Tobacco and Asbestos Finally Meet in Court

Traditional alliances are taking a beating in the smoking wars. Filial piety is too.

Consider the latest assault on Big Tobacco--a multibillion-dollar suit against cigarette makers by the Manville Personal Injury Settlement Trust.

The trust, which was spawned by the 1982 bankruptcy of asbestos giant Johns Manville Corp., compensates workers for the asbestos-related diseases that drove Manville to seek bankruptcy protection. But the trust has been so inundated with claims that it is paying just 10 cents on the dollar. In its case filed Dec. 31 in federal court in New York, the trust is demanding that cigarette makers pour billions of dollars into its compensation fund, pointing to studies showing that smoking dramatically boosts the risk and severity of asbestos illness.

The scathing complaint accuses cigarette makers of waging “an aggressive campaign of disinformation and deceit” about the hazards of smoking--an eerie echo of the charges that brought asbestos makers themselves to their knees.

But the irony also extends to the pedigree of the lawyer filing the suit--Manville trust general counsel David T. Austern. During the time cigarette makers “and their agents” conspired “to mislead, deceive and confuse the public,” in the words of the complaint, the industry had no agent more important than Austern’s father.

During the 1960s and ‘70s, the late H. Thomas Austern generaled the tobacco forces through pivotal regulatory battles--helping to assure the industry would not merely survive, but prosper and grow.

“I was aware of [the irony] when I wrote the lawsuit,” David Austern acknowledged in an interview. “I’m sorry [my father] was involved in this.”

For their part, the cigarette makers say the lawsuit has no merit. Yet its mere existence could present a thorny obstacle to their cherished goal of getting Congress to ratify the giant tobacco truce announced in June.

Under terms of the agreement among the industry, state attorneys general and private anti-tobacco lawyers, cigarette makers would pay $368.5 billion to reimburse state health-care expenditures and fund anti-smoking programs. In return, tobacco firms would be immune from all manner of future legal claims except suits by individual smokers--who would be barred from seeking punitive damages. All class-action or group claims would be barred.

But in the days preceding the settlement announcement and the nine months since, the Manville trust and other groups that would be shut out by the deal have raced to the courthouse to file claims of their own before Congress can ratify the agreement.

*

For example, in California and 28 other states, new class-action suits have been filed by labor-management health insurance plans that serve millions of workers in a wide array of industries. The plans, joined together as the Coalition for Workers’ Health Care Funds, contend that their mainly blue-collar beneficiaries smoked more than average and suffered higher-than-average rates of smoking-related illness. As with the cases brought by state attorneys general, these suits contend that cigarette makers should reimburse the funds for the disproportionate financial burden imposed by diseases caused by smoking.

Moreover, three asbestos firms and trusts in addition to Manville have also gone to court since the settlement was announced. The case of former asbestos maker Raymark Industries Inc. is pending in federal court in Atlanta, Fibreboard Corp.’s case is pending in state court in Oakland, and that of the H.K. Porter Trust is in federal court in New York.

*

The past failure of asbestos interests to sue tobacco companies had been the subject of long-running speculation and debate within legal circles. That’s because studies have long shown that smoking is a potent contributor to asbestos disease.

For example, the U.S. surgeon general reported in 1985 that whereas the risk of lung cancer among asbestos workers was five times higher than average, it was 53 times higher for asbestos workers who smoked--and 87 times higher for those smoking more than a pack a day.

As long ago as 1982, a major insurance company, Commercial Union, implored asbestos firms to demand “that the tobacco industry pay its fair share of asbestos claims.”

Better late than never, say lawyers involved in the asbestos suits. They, along with representatives of the Coalition of Workers’ Health Care Funds, argue that attorneys general and industry lawyers had no authority to bargain away their legal rights. They say that unless the deal is broadened with money for them, they mean to pursue their suits.

But broadening the settlement is “a deal breaker,” said Austern, because “tobacco won’t go along with it.”

He predicted, however, that the asbestos lawsuits won’t be thrown out through any action of Congress, arguing that the legislation to implement the tobacco deal “would be on very thin constitutional ice if it tried to bar an existing lawsuit.”

Cigarette makers say they have no intention of sweetening the pot, arguing that $368.5 billion is generous enough. Tobacco firms “have put forward what they can afford to pay,” said Scott Williams, an industry spokesman.

Besides, Williams said, the recent lawsuits “have no merit” and will be seen by Congress as opportunistic. “We don’t think they will have an effect on the settlement,” he said.

*

Criticism also has come from an unexpected source: top asbestos plaintiffs’ lawyer Ronald M. Motley of Charleston, S.C.

The redoubtable Motley said he will be happy if the suit is successful but that he worries that the trust will end up “dissipating its assets” in a fruitless legal battle, with fees “going out by the handful and nothing come in.”

Motley himself is in a somewhat awkward position. As counsel to armies of asbestos victims, he plays an oversight role as one of three select counsels for trust beneficiaries. A legal victory for the trust would mean more compensation for Motley’s clients, and more fees for him.

But Motley also represents about 30 of the state attorneys general whose multibillion-dollar lawsuits triggered the tobacco settlement. Under terms of the deal--which Motley’s partner Joe Rice helped negotiate--the firm could get tens of millions of dollars in legal fees. His law firm, Ness, Motley, Loadholt, Richardson & Poole, has been lobbying for the deal and defending it against critics such as the Manville trust.

However, the oddest twist is the role of an Austern as tobacco foe.

David Austern was “saddened to see his father’s name coming up in documents which he now is going to use against the tobacco industry,” said Alan Morrison, a senior attorney with the Public Citizen Litigation Group who has known David Austern since the 1970s.

Austern’s father, who died in 1984, had been a senior partner with the powerhouse Washington law firm of Covington & Burling. A top regulatory attorney, Tommy Austern had helped keep the industry afloat in the turbulent wake of the 1964 surgeon general’s report linking smoking and lung cancer.

The industry, in a brilliant instance of landing on its feet, eventually induced Congress to mandate a weak cigarette warning label that, history would show, did little to discourage smoking but would prove a potent defense against claims by sick smokers.

In one celebrated episode, however, Tommy Austern risked the wrath of tobacco clients through an unfortunate burst of candor.

In 1969, when the Federal Trade Commission was considering mandatory warnings on tobacco ads, Austern testified at a hearing that “anyone not deaf and blind can today not be unaware of the hazards.” His failure to use the obligatory qualifier of “alleged” or “claimed” was duly noted in the media.

“This was the first time that a tobacco industry spokesman had conceded any link between smoking and health,” the New York Times observed the next day.

A horrified Austern staunchly insisted he had been misquoted by the newspaper and in the official hearing record. He petitioned the FTC to amend the transcript, and through “carefully applied appeals and belligerence,” in the words of one account, got the record changed.

Because Austern was a member of tobacco’s inner circle, his name appears in documents surfacing in anti-tobacco lawsuits. According to critics, such documents show that tobacco lawyers improperly invoked the attorney-client privilege to conceal papers that should have been provided to legal adversaries and public agencies.

*

For example, a 1963 document discusses the need to keep secret any negative findings of a survey the industry was planning to conduct.

“Mr. Austern has suggested that should the results of the survey prove unfavorable, they may be subpoenaed or otherwise may fall into the hands of the FTC, a congressional committee or a plaintiff in pending cancer litigation,” the memo states.

Thus, according to the memo, the findings and all records will be given to the lawyers because “the danger of a successful subpoena would be reduced . . . if the survey were in an attorney’s files.”

David Austern, 58, who also teaches legal ethics at American University, recalled arguing with his father about his tobacco work during his college and law school years.

Said Austern: “My dad was the smartest lawyer I’ve ever known,” but his defense of tobacco and other product-liability cases “troubled me.”