers, plainly caused many deaths and injuries among plant workers around the globe, and no doubt more deaths and injuries of plant workers will follow in future years. One also may reasonably assume that so-called "take home" exposures have produced some number of deaths or injuries among spouses of plant workers through fact patterns such as a wife contracting mesothelioma due to having shaken out and washed a husband's work clothes laden with asbestos fibers. It also seems fair to conclude that injuries and deaths also have occurred and will continue among persons who worked for contractors who performed services at the plants, such as persons who installed, removed, or serviced a factory boiler. In the US, the latter incidents would give rise to "premises liability" claims. In addition, some additional number of current and future product liability claims will arise among persons who sawed, drilled, broke or otherwise worked directly with asbestos-cement or other Eternit products. For all of these groups of current and future victims of disease, one assumes that some significant number of persons and/or their families will have migrated to other nations.
The injuries and deaths arising from decades of global operations and transfers of business operations will provide the factual grist needed for plaintiff's lawyers, defense lawyers and insurance company lawyers to write and argue a wide range of legal positions on a wide range of liability, compensation and insurance issues. The various positions will be further colored by the years in which relevant action or inaction did or did not occur. The issues for example logically would require parsing which entities and/or officers and directors are directly liable to pay which claims, whether as defendants facing civil claims or via mitigation payments to reduce criminal sanctions ? Also, are those entities or persons financially protected by insurance or other indemnities ? Which entities, persons, insurance policies, or insurers are known, still exist , and are financially viable ? Can funds be obtained from solvent reinsurers who lurk behind insolvent primary insurers?
Other issues may arise regarding which entities or persons are entitled to make claims or decisions regarding insurance or other assets. And, all of these issues will arise under the laws of myriad nations. Moreover, health care costs associated with the injuries will be incurred in myriad nations under myriad legal rules regarding the recoverability of such expenses. To the extents the costs are not recovered from Eternit entities, they will have imposed a burden on the "economic commons" of many nations, and those burdens will be suffered for several future decades due to the 20-50 year latency periods associated with cancers caused by asbestos inhalation.
Also consider the impacts of corporate papers written in myriad languages, and myriad rules on discovery. And bear in mind that most of the paper will not be in digital form. Also think about if and when relevant papers were destroyed or preserved.
County-Specific Topics: To highlight just a few of the legal issues, one may look at the Italian trial to see both differences and similarities when compared, tor example, to the US legal system. One difference between US and Italian law is that Italy allows joinder of both criminal charges and civil claims, an approach that would set off shock waves if used in the US. Second, note that the trial includes claims by Italian government agencies seeking to obtain repayment of expenses incurred for medical care for injured persons. Thus, another example of the reality that diminishing government resources lead to more claiming, and that the US is not unique in being a home for lawsuits seeking government cost recoveries. Note also that the Italian system moves more slowly and in different ways than does the US system. Thus the prosecutors gather and share information and evidence in conjunction with testimony taken at various times before one or more judges. Note finally that the trial coverage highlights yet again the risk related to corporate reputation.
Macro Issues: So, who pays, when and how given a history of inter-related entities spread across the globe, many transfers of entities and assets, and many nations with an apparent interest in asserting jurisdiction and trying to provide due process for both claimants and defendants ? And, how does society cope with the reality that some of the victims probably have moved to other parts of the distant from where they inhaled fibers, and that faux victims will emerge ?
Litigation of course is an option. Consider, however, the incredible amount of wasted resources we saw in US asbestos litigation that took place mainly under one language and with mainly state-based rules of law that vary, but are not so terribly different in their general framework. Now consider the inefficiencies plainly ahead when the Eternit/Etex issues described above will unfold globally in myriad languages under rules of law that in some cases are now fixed but in other cases have yet to be written or decided in developing countries.
For all the above issues, who can or should speak for which future personal injury claimants? Who can or should speak for governments or others who incur health care costs resulting from Eternit-caused injuries ? Who can or should speak for other corporate defendants that will be called on to pay for some or all of the injuries caused by work at Eternit plants or by Eternit products? Who speaks for US and non-US asbestos trusts and/or foundations that will be called on to pay for some or all of the injuries caused by work at Eternit plants or by Eternit products? Who speaks for solvent or insolvent insurers or solvent insurers that are trying to cut off their future payments and risks by participating in "schemes of arrangement" in the UK, the United States or other nations?
Today's post focuses on the large number of Eternit, Etex and other related entities that for decades have comprised a literally global network of manufacturers of asbestos-cement. Today, some of these companies are in the news because of the recent start of an Italian trial to resolve combined civil and criminal charges involving over 2,500 injuries and deaths suffered by persons injured by asbestos inhaled at manufacturing facilities operated in Italy by Eternit entities. In the trial, individual officers and managers face Italian law charges that are more or less akin to reckless homicide, with the charges related to Italian laws requiring a safe workplace. Additional media stories exist because one of the defendants is a billionaire, and he is busy with actions that rightly or wrongly seek to portray Mr. Schmidheiny as a person who is both "green" and concerned about other people.
Global Scale, Decades Ago: What are sources for facts discussed in this post ? As to the entities in general, this substantial paper provides an extensive and apparently reasonably credible hundred year history of various Eternit entities sprawled around the globe (but note the paper is prepared by partisans plainly interested in causing Eternit entities to make compensation payments.) The paper can be skimmed in just a few minutes to obtain a basic grasp of the global scale and inter-connected nature of the operations. A basic summary is that the entities operated across Europe, Africa, South America and Asia. The paper also describes extensive transfers of business operations between and among entities. For more background and specifics on the trial in Italy, please look to the left for prior posts indexed under Eternit and/or go to this partisan website operated by persons who support the injured persons. Articles here and here relate to Mr. Schmidheiny and his image/actions.
The bottom line ? Actions of Eternit and Etex entities, and their officers and managers, plainly caused many deaths and injuries among plant workers around the globe, and no doubt more deaths and injuries of plant workers will follow in future years. One also may reasonably assume that so-called "take home" exposures have produced some number of deaths or injuries among spouses of plant workers through fact patterns such as a wife contracting mesothelioma due to having shaken out and washed a husband's work clothes laden with asbestos fibers. It also seems fair to conclude that injuries and deaths also have occurred and will continue among persons who worked for contractors who performed services at the plants, such as persons who installed, removed, or serviced a factory boiler. In the US, the latter incidents would give rise to "premises liability" claims. In addition, some additional number of current and future product liability claims will arise among persons who sawed, drilled, broke or otherwise worked directly with asbestos-cement or other Eternit products. For all of these groups of current and future victims of disease, one assumes that some significant number of persons and/or their families will have migrated to other nations.
The injuries and deaths arising from decades of global operations and transfers of business operations will provide the factual grist needed for plaintiff's lawyers, defense lawyers and insurance company lawyers to write and argue a wide range of legal positions on a wide range of liability, compensation and insurance issues. The various positions will be further colored by the years in which relevant action or inaction did or did not occur. The issues for example logically would require parsing which entities and/or officers and directors are directly liable to pay which claims, whether as defendants facing civil claims or via mitigation payments to reduce criminal sanctions ? Also, are those entities or persons financially protected by insurance or other indemnities ? Which entities, persons, insurance policies, or insurers are known, still exist , and are financially viable ? Can funds be obtained from solvent reinsurers who lurk behind insolvent primary insurers?
Other issues may arise regarding which entities or persons are entitled to make claims or decisions regarding insurance or other assets. And, all of these issues will arise under the laws of myriad nations. Moreover, health care costs associated with the injuries will be incurred in myriad nations under myriad legal rules regarding the recoverability of such expenses. To the extents the costs are not recovered from Eternit entities, they will have imposed a burden on the "economic commons" of many nations, and those burdens will be suffered for several future decades due to the 20-50 year latency periods associated with cancers caused by asbestos inhalation.
Also consider the impacts of corporate papers written in myriad languages, and myriad rules on discovery. And bear in mind that most of the paper will not be in digital form. Also think about if and when relevant papers were destroyed or preserved.
County-Specific Topics: To highlight just a few of the legal issues, one may look at the Italian trial to see both differences and similarities when compared, tor example, to the US legal system. One difference between US and Italian law is that Italy allows joinder of both criminal charges and civil claims, an approach that would set off shock waves if used in the US. Second, note that the trial includes claims by Italian government agencies seeking to obtain repayment of expenses incurred for medical care for injured persons. Thus, another example of the reality that diminishing government resources lead to more claiming, and that the US is not unique in being a home for lawsuits seeking government cost recoveries. Note also that the Italian system moves more slowly and in different ways than does the US system. Thus the prosecutors gather and share information and evidence in conjunction with testimony taken at various times before one or more judges. Note finally that the trial coverage highlights yet again the risk related to corporate reputation.
Macro Issues: So, who pays, when and how given a history of inter-related entities spread across the globe, many transfers of entities and assets, and many nations with an apparent interest in asserting jurisdiction and trying to provide due process for both claimants and defendants ? And, how does society cope with the reality that some of the victims probably have moved to other parts of the distant from where they inhaled fibers, and that faux victims will emerge ?
Litigation of course is an option. Consider, however, the incredible amount of wasted resources we saw in US asbestos litigation that took place mainly under one language and with mainly state-based rules of law that vary, but are not so terribly different in their general framework. Now consider the inefficiencies plainly ahead when the Eternit/Etex issues described above will unfold globally in myriad languages under rules of law that in some cases are now fixed but in other cases have yet to be written or decided in developing countries.
For all the above issues, who can or should speak for which future personal injury claimants? Who can or should speak for governments or others who incur health care costs resulting from Eternit-caused injuries ? Who can or should speak for other corporate defendants that will be called on to pay for some or all of the injuries caused by work at Eternit plants or by Eternit products? Who speaks for US and non-US asbestos trusts and/or foundations that will be called on to pay for some or all of the injuries caused by work at Eternit plants or by Eternit products? Who speaks for solvent or insolvent insurers or solvent insurers that are trying to cut off their future payments and risks by participating in "schemes of arrangement" in the UK, the United States or other nations?
Monday, December 28, 2009
Focusing this Week on Global Issues and Future Claims, Starting with Articles on Growing Asbestos Cement Use in India
I keep falling off the "global" side of things. So, this week, I'll make a special effort to be more global. This week I'm also going to try to focus more on the wide range of issues regarding "future" claims. By future claims, I mean future tort or business to business claims that possibly, likely or probably will arise as a result of past and/or current and/or future sales of products that involve risks, whether known, knowable or evolving.
Issues to Ponder: The starting point is India and its booming production of asbestos cement products. As detailed in the articles described below, there are myriad entities involved in and expanding their businesses in India producing asbestos cement products. Plainly, the manufacturing process itself sales produces risks of future physical injuries, and so do sales of the products. So, given the asbestos injury debacles still ongoing in North America, Europe and Australia, what should one think about these processes and sales in other nations. Should asbestos fiber be sold at all since, without it, there is no industry ? Should asbestos-cement sales be allowed ? Should the manufacturers be required to issue warnings in languages geared at the likely readers ? How big should the warnings be? How permanent should the warnings be - after all, someone will dismantle or cut these sheets some day in the future ?
Should the manufacturers be required to buy minimum levels of insurance in case they are wrong in their hopeful assessment that risks are low ? Is insurance even available or is there an "asbestos exclusion" of the sort put into place in the US in the early to mid-1980s? Either way, should their be minimum capital requirements for conducting a business that plainly involves some level of risk? Should these companies be allowed to do business for 20 years and then fold up and exit before cancers arise after lengthy latency periods ? Should they exit through dissolution, insolvency, or chapter 11 like proceedings? Should we judge the actions of the companies, their insurers and their customers based on what we know and have been through in the US, Europe and Australia, or should a different standard apply?
If the risks prove to be greater than stated and/or expected, how much should be paid as compensation when future cancers arise? Should legislation be put in place now that will let insurers keep down premiums and that will warn asbestos-cement users that future damages for a potentially horrible death by mesothelioma will be capped at 1,000,000 rupees? But, what happens when exposed persons migrate to new nations, start families and then become sick (or at risk) in other nations? Will those caps apply ? Will the caps apply to risks of cancer or other disease, or just an actual, manifest disease itself?
If there is much future claiming, shall we (once again) blame the lawyers involved? Shall we blame the business persons who went ahead producing asbestos-cement, knowing they were exposing others to risks and failing to confront fully some very real issues with predictable possible future consequences? Or, shall we blame government officials who let the issues go ? Or, shall we just let the topic unfold on its own, trusting that there will be an economic market-based solution ? Will that solution involve litigation funders? Multinational plaintiff's firms?
Will science save the victims ? In 5, 10 or 20 years, will cancer be a manageable disease? Curable? Always? Sometimes ? For some genomes, but not others? For some cancers, but not others? Will it all depend on when the disease is first spotted as having started at the cellular level?
Simply put, we are now at a time where intelligent, sentient beings are not able to credibly deny the foreseeability of the future issues that may arise. Judge Weinstein and others have plainly said that we in the US have collectively done a lousy job dealing with tort law issues. "Conservatives" blame the trial lawyers. The trial lawyers blame "greed" and purportedly "heartless" business persons. Academics ponder and write, some are great but too many lack a real understanding of the real world of business, science and the litigation industries that thrive on insurance claims and tort claims. Those industries, however, do not have all the answers, and so there is the quagmire known as chapter 11
Myriad former manufacturers and sellers of risky products (not just asbestos) are now in chapter 11, some due to actual insolvency caused by product liabilities and some because chapter 11 is a great place to use legal and financial engineering to dump problems and move ahead without the burden of the past. To that end, our nation's bankruptcy judges have issued rulings creating $ 30 billion or more of asbestos trusts. In the process, the bankruptcy judges hear evidence (very loosely speaking) and make rulings about future tort "liabilities" even though they have little or no clue about the real rules of each of the 50 state court tort systems and/or the realities of insurance claiming or paying, and also have little or no clue why state court tort claim settlements and trials turn out as they do. Too often, they do not even allow objectors to appear and they just "bless" deals cut by interested people, all making money from the outcome. Meanwhile, state court trial judges continue to march asbestos cases to trial despite having little or no idea of or regard for what may or should happen with the $ 20 billion still left in the trusts, and the billions more that will be added. And, virtually no one does or says much for companies that stay in business and are stuck paying the financial tab for deaths and injuries that in fact were caused by companies now sheltered by purportedly world-wide chapter 11 injunctions.
All these abstract issues really do matter and need better answers than we have today. But, the answers are not arriving. Why ? In part because the issues quickly become moot for a person dying from (avoidable) cancer. All they may want to do is try to live, or to die gracefully, perhaps leaving some money behind to support a dependent spouse or children. So, they victims say very little, and their lawyers include some good people, but they are busy looking for the next case and in any event are not really the spokespersons for the future victims.
Who really speaks for these foreseeable future claimants? No one, because their interests are in fact not well-served by today's "future's representatives." Why is that so (in my opinion), when the ranks of the futures representatives include some genuinely good, smart and compassionate individuals? The realistic answer includes many factors. One is that futures representatives are hopelessly conflicted between really sick people and the not so sick. (On this topic, see the Amchem decision, the many law reviews after it, and this great article by Plevin, Epley (now Davis) and Elgarten on the specifics of futures representative conflicts in asbestos bankruptcies) The futures representatives also hit conflicts due to the desire to reach certainty, today or "soon," despite the changes science will bring tomorrow. They also are outnumbered and out muscled. And, finally, the bankruptcy code gives them far too little power, and pays far too little attention to current or future science.
Global Context for Why the Issues Matter: On the last two Sundays, The Toronto Star has published an extended pair of articles (here and here) that are well worth reading as they cover in some detail the topics of increasing use of asbestos in India as a "developing country," and plans to export more asbestos fiber from Canada's Jeffrey Mine. The first article focuses on the growing use of asbestos cement to provide less expensive and "better" housing for people living in massive slums in India. The author, Jennifer Wells, candidly confronts the disparities between the "talking points" offered by the manufacturers and government as compared to the reality of actual working conditions in factories and the reality that there are no safeguards on use in the slums. She also points out that all of the warnings on the products are in languages other than Hindi. Ms. Wells also identifies the manufacturers and fiber suppliers.
The second article focuses on the issues regarding Canada's continuing export of chrysotile fiber, and plans to expand the exports from the Jeffrey Mine. The mine was formerly owned by Johns-Manville and has been in use for decades. According to the article, the open pit phase of mining is drawing to a close, but an underground mining phase is perhaps approaching fruition. The article includes some of the needed dialogue regarding the distinctions between the different asbestos fibers. Unfortunately, the article does not report on whether the "new" fiber to be mined has or has not been tested for "contamination" with amphibole fibers.
These article are yet another example of the issues that evolve as "developing" countries face opportunities and choices. In part, they face choices between current and future health risks, and the demands/pressures of industry and a vast population. They also face choices between the financial and health costs and risks encountered by people aspiring to "better" living conditions.
For those interested in more on the topic of banning asbestos, consider Laurie Kazan-Allen's website that documents her many years spent campaigning with others to ban asbestos use around the world. Ms. Kazan-Allen works through an organization known as the International Ban Asbestos Secretariat (IBAS). Ms. Kazan-Allen is the sister of an American asbestos plaintiff's lawyer, Steve Kazan. She has accomplished a great deal to limit the harms that can arise from asbestos use. She also has organized many groups of victims seeking medical care. legislation and/or compensation. The website contains a vast amount of information and is well worth the time to browse for anyone interested in the issues. The website also highlights a paper on and an upcoming conference opposed to asbestos use in Asia. In addition, Steve Kazan provides a website known as the World Asbestos Report.
Others, of course, would say IBAS goes too far in seeking to ban all use of all forms of asbestos. That position is well laid out in the Toronto Star's second article.
Unfortunately, there is no website focused on those who will have the future risk or disease, or the interests of the companies that will in the future pay bills for other companies.
Issues to Ponder: The starting point is India and its booming production of asbestos cement products. As detailed in the articles described below, there are myriad entities involved in and expanding their businesses in India producing asbestos cement products. Plainly, the manufacturing process itself sales produces risks of future physical injuries, and so do sales of the products. So, given the asbestos injury debacles still ongoing in North America, Europe and Australia, what should one think about these processes and sales in other nations. Should asbestos fiber be sold at all since, without it, there is no industry ? Should asbestos-cement sales be allowed ? Should the manufacturers be required to issue warnings in languages geared at the likely readers ? How big should the warnings be? How permanent should the warnings be - after all, someone will dismantle or cut these sheets some day in the future ?
Should the manufacturers be required to buy minimum levels of insurance in case they are wrong in their hopeful assessment that risks are low ? Is insurance even available or is there an "asbestos exclusion" of the sort put into place in the US in the early to mid-1980s? Either way, should their be minimum capital requirements for conducting a business that plainly involves some level of risk? Should these companies be allowed to do business for 20 years and then fold up and exit before cancers arise after lengthy latency periods ? Should they exit through dissolution, insolvency, or chapter 11 like proceedings? Should we judge the actions of the companies, their insurers and their customers based on what we know and have been through in the US, Europe and Australia, or should a different standard apply?
If the risks prove to be greater than stated and/or expected, how much should be paid as compensation when future cancers arise? Should legislation be put in place now that will let insurers keep down premiums and that will warn asbestos-cement users that future damages for a potentially horrible death by mesothelioma will be capped at 1,000,000 rupees? But, what happens when exposed persons migrate to new nations, start families and then become sick (or at risk) in other nations? Will those caps apply ? Will the caps apply to risks of cancer or other disease, or just an actual, manifest disease itself?
If there is much future claiming, shall we (once again) blame the lawyers involved? Shall we blame the business persons who went ahead producing asbestos-cement, knowing they were exposing others to risks and failing to confront fully some very real issues with predictable possible future consequences? Or, shall we blame government officials who let the issues go ? Or, shall we just let the topic unfold on its own, trusting that there will be an economic market-based solution ? Will that solution involve litigation funders? Multinational plaintiff's firms?
Will science save the victims ? In 5, 10 or 20 years, will cancer be a manageable disease? Curable? Always? Sometimes ? For some genomes, but not others? For some cancers, but not others? Will it all depend on when the disease is first spotted as having started at the cellular level?
Simply put, we are now at a time where intelligent, sentient beings are not able to credibly deny the foreseeability of the future issues that may arise. Judge Weinstein and others have plainly said that we in the US have collectively done a lousy job dealing with tort law issues. "Conservatives" blame the trial lawyers. The trial lawyers blame "greed" and purportedly "heartless" business persons. Academics ponder and write, some are great but too many lack a real understanding of the real world of business, science and the litigation industries that thrive on insurance claims and tort claims. Those industries, however, do not have all the answers, and so there is the quagmire known as chapter 11
Myriad former manufacturers and sellers of risky products (not just asbestos) are now in chapter 11, some due to actual insolvency caused by product liabilities and some because chapter 11 is a great place to use legal and financial engineering to dump problems and move ahead without the burden of the past. To that end, our nation's bankruptcy judges have issued rulings creating $ 30 billion or more of asbestos trusts. In the process, the bankruptcy judges hear evidence (very loosely speaking) and make rulings about future tort "liabilities" even though they have little or no clue about the real rules of each of the 50 state court tort systems and/or the realities of insurance claiming or paying, and also have little or no clue why state court tort claim settlements and trials turn out as they do. Too often, they do not even allow objectors to appear and they just "bless" deals cut by interested people, all making money from the outcome. Meanwhile, state court trial judges continue to march asbestos cases to trial despite having little or no idea of or regard for what may or should happen with the $ 20 billion still left in the trusts, and the billions more that will be added. And, virtually no one does or says much for companies that stay in business and are stuck paying the financial tab for deaths and injuries that in fact were caused by companies now sheltered by purportedly world-wide chapter 11 injunctions.
All these abstract issues really do matter and need better answers than we have today. But, the answers are not arriving. Why ? In part because the issues quickly become moot for a person dying from (avoidable) cancer. All they may want to do is try to live, or to die gracefully, perhaps leaving some money behind to support a dependent spouse or children. So, they victims say very little, and their lawyers include some good people, but they are busy looking for the next case and in any event are not really the spokespersons for the future victims.
Who really speaks for these foreseeable future claimants? No one, because their interests are in fact not well-served by today's "future's representatives." Why is that so (in my opinion), when the ranks of the futures representatives include some genuinely good, smart and compassionate individuals? The realistic answer includes many factors. One is that futures representatives are hopelessly conflicted between really sick people and the not so sick. (On this topic, see the Amchem decision, the many law reviews after it, and this great article by Plevin, Epley (now Davis) and Elgarten on the specifics of futures representative conflicts in asbestos bankruptcies) The futures representatives also hit conflicts due to the desire to reach certainty, today or "soon," despite the changes science will bring tomorrow. They also are outnumbered and out muscled. And, finally, the bankruptcy code gives them far too little power, and pays far too little attention to current or future science.
Global Context for Why the Issues Matter: On the last two Sundays, The Toronto Star has published an extended pair of articles (here and here) that are well worth reading as they cover in some detail the topics of increasing use of asbestos in India as a "developing country," and plans to export more asbestos fiber from Canada's Jeffrey Mine. The first article focuses on the growing use of asbestos cement to provide less expensive and "better" housing for people living in massive slums in India. The author, Jennifer Wells, candidly confronts the disparities between the "talking points" offered by the manufacturers and government as compared to the reality of actual working conditions in factories and the reality that there are no safeguards on use in the slums. She also points out that all of the warnings on the products are in languages other than Hindi. Ms. Wells also identifies the manufacturers and fiber suppliers.
The second article focuses on the issues regarding Canada's continuing export of chrysotile fiber, and plans to expand the exports from the Jeffrey Mine. The mine was formerly owned by Johns-Manville and has been in use for decades. According to the article, the open pit phase of mining is drawing to a close, but an underground mining phase is perhaps approaching fruition. The article includes some of the needed dialogue regarding the distinctions between the different asbestos fibers. Unfortunately, the article does not report on whether the "new" fiber to be mined has or has not been tested for "contamination" with amphibole fibers.
These article are yet another example of the issues that evolve as "developing" countries face opportunities and choices. In part, they face choices between current and future health risks, and the demands/pressures of industry and a vast population. They also face choices between the financial and health costs and risks encountered by people aspiring to "better" living conditions.
For those interested in more on the topic of banning asbestos, consider Laurie Kazan-Allen's website that documents her many years spent campaigning with others to ban asbestos use around the world. Ms. Kazan-Allen works through an organization known as the International Ban Asbestos Secretariat (IBAS). Ms. Kazan-Allen is the sister of an American asbestos plaintiff's lawyer, Steve Kazan. She has accomplished a great deal to limit the harms that can arise from asbestos use. She also has organized many groups of victims seeking medical care. legislation and/or compensation. The website contains a vast amount of information and is well worth the time to browse for anyone interested in the issues. The website also highlights a paper on and an upcoming conference opposed to asbestos use in Asia. In addition, Steve Kazan provides a website known as the World Asbestos Report.
Others, of course, would say IBAS goes too far in seeking to ban all use of all forms of asbestos. That position is well laid out in the Toronto Star's second article.
Unfortunately, there is no website focused on those who will have the future risk or disease, or the interests of the companies that will in the future pay bills for other companies.
Thursday, November 19, 2009
State Secrets Privilege - Should The Alleged Victim Be Compensated When the Government Chooses to Exercise the Privilege ?
Here is an interesting NLJ article on the state secrets privilege from a law professor and dean with an impressive background in both public interest litigation and academics. The law professor, Alan B. Morrison, currently is the Lerner Family Associate Dean for Public Interest and Public Service Law at the George Washington University School of Law. In short, he suggests that the price for exercising the privilege should be that the government pays for the harm caused. Here are two key paragraphs:
"The problem to date has been that the arguments have all been about whether the claims of secrecy are actually justified and who should decide that. The best way around that debate is for Congress to pass a law saying to the intelligence community, "You can keep your secrets, but you (the U.S. Treasury) must pay the claimant's damages if you won't allow the case to be tried in the ordinary fashion." That's what the law says will happen if the government wants to take my land to build a military base, and that same principle should apply in these cases as well.
"The problem to date has been that the arguments have all been about whether the claims of secrecy are actually justified and who should decide that. The best way around that debate is for Congress to pass a law saying to the intelligence community, "You can keep your secrets, but you (the U.S. Treasury) must pay the claimant's damages if you won't allow the case to be tried in the ordinary fashion." That's what the law says will happen if the government wants to take my land to build a military base, and that same principle should apply in these cases as well.
Here's how such a law might work. Cases would be filed in the usual way, and if the government contended that state secrets might have to be divulged if the case were tried, it would make whatever efforts it could to dismiss the case on nonstate secrets grounds. But if that failed, the attorney general could formally invoke the state secrets privilege. At that point, the case would be transferred to the Court of Federal Claims, which hears claims against the government that it has taken someone's property without compensation. However, once the government invoked the state secrets defense, it would lose its right to contest its liability: The only issue remaining would be the proper amount of actual, but not punitive, damages."
Thursday, November 5, 2009
Korea to Open Law Firms to Outside Investment and Ownership, and Allow MDP Entities
Here is an interesting AmLaw post on the Korean government seeking to deregulate legal services and end restrictions on nonlawyers investing in and providing legal services. The key excerpts say:
"The Korean government is planning a major deregulation of the nation's legal and other professional services markets, the Korea Herald reports.
At a government meeting Tuesday, Finance Minister Yoon Jeung-hyun explained the move as a way to boost employment in the high-value services sector.
"The government will lower entry barriers to the professional service market to spur competition and to boost the size of the market," Yoon said.
A number of measures aimed at reducing regulation have been recommended to the government by the Korean Development Institute, a think tank. Perhaps most controversially, the KDI has proposed that non-lawyers and conglomerates be permitted to own stakes in law firms. The institute has also recommended an end to restrictions on lawyers, patent agents and certified public accountants practicing together."
Friday, October 30, 2009
Chapter 11 in Hong Kong ? What Would They Do With Mass Tort Claims ?
Here is an AmLaw article about the apparently fairly real possibility of chapter 11 type legislation in Hong Kong. This is getting ahead of the game, but it does provide an opportunity to pause and think about what Hong Kong or other sovereigns might use as an approach to corporate failures caused by mass tort claims. After all, we've seen some serious mass tort issues arise from Hong Kong's nearby neighbors.
Let's hope other sovereigns do better than section 524(g) of teh US bankruptcy code. Otherwise, we may see a global spread of mass claiming by the least sick.
Let's hope other sovereigns do better than section 524(g) of teh US bankruptcy code. Otherwise, we may see a global spread of mass claiming by the least sick.
Wednesday, September 23, 2009
Will There Soon Be Another Chapter 11 Tort Claim Trust for Chinese Drywall Claims Against an Insolvent Builder, Perhaps With Insurers Involved ?
This summer brought the Chrysler and GM chapter 11 cases in which bankruptcy courts issued wide-ranging injunctions that seek to block some or all tort claimants from pursuing some or all current and/or future tort claims against the insolvent entities and their successors and/or buyers. Now, as we move into fall, here's the latest example of the expanding use of chapter 11 injunctions and trust funds as the proposed means to resolve underlying alleged "mass tort" claims. These ongoing expansions make it even more important to scrutinize the rules to the process by which Wall Street is now able to use chapter 11 to eliminate or transfer financial responsibility for underlying mass tort claims. These ongoing expansions also make plain that there is a pressing need to pull down the veil of secrecy that blocks meaningful scrutiny of the operations of most, if not all, chapter 11 trust funds that resolve tort claims.
This latest example arises from this new motion filed in the Tousa home builder bankruptcy. The effort in Tousa parallels the approach taken in the WCI home builder chapter 11 case. The new motion in Tousa seek to continue the automatic stay to block tort and contract claims regarding buildings built with allegedly defective Chinese drywall. The motion seeks to continue to block the underlying lawsuits based on the prospect of creating a chapter 11 trust to resolve the same underlying lawsuits. Presumably the trust also would be used to resolve the claims that would arise if the court were to allow a proposed class action against Tousa by would-be drywall claimants . The proposed class action is the subject of other bankruptcy court motions.
The motion in Tousa is noteworthy for multiple reasons. For one, it asserts that the debtor will welcome the involvement of its insurers in creating the proposed trust. In contrast, in the asbestos chapter 11 cases, the debtors virtually always assert that trust are "insurance neutral," meaning that whatever happens in the bankruptcy court does not effect the rights of insurers. Based on that claimed neutrality, the debtors and plaintiff's lawyers almost always argue that the tort claim insurers lack "standing" to be involved in the bankruptcy court proceedings.
Insurers sometimes but not always disagree, depending on what view suits a particular insurer's interest in a particular chapter 11 case and its overall financial status. Usually, but not always, insurers that issued primary policies re heavily exposed to the tort claims, and so will seek to cut a deal with the debtor and the plaintiff's bar in order to achieve certainty. Other insurers that issued higher level excess policies tend to fight the debtor on the standing issue until they've created enough of a record that the debtor agrees to accept from the high-level insurer a nominal payment over time in return for a release of all obligations under the higher-level excess insurance policy.
The motion also is noteworthy for what it does not mention. For one, it makes no mention of the current or future rights of other, solvent companies that are now or will in the future end up as co-defendants in the underlying lawsuits. Co-defendant entities can be incredibly harmed by the terms of the bankruptcy trust if the terms cut off or in any way limits the right of co-defendants to bring cross-claims or equitable contribution claims against the debtor or the trust. In the chapter 11 asbestos cases, the trust terms almost always have imposed severe and unconstitutional limits on the rights of the co-defendants to bring cross-claims against the debtor or the trust. To be fair to co-defendants, bankruptcy courts can and should appoint at least one person to represent the interests of fat least future co-defendants.
Additional adverse impacts arise for co-defendants if secrecy is allowed regarding claims submitted to the trust fund and its payouts to particular claimants. Once again, the chapter 11 trust model should not be followed because in most such cases, the plan tosses a veil of secrecy over information regarding which claimants have made claims and what they have been paid. Co-defendants rightly argue that the veil of secrecy is poor public policy because court-ordered trusts should instead be transparent as a matter of public policy. Beyond pure policy issues, the veil of secrecy also is improper because it blocks the co-defendants from asserting state law rights. Secrecy also blocks legislators from understanding what really is or is not being done to compensate legitimate and illegitimate claimants.
The motion also is significant because it does not mention various other sources of conflicts between constituencies with interests in the terms of a trust created to resolve tort system claims. One source of conflicts is that persons with strong and serious claims do not want to see trust fund money frittered away on payments to spurious or marginal claimants. Once again the asbestos chapter 11 cases highlight the problem because most of the trusts have been put in place with terms that have allowed billions of dollars to be paid to claimants who are not "sick" in any meaningful way.
Here are key excerpts from the Tousa motion:
4. Among other things, the Debtors are aware of the recent plan of reorganization confirmed in the chapter 11 cases of WCI Communities, Inc. and certain of its affiliates (collectively, “WCI”) in which WCI successfully managed its liability with respect to Chinese Drywall by implementing a global strategy that will address Chinese Drywall claims through the use of a trust, a channeling injunction and claims liquidation procedures. Additionally, the plan of reorganization permitted WCI to efficiently address its’ claims against its insurance carriers as well as the installers and manufacturers of Chinese Drywall. While the Debtors continue to analyze their own Chinese Drywall cases and their prospects for a chapter 11 plan, the WCI approach offers one possible alternative to piecemeal litigation of Chinese Drywall claims.
5. The Debtors intend to work with their major creditor constituencies in an effort to establish a global strategy with respect to claims arising from or relating to Chinese Drywall. This global strategy will prevent a “race” to insurance proceeds by similarly situated claimants that will have the negative effect of depleting the amount of insurance available to satisfy other claims or, otherwise, impact the Debtors’ ability, as a practical matter, to craft a more comprehensive resolution of the Chinese Drywall-related claims. To that end, the Debtors intend to involve the alleged holders of Chinese Drywall-related claims and the Debtors’ insurance carriers in any such discussions. Based on the Debtors’ desire to develop a global resolution of the Movants and similar claims, the Debtors have filed this objection.
Hat tip to LAW360 for noting the motion to continue the automatic stay.
This latest example arises from this new motion filed in the Tousa home builder bankruptcy. The effort in Tousa parallels the approach taken in the WCI home builder chapter 11 case. The new motion in Tousa seek to continue the automatic stay to block tort and contract claims regarding buildings built with allegedly defective Chinese drywall. The motion seeks to continue to block the underlying lawsuits based on the prospect of creating a chapter 11 trust to resolve the same underlying lawsuits. Presumably the trust also would be used to resolve the claims that would arise if the court were to allow a proposed class action against Tousa by would-be drywall claimants . The proposed class action is the subject of other bankruptcy court motions.
The motion in Tousa is noteworthy for multiple reasons. For one, it asserts that the debtor will welcome the involvement of its insurers in creating the proposed trust. In contrast, in the asbestos chapter 11 cases, the debtors virtually always assert that trust are "insurance neutral," meaning that whatever happens in the bankruptcy court does not effect the rights of insurers. Based on that claimed neutrality, the debtors and plaintiff's lawyers almost always argue that the tort claim insurers lack "standing" to be involved in the bankruptcy court proceedings.
Insurers sometimes but not always disagree, depending on what view suits a particular insurer's interest in a particular chapter 11 case and its overall financial status. Usually, but not always, insurers that issued primary policies re heavily exposed to the tort claims, and so will seek to cut a deal with the debtor and the plaintiff's bar in order to achieve certainty. Other insurers that issued higher level excess policies tend to fight the debtor on the standing issue until they've created enough of a record that the debtor agrees to accept from the high-level insurer a nominal payment over time in return for a release of all obligations under the higher-level excess insurance policy.
The motion also is noteworthy for what it does not mention. For one, it makes no mention of the current or future rights of other, solvent companies that are now or will in the future end up as co-defendants in the underlying lawsuits. Co-defendant entities can be incredibly harmed by the terms of the bankruptcy trust if the terms cut off or in any way limits the right of co-defendants to bring cross-claims or equitable contribution claims against the debtor or the trust. In the chapter 11 asbestos cases, the trust terms almost always have imposed severe and unconstitutional limits on the rights of the co-defendants to bring cross-claims against the debtor or the trust. To be fair to co-defendants, bankruptcy courts can and should appoint at least one person to represent the interests of fat least future co-defendants.
Additional adverse impacts arise for co-defendants if secrecy is allowed regarding claims submitted to the trust fund and its payouts to particular claimants. Once again, the chapter 11 trust model should not be followed because in most such cases, the plan tosses a veil of secrecy over information regarding which claimants have made claims and what they have been paid. Co-defendants rightly argue that the veil of secrecy is poor public policy because court-ordered trusts should instead be transparent as a matter of public policy. Beyond pure policy issues, the veil of secrecy also is improper because it blocks the co-defendants from asserting state law rights. Secrecy also blocks legislators from understanding what really is or is not being done to compensate legitimate and illegitimate claimants.
The motion also is significant because it does not mention various other sources of conflicts between constituencies with interests in the terms of a trust created to resolve tort system claims. One source of conflicts is that persons with strong and serious claims do not want to see trust fund money frittered away on payments to spurious or marginal claimants. Once again the asbestos chapter 11 cases highlight the problem because most of the trusts have been put in place with terms that have allowed billions of dollars to be paid to claimants who are not "sick" in any meaningful way.
Here are key excerpts from the Tousa motion:
4. Among other things, the Debtors are aware of the recent plan of reorganization confirmed in the chapter 11 cases of WCI Communities, Inc. and certain of its affiliates (collectively, “WCI”) in which WCI successfully managed its liability with respect to Chinese Drywall by implementing a global strategy that will address Chinese Drywall claims through the use of a trust, a channeling injunction and claims liquidation procedures. Additionally, the plan of reorganization permitted WCI to efficiently address its’ claims against its insurance carriers as well as the installers and manufacturers of Chinese Drywall. While the Debtors continue to analyze their own Chinese Drywall cases and their prospects for a chapter 11 plan, the WCI approach offers one possible alternative to piecemeal litigation of Chinese Drywall claims.
5. The Debtors intend to work with their major creditor constituencies in an effort to establish a global strategy with respect to claims arising from or relating to Chinese Drywall. This global strategy will prevent a “race” to insurance proceeds by similarly situated claimants that will have the negative effect of depleting the amount of insurance available to satisfy other claims or, otherwise, impact the Debtors’ ability, as a practical matter, to craft a more comprehensive resolution of the Chinese Drywall-related claims. To that end, the Debtors intend to involve the alleged holders of Chinese Drywall-related claims and the Debtors’ insurance carriers in any such discussions. Based on the Debtors’ desire to develop a global resolution of the Movants and similar claims, the Debtors have filed this objection.
Hat tip to LAW360 for noting the motion to continue the automatic stay.
Saturday, July 18, 2009
Corruption Statutes - Are They Bad Policy and Trade Sanctions ?
Are anti-bribery statutes actually trade sanctions that discourage investment, and should such statues be modifed? For more on that topic, see this post at Conglomerate and its link to a scholarly article on the topic.
Friday, July 17, 2009
# 1 - Growing Battles Over Techniques and Rules Used on Wall Street, in Tort Trials, and By Government to Shift Financial Obligations for Tort Losses
The tort litigation industry is seeing new battles emerge at the micro and macro level regarding the techniques and rules used on Wall Street, in tort trials, and by government to shift financial responsibility for payments for expenses arising from legitimate and illegitimate tort claimants. The battles are ongoing at both the micro and macro level, and will take years to resolve. Over time, billions and ultimately trillions of dollars are at stake when one considers direct and indirect payments, plus stock price changes, legal fees, and other associated costs and expenses of tort litigation and ancillary litigation. Posts over the next few weeks will present examples of the battles and their consequences. Throughout, one key is to look for whether, when and how one person/entity (or a group) are allowed to make deals that increase or decrease the risks and financial obligations for others involved in the same tort.
Today's example is a micro battle being fought in Illinois in a case arising from falling scaffolding killing Mr. Ready during a construction project at a power plant. One issue is whether fault can be apportioned at trial against defendants that settled before trial. Why does that matter? Because the plaintiff and one or more defendants can and may agree to a settlement contract because the settlement monies paid 1) will give plaintiff some level of financial certainty and 2) will shift to the remaining defendants the risk and financial obligation for the plaintiff's losses as determined at trial because the settlement, if approved, will by statute block the remaining defendants from suing the settling defendants for "contribution," and may block the trial defendants from asking the jury to apportion a percentage of fault to the settling parties. Further, the settlement also may influence whether the remaining defendants can offer trial proof of the actions of the settled defendant even if even if the jury is not allowed to apportion a percentage of fault to the settled defendants.
So, the most basic macro issue is whether and when this private settlement contract between three private parties will become the operative event that will enable the government (the courts) to take pre-existing claims and legal rights of the other defendants. In this instance, the defendants are Mr. Ready's employer, the general contractor and a subcontractor. In teh case, the employer and the general contractor settled, leaving the subsontractor exposed to a trial, which it lost. And, of course, lurking in the background are the insurers for those entities. But, for the macro level, bear in mind that some companies are self-insured, and some companies were insured but that insurance is or may be gone because the insurer actually is insolvent or may be trying to run away from "incurred but not reported" losses (that is, future losses) by ceasing its business operations and/or invoking a dissolution process specific to insurers. And, the issues arise in the context of events during a trial held during a period of time for which a "tort reform statute was said to be applicable.
In short, the Illinois Supreme Court held, under the statute, that the jury could not apportion fault against the settled defendants. Thus, the private settlement was converted into a government enforced agreement with legal consequences for the remaining defendant, which had not objected to the settlement. Left open by the Supreme Court was whether the jury should have been allowed to hear evidence about the actions (or inaction) of the settled parties. On remand, the appellate court held that the trial court should have allowed the jury to hear evidence of the actions of the settled defendants. The case may now be headed back to the Supreme Court of Illinois.
The Illinois Supreme Court's opinion from late 2008 is here (for now, but will move later when the opinion is archived.) Here is the June 30, 2009 opinion of the appellate court on remand. Here is a press article updating the case history, and explaining that the case is perhaps headed back to the Illinois Supreme Court. Here prior commentary by a large law law firm that represents corporate defendants.
Today's example is a micro battle being fought in Illinois in a case arising from falling scaffolding killing Mr. Ready during a construction project at a power plant. One issue is whether fault can be apportioned at trial against defendants that settled before trial. Why does that matter? Because the plaintiff and one or more defendants can and may agree to a settlement contract because the settlement monies paid 1) will give plaintiff some level of financial certainty and 2) will shift to the remaining defendants the risk and financial obligation for the plaintiff's losses as determined at trial because the settlement, if approved, will by statute block the remaining defendants from suing the settling defendants for "contribution," and may block the trial defendants from asking the jury to apportion a percentage of fault to the settling parties. Further, the settlement also may influence whether the remaining defendants can offer trial proof of the actions of the settled defendant even if even if the jury is not allowed to apportion a percentage of fault to the settled defendants.
So, the most basic macro issue is whether and when this private settlement contract between three private parties will become the operative event that will enable the government (the courts) to take pre-existing claims and legal rights of the other defendants. In this instance, the defendants are Mr. Ready's employer, the general contractor and a subcontractor. In teh case, the employer and the general contractor settled, leaving the subsontractor exposed to a trial, which it lost. And, of course, lurking in the background are the insurers for those entities. But, for the macro level, bear in mind that some companies are self-insured, and some companies were insured but that insurance is or may be gone because the insurer actually is insolvent or may be trying to run away from "incurred but not reported" losses (that is, future losses) by ceasing its business operations and/or invoking a dissolution process specific to insurers. And, the issues arise in the context of events during a trial held during a period of time for which a "tort reform statute was said to be applicable.
In short, the Illinois Supreme Court held, under the statute, that the jury could not apportion fault against the settled defendants. Thus, the private settlement was converted into a government enforced agreement with legal consequences for the remaining defendant, which had not objected to the settlement. Left open by the Supreme Court was whether the jury should have been allowed to hear evidence about the actions (or inaction) of the settled parties. On remand, the appellate court held that the trial court should have allowed the jury to hear evidence of the actions of the settled defendants. The case may now be headed back to the Supreme Court of Illinois.
The Illinois Supreme Court's opinion from late 2008 is here (for now, but will move later when the opinion is archived.) Here is the June 30, 2009 opinion of the appellate court on remand. Here is a press article updating the case history, and explaining that the case is perhaps headed back to the Illinois Supreme Court. Here prior commentary by a large law law firm that represents corporate defendants.
Monday, July 13, 2009
Chicago Cubs to Follow GM and Chrysler in Using Chapter 11 - Just Another Tool for Managing/Ending Liabilities ?
The following item from Crain's Chicago Business speaks for itself as to today's use of chapter 11 to manage/resolve risks and "liabilities." In some instances, though, the table is being set for constitutional law battles ahead on just how much a bankruptcy judge can do to alter rights arising under state law or the law of other nations.
http://www.chicagobusiness.com/cgi-bin/news.pl?id=34725&ba=1
Cubs may file for bankruptcy protection to speed sale: report
By: Todd J. Behme July 13, 2009
(Crain’s) — Tribune Co. may file for Chapter 11 bankruptcy protection for the Chicago Cubs to smooth the sale of the team, according to a report.
A short bankruptcy would be a legal move to prevent the Cubs from having any liability related to the bankruptcy case of Tribune, which filed for Chapter 11 protection in December, Bloomberg News said, citing four unnamed sources familiar with the matter.
Spokesman for Tribune, Major League Baseball and Tom Ricketts declined to comment to Bloomberg. The Ricketts family reportedly has reached a deal with Tribune to buy the team.
It’s possible the team could be sold without a bankruptcy protection filing, the sources told Bloomberg.
A Chapter 11 filing could ensure that the team isn’t tangled up with Tribune’s creditors, Michael J. Cramer, an assistant professor of sports management at New York University and who formerly was president of the Texas Rangers, told Bloomberg.
“This would make sense for Major League Baseball,” he told the news service. “They would like to see that asset be stand-alone, very clean, not tied up in other issues.”
A filing by the Cubs would be meant to provide for quick selling of the team assets, the sources told Bloomberg.
Filing for bankruptcy protection would not mean that the Cubs are having financial problems, Gregory A. Cross, head of the bankruptcy practice at law firm Venable LLP, told Bloomberg.
“You do not have to be insolvent to be in bankruptcy,” Mr. Cross, who is not involved in the matter, told Bloomberg. “All you need is a legitimate business reason.”
http://www.chicagobusiness.com/cgi-bin/news.pl?id=34725&ba=1
Cubs may file for bankruptcy protection to speed sale: report
By: Todd J. Behme July 13, 2009
(Crain’s) — Tribune Co. may file for Chapter 11 bankruptcy protection for the Chicago Cubs to smooth the sale of the team, according to a report.
A short bankruptcy would be a legal move to prevent the Cubs from having any liability related to the bankruptcy case of Tribune, which filed for Chapter 11 protection in December, Bloomberg News said, citing four unnamed sources familiar with the matter.
Spokesman for Tribune, Major League Baseball and Tom Ricketts declined to comment to Bloomberg. The Ricketts family reportedly has reached a deal with Tribune to buy the team.
It’s possible the team could be sold without a bankruptcy protection filing, the sources told Bloomberg.
A Chapter 11 filing could ensure that the team isn’t tangled up with Tribune’s creditors, Michael J. Cramer, an assistant professor of sports management at New York University and who formerly was president of the Texas Rangers, told Bloomberg.
“This would make sense for Major League Baseball,” he told the news service. “They would like to see that asset be stand-alone, very clean, not tied up in other issues.”
A filing by the Cubs would be meant to provide for quick selling of the team assets, the sources told Bloomberg.
Filing for bankruptcy protection would not mean that the Cubs are having financial problems, Gregory A. Cross, head of the bankruptcy practice at law firm Venable LLP, told Bloomberg.
“You do not have to be insolvent to be in bankruptcy,” Mr. Cross, who is not involved in the matter, told Bloomberg. “All you need is a legitimate business reason.”
Sunday, July 12, 2009
Empiric Data on the European Court of Justice - References from National Judges to the ECJ
The world plainly is growing smaller and is more subject to empiric evaluation. To me, those are great trends for many reasons, including my preference for facts instead of hearsay and anecdote. So, I follow the Empirical Legal Studies blog. The following post is germane for lawyers around the world seeking to better understand the activities of the European Court of Justice.
_______________________________________________________________
from Empirical Legal Studies by Jason Czarnezki
Alec Stone Sweet and Thomas Brunell have posted three data bases, on the activities of the European Court of Justice, and the adjudication of EU law, under Articles 226 (infringement proceedings - brought by the Commission against a Member State), 230 (annulment actions in administrative law brought by individuals and companies against the EU), and 234 (preliminary references from national judges to the ECJ). They collected these data over the course of 12 years, and they are unavailable outside of the Court, which does not provide public access to them. The home for these data is the Robert Schuman Centre, the European University Institute. The datesets, accompanying codebooks, and papers providing summary analyses of the data can be found here: http://www.eu-newgov.org/datalists/deliverables_detail.asp?Project_ID=26. Since 1996, scholars have used these data in a wide variety of research projects, including doctoral dissertations, books, articles in economics, law, sociology, and political science.
_______________________________________________________________
from Empirical Legal Studies by Jason Czarnezki
Alec Stone Sweet and Thomas Brunell have posted three data bases, on the activities of the European Court of Justice, and the adjudication of EU law, under Articles 226 (infringement proceedings - brought by the Commission against a Member State), 230 (annulment actions in administrative law brought by individuals and companies against the EU), and 234 (preliminary references from national judges to the ECJ). They collected these data over the course of 12 years, and they are unavailable outside of the Court, which does not provide public access to them. The home for these data is the Robert Schuman Centre, the European University Institute. The datesets, accompanying codebooks, and papers providing summary analyses of the data can be found here: http://www.eu-newgov.org/datalists/deliverables_detail.asp?Project_ID=26. Since 1996, scholars have used these data in a wide variety of research projects, including doctoral dissertations, books, articles in economics, law, sociology, and political science.
Sunday, June 21, 2009
The Entrepreneurial Litigation Industry
What will the global litigation industry look like in 10 years? My bet is that it will look increasingly entrepreneurial, and more like the litigation industry as it presently exists outside the US.
In Australia, a personal injury law firm known as Slater & Gordon went public back in May 2007, as it describes on its history page. That development caught the eye of the WSJ - see here.
In Europe, there is an interesting variation on that theme as corporate law firms already include groups of lawyers working on contingent fees for personal injury claimants. Thus, Field Fisher Waterhouse looks like and is a corporate law firm with offices across Europe, as you can see by visiting its home page. In addition, however, the firm also has an apparently active, successful practice representing personal injury claimants in a wide range of claims. The website page for personal injury claims is here, and describes the firm representing plaintiffs in medical malpractice litigation and in asbestos litigation.
In the US, the move to entrepreneurial litigation is today the subject of a growing number of discussions about moving away from the billable hour to flat fees and contingent fees for litigation and corporate work. Indeed, there is an already active alternative entrepreneurial approach used by boutique law firms (e.g. Bartlit Beck; Valorem Law Group; Boies Schiller ) and some large law firms (e.g. Robins Kaplan for some time, with Saul, Ewing and Kirkland & Ellis now saying they are doing the same) working for corporations on contingent fees and various forms of flat fees. And, firms such as Robins Kaplan sort of took on personal injury litigation as plaintiffs when it represented the state of Minnesota in tobacco litigation. Take a read through the websites and note the wide range of cases handled for corporate Americas as plaintiffs.
In Australia, a personal injury law firm known as Slater & Gordon went public back in May 2007, as it describes on its history page. That development caught the eye of the WSJ - see here.
In Europe, there is an interesting variation on that theme as corporate law firms already include groups of lawyers working on contingent fees for personal injury claimants. Thus, Field Fisher Waterhouse looks like and is a corporate law firm with offices across Europe, as you can see by visiting its home page. In addition, however, the firm also has an apparently active, successful practice representing personal injury claimants in a wide range of claims. The website page for personal injury claims is here, and describes the firm representing plaintiffs in medical malpractice litigation and in asbestos litigation.
In the US, the move to entrepreneurial litigation is today the subject of a growing number of discussions about moving away from the billable hour to flat fees and contingent fees for litigation and corporate work. Indeed, there is an already active alternative entrepreneurial approach used by boutique law firms (e.g. Bartlit Beck; Valorem Law Group; Boies Schiller ) and some large law firms (e.g. Robins Kaplan for some time, with Saul, Ewing and Kirkland & Ellis now saying they are doing the same) working for corporations on contingent fees and various forms of flat fees. And, firms such as Robins Kaplan sort of took on personal injury litigation as plaintiffs when it represented the state of Minnesota in tobacco litigation. Take a read through the websites and note the wide range of cases handled for corporate Americas as plaintiffs.
Where will this end up in the US ? Hard to say due to state by state ethics rules, but plainly the American liitigation industry will become even more entrepreneurial, as it already is around the globe. And, with more and more corporations acting as plaintiffs, some traditional positions are going to become harder to sustain. It will be, for example, harder for corporate America to complain credibly about contingent fees and "trial lawyers" when corporate America is using the same approach.
Sunday, June 14, 2009
Preliminary Report In UK on Possible Changes to Assessment of Costs
The UK is famous for assessing costs if a case actually goes to judgment. A new look at that topic is underway and is slated to produce a final report by year end 2009. A preliminary draft report has been issued and will be the subject of meetings and comments over the summer. More specifically, a press release from the British Judiciary explains that " Lord Justice Jackson has published the preliminary report in his Review of Civil Litigation Costs.The report is a major piece of work, deriving from four months of fact-finding, research and receiving submissions, and it extends to over 650 pages with three annexes and 30 appendices. It is available" online here.
A June 1, 2009 article in Business Insurance by Sarah Vesey provides a terse summary of the report. She comments:
"In the report, Justice Jackson said several potential changes to the existing cost regime for group actions "merit consideration."
Among them are instituting a no-cost-shifting rule; allowing cost-shifting for only part of the proceedings, for example only after the stage where a class wins certification; implementing a common funds doctrine, such as that used in the United States in which successful lawyers are entitled to have their fees reimbursed from the fund awarded to the class; public interest litigation, whereby the court has power to order that no cost-shifting occur when a group representative brings an action on an issue of public interest; and using a lower-cost scale for collective actions.
Justice Jackson said his "tentative view" to do away with cost-shifting for collective actions merits serious consideration in the second phase of his review and would, among other things, promote access to justice and be fairer for defendants."
A June 1, 2009 article in Business Insurance by Sarah Vesey provides a terse summary of the report. She comments:
"In the report, Justice Jackson said several potential changes to the existing cost regime for group actions "merit consideration."
Among them are instituting a no-cost-shifting rule; allowing cost-shifting for only part of the proceedings, for example only after the stage where a class wins certification; implementing a common funds doctrine, such as that used in the United States in which successful lawyers are entitled to have their fees reimbursed from the fund awarded to the class; public interest litigation, whereby the court has power to order that no cost-shifting occur when a group representative brings an action on an issue of public interest; and using a lower-cost scale for collective actions.
Justice Jackson said his "tentative view" to do away with cost-shifting for collective actions merits serious consideration in the second phase of his review and would, among other things, promote access to justice and be fairer for defendants."
Friday, June 5, 2009
Can Doctors Enforce Contracts Barring Public Comments on the Care They Provide (or Fail to Provide)
This month's ABA Journal includes an article that stunned me, and it is set out below. The gist is that some physicians are trying to use contracts to preclude patients from commenting in public media about the care they receive or do not receive. According to the article, the patient is limited by contract to filing a malpractice suit, complaining to the state regulator or telling friends (not clear what's ok there - can you email or just whisper softly to your friends in the confines of your home). Even more surprsing to me is that, according to the article, the AMA "takes no position" on the propriety of such contracts.
Even though I am a defense/corporate lawyer and am in general sympathetic to defense-side issues, the contract described by the article is to me a stunningly bad idea, and a contract of adhesion that courts can not and should not enforce when entered into prior to the care being provided. Suppose you have cancer and need treatment asap - how in the heck can anyone claim there is room for fair bargaining in such a situation ?
The AMA not taking a position is to me no correct. I cannot imagine our ethical rules for lawyers letting us do this sort of thing. I won't claim to be an ethics expert, but a quick flip through the rules brought caused me to focus on Illinois Rule 1.8(b. That rules specifically precludes lawyers from asking a client for rights related to publizing the facts of an engagement until the engagement is over. I presume that rule was aimed at blocking the lawyers from acquiring the rights to a sensational story as part of a retainer agreement, which is a somewhat different situation than teh doctor who is trying to avoid publicity. That said, the situations are alike in that clients cannot possibly know what is in their interest, or not, until the professional engagement is over, and so our rules block us from asking cleints to give up rights in advance. Rule 1.8(f) also is relevant as it precludes Illinois lawyers from seeking to limit our liability to our clients unless the client has separate counsel to evalaute that agreement.
I fail to see why doctors should be treated differently, especially when their mistakes actually can kill or badly injure a person. At least for civil lawyers, the worst we can usually do is to cost someone some moeny.
Comments anyone?
http://www.abajournal.com/magazine/a_prescription_for_silence/
Opening Statements
A Prescription for Silence
June 2009 Issue By Leslie A. Gordon
Once consumer websites began rating everything from restaurants to dog groomers, it was only a matter of time before doctors found their care and bedside manner critiqued online.
As many as 40 websites, including Zagat, Angie’s List and RateMDs.com, now feature anonymous, patient-written doctor ratings. Physicians say these unpoliced sites often publish unfair accounts that can destroy professional reputations. And, because the ratings usually are anonymous, doctors argue that the “patients” rating them may really be disgruntled employees, ex-spouses or competitors. Federal and state privacy laws prohibit doctors from responding, even to legitimate posts.
Now one doctor has figured out a way to help his colleagues fight back, but his technique has left some wondering about the legality of his tool.
Dr. Jeffrey Segal, a neurosurgeon and founder of Greensboro, N.C.-based Medical Justice, created mutual privacy agreements that prohibit patients from rating their doctors. Wiggling through loopholes in the Communications Decency Act, the agreements transfer to the physician the copyright on any online content about the doctor. Segal’s business has licensed the agreements to 2,000 physicians, and he says the “vast majority” of patients sign them.
If a patient violates the agreement, the doctor can try to enforce it by asking the ratings website to remove the post.
While the American Medical Association has no policy on these agreements, its president, Dr. Nancy Nielsen, says Web forums “have many shortcomings.” Segal says a credible system, akin to the one used to produce Consumer Reports, would verify patient status, evaluate only technical competence and require a minimum of evaluations “to soften the extremes.”
While First Amendment considerations don’t factor in, Sam Bayard of Harvard University’s Citizen Media Law Project questions whether copyrights to content that doesn’t yet exist can be transferred. But, he adds, “private parties can do what they like.”
So far the agreements have not been tested in court. But that has not stopped them from being—according to Segal—unfairly characterized as gag orders, even though nothing in them prevents unhappy patients from suing, speaking to friends or complaining to licensing boards.
Bayard says rating sites are valuable because “individuals can con- tribute to the dissemination of information. There are defamation laws to redress speech that’s really bad.”
Invoking the “marketplace of ideas,” Bayard adds that the remedy for reckless speech is to allow more. “They are truly open forums. Someone else can come along and add a positive comment. It’s healthy.”
Even though I am a defense/corporate lawyer and am in general sympathetic to defense-side issues, the contract described by the article is to me a stunningly bad idea, and a contract of adhesion that courts can not and should not enforce when entered into prior to the care being provided. Suppose you have cancer and need treatment asap - how in the heck can anyone claim there is room for fair bargaining in such a situation ?
The AMA not taking a position is to me no correct. I cannot imagine our ethical rules for lawyers letting us do this sort of thing. I won't claim to be an ethics expert, but a quick flip through the rules brought caused me to focus on Illinois Rule 1.8(b. That rules specifically precludes lawyers from asking a client for rights related to publizing the facts of an engagement until the engagement is over. I presume that rule was aimed at blocking the lawyers from acquiring the rights to a sensational story as part of a retainer agreement, which is a somewhat different situation than teh doctor who is trying to avoid publicity. That said, the situations are alike in that clients cannot possibly know what is in their interest, or not, until the professional engagement is over, and so our rules block us from asking cleints to give up rights in advance. Rule 1.8(f) also is relevant as it precludes Illinois lawyers from seeking to limit our liability to our clients unless the client has separate counsel to evalaute that agreement.
I fail to see why doctors should be treated differently, especially when their mistakes actually can kill or badly injure a person. At least for civil lawyers, the worst we can usually do is to cost someone some moeny.
Comments anyone?
http://www.abajournal.com/magazine/a_prescription_for_silence/
Opening Statements
A Prescription for Silence
June 2009 Issue By Leslie A. Gordon
Once consumer websites began rating everything from restaurants to dog groomers, it was only a matter of time before doctors found their care and bedside manner critiqued online.
As many as 40 websites, including Zagat, Angie’s List and RateMDs.com, now feature anonymous, patient-written doctor ratings. Physicians say these unpoliced sites often publish unfair accounts that can destroy professional reputations. And, because the ratings usually are anonymous, doctors argue that the “patients” rating them may really be disgruntled employees, ex-spouses or competitors. Federal and state privacy laws prohibit doctors from responding, even to legitimate posts.
Now one doctor has figured out a way to help his colleagues fight back, but his technique has left some wondering about the legality of his tool.
Dr. Jeffrey Segal, a neurosurgeon and founder of Greensboro, N.C.-based Medical Justice, created mutual privacy agreements that prohibit patients from rating their doctors. Wiggling through loopholes in the Communications Decency Act, the agreements transfer to the physician the copyright on any online content about the doctor. Segal’s business has licensed the agreements to 2,000 physicians, and he says the “vast majority” of patients sign them.
If a patient violates the agreement, the doctor can try to enforce it by asking the ratings website to remove the post.
While the American Medical Association has no policy on these agreements, its president, Dr. Nancy Nielsen, says Web forums “have many shortcomings.” Segal says a credible system, akin to the one used to produce Consumer Reports, would verify patient status, evaluate only technical competence and require a minimum of evaluations “to soften the extremes.”
While First Amendment considerations don’t factor in, Sam Bayard of Harvard University’s Citizen Media Law Project questions whether copyrights to content that doesn’t yet exist can be transferred. But, he adds, “private parties can do what they like.”
So far the agreements have not been tested in court. But that has not stopped them from being—according to Segal—unfairly characterized as gag orders, even though nothing in them prevents unhappy patients from suing, speaking to friends or complaining to licensing boards.
Bayard says rating sites are valuable because “individuals can con- tribute to the dissemination of information. There are defamation laws to redress speech that’s really bad.”
Invoking the “marketplace of ideas,” Bayard adds that the remedy for reckless speech is to allow more. “They are truly open forums. Someone else can come along and add a positive comment. It’s healthy.”
Wednesday, June 3, 2009
Product Liability Claimants Unhappy with Chrysler and GM Bankruptcies
An article in The Hill reports that product liability claimants are not happy with the developments in the Chrsyler and GM chapter 11 cases, so they are taking the issue to new fora - the Senate and the media. A similar article is in the WSJ blog known as Deal Journal. Specifically, they are upset that money is not being set aside to pay damages for pending product liability claims. Set out below is the relevant text from the article. The claims are said to be worth over $ 1 billion. One assumes the asbestos claimants are happy to let the car wreck claimants lead the charge on this issue. One also wonders who purports to speak for product liability claimants who have not yet been hurt, but inevitably will be hurt.
________________________________________________________
Lawyers cry foul over GM
By Ian Swanson
Posted: 06/02/09 08:19 PM [ET]
Consumer groups and trial lawyers are crying foul over the Obama administration’s bankruptcy plans for General Motors and Chrysler.
Those plans would extinguish all ongoing auto accident claims that blame a death or serious injury on a defective GM or Chrysler vehicle.
“It’s a raw deal for consumers,” said Clarence Ditlow, executive director of the Center for Auto Safety.
Ditlow said the plans are unusual in that they would prevent anyone from bringing a future liability claim against GM or Chrysler if a car already purchased from either company is defective and results in an accident causing death or serious injury.
He and others said it was also unusual for no money to be set aside for liability claims. When companies producing asbestos went bankrupt, some funds were set aside for such claims, Ditlow said.
Pam Gilbert, of Cuneo Gilbert and LaDuca LLP in Washington, said Obama’s auto task force should have looked out more for consumers and those with liability cases as it negotiated the complicated bankruptcy plans for both companies.
She notes that the administration is guaranteeing warranties issued by GM during its bankruptcy, meaning someone could get a broken exhaust pipe found to be defective fixed even while GM is in bankruptcy.
This means “they will fix the car, but if someone with a car suffers a serious injury or death because of a defection, we won’t fix the person,” Gilbert said.
Although a committee representing consumers and those with cases against the companies was involved in negotiations over Chrysler’s and GM’s bankruptcies, the group has received less attention compared to unions and those holding company debt.
That may change on Wednesday, when victims and families of victims with claims against the companies hold a press conference outside a Senate Commerce Committee hearing on GM’s bankruptcy.
Those set to attend include the family of an ABC cameraman killed when the roof of his GM Suburban caved in during an accident, as well as the families of several children who suffered broken necks and blame faulty seatbelts, according to the Center for Justice and Democracy, a New York-based consumer group.
Three hundred plaintiffs seeking $1.25 billion in damages are affected, another attorney told The Wall Street Journal’s ‘Deal Journal’ blog.
General Motors says claimants will have the opportunity to submit their claims and have them resolved “as provided by the Bankruptcy Code and other applicable law, both as to amount and priority.”
“We won’t discuss specific claims or the possible outcomes, as that will be determined by the court,” it said in a statement.
But those claims must be made against the old GM company after bankruptcy, meaning people with the claims will need to stand in line with other unsecured creditors to seek compensation from the old company’s remains, Gilbert said.
The new GM that arises out of bankruptcy will not be liable for those claims.
Ditlow blamed Obama’s auto task force for the situation, which he said would ultimately add to other problems.
He cited the case of a young girl in New York left a quadriplegic from a car accident who has $500,000 in annual medical costs. That victim is likely to become a ward of the state, he said.
________________________________________________________
Lawyers cry foul over GM
By Ian Swanson
Posted: 06/02/09 08:19 PM [ET]
Consumer groups and trial lawyers are crying foul over the Obama administration’s bankruptcy plans for General Motors and Chrysler.
Those plans would extinguish all ongoing auto accident claims that blame a death or serious injury on a defective GM or Chrysler vehicle.
“It’s a raw deal for consumers,” said Clarence Ditlow, executive director of the Center for Auto Safety.
Ditlow said the plans are unusual in that they would prevent anyone from bringing a future liability claim against GM or Chrysler if a car already purchased from either company is defective and results in an accident causing death or serious injury.
He and others said it was also unusual for no money to be set aside for liability claims. When companies producing asbestos went bankrupt, some funds were set aside for such claims, Ditlow said.
Pam Gilbert, of Cuneo Gilbert and LaDuca LLP in Washington, said Obama’s auto task force should have looked out more for consumers and those with liability cases as it negotiated the complicated bankruptcy plans for both companies.
She notes that the administration is guaranteeing warranties issued by GM during its bankruptcy, meaning someone could get a broken exhaust pipe found to be defective fixed even while GM is in bankruptcy.
This means “they will fix the car, but if someone with a car suffers a serious injury or death because of a defection, we won’t fix the person,” Gilbert said.
Although a committee representing consumers and those with cases against the companies was involved in negotiations over Chrysler’s and GM’s bankruptcies, the group has received less attention compared to unions and those holding company debt.
That may change on Wednesday, when victims and families of victims with claims against the companies hold a press conference outside a Senate Commerce Committee hearing on GM’s bankruptcy.
Those set to attend include the family of an ABC cameraman killed when the roof of his GM Suburban caved in during an accident, as well as the families of several children who suffered broken necks and blame faulty seatbelts, according to the Center for Justice and Democracy, a New York-based consumer group.
Three hundred plaintiffs seeking $1.25 billion in damages are affected, another attorney told The Wall Street Journal’s ‘Deal Journal’ blog.
General Motors says claimants will have the opportunity to submit their claims and have them resolved “as provided by the Bankruptcy Code and other applicable law, both as to amount and priority.”
“We won’t discuss specific claims or the possible outcomes, as that will be determined by the court,” it said in a statement.
But those claims must be made against the old GM company after bankruptcy, meaning people with the claims will need to stand in line with other unsecured creditors to seek compensation from the old company’s remains, Gilbert said.
The new GM that arises out of bankruptcy will not be liable for those claims.
Ditlow blamed Obama’s auto task force for the situation, which he said would ultimately add to other problems.
He cited the case of a young girl in New York left a quadriplegic from a car accident who has $500,000 in annual medical costs. That victim is likely to become a ward of the state, he said.
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