Manville Offers $2.5 Billion to Victims of Asbestos Dust Summary

  • Last updated on November 10, 2022

The accord reached between the leading manufacturer of asbestos in the United States and victims of asbestos-related health problems brought to an end an almost twenty-five-year-old legal battle.

Summary of Event

The wonders of asbestos, the “magic mineral,” have been known since the days of the ancient Greeks. The great advantage of asbestos is that it is fire-resistant yet asbestos fibers are soft and flexible, making it relatively easy to fabricate into a wide range of products. Although relatively unimportant in antiquity, asbestos became extremely important during the Industrial Revolution in Europe and the United States in the nineteenth century. Because asbestos is incombustible, it became indispensable as an insulation material on furnaces, turbines, boilers, steam pipes, and ovens as well as an integral material in the shipbuilding and construction industries. Manville Corporation Asbestosis Lawsuits;asbestos exposure [kw]Manville Offers $2.5 Billion to Victims of Asbestos Dust (Winter, 1985) [kw]Victims of Asbestos Dust, Manville Offers $2.5 Billion to (Winter, 1985) [kw]Asbestos Dust, Manville Offers $2.5 Billion to Victims of (Winter, 1985) Manville Corporation Asbestosis Lawsuits;asbestos exposure [g]North America;Winter, 1985: Manville Offers $2.5 Billion to Victims of Asbestos Dust[05890] [g]United States;Winter, 1985: Manville Offers $2.5 Billion to Victims of Asbestos Dust[05890] [c]Environmental issues;Winter, 1985: Manville Offers $2.5 Billion to Victims of Asbestos Dust[05890] [c]Manufacturing and industry;Winter, 1985: Manville Offers $2.5 Billion to Victims of Asbestos Dust[05890] [c]Health and medicine;Winter, 1985: Manville Offers $2.5 Billion to Victims of Asbestos Dust[05890] Brown, Vandiver McKinney, John A. Selikoff, Irving J. Stephenson, Ward

Unfortunately, asbestos, for all of its positive properties, contained a serious and deadly drawback. As early as the first century c.e., the Greeks mentioned lung problems afflicting slaves who wove asbestos fibers into cloth. This information was virtually ignored until 1906, when a British physician, H. Montague Murray, Murray, H. Montague performed an autopsy on a man who had spent fourteen years working in an asbestos textile factory. On the basis of slender slivers of asbestos found in the man’s lung tissues, Murray concluded that the worker’s death was connected to his occupation.

Murray’s discovery could have been devastating to the booming asbestos industry, especially for the Johns-Manville (J-M) Corporation, the world’s largest manufacturer of asbestos. In 1929, the Metropolitan Life Insurance Company, Metropolitan Life Insurance Company at the request of several leading corporations within the asbestos industry (including J-M and Raybestos-Manhattan, the two largest firms), commissioned medical research to study the hypothesized link between asbestos and lung problems and to determine what, if anything, could be done to control or prevent serious health problems in asbestos-manufacturing plants.

The results of the study, which was conducted by Dr. Anthony Lanza Lanza, Anthony and two colleagues, were reported to J-M in 1931. Lanza noted that more than half of the workers he had studied in an asbestos plant had developed asbestosis, that asbestosis was “clinically . . . milder than silicosis” (a condition already known to cause pulmonary problems to miners), that asbestosis could be fatal, and that asbestos dust control in conjunction with physical exams and X rays were important measures to monitor worker safety. Vandiver Brown, the head of J-M’s legal department, suggested that, without altering the results of the study before publication, Lanza might emphasize two facts that were beneficial to the asbestos industry: that asbestosis was milder than silicosis and that the state of medical and scientific knowledge was such that any regulations forcing the owners of asbestos plants to take special precautions (for example, sharing the results of X rays and physical exams with infected workers) were unwarranted.

An understanding of the extent of the scientific knowledge eventually accumulated concerning asbestos dangers is vital to an understanding of the asbestos controversy and the subsequent legal settlement made by J-M. In 1964, Dr. Irving J. Selikoff and his associates studied asbestos-insulation workers at the behest of two labor unions and found “incontrovertible evidence” that exposure to asbestos is extremely hazardous to health and that the hazard increases with prolonged exposure. This only reinforced what J-M already knew as a result of Lanza’s research some thirty-five years before.

By the early 1960’s, J-M had become the subject of numerous lawsuits alleging wrongful death and product liability brought by asbestos workers and their family survivors—workers who suffered from asbestosis, mesothelioma, and a host of other pulmonary diseases. J-M contested the suits, avowing that the company did not know of the health consequences of prolonged exposure to asbestos dust. This was, of course, at complete odds with the findings of the Lanza study as well as those of several other studies done between 1931 and 1964. Moreover, J-M failed to acknowledge its own role(through Vandiver Brown’s memorandum to Lanza prior to publication of the latter’s research) in suppressing scientific knowledge concerning the health dangers posed by exposure to asbestos.

J-M further argued that the federal government should be held liable, because hundreds of thousands of workers had been exposed to asbestos in the nation’s shipyards during World War II, and J-M was merely fulfilling government contract specifications requiring asbestos insulation throughout U.S. Navy vessels. Finally, J-M indicted the lawyers representing those who were exposed to asbestos, maintaining that large portions of successful monetary settlements went to the lawyers and not to the workers who brought suit. J-M asserted, in effect, that lawyers involved in associations such as the Asbestos Litigation Group Asbestos Litigation Group (an organization of lawyers who shared legal strategy, court rulings, and medical evidence relating to asbestos) were involved in a new kind of “ambulance chasing.”

By the late 1970’s, J-M was facing more than fifteen thousand lawsuits. Until that time, J-M’s numerous insurers had had little trouble paying damage awards won by successful litigants. One of the insurers, the Travelers Corporation, Travelers Corporation began to refuse payment on asbestos-related claims, and thus arose the “trigger date” controversy. The critical issue concerned which insurance firm would be held liable for settling claims: the insurer during the exposure of the victim, the insurer during the manifestation of the disease, the insurer during the filing of the lawsuit, the insurer during the judgment of the case, or some combination of these. This was an extremely important question to the various insurers who would ultimately pay damages, because asbestosis can appear decades after the initial exposure.

On August 26, 1982, the Manville Corporation (J-M changed its name in 1981 as part of a restructuring move) took the wholly surprising and unprecedented step of filing for bankruptcy under Chapter 11 protection, even though it held more than $2 billion in assets. Bankruptcies;Manville Corporation The company successfully argued before the bankruptcy court that asbestos suits (which then included punitive damages awards in the millions of dollars) had left Manville in a position of “equity insolvency,” meaning that at some point in the future it would be unable to pay its debts as they came due. Obviously, a large percentage of Manville’s future debts would be caused by the more than sixteen thousand asbestos claims then awaiting litigation.

The significance of Manville’s petition for bankruptcy was that all payments and awards to asbestos claimants were halted pending the company’s emergence from bankruptcy. This, in turn, placed a severe financial burden on those workers who were disabled or incapacitated from asbestos dust exposure and for whom cash settlements granted by judges or juries were crucial to survival. Lawyers representing asbestos workers immediately appealed to bankruptcy judge Burton Lifland Lifland, Burton to deny Manville’s petition, claiming that Manville’s filing under Chapter 11 represented a callous attempt to deprive successful asbestos litigants of their monetary awards. Judge Lifland denied the appeal and ordered both sides in the case to effect a compromise.

Acrimonious negotiations began in late 1982, and the broad outlines of a compromise were reached in the winter of 1985. The complex compromise the two sides eventually reached included the following terms: All claims brought by Manville’s commercial creditors were settled with money and stock, and, most important, asbestos litigants would seek compensation from a fund totaling more than $2.5 billion generated by contributions made by Manville and its insurers. This would result in settlements of between $30,000 and $50,000 for the estimated forty to sixty thousand asbestos claims yet to be filed. This represented a mere pittance compared with the average total compensation of $385,000 won by individual claimants who went to trial between 1980 and 1982. Apparently worn out by incessant delays and legal squabbling, asbestos victims thought that it was better to receive some compensation than to risk getting nothing as a result of unfavorable legal rulings in the future.

Significance

Manville’s bankruptcy and subsequent settlement with victims of asbestos-related diseases raised significant issues relevant to the consumer rights movement. When Manville declared bankruptcy in August of 1982, it was the richest and healthiest corporation to make such a move up to that time. The gist of Manville’s bankruptcy petition was that it would not be able to make good on successful asbestos claims against it at some point in the future, although it held more than $2 billion in assets at the time it was granted Chapter 11 protection by the courts. Manville’s action became known as an instance of “strategic bankruptcy,” whereby a solvent enterprise protects itself against future liability, evading what some would argue is its corporate responsibility. Such action was perfectly legal under the liberal reforms granted under the 1978 Bankruptcy Reform Act. Bankruptcy Reform Act (1978) Manville’s action may have set a precedent for other firms involved in the manufacture of potentially hazardous or toxic substances, especially those in the nuclear, medical, and chemical industries, possibly leaving affected workers no chance for compensation in the courts for injury or sickness.

By far the biggest losers in the settlement were Manville’s shareholders, who lost 80 percent of the value of their stock. Shareholders’ substantial equity losses (together with Manville profits) helped fund the $2.5-billion compensation claims pool for asbestos victims. Not surprisingly, shareholders were the only group to vote against the agreement. The settlement ended this particular chapter in the scientific, legal, and moral battle waged by diseased workers against Manville and other corporations in the asbestos industry, but the industry continued to draw the ire of thousands of workers who had been exposed to asbestos. Manville Corporation Asbestosis Lawsuits;asbestos exposure

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Bowker, Michael. Fatal Deception: The Untold Story of Asbestos—Why It Is Still Legal and Still Killing Us. Emmaus, Pa.: Rodale Press, 2003. Volume written in a muckraking style explores the topics of asbestos dangers and the role of big corporations in protecting their own interests in keeping the use of asbestos legal. Focuses in particular on one Montana town, but includes wider discussion of all issues surrounding asbestos.
  • citation-type="booksimple"

    xlink:type="simple">Brodeur, Paul. “The Asbestos Industry on Trial.” The New Yorker, June 10-July 1, 1985. Thoroughly documented four-part series (excerpted from Brodeur’s Outrageous Misconduct; see below) is essential reading for anyone wishing to understand the asbestos controversy. Reads like a mystery novel and makes complex medical, legal, and scientific jargon and arguments understandable to a nontechnical audience.
  • citation-type="booksimple"

    xlink:type="simple">_______. Outrageous Misconduct. New York: Pantheon Books, 1985. Provides extensive history and detail of Manville’s role in preventing information about asbestos-induced disease from reaching workers. Discusses all the significant corporations, lawyers, corporate executives, and health officials involved in the case. Final three pages provide a gripping and poignant reminder that the dizzying dollar figures and other statistics in the book often mask the human tragedy that is the asbestos controversy.
  • citation-type="booksimple"

    xlink:type="simple">Calhoun, Craig, and Henryk Hiller. “Coping with Insidious Injuries: The Case of Johns-Manville Corporation and Asbestos Exposure.” Social Problems 35 (April, 1988): 162-181. First-rate academic treatment of the legal issues and complexities raised by the J-M bankruptcy. Argues that incentives could motivate corporate managers to provide full information about potentially dangerous products such as asbestos.
  • citation-type="booksimple"

    xlink:type="simple">Castleman, Barry I. Asbestos: Medical and Legal Aspects. 5th ed. New York: Aspen, 2005. Definitive resource includes discussion of the history of asbestos use in the United States and the public health problems related to that use. Features informative appendixes and index.
  • citation-type="booksimple"

    xlink:type="simple">Delaney, Kevin J. “Power, Intercorporate Networks, and ’Strategic Bankruptcy.’” Law and Society Review 23 (1989): 643-666. Provides a brief sketch of the asbestos controversy and Manville’s role in it. Also traces the history of bankruptcy legislation, details the negotiated settlement, and demonstrates the ways in which insurers, creditors, and the federal government constrained Manville’s ability to act unilaterally during its tenure under Chapter 11 protection.
  • citation-type="booksimple"

    xlink:type="simple">Selikoff, Irving. “Asbestos-Associated Disease.” In Asbestos Litigation, edited by Wendell B. Alcorn, Jr. New York: Harcourt Brace Jovanovich, 1982. Helpful resource for understanding studies of asbestos-associated disease as well as the kinds of cancers and pulmonary illnesses that result from asbestos exposure.
  • citation-type="booksimple"

    xlink:type="simple">Vermeulen, James E., and Daniel M. Berman. “Asbestos Companies Under Fire.” Business and Society Review 42 (Summer, 1982): 21-25. Readable article provides a useful introduction to the controversy surrounding asbestos and the role of Manville in that controversy.

Consumer Product Safety Commission Bans Lead Paints

Government Reveals Oak Ridge Mercury Releases

Toxic Gas Leaks from a Union Carbide Plant in Bhopal, India

North Carolina Fire Points to Workplace Hazards

Mississippi Settles Lawsuit with Cigarette Makers

Categories: History Content