WR Grace Exits Bankruptcy After 13 Years, Was it Worth the Wait? You Decide

After ducking asbestos claims for 13 years, W.R. Grace in February of this year finally emerged from Chapter 11 bankruptcy.  W.R. Grace was one of the worst polluters on Earth. At the time they filed, they were facing over 100,000 personal injury and death cases, primarily stemming from the use of fireproofing and plaster products.  W.R. Grace gained notoriety as the company which contaminated the tiny mountain town of Libby, Montana with tremolite asbestos from the mining of asbestos laced vermiculite.

At the time they filed, in 2001, WRG stock was around $1.50 a share. When they emerged from bankruptcy protection 13 years later, the stock was selling at $92 a share. It pays to duck responsibility? You decide.

Part of its court-approved bankruptcy reorganization plan was the establishment of two trusts to pay personal injury claimants and property owners.  The trusts are funded by more than $4 billion in cash, stock warrants, insurance proceeds and other sources.

This August, the trust began accepting Proof of Claim forms. According to their Trust Distribution Procedures, (basically their instruction manual) the Scheduled Average Value for a claimant diagnosed with mesothelioma is $180,000. The value for asbestos-related lung cancer is $42,000. However, the actual payment percentage is 26% of the Scheduled Value.  

A claimant is free to seek a value greater than the Scheduled Value by requesting the Trust perform an Individual Review of the claim. However, this does not guarantee a greater value or even an equal value as the Scheduled Value. The Maximum Value for this type of review for a mesothelioma claim is $450,000 before applying the liquidated payment percentage of 26%. For an asbestos-related lung cancer, the Maximum Value of an Individual Review claim is $95,000

To qualify for payment, a claimant must provide credible medical and exposure evidence as defined in the instruction manual (TDP).

The claims are paid on an impartial first-in-first-out basis.

Now, if a claimant was unfortunate enough to have filed a claim prior to April 2, 2001 against WRG as a part of a lawsuit but was never paid, they would have to follow the conditions outlined in the TDP, but the claim would be reviewed sooner.

The WRG bankruptcy is the longest in a long line of bankruptcies filed by the asbestos superpowers.  It's a sordid tale, and a long and desolate trail, but for those with the stomach, and the patience, here's a timeline. As they say, justice delayed is justice denied. What do you think? Will MBA students be studying the WRG bankruptcy as an example of what not to do in corporate america? Or will they be looking at it as a brilliant business move that saved the company billions and enriched thousands of shareholders?

You decide.

In April of 2001, WRG is named in more than 325,000 asbestos-related personal injury lawsuits.  They soon announce they have filed for voluntary Chapter 11 bankruptcy protection.

In May of 2001, WRG gets approval from the U.S. Bankruptcy Court to receive a $250 million loan from Bank of America, to help support operations.

In February of 2003, WRG asks the U.S. Bankruptcy Court to allow an extension of its $250 million loan agreement with Bank of America for another three years.

In October of 2004, WRG makes a request to delay filing a reorganization plan, hoping to continue negotiations with creditors.  WRG also is notified they are a target of a federal grand jury investigation, facing indictments on several charges including interfering with an EPA investigation, violating the Clean Air Act and placing asbestos materials in schools and local residences and conspiring to conceal the resulting health problems.

In November of 2004, WRG files a reorganization plan with a Delaware court which is soon approved.

In January of 2005, WRG files an amended bankruptcy protection plan with a Delaware court.

In September of 2005, WRG opens a new China headquarters in Shanghai, which consolidates four other offices in the country.

In December of 2005, WRG announces they have spent $20 million in the year 2005 on legal defense costs.

In February of 2006, WRG announces it will open a new manufacturing facility, costing $20 million, in Mt. Pleasant, Tennessee.

In April of 2008, WRG reaches a tentative settlement on all current and future asbestos-related claims, worth $2 billion.

In January of 2011, WRG latest bankruptcy reorganization plan is approved by Judge Judith Fitzgerald in Wilmington, Delaware.

In January of 2012, WRG’s bankruptcy reorganization plan is approved by a judge of the U.S. District Court.

In November of 2012, WRG announces it will pay cash, not stock, to settle a larger share of the asbestos-related injury claims against the company.

In December of 2012, WRG announces its total payments to date with its bank lenders, including interest is at $1.1 billion dollars.

In February of 2014, WRG emerges from bankruptcy protection.

The Wall Street Journal provided an excellent WRG trip summary.

WSJ highlights: 

• The original bankruptcy judge, Alfred Wolin, was ordered off the case under fire from distressed-debt investors who fretted he was too friendly with the asbestos plaintiff’s camp.
• A criminal indictment of the company and some executives, accused of knowingly allowing dangerous asbestos contamination to spread. WRG and its executives beat the charges, after a trial before a jury in Montana.
• Some dark comedy, such as the asbestos-disposal solution WRG pursued for years in a Minneapolis neighborhood: Advertise asbestos-contaminated material as “free crushed rock” and invite the neighbors to come haul it away to decorate their lawns, firm up their driveways. WRG cleaned up the contamination.

Was it all worth it?  Earlier this month, WRG showed off its new 90,000-square-foot global headquarters building along with several laboratories at its 160-acre Columbia, Maryland campus.

You decide.

Wall Street Journal Continues to Side with Asbestos Companies on Allegations of Asbestos Trust Fraud

The Wall Street Journal is continuing its practice of spreading asbestos trust fraud propaganda in its recent piece, “Exposing Asbestos Fraud.” The piece alleges that the judiciary is standing in the way of justice and that a judge ruling against a corporation while keeping the proceedings closed to the public is proof that there is fraud occurring in the asbestos trust system.

WSJ claims that North Carolina Federal Judge George Hodges is being “pushed” by plaintiffs’ attorneys to force Garlock Sealing Technologies to deposit an additional $1.3 billion into a bankruptcy trust for future asbestos claims, while Garlock feels that the $125 million trust they were forced to set up in 2010, after filing for bankruptcy in an attempt to secure immunity from lawsuits filed by persons injured by its asbestos products, should be more than enough to suffice.

WSJ asserts that plaintiffs’ attorneys filing claims with multiple bankruptcy trusts while pursuing others in court is a scam. WSJ, asbestos manufacturers and industry-backed government representatives like to call this practice “double-dipping.” Asbestos manufacturers feel that even if a plaintiff was exposed to asbestos through use of their products, if they were also exposed through use of another manufacturer’s product, they should only receive compensation for their deadly disease from one. This is not a scam, and there is nothing fraudulent about it, the majority of people who suffer from asbestos related disease were exposed to a wide variety of asbestos products from different manufacturers which ultimately caused their disease.

Lest we forget, the companies who manufactured and sold asbestos containing products up into the 1970s and 1980s knew for decades the harm caused by asbestos and kept it hidden, paying “scientists” and “industrial experts” to create false scientific articles, reports and evidence that asbestos was safe. Very much like what the Canadian government and asbestos industry were doing up into 2012, while Russia and other countries with thriving asbestos industries continue this practice today.

WSJ also criticizes Judge Hodges for closing his courtroom to the public during proceedings. WSJ and the industry would have you believe that keeping settlement information between different defendants confidential is deceitful. The truth is that settlements are the result of defendants deciding that the risk of going to trial before jury is too high, and it would be more beneficial for them to settle outside of court.

WSJ has previously expressed ardent  support of the deceitfully clever bill known as the Furthering Asbestos Claim Transparency Act, the FACT Act, which would require asbestos trusts to file quarterly reports disclosing personal settlement information on claimants in an attempt to limit the payouts of other defendants, who are also found liable for causing a victim’s exposure. WSJ reported on rampant fraud occurring in the trust system, the sponsors of the bill even quoted WSJ’s “investigative reporting” as evidence at the bill’s hearing, but as we discussed here, both parties failed to present any actual evidence of fraud.

WSJ continues to claim that fraud is occurring in the trust system but still offers no actual evidence. They state that Garlock was forced into bankruptcy because of fraudulent claims, again with no evidentiary support. If Garlock was forced into bankrupty, it was due to being tried and found guilty for causing harm to thousands of people in court systems all over the country. WSJ also alleges that Judge Hodges’ ruling against Garlock must be wrong simply because they are not privy to the transcripts. WSJ seems to believe that they should be able rule over these cases, and it’s a good thing they do not, as they have made it clear who they think the real victims are. 

Susan Vento, Wife of Deceased Congressman and Mesothelioma Victim Bruce Vento, Expresses Her Strong Opposition to the So-Called “FACT Act”

Susan Vento lost her husband in October of 2000, just eight months after he had been diagnosed with malignant pleural mesothelioma. Susan’s husband was Democratic Congressman Bruce Vento of Minnesota who served as a United States Representative for 24 years and devoted his work in the government to environmental and homeless causes. When he was diagnosed with mesothelioma, he began championing asbestos victims’ rights and was committed to raising awareness for mesothelioma and the urgent need for research funding.

Recently, Susan and many others whose lives have been turned upside down by asbestos disease were eager to offer testimony to lawmakers in opposition to House Resolution 982, the “Furthering Asbestos Claim Transparency (FACT) Act”. They were told they would get the opportunity to do so, but instead Susan and the others were offered only a closed-door meeting with congressional staffers and were told they could offer written comments away from the press. This, of course, is a far cry from the public open hearing they were promised.

Undeterred, and intent to have her opinions and unique perspective on the legislation heard by lawmakers and the public, Susan authored an article that was published in the June 3, edition of Roll Call. The complete article can be seen here.

This isn’t the first time Susan has stood up for asbestos victim’s rights. In 2003 Susan took an active and vocal stance against legislation that attempted to create an industry-bankrolled trust fund to compensate sick workers and their families and would have taken away individual asbestos victims’ right to trial.

FACT Act sponsor Blake Farenthold repeatedly claims the purpose of the bill is to “avoid waste, fraud and abuse within the trust claim system in order to secure compensation for the ‘real’ victims of asbestos disease and not deplete the funds of the trusts for future victims.” Farenthold refers often to the Wall Street Journal’s ”investigative reporting” as if it had presented actual evidence of fraud, but as we discussed here, the so-called evidence falls far short.

Reading the transcript of the May 21, 2013 proceedings is angering. It is blatantly obvious and painfully clear that those in support of the bill are not defending the victims of asbestos disease, but are the hand puppets of corporate interests. It is important to remember that most of the “bankrupt asbestos companies” are still in business and, in many cases, very successful. The trusts were created under bankruptcy laws which allow companies to avoid liability for their dangerous products in exchange for partial payment to victims so that they can continue to operate as viable and profitable companies, as noted by consumer advocate Joan Claybrook in her refutation of the WSJ’s “investigative reporting” regarding the FACT Act.

In a letter to congress opposing HR 982, the Center for Justice and Democracy and the Alliance for Justice ask some very good questions. Wouldn’t a bill that is designed to increase transparency require equal disclosure of all settlement amounts by defendants as well? Shouldn’t this bill require asbestos defendants to disclose information about the history of exposures caused by their asbestos products?

Asbestos litigation is already an arduously painstaking process, the so-called transparency being sought by corporate-funded representatives is just the latest ploy to limit payouts and further prevent justice to suffering individuals. The legislation is one-sided, unfair and unnecessary.

The Hunt for A Cure: W&C responds to WSJ article

The Wall Street Journal, which is in the business of putting asbestos trial lawyers out business, contacted me over a year ago. They wanted to run an article about my donations to medical research.

As a journalist myself in college, it didn’t take long for me to figure out their angle. They wanted to show that somehow my practice of sponsoring medical research, as opposed to spending oodles on TV and Google ads, was “fishy” if not “rotten.”

The result of that year long quest appeared today in the crusty WSJ under the byline of reporter Dionne Searcey. The title: “Mesothelioma Doctors, Lawyers Hunt for Valuable Asbestos Cases.” 

Right away you get a feel for the slant. We are “hunters.”  Now, I’ve gotten to know Ms. Searcey fairly well and my guess is she didn’t write the headline.  Contrary to the splenetic anti-lawyer bias of the WSJ’s editorial board,  Ms. Searcey actually went the extra mile to check her facts, question her own biases, and listen to contrary points of view. To her credit, she even previewed with me the accuracy of the quotes she attributed to me and others.  In sum, she has shown a degree of professionalism I did not expect from her employer, and I respect her methods greatly.

But I wanted to clarify just a few points.

First, we wouldn't be in this mess if the asbestos industry hadn’t created it.  Nor would we be fussing about the ethics of sponsoring medical research if the asbestos industry itself had not steadfastly and stupidly refused to clean up their horrific mess.

Second, if the parties responsible for the asbestos cancer mess won’t clean it up, who will? The Federal government has not invested in medical research commensurate with the size of the problem, their responsibility (for Navy vets, meso is a “service connected disability) or their own fault. Meanwhile, the number of people diagnosed with meso is “too small” for Big Pharma to justify any serious investment. The labor unions are broke. If not the patients and their advocates, who will step up? 

Third, if money curries favor, from a strict profits and losses perspective, why hasn’t the asbestos industry donated to research?  A few years ago, Dr. Cameron was invited to speak to 600 asbestos defense lawyers, insurance adjusters and company reps.  He talked about the medical and ethical benefits of sponsoring research. How much did they pony up? Zero. Now, that’s “disgraceful.”

The asbestos industry is notorious for corrupting the medical and scientific literature with false and deceptive articles they paid for designed to prove to juries that asbestos is as benign as mother’s milk. If anyone knows how to curry favor with money, it’s the asbestos industry.

It simply boggles my mind that the industry, after 50 years of wasting tens of billions of dollars on phony research and medical mercenary “experts,” still has yet to see the economic benefits from finding a cure.  Put lawyers like me out of business! Save asbestos-tainted companies from bankruptcy! Spare millions of people agony, misery and death! It makes dollars and sense.

Fourth, the only “stakeholders” that really don’t want to see a cure for mesothelioma are the legions of “bill to kill” defense lawyers. They get paid by the hour. It’s in their economic interest to drag out tedious, life-sucking litigation, as the John Johnson case sadly but clearly demonstrates.

That said, over the past 25 years, I have met several honorable defense lawyers who agree with me that their clients should indeed invest in a cure.  They agree with me that they should find a way to resolve meritorious cases early before racking up thousands and thousands in legal fees. And they agree that it makes no sense at this late date for asbestos defendants to invest in crackpot “experts” to gin up junk science to bamboozle juries, when the money should instead be invested in cleaning up their horrific mess. 

We are quick to forgive in this country.  People, like corporations, make mistakes. What’s unforgivable is the perpetuation of that mistake by stubbornly refusing to own up to it.

Finally, maybe I’m wrong about the “benefits” of keeping meso patients alive. Unfortunately, as long as certain states limit or eliminate the damages available in wrongful death cases, then the bad guys will indeed have an economic incentive to hasten their victim’s demise.  It’s no secret that here in California the asbestos companies generally settle wrongful death claims for far, far less than they do for living claims.  The law encourages this wicked behavior.  In this dark and dusty light, it’s no wonder the bad guys don’t invest in a cure.

My firm’s motto has always been: “Asbestos Lawyers for Life.”  Yes, it’s in my firm’s interest to help my clients live long and prosper.  The day that in this great country we hold in contempt efforts to cure cancer but applaud and reward the cancer creators, well, that’s a day I’d rather put off, and I don’t think I’m alone.

RGW

5/6/13

Hunters for Justice and a Cure for Meso: The John Johnson "Fight Meso" Family, sponsors of the Dana Point Grand Prix