USA: Supreme Court setback to companies with asbestos liabilities

Companies seeking to limit asbestos liabilities suffered a setback in the U.S. Supreme Court, which on 10 March 2003 ruled that railway workers from Norfolk Southern Corp. can win damages for their fe…

Companies seeking to limit asbestos liabilities suffered a setback in the U.S. Supreme Court, which on 10 March 2003 ruled that railway workers from Norfolk Southern Corp. can win damages for their fear of contracting cancer. The court voted 5-4 to uphold a USD 4.9 million award to six retired workers who took Norfolk Southern to court under a federal law that governs employee lawsuits against railroads. The workers all have the disease asbestosis, which can lead to cancer. Norfolk Southern officials were still assessing the decision but expressed their dismay. “Unfortunately, the ruling allows people who are not likely to contract cancer to collect damages due to their alleged fear of cancer,” said Susan Terpay, a Norfolk Southern spokeswoman. A stronger possibility of contracting cancer “must necessarily have a most depressing effect upon the injured person,” Justice Ruth Bader Ginsburg, who was treated for colon cancer, wrote for the court. “Like the sword of Damocles, he knows it is there, but not whether or when it will fall.” Many workers who have been exposed to asbestos and who have lung disease have successfully based claims on a fear of developing cancer. A study by the US insurance industry in 2002 concluded that asbestos claims already have cost U.S. companies as much as USD 275 billion, and more than 60 companies, including W.R. Grace & Co. and Owens Corning have been forced into bankruptcy by asbestos liabilities. Norfolk Southern officials were not expecting the ruling to result in a substantial increase in the number of asbestos claims filed, Terpay said, because it was specific to people who had asbestosis. “We don“t see a significant financial impact,” she added. The ruling applies directly to cases filed under the Federal Employers“ Liability Act, which affects railroads. However, lawyers representing both companies and employees said before the ruling that the justices“ reasoning may influence courts considering asbestos cases filed under state law. Terpay said Norfolk Southern was conscious that the ruling stressed the need to address the increasing burden of asbestos lawsuits. Congress is considering legislation to reduce that burden. One proposal would set medical criteria to decide who can sue over asbestos exposure; the other advocates creation of a trust fund to pay claims.