Exhibit G: Statement of the Alliance for a Fair Tobacco Settlement
Submitted to the House Judiciary Committee
February 5, 1998
In Conjunction With the Testimony of Steve Kazan, Esq.
The Alliance for a Fair Tobacco Settlement is an ad hoc group of asbestos trusts and defendants. It has joined with representatives of victims groups and unions whose members include asbestos workers to propose to Congress a specially tailored solution to the unique and pressing problem presented by the lethal connection between asbestos exposure and tobacco—and between tobacco litigation and the asbestos litigation crisis. The coalition's proposed solution is being presented to Congress as part of the testimony of Steven Kazan, one of the country's leading asbestos plaintiffs' lawyers.
The solution—and the need for it—stems from a combination of unique scientific and legal factors. As a matter of medical science, we know that smoking is far more harmful to asbestos workers than to almost any other segment of the population. Smoking is a major contributor to the devastating incidence of cancer and disabling lung disease among asbestos workers. As a matter of law, this joint and overlapping causation has produced joint and overlapping legal liability that, in turn, has contributed greatly to what the Judicial Conference has aptly called, in its report submitted to this Committee, our national "asbestos litigation crisis."
Asbestos litigation defendants have paid, and will continue to pay, tens of billions of dollars in compensation to injured asbestos workers. As a result, nearly 70% (by market share) of former asbestos manufacturers are now bankrupt. The asbestos trusts that stand in the shoes of those bankrupt companies pay as little as 10 cents on the dollar for their admitted liability. By contrast, the tobacco companies have paid nothing to asbestos workers injured by smoking. The release of the long-suppressed, internal tobacco industry documents means that Tobacco's undeniable causation of asbestos-related diseases is about to become unavoidable tort liability for that harm.
For different reasons, either granting immunity to tobacco companies as proposed under the global settlement, or leaving resolution of their liability to the tort system will make the asbestos litigation crisis far worse.
In their proposed settlement, the tobacco companies seek partial immunity from asbestos workers' claims, and total immunity from third-party claims for "contribution" by asbestos defendants and trusts. That request is patently unreasonable and unfair. Asbestos defendants and tobacco companies alike are often subject to the rule of "joint and several liability" in the tort system. Any party liable to the injured plaintiff is responsible to pay all of the damages suffered. If immunity of granted to the tobacco companies, it will simply transfer Tobacco's legal liability to the already overburdened asbestos defendants and trusts. Moreover, it would create, not resolve, litigation chaos by injecting special, conflicting "tobacco tort" rules into asbestos litigation.
On the other hand, Steve Kazan is correct when he states that if tobacco companies are not given immunity, the unleashing of pent-up tobacco litigation into the heart of nearly every asbestos case is going to make the existing asbestos litigation crisis even worse. Asbestos-smoking harm is a unique case in Congress' deliberations over the role of the tort system in resolving tobacco's liability because the tort system has already suffered an unprecedented collapse with respect to asbestos cases. It cannot now give timely relief to the vast majority of asbestos victims, and a flood of smoking litigation and tobacco defendants into asbestos cases will compound the problem many times over.
Nearly two of every three dollars spent by non-bankrupt asbestos defendants is wasted on transaction costs—never reaching claimants. Courts are so overwhelmed by the endless stream of complex asbestos cases that, as the Judicial Conference emphasized, "death often overtakes events with no response from the system."
Our coalition's answer to this dilemma requires the tobacco companies to resolve the claims of asbestos workers, and asbestos trusts and defendants, by committing $35 billion into a Tobacco Asbestos Trust which will be used to pay to victims prompt and fair compensation for smoking-caused harm. The Trust would be divided into two funds. The first, representing reimbursement to asbestos defendants and trusts for amounts paid in the past for smoking-caused harm, would be allocated to these defendants and trusts based on their past payments and settlements in asbestos litigation. This allocation could be used by them for only one purpose—to compensate workers injured by asbestos and tobacco.
The second fund would be used exclusively to pay asbestos workers' with pending and future claims for the smoking-caused portion of their harm, on a timely and equitable basis according to acceptable procedures and standards. A qualifying claimant could access this fund at any time—before, during or after the processing of his asbestos claim by asbestos defendants and trusts.
Our proposal preserves the right of an asbestos worker to proceed in the tort system against the tobacco companies, instead of accessing the Trust, subject to the same restrictions as other smokers. After the establishment of the Asbestos Tobacco Trust, individuals with asbestos personal injury claims will remain free to pursue claims against asbestos defendants and trusts in the future, except that they could recover for asbestos-caused, but not smoking-caused, harm caused by asbestos defendants.
Any legislation on tobacco, whether it provides a broad grant of immunity to the tobacco industry or not, should address the "tobacco-asbestos crisis." As Mr. Kazan states, echoing the Judicial Conference, because of the enormous and growing asbestos case backlog, without specially tailored relief, there will be no timely compensation paid by the tobacco companies to sick and dying asbestos workers for the terrible and unique harm smoking has caused them.
ALLIANCE FOR A FAIR TOBACCO SETTLEMENT
1120 Connecticut Avenue, 11th Floor
Washington, D.C. 20036
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