Asbestos Settlement Overturned by Supreme Court

A landmark $1.5-billion settlement against Fibreboard Corp. (now owned by Owens Corning) that resolved the claims of approximately 185,000 victims of asbestos poisoning was overturned by the US Supreme Court on June 23. Court watchers say the decision will make it more difficult for defendants in product liability cases to reach class action settlements without either paying top dollar or filing for bankruptcy protection.

In overturning the settlement, the Supreme Court found the plaintiff's attorneys had a possible conflict of interest between protecting their clients' rights by winning a fair settlement and making a fast deal that would earn them multimillion dollar legal fees. A study mentioned in the ruling found that nearly two-thirds of every dollar that is available to victims of asbestos poisoning is spent on attorney fees and other costs.

The Supreme Court ruled that the lower court that approved the settlement failed to consider that there was more money available for the claims. Fibreboard's contribution to the settlement was $500,000, even though Owens Corning paid $515 million for the company two years ago. Fibreboard's insurers would have paid the remainder of the settlement. The agreement also would have limited the ability of plaintiffs to drop out of the class action suit and bring their own lawsuits against Fibreboard Corp.