Exhibit F: Workers' Statement
Statement of International Association of Heat & Frost Insulators & Asbestos Workers, AFL-CIO Submitted to Committee on Judiciary, United States House of Representatives, Hearings on the Civil Liability Provisions of the Proposed Tobacco Legislation
February 5, 1998
The International Association of Heat and Frost Insulators and Asbestos Workers, AFL- CIO is a labor organization composed of approximately 20,000 active members who are employed in the construction industry. In addition to our representation of these members, the Union endeavors to promote the interests of several thousand retirees, as well as the next of kin of former workers who have died prematurely from occupationally-related diseases.
As the name of our organization indicates, chief among the diseases from which asbestos workers and their family members die prematurely are those that have resulted from occupational exposure to asbestos products. These diseases include: lung cancer, mesothelioma, several other cancers, and asbestosis. Thousands of our members have died prematurely from causes attributable to occupational exposures to asbestos. Thousands more, who may not have died prematurely, have suffered -- physically, psychologically and economically -- from the ravages of these terrible diseases. Even though new asbestos products are no longer being installed in this country, and even though there is now in place a protective OSHA standard applicable to asbestos abatement work, thousands more workers are expected to die prematurely, and suffer, well into the twenty-first century. This is in part due to the long latency period associated with the development of asbestos diseases.
The Asbestos Workers Union has followed the news accounts of the proposed Tobacco Settlement and the Tobacco Bills introduced in Congress. We urge the Congress to reject any such legislation which fails to provide substantial funds for asbestos victims. There is no denying the fact that smoking substantially increases the risk to asbestos workers of contracting asbestos-related lung cancer. This is the so-called synergistic relationship between smoking and exposure to asbestos that has been well documented by the scientific community. Workers who were exposed to asbestos, and who smoked, have a risk of dying of lung cancer that is 87 times that of the non-smoking public. There is no group of Americans for whom tobacco is a more lethal product. It is therefore entirely appropriate for any Tobacco legislation to include substantial funds for payment to asbestos victims. Unfortunately, if the current Tobacco legislation proposal goes through, the tobacco companies will never pay a dime for the harm their products have caused asbestos workers.
Much has been stated concerning the asbestos litigation crisis in this country today. The greatest victims of this crisis, without any doubt, are the many thousands of asbestos-exposed workers, and their family members, for whom our legal system has failed to provide justice. While there are a considerable number of individuals who have managed to secure some compensation from asbestos manufacturers and distributors by court actions and settlements, and while it is essential that the judicial forum remain available to those who wish to seek their redress in this manner, there are many more asbestos victims for whom the system hasn't worked well or fairly. One reason, of course, is the huge backlog of cases in the federal and state courts. Another reason is the extremely high level of transaction costs -- attorneys fees and other litigation expenses -- of the parties in these cases. It is estimated that after deductions are made for such costs, the plaintiffs receive less than 40 percent of the total dollars that are spent in cases resulting in monetary awards by way of judgments and settlements. A third reason is the insufficiency of assets held by the asbestos companies to satisfy court judgments, or that warrant suit at all. Approximately 15 asbestos companies have gone through bankruptcy proceedings. At best, some of these proceedings have resulted in the creation of trusts which pay asbestos claims at a drastically reduced level.
For example, the largest of the asbestos trusts, the Manville Trust, currently pays only 10 cents on the dollar of the amount the Trust agrees it owes (which itself is only 30% of the victim's total damages which the Trust believes should be paid a victim by all the asbestos trusts and defendant companies). In testimony presented to the Senate Judiciary Committee last July on the proposed Tobacco Settlement, the chairman and managing trustee of the Manville Trust candidly noted that "because the Trust pays only 10 percent of liquidated value, the claimants in question have not received, nor are they likely ever to receive, the unpaid $5.7 billion which is the 90 percent of claim value the Trust is unable to pay because of the assets/liability mismatch."
The Asbestos Workers Union was pleased to see in the Manville Trust's testimony the acknowledgment that the "Trust's mission is to 'enhance and preserve the Trust estate' in order to 'deliver fair, adequate and equitable compensation to claimants, whether known or unknown.'" We were also heartened by the Manville Trust's statement, in its testimony, that: "We are authorized to represent that asbestos trusts and co-defendants agree that all funds received under such a contribution mechanism would be reserved and expended solely for injured victims." It was because of these commitments, made to the Senate Judiciary Committee, that our Union decided to participate in the ongoing effort of the Alliance for a Fair Tobacco Settlement, an ad hoc organization of asbestos trusts and defendants. This effort is discussed in the testimony before this committee today of plaintiffs' attorney Steven Kazan, Esq., and in the statement of the Alliance.
It would be regrettable if thousands of asbestos victims were forced to sue tobacco companies in order to receive their full share of damages to which they are entitled. We are hopeful that a just resolution of this problem can be found which will spare our members the need to commence another massive set of lawsuits over the next few decades. While the litigation alternative must remain available to asbestos victims who choose to seek their redress by means of this forum, an infusion of substantial additional funds from the tobacco companies would have the practical effect of reducing, in a major way, the number of new cases that would be filed in the future.
Similarly, it is reasonable to expect that such a payment by the tobacco companies would serve to reduce litigation between the asbestos companies and the tobacco companies. As previously noted, one of the principal reasons for the shortfall in payments by asbestos companies and trusts to asbestos victims is the huge transaction costs paid to attorneys, expert witnesses and related litigation service providers. Litigation between the asbestos companies and the tobacco companies will exacerbate this situation to the further detriment of the asbestos victims. Everything must be done to maximize payments to the asbestos victims.
Mr. Kazan's testimony describes the joint proposal which has been negotiated among members of our coalition and which the Asbestos Workers Union endorses. Our endorsement is based upon several features of the proposal which we would like to highlight:
- The proposal calls for the deposit into an asbestos/tobacco trust of a very substantial, but reasonable and necessary, amount of funds by the tobacco companies.
- All monies paid by the tobacco companies shall be used for the direct benefit of asbestos claimants and may not be used for costs of defense, corporate dividends, or any other corporate purpose.
- These funds (from the tobacco companies) would be in addition to monies paid by the asbestos defendants and trusts resulting from the existing systems for filing claims and suits, negotiating settlements, and pursuing suits to judgment. However, the proposal would require claimants to look to tobacco companies for the tobacco portion of claimant's damages, thereby relieving asbestos defendants and trusts of this liability. The proposal clearly states that the combination of both portions -- the asbestos portion and the tobacco portion -- will result in compensation "on a full and timely basis."
- The proposal states that the administrative system for resolving claims against the tobacco companies, for the tobacco portion of asbestos-related diseases, would be available "as an alternative, at the election of an asbestos claimant, to the claimant's use of the tort system against the tobacco companies." The Asbestos Workers Union would strongly oppose any legislation that would force its members to forego the tort system as the chosen avenue of seeking adequate and appropriate compensation.
The point in the immediately preceding paragraph gives rise to the question whether Congress should approve the immunity provisions that are contained in some of the pending Tobacco bills. Our coalition's proposal by its terms, "does not address the limitations on tort rights, if any, that should be imposed on asbestos claimants who smoked and who elected to pursue their tobacco-related claims against the tobacco companies in the tort system." But, this is an important issue for our Union. We believe that a meaningful right of claimants to sue Tobacco Companies in the tort system (where such claimants do not resort to alternative claims or resolution mechanisms) must be preserved.
Several different kinds of litigation restrictions are contained in the Tobacco bills now pending before the Congress. These include (1) preclusion of punitive damages; (2) caps on compensatory damages; (3) preclusion of certain causes of action, or certain legal theories upon which causes of action are based; and (4) elimination of procedures that are well recognized in mass tort cases and are intended to make the judicial system work more efficiently.
It is our view that none of these types of restrictions should be enacted. There should be no limitation on punitive damages, in view of the existing and ever- growing body of evidence that the tobacco industry sought to maximize the addictive effect of its product, despite being fully aware of the horrible diseases it causes, the special risk of asbestos workers, and the targeting of young people. There is even less reason to enact a cap on compensatory damages, which are intended to reimburse victims for the harm done to them, both economic and personal. Nor should limitations be placed on causes of action or legal theories which, presently, are legally relevant to the facts surrounding tobacco companies' practices. Finally, it would be contrary to public policy, and imprudent, to say the least, were Congress to prevent courts -- federal as well as state -- from utilizing procedures whose very purpose is to dispense speedier and more uniform justice. Congress should not enact such provisions.
If you would like to discuss this statement with a representative of the International Association of Heat & Frost Insulators & Asbestos Workers please contact:
Elihu I. Leifer
SHERMAN, DUNN, COHEN, LEIFER & YELLIG, P.C.
1125 Fifteenth Street, N.W., Suite 801
Washington, D.C. 20005
(202) 785-9300
(202) 775-1950 (Fax)