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Judge Assigns Class-Action Status to School Asbestos Suit

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In a long-awaited ruling that affects every school district in the nation, a federal district judge in Philadelphia has granted class-action status to a lawsuit by several school districts against 54 asbestos manufacturers.

The decision by U.S. District Judge James M. Kelly in effect creates a case in which all school districts in the country are represented unless they choose not to be. Since last spring, when Judge Kelly was asked by the districts in the case to rule on the class-action question, nearly all litigation by school districts against asbestos firms has been on hold. (See Education Week, Oct. 3, 1984.)

The lawsuit, In Re: School Asbestos Litigation, provides schools and school districts with a potential means for recovering costs associated with cleaning up asbestos in their buildings. It is the first nationwide class action involving manufacturers' liability for property damages due to the presence of asbestos products in public or private structures.

The suit began in the winter of 1983, when three public-school districts in Pennsylvania and one in South Carolina decided to sue all of the major producers of asbestos construction and insulation products in the nation's schools, as well as the principal suppliers of raw asbestos, for the cost of removing or covering asbestos-containing materials in their buildings. The suit also seeks direct abatement action by the industry for remaining asbestos problems, continued maintenance of contained asbestos left in schools, and medical surveillance to identify and monitor children and school employees who may have been exposed to school asbestos.

"In my view the school-asbestos litiga-tion is uniquely suitable to class-action treatment," Judge Kelly wrote in his Sept. 28 decision. "Instead of hundreds of thousands of school-asbestos cases in separate forums, the litigation would be concentrated in a single forum, thereby economizing litigation expenses."

'Extremely Important' Ruling

Herbert B. Newberg, a lead counsel for the plaintiffs, said the class-action decision "is an extremely important one" that protects the rights of schools that do not want to file individual claims or that cannot afford to do so, while leaving the door open for schools that favor independent litigation.

Lawyers representing school districts called the decision a victory of great significance for schools. Those representing asbestos manufacturers in the case said that it is too soon to tell whether any of the asbestos companies will appeal the decision.

Compensatory Class Voluntary

Under the terms of Judge Kelly's ruling, the class action for compensatory-damage claims will be voluntary. That is, it will begin by representing all schools and school districts in the nation, but then will permit individual schools and districts that do not want to be represented to exclude themselves by a certain date, to be fixed by the judge.

Schools that opt out will then be free to pursue litigation on their own to recover the actual costs of removing or containing asbestos. They will not be bound by any judgment regarding compensatory damages (monetary awards the court orders the defendants to pay for actual property damages or economic loss suffered by the plaintiffs) in the Pennsylvania case.

However, as soon as a school opts out of the class, local statutes of limitation on product-liability cases--which Judge Kelly had suspended as of the January 1983 filing of the suit--will begin running again. Schools planning to file individual suits will have to do so before those time limits run out.

Schools that remain part of the class action will continue to benefit from the stay on statutes of limitation.

Punitive Class Mandatory

The judge upheld a mandatory class action for punitive-damage claims against all of the 54 defendants. Theoretically, this means that all school claims for punitive damages (monetary awards the court orders defendants to pay beyond actual property or economic loss to punish them for a serious wrong) against asbestos companies must be brought through the Pennsylvania case. However, it appears that school districts will have some means for pursuing punitive-damage claims on an individual basis, according to Mr. Newberg.

The judge specifically stated in his decision that schools that exclude themselves from the compensatory class will be allowed to make settlements on punitive-damage claims individually.

According to Mr. Newberg, that implies that if there is any claim for punitive damages that is eligible to be settled, an individual school would have the power to pursue that claim in separate proceedings.

At the same time, Mr. Newberg added, because Judge Kelly has certified a mandatory class limited to the issue of punitive damages, local courts will have the discretion either to dismiss any separate punitive-damage claim or to stay any proceedings that include punitive-damage claims pending the outcome of the class action.

Although Judge Kelly has the discretion to prevent the litigation of individual punitive-damage claims, he does not have to exercise that option, Mr. Newberg said.

He also noted that any punitive-damage settlements made by individual schools before resolution of the Pennsylvania case will be subtracted from the final settlement in that case, meaning that the companies will get credit for these payments.

Mixed Reactions

Daniel Berger, the other lead counsel for the plaintiffs, said that while his firm had hoped for a mandatory class that would have barred all independent litigation by school districts against asbestos manufacturers, the judge's decision would stem complaints from school districts that did not want to be part of a class action. "In that sense," Mr. Berger said, "I think it was a wise decision."

Mr. Berger said he hoped that most schools and school districts will decide to remain part of the Pennsylvania lawsuit.

The asbestos companies that had consented to a mandatory class before the judge's present decision had hoped for a mandatory class for both compensatory and punitive damages, according to Lawrence T. Hoyle Jr. of Philadelphia, a lawyer for the defendant asbestos companies. However, some "class treatment is better than no class at all," he added.

Ralph W. Brenner of Philadelphia, another counsel for the companies, said some of them are considering an appeal.

According to Mr. Newberg, the judge's decision relies heavily on class-action rulings by a district-court judge in New York on Agent Orange litigation. Consolidating 3numerous suits brought by Vietnam War veterans and others exposed to the toxic chemical defoliant, the judge similarly certified a voluntary class for compensatory damages and a nationwide mandatory class for punitive damages.

No Schedule Yet

Judge Kelly has not yet set a schedule for pretrial proceedings and trial dates in the case. He has asked both sides in the case to prepare within the next month sample notification forms for school districts and will then decide on the notification procedure.

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