Third time's the charm? Manville trust restructured.

One of the behemoths of asbestos litigation may be lumbering toward extinction. The third reorganization of the Manville Personal Injury Settlement Trust was approved by the parties in late July; the approval hearing was scheduled for November 1. (Parties Approve New Class Settlement for Manville Personal Injury Trust Payments, Prod. Safety & Liab. Rep. (BNA), No. 30, at 799 (Aug. 5, 1994).)

Victims will receive an initial payment of 10 percent of the value of their claims because the trust's liabilities vastly exceed its assets. Later distributions will be made if changes in the liability and asset estimates warrant it. The 200,000 pending claims should be settled much more quickly than the 30,000 settled and paid thus far. According to Patricia Houser, the trust's executive director, it now has about $330 million in unrestricted funds with which to pay claims and may have an additional $300 million during 1995.

Recent trial testimony by judge-appointed experts and the trust's experts indicated that at least another 300,000 claims can be expected. The fund has paid over $1 billion to claimants; its remaining assets are worth between $1.8 billion and $2.2 billion. (Edward Adams, Parties Reach Settlement in Manville Trust Cases, N.Y.L.J., July 28, 1994, at 1.)

The litigation is being overseen by a Brooklyn federal judge, Jack Weinstein, and a Manhattan bankruptcy judge, Burton Lifland. Asbestos plaintiffs from every state but Maryland are covered by this agreement.

The litigation harks back to 1982, when the Johns-Manville Corp. of Denver, a building products company, filed for bankruptcy. The original fund of $2 billion was expected to suffice for an estimated 85,000 to 100,000 claims received over 27 years. However, the trustees soon found that the number and size of potential claims had been seriously underestimated. (Asbestos Class Ordered; Trust Fund Must Reorganize, TRIAL, Aug. 1990, at 72.)

A second settlement was approved in 1991. This plan required that claims for the most serious injuries be handled earlier and more generously than claims for less serious injuries. However, the Second Circuit vacated this plan in late 1992 because it lumped parties with conflicting interests together in the same class and did not allow them to opt out of the class.

Under the new plan, each claim will be put in one of seven injury categories. Plaintiffs will be offered a fixed amount according to category and severity--for example, $12,000 for bilateral pleural disease; $40,000 for cancer other than lung cancer; $60,000 to $90,000 for lung cancer; and $200,000 for malignant mesothelioma. The trust hopes to be able to make about 10,000 settlement offers per month under this system. Claimants who opt out will eventually be evaluated individually and could be offered lower or higher values, depending on the facts of the claim.

The settlement also created funds for three other beneficiaries to compensate them in part for harm they say they suffered due to Judge Weinstein's stay of litigation against the trust in 1990. These beneficiaries include most of the other asbestos manufacturers sued in the initial litigation, who wound up paying more than their share under joint and several liability; various asbestos distributors seeking indemnification for damages; and distributor McArthur & Co., which made its own agreement with Manville.

Another asbestos class action passed a major milepost in August. A Pennsylvania federal court approved a $1.3 billion settlement in Georgine v. Amchem Products, Inc. (No. 93-CV-0215 (E.D. Pa. Aug. 19,1994).) Funding is to come from 20 manufacturers and suppliers, all members of the Center for Claims Resolution. They estimate the fund will resolve about 10,000 claims a year for the next 10 years.