The Scarlet Letter: Asbestos Litigation for the New or Low-Profile Defendant
Asbestos litigation will continue for decades, and it will ensnare more companies along the way. Three facts prove these points: (1) the peak year for importation of asbestos into the United States was 1973; (2) the latency period for mesothelioma is 20-50 years; and (3) about 70 companies have gone bankrupt because of asbestos litigation, leading plaintiffs’ lawyers to find new defendants to sue. Fortunately, a new or low-profile defendant is not condemned to follow the path to bankruptcy. There are several measures a company can employ to manage the business problem of asbestos litigation.
Perhaps the most important step a company can take in defending itself in asbestos litigation is to create a centralized program to control its defense. The most important features in any such program are who runs it and who doesn’t. Almost every defendant should have some sort of national coordinating counsel who is experienced in asbestos litigation. Plaintiffs’ lawyers are always looking to tar a defendant with an arguably inconsistent position taken in discovery or motion practice, and they will take a document produced in one case and use it another. Therefore, coordination is crucial to ensure consistency over a period of time and across multiple jurisdictions. Experience in asbestos litigation is essential because asbestos litigation is different from most other litigation. Courts have developed special rules of law and procedure – generally favorable to plaintiffs and onerous to defendants – that every defendant should do its best to understand. National coordinating counsel can be an in-house attorney, an outside law firm, or a combination of the two. It can be a lawyer’s full-time job, or it can be a relatively small percentage of that person’s work. The company can decide what’s best for its own circumstances. The most important thing is to have an experienced national coordinating counsel.
On the other hand, a defendant should not turn control over to its insurers. As explained below, insurance coverage may be available for asbestos claims, and that funding source certainly can be valuable. However, the defendant should still control its own defense even if insurers are paying for some or all of that defense. No insurance company will ever know as much about a defendant or its business than the defendant itself knows. No insurance company will ever care as much. No insurance company will employ the strategies described here or that the defendant would choose for itself.
Whatever a new defendant thinks about its history regarding asbestos is probably incorrect, incomplete, or both. That’s not a criticism. It’s a recognition of the fact that asbestos was used for decades not only as an insulation material in industrial and construction applications but also in a wide variety of commercial and consumer products including brakes and other automotive parts, ovens, hair dryers, and faucets. In addition, a defendant with a long and complex corporate history may face lawsuits relating to business units that were sold or dissolved many years before any current employees were hired. Plaintiffs’ lawyers are constantly doing exactly this type of investigation in order to identify and build their cases against a new defendant. But the defendant has the inside track to investigate itself more thoroughly and efficiently, which will help the defendant build a more effective defense.
Every defendant should carefully select defense counsel in each jurisdiction in which it is sued. Given the enormous volume of asbestos litigation and the great number of defendants, there are innumerable lawyers and law firms who practice in this area. Many lawyers do nothing but defend asbestos cases. Some of the qualities to look for in defense counsel include a deep understanding of the idiosyncrasies of asbestos litigation in the particular jurisdiction, an eagerness to implement the defendant’s strategy rather than force the defendant to accept how that lawyer or firm may represent other clients, and a willingness to fight the discovery or trial battles that the defendant may find necessary. Try to avoid a firm in which partners will not be deeply involved in individual cases, the firm’s main selling point is low rates, and the lawyers seem to believe their job is to figure out how much their clients should pay to settle cases. The selection of defense counsel should be made with the same care that a defendant would employ in choosing counsel for a bet-thecompany case because that may, in fact, be the import of asbestos litigation for any particular defendant.
A company may have insurance coverage for asbestos litigation and not even realize it. The allegations in any particular asbestos case typically involve events that occurred decades ago. That may implicate old “occurrence” policies that did not have asbestos exclusions. Some of those policies may have been issued to parent, subsidiary, or affiliated companies that no longer exist, but the policies may be assets that followed the asbestos liabilities. Some defendants have internal resources sufficient to explore these coverage possibilities, but many can benefit from assistance from insurance coverage counsel, insurance brokers or claim consultants, or insurance archeologists.
A defendant may also have rights to defense or indemnity under corporate transaction agreements. The more complex the defendant’s corporate history, the more likely it is to face asbestos claims that can be tendered to some other company. Between insurance and indemnity agreements, a defendant may have substantial outside sources for funding its defense. Asbestos litigation is a business problem that can be managed, but only if it is viewed that way. With a thoughtful and comprehensive approach, a new or low-profile defendant can develop strategies to prevent the problem from growing out of control and crippling the company.