The Wall Street Journal purports to be a sophisticated, respectable newspaper. One would expect, then, that its editorial board would exercise some independent judgment backed by facts and nuanced analysis. The board's recent editorial about the asbestos bankruptcy trust system shows none of these hallmarks of respectable journalism. Rather, the editorial is nothing more than U.S.. Chamber of Commerce talking points placed in complete sentences. The piece was lazy, superficial, and, most importantly, misleading.
The editorial rests on two main premises, both of which are demonstrably false. The first is that there is already so much money available in the asbestos trusts – $36 billion! – that seeking compensation via lawsuits is just pure greed. To be sure, $36 billion is an enormous amount of money. But remember, we are talking about tens of thousands of people suffering painful deaths – months or years of radiation, chemotherapy and surgery while slowly suffocating, their lungs literally turning to mush – and leaving behind devastated loved ones. And the money in these trusts has to compensate those currently suffering and last long enough to provide some recovery to the thousands more projected to suffer and die in years to come. As a result, each bankruptcy trust treats asbestos victims as any creditor in the bankruptcy system. If you or I declare bankruptcy, the people we owe will only recover a fraction of what they are owed. So too with asbestos victims – they can only recover from the bankruptcy trust a fraction of what they could have recovered from that company in a lawsuit. Far from the windfall that the WSJ editorial implies, asbestos victims are vastly under-compensated by the bankruptcy trusts when one considers the agony that they and their families experience. To be made whole, therefore, the victims must also pursue claims against the companies that have not gone bankrupt. By analogy, if one of the Fortune 500 companies that bankroll the Chamber of Commerce could recover money it is owed from a solvent person or entity, it would not settle for a partial recovery from a bankrupt debtor. This is not greed, it is justice.
The second false premise is that recovering from bankruptcy trusts and then recovering from solvent companies after a lawsuit is "double dipping." This is a plain misstatement of existing tort law. Double dipping is receiving two dollars when you should only receive one. The interplay between bankruptcy recovery and lawsuit recovery is the exact opposite. Every dollar that a victim receives from bankruptcy trusts is a dollar that he cannot receive from a lawsuit. If a jury determines that a victim's damages are, say, half a million dollars, and that person has already received $250,000 from asbestos bankruptcy trusts, the defendant only owes the victim the other $250,000. If the victim has received $400,000 from the trusts, the defendant only owes $100,000. Bankruptcy trusts do not cost solvent companies money. They save solvent companies money. Moreover, consider the alternative: if these bankruptcy trusts did not exist, the victim would go to trial against all of the responsible companies. The companies would not know how much the victim had already recovered because he would have recovered nothing. Why should that change just because the victim recovered part of his damages early? The damages (harms) are still the same.
Just to be clear about the harm to America caused by asbestos, the Centers for Disease Control estimates that by the year 2030 asbestos-containing products may kill 200,000 Americans. A RAND study estimated 432,000 asbestos-related deaths between 1965 – 2029. And, by some estimates, asbestos continues to kill 5,000 – 10,000 per year, which may underestimate the number because pleural mesothelioma, an asbestos "signature" disease (a type of lung cancer), is many times misdiagnosed. Between 1979 – 2001, at least 43,000 Americans died from mesothelioma alone! The early asbestos industry knew by the mid-1930's that the products it was manufacturing were lethal, and many of those manufacturers conspired to keep this important fact from the rest of the country – and their own workers. The American asbestos story is one of the most abhorrent and misunderstood tragedies in our history.
It, therefore, takes some chutzpah for the Chamber of Commerce (funded by a number of the companies that put lethal, asbestos-containing products into the American stream of commerce) to take an asbestos bankruptcy trust system that it championed yesterday, and from which its members have benefited greatly, and use it as a whipping boy today. But then again, hypocrisy in pursuit of profit has become the accepted norm on Wall Street and in numerous corporate board rooms across America, and Americans are becoming used to it. What is disappointing, and perhaps the real "scam" here, is the WSJ editorial board's decision to place its name on these empty and disingenuous Chamber talking points.
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