Tobacco Litigants: Take a Look at Asbestos

Advice to those who viewed the recent tobacco deal as a settlement in the making and are now waiting for the signing ceremony: Consider asbestos and exhale.

In 1973, a federal court in Texas held that workers who had been injured by exposure to asbestos could sue asbestos manufacturers to collect compensation for their losses. So began a saga of almost a quarter century of workers’ attempts to recover damages for medical care, disability and other less easily quantifiable losses.

Hundreds of thousands of claims would be filed against scores of companies in industries ranging from shipbuilding to oil refining to auto brake manufacturing. Billions of dollars would be spent on legal fees, and more than a dozen companies driven into bankruptcy. After years of waiting, some workers’ families would receive hundreds of thousands of dollars in compensation, but most would receive far less. Those who lined up early were likely to get more than those who came later. Severity of illness would have little to do with these outcomes. Indeed, significant sums would be paid to workers who had been exposed to asbestos but showed no signs of disease.

There would be only one constant: Whatever workers got, the lawyers would always get more.

Judges struggled to devise ways of dealing with a litigation flood that rose, inexorably, from a few thousand claims to tens of thousands to a crest that is variously estimated from hundreds of thousands to more than 1 million. Individual litigation seemed impossible, but legal rules for combining cases didn’t appear to fit a diverse set of claims.

The lawyers insisted they were protecting the workers. The companies contended they would protect the workers if only the lawyers would get out of the way. The law professors lectured about the importance of maintaining workers’ access to the legal system. The workers never got a word in.

From time to time, some group or other sought help, always in the same direction. Company lobbyists and judges pleaded with Congress to step in. A committee appointed by Chief Justice William Rehnquist concluded that something needed to be done, and only Congress could do it. But Congress refused to act. “Too much money,” the senators and representatives said. “Could become another one of those expensive benefit programs.”

At length, lawyers, judges and companies alike gave up on Congress and turned to devising ways of settling the immediate and prospective caseload wholesale. Critics fretted that future claimants--asbestos-related diseases can take up to 40 years to develop--had no role in determining the nature of the settlement. Everyone avoided the fact that the current claimants played no real role either.

On June 25, the latest chapter in the asbestos saga was written by the U.S. Supreme Court. The justices held that a plan approved by a federal court in Pennsylvania to settle all claims against a consortium of asbestos defendants did not adequately reflect the full complexity of the litigation and sent the lawyers back to the drawing board. A nationwide administrative scheme, they added, might be fairer and more efficient than anything the lawyers could devise. But only Congress could do that.

Developing an administrative compensation system that provides fair and efficient compensation to injured workers, keeps culpable defendants on the hook and avoids expending scarce resources on those with only minor injuries is no easy task. But other governments have managed to do it. The state of New South Wales in Australia combines workers’ compensation benefits, funded by a special surcharge on employers, with access to the courts for those who think they deserve more or want to claim punitive damages. That plan spreads the costs of taking care of asbestos victims across the economy, while providing a safety valve for those who want to pursue legal remedies. Other countries rely on national health and disability insurance plans, with limited access to the courts for those who want to claim damages for pain and suffering. The pie is smaller, but lawyers get less, workers more.

Perhaps our asbestos problems are more complex than those of others. But if Congress can’t devise a way out of the asbestos litigation mess, what makes us think it can deal with tobacco?