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Major Pennsylvania Asbestos Case: 'A Plot Hatched In the Courtroom,' Says Lawyer Representing Schools

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The conflicts and problems inherent in school-asbestos litigation have been illuminated in recent months in the major Pennsylvania case, In Re: Asbestos School Litigation, which is being closely followed by school lawyers nationwide. So thorny are its issues that lawyers for the plaintiff group have spent almost as much time arguing among themselves as they have battling with the defense, according to some sources.

The Pennsylvania case was initiated in January 1983 when three school districts in Pennsylvania and one in South Carolina decided to sue all of the major manufacturers of asbestos construction and insulation products in the country for the cost of removing or containing asbestos-containing materials in their schools.

On April 13 of this year, Judge James M. Kelly--at the request of David Berger Attorneys-at-Law, the lawyers for the four school districts, and with the consent of three of the major asbestos manufacturers named in the case--certified the suit as a "mandatory class action."

This meant that no party to the suit or school or school district in the nation could voluntarily exclude itself from the case and pursue a similar case on its own. As part of the same order, Judge Kelly issued an injunction suspending the prosecution of any other pending litigation by schools against the three large manufacturersAnd he prohibited any new legal actions by schools against the three companies.

Four days earlier, Daniel A. Speights, a lawyer in Hampton, S.C., had accepted the first settlement in the nation in a school-asbestos lawsuit. On April 9, the United States Gypsum Company paid the Lexington (S.C.) School District $675,000 as settlement for a damage claim of $375,000.

United States Gypsum was one of the three companies--along with W.R. Grace and National Gypsum--that initially consented to a mandatory class in the Pennsylvania case.

Mr. Speights, who describes Judge Kelly's April 13 mandatory-class decision as "a plot hatched in the courtroom" in Pennsylvania is one of dozens of lawyers who vehemently objected to the decision.

Both the National School Boards Association and some larger school districts, like the Los Angeles Unified School District, strongly opposed a class action that would not provide schools with the option of pursuing lawsuits on their own.

In fact, lawyers for other schools and school districts raised so many objections that on July 31, Judge Kelly exempted from the ban all school districts that had filed litigation prior to April 13.

Since April, he has held two separate hearings on the objections to a mandatory class, and a third hearing on whether there should be any class action at all.

He has agreed to the appointment of a second co-lead counsel for the plaintiffs to speak for those school districts who claim that David Berger is not representing their interests. And he has approved a second liaison lawyer for those asbestos manufacturers who say that they were not represented by the defense lawyer who consented to the mandatory class.

At present, 30 of the 54 asbestos companies named in the case oppose any kind of class action, according to Ralph W. Brenner of Philadelphia, one of the two liaison lawyers for the defendants. Most of the others have not formally stated their position to date.

At the time of Judge Kelly's decision, there were 37 school-asbestos cases filed in different courts around the country. After many months of delay caused by the judge's suspension, lawyers say those cases are slowly getting back on track.

But Mr. Speights adds that his law firm alone has in excess of 50 cases that it could file, if Judge Kelly would lift his continuing ban on new suits against the three major manufacturers. And other lawyers around the country say they are in similar positions.

'Unalterably Opposed'

"We are unalterably opposed to a mandatory class action," said Mr. Speights. "Among other reasons, it is a matter of simple fairness. We don't believe that individual school districts should be required to litigate their case in Philadelphia, which will take years to resolve, which will be before juries that are not familiar with local problems and local issues and local laws, and which will involve appeals after that, which will impose upon them attorneys whom they do not know and do not want to represent them in the litigation."

School districts that have taken the time to investigate and file litigation, "will get much more on the dollar by litigating the matter individually," he said.

But "the very same parties who are objecting to a mandatory class are very much in favor of a class action that would permit schools to exclude themselves at their choice," said Herbert B. Newberg, the lawyer appointed as co-lead counsel for the school districts and the author of an eight-volume treatise, Newberg on Class Actions.

"Even the large schools who may exercise an option to exclude themselves from a class action," he said, "fully appreciate that there are many schools that have smaller claims who cannot afford to litigate individually, and that these smaller schools will obtain recovery from the manufacturers for products containing asbestos only through a class action."

Mr. Newberg said almost all of the schools favor some form of class action "to preserve the claims of schools and school districts who either cannot or prefer not to litigate individually."

Preventing Fragmentation

"We've created an enormous amount of controversy. We're being treated like Manville, in a sense," countered Daniel Berger, who argued for a mandatory class action.

Mr. Berger said his firm asked for a mandatory class action "to prevent fragmentation" and the "proliferation of individual lawsuits" across the country.

"It's absolutely essential that the asbestos problem be addressed on an across-the-board basis, on a consolidated basis," he said. "It's intolerable to have cases ... which raise the same issues of law and fact, or highly similar ones, in hundreds of courts all over the country. It doesn't make the slightest bit of sense. It's stupid, as a matter of fact. ... and it's grotesquely expensive."

"Normally, we would be satisfied with a class where the individual claimants ... could opt out," he added. "But because of the special circumstances presented by this asbestos litigation--we already have three companies in bankruptcy; we have thousands of claims pending in personal-injury cases against the named defendants and thousands more predicted to be filed against them in the next 30 years; we have thousands if not tens of thousands of potential claims by schools and nonschools for property damages--we think that the only way to litigate the school cases, ... and not have a bankruptcy proceeding involving every member of the asbestos industry, would be through a single class action."

Mr. Berger also contends that the class action provides the best opportunity for schools to recover their abatement costs.

"If the claim stays together and the class stays together," he said, "then I think an across-the-board settlement might be possible that would cut through years of litigation and get money to the schools right now. If they went through and litigated these cases on a case-by-case basis ..., there's no question in my mind that a lot of them would be lost."

Some of the asbestos manufacturers, he noted, "say they're going to fight these cases tooth and nail and make it worse than the personal-injury situation. It could be a circus that could go on indefinitely."

Judge Kelly's Choices

According to Mr. Newberg, Judge Kelly has a number of choices regarding the class action:

He can uphold a mandatory class or certify an "exclusionary class" that allows school districts to opt out if they wish.

He can uphold either a mandatory or an exclusionary class for selected issues that are common to all cases--such as whether asbestos in schools poses a health hazard--and then allow schools and school districts to pursue their own remedies on issues that are individual in nature, such as the amount of damages a particular school should recover.

Or he can certify a class for both common and individual issues, and have a class trial on the common issues only, and then set up a mechanism for determining the individual issues.

Some form of class action is appropriate, Mr. Newberg argued, because there are questions of fact or law that are common to all schools and school districts. He added that the court will only uphold a class if it is satisfied that the class representatives will adequately represent the interests of the absent schools, and that the lawyers will vigorously prosecute the case on behalf of all schools.

If the court decides to allow schools or school districts to opt out of the class, they will have to do so within a certain time period, or they will be bound by the judge's decisions--whether favorable or adverse.--lo

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