[Congressional Record (Bound Edition), Volume 150 (2004), Part 5]
[Senate]
[Pages 6941-6944]
[From the U.S. 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

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now find themselves held responsible for the actions of other 
companies. These companies employ thousands of 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

[[Page 6943]]

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.
  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

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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 
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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