Asbestos Verdicts, Settlements Going In Favor of Schools

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Joining the massive class action against the largest asbestos producers may not be the best way for school districts to recoup the costs of removal and abatement, suggest lawyers who have won recent victories for schools in separate suits.

Martin Dies, a Texas lawyer who represented a group of 83 districts in that state that reached a multi-million-dollar settlement last month, calls the long-running class action "a scheme to settle all the cases at 10 cents on a dollar.''

Momentum gained from his and other recent settlements--and from a string of court verdicts favoring schools--make it more profitable, he said, for districts to pool their resources in smaller suits.

Though the exact dollar amount of the Texas settlement with U.S. Gypsum and W.R. Grace has not been released, Mr. Dies termed it "favorable.'' The plaintiffs had reportedly been asking for between $55 million and $90 million.

In a similar out-of-court settlement in late April, National Gypsum Co. agreed to pay an undisclosed amount to multiple districts in 20 states who were represented by a single law firm.

According to Mr. Dies, such settlements "represent a major change of position on the defense.''

"The defense just realized that we had the resources to cause them severe damage,'' he said. "It's just a question of going out and showing them what damage can be done to them in front of a jury. They're worried about the evidence that's in their own files.''

In fact, since last November alone, school districts in Independence, Mo.; Athens, Tenn.; and Spartanburg, S.C., have won cases against asbestos makers.

And the apparent trend has added strength to the conviction held by officials in some of the nation's largest districts that joining the class action would for them be counterproductive.

"The class action vehicle may be a good thing for smaller districts,'' said Aaron Simon, a lawyer for the Los Angeles Unified School District, "but it wouldn't recover our costs. Whatever we'd get out of it would be a small drop in a very large bucket.''

'Complex' Case

The lawsuit in question, In Re School Asbestos Litigation, was filed against 51 asbestos manufacturers in U.S. District Court in Philadelphia in 1983. In September 1984, it was made a voluntary nationwide class for all school districts seeking compensatory damages from companies making the cancer-causing substance.

Since then, action in the case has been stalled by countersuits, procedural matters, and out-of-court settlements with individual companies.

According to lawyers familiar with the case, no one can accurately predict when it will come to trial or how long the litigation might take. Herbert B. Newberg, one of the two lead counsels in the suit, said last week that there was an "expectation'' that many of the defendants will settle out of court.

Two deadlines, however, are facing school officials: They must decide by June 22 whether or not they will join in a separate settlement with two of the manufacturers, and they must determine by a yet-to-be-named date whether or not they wish to be part of the class action at all.

Those who do not specifically opt out of the case will automatically be part of the class--and thus not eligible to sue the asbestos makers on their own.

The stakes of such a decision, legal experts and school officials said last week, may for some districts be high.

The pressure to recover some of the often staggering costs involved in asbestos removal and abatement has increased since April, when the Environmental Protection Agency released a long-awaited set of rules governing the procedures and timetables schools must follow in the process. (See Education Week, April 29, 1987.)

Deciding whether or not a district would benefit from inclusion in the class is often, the experts said, a question of size and financial resources.

Despite the disadvantages of the class action, its supporters argue that it is the only chance many school districts have to recover any of their costs. And, they insist, one joint suit is preferable to many individual suits clogging up the judicial system.

Sheldon Taubman, a lawyer for one of the 14 law firms representing districts in the class, acknowledged that the suit was "complex,'' but said it represented one of the only avenues open to some financially strapped districts.

That "complexity'' includes the settlement reached last year with Owens-Illinois and Proko Industries. Worth approximately $5 million, it would be divided between districts who agree to settle with the companies--meaning they will join no further legal action against them. Districts which decide to do so may remain a part of the general class action against other asbestos manufacturers.

Recouping 'Staggering' Costs

But for some large urban districts, the approaching decision on whether to "opt out'' of the class officially may be more crucial, according to experts.

In such districts, the costs of asbestos removal have been "staggering,'' they said, making the freedom to pursue their own litigation, in some cases, a necessity.

Ruthanne Miller, a lawyer for the District of Columbia, said the school system was now weighing whether or not to stay in the class. The District government is currently involved in a separate suit for all its municipal buildings, and is seeking $200 million to pay for the costs of removal, and an additional $200 million in punitive damages.

"When we have to make that decision,'' she said of the schools case, "we'll make it.''

Mr. Simon, the lawyer for the Los Angeles Unified School District, said his district would opt out of the Philadelphia case because it could at best expect to get only "a very trivial amount'' from a verdict or settlement.

In Chicago, Susan Wayne, a lawyer for the public schools, said her district faced a bill of approximately half a billion dollars for asbestos removal, and has spent about $17 million to date. She said the district would probably wait to see how its own suit, now on appeal in the Illinois appellate court, is going before deciding whether to opt out.

"Considering that there are more and more positive verdicts and settlements, it certainly encourages us to opt out,'' she said.

"I believe that nearly all, if not all, of that money will go to pay the attorney fees that have accumulated,'' she added.

"We would probably see pennies on the dollar, whereas a smaller district would probably come out better.''

"Besides,'' Ms. Wayne added, "the settlement won't approach the settlement we need. The money we have at stake is really tremendous.''

Smaller Districts To Join

For smaller districts, however, the class action may be the only way to recover any costs.

James Hanks, the lawyer for the Sioux City, Iowa, school system, said that his district intends to "piggyback'' on the class action.

Although the district faces a $1.2 million asbestos-removal bill for its three high schools alone, he said, the costs do not justify the "substantial'' added expense of a separate lawsuit.

"If we did recover something, we wouldn't be sure that it would be enough to cover removal or encapsulation,'' Mr. Hanks said. "We don't even have the odds of the Las Vegas slots machines.''

To many others, the recent favorable decisions in separate asbestos suits are an argument for, not against, staying in the class action.

Daniel Speights, a lawyer with one of the firms representing districts in the class, said that the "general momentum is in favor of the school districts.''

"I think people staying in the class action suit should be encouraged by [the recent settlements in separate suits],'' he said.

And Gwendolyn H. Gregory, the counsel for the National School Boards Association, said she doubted whether many districts would pull out specifically because of favorable settlements elsewhere.

"If you don't have a really large claim, it's probably not worth your while to hire an attorney,'' she said.

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