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$200 Million Settlement Reached in Asbestos Case

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Thousands of school districts reached a $200 million property-damage settlement last week with several major asbestos manufacturers, bringing a decade of litigation one step closer to an end.

In one of the largest class actions ever brought before a federal court, most of the school districts in the country--more than 15,000--sued 50 companies in 1983. They sought reimbursement for the millions they spent to eradicate the hazardous material--once widely used as a fire preventive and insulation--from school buildings.

Since the lawsuit was filed, several smaller companies named as defendants in Board of Education of Memphis City Schools v. U.S. Gypsum Company had reached settlements with districts. With last week's agreement involving the 10 largest manufacturers, only three companies remain.

The settlement also eliminates thousands of districts whose legal staffs have been absorbed by the case for years. The exact number of districts involved in the new pact is not known.

While U.S. Gypsum was one of the largest property-damage cases related to asbestos, dozens of other lawsuits remain. Most involve larger school districts, such as New York City and Chicago, that opted out of U.S. Gypsum.

United States Gypsum Company recently settled a similar class action in Michigan involving 333 school districts, totaling $30 million. Another asbestos property-damage class action is pending in Texas.

In addition to the property-damage cases, there are hundreds of personal-injury lawsuits in which plaintiffs claim exposure to asbestos caused cancer and other health problems.

Matthew Gonring, a spokesman for U.S. Gypsum, said last week's settlement will cost the company $30 million. The agreement also calls for the company to provide schools an additional $50 million in coupons for discounts on plaster products, an amount not included in the $200 million settlement, he said.

David Berger, the Philadelphia-based lawyer leading a team of attorneys representing the 15,000 districts, said three other companies--W.R. Grace & Company, the Georgia Pacific Corporation, and the Union Carbide Corporation--will contribute most of the remaining amount.

Mr. Berger noted that claims pending against other manufacturers originally named in the lawsuit--some of which have been forced into bankruptcy by the long court battles--will eventually increase the amount of damages paid to the districts.

Amount Is 'Peanuts'

In 1986, Congress passed the Asbestos Hazard Emergency Response Act, requiring all schools in the country to inspect for asbestos and submit a plan to either remove or contain the material. The U.S. Environmental Protection Agency estimates that 98 percent of school districts have complied with the law. (See Education Week, Sept. 8, 1993.)

The bill for asbestos removal, school-finance experts say, has exceeded $3 billion.

Some experts said last week's agreement will not do much to repair the damage done to school districts' budgets. New York City alone has spent more than $100 million to remove asbestos from its public schools.

"The settlement seems like peanuts to me," said Gwendolyn H. Gregory, the deputy general counsel for the National School Boards Association. "If the claims are in the billions, this isn't that much."

Earnest Kelly, the general counsel for the Memphis schools, which spent millions on asbestos abatement, agreed. "The settlement would fall short of paying us back dollar for dollar," he said.

Lawyers for both sides declined to discuss details of the settlement, but the relatively small amount of the settlement could be attributed to the difficulty in proving corporate liability, Mr. Kelly said.

It was unclear last week how the $200 million would be divided among the districts. A federal district judge in Philadelphia may rule on that issue in the next few months, according to Mr. Berger.

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