Page 1 Asbestos Litigation and Judicial Leadership Griffin B. Bell Charleston, West Virginia July 25, 2002 ________________ Almost thirty years have passed since the Fifth Circuit Court of Appeals decided Borel v. Fibreboard, a case that would significantly alter the course of asbestos litigation in West Virginia and throughout the country. The Court held that workers at construction sites could recover from manufacturers for injuries linked to building materials that contained asbestos fibers. At that time, no one had an inkling of the immense legal and economic implications of this decision. No one foresaw that asbestos litigation would assume such monstrous proportions. I do not believe that anyone foresaw in Borel a major shift in American law—a shift away from the basic requirements to prove a legal claim. Twenty years after Borel—and more than a decade ago—the scope of asbestos litigation was alarming enough to prompt Chief Justice Rehnquist to appoint an ad hoc committee of the United States Judicial Conference to study it. The committee reported back that asbestos litigation was already becoming “a disaster of major proportions.” It predicted “the worst is yet to come.” Truly prophetic words. Page 2 In 1996, the West Virginia Supreme Court characterized asbestos cases as “paralyzing” court dockets and threatening “to cripple the common law system of adjudication.” By 1999, the U.S. Supreme Court had to employ unusually strong language to call attention to an “elephantine mass of asbestos cases.” That disaster, long described by the nation‟s highest court, is now upon us. The worst is here. In the midst of this crisis, I do not minimize the human tragedy caused by asbestos. People are injured and dying from exposure to asbestos. They deserve a system that efficiently and fairly compensates them. They do not now have such a system. For every sick claimant who sues, there are many more claimants seeking money who are not sick. Asbestos litigation now stands as the only part of our tort system in which people who can show no real physical injury are routinely allowed to sue. It is not right that healthy plaintiffs overwhelm the courts in such numbers that many mesothelioma cancer victims will not live to have their day in court. It is not right that legitimate and frivolous claims are grouped together in massive inventories at the expense of due process. It is not right that defendants must pay persons not actually hurt—or not hurt by them. The most visible damage caused by the asbestos litigation crisis is to our economy. These suits have driven more than 50 American companies into bankruptcy, from small manufacturers to Fortune 500s. With all the original defendants now bankrupt, a wider net is being cast for fresh defendants with deeper pockets. So lawsuits are targeting companies that never manufactured any asbestos-containing materials, but only had some peripheral involvement. Several thousand companies are now targets of this litigation. Thousands of Page 3 innocent employees have lost their jobs; thousands of innocent employees have suffered huge losses in their retirement plans; thousands of innocent shareholders have seen their investments reduced or destroyed. The costs are staggering. Some experts predict that asbestos liability could cost companies $275 billion. That amount exceeds current estimates of the cost of all Superfund cleanup sites combined, Hurricane Andrew or the September 11th terrorist attacks. Asbestos has not been widely used for decades. So why are these costs so high? It is because the number of claimants is expanding dramatically, contrary to medicine and common sense. The RAND Institute for Civil Justice reports that 500,000 claims have been filed, not to mention untold numbers of potential claims that may have been settled before filing. Over 200,000 claims are pending. At such a rate, the total number of filed claims could top two-and- a-half million. Claims are multiplying because courts are permitting unimpaired people to pursue claims against many defendants, including many which had little or no involvement with the claimant. And this development brings us to the highest cost of all—the loss of due process and simple justice. Consider the asbestos plaintiff in a Mississippi courthouse who admitted that, far from suffering from a shortness of breath, he exercised by walking three to four miles a day. You might think the judge would put the brakes on such a case. If so, you‟d be wrong. This man and five others won one of the highest jury awards for 2001—some $150 million, $25 million each. West Virginia has its own examples of claimants receiving massive recoveries despite the absence of serious physical impairment or economic injury. In one case on appeal to the U.S. Page 4 Supreme Court, a West Virginia jury awarded nearly $1 million each to six claimants for their “fear” of getting cancer, a “fear” that the claimants did not even contend caused them severe emotional distress and that the claimants did not substantiate with any objective evidence. One effect of such judgments is that huge payouts to the healthy force beleaguered asbestos defendants in bankruptcy to pay only pennies on the dollar to those who are genuinely sick. After transaction costs and fees for both plaintiff and defense lawyers, only about one-third of all money spent on asbestos litigation reaches the claimants. This strikes me as an expensive way to transfer money to those who need it. And remember—the sick ones have to split this money with the vast majority of claimants who are not sick. Former Chief Justice Conrad Mallett of Michigan‟s Supreme Court testified before Congress that “the rush of non-impaired cases diverts the limited resources of defendants away from compensating the victims of asbestos-related disease—including, tragically, cancer cases . . . .” In one Supreme Court opinion, Justice Breyer recognized that “up to one-half of asbestos claims are now being filed by people who have little or no physical impairment.” The system is so cruel to the sick that one lawyer for genuinely ill patients sent an indignant letter to his fellow asbestos plaintiff lawyers. Of the influx of new cases, he wrote: “Whether the explanation is fraud, physician incompetence, or failure of recollection by claimants, I do not know. What I do know is that this claimed epidemic of the 21st Century „asbestosis‟ cannot possibly be real.” So our Judicial System is failing the people who really need it. And in the process, our judicial standards are slipping—badly. Page 5 Asbestos cases, like water running downhill, seek the lowest level. Asbestos plaintiff lawyers file frivolous cases in the few jurisdictions where defendants consistently face an uneven playing field. It is sad to say that some of our courts tolerate this crass venue shopping. In one notorious Mississippi county, the number of plaintiffs filing lawsuits over a recent five-year period was more than double the entire population of the county. In fact, Mississippi— with 1 percent of the U.S. population, is home to approximately 20 percent of pending asbestos claims. Mississippi, where it costs more to settle cases, has been called the haven of jackpot justice. But I don‟t mean to single out Mississippi. Other states are close behind. In West Virginia, for example, four Railroad defendants estimate that over 5,000 claimants, from at least seventeen different states, have filed lawsuits against them in this state. They estimate that 70% of these claimants are out-of-state plaintiffs with no connection whatsoever to West Virginia. In one pending U.S. Supreme Court case, a group representing “18 million people who make things in America,” including 10,000 small and mid-sized companies, described West Virginia‟s system for handling asbestos cases as “subordinating the procedural rights of defendants in a misguided effort to promote the „efficient‟ handling of asbestos claims.” All West Virginians who hope to benefit from a robust state economy should be concerned about this perception. Just three weeks ago, Justice Maynard of the West Virginia Supreme Court described this migration of out-of-state claimants to West Virginia courts as an “improper pilgrimage.” In his concurring opinion in State ex rel. Mobil v. Gaughan, Justice Maynard concluded: “I fear that Page 6 allowing every plaintiff who wishes to litigate a claim in West Virginia, even though he or she has no connection to this State, may violate the defendants‟ due process rights.” He observed that West Virginia courts should consider sending the thousands of out-of-state cases clogging West Virginia dockets back to their home jurisdictions. Justice Maynard‟s view represents a sensible and refreshingly candid assessment of the asbestos crisis that West Virginia courts now face. Justice Maynard is not the only West Virginia judge who has recognized that out-of-state asbestos claimants are forum shopping at the expense of West Virginia residents. Judge Gaughan, who until two weeks ago supervised all West Virginia asbestos cases, observed in May of this year that “there is a long history of massive case filings on behalf of non-West Virginia residents having no exposure to asbestos in West Virginia.” These foreign plaintiffs never paid West Virginia taxes, never worked in West Virginia and never served on a West Virginia jury. Judge Gaughan noted that these out-of-state plaintiffs “divert resources of the West Virginia judiciary away from handling its own residents‟ cases.” He ultimately ruled that all future claims by non-West Virginia residents with no asbestos exposure in West Virginia should be dismissed. Since Judge Gaughan‟s May ruling, plaintiff lawyers have moved to disqualify him from all asbestos cases, claiming that he owned stock in asbestos defendant companies. Two weeks ago, one West Virginia Supreme Court Justice unilaterally granted that motion and assigned Judge Gaughan‟s replacement. It will be interesting to see if Judge Gaughan‟s replacement follows his good example and bars non-residents from filing suit in West Virginia. It also will be interesting to see whether Judge Gaughan‟s order is appealed. One conclusion is clear, however: Judge Gaughan‟s dismissal raises more questions than answers. Page 7 Beyond venue shopping, there are other abuses in certain state courts handling asbestos cases. Some courts permit product identification, from decades-old memories, that smacks of witness coaching. Some courts permit the bundling of claims, so that the claims of relatively few sick plaintiffs can be used as leverage to extract payments for thousands of meritless cases. The highest West Virginia court has fostered this unconstitutional practice by requiring mass trials, which often prompt defendants to accede to large block settlements that include many non-sick claimants. Between 1996 and 1999, six mass trials in West Virginia resulted in the resolution, through trial and settlement, of an estimated 20,000 asbestos-related cases. Encouraged by this mass trial concept and faced with what it called a “managerial nightmare” of asbestos cases, the present situation is that the West Virginia Supreme Court has ordered the grouping of all pending asbestos cases—over 25,000 claims and counting—before one trial court, which intends to conduct more mass trials on liability, damages and causation. The need for courts to develop creative approaches to the asbestos litigation cannot be denied. But judicial innovations that permit unconstitutional mass groupings of cases, force settlement regardless of the factual merits, and compromise basic legal values like individualized justice are not, in my view, worth the damage inflicted on our legal traditions. Some of West Virginia‟s judges have recognized that this bundling of dissimilar cases has grave constitutional consequences. Justice Maynard, for example, observed that mass trials, or even small-group trials, would involve a “myriad of highly individualized facts” and create a “Frankenstein‟s Monster.” He expressed serious concern that defendants have been denied due process in West Virginia courts and that “some federal court will eventually tell us so.” Page 8 This bundling of claims has not resolved the asbestos crisis or reduced the filing of asbestos claims in West Virginia or elsewhere. Judge MacQueen, the West Virginia judge who, until recently, presided over all West Virginia asbestos cases, observed the opposite effect—that mass trials and consolidations have encouraged additional asbestos lawsuits. Judge MacQueen noted: “I will admit that we thought that [an early mass trial] was probably going to put an end to asbestos, or at least knock a big hole in it. What I didn‟t consider was that that was a form of advertising. That when we would whack that batch of cases down that well, it drew more cases.” Some courts also permit, in the name of efficiency, standards of causation that are so relaxed that practically anyone could be named a defendant. Some courts then drastically limit these defendants‟ discovery rights. In a case originally naming 36 defendants, a Texas trial judge set 22 claimants for trial. Immediately before trial, the judge allowed defendants a mere five minutes for each plaintiff‟s product identification deposition—in open court while the other plaintiffs listened. The judge ordered this procedure even though some of the plaintiffs had given previous statements that they could not identify the products of the two remaining trial defendants. Not surprisingly, this procedure utterly polluted the testimony of the remaining plaintiffs, allowing them to “refresh their recollections,” or worse, after listening to the first plaintiff who was well-prepared and able to identify the defendants‟ products. Under additional time pressure during trial, the judge informed the parties that each plaintiff would be on the stand for no more than 30 minutes, including both direct and cross- examination. The jury ultimately returned a verdict of $35 million, $1.6 million for each plaintiff, none of whom had cancer. Why do some courts foster injustices like these? Page 9 I understand the pressures and difficulties of trying to manage an overflowing docket. I think Justice Mallett explained it well in his testimony before Congress. He said: “Think about a county circuit judge who has dropped on her 5,000 asbestos cases all at the same time . . . [I]f she scheduled all 5,000 cases for one week trials, she would not complete her task until the year 2095. The judge‟s first thought then is, „How do I handle these cases quickly and efficiently?‟ The judge does not purposely ignore fairness and truth, but the demands of the system require speed and dictate case consolidation even where the rules may not allow joinder.” Under pressure from plaintiff attorneys, some judges have fallen into the trap of thinking about the process, while forgetting that justice is the goal that the process is meant to serve. They have allowed lawyers to transform them into claims processing machines. The allegations in a pending case in West Virginia federal court exemplify the concern that some courts may be subordinating fairness to the expediency of resolving cases. A number of asbestos defendants have filed suit against certain West Virginia state judges, contending that the “administrative joinder and consolidated treatment of thousands of plaintiffs” violates the Due Process Clause of the 14th Amendment to the Constitution. The defendants allege that the judges have grouped mass numbers of claims to pressure them to settle and resolve cases. Their alternative to settlement is risking huge trial verdicts that are inflated by the most seriously injured plaintiffs while other plaintiffs in the group—those who are unimpaired or slightly impaired—obtain windfall awards for “baseless” or “potentially frivolous” claims. This type of highly uncommon lawsuit, where defendants see no alternative but to pursue relief in federal court for alleged constitutional violations by state courts, is yet another sign that the asbestos litigation system is not working equitably. Page 10 This situation is not lost on those companies that must decide where to locate their operations and whether to do business under West Virginia‟s tort law. This egregious burden on interstate commerce, which the West Virginia court system has created in asbestos litigation, has two sources. One is allowing suits by non-residents claiming injuries for something that happened outside West Virginia, and the second is allowing claims to be filed where there is no injury. Judge Gaughan noted in his order that suits by non-residents filed after September 6, 2001 would be dismissed. He pointed out that there are only 65 trial judges in West Virginia and that suits by non-residents make up a large part of the pending cases in the entire state. It is clear to me that to accommodate these non-resident suits, the Supreme Court of West Virginia has chosen to invoke the mass trial proceedings with the consequent denial of both due process and equal protection to asbestos defendants. One can only wonder why the court would not have simply left the cases of non-residents whose injuries occurred in other states to be handled in those other states rather than in West Virginia. What can we do to restore fairness to this system? One obvious solution would be federal legislation that would impose fair and reasonable standards. Such a national solution is certainly warranted. After all, asbestos litigation is hardly a local problem—it is a national crisis. That is why the U.S. Supreme Court, as well as the lower courts, has urged Congress to enact such legislation. And I hope Congress will act. But the Supreme Court has been calling for this solution for years now. We should not hold our breath or count the days. Page 11 What should we do? I remember, back in my days as a federal judge, how Congress took too long to address the violations of the civil rights of millions of Americans. Despite its duty to protect constitutional rights under Section 5 of the 14th Amendment, Congress failed to act. Judges, then as now, could have waited for Congressional action. Instead, federal courts began to render judgments in civil rights cases years before Congress finally took a stand and enacted the Voting Rights Act. I say that this is another instance in which judges can no longer afford to wait or close their eyes to what is happening. Judge Joseph F. Weis, Jr., of the Third Circuit Court of Appeals, puts our choice in stark terms: “Courts should no longer wait for congressional or legislative action . . . . Mistakes created by courts can be corrected by courts without engaging in judicial activism. It is judicial paralysis, not activism, that is the problem in this area.” West Virginia Supreme Court Justice Maynard recently expressed a similar urgency to find solutions to the asbestos problem: “There should be a simple answer that would guarantee everyone‟s due process rights, but I cannot conceive or fashion one.” In my view, there are five specific steps that courts should take now to help solve this crisis. First, mass X-ray screenings have driven the flow of new asbestos claims by healthy plaintiffs. Medical audits by independent experts have shown that high percentages of claimants have little or no impairment. In one notorious case, only 16 out of the 439 tireworkers that had filed lawsuits, or 3.6%, exhibited chest abnormalities that could have resulted from asbestos. Page 12 Plaintiff lawyers advertise these mass screenings as “free,” often with the implication that there is a health-related reason for the screening. This implication is false. There is no medical purpose for these screenings. Plaintiff law firms employ these physicians, who rarely establish a doctor-patient relationship with screened workers. Often, no physician prescribes or supervises these X-rays. Unregulated X-rays are a danger to the men and women who are screened. In one case, Adams v. Harron, a physician employed by a West Virginia law firm notified the lawyers that he detected signs of lung cancer on the X-ray of a man who was screened. Neither the law firm nor the doctor notified Mr. Adams or arranged any medical follow-up or treatment. One year later, he was diagnosed with lung cancer, and died shortly thereafter. Like the physician in this case, many doctors who interpret X-ray film from screenings expressly disclaim any doctor-patient relationship with the people whose X-rays they read. Put another way, certain doctors are unwilling to stand by their limited “opinions” for fear of malpractice liability, but courts routinely accept these unreliable X-ray interpretations in litigation. I believe that X-rays are best left to the practice of medicine, and that proper medical standards should not be abandoned simply to generate lawsuits. Human health should not be traded as a commodity or played as a poker chip. Our courts should put an end to mass X-ray screenings. When new cases are filed that were generated by a mass screening, the court should open an inquiry into: whether the X-rays were properly prescribed and supervised by a physician; whether there was proper disclosure of the real purpose of the screening; Page 13 whether the use of the X-ray machines complied with state and federal law; and whether there has been a genuine diagnosis by a licensed physician of an asbestos-caused disease. Cases based on screenings that do not meet these tests should be dismissed. Second, the vast majority of asbestos plaintiffs today are either healthy or they suffer from medical conditions not caused by exposure to asbestos. Some state courts—notably in Pennsylvania—have held that plaintiffs who do not suffer some physical impairment caused by asbestos are not entitled to maintain an asbestos lawsuit. This may sound like common sense, but in some states the application of common sense seems to be missing. I am sympathetic to people who have been exposed to asbestos and believe that they may get sick sometime in the future, and I do not downplay their concern. They should have a right to file a claim when, and if, they become sick—but not before that point. In my view, unless people suffer a physical impairment, they have not suffered legal injury. They have no basis to sue. Unimpaired plaintiffs should see their cases dismissed or placed on an inactive court docket—a strategy adopted by Judge Charles Weiner of the Eastern District of Pennsylvania. This move tolls the statute of limitations so people who have been exposed to asbestos can still sue if a disease should later develop. This balanced approach preserves claimants‟ day in court if they get sick, while still recognizing that legal injury is required for a recovery. This pragmatic rule should now be adopted by state courts. Page 14 Third, some plaintiffs claim to have an asbestos-related disease based on testimony by so- called “medical experts.” Generally, these medical experts never treated the plaintiffs, and the testimony of these experts usually would not be accepted as reliable by most physicians. One federal judge in Cincinnati dealt with this problem by appointing independent experts. After these experts determined up to 65 percent of claims before the court were invalid, these cases were dismissed. More courts should follow this good example. Fourth, a key issue in asbestos cases is whether plaintiffs can prove that they were exposed to asbestos fibers for which a particular defendant was responsible. We need to get beyond the mentality that any defendant will do whether associated with the product in question or not. The courts also need to crack down hard on witness coaching. Judges need a clear sense of reality when they hear a plaintiff confidently testify about events—not important at the time— that took place so long ago. Finally, the courts need to return to fundamental tort principles and require individualized treatment of cases. Reinvigorating the doctrine of forum non conveniens would help by reducing the massive concentrations of out-of-state plaintiffs in a select few jurisdictions. It is telling to me that many asbestos plaintiff lawyers use the name “inventory” for the people they represent. “Inventory,” not “clients.” Many courts now permit the asbestos plaintiff lawyers to aggregate their “inventory” in order to pressure defendants to resolve cases in bulk. These defendants are forced to settle with masses of plaintiffs who are not sick in order to avoid trial against a few plaintiffs who are. This offends the most fundamental rule of legal ethics—loyalty to each individual client. Page 15 “Inventory” treatment of claims also violates the fundamental rights of defendants to due process of law. The courts should not permit clients to be treated as “inventory,” as though they were inanimate objects. Courts should not permit defendants to be coerced to settle frivolous cases in order to settle good ones. In short, our courts should: dismiss cases based only on mass X-ray screenings; adopt Judge Weiner‟s rule requiring physical impairment; appoint independent medical experts; require pretrial, credible identification of specific products; and restore integrity and fairness by returning to fundamental tort principles and reinvigorating the doctrine of forum non conveniens. Asbestos litigation is not a special branch of the law in which customary rights and legal rules do not apply. It should not be treated as if it were. And especially in West Virginia, the Supreme Court should order that suits asserting claims by non-residents for injuries sustained outside West Virginia be dismissed under the doctrine of forum non conveniens. The West Virginia court system should be reserved to serve its own citizens. Last year, the West Virginia Supreme Court described the effects of asbestos litigation on the judiciary, quoting the following Congressional testimony: “A big loser is the judiciary, Page 16 which has a larger management problem than ever before… The asbestos litigation problem is one that has defeated the judiciary. An increasing number of judges are now admitting it.”1 The West Virginia Supreme Court is no doubt accurate in its observation that the system is in disrepair. But it is not beyond repair. If we return to principles of simple justice and due process, the asbestos litigation will be brought under control and this will be the last decade of the asbestos crisis. Until then, lawyers and non-sick claimants will continue to benefit from the asbestos litigation at the expense of sick plaintiffs, innocent employees and shareholders, and American businesses. Abraham Lincoln often described our democracy as the heritage of all peoples, in all lands, for all time. Our Judicial System has long been a part of our democracy most admired and emulated around the world. Yet today, many of America‟s admirers can only look at our tort system and shake their heads in disappointment and disbelief. We must uphold the integrity of American jurisprudence. We must uphold the belief that America is an example of fairness and equal protection under the law. We must uphold the law. Sometimes this is not easy. Sometimes it takes courage. This is one of those times. It is the ethical duty of lawyers and judges not only to maintain, but to improve, our system of justice. Judges have the responsibility to take the lead. # # # 1 State ex rel. Allman v. MacQueen, 551 S.E.2d 369, 374 (W. Va. 2001) (quoting Statement of Prof. William N. Eskridge, The Fairness in Asbestos Compensation Act of 1999: Hearings on H.R. 1283 Before the House Comm. on the Judiciary, 106th Cong. (July 1, 1999)).