Asbestos victims have spoken and, for now, the U.S. Senate has listened.
For the year 2003, at least, thanks to your protest letters, phone calls,
emails and faxes, the U.S. Senate will not debate or vote on the Hatch
Asbestos Bail Out Bill (SB 1125, seehttp://www.mesothel.com/pages/s1125_hearing.htm.
I want to thank each of you for your spirited and tireless advocacy against
the Hatch Bill. As you know, this breathlessly wrong Bill which would
have created a massive yet under-funded federal bureaucracy that was going
to be broke before it opened for business. It would have recklessly voided
unpaid settlements. It would have barred victims from seeking redress
in the courts. It would have bailed out some of the wealthiest companies
in the world who caused the misery in the first place. It would have short-changed
victims on a take-it-or-leave-it basis for amounts far less than historical
settlement and jury value averages. It would have done nothing to deter
negligent or malicious corporate conduct. Although conferring an astounding
windfall to the wrongdoers, it would have done nothing to fund the long-overdue
investment in cancer prevention, early detection or treatment. (see selected
protest letters at http://www.mes
Thank you. Thank you.
But before celebrating, remember the Hydra headed monster from Greek mythology
-- as soon as a brave warrior would lop off one gnashing head, another
would spring up in its place. In order to terminally vanquish the monster,
Hercules had to simultaneously lop off all 9 heads. Hatch may not rear
it's ugly head in 2003, but my sources fear that a reincarnation of
the Hatch bill will likely pop up in 2004.
Remain vigilant. The whisper is the Republican leadership is plotting behind
the scenes to present the asbestos bill to the full Senate at some point
buried within an omnibus "Jobs Bill." The omnibus "Jobs
Bill" has yet to be unveiled and it's not likely to see the sunshine
of public debate. The plan is to simply unveil it and take it straight
to the Senate Floor -- a giant, virtually mind-numbing, voluminous and
multi-chaptered bill weighed down with so many complex and controversial
measures that it would never actually see an open debate.
Another rumor has it that the industry is working to amend the bankruptcy
code to make it easier for solvent (and flush) asbestos defendants to
escape liability by obtaining immunity in the bankruptcy courts. The scheme
would allow a parent company to saddle a subsidiary with all of its asbestos
debt, take the dummy corporation into chapter 11, and obtain a court order
protecting the parent from any liability stemming from the subsidiary's
The shell game ruse, unfortunately, is not merely theoretical. Presently
Honeywell (with assets in 2002 estimated at $24.2 billion) is protected
from asbestos lawsuits arising from its ownership of Bendix, which for
many years made asbestos friction products. Honeywell sold Bendix to a
company already in chapter 11, Federal Mogul, and by doing so obtained
the protection of Section 524(g) of the bankruptcy code, which has been
used to shield parents from the liability of the debtor during the latter's
Chapter 11 reorganization litigation. This week, Detroit's Big Three
automakers filed a lawsuit against Honeywell, alleging that it's scheme
to avoid asbestos liability was illegal and fraudulent (see the article
below). The Big Three didn't suddenly develop a conscience. They know
that if competitors can exploit loopholes and avoid playing by the rules,
companies that do obey the rules and have to pay the price will be put
at an economic disadvantage in the marketplace.
The take-home message: it's not over. At the same time, we can feel
good about the role each of us played in defeating the Hatch bill this
year. When many soft voices speak at once, the roar can be deafening.
We will continue to keep you posted.
Roger G. Worthington, Esq.
* * * * * * * * * *
BIG THREE AUTOMAKERS SUE HONEYWELL, ALLEGING ASBESTOS FRAUD
NEW YORK/CHICAGO (Reuters) - Detroit's Big Three automakers have filed
suit to stop Honeywell International Inc. (NYSE:HON - news) from selling
its brake products unit to bankrupt Federal-Mogul Corp. (OTC BB:FDMLQ.OB
- news), accusing Honeywell of trying to avoid its asbestos-related obligations.
Honeywell in January agreed to sell its Bendix brake unit, which faces
about 47,000 asbestos cases, to Federal-Mogul, an auto parts supplier
currently reorganizing after filing for Chapter 11 protection in October
2001 under the weight of mounting asbestos lawsuits.
Federal-Mogul's proposed reorganization plan includes the establishment
of a trust to pay existing and future asbestos claims, allowing the company
to emerge from bankruptcy free of asbestos liabilities.
Under the proposed Bendix deal, Federal-Mogul would acquire certain assets
of the unit, and Honeywell, in exchange, would receive protection from
In the lawsuit filed on Wednesday, Ford Motor Co. (NYSE:F - news), General
Motors Corp. (NYSE:GM - news) and DaimlerChrysler AG (DCXGn.DE) described
the proposed Bendix sale as a "fraudulent transfer."
"Bankruptcy protection cannot be bought and sold. Federal-Mogul's
and Honeywell's unprecedented attempt to do so would violate federal
and state law, be unfair to thousands of asbestos claimants and inappropriately
shift litigation costs to the automakers," David Sykes, attorney
with Duane Morris, which is representing the carmakers, said in a statement.
The Big Three face asbestos-related litigation costs totaling between $320
million and $1.2 billion, investment bank UBS Warburg estimated in a 2002 report.
A Honeywell spokesman said the company was reviewing the lawsuit and declined
to comment on it.
A spokesman for Federal-Mogul, which is hoping to emerge from bankruptcy
protection in 2004, also declined comment, saying the suit was under review.
Bendix makes brakes and brakes systems, and asbestos was once a key component
in these products. The proposed sale of Bendix remains subject to anti-trust
clearance and agreement with attorneys representing asbestos plaintiffs.
According to Federal-Mogul's reorganization plan, filed in Delaware
federal court in March, asbestos claimants would convert all claims, running
into billions of dollars, into equity in the emerging company.
In their lawsuit, the U.S. automakers said Federal-Mogul sought to use
its immunity status to take on Honeywell's liabilities.
Hundreds of U.S. companies have been hit with lawsuits from claimants exposed
to asbestos, a fire-resistant material that scientists have linked to
a form of lung cancer and other fatal diseases.