Two recent developments dramatize how lawyer-plutocrats continue to obscenely enrich themselves by using massive asbestos lawsuits and a disgracefully dysfunctional litigation system to extort billions of dollars from American consumers every year. The lawyers blackmail mostly blameless companies, while cheating the real victims of asbestos.
This scandal in turn dramatizes how our lawsuit industry often operates as an engine of injustice—and as a drain on the economy, an inadequate vehicle for compensating people actually harmed by corporate wrongdoing, and a transparent fraud in its pretensions to punish those responsible for such wrongdoing.
One development was the September 25 testimony of a lawyer who told the Senate Judiciary Committee that asbestos litigation has become "a national disgrace" because of "a perverse entrepreneurial model in which clients are recruited by lawyers who then file suit even when there is no real illness." Familiar stuff—except that this was a plaintiffs' lawyer, Steve Kazan, of Oakland, Calif., who has represented victims of real, asbestos-induced cancers and their families for nearly 30 years. Kazan holds no brief for corporate America. His complaint is that by helping to drive some 60 companies into bankruptcy, the flood of claims by unharmed plaintiffs has served both to delay and to "severely reduce the compensation awarded to the sick."
It has come to this: Lawyers for real victims who are sick and dying have been forced to join corporate defendants in seeking reforms to fight the rapacity of trial lawyers who round up claims that often appear to involve "fraud, physician incompetence, or failure of recollection by claimants," as Kazan said in a letter to colleagues last October. According to estimates by other experts, fewer than 10 percent of new asbestos claimants have asbestos-induced cancer and at least 60 percent to 70 percent have no medical impairment at all, just chest X-rays purporting to show scarring of the pleural membrane.
The other development was the September 24 opening of a mass trial in Charleston, W.Va., that shows how utterly our judicial system has abandoned any pretense of fairness in resolving asbestos claims, as judges force defendants who did little or nothing wrong to "compensate" claimants, many of whom are neither sick nor likely to become sick from asbestos.
West Virginia's courts ordered more than 250 companies to defend themselves in a multiphased mass jury trial against some 8,000 plaintiffs who claim that they were exposed to various products containing asbestos, in various ways, at various times, in various places, all over the country. Most of these companies have recently settled—not because of any proof that they had harmed the plaintiffs, but because the courts have stacked the deck, threatening even blameless defendants with huge punitive awards by making it virtually impossible for jurors to sort out which plaintiffs have real injuries and which defendants (if any) had any role in causing them.
This is not to deny the responsibility—indeed, the criminality—of some malefactors of wealth and the companies they ran for concealing the deadly danger of inhaling particles of the once-ubiquitous insulating material. These executives helped doom 2,000 to 5,000 people a year to horrible deaths, mostly from malignant mesothelioma and lung cancer, and left tens of thousands of others with asbestosis, a usually nonfatal but sometimes disabling lung disease.
But that was many decades ago. All of these malefactors are dead. And the companies that they once headed—asbestos manufacturers such as Johns-Manville and others that profited by concealing the dangers—were long ago driven into bankruptcy, where they have more recently been joined by others that did little or nothing wrong but were sued anyway because they were (once) solvent.
So the costs of the current asbestos litigation—which are estimated to exceed $50 billion already and could reach $275 billion—are paid almost entirely by people who did nothing wrong. The immediate targets for legal fleecing are the stockholders-including many rank-and-file employees who have seen their retirement savings (and in some cases their jobs) evaporate as share values plunged toward zero—of the more than 6,000 companies that have been dragged into lawsuits over asbestos products that were at most peripheral to their businesses. Then there are the insurers, whose asbestos liabilities will exceed their total payments for the 9/11 attacks.
The defendants represent such a wide swath of the economy that the payments extorted from them are inevitably spread through higher prices and premiums to the rest of us. The bottom line is that judicially empowered asbestos-litigation looters have imposed a multibillion-dollar annual tax on America's consumers.
Where do these billions go? An estimated 57 percent goes to enrich both the plaintiffs' attorneys—some of whom have made hundreds of millions of dollars—and the defense lawyers, and to cover other legal and insurance costs, according to a new Rand study. Only about four dollars in 10 goes to claimants. And much of that money goes not to sick people or their families but to thousands of unharmed claimants. Their claims have severely delayed and reduced the compensation available to the thousands who suffer from asbestos-induced cancers and severe asbestosis.
How did the courts let matters get to this point? Partly through well-intentioned shortsightedness. By 1980, there were so many seriously ill asbestos plaintiffs as to overwhelm the courts' capacities to hold individual trials. And because asbestos-induced illnesses typically do not become manifest until many years after exposure, traditional legal rules would have left many victims uncompensated. These problems understandably prompted many judges to bend the rules to help plaintiffs win, consolidating thousands of cases and pressuring defendants to settle. Especially in plaintiff-friendly jurisdictions where forum-shopping claimants cluster, some judges relieved plaintiffs of the burden of proving either that they were sick or that any of the defendants had exposed them to asbestos.
This served as a standing invitation for aggressive lawyers to use scientifically suspect mass X-ray screenings to recruit more and more plaintiffs (such as textile workers) who might have some pleural scarring from inhaling asbestos dust but are unlikely ever to suffer any ill effects, and to sue ever-more-peripheral defendants. So it is that we have seen an explosion of new asbestos claims—90,000 in 2001 alone—more than 25 years after regulators severely restricted use of the substance. With as many as 100 million Americans having experienced some occupational exposure to asbestos, the supply of potential plaintiffs is nearly inexhaustible.
Most defendants settle even the weakest claims because they cannot run the risk of going to trial. That is the lesson of such verdicts as the one in Mississippi last October in which the jury hit three companies for an award of $150 million to six plaintiffs whose supposed asbestosis was so mild that none even claimed to have incurred medical expenses or missed a day of work.
Legal ethics? Lawyers have recruited thousands of healthy plaintiffs with advertisements like this: "Find out if YOU have MILLION DOLLAR LUNGS." A 20-page document prepared by the Dallas firm of asbestos-litigation kingpin Fred M. Baron, headed "Preparing for Your Deposition," advised claimants: "It is important to maintain that you NEVER saw any labels on asbestos products that said 'WARNING' or 'DANGER.' " When this came to light in 1997, Baron's firm blamed the language on an overzealous paralegal, while maintaining it was not improper because the firm also advised clients to tell the truth. But according to a 1998 investigative report by the Dallas Observer, the document was part of a pattern in which Baron's firm "invented testimony, encouraged witnesses to lie, and implanted memories in workers whose claims that they were harmed by asbestos are, in some cases, dubious." Baron's firm is hardly unique.
Baron has repeatedly denied wrongdoing. At the Senate Judiciary hearing, he defended the asbestos-litigation industry—from which he has reaped an enormous fortune—as fair and efficient. Baron testified on behalf of the Association of Trial Lawyers of America, of which he is a past president. ATLA is a huge campaign donor to congressional Democrats, and members like Baron are the biggest donors to many of the elected state court judges whose sometimes-shocking rulings have helped make the lawyers so rich.
The U.S. Supreme Court has essentially thrown up its hands at what it once called "the elephantine mass of asbestos cases," while repeatedly urging Congress to do something. So far, Congress has done virtually nothing. The main reason: Many members have been bought and paid for by malefactors of wealth.