Choking Off the Right to Sue: GAF's Campaign to Restrict Asbestos Victims' Rights

by Charlie Cray

Decades of asbestos litigation in the United States have involved hundreds of companies, ranging from some of the largest Fortune 500 corporations to local hardware stores. Forced to pay for exposing workers ‹ most of whom were unaware of the risks ‹ to the deadly substance, many of these companies have seen their bottom lines hit hard, and some have even plunged into bankruptcy.

At least one company, however, believes it should not be required to fully compensate workers exposed to the asbestos it used. Reasoning that its liability should be minimal for sales of a product it ceased marketing three decades ago, the New Jersey-based GAF corporation has spent millions of dollars in the past few years orchestrating a highly sophisticated campaign to enact legislation which critics say would strip away the rights of tens of thousands of U.S. asbestos victims, many of whom are just beginning to become sick and file suit.

GAF's asbestos liability follows from its 1967 acquisition of Ruberoid, a roofing manufacturer that produced an insulation product.

"In point of fact, the United States Navy had asked Ruberoid during World War II to develop this product for use as an insulation material in its ships," GAF CEO and 97 percent owner Sam Heyman told a Congressional committee in 1999.

But even as asbestos ‹ perceived as a magic mineral for its many insulation and other industrial applications ‹ was becoming increasingly ubiquitous in the United States through the middle of the twentieth century, the asbestos manufacturers were aware of scientific evidence revealing its hazardous nature.

Because asbestos' minuscule fibers are friable ‹ so tiny that once they break apart they can float in the air indefinitely ‹ they are easily breathed into the lungs, where they are as indestructible as they are in nature. Breathing asbestos fibers can cause a number of illnesses, including an increased risk of lung cancer. Many of these illnesses do not manifest themselves until decades later.

Although Ruberoid has not produced any asbestos products for nearly 30 years, GAF's outstanding liability remains huge. At the end of 1999, GAF still faced 113,800 unsettled claims. GAF has already paid out more than $1.2 billion in claims.

After a 1997 Supreme Court ruling rejecting a proposed settlement structure that would have benefited the asbestos companies, GAF launched a campaign to push the "Fairness in Asbestos and Compensation Act" in the U.S. Congress, where the bill was first introduced by Representative Henry Hyde, R-Illinois, in 1998.

The proposed legislation would establish a federal clearinghouse to administer a new asbestos claims resolution program. As designed, the program would determine medical eligibility for compensation and set up an alternative dispute resolution process, which would kick in if the parties fail to voluntarily reach a settlement within 60 days.

The bill's proponents, including GAF CEO Heyman, describe the legislation as a "victims' rights bill," saying that it abolishes the statute of limitations and directs payments to victims instead of to lawyers and people with illegitimate claims (Heyman complains that "a substantial portion" of GAF's payments "has gone to people who are not sick"), while allowing cancer victims to collect compensation for more serious conditions even if they have already received payment for nonmalignant conditions.

For all these reasons, Heyman says backers of the bill "accept their responsibility to fully, fairly and promptly compensate those who are sick and were exposed to their products."

Despite its alleged virtues, the bill has no lack of critics ‹ including the AFL-CIO and numerous unions, victim groups such as the White Lung Association, consumer and environmental groups, as well as personal-injury lawyers ‹ who have dubbed the legislation the "Asbestos Industry Relief Act."

These critics argue the bill would relieve GAF, other companies and their insurers of billions of dollars in payments, by making many victims ineligible for compensation, as well as by placing a cap on the punitive damages awarded to victims by juries.

Behind the Asbestos Curtain

GAF has spared no expense, nor missed a corporate lobbying trick, in the effort to ram its legislation through Congress. It has flooded Congress with campaign contributions, spent a small fortune on lobbyists, established a front group and employed respected academics to support its case ‹ and even to draft the legislation itself.

The scale of GAF's contributions have escalated with the company's mounting liabilities, rising ten-fold from 1995 ($21,750) to 1999 ($293,220). GAF, its political action committee and Heyman's family have contributed a total of $559,677 to federal candidates and political parties since 1995. (Fifty-seven percent of that total was contributed by Heyman family members).

The vast majority of contributions ‹ 73 percent ‹ has gone to candidates who have had a hand in determining the fate of the legislation (either because they were early cosponsors or key committee members with jurisdiction over the bills), with members of the House Judiciary Committee receiving some of the biggest contributions.

While most Republicans have long supported limitations on victims' rights to sue corporations, a good portion of GAF and the Heyman family's contributions have been targeted at Democrats.

Co-sponsorship of the bill by Democratic senators such as Connecticut Senators Chris Dodd (recipient of $10,000 in GAF contributions) and now Vice Presidential nominee Joseph Lieberman (who has taken $5,000 from GAF) lend the bill an air of representing an all-important "bipartisan consensus."

Senator Charles Schumer, D-New York, who has traditionally supported positions taken by unions and trial lawyers, also has endorsed the Act. Schumer received $70,000 of the $86,000 in hard money given by the Heyman family in 1998, including $60,000 sent to a "Victory in New York" fund in the final week of his race to unseat Al D'Amato.

GAF also contributed $40,000 to the Democratic Senatorial Campaign Committee in 1999 ‹ the first soft money donation the company ever made. The Democratic Senatorial Campaign Committee is headed by New Jersey Senator Robert Torricelli, who became an original cosponsor of the asbestos legislation in 1998. Torricelli is the ranking Democrat on the Senate Judiciary Subcommittee with jurisdiction over the legislation.

GAF's lobbying expenses have also accelerated at a breathless pace since early 1997.

The $7.11 million spent by GAF on lobbying since 1997 "is massive for a company of this size," says Frank Clemente of Public Citizen's Congress Watch. "GAF's spending is especially striking when you consider that the company is lobbying exclusively on the asbestos liability bills, whereas some of the other asbestos companies have many other issues that they lobby on."

The lobbyists paid by GAF include:

• Weil, Gotshal & Manges, who received $1.28 million between 1997 and 1999 to be the legislation's overall strategist.
• Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, a Boston firm that was paid $340,000 in 1999 to persuade various medical associations to endorse the medical criteria in the bill.
• Ken Levine, a former plaintiffs' lawyers lobbyist who switched sides; paid $360,000.
• Parry, Romani & DeConcini, a firm which includes Thomas Parry, former chief of staff for Senator Orrin Hatch, R-Utah, Hatch's son Scott and Dennis DeConcini, himself a former senator; received $80,000. Hatch is the chair of the Senate Judiciary Committee and is a co-sponsor of the legislation. He received $5,000 from the GAF PAC in March.

In addition to the $7 million direct lobbying campaign, GAF has also controlled and financed a corporate "front group" ‹ the Coalition for Asbestos Resolution (CAR) ‹ which has been the primary force advocating for the legislation.

Although CAR includes nearly 200 other members, including a group called Citizens Against Government Waste, which has ties to W.R. Grace Co., a former asbestos manufacturer responsible for an infamous asbestos mine in Libby, Montana, it is widely acknowledged that GAF controls and largely finances CAR.

CAR has sponsored extensive paid media advertising, including TV and print ads, many of which ran in Roll Call and other publications exclusively directed at influencing members of Congress. Lobbying disclosure reports obtained by Public Citizen reveal that CAR has spent at least $680,000 since 1997 on high-powered lobbyists to promote the legislation.

Top CAR lobbyists include Griffin, Johnson, et. al. (whose chief lobbyist, Patrick Griffin, is a former director of legislative affairs for the Clinton White House) and Timmons and Co. (whose chief lobbyists are former Nixon White House officials William Timmons and Tom Korologos). In 1999, CAR also hired the MWW Group of New Jersey.

The Best Minds Money Can Buy

One of CAR's registered lobbyists is Paul R. Verkeil, dean of the Cardozo School of Law, who testified before Congress in support of the legislation. Cardozo was given $1 million by Sam Heyman and his wife to establish the Samuel and Ronnie Heyman Center on Corporate Governance.

CAR's key consultant is another academic, Christopher Edley Jr., a Harvard Law School professor and former Clinton White House official. While registered as a CAR lobbyist, Edley drafted versions of the asbestos bill that were circulated for review by the staff of the House Judiciary Committee.

"Chris Edley essentially wrote the whole bill," one committee staffer says.

Edley sang the bill's praises as well as the "failings of the asbestos tort industry" in lengthy testimony before the House Judiciary Committee in 1999.

"What this really represents is a wholesale turning over of Congress's responsibility to write legislation to the corporate interest groups behind it," John Bell of the Association of Trial Lawyers of America says.

One of Edley's main assertions is that the bill is responsive to two pleas from the Supreme Court to pass national legislation to ease the "elephantine" backlog of asbestos cases clogging the Federal court dockets.

By creating a federal clearinghouse, Edley says, the bill would streamline the compensation process for asbestos victims, relieving the courts of an overwhelming burden of asbestos cases.

But officials from the Justice Department, which would oversee the clearinghouse, disagree, pointing out that asbestos litigation is a "mature tort:" most cases are settled out of court already, since both parties usually have a clear understanding of the historical value of any claim based upon prior settlements.

"State and federal courts around the country have instituted several case management controls that harness the volume of asbestos claims and permit the claims of the sickest victims to be expedited," Assistant Attorney General Robert Raben wrote House Judiciary Committee Chair Henry Hyde.

"In recent years," Raben wrote in his letter to Hyde in 1999, "the parties to the asbestos controversy have settled hundreds of thousands of claims, a marked improvement over the more adversarial culture that permeated much of asbestos litigation" in the past.

Raben says the Justice Department also opposes the bill since it "would transfer costs now borne by defendant companies Š to asbestos victims and the taxpayers."

The Eligibility Gateway

Critics of Edley's bill point out that it would eliminate the ability of an entire classes of asbestos victims to receive compensation by prohibiting compensation to workers with less severe illnesses such as asbestos-caused pleural plaques (thickening of the wall of the lung), and would adopt restrictive medical criteria for the types of lung cancer for which plaintiffs can be compensated, depriving non-mesothelioma victims of any remedy.

As Edley sees it, the stricter medical criteria are a good thing, because they reserve compensation for the truly sick. Along with a provision that eliminates punitive damages, this provision "elimina[tes] compensation for the unimpaired, reduc[ing] the risk of corporate bankruptcies so that resources will be available to those who are sick in the future."

GAF won support for this view from the American College of Chest Physicians (ACCP), which endorsed the bill's medical criteria, but only amidst a cloud of controversy.

Dr. Michael Harbut, chair of ACCP's Occupational and Environmental Health Section, quit ACCP after the disclosure that Ray Cotton, a paid lobbyist for ACCP, was registered at the same time as a lobbyist for GAF.

ACCP "did not follow any kind of peer review process" to arrive at its endorsement, Harbut stated in his resignation letter. Instead, ACCP leaders and Cotton went directly to its Board of Regents, who granted the endorsement without vetting it by the committee of specialists.

"The staff and leadership of the ACCP have constructed a firewall built of asbestos to protect whatever it is they are protecting," Harbut says. "There is no interest in ethical behavior. ... There is no interest in medical science. There is no interest in helping patients with asbestos-related disease beyond the proposed law written by an asbestos company attorney."

In a letter opposing the legislation, a group of leading U.S. asbestos illness specialists including Harbut explained that "medical criteria in the proposed legislation are 1) arbitrary, without support in and generally contrary to published medical and scientific literature, 2) ambiguous and 3) likely to limit access to medical care and due process for a large number of asbestos-exposed workers."

The doctors also criticized the evaluation process set up for the clearinghouse under the legislation. "Notably absent are occupational physicians, arguably the specialty most capable of diagnosing asbestos-related disease."

Although GAF's lobbyists intended to use the ACCP's endorsement of the medical criteria to gather further support from the American Medical Association and other powerful groups, the controversy over ACCP's endorsement has apparently stymied their effort; the AMA remains undecided on the issue.

A Friable Industry Front

GAF's strategy has also been undermined by vocal opposition to the bill from other asbestos defendants. Owens Corning, a building products manufacturer that once sold asbestos insulation products, touts an alternative national settlement process (NSP) it has used to settle over 200,000 claims since 1998.

"Companies like Owens Corning chose the high road while GAF chose the low road, gambling on their ability to get Congress to bail them out," John Bell of the Association of Trial Lawyers of America says.

Owens Corning's General Counsel Maura Abeln says Owens Corning has used the NSP to "achieve what the legislation attempts to achieve, but without a federal bureaucracy and its attendant costs."

Abeln says GAF's legislation would provide no incentive for victims with pending claims to participate. Those who withdraw their lawsuits to go into the Asbestos Resolution Corporation, the entity which would administer the proposed compensation system, "risk being placed at the end of another long line should they deem the settlement offer insufficient."

Although GAF officials emphasize the legislation's benefits for asbestos victims over its own bottom line, their main criticism of Owens Corning's settlement plan is that it has hurt the value of the company's stock, which has fallen from nearly 40 when the plan was created to under 6.

Nevertheless, Owens Corning believes the bill would primarily benefit GAF and other "newer defendants, many of whom have substantial resources, to escape paying their fair share." Owens Corning and other companies would end up paying more for owning up to their responsibility earlier, says Abeln.

"The particular funding formula embodied in the pending legislation will have the effect of freezing into place the disproportionate level of payments by a relatively small percentage of the many hundreds of former producers and distributors of asbestos-containing products," Abeln told the House Judiciary Committee. "Such an allocation is particularly unfair to Owens Corning, which has resolved the vast majority of claims against it and therefore has no need for such a program."

High Stakes

Although the Asbestos Compensation Act passed the House Judiciary Committee by a vote of 19 to 18, it is not likely to move any further before the fall elections.

Meanwhile, GAF's Washington-based lobbying strategy began to face organized opposition from a coalition of grassroots environmentalists, victims groups and trial lawyers who have been hammering key senators and representatives in their home districts.

In Montana, the Montana Environmental Information Center and its allies held a press conference at the beginning of a two-week radio blitz in January targeting Republican Senator Conrad Burns and focusing on the widespread asbestos contamination and an epidemic of related diseases which afflict the mining town of Libby [See "The Ten Worst Corporations of 1999," Multinational Monitor, December 1999], where at least 192 people have died of asbestos-related disease. The Montana campaign ended up catalyzing national news attention. Ultimately, Burns withdrew his sponsorship of the bill.

Nevertheless, as long as GAF is doling out PAC money and lobbyists' salaries, Congress is certain to take the legislation up again, with high stakes not only for asbestos victims and companies.

As Tom Donohue of the U.S. Chamber of Commerce told the House Judiciary Committee in 1999, the struggle over the bill "has consequences far beyond the simple question of how asbestos exposure claims ought to be administered."

Limits on liability for the asbestos industry are likely to soon spread throughout the U.S. civil justice system, proponents and critics agree, making it harder for victims of all kinds of corporate violence to sue corporations and obtain compensation.