Life Under the Fairchild Cloud
As every UK verdict and settlement is meticulously examined in light of the restrictive Fairchild judgment (newsletter issue 42), asbestos litigation in the US continues to expand. The number of asbestos claims being brought against some American defendants has more than doubled over the last ten years according to a report released on June 12, 2001 by management consultants Tillinghast-Towers Perrin. Annual averages of 20,000 claims per defendant have grown to 50,000-60,000, leading accountants to predict that the total cost of asbestos-related settlements will reach $200 billion. According to Mike Angelina, one of the co-authors of the study: "Over 450,000 claims have been filed to date and we project that close to 1 million claims will be filed before the litigation ends, absent some type of federal legislation." Although defendant corporations will be liable for $55-$65 billion (39% of the liabilities), the rest will be picked up by US insurance companies (30%) and foreign insurers (31%). To date, the US insurance industry has paid out $41 billion for asbestos claims; this study calculates that the insurers' final bill could reach $85-$105 billion.
W.R.Grace & Co. and USG, the largest wallboard maker in the US, have joined the lengthening list of US corporations seeking protection from asbestos liabilities by filing for Chapter 11 bankruptcy. In the last twenty years, twenty-seven companies have reorganized under the Federal Bankruptcy Code. According to information supplied by Grace, there were 81% more asbestos-related claims filed against the company in 2000 than in 1999. Since then, "the pace of asbestos claims… has skyrocketed." In the last seven years, USG has been named in more than 250,000 asbestos injury cases; the company has paid out $450 million to resolve asbestos-related litigation. It is believed that the twenty-two thousand new claims received by USG in 2001 will contribute to a yearly asbestos bill exceeding $275 million. Experts at the Manville Trust have recently announced that a 1999 prediction of 500,000 total claims has been revised to 1.5-2.5 million claims.
Since February, 2001 the judicial climate in which UK asbestos personal injury litigation is processed has been dominated by Mr. Justice Curtis' reversal of legal precedents in the Fairchild case. The judge let both defendants off the hook declaring himself unable to apportion liability between them for the occupational asbestos exposure experienced by the late Arthur Fairchild. The day after the Fairchild judgment was issued in the High Court, the Court of Appeal (February 2, 2001) upheld the original ruling in a case brought by the widows of two other mesothelioma victims. In February 2000, Deputy High Court Judge R.D. Machell Q.C. had found for the plaintiffs, Betty Irene Jeromson and Ruth Mary Dawson, in their action against Shell Tankers UK and Cherry Tree Machine Co. Ltd. Both defendants appealed alleging that the Asbestos Industry Regulations 1931 were specific to the asbestos industry and were not relevant to "the incidental use of asbestos in other industries." Appeal Court Justices Lord Mantell, Hale and Cresswell were unequivocal: "The regulation in this case is quite clear: the obligation to provide an exhaust is absolute unless it is not practicable to do so. There is no question of reasonable practicability. In any event, the known danger was dust and the required precaution was both known and practicable. The judge was clearly right to hold that if the regulation applied it had been broken in this case." Another favourable result in a mesothelioma case was reached on February 8 with an out-of-court settlement of £275,000 in Leonard Leslie Humber v W.S. Shuttleworth (Slough) Ltd. Between 1967-1975, the plaintiff was occupationally exposed to asbestos while preparing asbestos sheets for delivery to customers and working in the vicinity of colleagues sawing these sheets. In 1999, he became unwell and was subsequently diagnosed with malignant mesothelioma. Mr. Humber was represented by a solicitor from the London law firm of Field Fisher Waterhouse; the firm's Asbestos Newsletter can be viewed on the website located at: www.ffwlaw.com The Spring 2001 issue lists successful actions against defendants such as: Elders & Fyffes Ltd., Hessle Foam Products Co. Ltd., Smith & Partners Ltd. (formerly Smith Insulations Ltd.), Cape Darlington Ltd., Expandite Contract Services Ltd., Turmag (Great Britain) Ltd. (formerly Mitchell Brothers, Sons & Co. Ltd.), Watkin Heating Co. Ltd., Barrett & Wright (London) Ltd., Cape Building Products Ltd. and the British Waterways Board (formerly the British Transport Commission). Of particular interest is the settlement achieved in the John Johnson case. Although a post mortem examination established the presence of pleural plaques, no evidence of asbestosis was found in Mr. Johnson's lungs. In addition, the deceased had smoked 20 cigarettes daily over a period of thirty-five years. Citing the Helsinki report (1997) which held that "asbestosis was not a necessary condition for the causation of lung cancer by asbestos" and presenting expert evidence from Dr Robin Rudd and Professor Douglas Henderson encouraged the defendant's insurers to make an offer equivalent to two thirds of the agreed value of the claim.
Following the path trodden one month previously by Mr. Justice Curtis, His Honour Judge Mackay cited the Fairchild reasoning in his March 27th judgment in the case of Doreen Fox v Spousal (Midlands) Ltd. Mrs. Fox's husband died in 1996 from mesothelioma. The deceased had worked as a pipe lagger for the defendants from 1953-1955; from 1955-1989 he worked in Liverpool Docks as a stevedore/holdsman. Judge Mackay concluded: "the claimant cannot prove that these (Spousal) particular defendants… were the relevant employers at the time when this disease was started. I reject the claimant's assertion in this particular case that that proof is apparent or can be established in the manner which the claimant puts forward, or indeed, can be established in the manner which was put before Mr. Justice Curtis in the case which he heard, Fairchild-v-Leeds City Council." Permission to appeal has been granted and the Fox case will be included amongst several to be heard in the Fairchild appeal on November 12, 2001.
What is believed to be the first English award for psychological stress caused by the fear of contracting an asbestos-related disease was agreed in April, 2001. Although the plaintiff, Ronald Lyons, does not have any physical symptoms of an asbestos-related lung condition yet, his exposure to asbestos during fifteen years at the Southampton dockyards has made him all too aware of the possible repercussions. The claim was for severe depression caused by "paranoia" and fear that he would suffer the same fate as many others who unloaded bags of asbestos from ships' holds during the 1950s and 1960s. Mr Lyons has witnessed relatives and friends succumb to asbestos-related diseases over the years: "It is like someone holding a loaded gun to your head and saying they are going to pull the trigger but they won't tell you when. It's like a time bomb inside me." The case Mr. Lyons brought against his former employers, Union Castle (now the Stuntbrand Mail Steam Ship Co.) and Associated British Ports, was settled out of court for a sum which the plaintiff has classed as "pitiful." While disappointed by the amount, it was the principle that mattered: "it is not about the compensation. If they had given me £600,000 it would not solve my problems. I have to go on suffering every day. Nothing can change that."
In June, 2001 the sum of £240,000 was awarded for the mesothelioma death of Robert Kirk, a heating engineer with fifteen years employment in the central heating and engineering industry. According to solicitor Louise Morgan, thirty-nine year old Mr. Kirk, who died in 1997, was: "the youngest victim of this terrible disease that we know of." The case against Hallamshire Heating Company Ltd., the Sheffield-based company which employed Mr. Kirk as a trainee heating engineer from 1974-1980, was complicated by the defendant's liquidation. The company's insurers were traced after legal action had been taken against former company directors. The defence solicitors initially denied the "alleged" exposure, contested the income dependency claim, mounted a limitation defence and pleaded the Fairchild point because of subsequent occupational exposure.
While civilian workers are permitted to sue the Ministry of Defence (MOD) for asbestos-related damages, former service personnel are not. The resulting inequality of treatment constitutes a blatant injustice which has been overlooked by successive governments. A 1996 campaign for changes in Section 10 of the Crown Proceedings Act 1947 petered out long ago. Although the act was repealed in 1987, Section 10 still applies. Solicitor Adrian Budgen explains: "Section 10 still bars former members of the Armed Forces from claiming Common Law damages in respect of asbestos injuries as the date of exposure will inevitably have been before May 1987." There has been talk of bringing cases before the European Court but nothing tangible has happened to improve the plight of military personnel with asbestos-related diseases. These claimants remain at the mercy of a system incorporating piecemeal payments from the DSS War Pensions Agency, the Armed Forces Pension Scheme, the Criminal Injuries Compensation Scheme, the Criminal Injuries Compensation (Overseas) Scheme and the MOD (only if employer's negligence can be proved). An MOD consultation document currently being circulated looks likely to prolong this injustice. The Joint Compensation Review aims to update an under-resourced and confused scheme "with modern, fair and simpler arrangements; to ensure that appropriate benefits are targeted at those most disabled; and to reduce the number of claims for compensation that have to be settled in court." The objectives are laudable: "we suggest that the structure of the new compensation package should be not too far out of line with awards available in civil negligence claims… (we seek) consistency with practice in civil litigation cases and insurance benefits, so that fairness and transparency of awards can be validated." The problem is located in section 6.12: "the date of the exposure or incident in service, rather than the date of the claim arising from the exposure or incident… would determine whether a case was considered under the old scheme or the new." As the overwhelming majority of asbestos-related MOD claims stem from before the cut-off date, these victims will continue to be disadvantaged.
July 17 2001