Hundreds of thousands of asbestos-related personal injury lawsuits involving the Manville trust may be settled and brought together in one of the largest class-action suits ever, according to court papers filed yesterday.
The settlement agreement, if approved by a federal judge in New York, would drastically reduce both attorneys' fees and payments to asbestos victims, but it would allow the beleaguered trust to begin paying the most seriously injured asbestos victims within the next two to three years.
The $3 billion Manville Personal Injury Settlement Trust, set up after the asbestos manufacturer Manville Corp. filed for bankruptcy in 1982, said earlier this year that it was virtually broke after paying about 20,000 claims and that it could not compensate some remaining victims or their survivors for as many as 20 years.
Manville was a primary target of a flood of lawsuits filed on behalf of workers who contracted cancer and lung disease after making or using asbestos products as far back as World War II. The suits charged that Manville and other manufacturers concealed the hazards of asbestos from the workers.
The 130,000 pending asbestos lawsuits that have been clogging courts across the country would be eliminated under the settlement, which proposes that all the suits be brought together in the courtroom of U.S. District Court Judge Jack B. Weinstein in Brooklyn, N.Y.
Weinstein is expected to approve a class-action suit that would rank with personal-injury suits that involved the Dalkon Shield birth control device and the Vietnam-era defoliant Agent Orange in terms of numbers of litigants.
Weinstein was expected today to appoint Washington lawyer Laurence Gold as a special adviser on the settlement, according to sources. Gold, who is general counsel to the AFL-CIO, could not be reached for comment yesterday.
The lack of funds in the Manville trust, which registered $42 million in administrative expenses in the first nine months of this year, has sparked a debate over special severance arrangements for its top executives.
Sources expressed outrage yesterday at the news that trustees for the Manville trust are in the process of drafting severance packages for the top four executives of the trust that would amount to 1 1/2 times their annual salaries -- salaries that have reportedly been as high as $200,000 a year.
John C. Sawhill, chairman of the board of trustees, said he believed the severance agreements were necessary to allow the trust to keep its top officials and he expects a final package to be completed by the end of the year.
Sources said they believed the controversy, first reported by the New York Times, had been initiated because of a fear among top officials of the trust that Weinstein might fire them once the settlement agreement was in place. Marianna S. Smith, executive director of the Washington-based trust, yesterday said that she does not expect to be fired.
The settlement agreement proposed yesterday would establish two classes of asbestos victims. The families of victims who have already died and those with life-threatening illnesses such as cancer, estimated to be about 25,000 cases, would have their claims processed over the next two years. About 100,000 less serious cases would be eligible for funds beginning in the third year. While claims from both groups would be processed more promptly, full payments would take many years.
The plan would require that the trust settle claims with greater speed than in the past, when many victims of asbestos died waiting to be paid.
Both groups would receive 45 percent of the settlement amount that the trust has been paying for that particular disease. For example, the $100,000 amount that cancer victims have traditionally received from the trust would be reduced to $45,000 under the settlement agreement.
After weeks of sometimes caustic negotiations, some of the plaintiffs' attorneys who negotiated the settlement with a court-appointed adviser still came away less than happy.
"It was a bitter pill to swallow, but the best we could do under the circumstances," said Ron Motley of Ness, Motley, Loadholt, Richardson & Poole, a Charleston, S.C., firm that represents thousands of asbestos plaintiffs. "We all came to the conclusion that there isn't enough money and this is the best we could do."
One of the attorneys, who asked not to be identified, said he may oppose the settlement agreement in court.
Critics of the trust have blasted the previous method of payment, in which the first victims to file were the first to receive their payments. Those early payments also have been criticized for being too high relative to the severity of the illnesses.
The settlement would also reduce the amount of money that plaintiffs' lawyers receive. Traditionally, attorneys who filed cases for asbestos victims received 33 percent to 40 percent of the total award. Weinstein and others have been extremely critical of such fees, which have eaten up hundreds of millions of dollars of the payouts. Under terms of the proposed settlement, attorneys would receive 25 percent of the total award.
Critics have argued that some plaintiffs' attorneys have become rich while paralegals do most of the rote work of processing claims of asbestos victims and their families.
Several attorneys involved in the process said Weinstein was likely to alter attorneys' fees if they didn't. However, they said the new fees do not bode well for the additional 70,000 victims who some say could still file claims.
"This will significantly detract from their ability to get first-class lawyers," said Fred Baron, a plaintiffs' lawyer at Baron & Budd in Dallas. "That's a shame."
Weinstein had no comment on the settlement or on the future of trust officials yesterday.
The money for the settlement would come from a restructuring of the assets of Manville Corp., which would pay the trust up to $520 million in special dividends over the next seven years.
Staff writer Frank Swoboda contributed to this report.