From its small start more than forty years ago, asbestos has transformed into what the Supreme Court described as a “litigation crisis.”
Despite decades of asbestos litigation, our nation’s asbestos compensation systems are broken. There are strong indications that they are shortchanging victims, hurting businesses and undermining our justice system. That’s why it’s so important that Congress approve the Furthering Asbestos Claim Transparency (FACT) Act (H.R. 942).
Sponsored by Congressmen Blake Farenthold (R-TX) and Jim Matheson (D-UT), the bipartisan FACT Act addresses problems with federally-created asbestos bankruptcy trusts. These entities, with assets estimated in excess of $36 billion, were established by companies forced into bankruptcy by asbestos litigation. Their goal is to compensate asbestos victims fairly and promptly.
Unfortunately, the trusts’ opaque operations open the door to abuse. A recent article in the Wall Street Journal revealed that an employee of a California law firm filed a claim with a trust in the name of someone who didn’t even exist. Five weeks later, he received a $26,000 check from the trust. The same firm also filed trust claims on behalf of clients who were nurses. They allegedly were exposed to asbestos while chipping paint from boilers – not exactly a typical duty for nurses.
The Journal also found thousands of questionable or abusive claims:
“In its analysis, the Journal found 2,689 [Johns Manville bankruptcy trust] applicants through 2005 who claimed to be working in various labor-intensive occupations while under the age of 12. Among them were 753 people who claimed their exposure to asbestos began while working in construction before turning 12; 356 people who said they were metal workers; and 184 chemical workers.”
The paper also found examples of inconsistent filings between the trusts and the court system:
“At least 312 people submitted mesothelioma claims to [the Manville trust] while describing the disease as lung cancer in filings to public court dockets or other bankruptcy trusts.”
These abuses hurt legitimate asbestos victims, as each improper claim paid by the trusts is money that is not going to deserving victims. And they hurt solvent, job-creating businesses – many with only a peripheral relation to asbestos – that are forced to defend themselves in court without knowing about inconsistent trust claims from plaintiffs.
Congress has an opportunity to greatly improve this situation by passing the FACT Act, which will simply require the trusts to file quarterly reports on their claims. These reports will help the trusts and the courts avoid improper claims, protect solvent businesses from lawsuit abuse, and ensure that scarce trust dollars go to the people who actually need them most.
The FACT Act’s opponents claim it is an attempt to delay and deny justice for asbestos victims. But nothing could be further from the truth. Because the trusts have a finite amount of funds, improper payments today are denying compensation to future claimants. By discouraging improper claims, the FACT Act would enhance, not undermine, justice for asbestos victims.
For this reason, Congress should approve the FACT Act. Doing so will help restore integrity to the justice system, protect businesses from lawsuit abuse, and ensure that legitimate asbestos victims receive the compensation they deserve.
The Baltimore Sun reports that the team physician for the Baltimore Orioles has diagnosed more than 5,000 asbestos patients for lawsuits filed by plaintiffs’ lawyer – and team owner – Peter Angelos. The Angelos firm is attempting to revive thousands of old cases in the hopes of combining them into a class action, but the defendants are questioning whether the rate of screenings indicates mass screenings that have been shown in other cases to have led to faulty diagnoses.
Ruling that “under the proper standard for evaluating certification, respondents’ model falls far short of establishing that damages are capable of measurement on a classwide basis,” the Supreme Court dismissed a class action lawsuit against Comcast in a 5-4 decision, the Associated Press reports. “The current Court has taken much-needed steps to rationalize class certification,” writes the Wall Street Journal, “and the Justices should make it clear they expect other federal courts to honor the precedents.” The court’s Comcast ruling comes less than two weeks after it nixed a plaintiff lawyer ploy to bypass provisions of the Class Action Fairness Act.
“It’s time to take the bite out of lawsuit loan-sharking,” writes Chip Hough in the Corpus Christi Caller. Predatory lending to plaintiffs, often advertised as “quick and easy,” is on the rise, and the cost of the loan can end up exceeding any expected awarded judgment due to compounding interest and hidden fees. Additionally, lawsuit lenders are not subject to the same regulations as other lenders, allowing them to charge interest rates as high as 150%.
Business Coalition Letter to the Japanese Consumer Affairs Agency Regarding Expansion of Class Actions
Urgent Proposition on the Japanese Class Action System (Shudan Sosho Seido)
Keidanren, Japan Chamber of Commerce and Industry (JCCI), Keizai Doyukai, American Chamber of Commerce in Japan (ACCJ), U.S. Chamber Institute for Legal Reform (ILR), European Business Council in Japan (EBC), and BUSINESSEUROPE are comprised of member companies and management executives committed to producing quality products and services for consumers in Japan.
We support legal systems that offer remedies for consumer damages, including appropriate activities by consumer consultation centers or consumer organizations, Alternative Dispute Resolution (ADR) and legitimate claims filed in civil litigation.
Currently, the Consumer Affairs Agency is preparing to propose for adoption the "Draft Bill for Establishing a Special Exception to the Civil Litigation Process for Recovery of Monetary Consumer Damages as a Class" (the "Proposal") at the current ordinary Diet session.
However, once introduced, the proposal could have considerable negative impacts on Prime Minster Abe's economic revitalization program which was beginning to show signs of acceleration. In addition, there are problems in the proposal, including the possibility that litigation for small amounts of damages will be filed by plaintiff organizations without authorization by numerous consumers. Furthermore, the proposal should not be applied retroactively, since it is possible that such impacts will be exacerbated if the proposal applies to any damages which arose under contracts executed before the proposal's enactment. Therefore, we believe that it would be unreasonable to hastily adopt legislation based on the proposal without providing adequate opportunity for review and an economic impact study.
To realize effective remedies for consumers, and to establish a system consistent with the government's Economic Revitalization Program, which includes job creation, wage increases, innovation and economic growth, more careful consideration is necessary.
We respectfully urge the government to avoid the negative impacts resulting from a hasty enactment, and to support businesses and consumers in developing a win-win relationship by reconsidering its policy of submitting the bill in the ordinary Diet session.
- Japan Chamber of Commerce and Industry
- Keizai Doyukai
- The American Chamber of Commerce in Japan
- U.S. Chamber Institute for Legal Reform
- European Business Council in Japan
Last week, the Kentucky Supreme Court upheld the disbarment of attorney Stanley Chesley for his role in a “scheme to skim millions of dollars in excess attorney's fees from unknowing clients.” Chesley is the latest lawyer to join a “rogues’ gallery of disgruntled plaintiffs-bar giants” writes Paul Barrett in Businessweek, which could swell further as allegations of questionable conduct by plaintiffs’ lawyers in Ecuador – including fabricated evidence and ghostwritten court documents – are investigated
In response to “past questions surrounding appointment of outside counsel,” West Virginia Attorney General Patrick Morrissey announced a new policy requiring stricter limits on the selection and use of private lawyers by the state, including a new bidding process and a cap on contingency fee payments. Additionally, outside counsel will only be hired when it is “both cost-effective and in the interest of the public,” reports the Charleston Gazette. “With this policy, West Virginia will join a vanguard of states who have led the effort to open the relationships between state attorneys general and private lawyers hired to work with them to public scrutiny,” said ILR President Lisa Rickard in a statement applauding the new policy.
Unanimous Ruling Preserves Key Provision of Class Action Fairness Act
WASHINGTON, D.C. – The U.S. Chamber of Commerce today praised a decision by the U.S. Supreme Court that preserves a key provision of the landmark Class Action Fairness Act (CAFA).
In its ruling today in the case of Standard Fire Insurance Company vs. Knowles (available here), the Court unanimously rejected a scheme by plaintiffs' lawyers to circumvent CAFA's $5 million amount-in-controversy requirement and prevent major class actions from being tried in federal court. The purpose of CAFA was to ensure that major class actions are tried in neutral federal courts rather than certain plaintiff-friendly state courts.
"Since its passage eight years ago, the Class Action Fairness Act has done much to curb class action abuses, such as forum shopping," said Lisa Rickard, President of the U.S. Chamber Institute for Legal Reform. "The Court's unanimous ruling preserves one of the most crucial provisions of the law and ensures that CAFA's reforms live on."
"Today's unanimous ruling is a victory for everyone supporting fairness and justice in our court system," said Lily Claffee, General Counsel of the U.S. Chamber of Commerce. "We are pleased that the Court listened to the views of America's business community and preserved this important protection against class action abuse."
Enacted in 2005, the Class Action Fairness Act aimed to improve the treatment and scrutiny given to large, interstate class actions. It gave litigants new tools to move such cases to federal courts and required greater scrutiny of class certification and settlement terms. Since the law's passage, the number of class actions filed in plaintiff-friendly jurisdictions like Madison County, Illinois has dropped precipitously.
The U.S. Chamber Institute for Legal Reform campaigned strongly for CAFA's passage. In addition, the Chamber's National Chamber Litigation Center filed amicus curiae briefs, both in support of certiorari and on the merits, in the Knowles case (available here and here).
ILR seeks to promote civil justice reform through legislative, political, judicial, and educational activities at the national, state, and local levels.
NCLC is the public policy law firm of the U.S. Chamber of Commerce that advocates fair treatment of business in the courts and before regulatory agencies.
The U.S. Chamber of Commerce is the world's largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.
Lawyers cannot bypass a provision of the Class Action Fairness Act by promising to keep their recovery below $5 million, the Supreme Court ruled in a unanimous decision. CAFA requires class actions seeking more than $5 million be sent to federal court, so plaintiffs lawyers hoped that capping their damages would keep their cases in friendly state courts, reports Bloomberg.
Amid concerns of an increase in fraudulent asbestos claims, a House Judiciary subcommittee heard testimony on a proposal that would require asbestos bankruptcy trusts to provide more detailed information on payments to claimants, reports Bloomberg. The trusts operate with little or no oversight, allowing claimants to file with the trusts then turn around and sue solvent companies with differing – or even contradictory – allegations. “For too long, asbestos bankruptcy trusts have operated without adequate oversight,” says ILR president Lisa Rickard. “Claimants go after trust money and then make different claims in lawsuits.”