Document Sample
					                            UNITED STATES DISTRICT COURT
                             DISTRICT OF SOUTH CAROLINA
                                CHARLESTON DIVISION

CENTRAL WESLEYAN COLLEGE,           )               CIVIL ACTION NO. 2:87-1860-8
on behalf of itself and all others  )
similarly situated,                 )
             Plaintiffs,            )
                                    )               NOTICE AND OPPORTUNITY
      -versus-                      )               TO COMMENT ON DRAFT
                                    )               SETTLEMENT DISTRIBUTION
W.R. GRACE & CO., et al.            )               GUIDELINES
             Defendants.            )


       This notice is being sent to your institution because it may be eligible for reimbursement

of certain asbestos abatement expenses, as discussed herein.           A committee of college

representatives (the Settlement Advisory Committee) appointed by the Court has created these

draft guidelines with the assistance of Class Counsel. They are being sent to you at this time for

your review and any comments or suggestions you wish to make concerning them. THESE ARE


promulgated after the Settlement Advisory Committee reviews all comments concerning these

draft guidelines, makes any revisions it deems warranted, and receives Court approval of the

final guidelines. You do not need to respond to these draft guidelines unless you have comments

or suggestions. In the future, you will receive notice of the final distribution guidelines and a




        On July 17, 1987, Central Wesleyan College filed a class action complaint in the United

States District Court for the District of South Carolina against numerous defendants on behalf of

all public and private colleges and universities in the country. This action is known as Central

Wesleyan College v. W.R. Grace, et al, No. 2:87-1960-8 (D.S.C.).             The complaint sought

compensatory and punitive damages, as well as injunctive relief, alleging that “friable” asbestos-

containing products installed in buildings owned or operated by class members can contaminate

these buildings and that, pursuant to federal regulations, these products must be specially

removed during renovations or a demolition. “Friable” refers to asbestos-containing material

that can be reduced to powder by hand pressure. Plaintiffs’ liability claims include negligence,

strict liability, breach of warranty, civil conspiracy and restitution.

        In a prior notice to all class members, institutions were given the opportunity to “opt-out”

or exclude themselves from this action by filing an opt-out form with the Court by May 6, 1996.

If your institution did not file an opt-out form by that date, it is a member of the class and may be

eligible for the class settlement benefits discussed herein. If you are unsure whether your

institution opted out of the class, you may verify your institution’s status with Class Counsel’s

office by contacting kcamarda@rpwb.com (843-727-6510). If you opted out of the class, you

are not eligible for the settlement benefits discussed herein.

        Over the course of the litigation, the class has conducted extensive discovery. Beginning

in the early-1990s, the class also conducted settlement discussions with many of the defendants.

These discussions resulted in a series of settlements that were presented first to the Court for

preliminary approval, then to the Class for its members’ comments, and thereafter to the Court

for final approval. These settlements have resulted in the creation of a settlement fund exceeding

$50 million for distribution to class members.

       In addition to the existing settlement fund, the Class continues to pursue claims against

several original defendants in bankruptcy courts in Florida, Pennsylvania, Delaware and New

Jersey. It is possible, although not guaranteed, that one or more of these bankruptcy claims will

result in additional monies being available to the settlement fund. The amount of any such

additional monies is unknown at this time.

       The class also continues to litigate against the H.K. Porter Asbestos Trust which has been

substituted for H.K. Porter Co., an original defendant. It is possible, although not guaranteed,

that additional recovery may be available to the class from the H.K. Porter Asbestos Trust. The

amount of such potential recovery cannot be estimated at this time.

       In addition to the cash settlement fund, the class has also received the right to redeem up

to $25 million in product rebate coupons from W.R. Grace & Company over a ten-year period

ending in 2010. These rebates of approximately 25% on certain W.R. Grace construction

products are available to all class members regardless of whether or not they will qualify for a

cash payment from the settlement fund described herein.         All class members should have

received several communications from Class Counsel concerning the W.R. Grace rebate

program. Any institution wishing to receive more information concerning that program should

contact kcamarda@rpwb.com.


       On November 16, 2001, the District Court approved the formation of the Class

Settlement Advisory Committee composed of members from the American Council on

Education (ACE), the National Association of College and University Business Officers

(NACUBO), Central Wesleyan College, Newberry College, Claflin College, Princeton

University, Rutgers University, Stanford University, Brown University and Johns-Hopkins

University. The Committee was appointed to work with Class Counsel to devise appropriate

draft guidelines for eventual distribution of the class settlement fund.

       The Committee has considered numerous legal and factual issues, received advice from

Counsel, had several in-person meetings and conferred on other occasions by electronic and

telephonic means to consider these issues. The Committee’s goal has been to arrive at a fair and

equitable way to distribute the settlement fund in a case: (1) where the fund is derived from

payments by numerous defendants whose products are likely to have been in some, but by no

means all class members’ buildings; (2) when it would be costly, and in some cases impossible,

to identify which defendants’ products are in which class members’ buildings; (3) where certain

legal issues (nullum tempus, statutes of repose, discovery rule, learned intermediary doctrine)

may affect the claims of certain class members; and (4) where different types of asbestos

products have different unit asbestos removal costs.         A brief review of the major issues

considered by the Committee and the Committee’s decisions on those issues is outlined below.

The Final Settlement Distribution Guidelines will incorporate these decisions unless they are

amended following the comment period:

       1.      Incentive Recognition for the Class Representative – Since 1987, Central

Wesleyan College has been the primary Class Representative. It stepped forth when the two

original college representatives were found to be so closely aligned with the state that they were

not “citizens” for federal jurisdictional purposes.     Central Wesleyan’s willingness to come

forward prevented dismissal of the colleges’ asbestos abatement cost recovery effort.          Its

personnel have endured building inspections, document production requests, and deposition

sessions at which they were examined extensively by the defense interests. Central Wesleyan

believes that publicity about its role as a lead plaintiff against the asbestos companies, including

a large company in its area, has damaged its fundraising abilities within the corporate

community. In considering the issue, the Committee reviewed in detail Central Wesleyan’s

effort and made an in-depth review of incentive payments from numerous class actions.

Following extensive discussion, the Committee (Central Wesleyan abstaining) determined that in

recognition of Central Wesleyan’s special efforts in preventing potential dismissal, enduring the

discovery process, and subjecting itself to potentially adverse publicity, it should receive a

recognition payment of $185,000 beyond any amount it may recover as a class member under the

Settlement Distribution Guidelines.

       2.      Reimbursement of “Seed Money” to Early Supporters of the Case – At the

outset of the case, a group of approximately 40 institutions agreed to provide a “seed money”

advance of $15,000 each to create an initial fund to finance the litigation. Class Counsel

represented to those seed money institutions that he would seek to refund their contributions

before any other distribution of a class recovery. On several occasions, Class Counsel has noted

this commitment to the original supporting institutions in filings with the Court. The Committee

has determined that it appropriate to return to each of the original supporting institutions its

contribution plus interest at the average federal judgment rate from the date of contribution.

       3.      Recognition to Original Class Representatives and Proposed Intervener

Colleges – As noted above, prior to Central Wesleyan becoming the class representative, two

other institutions (Clemson University and the College of Charleston) represented the class.

These two institutions underwent building inspections, document reviews and deposition

sessions that required significant commitment of resources and personnel.

       In addition, several years after Central Wesleyan became the Class representative it

became apparent that additional colleges might have to be added as interveners to retain the class

claims against several of the remaining defendants.          After an extensive search, Furman

University, Newberry College and Claflin University agreed to serve as intervener plaintiffs.

They cooperated in a comprehensive process of inspections and product identification in their

buildings and agreed to be added as plaintiffs despite the possibility of adverse publicity.

       The Committee (Newberry and Claflin abstaining) voted to recognize this special

commitment to the class action by awarding each of the original class representatives and

proposed intervener institutions $15,000 beyond any amount they may recover as class members

under the Settlement Distribution Guidelines.

       4.      Reimbursement Percentage for Qualifying Expenses – It is currently unknown

what percentage reimbursement the settlement fund will pay for qualifying asbestos abatement

expenses. That percentage will be determined by dividing all qualifying expenses into the

available fund. During the Committee’s deliberations, questions were raised concerning whether

a different payment percentage should be made to colleges for any of the following factors: (1)

date of installation of the asbestos product; (2) type of asbestos product; (3) favorable state tort

law; and (4) product identification. The Committee carefully considered each of these and

similar potential factors that could affect the payment percentage. In the final analysis, the

Committee decided that there should be no differential made for any of these factors because

some might be largely fortuitous (e.g. the state where an institution is located), and others quite

difficult to quantify. Accordingly, it is the Committee’s decision that all qualifying asbestos

abatement expenses will be paid at the same percentage, with that percentage being determined

based on the total qualifying claims submitted versus the available settlement fund. However,

the Committee has reserved the right to revisit this issue following submission of all qualifying

reimbursement requests to respond to any gross disparities that may appear from application of a

uniform payment percentage.

       5.      Product Identification Requirement - The Committee also carefully considered

what degree of product identification should be required for reimbursement. The Committee

realizes that requiring product identification would greatly reduce the number of claimants and,

therefore, increase the payment percentage to institutions with product identification.      The

Committee determined, however, that requiring institutions to identify which defendant provided

the product subject to abatement would be cost prohibitive, discourage class members from

participating in the settlement, and consume a disproportionate amount of the settlement funds.

The Committee did decide, however, that institutions seeking reimbursement for qualifying

asbestos abatement expenses will be required to: (a) demonstrate that the product abated

contained asbestos; and (b) confirm by satisfactory evidence, including verification under oath,

that the abatement expenses submitted were incurred by an institution for removal of qualifying

asbestos-containing building products. Claim forms will be submitted under penalty of perjury

as part of this federal court proceeding. The Committee also determined that an audit program

will be implemented to verify that institutions are complying with the requirements for

submission of valid claims for the types of asbestos abatement that will be reimbursed.

       6.      Types of Asbestos-Related Costs Subject to Reimbursement - The Committee

considered whether asbestos-related expenses other than abatement (“abatement” includes

removal, enclosure or encapsulation) should be eligible for reimbursement from the settlement

fund. In particular, the Committee considered whether asbestos-related training expenses or

asbestos operations and maintenance expenses should be reimbursed.              The Committee

determined that because qualifying asbestos abatement expenses are likely to exceed

significantly the available settlement fund, it would not be appropriate to reimburse other

asbestos-related expenses. The Committee recognizes that these other expenses could potentially

have been reimbursable as part of a litigated judgment. But because many institutions have

incorporated asbestos training and operations and maintenance programs into their general

budgets, they are not the types of extraordinary expenditures that asbestos abatement costs

represent at many institutions.

       7.      Future Asbestos-Related Expenses - A related issue was whether the settlement

fund should pay for completed asbestos abatement only, or whether provision should be made

for payment of future asbestos abatement expenses. In considering this issue, the Committee has

reviewed recent precedent on the treatment of future claimants in class action settlements. The

Committee has determined that in light of the finite amount of the settlement fund, qualifying

asbestos abatement expenses incurred as of a date certain will be reimbursed at the payment

percentage, but anticipated future expenses will not. The precise cut-off is expected to be a date

some months after the final guidelines are distributed. That date has not yet been determined as

it will depend on the timing of Court approval of the final guidelines.

       Issues of verification concerning proposed future asbestos abatement and concern about

whether money provided in advance would actually be used for asbestos abatement were among

the considerations convincing the Committee that only previously-incurred asbestos abatement

expenses would be eligible for reimbursement. The Committee intends to set the cut-off date for

incurring qualifying asbestos abatement expenses sufficiently in advance of the deadline for

submission of claim forms that institutions wishing to qualify an expense for the settlement fund

will have reasonable opportunity to execute such pending asbestos abatement plans.

        8.      Reimbursement Differential Depending on Claim Size - The Committee also

considered whether the same payment percentage should be applied to all asbestos abatement

reimbursement requests regardless of size. The Committee discussed whether to pay a base

amount of asbestos abatement expenses per institution at a certain percentage and subsequent

expenses at a different percentage in order to insure that all institutions, regardless of size,

received a larger percentage reimbursement on their initial asbestos abatement amount. After

due consideration, the Committee decided not to institute such a tiered reimbursement

percentage program due not only to potential complications that such a program would inject

into the distribution process, but also to the feeling that all colleges, regardless of the size of their

asbestos abatement claims, should be treated alike.

        9.      Treatment of Collateral Sources – The Committee considered whether

reimbursements from the settlement fund should take into account that certain institutions may

have already received some payment for their asbestos abatement expenses from the Manville

bankruptcy, private insurance, state programs or other sources. After reviewing all aspects of

this issue, the Committee determined that institutions should be required to report on their claim

form any reimbursement already received for the asbestos abatement expense submitted, but

only if an institution had been completely reimbursed for its expenses would recovery from the

settlement fund be barred. No offsets will be applied due to a prior partial payment from another

source, as long as the combination of the prior payments and the Settlement Fund reimbursement

do not collectively exceed 100% of the qualified abatement costs.

        10.     Payment of Interest – The Committee considered whether past asbestos

abatement expenses should be reimbursed with interest. With the exception of the seed money

reimbursement for the institutions that had advanced funds at the outset of this suit, the

Committee determined that no institution should receive interest based on the date of its asbestos

abatement expenditure. It was felt that introducing the concept of interest would complicate the

distribution process, dilute the available funds, and unnecessarily differentiate among institutions

solely on the basis of the date of asbestos abatement.

       11.     Degree of Documentation and Proof Required for a Reimbursement Claim -

In attempting to strike a balance between a claim form that would be so onerous that institutions

would not spend the time to complete it, and a claim form so simple that it encouraged

unsubstantiated claims, the Committee has determined that it will require “substantial evidence”

of the existence of an asbestos-containing product and qualifying asbestos abatement expenses.

The claim form will detail the types of acceptable “substantial evidence”, which should generally

be understood as evidence sufficient to support a prima facie claim in a judicial tribunal and

avoid a directed verdict.      Documentary evidence of the existence of asbestos-containing

materials may include, for example, sales documents, scientific reports, architect certifications

with specifications, and similar documents.            Substantial evidence of qualifying asbestos

abatement expenditures may include abatement contractors’ bills with evidence of payment,

cancelled checks and receipts.       The Committee has decided that where other evidence of

qualifying asbestos materials and their abatement is unavailable, it will accept a verified

statement under penalty of perjury by a responsible college official attesting to the existence of

the asbestos-containing material, its abatement, and the expenditures for that abatement with

sufficient detail that the facts can be verified upon audit.

       12.     Recognition for Cooperating Institutions – The Committee considered whether

special recognition should be given to the numerous institutions who have cooperated with Class

Counsel over the course of this litigation by sending samples for scientific analysis or examining

their records to determine if they had asbestos-containing materials. While the Committee

acknowledges the valuable assistance rendered by these institutions, the Committee has

determined that no special recognition should be afforded to them because, among other reasons,

many of these institutions have had their samples tested at no cost to themselves to determine

whether they contained asbestos.       Such information will be useful to those institutions in

submitting claims for reimbursement from the Class Settlement Fund.

        13.    Types of Asbestos Material for Which Reimbursement Will be Permitted –

From the outset, this action has focused on “friable” asbestos-containing materials, i.e. those that

can be crumbled to powder with hand pressure. The primary types of friable asbestos-containing

products involved in the suit are acoustical plasters, spray-applied fireproofing and thermal

insulation. Abatement of these products, and associated miscellaneous asbestos materials, such

as pipe-wrapping cloth and pipe gaskets will qualify for reimbursement from the Settlement

Fund.    Asbestos-containing materials not normally regarded as “friable”, such as roofing

material, ceiling tile, or floor tile will not be eligible for reimbursement from the Settlement

Fund. An ancillary proceeding in which the class has participated may provide some recovery

for floor tile claims that are not covered by the original complaint.


        At this time, it has not been determined when the Settlement Fund will make

distributions. This timing of distributions may depend on a number of factors including: the

nature and degree of comments received from class members concerning the draft guidelines; the

extent of revisions, if any, to the draft settlement guidelines resulting from class members’

comments; timing of the District Court’s consideration of the application for approval of the final

settlement guidelines; nature and volume of claims submitted for reimbursement; time needed to

review and audit (where necessary) selected claims; and resolution of certain tax issues

concerning the Settlement Fund.


       This Notice is your opportunity to comment on the Settlement Advisory Committee’s

tentative decisions concerning the issues outlined above.     If you disagree with any of the

Committee’s tentative decisions or have comments on those decisions, you should provide those

comments by email to ewestbrook@rpwb.com. You do not have to provide comments on these

Draft Settlement Distribution Guidelines. Failure to comment will not affect your eligibility for

reimbursement under the Final Guidelines when they are promulgated. DO NOT SUBMIT ANY


to provide all members of the college class with an opportunity to understand the Settlement

Advisory Committee’s decisions and make any comments thereon.

       In order that the Committee can have the benefit of all comments and make any changes

in the Draft Distribution Guidelines it deems warranted by the comments, all comments must be

received in the office of Class Counsel by March 21, 2005.


       Following receipt of any comments, the Settlement Advisory Committee will decide if

any changes are warranted to the Draft Guidelines. Following that decision, Class Counsel will

submit the Guidelines to the Court for final approval. Once the Guidelines are approved in final

form, your institution will receive notice of their promulgation along with a Claim Form packet.

That notice and packet will contain instructions on completion of the Claim Form and the

deadline for submission of reimbursement requests.           After all qualifying claims for

reimbursement are submitted by the deadline contained in that Notice, the claims will be

evaluated, audited where necessary, and a reimbursement percentage set based on the ratio of

qualifying claims to total available settlement funds.

       If you have any questions concerning this Notice, please contact Class Counsel

(ewestbrook@rpwb.com). Do not contact the Court.


Shared By: