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2/26/2018 By Lauren Osterndorf

A recent article by James Lowery, a partner at Gordon & Rees, examines how naming defendants on asbestos complaints has changed since asbestos litigation began. Titled “The Scourge of Over-Naming in Asbestos Litigation: The Costs to Litigants and the Impact on Justice”, the piece traces the dramatic increase in the number of defendants named on complaints.

For example, the first asbestos lawsuit, filed over a generation ago, named only 11 manufacturers of insulation products. Fast forward to 2017, when on average, over 60 defendants were named on complaints — and in some cases as many as 300 defendants were named[1].

Over time, we have also seen the overall pool of defendants named on complaints grow. The number of unique defendant companies named began as a few dozen companies and has grown to more than 10,000.

More so, it is believed that many defendants are named frequently with no proof of exposure. However, it is still costly for them to obtain a dismissal. The article details a hypothetical analysis that, on average, each defendant spends approximately $5,400 just to determine what the plaintiff is alleging in the complaint. It becomes even more costly to prove the plaintiff was not exposed to the product and dismiss the case. Instead, some defendants and defense counsels opt to settle such cases for a nominal amount, rather than spend time and money to defend the case.

Although settling a baseless case for a few hundred dollars saves defense costs for that case, it can contribute to the problem of over-naming defendants. Plaintiff’s counsel knows they can continue to name a defendant and guarantee a small settlement. They may even name additional defendants in the future, in hope of gaining the same outcome.

The article uses Garlock’s bankruptcy as an example. It is estimated Garlock spent nearly $1.8 billion settling and defending over 700,000 claims, which drove them to bankruptcy. Out of the claims that named Garlock, it is believed the company had real liability in only 0.1% of the filings.

All of this calls to mind the documentary “UnSettled, which was shown at the DRI: Asbestos Medicine conference last November. It featured the owner of Lampe Dodge, a company named as one of 43 defendants in a wrongful death asbestos-related lawsuit. The complaint alleged that the deceased, Leonard Hardeman, was exposed to asbestos from Lampe Dodge. However, Lampe Dodge never sold asbestos-containing products and did not even exist during the time of alleged exposure. The owner was so outraged about the unsubstantiated naming on the complaint, he refused to settle; he was determined to fight. Ultimately, 31 defendants were dismissed and 11 settled, which left Lampe Dodge as the only defendant to go to trial. Of those 11 defendants, the settlement amounts ranged from $2,500 to $50,000, for a total of $165,750. After four years of defending the case, the defense costs and fees for Lampe Dodge was nearly the same as the total settlements from the other defendants — showing just how expensive it can be to fight a case in which a defendant feels the naming was wrong in the first place.

It seems fighting a case in which a defendant has no liability, or paying a small amount just to settle, can have dire consequences to a company from a financial perspective. Can this paradigm be stopped or changed? Shining a spotlight and increasing the conversation around it can be the first step to halting the phenomenon of naming companies that had no part in a plaintiff’s injury.

KCIC continues to analyze the pattern of defendant companies named on complaints. The next analysis will be discussed in our 2017 Asbestos Litigation Report, set to be released in March. Stay tuned …

[1] 2017 statistics based on asbestos related complaints received by KCIC.

Lauren Osterndorf

About Lauren Osterndorf

 Lauren Osterndorf manages projects that involve insurance coverage litigation and settlement, development of claims processing procedures and systems, and complex analysis of claims and insurance. Lauren is involved in all aspects of client's needs and understands how claims data impacts litigation and forecasting.

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