A Cincinnati firm that once made asbestos tentatively has agreed to put up $750 million over 20 years to settle litigation with asbestos victims, a major step toward resolving tens of thousands of personal-injury cases, sources said yesterday.
Eagle-Picher Industries Inc., which once made asbestos and now manufactures specialty chemicals, automotive parts and machinery, would be the first large asbestos defendant to consolidate all its cases in one court and settle them without first filing for bankruptcy.
The company has about 65,000 outstanding claims against it, according to company officials.
The tentative settlement was reached among asbestos victims, the company and a special court-appointed mediator over the weekend, sources said. It still must be approved by U.S. District Court Judge Jack B. Weinstein, who is attempting to consolidate the asbestos cases of companies that are likely to fail because of limited funds to settle cases.
"The settlement with Eagle-Picher is an extremely important development in resolving the national asbestos problem," said Kenneth R. Feinberg, the mediator in the case. He said the move would be a signal to both plaintiffs and asbestos companies that there are alternatives to litigation or bankruptcy.
Federal judges have been struggling to deal with an overwhelming backlog of lawsuits filed across the country on behalf of asbestos victims, many of whom contracted fatal lung diseases from working with the product and died before their cases came to trial or were settled.
Many of the companies that once made asbestos either have filed for bankruptcy court protection or are threatening to do so because they cannot pay the settlements and legal fees in the asbestos cases.
Sources said that a similar plan to consolidate cases involving the Manville Trust could be approved by Weinstein soon. Manville Corp., once the country's largest maker of asbestos, set up the trust with a $3 billion fund to compensate asbestos victims in 1987 after filing for bankruptcy protection because it was inundated with personal-injury lawsuits.
Earlier this year, the trust said that it was virtually broke and could not pay more than 130,000 asbestos victims or their survivors who are awaiting payments. Weinstein has ordered the trust and its method of paying survivors restructured.
Eagle-Picher has paid more than $500 million in settlements and lawyers' fees for more than 60,000 asbestos-related cases since the early 1980s. From 1934 until 1971, the company made pipe insulation containing asbestos that was used on Navy ships.
Last summer, Eagle-Picher told Weinstein that there was a risk the company would have to file for bankruptcy if the litigation by individuals continued.
Company officials said the settlement over the weekend would be an important step in allowing it to compensate claimants and would allow the company to move forward with its other businesses.
The settlement does not require Eagle-Picher to sell assets or give up any stock, according to sources close to the case. The company, which had 1989 sales of $730 million, would contribute to the claimants fund out of income over the next 20 years, sources said.
The advantage would be that the company would no longer have to litigate cases in every state in the country and claimants would have a pool of funds from which to draw.