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.
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.
Unfortunately, asbestos, for all of its positive properties, contained a serious and deadly drawback. As early as the first century
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,
The results of the study, which was conducted by Dr. Anthony Lanza
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
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,
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.
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
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.
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.
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.
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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. -
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. -
_______. 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. -
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. -
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. -
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. -
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. -
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.
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