News Coverage
US law firms target Hardie
Published February 19, 2005
BESIEGED building products company James Hardie Industries is lobbying politicians in the US and Australia in a desperate attempt to win protection from an expected avalanche of US asbestos disease claims.
Hardie has engaged top-dollar Washington lawyers to persuade Congressmen to pass legislation to set up a $140 billion statutory "no fault" scheme to provide for the asbestos victims.
The company's strategy is to throw its weight behind President George W. Bush's crusade to take asbestos litigation cases out of the US courts by trying to ram the legislation through Congress this year.
The proposal is aimed at reining in the litigation that has destroyed more than 70 former asbestos companies in the US and put scores more into court administration, with a total cost to business of at least $US54billion ($68 billion) in three decades of asbestos lawsuits.
That fate could now threaten Hardie after The Australian revealed this week that the company exported Australian-manufactured asbestos building products and brake linings to the US from the 1960s to the 1980s, and that for the first time an American has won a secret payout from Hardie's former Australian asbestos subsidiary.
US plaintiff lawyers are gearing up for more lawsuits against Hardie and the trust it set up in 2001 to compensate victims of the asbestos products it manufactured in Australia until 1987.
The head of one of the largest and most effective of these firms, which deals exclusively in asbestos litigation, Steven Kazan, told The Weekend Australian his office already had two claims against Hardie.
They are separate from the lawsuit revealed by The Australian on Monday, which was being handled by a different US legal firm.
Mr Kazan said his firm intended to run a raft of claims against Hardie and the trust, seeking payouts of several million dollars in each case. This would be in line with the norm in the US, where compensation awards for asbestos cancer cases are almost always over $US1 million and occasionally top $US10 million, compared with an average payout of $250,000 in Australia.
Mr Kazan said he expected that now The Australian had broken the news about the secret payout by Hardie to a US asbestos victim, other US plaintiff firms would mount actions.
He said the asbestos products that Hardie shipped from Australia to the US were now killing and maiming Americans after the usual 20-to-30-year incubation period for the disease between exposure and symptoms. Mr Kazan said Hardie should be seriously worried about a flood of US claims.
While Hardie chief financial officer Russell Chenu this week said the amount of Hardie Australian asbestos product shipped to the US was "modest," Mr Kazan said: "If I were Chenu, I'd be a bit nervous."
Speaking from his offices in Oakland, California, Mr Kazan said: "There's litigation here, and there's no reason for him to think he's not going to get his folks sued.
"He has business here, he sold stuff here, and it's going to cost him money."
The US moves spell potential disaster for the historic and hard-fought provisional agreement signed just before Christmas in which Hardie agreed to pay an estimated $1.5 billion into a special purpose fund for future Australian victims of asbestos disease caused by its products.
While Hardie is now a separate entity from the compensation trust, known as the Medical Research and Compensation Foundation, the company has said it is counting on the MRCF's $130 million or so in remaining assets to go into the pool of funds for Australian victims.
Any diminution of the trust's funds would ultimately come at Hardie's expense, and plaintiff lawyers like Mr Kazan said they were quite happy to sue Hardie companies in the US if and when the trust's money ran out. Hardie has retained the politically plugged-in Washington law firm of Shea and Gardner -- now part of a larger firm called Goodwin Procter -- to handle its litigation in the US.
Shea and Gardner has powerful political connections, mostly on the Republican side of politics.
In his State of the Union address two weeks ago, Mr Bush urged Congress to pass the stalled statutory scheme legislation to eliminate "frivolous" asbestos claims.
Hardie fears it could be inundated with a wave of those sorts of lawsuits.
But for Mr Bush, the former asbestos manufacturers and Hardie to win their case, they must triumph over the fierce opposition of unions, plaintiff lawyers, the Democrats and even some Republicans.
Hardie is also lobbying the NSW Government to protect it from overseas claims, and some legal observers say the Government could conceivably enact legislation allowing only Australians to sue the compensation fund.
A spokesman for NSW Attorney-General Bob Debus said details of the compensation deal, including any legislation, had not been finalised.
But Mr Kazan said that if the NSW Government protected the compensation trust from US claims, he would then sue Hardie in the US -- the company's biggest and richest market, where it has registered subsidiaries.
"Nothing this Government of NSW can do is going to stop us suing Hardie," Mr Kazan said firmly.