Caroselli, Beachler & Coleman, L.L.C.

Asbestos liability ruling could affect Allegheny County cases

The bankruptcy of two subsidiaries of RPM International, Inc. is significant for plaintiffs in asbestos liability cases. Bondex International Inc. and Specialty Products Holding Corp. filed for bankruptcy three years ago. Both companies manufactured products containing asbestos, a substance linked to severe lung diseases including fatal mesothelioma.

A bankruptcy judge recently issued a written ruling that affects the money the companies must have in reserve to pay settlements and awards in ongoing and future asbestos litigation. Once the asbestos trust is emptied, no future damage claims would be possible.

Company estimates of $300 to $575 million were well below what the judge felt was adequate. The court rejected the companies' request and recommended a liability trust of $1.2 billion, double what the businesses expected.

The amount was not a random figure. The judge based her ruling on facts from an estimation proceeding, where the companies' litigation past was reviewed. The judge could estimate what the future might hold by looking at the companies' history of paid settlements and claims.

Attorneys for Specialty Products argued the judge's opinion overvalued plaintiffs' injuries and claims due to the inclusion of nuisance or low-merit settlements. An appeal is planned.

Settlements do not represent a defendant's admission of liability; however, the judge believed settlements paid by Specialty Products and Bondex had value that could not be dismissed. Legal observers wonder how the ruling will impact other asbestos-related cases.

Companies commonly settle minor claims through settlements often to save costs or avoid negative business publicity. By adding value to a settlement, the judge appears to say that the size of a damage claim may have nothing to do with legitimacy.

Some plaintiffs feel damage awards are secondary in liability lawsuits. Monetary awards satisfy a need for plaintiffs to recover from economic losses. In some lawsuits, victims are more desirous of public confirmation that a defendant was responsible for harm.

Source:  newsandinsight.thomsonreuters.com, "Bankruptcy judge rejects 'novel' theory to limit asbestos liability" Tom Hals, May. 21, 2013

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