UPCOMING IADC MEETINGS Visit www.iadclaw.org for more information July 10-15, 2010 Annual Meeting Hotel Arts Barcelona, Spain October 7 8, 2010 International Corporate Counsel College InterContinental Paris-Le Grand Paris, France July 31 August 6, 2010 38 th Annual Trial Academy Stanford Law School Palo Alto, California USA February 19 24, 2011 Midyear Meeting Inn at Spanish Bay Pebble Beach, California USA
Asbestos Litigation in Europe: An Evolution of the U.S. Experience or Something Completely Different? Wednesday, June 30, 2010 Presented By the IADC Product Liability Committee Welcome! The Webinar will begin promptly at 10 am CDT/5 pm CEST. Please read and follow the below instructions: 1. If you have not already done so, please join the conference call. 2. Mute your phone line. If you do not have a mute button or are on a cell phone, press *1 to mute your phone. 3. If you are on a conference phone, please move all cellular or wireless devices away from the conference phone to avoid audio interference. 4. If you have questions during the presentation, you may utilize the Q&A function at the top of your screen. You may type questions here and it will be sent to the presenter for response. If your question is not answered during the presentation, our presenter will answer questions at the end of the webinar, or via email following the webinar. 5. Visit the Handouts section in the upper-right-hand corner of the screen if you would like to download a copy of this PowerPoint presentation.
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Moderator Roy Alan Cohen Porzio, Bromberg & Newman, P.C. Morristown, New Jersey USA racohen@pbnlaw.com
Presenters Cecile Derycke Hogan Lovells Paris, France Cecile.derycke@hoganlovells.com Rod Freeman Hogan Lovells London, United Kingdom Rod.freeman@hoganlovells.com Christian Lahnstein Munich Reinsurance Company Munich, Germany clahnstein@munichre.com
Overview of American Asbestos Litigation Since the Late 1970s International Association of Defense Counsel Product Liability Committee Roy Alan Cohen, Esq. Porzio, Bromberg & Newman, P.C. Morristown, New Jersey
GENERAL COMMENTS Evolution of plantworker litigation Expansion of end-product litigation Bystander, household exposure, and premises liability claims Massive numbers of bankruptcies of the primary asbestos product manufacturers have impacted litigation development
SOME STATISTICS FROM THE 2007 RAND STUDY 730,000 people in the United States filed compensation claims for asbestos-related injuries from the early 1970s through the end of 2002 Cost to businesses and insurance companies - $70 billion Claimants have received about 42 cents of every dollar spent on asbestos litigation, with 31 cents to defense costs and 27 cents to plaintiffs' attorneys and other related costs Researchers said the number of asbestos claims has increased sharply through the 1990s and into 2002, driven primarily by people who claim non-cancerous injuries These cases now account for 90 percent of all new claims
SOME STATISTICS FROM THE 2007 RAND STUDY (cont d) The number of claims made by people with mesothelioma has increased sharply in recent years doubling during the period from 1994 to 2002. However, cases based upon mesothelioma remain a small proportion of all asbestos claims At least 8,400 entities had been named as defendants in asbestos claims through 2002 At least 73 companies named in a substantial number of asbestos claims filed for bankruptcy through mid-2004 Trust funds created following the bankruptcies of asbestos manufacturers and other major asbestos defendants pay only a small fraction of the agreed-upon value of individual's claims against those defendants
THE FAILURE OF GLOBAL SETTLEMENT EFFORTS Federal asbestos cases were transferred to Judge Charles Weiner by the Judicial Panel on Multidistrict Litigation (JPMDL) in 1991 Many asbestos lawyers anticipated that Judge Weiner would help parties negotiate a global settlement of all federal cases against all defendants that would in turn provide a model for resolving state cases The search for a single overarching settlement failed as have other efforts to reach a global resolution Similarly, efforts to consolidate and try asbestos cases as class actions have generally failed in most jurisdictions because of the nature of these cases
DEFERRED AND EXPEDITED DOCKETS The failed alternative to consolidation and class actions has led to other options Courts faced with large asbestos caseloads that include large numbers of cases involving unimpaired claimants have led to deferred dockets in the late 1980s and early 1990s (state courts in Massachusetts, Cook County, Illinois, and Baltimore) Courts that have established inactive dockets in recent years include New York City, Seattle, and Madison County, Illinois, all of which now have substantial numbers of asbestos cases on their inactive dockets. In a variation on this policy, some courts have established expedited dockets that give priority to cancer claims, placing the claims of those without functional impairment at the back of the queue
Overview of American Asbestos Litigation Since the Late 1970s Roy Alan Cohen, Esq. Porzio, Bromberg & Newman, P.C. Morristown, New Jersey
Asbestos Litigation IADC Webinar Asbestos: the UK litigation landscape Rod Freeman, Partner, London 30 June 2010
Asbestos an unparalleled social tragedy The British mesothelioma death rate is now the highest in the world (accounting for 1 in 40 of all male cancer deaths). The projected lifetime risk of fatal mesothelioma in all British men born in the 1940s is 0.59%, or about 1 in 170 of all deaths. The expected number of deaths amongst males in the UK is predicted to increase to a peak of 2038 in the year 2016. Mesothelioma is predicted to cause 91,000 deaths in the UK by 2050 (with around two thirds of these deaths still to occur). The volume of mesothelioma sufferers making insurance claims increased by 50% between 2003 and 2007. Average mesothelioma settlements have increased from 53.2k in 2000 to 81.3k in 2007. Estimated 28.3 billion cost to insurance industry. www.hoganlovells.com
The legacy of asbestos An unparalleled social tragedy...... an unprecedented response. Traditional legal principles and procedures altered in order to try to meet the social needs arising. Fundamental issue the litigation system is ill-suited to meet the needs of those concerned, and ongoing reliance on the litigation system is not likely to lead to a satisfactory resolution. www.hoganlovells.com
Evidentiary issues A reduced evidentiary burden on claimants? the Courts have affirmed that that the burden in law rests on claimants: Brett v University of Reading [2007] EWCA Civ 88. BUT in effect? no requirement for claimants to pinpoint exposure incomplete/vague recollection excused defendants may face difficulties if they cannot disprove the claimant s account Maggs v Anstey [2007] EWHC 515 However, markedly inconsistent and opaque claimant evidence will not suffice Harrington v DBERR [2008] EWHC 2658 (QB) www.hoganlovells.com
The public liability insurance problem Problems in finding insurance coverage to meet potential liabilities. The legacy of Bolton MBC v MMI Insurance Ltd [2006] EWCA Civ 50: when did the damage "occur"? PL insurers on risk at tumour development or at diagnosis? www.hoganlovells.com
Employers liability: the insurance black-hole What triggers an insurer being on risk under EL policies? Durham v BAI and others [2008] EWHC 2692 (QB): exposure? tumour development/manifestation? reconsideration of the 10 year rule in mesothelioma cases. Implications for defendants. www.hoganlovells.com
Insurance recoveries: practical problems and solutions Apportionment of liability between insurers: Scale of the asbestos issue, over time, led to development of pragmatic approaches. But growing scale is starting to cause those historical practices to be questioned the traditional time-exposure approach in the industry; the common sense approach of the Courts: Russell v London Fire & Emergency Planning Authority and others [2005] EWHC 581 (QB) future of apportionment Invest in understanding your coverage history: insurance archaeologists coverage charts www.hoganlovells.com
UK fast-track procedure Master Whitaker s special list Expedition of urgent living claims pre-service: ideally, 16 weeks from claim to trial Show cause procedure Justifications for the show cause procedure? Reversal of the burden of proof? www.hoganlovells.com
UK fast-track procedure Implications for defendants Prompt investigation of liability: courts unsympathetic to defendants who merely ascertain insurance cover the Courts will assess quantum as favourably as possible for claimants, including by determining liability during the claimant's life, but reserving assessment of damages after his death www.hoganlovells.com
Pleural plaques the latest word England Rothwell upheld following government consultation no compensation for new claimants political pressure: extra-statutory compensation for pending claims Scotland Damages (Asbestos-related Conditions) (Scotland) Act JR challenge dismissed by the Outer House of the Court of Session, January 2010 appeal lodged Northern Ireland government consultation recommends law be changed to follow Scotland Implications if plaques are compensable? www.hoganlovells.com
Expansion of the Fairchild principle The Fairchild principle claimants have sought to rely on this on two levels: (i) precedent for the adaptation of the traditional rules on causation, now applied in non-mesothelioma cases professional negligence claims: Chester v Afshar [2005] 1 A.C. 134 White v Paul Davison [2004] EWCA Civ 1511 non-professional negligence claims: Cookson v Novartis Grimsby Ltd [2007] EWCA Civ 1261 Clough v First Choice Holidays [2006] EWCA Civ 15 (ii) getting within the fact pattern of Fairchild: Sanderson v Hull [2008] EWCA Civ 1211 Fairchild and asbestosis: Wright v Stoddard [2008] Rep. L.R. 2 www.hoganlovells.com
Global Risks multinational exposures www.hoganlovells.com
Asbestos Litigation IADC Webinar France: companies still in the front line to compensate claimants Cécile Derycke, Partner, France June 30, 2010
Asbestos in France claimants' main choices Former or current employee Claim for anxiety Early retirement scheme (50 years old or more) Recognised asbestos-related illness Damages 65% of last salary until standard retirement Pension Gross negligence claim NB: - product liability claims by third parties - criminal liability Damages? Increase in pension + damages www.hoganlovells.com 26
Gross negligence claims www.hoganlovells.com 27
What does gross negligence mean? The employer (i) was, or should have been aware, of the danger and (ii) did not take the necessary steps to protect the employee 2002: presumption of gross negligence 2009: even if level of exposure complied with applicable regulations, employer was grossly negligent What is at stake? Claim for: increase of pension damages Relatives may file gross negligence claim if employee passed away www.hoganlovells.com 28
FIVA's action 86.6% of people who have developed an asbestos-related illness turn to FIVA instead of acting directly before the Courts (60,418 requests up to December 2009) So far, 2,329 billion have been paid by FIVA In 2008, FIVA had compensated 13,254 claimants (56% were employees) and launched 716 cases against employers Warnings about FIVA's great deficit and delay in the payment of damages: French State signed an "efficiency agreement" with FIVA www.hoganlovells.com 29
Early retirement claims Economic loss www.hoganlovells.com 30
Background Early retirement scheme Launched in 1999 and managed by FCAATA For employees of at least 50 years old who: developed an occupational illness linked to asbestos or worked on a site designated by ministerial orders Until 60/65 years old: employee earns 65% of last salary (the ACAATA) www.hoganlovells.com 31
Outburst of new claims Claim for damages for the reduction of income (35% of their last salary) Two cases: ZF Masson case: Paris Court of Appeal - September 18, 2008 Default choice between early retirement and a continued exposure to asbestos 35% of last salary Ahlstrom Labelpack case: Bordeaux Court of Appeal April 7, 2009 By choosing to use asbestos and by not protecting its employees properly, the employer aggravated their working conditions loss of chance to have a normal professional life 20% of last salary www.hoganlovells.com 32
Judgments of the Cour de Cassation May 11, 2010 The Cour de Cassation quashed the Courts of Appeal "an employee who requested the benefit of the allowance [ACAATA] is unfounded in obtaining from the employer at fault, on the basis of the rules of civil liability, compensation for the loss of income that results from the implementation of legal measures". What next? These judgments of the Cour de Cassation are not final In any case, no causal link between an alleged fault of the employer and the reduced income during early retirement opinion of the Advocate General Jacques Duplat www.hoganlovells.com 33
Anxiety damage www.hoganlovells.com 34
Creation of a new specific ground of damages Alstom Power Boiler case: Criminal Court of Lille - September 4, 2006 Claimants were granted 10,000 Euros each Ahlstrom Labelpack case: Bordeaux Court of Appeal - April 7, 2009 Claimants were granted 7,500 Euros each Cour de Cassation's judgment May 11, 2010 "a permanent state of anxiety, for which the employer is regarded as responsible for, as [employees] are facing the risk of being diagnosed with an asbestos-related illness at any time and have to undergo regular medical check-up likely to make this anxiety more present". What next? New type of claim not limited to employees who left on early retirement Relatives may be compensated as well Amounts claimed may increase www.hoganlovells.com 35
Thank you for your attention www.hoganlovells.com 36
ASBESTOS LITIGATION IADC WEBINAR, JUNE 20, 2010 Christian Lahnstein, Munich Re
Overview of current asbestos scenarios worldwide June 20, 2010 38
Involvement of insurance on four levels Pension, disability and health insurance Workers compensation insurance Employers liability insurance Environmental and product liability insurance Different mix of these levels. Funds as alternative June 20, 2010 39
Number of asbestos related and other occupational fatalities in Germany Number of occupational fatalities in Germany 4,000 3,500 65 fatal occupational accidents 3,000 2,500 2,000 1,500 1,000 1723 1807 343 1048 1437 1405 1312 994 1067 1179 1451 1093 1510 989 1540 944 1443 1100 1425 1479 890 912 other fatal occupational diseases fatal occupational asbestos related diseases 500 1086 825 811 773 735 645 589 711 619 572 0 1980 1990 2000 2001 2002 2003 2004 2005 2006 2007 2008 June 20, 2010 40
Problems of liability attribution and insurance allocation June 20, 2010 41
Questions for Presenters? Cecile Derycke Hogan Lovells Paris, France Cecile.derycke@hoganlovells.com Rod Freeman Hogan Lovells London, United Kingdom Rod.freeman@hoganlovells.com Christian Lahnstein Munich Reinsurance Company Munich, Germany clahnstein@munichre.com
Asbestos Litigation in Europe: An Evolution of the U.S. Experience or Something Completely Different? Wednesday, June 30, 2010 Presented By the IADC Product Liability Committee Thank you for Participating! Past Webinar Materials, Upcoming Webinars and additional information can also be found on our website: www.iadclaw.org