WASHINGTON -- Blocking a $1.3 billion deal to divert hundreds of thousands of asbestos injury claims away from the courts, the Supreme Court yesterday sharply pared the authority of federal courts to end nationwide legal disputes without trials.
The decision, with implications for the $368.5 billion tobacco industry settlement plan reached last week, shifts to Congress the option of ending hundreds of thousands of lawsuits for asbestos-related disease and deaths.
The ruling could mean that Congress will soon have to wage two major legislative battles over legal rights and health hazards: The tobacco deal is already scheduled to go to Capitol Hill in coming weeks.
Just as the opposing sides in the fight over health risks from smoking worked out a plan to stop lawsuits against that industry, lawyers for both sides in the years-long legal wars over asbestos agreed to set up an out-of-court fund to pay those afflicted by asbestos exposure or their survivors.
The asbestos deal collapsed in the 6-2 ruling by the justices yesterday.
The court spelled out the limited circumstances in which a large pool of individual injury or death lawsuits can be combined and then settled without trials in federal court.
Implications for states
Although the decision dealt only with federal court rules involving class action lawsuits, many states have laws modeled on those rules, so yesterday's decision could influence state courts, too. Many pending tobacco class action cases are in state courts.
"No settlement class called to our attention is as sprawling as this one," Justice Ruth Bader Ginsburg wrote for the majority in striking down the asbestos class arrangement.
"Untold numbers of individuals," she said, "may fall within" the pooled group that would have shared in the $1.3 billion fund to be supplied by 20 companies that formerly made asbestos products. All those companies have since stopping making those products.
Ginsburg's opinion was sprinkled with critical discussions of the deal, including a series of comments that questioned the basic fairness of it to those who do not now have any symptoms of dis- ase but may develop them in the future.
Asbestos-related diseases are known to develop slowly over periods as long as 40 years.
The federal law allowing class actions, Ginsburg wrote, "calls for caution when individual stakes are high and disparities among class members great."
The deal failed ultimately because the court found that the differing circumstances of the vast number of claims made it impossible to work out a single deal fair to all those affected.
There have been predictions of 200,000 asbestos disease deaths before 2000 and as many as 265,000 by 2015.
Many couldn't have sued
The settlement would have cut off the right to sue in any federal or state court for between 250,000 and 2 million people who have been exposed to asbestos, either at work or at home through exposure to affected workers.
In return for giving up the right to sue, some of those individuals, but not all, would be guaranteed some payments from the manufacturers' fund.
A separate deal gave the lawyers who negotiated for the victims $70 million in fees as part of a $215 million cash settlement for cases already pending.
The overall group affected by the settlement would have included 5,000 to 6,000 Maryland residents.
Peter Angelos, the Baltimore lawyer who represents about 3,000 people affected by yesterday's ruling, had called the asbestos settlement "a terribly bad deal."
Angelos' office said he was in meetings yesterday and not available for comment.
David C. Vladeck, director of the Public Citizen Litigation Group, an advocacy group that has fought the asbestos settlement and now opposes the tobacco deal, said the court's ruling "is really a wake-up call to the federal courts to be more rigorous in reviewing the terms" of settlements.
Lawyers have been put on notice "not to come into court with these broad class action cases where there are substantial deviations in state law and very significant differences" in the individuals' claims, Vladeck said.
Disappointment, and a vow
The Center for Claims Resolution, an association of the 20 companies that formerly made asbestos products, expressed disappointment at the ruling, but vowed "to continue efforts to resolve the national asbestos litigation crisis."
Spokesman Larry Fitzpatrick said the group would try to save "the essential tenets of the agreement through alternative channels."
Justice Ginsburg's opinion was supported by Chief Justice William H. Rehnquist and Justices Anthony M. Kennedy, Antonin Scalia, David H. Souter and Clarence Thomas. Justices Stephen G. Breyer and John Paul Stevens dissented.
Justice Sandra Day O'Connor did not participate, and she gave no reason for disqualifying herself.
Pub Date: 6/26/97