Fw: Settlements May Limit Victims' Future Right to Sue ~ NY Times

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Subject: Settlements May Limit Victims' Future Right to Sue ~ NY Times

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> http://www.productslaw.com/georgine.html

>

> The New York Times - Wednesday, January 10, 1996

>

> Lawsuits to End All Lawsuits

>

> Settlements May Limit Victims' Future Right to Sue

>

> By BARRY MEIER

>

> Imagine you are diagnosed with a disease linked to a toxic substance,

> but then discover you can't sue its manufacturer. The reason: A

> lawsuit settled years earlier limited your ability to do so, even

> though you never heard about the deal or met the lawyers who made

> fortunes supposedly representing you.

>

> In a country where thousands of lawsuits are filed daily, the prospect

> might seem far-fetched. But it is one that is increasingly being

> played out in courts nationwide.

>

> A growing number of companies, desperate to limit their exposure to

> potentially ruinous litigation, are initiating class-action lawsuits

> against themselves. And they are getting help from an unlikely source:

> plaintiffs' lawyers. By negotiating settlements that cover those who

> may someday get sick from their products, the companies are able to

> limit future lawsuits and cap damages.

>

> The irony is that many of the same companies that claim to be helpless

> victims of a predatory legal system are in fact aggressively using

> that system to protect their financial interests. In some cases,

> companies have offered to settle complaints on terms that can yield

> millions of dollars in legal fees - if the opposing lawyers will then

> file and settle class-action lawsuits resolving the claims of those

> not yet sick or injured.

>

> Supporters of these so-called futures settlements insist they are an

> innovative way to unclog courts, cut legal costs and save companies

> from bankruptcy, while guaranteeing timely compensation payments to

> people who are truly ill.

>

> Geoffrey Hazard, a legal-ethics expert at the University of

> Pennsylvania School of Law, said a recent futures agreement on

> asbestos claims will slash litigation costs.

>

> " The money is going to sick people and not the lawyers, " he said.

>

> But critics of the plans said they tempt companies and plaintiffs'

> lawyers to collude and ignore the rights of those who are not sick now

> but might eventually want to have their day in court. Some also regard

> the settlements as a de facto tort reform that supplements the broader

> efforts by Congress to rein in litigation against business.

>

> " I think it is being used not for the class but against the class, "

> said Leubsdorf, a professor at Rutgers Law School in Newark, N.J.

> Added Deborah Hensler, director of the Rand Institute for Civil

> Justice in Santa , Calif.: " We are trying to bring people into

> litigation before their time. "

>

> Often class-action settlements - like the pending deal involving suits

> over silicone breast implants - seek to resolve both existing and

> future health claims at the same time. But the recent batch of cases

> is striking because they only cover future health claims - those that

> may arise after the class-action suit is filed and settled.

>

> Some plaintiffs' lawyers, public-interest groups and others have

> appealed court approval of the futures settlements, arguing, among

> other things, that future litigants are being stripped of their

> rights. But defenders of the pacts say that, as in other class

> actions, claimants who take part in the proceedings can represent

> those who do not.

>

> In perhaps the most bitterly contested case, a federal judge in

> Philadelphia in 1994 approved a $1.3 billion class-action settlement

> that would resolve up to 10,000 health claims over the next 10 years

> from workers and their families against 20 companies that once made

> asbestos or products that contained asbestos.

>

> Lawrence Fitzpatrick, the president of the Center for Claims

> Resolution, a consortium in Princeton, N.J., that represents the

> companies, said they sought the settlement so they could be more

> certain of their future legal exposure.

>

> " One goal was to take asbestos litigation out of tort system, " said

> Fitzpatrick.

>

> The companies, representing 15 to 20 percent of the asbestos

> industry's liabilities, began the action by approaching two of the

> country's leading asbestos plaintiffs' lawyers, Ron Motley of

> ton, S.C., and Gene Locks of Philadelphia.

>

> The lawyers agreed to file the action, but critics say the settlement

> sold future claimants short, providing them poorer terms than those

> Motley, Locks and other lawyers had just negotiated out-of-court for a

> group of 14,000 workers.

>

> Many of those 14,000 workers had no symptoms of disease, but

> nonetheless received cash payments because they were exposed to

> asbestos. Together, the workers' claims were settled for about $215

> million. Assuming an average contingency fee of 33 percent, Motley,

> Locks and lawyers associated with them netted an estimated $71 million

> in fees.

>

> By contrast, the class-action settlement worked out by the two lawyers

> only provides cash for workers who actually develop an

> asbestos-related illness. Payouts to those who develop more serious

> diseases like mesothelioma, a fatal lung cancer linked to asbestos

> exposure, may take years, because the companies involved in the

> Philadelphia plan will only pay a specified number of claims annually.

> Similarly, only a specified number of future claimants who are

> unsatisfied with the companies' settlement offer will be permitted to

> go to court to seek higher damages.

>

> The fees for Motley and Locks in this case will be determined by the

> number of people they ultimately represent. But because of the deal,

> lawyers will most likely receive smaller pieces of any settlements

> than they would have if the cases had gone to court.

>

> Some legal-ethics specialists have accused Motley and Locks of selling

> out the interests of people who will get sick in the future for their

> own immediate benefit.

>

> " I don't think you want people who have a vested interest in cutting a

> deal deciding for you what your life is going to be like, " said

> P. Koniak, a professor at Boston University Law School, who testified

> in 1994 against the plan during a fairness hearing as a paid expert

> witness.

>

> Hazard, who testified in the hearing as a paid expert favoring the

> plan, said lawyers could represent unknown, future clients with the

> same zeal they show toward current ones. " I don't go into shock when

> somebody says you can't represent someone you haven't met, " he said.

>

> Motley rejected any suggestion of impropriety by the plaintiffs'

> lawyers. He noted that a federal judge dismissed allegations of

> collusion in approving the plan. And, he argued, workers already

> involved in lawsuits deserved more because their claims had languished

> for years in courts - a fate that he contended awaits other asbestos

> victims unless new ways continue to be found for dealing with the

> litigation glut.

>

> " The horizon is even bleaker for asbestos victims if they don't seek

> alternative methods for dispute resolution, " he said.

>

> Legal experts say the 1994 Philadelphia settlement was the first such

> futures deal. Since then, at least two more have been struck. Among

> the knotty legal questions they have unleashed is this: How do you

> make people aware that they have a stake in a lawsuit if they have not

> even fallen sick?

>

> Consider the case of Martha , a housewife living in

> Winston-Salem, N.C. Mrs. said it came as a shock to her when

> she was diagnosed in 1994 with mesothelioma. She never worked around

> asbestos, but she figures she was exposed to it as an infant during

> World War II, when her father and grandfather worked in shipyards

> where asbestos was used as insulation. " My daddy and grand-daddy used

> to come home covered in dust, " she said.

>

> Never suspecting she was a candidate for the disease, Mrs.

> said, she paid no attention to local television ads instructing

> mesothelioma sufferers who wanted no part of the Philadelphia asbestos

> settlement to opt out of it. Though she retains the legal right to sue

> some asbestos manufacturers, her claim against the 20 companies in the

> Philadelphia case will be determined by an administrative board, not a

> jury.

>

> Under the terms of the agreement, 97 percent of mesothelioma claims

> over 10 years will bring on average between $37,000 and $60,000, with

> the remaining 3 percent - principally claims those from younger

> workers or those whose exposure was primarily to the products of the

> consortium's members - could potentially bring more than $200,000.

>

> After 10 years, the companies can withdraw and face the prospect of

> being sued again. There is no bond to guarantee that the settlement

> money will last 10 years, but the court found that the companies had

> sufficient money to finance the deal.

>

> The labor movement, which once took a united stand on asbestos

> litigation, is split over the futures deals. The AFL-CIO strongly

> backs the Philadelphia plan, but some unions and some workers with

> asbestos-related illnesses have balked.

>

> " I felt like my constitutional rights had been disregarded, " said

> Hildebrand, a former boilermaker in sburg, W.Va.

>

> While the Philadelphia lawsuit started out as a futures settlement,

> other cases have evolved into them.

>

> In 1992, residents of , Texas, living near a chemical plant owned

> by the U.S. subsidiary of the French multinational Elf Aquitaine filed

> a lawsuit accusing the company of polluting local lakes and streams

> with arsenic, which can cause cancer. Though some health claims were

> made, the lawsuit principally sought costs related to property damage

> and creation of a system to monitor residents' health.

>

> But Dennis Reich, a plaintiffs' lawyer in Houston, said that lawyers

> for the company subsequently approached him seeking to settle the

> lawsuit if it also included all future health claims from residents.

> Reich said that he agreed to do so after reviewing the subsidiary's

> finances and deciding that it faced bankruptcy if it lost a major jury

> verdict arising from the pollution case. The company had already

> settled individual lawsuits from residents alleging birth

> defects and cancer arising from the arsenic pollution.

>

> " When you are dealing with companies that are economically fragile,

> you have to decide whether to resolve the case in one fell swoop or on

> a piecemeal basis, " said Reich.

>

> The class-action settlement was approved last year by a federal

> magistrate. But some lawyers, public-interest groups and

> residents have appealed the pact, arguing that the health-compensation

> component of the $55 million deal will expire in seven years - too

> soon to cover diseases that can take far longer to develop.

>

> " There are some people who are going to get some small pittance, and

> if arsenic disease shows up in others at some later date they will be

> out of luck, " said Mark O'Connor, an environmental consultant in

> , which is 100 miles north of Houston.

>

> Knox Nunnally, a lawyer for Elf Aquitaine, said there was no evidence

> of any arsenic-inducted illness in . And Reich played down that

> fear, as well. " You are dealing with a risk level that appears to be

> small, " he said.

>

>

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>

> See Georgine v. AmChem Prods. Inc., 157 F.R.D. 246, (E.D. Pa., Aug.

> 16, 1994)

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