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I am in Atlanta at the DRI Conference on Silica medicine. Some really fascinating stuff on the screening fraud being perpetrated by a limited number of screening companies and physicians. But I digress. A lobbyist from Navigant spoke yesterday and went through a number of hurdles and other hiccups confronting the asbestos legislation. His best guess—40% chance of passage. He thinks we may end up with a medical criteria bill, which would be a good thing too.
On Thursday, May 26, 2005, the Judiciary Committee passed the Asbestos Bill by a vote of 13–5. Here are two reports of the day’s events:
Summary by Bob Carlstrom, Director Navigant Consulting
After overcoming an onslaught of ATLA and AFL-CIO amendments, offered by Senator Biden (D-DE) -- at extraordinary length and with rancor in what would qualify as an effort at filibuster in the committee -- as well as Kennedy (D-MA) and Feingold (D-WI), the Judiciary Committee approved S. 852 by a vote of 13-5. Another multi-part managers amendment and a compromise Specter-Leahy amendment to a Lindsey Graham (R-SC)/Kennedy amendment that would have the Agency for Toxic Substances and Disease Registry investigate other communities in which plants processed vermiculite (@20 - 25 on the EPA list) and to determine if a Libby MT like situation occurs there. It was a protracted cliff-hanger.
Next steps include the writing and approval of a Senate Judiciary Committee report with additional views inserted, negotiations of further amendments that can be agreed to on the Senate floor. Timing for Senate action: I think the last week in June at the earliest and likely will spill over into July and require five days. I expect an effort by those Senators who support the plaintiffs bar to try to filibuster ,e.g. Senators Biden, Durbin, Feingold, and Kennedy at the lead.
National Journal Recap May 26, 2005
Senate Panel Approves Asbestos Bill With Tweaks To Come
The Senate Judiciary Committee today passed a massive asbestos bill on a bipartisan vote, bucking long odds that faced the legislation, although it still faces tweaking before and during floor debate. The bill has been the subject of intense negotiations and seven markup sessions in the last few weeks. It finally gathered enough support to pass after Judiciary Chairman Specter offered a manager's amendment designed to ease concerns of wavering lawmakers. The package included a compromise negotiated among Specter, Judiciary ranking member Patrick Leahy, D-Vt., and Sens. Dianne Feinstein, D-Calif., and Jon Kyl, R-Ariz., concerning the start up of the asbestos trust fund. Kyl and others had been concerned that companies would have to simultaneously pay court settlements and begin contributing to the trust fund while the fund gets up and running. The bill passed 13-5. All Republicans and three Democrats -- Leahy, Feinstein and Sen. Herb Kohl of Wisconsin -- voted for it. The package also included about 20 additional changes to the bill, such as one proposed by Sen. John Cornyn, R-Texas, that would limit surcharges on certain companies paying into the fund. Specter said he expects more changes to the bill before it reaches a final Senate vote. At one point, Specter responded to an amendment by Sen. Edward Kennedy, D-Mass., saying he would address Kennedy's concern "before floor time, where I know we will reconsider many of these provisions."
The committee beat back a series of amendments, including some sponsored by Sen. Joseph Biden, D-Del., and Kennedy while struggling to maintain a quorum. Biden's objections previewed what are certain to be those of many Democrats when the bill is on the floor. He said the bill does not ensure that companies will pay the amounts envisioned into the trust fund and that it likely will face delays from lawsuits challenging its constitutionality. The bill would halt all asbestos lawsuits and instead create a $140 billion trust fund to compensate victims of asbestos-related illnesses. The committee adopted a version of the bill in 2003 on a near party-line vote, but it failed after talks between Majority Leader Frist and then-Minority Leader Daschle did not produce a compromise. -- by Emily Heil
Very interesting article in the National Law Journal this week on an unintended byproduct of Sarbannes-Oxley—causing public companies to go private. Things can be so much easier as a private company and the grass is always greener ….. The article cautions all would-be privateers to be very careful, however. In these days of legacy issues and the judges who are unimpressed with corporate veils when dealing with private companies, failure to understand the bases for piercing the corporate veil and to govern the company in a way the ensures against these pitfalls is a recipe for disaster. It may be nice to avoid SOX, but don’t avoid it too much.
On May 5, 2005, Florida's Legislature approved a bill that would require claimants alleging asbestos- or silica-related injury to meet specific medical criteria before pursuing their claims. Governor Bush is certain to sign the bill, which would take effect July 1.
In addition, the Asbestos and Silica Compensation Fairness Act of 2005 requires that claimants be Florida residents or be able to prove that their exposure to asbestos or silica occurred in Florida before filing a claim in a Florida court. So I guess Flordia decided not be the next Mississippi (a claim dumping ground) now that Mississippi has decided it doesn’t want to be Mississippi anymore.
Florida is the third state to approve such medical criteria legislation in the last year, joining Ohio and Georgia. In addition, the Texas Senate has given its approval to similar legislation, which is expected to be taken up by the state House later this month.
Every football season, you hear about players who have arthroscopic knee surgery and then return to play two weeks later. It doesn’t seem to be that big a deal. Well, I had my knee ‘scoped on Monday. All I can say is that it is a miracle that these guys can run and tackle and so forth in two weeks time. I am fortunate that my parents are visiting for a week—I stole my Dad’s cane just so I can walk around the house! Actually, “walking” is too charitable a description of what I am doing. Its an ugly picture, and I’ll save you from it.
Reports are that the “mark-up” of the asbestos bill went very poorly today. Scores of amendments were offered, and only a couple were voted on. The judiciary committee adjourned and no further action on the bill is expected until after May 9. It appears that the opponents of the bill are going to try to amend it to death. Support is thin enough that even a few unpopular amemdments could peel a few votes away. Of course, many can announce they supported the bill before “they” amended it, “they” being the boogeyman that a particular Senator has to confront.
On May 5 and 6, I will be co-chairing a seminar sponsored by Harris Martin, entitled “Peripheral No More: The Increasing Prominence of Equipment, Gasket and Friction Defendants.” The focus of the seminar will be on the changing nature of asbestos litigation, which now increasingly focuses on gasket and packing manufacturers, equipment manufacturers which utilized gaskets and packing, and friction defendants including auto makers. My partner Kirk Hartley will be speaking on some specific legacy issues, including the fall-out from plaintiffs suing the wrong parties. The seminar will be at the Bellagio in Las Vegas. Details can be found at www.harrismartin.com.
The greatest legacy liability in history is, of course, asbestos. To this day, otherwise terrific business deals don't happen because of the possibility that the target could end up in asbestos litigation. But it now appears likely that Congress will pass legislation that will end asbestos litigation as we know it. If the legislation passes, it will take some time for deals involving major asbestos defendants to happen, but they will. Figuring out which companies will be involved could be the next big betting line on Wall Street.
For a period of seven years during the late 1970s and early 1980s, two companies, AAA and BBB shared a common parent. Both were insured under the parent's insurance program. Both were sold to new owners and AAA and BBB are no longer related companies. Both AAA and BBB have been named in numerous asbestos personal injury claims, and both have triggered the insurance policies bought by their former common parent.
Here's the rub. AAA is aggressively and successfully defending the asbestos lawsuits and has consumed virtually none of the primary limits on its former parent's policies. BBB, on the other hand, has paid millions in settlements and has exhausted several of the shared policies.
AAA feels aggrieved. It was (and remains) much bigger than BBB, and paid a much larger share of the premiums. The insurer feels it must make payments on a first-come, first-served basis. AAA wants the insurer to apportion the remaining primary limits and applicable excess claims. Is AAA's claim improved if the insurer has accepted the defense of both parties, but is exerting more control over BBB's settlements? What can AAA do vis the insurer and BBB?
The frenzy of merger and acquisition activity in the 1980s and 1990s has created a plethora of legal issues. Among them--shared insurance rights amongst no-longer related companies, indemnity issues, successor liability, piercing the corporate veil, corporate history and archiving, insurance archeology, jurisdiction and many others. These issues, and emerging issues such as liability under the Foreign Corrupt Practices Act, will be discussed in this blawg.
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