Mesothelioma Cancer - Asbestos Lung Cancer
PROF. ROTHSTEIN: It is big and unusual, but our society is filled with new chemicals and new compounds and new products that we don't know will they manifest disease in ten or twenty or thirty years from now.
The asbestos thing is even one step worse than you just portrayed, it is not the original companies that are being hit, it is successor companies or companies that were bought by other companies and then the company that bought it finds themselves with an asbestos liability that wasn't factored into the original purchase price.
On the judge's point, I would just say, if it comes up, something like asbestos comes up again, the same system should be applied to it.
DR. DAVID: And we do have past experience. I mean, Congress has stepped in in certain cases and taken steps. And so I personally don't find it, if the benefits of congressional action outweigh the cost, which I think there is a solution here where that is achieved, it is a worthy action to take from a public policy perspective, and each case where this may come up should be evaluated, and if you can come up with a solution that's better than the current system, then you do it.
I don't find having sort of unique solutions for certain products offensive to myself or to the general system from the perspective that I come.
JUDGE DAVID: Everyone, well, not everyone, lots of people have said, well, the system is broke and the cause has been asbestos. I disagree, I think the system has been terribly beat up by the asbestos litigation. I have a feeling and some confidence that it is very slowly working its way out of the problem. I am really hopeful of that. That isn't to ignore the fact that a lot of lessons should be learned and some corrective action should be taken by industry as well as by the judiciary, because of what we have learned. I just sense that this is extremely a very drastic approach. And I am concerned what it will create in the future.
PROF. ROTHSTEIN: Briefly, I would venture to say that you as a judge, when you took the job, thought you would be handling pretty near single party litigation, contract litigation, maybe a company against another company, maybe some fender benders, a few criminal cases. This kind of thing is not at all what judges are traditionally versed in and meant to be doing. It is a whole new role for the judiciary and I am not sure that it is equipped to do that. They don't have investigative arms gathering data like we have seen today. I just think Congress -
JUDGE TRAFELET: I agree with you, but the judiciary has had twenty years dealing with these or twenty-five years and in some parts of the country have done very little about trying to get up to speed on handling them or managing them.
MS. PENDELL: We have a question here and then we have a question over here.
MS. REISTROP: Katherine Reistrop, Liability & Insurance Week. I would like to ask Prof. Rothstein about his point on punitive damages. Were you recommending that Congress step in and set a federal standard on punitive damages? We saw how difficult that was when the Supreme Court asked Larry Treib the other day if he could come up with one in State Farm.
PROF. ROTHSTEIN: Well, if we continue with the present system, with the courts doing it, I think there ought to be some obligation to look at what other punitive damage awards have been given against the same company for the same conduct, to have some kind of collateral estoppels or if the punitive component has already been taken care of, some kind of coordination.
Think about what punitive damages is for, is it for those people who haven't been able to come to court, should the punitive damages be put in some kind of fund to give to other claimants rather than given to this one claimant? This claimant reaps all the punitive damages for all the claimants in the whole country.
So, I don't have an exact system, but thinking along these lines should be done.
JUDGE TRAFELET: I agree with that. The jurors are not allowed in most jurisdictions, if not all, to be educated as to the consequences of them awarding punitive damages, as to whether it has been awarded in similar cases elsewhere and to what extent. So, what extent that punishment has been, they are kept totally in the dark and they think, as the professor said, this is their only way to retaliate and exercise the punishment that the court is instructing them they can do.
MR. GABRIEL: Chuck Gabriel, Prudential Securities. And I just want to ask you to think about insurance for one second. The Rand study roughly estimates that about three-fifths of the payouts so far have come from U.S. and foreign insurers and reinsurers, and I was just curious if you thought about whether we can expect a rough continuation of a ratio like that. It seems like some of these peripheral cases we have been looking at in the last few years, that some of the insurance liability is capped. So, that's one of the reasons I asked.
And I also want to ask if the costs of higher insurance premiums as a result of all this is something that has been factored into the costs being born by the private sector?
DR. HENSLER: I kind of ducked the question about the future distribution, because that is a piece of the analysis that my colleague Steve Carroll has done. But I know that we've been concerned about not simply extrapolating straight line from the past for a number of reasons, including the reason you suggested. So, I don't know the answer to that question. And perhaps one of the other panelists would like to comment on the costs of insurance premiums.
DR. DAVID: Well, in some sense that would show up at the firms that are bankrupt and those, and we didn't quantify those effects, but, you know, they are certainly real. I mean, you hear anecdotal stories about insurance payments and the impact that is having on firms. So, I am sure that it is having a negative consequence of some form in terms of all the factors that we looked at. But in terms of quantifying it, it is not something that we did. I don't know if you want to talk about the secondary effects.
DR. ORSZAG: I am not familiar with the actual trend in insurance premiums and that may be something that we might look at in the future. But it is an interesting question about whether those dollars are going to address risks that are basically sunk and already happened or whether the trend in asbestos lawsuits actually reflects a broader trend and the likelihood of future risks faced by firms that are paying those premiums. So if, in fact, that's the case, risk to firms for any kind of lawsuit, any kind of product liability lawsuit have increased because of this history, that's an important question about whether that is some loss that is being borne by industry or maybe it reflects the true risks that perhaps weren't reflected in the past.
MS. PENDELL: Anymore questions? I want to thank our panelists, it has been a terrific discussion and presentation from all of you and thank you all for coming.
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