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Bankruptcy's Effect on Product Identification in Asbestos Personal Injury Cases

by Lloyd Dixon, Geoffrey McGovern

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Research Questions

  1. Does bankruptcy reduce the likelihood that exposures to the firm's asbestos-containing products will be identified in interrogatories and depositions?
  2. Do defendants make efforts during depositions to counter the decline in exposures reported in interrogatories?
  3. What is the significance of the findings, and what, if anything, should be done about them?

One of the most significant developments in asbestos litigation in the past 15 years is the rising rate of bankruptcy among asbestos defendants. More than 100 companies have filed for bankruptcy at least in part because of asbestos lawsuits. As a result, contemporary asbestos ligation now involves both tort suits against solvent defendants and claims for compensation filed with the specially created asbestos bankruptcy trusts. The outcome of an asbestos lawsuit crucially depends on whether litigants in the tort case introduce evidence of exposure to the products of bankrupt parties. If some of these exposures are not identified, more fault can be assigned to the remaining solvent defendants. These defendants are thus likely to end up paying more when such evidence is not developed than when it is. Plaintiffs might also receive more in compensation from the courts and trusts combined if fault is not allocated to the bankrupt parties. This analysis provides empirical evidence that bankruptcy reduces the likelihood that interrogatories and depositions will identify exposure to the asbestos-containing products of the bankrupt parties. It also presents plaintiff and defense perspectives on whether the findings are a cause for concern and what, if anything, should be done in response.

Key Findings

Bankruptcy Reduces the Likelihood That Interrogatories and Depositions in Subsequent Tort Cases Will Identify Exposure to the Asbestos-Containing Product of a Bankrupt Party

  • The absence of information on such products complicates the determination of compensation for plaintiffs and payments by solvent defendants.

Plaintiffs' Exposure to the Asbestos-Containing Product of a Bankrupt Firm Is Identified Less Frequently Than Before Bankruptcy

  • The longer the time between a firm's bankruptcy and the date a tort case is filed, the lower the likelihood that the bankrupt firm's products will be identified in the tort case.

Exposures Identified During Depositions Do Not Offset a Decline in Product Identification in Interrogatories

  • During depositions, defendants do little to counter the decline in the number of firms identified in interrogatories by exploring exposures to bankrupt parties not identified in interrogatories.

Views Are Sharply Divided About Whether These Findings Are a Cause for Concern

  • Plaintiffs' attorneys said that the system is working.
  • Defense attorneys believe that a falling rate of product identification postbankruptcy is of major concern.

Recommendation

  • The findings should be considered in evaluating possible changes in court and trust procedures.

Table of Contents

  • Chapter One

    Introduction and Background on Asbestos Bankruptcies

  • Chapter Two

    Data Used to Assess Bankruptcy's Impact on Product Identification

  • Chapter Three

    Findings

  • Chapter Four

    Discussion

  • Appendix A

    Firms Whose Product Identification We Analyzed

  • Appendix B

    Alternative Approaches for Estimating Bankruptcy's Effect on Product Identification

This research was supported by the RAND Institute for Civil Justice (ICJ) and by contributions from the following asbestos defendants and organizations: Ampco-Pittsburgh Corporation; CertainTeed Corporation; Coalition for Litigation Justice; Crane Company; Dow Chemical Company; E. I. du Pont de Nemours and Company; EnPro Industries; General Electric Company; Georgia-Pacific Corporation; Owens-Illinois, Inc.; and the U.S. Chamber Institute for Legal Reform.

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