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The bankruptcy courts have been a notable forum for resolving cases en masse, beginning with the pathbreaking Manville Trust^s In 1988, after six years under court supervision, Johns-Manville Corp. emerged from bankruptcy 50% owned by a trust charged with compensating current and future asbestos liability claimants. Administrative procedures were developed to streamline claims handling. The trust's operating expenditures are only 5% of benefits paid, and lawyers representing claimants cannot charge more than 25%. Thus, claimants receive 70% of what the trust pays out. Unfortunately, though, the amounts paid are quite low, since the assets of the trust have only been adequate to pay 5% to 10% of full value. The system became a model for other, solvent companies. Congress also codified the process for a bankrupt firm to resolve its liability for all pending and future claims via such trusts.' In short, some observers believe that through such innovations "asbestos litigation was transformed in fact - although not in form - into a quasiadministrative regime."'

Most recently, some corporations, including Halliburton, Honeywell and the European-based manufacturer ABB, have presented plans by which claims are to be resolved by the bankruptcies of their subsidiaries rather than the parent corporation, which would then be able to carry on freed of asbestos liabilities. This would make use of the 1994 bankruptcy law amendment, but leave the parent corporation solvent and still in control of its operations (unlike the Manville model, which put control of the whole corporation under the trust).8

Finally, many had expected eventually to come to a final resolution of most cases by "global" settlements. However, the two prominent asbestos settlements that were fully litigated up to the Supreme Court were overturned there.9 The key features of the Georgine settlement were (1) definitive criteria for proving exposure and illness, in a simplified and expedited process, (2) standardized compensation for actual illness only, (3) preservation of the right to compensation later if disease (or worsened disease) occurs later, (4) a cap on attorney fees, and (5) a limited right to opt out and rely on one's ordinary right to sue. These settlements were rejected for not meeting the requirements for establishing class actions under Federal Rule of

'Daniel Gross, "Recovery Lessons from an Industrial Phoenix," New York Times, Apr. 29, 2001, Business Section, p. 4.

' Section 111 of the Bankruptcy Reform Act of 1994 (P.L. 103-394).

' RAND report, p. 26.

s Susan Warren and Alexei Barrionuevo, "Halliburton to Settle Asbestos Claims," Wall Street Journal (Dec. 19, 2002), pp. A3, A6. A recent ruling has cast doubt on the efficacy of this strategy. See Russell Gold and Goran Mijuk, "ABB Fails to get Court Approval for Asbestos Plan," Wall Street Journal (Dec. 3, 2004), pp. A3, A8.

9Amchem Products v. Windsor, 521 U. S. 591 (1997) [also known as the Georgine case] and Ortiz v. Fibreboard, 527 U.S. 815 (1999). See Deborah Hensler, "As Time Goes By: Asbestos Litigation after Amchem and Ortiz," Texas Law Review, v. 80, no. 7 (June 2002), pp. 1899-1924.

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