High Court OKs Extra Damages for Cancer Fear

Corporate America’s asbestos liability problem grew worse Monday, when the Supreme Court ruled that a worker’s fear of developing cancer can be the basis for winning extra damages from his employer.

The 5-4 ruling came in a lawsuit against a railroad company, but the logic of the court’s decision will extend broadly, beyond even asbestos cases, business experts said.

“This is not a good result for us,” said Stephen Bokat, general counsel for the U.S. Chamber of Commerce. “The fear of cancer has arisen in lots of cases involving not just asbestos but other toxic substances. We see this as opening a huge door with a potential for very large damage awards.”

But a Dallas lawyer representing asbestos victims downplayed the decision. The notion that fear of cancer is enough for a worker suffering from asbestos exposure to win additional money “has become fairly well accepted in the state courts,” Brent Rosenthal said.

Paying for the damage caused by asbestos has spawned a new industry in law and driven at least 57 companies to file for bankruptcy, including 26 since Jan. 1, 2000.

Until the 1970s, asbestos was commonly used for fireproofing, insulation and brake linings. By then, it had become clear that inhaling the dust from asbestos fibers caused lung damage and cancer.

But the disease, like the liability problem, was slow to develop. Workers exposed long ago are still filing asbestos claims. Employers have looked to the high court for help, but their hopes have been dashed on several occasions.

Citing a recent study by the Rand Institute for Civil Justice in Santa Monica, the high court on Monday said that asbestos litigation has consumed about $50 billion already and that the total cost may exceed $200 billion.

The justices said Congress should pass new laws to cope with the “elephantine mass of asbestos cases.” In the meantime, the court said, it will not change the ordinary rules of liability to shield employers from paying injured workers.

The ruling upheld jury verdicts won by six retired railroad workers in West Virginia who were exposed to asbestos on the job and suffered scarring of their lungs. They said they feared they would die of cancer.

Over the objections of the railroad’s lawyer, the trial judge had told the jurors they could award extra money to those workers who “developed a reasonable fear of cancer that is related to a proven physical injury from asbestos.”

All six had asbestosis, a noncancerous scarring of the lungs. The jury handed down awards of $770,000 to $1.2 million but didn’t say how much of the total was based on the plaintiffs’ fears of contracting cancer.

Six years ago, the high court ruled that “disease free” workers who were exposed to asbestos cannot win damages simply for their fear and emotional distress.

Last year, corporate lawyers were cheered when the Supreme Court agreed to hear the railroad’s appeal in the West Virginia case. The U.S. Chamber of Commerce, the American Insurance Assn., the Coalition for Asbestos Justice and the Bush administration joined the case on the side of the railroad. They urged the court to rule broadly that “emotional distress” cannot be the basis for a damage verdict, even for workers whose lungs were scarred by asbestos.

Instead, a narrow majority ruled Monday that under traditional principles of liability, persons who suffer a true injury or disease can seek extra compensation for “future harm genuinely feared.”

Workers like those who had scarred lungs may recover “mental anguish damages resulting from fear of developing cancer,” Justice Ruth Bader Ginsburg said in Norfolk & Western Railroad vs. Ayers.

“Courts must resist pleas ... to reconfigure the established liability rules because they do not serve to abate today’s asbestos litigation crisis,” Ginsburg added. Her fellow liberals John Paul Stevens and David H. Souter joined Ginsburg, as did conservatives Antonin Scalia and Clarence Thomas.

Although the decision interpreted the federal law governing railroads, the court’s statement of liability principles will have a broad effect, lawyers said.

“This case will be widely cited in the state courts,” Bokat said.

In dissent, Justice Anthony M. Kennedy called Monday’s ruling “imprudent” because it will take money away from future claimants who develop cancer. “Today’s decision is not employee-protecting; it is employee-threatening,” he wrote.

In a separate dissent, Justice Stephen G. Breyer questioned the awarding of damages based on “pure speculation” about the emotional cost of fear and anguish. The fear may be real, but there is no way to measure it in dollars, Breyer said.

Also dissenting were Chief Justice William H. Rehnquist and Justice Sandra Day O’Connor.

Victor Schwartz, counsel for the Coalition for Asbestos Justice, was disappointed by the outcome but said he was heartened that the court’s decision was confined to those who are “really sick.”

“It is virtually unprecedented for the court to call upon Congress three times to fix a serious problem,” Schwartz added.

Twice before, the justices have said the asbestos crisis requires national legislation, but Congress has failed to agree on a formula for resolving the problem.