Legal Drama of Asbestos Trial Is SRO in S.F.

Over the years, opera companies, ballet troupes and many other artists and entertainers have performed in the Nourse Auditorium here.

The current production, however, is unlike any other in the history of the 60-year-old, highly ornamented Beaux-Arts auditorium.

Since March, Nourse Auditorium has been the site of the largest and most complex trial in the history of California and perhaps the United States.

“It has to be. No doubt about it,” said veteran Los Angeles lawyer Seth M. Hufstedler.

On any given day, 75 or more lawyers from as far away as New York and Washington are in court to haggle over the meaning of words like expected and occurrence and of phrases like duty to defend and scope of coverage .

Lawsuits Filed

At issue is a dispute between about 70 asbestos manufacturers and insurance companies over who should pay for the damages sought by tens of thousands of workers who have been exposed to the cancer-causing mineral. In turn, many of the insurers are suing one another and their excess carriers.

About $2.5 billion is at stake, maybe nearly double that. A precise figure is hard to come by, in part because some of the disputed insurance policies, dating to the 1940s, cannot be found.

In all, nearly 100 law firms are involved, and some have dispatched as many as 30 lawyers to participate in various phases of the marathon trial.

“This is a once-in-a-lifetime experience,” said Chicago attorney Michael E. Dowd.

Millions of pages of documents have been produced as potential exhibits. One insurance firm by itself generated 14 million pages, and it was not alone.

In turn, attempts to introduce such documents as evidence have drawn about 200,000 objections.

To keep track of the paper work, dozens of computer terminals have been installed in the courtroom, including one at the judge’s desk, to tap into a common data base designed by American Legal Systems.

“It’s been called the most sophisticated litigation support in history, and it is,” said Marilyn James, director of sales and marketing for American Legal.

The trial judge, Ira A. Brown Jr. of San Francisco Superior Court, has moved his office and staff from nearby City Hall to the auditorium, where his office is a former women’s dressing room.

The case was still in the pretrial stages in the early 1980s, when Brown realized that no existing courtroom could accommodate all the lawyers during the trial. He appointed a committee of lawyers to find a suitable site.

Eventually, the warring parties paid $210,000 to convert the 1,800-seat auditorium into a courtroom. Hundreds of seats were ripped out of the sloping orchestra floor, and a level, richly carpeted floor was installed. So were a public address system and 28 conference tables, each equipped with a button linked to lights on the bench to let Brown know when one of the parties wishes to be heard.

Many of the out-of-town law firms have set up shop in San Francisco with their own libraries, paralegals, secretaries, copying machines and computer terminals.

So many lawyers have taken condominiums at the posh Opera Plaza nearby, Beverly Hills lawyer Ronald R. Robinson said, that it is nearly impossible to get into an elevator without bumping into another lawyer in the case.

In re Asbestos Ins. Coverage Cases, Judicial Council Coordination Proceeding No. 1072 opened on March 4. Unless there is an out-of-court settlement, the trial could go on for two years or more.

Because some of the disputes involve only a few parties, Brown divided the trial into phases.

One jury already has come and gone. That was in Phase I, which lasted six weeks.

‘Pretty Evenly Split

It focused on the missing insurance policies. A 12-member jury settled some of the disputes, and Brown settled the others. The decisions were “pretty evenly split” among manufacturers and insurers, San Francisco attorney Jeffrey Kaufman said.

Phase II dealt with medical definitions. What, for instance, was meant by asbestosis in decades-old insurance policies? Was it meant to include all asbestos-related diseases or only the specific disease now known by that name?

Brown heard those arguments without a jury; he has not announced his rulings.

In Phase III, considered a crucial stage, about 40 years of insurance policies are being examined in excruciating detail. It began in mid-September with nearly five days of opening statements.

Phase III may go a year, said Fred F. Gregory, a Los Angeles lawyer and liaison counsel for the attorneys from Southern California.

Also planned for Phase III is medical experts’ testimony about the nature of diseases related to asbestos, which was widely used as insulation in ships and buildings because of its fire retardant properties.

The precise onset of an asbestos-related illness, like the onset of many occupational and environmental diseases, is nearly impossible to pinpoint because of the long latency period between exposure and manifestation of disease.

Thousands of Suits

Starting in the 1970s, however, tens of thousands of ailing workers began suing asbestos manufacturers as a result of their on-the-job asbestos exposure.

In recent years, three such manufacturers, including the giant Manville Corp., filed Chapter 11 bankruptcies to shield themselves from further legal action.

Soon thereafter, insurers began refusing to honor their policies, thus giving rise to the massive litigation here.

At issue, specifically, is whether the billions of dollars in asbestos disease claims should be paid by insurers who provided coverage during the time a plaintiff was exposed to asbestos, or by subsequent insurers whose policies were in effect when an asbestos disease manifested itself, or by both.

In 1980, Manville sued 27 of its insurers. Most of those cases eventually were consolidated with similar lawsuits filed later by four other asbestos companies against many of the same 27 defendants and about 40 others.

Brown is hearing all the evidence and deciding for himself what are legal issues for him to decide and what are factual issues for a jury to decide.

The trial is “basically on schedule,” said Mark Vermeulon, one of Brown’s law clerks.

He said there will be several cleanup phases after Phase III, adding, “We haven’t decided just what they’ll encompass yet.”

Responsibility for Removal

One possible issue is who is responsible for the cost of removing asbestos from schools, office buildings and homes--the so-called property damage cases; so far, the trial has focused only on liability for personal injury claims.

There also is the question of punitive damages because many of the parties have accused one another of bad faith and of attempting to cover up their culpability to escape liability.

Furthermore, if the manufacturers lose--in other words, if it is decided that they did not have the insurance coverage they thought they had--they may well sue their insurance brokers.

And that, Hufstedler said with a twinkle in his eyes, “takes us up to about 1994.”

“It’s not the most efficient solution,” Brown readily acknowledged. “But nobody could come up with anything better.”

Brown is widely credited by the lawyers for running a tight ship. “It’s one thing to control two trial attorneys. But 100--that’s like being a master sergeant in the Marine Corps,” Dowd said.

Someday, after all the lawyers have gone home, one final question will remain: What to do with Nourse Auditorium.

It is part of a building that until 1952 was the city’s High School of Commerce. The building still is headquarters for the San Francisco Unified School District.

Restoration Considered

For $42,500 a year, the school district leased the auditorium--plus an upstairs gymnasium that has been converted into a library and law offices--to the litigants.

The school district has the option of having the auditorium restored at litigants’ expense or keeping it as is.

The betting is that it will stay as it is.

At least one other judge has expressed interest in the auditorium’s availability. His case stems from the onslaught of lawsuits filed by bondholders against the Washington Public Power Supply System over its default on $2.5 billion.

“These large cases are the wave of the future,” Brown said. “I think we are going to see a lot more cases like this one.”