Asbestos Products Company Abandons Lawsuit Against Tobacco Companies; Similar Case Dismissed in Mississippi.

Business Editors/Legal Writers

NEW YORK--(BUSINESS WIRE)--July 27, 2001

Another former manufacturer of asbestos products has voluntarily withdrawn its lawsuit against Philip Morris U.S.A. and other tobacco companies in federal court here, and a Mississippi state court judge has dismissed a similar claim brought by Owens Corning.

H.K. Porter, a former asbestos products manufacturer, became the second plaintiff in less than a month to abandon its lawsuit seeking reimbursement from tobacco companies for money paid to sick workers who also smoked. Earlier, the Manville Trust dismissed its case, known as Falise, scheduled for retrial in September before U.S. District Judge Jack Weinstein. The Porter case was also before Judge Weinstein.

In Mississippi, Jefferson County Circuit Judge Lamar Pickard ruled recently that Owens Corning had no legal basis on which to support its claim for damages from the cigarette makers.

"The asbestos companies' lawsuits defy common sense, and these latest dismissals are further proof that they make no legal sense," said William S. Ohlemeyer, Philip Morris vice president and associate general counsel.

The asbestos companies had argued that the tobacco companies caused or contributed to damages sustained by thousands of asbestos workers who also smoked and therefore they should be reimbursed for a portion of the money paid to those workers.

Judge Pickard based his ruling on the doctrine of "remoteness," essentially a recognition that Owens Corning could not claim the conduct of cigarette companies caused harm to the asbestos companies. Philip Morris U.S.A. has argued the remoteness defense in all cases involving third parties who sue tobacco companies for damages.

"We are pleased that these cases, like the Manville Trust and similar reimbursement cases filed in courts across the country, have been dismissed. The plaintiffs obviously have finally come to recognize that neither the facts nor the law support their claims.

"Courts across the country have consistently dismissed similar reimbursement cases because the connection between the conduct at issue and the damages being claimed is indirect, remote and speculative. These latest dismissals should send a clear signal that it is past time to put an end, once and for all, to these types of lawsuits," Ohlemeyer said.

Nearly all of these cases, known as third-party reimbursement lawsuits, have been rejected at the trial or appellate court level. Of the two cases tried to verdict, one involving numerous union health funds in Akron resulted in a unanimous defense verdict in 1997.

The second, in Judge Weinstein's court in a case brought by Empire Health Choice, resulted in defense verdicts on two key issues involving common law fraud and violations of the Racketeer Influenced Corrupt Organizations Act. Although the jury ruled for the plaintiff on a count involving New York's consumer protection law, it awarded $17.8 million in compensatory damages - a miniscule fraction of the approximately $800 million the insurer had sought.

Ohlemeyer said Philip Morris U.S.A. is currently preparing its appeal in the Empire case to the Second Circuit ------ U.S. Court of Appeals and is optimistic that verdict will be overturned.

"The fact remains that eight federal appellate courts, including the appellate court which will hear the Empire appeal, have considered these types of cases and all have unanimously rejected them.

"We will ask the Second Circuit to reverse the Empire verdict because we believe Judge Weinstein ignored well-established legal precedent by allowing the case to go to trial, and we believe we have an extremely strong argument that should convince the Court to instruct Judge Weinstein to enter judgment in our favor and dismiss this case," said Ohlemeyer.

"The fact remains that nothing Philip Morris U.S.A. or other tobacco companies ever said or did influenced decisions made by the plaintiffs in these cases," said Ohlemeyer.