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Home >> Asbestos
Court Rejects $1.5 Billion Settlement In Asbestos Class-Action Lawsuit
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WASHINGTON -- The Supreme Court rejected a $1.5 billion class-action asbestos settlement Wednesday, ruling that the 1993 accord unfairly excluded some potential plaintiffs.

1See the full text of the court's decision in the asbestos class-action suit.

2See the full text of the court's states-rights decision involving labor law.

3See the full text of the court's states-rights decision involving trademark law.

4See the full text of the court's states-rights decision involving patent law.

The court also delivered three bitterly divided decisions that limit the ability to sue states. The decisions ended the court's term. The court begins its 1999-2000 term on the first Monday of October.

In the asbestos lawsuit, the court, by a 7-2 vote, ruled that a federal judge in Texas wrongly approved the settlement, involving Fibreboard Corp., of Dallas.

The decision is of great importance to resolving complex product-liability lawsuits, such as those over breast implants, cigarettes and other allegedly dangerous products. The new guidelines may make it more difficult for manufacturers and other defendants to obtain settlements of such lawsuits.

Writing for the court, Justice David H. Souter said that in settlements in which a limited amount of money is available, those seeking the settlement "must show that the fund is limited by more than the agreement of the parties, and has been allocated to claimants belonging within the class by a process addressing any conflicting interests of class members."

"With Fibreboard retaining nearly all its net worth, it hardly appears that such a regime is the best that can be provided for class members," Justice Souter added.

Fibreboard, a unit of Owens Corning, Toledo, Ohio, manufactures vinyl siding and other building materials at 21 plants in the U.S. and Canada. Its products once contained asbestos, for decades used extensively in insulation and fireproofing before it was linked to severe and sometimes deadly respiratory problems.

In 1993 U.S. District Judge Robert Parker in Tyler, Texas, approved a so-called global settlement of about 186,000 potential future claims and several related agreements negotiated by Fibreboard, its insurers and some people with asbestos-related health claims. Judge Parker has since been elevated to the Fifth U.S. Circuit Court of Appeals.

The settlement was upheld by the Fifth Circuit, but the Supreme Court last June told the appeals court to restudy the case in light of a 1997 ruling in which the justices made it more difficult to find nationwide solutions in massive product-liability litigation.

That decision said judges lack the authority to allow a class-action settlement in a lawsuit that, under federal rules of civil procedure, would be denied class-action status at trial. After restudying the Fibreboard case, the circuit court again upheld the settlement.

Wednesday, the justices said the appeals court was wrong.

Joining Justice Souter's opinion were Chief Justice William H. Rehnquist and Justices Sandra Day O'Connor, Antonin Scalia, Anthony M. Kennedy, Clarence Thomas and Ruth Bader Ginsburg.

Justice Rehnquist wrote a concurring opinion that said the federal judge made "near-heroic efforts ... to make the best of a bad situation." But he said the court was restricted by federal civil-trial rules, adding that the situation "cries out for a legislative solution."

In dissent Justice Stephen G. Breyer said that in complicated cases such as asbestos claims, "our court should allow a district court full authority to exercise every bit of discretionary power that the law provides." He was joined by Justice John Paul Stevens. (Ortiz vs. Fibreboard)

Court Expands States' Rights

Regarding states' rights, the court ruled that the Constitution's "structure and history" shields a state not only from being sued in federal court, but also make a state immune from an individual's lawsuit in state court seeking to enforce a federal right.

By a 5-4 vote, the justices killed a state court lawsuit by dozens of state probation officers seeking to enforce a federal labor law and collect overtime pay from Maine.

The decision leaves Maine's probation officers with a federally protected right to be paid for overtime work but with no way to enforce that right aside from trying to get the federal government to sue the state for them.

The relationship between the federal government and the states, what constitutional scholars call federalism, is not widely considered as politically explosive as abortion, religion and other topics that reach the nation's highest court. But the court's view of that relationship defines in profound and fundamental ways the ebb and flow of political power.

In a series of cases decided by 5-4 votes, the justices have shown increasing sensitivity to how individual states' authority fares when pitted against the federal government's power.

The conservative coalition of Chief Justice Rehnquist and Justices O'Connor, Scalia, Kennedy and Thomas again prevailed Wednesday over more liberal colleagues, Justices Stevens, Souter, Ginsburg and Breyer.

Writing for the court in the Maine case Wednesday, Justice Kennedy said Congress lacked the authority, when enacting the Federal Labor Standards Act of 1938, to waive states' sovereign immunity from being sued in state courts.

"Congress has vast power but not all power," Justice Kennedy said. "The powers delegated to Congress under the ... Constitution do not include the power to subject nonconsenting states to private suits for damages in state courts."

In an extraordinarily lengthy session, Justice Kennedy read portions of his 51-page opinion, emphasizing the importance of a nation built on the idea of two distinct sovereignties -- the federal government and the individual states. "Congress must accord states the esteem due to them as joint participants in a federal system," he said.

Justice Souter responded by reading for 14 minutes from his 58-page dissenting opinion in words often dripping with sarcasm. "I expect the court's late essay into immunity doctrine will prove the equal of its earlier experiment in laissez-faire, the one being as unrealistic as the other, as indefensible and probably as fleeting," Justice Souter said. (Alden vs. Maine)

Florida Wins Disputes

The same 5-4 majority controlled the court in two other states-rights cases from Florida. The state had come under attack for its program to help families save for the cost of the state's public colleges and universities. College Savings Bank, of Princeton, N.J., sued the state twice in 1994 once under federal patent law and once under federal trademark law, alleging false advertising.

College Savings Bank since 1987 has marketed certificates of deposit for financing future costs of education.

In one of the cases, Chief Justice Rehnquist wrote the majority opinion, which barred patent holders from suing states in federal court over alleged infringements.

Illustrating the bitter divide of the court, Justice Stevens complained in dissent from the bench of the court's sweeping view of sovereign immunity. "The doctrine, I fear, is much like a mindless dragon that indiscriminately chews gaping holes in federal statutes."

"The principle that 'no man is above the law' which applies to the president of the United States as well as the lowliest public servant should apply equally to the states," Justice Stevens said.

In an opinion by Justice Scalia the court also held that Congress lacked the power to pierce states' sovereign immunity by making them liable for violations of a 1992 federal law, the Trademark Remedy Clarification Act. In so ruling, the court overturned its own 1964 decision that, along with subsequent rulings, indicated that states waive their immunity when they enter the marketplace as participants, not regulators. (Florida Prepaid Postsecondary Education Expense Board vs. College Savings Bank; College Savings Bank vs. Florida Prepaid Postsecondary Education Expense Board)

06/23/00

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