[Congressional Record Volume 150, Number 50 (Monday, April 19, 2004)]
[Senate]
[Pages S4084-S4087]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ASBESTOS LITIGATION REFORM
Mr. DeWINE. Madam President, shortly, we hope to be taking up S.
2290, the asbestos bill. I have come to the Senate this afternoon to
talk a little bit about the legislation. It is a good bill. It is a
bill that, quite frankly, needs to be passed. I believe our civil
justice system generally works very well. Like many of my colleagues on
both sides of the aisle, I think our State and Federal courts are a
vital part of our entire system of government. Our court system ensures
a level of fairness and justice for our citizens that is second to none
in the entire world.
Our civil justice system works well when we let juries decide
disputes between two individuals or a limited number of parties. It
usually works well in class action cases with large numbers of
individuals with similar injuries caused by one or a handful of
defendants. But we all have to admit our justice system is not perfect.
It doesn't always work.
We all know our justice system has failed to deal with the asbestos
crisis. I use the term ``crisis'' because that is exactly what it is.
The system is not adequately protecting the rights of victims nor
defendants. As things stand now, some victims are successful in getting
jury verdicts that compensate them fairly. But many victims have no one
to sue and receive perhaps 5 percent or 10 percent of the total value
of their claims from asbestos bankruptcy trusts. That is not right. It
is not fair.
On the other extreme, some victims receive huge awards or settlements
that are way out of proportion to their injuries. The bottom line is,
more and more victims face a risk of never being compensated for
asbestos-related illnesses at all, ever.
It is our responsibility in the Senate to deal with this crisis. We
must not wait any longer to act. I would like to take a moment to talk
about why we have this asbestos crisis and why the courts are ill
equipped to deal with it.
First, the sheer volume of claims is staggering. So far through the
year 2002--the last figures we have--730,000 individuals have made
claims for asbestos exposure, and the most recent Rand study estimates
that anywhere between 1 million and 3 million total individuals could
make claims in the future.
The second factor is the unusual nature of the illnesses caused by
exposure to asbestos. As witnesses before the Senate Judiciary
Committee testified, there is a long latency period between exposure to
asbestos and the actual illness or impairment. People are exposed to
asbestos for long periods of time and then don't show symptoms of
illness for 25 or sometimes even 30 years. Not everyone exposed to
asbestos ever gets sick, thank heavens. Yet our tort system requires a
potential victim to file his or her claim for injury within a year or
two from discovering the potential harm. What this means is the vast
majority of people who are filing claims don't have any actual symptoms
at that time, and many may not ever even get sick. Still they have to
sue to protect their rights.
Third, many of those who are exposed to asbestos feel compelled to
sue immediately because the number of financially sound potential
defendants is rapidly diminishing. Someone who has been exposed to
asbestos, even if he or she has no symptoms, may decide to sue now or
take the risk that nobody will be left to pay a claim down the road.
Clearly, this system isn't meeting the needs of victims, and it also
is causing tremendous problems for the business community. Candidly,
asbestos liability is bankrupting many potential defendants as claims
are now being brought against businesses that have a very remote
connection to the manufacture of asbestos. So the impact of asbestos
claims is overwhelming, not just to some of our Nation's largest
companies but to our small businesses as well.
As a consequence, tens of thousands of workers, people employed by
these businesses, are, in fact, being affected. Thousands and thousands
and thousands of people are being affected. Employees and their
families who never had any exposure to asbestos are, in fact, feeling
the effects in lost wages, and for many of them lost jobs.
The impact in my State of Ohio is particularly severe. From 1998 to
the year 2000, Ohio was one of the top five States in which asbestos
litigants chose to file their suits. This is partly because Ohio is the
home of many businesses that at one time or another used asbestos in
products. It is also likely the result of a litigation strategy in
which attorneys look for a court that has a history of allowing overly
generous verdicts for claimants. This is known, of course, as forum
shopping. But either way, literally thousands of companies have been
named as defendants in our Ohio courts.
Out of 8,400 firms that have been named as defendants nationwide,
over 7,000 have been named in cases filed in Ohio. Of the 66 or so
companies that filed bankruptcy because of asbestos-related liability,
more than 20 of these companies are headquartered or have significant
facilities in Ohio.
Perhaps most important is the impact this has on jobs. More than
200,000 people worked for those bankrupt companies. Not every job was
lost, but many were because of the bankruptcy and many employees were
affected in other ways. It is simply devastating for an employee whose
employer goes bankrupt--wages are cut, promotions are scaled back, and
pension funds can be completely wiped out. Of course, many of these
200,000 employees are in Ohio.
Let me be clear--I believe that companies should be held accountable
for their conduct. I am concerned, however, about the many companies
that now find themselves held responsible for the actions of other
companies. These companies employ thousands of
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people and contribute to our economy and tax base. No one, including
the victims of asbestos, is served by the closure or dramatic
reorganization of these companies. With both victims and employers at
risk, we have no choice but to enact a legislative remedy to address
this problem. We need to do something that protects the rights of those
harmed by exposure to asbestos and allows businesses at least to
predict how much this crisis will cost. ``Predictability'' is the key
word for business. The FAIR Act provides that protection and
predictability--protection for the victims and predictability for
business.
Mr. President, I will respond to an ad campaign that paints the FAIR
Act as nothing but a bailout for big companies that manufactured
asbestos products. The ad includes some outrageous and indefensible
quotes from asbestos company executives, and implies that Congress
wants to bailout the companies that were the source of these quotes.
I want to try to set the record straight. But first, I want to say
that I would not, under any circumstances, vote to bailout any company
that intentionally harmed its employees. However, this bill is not
about releasing big asbestos companies from liability simply because
there are virtually no companies left that manufactured asbestos.
With one notable exception, they all went bankrupt. I'll talk about
the exception in a moment, but let me tall you what the essential facts
are with regard to asbestos manufacturing companies. Johns-Manville
went bankrupt in 1982; 48 Insulations went bankrupt in 1985; Raymark
went bankrupt in 1989; Celoteax went bankrupt in 1990; Eagle Picher
went bankrupt in 1991; Armstrong World Industries went bankrupt in
2000; Babcock & Wilcox went bankrupt in 2000; Federal Mogul went
bankrupt in 2001; Owens-Corning went bankrupt in 2000; U.S. Gypsum went
bankrupt in 2001; and W.R. Grace went bankrupt in 2001.
Some of these companies had a lot to answer for with regard to the
asbestos exposure; others manufactured asbestos products before the
dangers were known. We don't need to judge their culpability, however.
They no longer exist as companies that must account for their conduct
with regard to asbestos. And, most importantly, this bill has little
effect on these companies. It is clearly not a ``bailout.'' Here's why.
In an asbestos liability bankruptcy, a majority of the assets of the
company are put into a trust fund to compensate asbestos claimants. I
want to note here that traditional creditors, such as banks, suppliers,
and stockholders are the minority creditors and often get mostly shut
out of recovery all together.
Please keep in mind that a company's stockholders often include the
company's pension fund. This bankruptcy process eliminates all of a
company's asbestos liability. If there is a ``bail out'' here, it is in
the current bankruptcy code.
The Johns-Manville Company is a perfect example of an asbestos
manufacturing company gone bankrupt. For years, Manville produced a
whole range of products containing asbestos and had as much as one half
the market share for manufactured asbestos products. They were the
subject of intense asbestos litigation and filed for bankruptcy in
1982. All the assets of Johns-Manville were sold years ago and the
proceeds are in the Manville Trust. Johns-Manville as it existed pre-
bankruptcy is long gone. The Manville Trust exists solely to compensate
victims of asbestos exposure.
In the real world, as it exists today, Johns-Manville's asbestos
liability is limited to the assets which are held by the Manville
Trust. Johns-Manville will never have to pay another dime for asbestos
exposure, over what is currently in the trust. Under our bill, all the
money in the Manville trust will be rolled into the national trust.
Manville will not get a dime back; they will not save a single dime.
And, they are not relieved from a single cent of their existing
liability. This is true for all the asbestos manufacturing companies,
which have gone bankrupt.
My point is that the suggestion that this bill bails out big asbestos
manufacturing companies is almost silly--there are virtually no
``asbestos'' companies left to bail out.
And, I should note, the Manville Trust is currently paying claimants
5 cents on the dollar. So, the future victims of asbestos exposure
whose only recourse will be against the Manville Trust do stand to
benefit greatly by this bill. The truly sick individuals who only have
claims against Manville will receive significantly more compensation
under the national trust than they would from Manville.
Now, I mentioned an exception a minute ago. There is one company that
could be considered an asbestos manufacturing company. The company is a
large and diversified manufacturer. But, it had a small division that
made pipe that included asbestos up until 1958, when the pipe
manufacturing division was sold.
But, here is the key--to date, this company has paid more than $1.5
billion towards its asbestos liability--liability that is largely
exhausted because it has not manufactured an asbestos product for 45
years. Nonetheless, under this bill, the company will pay hundreds of
millions of additional dollars into the trust fund. Is this bill a
``bailout'' for this company? Clearly, it is not.
Mr. President, in addition to protecting the victims of asbestos
exposure, at issue in this bill are small and mid-size businesses which
did not manufacture asbestos products. These are businesses that
provide needed jobs to Americans across the country--businesses that
are being driven to bankruptcy themselves due to the remotest of
connections to asbestos.
These are bankruptcies that will cost thousands of Americans their
jobs and their pensions--bankruptcies that mean that fewer and fewer
victims will receive compensation in the civil justice system. This is
why the legal system is broken and why we need the bill before us to
help fix it.
Mr. President, I will talk about just one example from my State of
Ohio. In my State, there is a medium-sized company that employs over a
thousand hardworking Ohioans. Before the dangers of asbestos were
known--when the industry standard was to use asbestos in a variety of
products--this company sold a home repair product for do-it-
yourselfers; the product was a drywall paste. This product was not used
in big commercial applications. Professional contractors did not use
this product. It was sold in local hardware stores to average Americans
who wanted to do things such as patch nail holes in their own homes or
maybe finish the inside of a garage.
At its peak, this company had less than a 1-percent market share for
this product and made less than $500,000 total. As soon as the dangers
of asbestos were known, this company immediately stopped production of
their product.
I would like everyone to keep in mind that the majority of harm
caused by exposure to asbestos is a result of occupational exposure
which is individuals who routinely work with asbestos products on the
job over a long and continuous period of time. It was unlikely that
anyone had any occupational exposure to the product made by this Ohio
company.
Let's take these two important facts together. One, the product was
not sold for use in commercial settings. By definition, then, an
individual could not have been exposed to this product over time as
part of his occupation and, two, a vast majority of asbestos-related
diseases were only caused by occupational exposure over long periods of
time. One would think this adds up to a pretty good defense in
litigation. One would think this company should not fear defending
themselves in court. One would think they would do OK in our civil
justice system. Let me tell you what has happened over the last few
years to this company.
They have been named in over 4,000 lawsuits that include something
like 15,000 individual claimants. The company has actually won all of
the few cases it has tried. However, in most of these cases, they have
a number of codefendants ranging from 6 to 20 or sometimes 30 in a
single case. Sometimes these codefendants settle early on. Sometimes
codefendants are bankrupt companies which were, in fact, bad actors
when it came to asbestos.
As litigation proceeds, this Ohio company finds itself in an
extremely difficult position over and over. It may be one of three or
four solvent defendants left in the case. Although it has a valid
defense, other defendants may not have a good defense.
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The problem is, many States have something called joint and several
liability. What that means is if a jury finds another defendant liable
and grants a huge jury verdict and that liable defendant is bankrupt,
our Ohio company is on the hook for the entire amount. So instead of
taking a chance, the company I am talking about in Ohio figures it is
in their best interest to settle. They settle over and over again in
cases in which they have a legitimate, significant defense.
In this example, this Ohio company has spent in excess of $175
million on asbestos litigation so far. They have a good defense. They
have won 100 percent of the cases they have taken to trial. Yet they
have spent $175 million on asbestos litigation.
The Senate is not a court. We are not in a position to judge
liability or nonliability of every defendant. I am not asking my
colleagues to do this, but I can say this Ohio company seems to have an
extremely good defense to liability, and a jury has said so several
times. I doubt all manufacturers that have been named in lawsuits have
such a good defense. So I want to make it clear that the last thing I
want is for a company that is legitimately liable for causing someone
harm to get off free. There is really no chance of that under this
bill, and I want to make that clear.
Under this bill, this Ohio company I described will be required to
pay $450 million into a trust fund for people who have health problems
caused by exposure to asbestos. That is $450 million in addition to
$175 million already spent. That does not seem fair. It does not seem
fair to them when they look at it. But this company and hundreds of
others like it are willing to go along with this solution even though
to them it does not seem fair. It does not seem fair to them when they
look at it, but they are willing to do it because it is better than the
status quo. It is better than the uncertainty they are facing today. It
is going to be painful for the companies and their employees, but it is
better than the uncertain future they face under the status quo today.
I have heard from several Ohio companies that, frankly, are not happy
about some of the provisions of this bill. If we can debate this bill
in the Senate, I plan to work with Senator Hatch and others to make
some additional refinements to the bill. Still, I anticipate that many
businesses will be concerned that we have gone too far and demand they
pay too much into the trust fund. But it is what must be done, I
believe, to guarantee that American owned and operated companies have
the certainty and predictability they need in dealing with their
potential asbestos liability. Hopefully, we will save companies from
the bankruptcies that cost jobs and pensions.
I would like to conclude my remarks. I see my colleague from
Tennessee is in the Chamber. I assure him I am wrapping up. I conclude
my remarks by talking for a couple more minutes about the process that
has led us to this point where we are actually debating whether to
bring the asbestos reform bill to the Senate floor for debate.
I have been working on and supporting efforts to deal with the
asbestos crisis for most of my time in the Senate. A little over a year
ago, my staff and I had numerous meetings to discuss the issue. I met
with a lot of folks from Ohio who told me stories that the impact of
the asbestos crisis had on them. These meetings were not only happening
in my office, but were happening all over the Senate in Democratic and
Republican offices alike. My colleagues had similar experiences. They
were experiences with companies, but, frankly, they were also
experiences with victims.
We had a hearing in the Judiciary Committee in early March of 2003.
Then I recall participating in a bipartisan asbestos summit which was
organized by our friend and colleague, Senator Dodd. That occurred
April 1 of last year. A large number of Senators on both sides of the
aisle participated in that summit. Then for months, through the spring
and summer, we all worked intensely, meeting and negotiating. A point
came when we decided the best approach to solving this problem was to
create a privately funded trust which would be managed by the Federal
Government to compensate victims.
This approach won out over the traditional-tort-reform-type approach
that had been discussed previously. Some of my colleagues were not
happy about that decision, and some outside businesses affected by
asbestos were not happy about that decision either, but it was a
compromise reached with the input of a number of Republican and
Democratic Senators and with the input of industry and organized labor.
Our staff and outside groups representing organized labor, big and
small manufacturers, and insurers met and worked for dozens of hours on
the structure of the fund, medical criteria, claims values, and
funding. They worked on nights and weekends. I recall when my staff
reported to me about progress in an intense all-day session on a sunny
Saturday in June, which included representatives from the AFL-CIO, the
Asbestos Study Group, the Asbestos Alliance, the American Insurance
Association, and staff from Senator Leahy's office, Senator Kennedy's
office, Senator Dodd's office, Senator Hatch's office, my office, and
other offices as well.
I recall we had another meeting in the Judiciary Committee in early
June. I recall that we welcomed the attendance of other Senators who
were not on the Judiciary Committee at that hearing. I believe Senator
Dodd, Senator Carper, and Senator Murray attended some of the hearings.
I know staff from many other Senate offices were there as well.
My only point is this was a group effort, where virtually every
Member of the Senate it seems like at one time or another has been
involved.
Negotiations continued behind the scenes. Every Senate office and
every party was not at every single meeting. That would not have been
impractical, if not impossible. Yet countless suggestions, and
suggestions from Senators and outside parties, were included in the
discussions and negotiations. Then in June 2003, the Judiciary
Committee began marking up a draft bill which we formulated from the
earlier discussions--and what a markup it was. It was an unbelievable
time. I think it took place during 4 full days over the course of
several weeks. I think we adopted 35 bipartisan amendments, many of
them making significant changes to the bill.
It is safe to say not a single Senator on the committee was entirely
happy with the resulting bill we reported. While the final vote was not
overwhelming, the process was bipartisan. Nobody got everything they
wanted. In fact, we created a little bit of a mess. It is a large and
complicated bill, and some of the amendments we adopted conflicted with
others. Some of the amendments we adopted sounded very reasonable, but
frankly did not withstand post-markup scrutiny. That is the way it
works sometimes in the Senate.
So the negotiations and redrafting started again, as often happens in
large, complex bills. Again, many Senators from both sides of the aisle
and outside parties submitted input into the process. Meetings took
place on at least two or three different tracks. Senator Frist's office
led staff negotiations that included representatives for Senator
Daschle, Senator Hatch, Senator Leahy, Senator Specter, Senator Dodd,
and others. Again everyone was not at every meeting. Many times more
than one meeting was going on. It was not practical to have everyone
who was interested in attendance at all times, but a range of political
views was represented at these meetings.
At the same time, Senator Specter convened a series of very important
meetings with the help of retired Circuit Judge Becker. These
comprehensive meetings involved stakeholders in the asbestos issue,
many of whom I have mentioned earlier. These meetings continued up
until last week, as I understand it.
I have gone through this tedious history for one reason, to point out
this bill is not a result of a single Senator's partisan effort to
craft a biased asbestos reform bill. Anyone who thinks that just has
not followed the laborious history of this bill. That is not the fact.
That is not true. Thousands of hours have gone into creating this bill
with input from all directions in this Senate. It is easy to say now,
well, that was not or this was not put into the bill or that meeting
was not attended or I was excluded from that meeting, or hundreds of
other allegations that the process for this bill was insufficient or
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maybe not even fair. The fact is this has been a good process.
I conclude by saying in fact the process that led to this bill was
comprehensive, it was fair, it was bipartisan. I do not think we should
use complaints about process as an excuse to vote against proceeding to
debate on this bill. We should bring this bill to the floor. We have
been through a long, laborious, and a good process. It has gotten us
this far.
If anyone would have said to me 2 years ago, 3 years ago, 18 months
ago we would have been this far on this bill, I would have said, I do
not think so; I do not think we can craft a bill that would be even
this close. We have come a long way.
First of all, we owe it to the victims who are still not being
compensated, either at all or adequately, to craft this bill and to
report a bill. We owe it to the victims to debate this and give it our
best efforts on the Senate floor. Too much work has gone into this. We
have come too far. We owe it to the workers who will lose their jobs if
more companies have to declare bankruptcy or if more companies go out
of business. We owe it to those companies, but most of all we owe it to
the victims.
So let's bring this bill to the floor. Let's give it the chance it
deserves. We have put a great deal of effort in it. Let's do the right
thing, bring this bill to the Senate floor.
I thank my colleague from Tennessee for his indulgence.
I yield the floor.
The PRESIDING OFFICER. The Senator from Tennessee.
Mr. ALEXANDER. Madam President, I commend the Senator from Ohio for
his comments on the asbestos legislation. This is a time when Americans
are concerned about jobs, especially about manufacturing jobs. In the
State of Tennessee, as in the State of Ohio, a large number of those
jobs are in the automotive industry. About one-third of the
manufacturing jobs in Tennessee is in the automotive industry. Making
automobiles is a very competitive business. There are companies all
over the world making cars. They are putting their assembly plants and
their parts suppliers in Ohio and in Tennessee, but they can put them
in Germany, South Korea, Mexico, and other places. If costs in
manufacturing cars and trucks in America go a little bit higher, then
we hear a lot about jobs going overseas.
All Senators who are worried about good manufacturing jobs going
overseas, jobs in the automotive industry in Ohio and in Tennessee,
should be wanting to come to the Senate floor and raise their hand and
say, let's get on with this asbestos legislation because it is slowing
down our economy, it is going to hurt the companies that produce the
jobs and it is keeping the victims from getting a fair recovery. So I
congratulate the Senator from Ohio. This helps Americans, and it is a
piece of jobs legislation. I hear about it from auto parts suppliers. I
hear about it, as I am sure the Senator does, from many manufacturers.
I thank him for his leadership. I ask unanimous consent to be
recognized as in morning business for the purpose of introducing
legislation.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ALEXANDER. I thank the Chair.
(The remarks of Mr. Alexander and Mr. Chambliss pertaining to the
introduction of S. 2319 are located in today's Record under
``Statements on Introduced Bills and Joint Resolutions.'')
Mr. ALEXANDER. Madam President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. CHAMBLISS. Madam President, I ask unanimous consent that the
order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
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