January 14, 2003 - Automakers Lose Court Ruling In Asbestos Case
DETROIT -- The U.S. Supreme Court on Monday ruled against U.S. automakers in an asbestos case decision that potentially could cost them $100 billion.
In a separate ruling, the court refused to consider ordering a class-action lawsuit for 60 million owners of Ford Explorers and Firestone tires.
The court refused to allow General Motors, Ford Motor and DaimlerChrysler to move thousands of asbestos-related cases to federal bankruptcy court rather than face hundreds of state judges and local juries.
Some 15,000 auto mechanics and factory workers are suing the automakers, complaining they were exposed without warning to cancer-causing asbestos brake pads.
Dealing with cases individually could cost automakers hundreds of millions of dollars in legal costs and expose them to $100 billion in damage claims.
Automakers had sought to have the cases moved to federal bankruptcy court, where parts maker Federal Mogul is operating under Chapter 11 bankruptcy protection after it became the target of asbestos cases. Plaintiff lawyers handling the cases have moved from suing bankrupt parts companies to the deeper-pocketed automakers.
Having seen several suppliers brought to their knees over asbestos, the automakers are fighting together, represented by Chicago attorney David Bernick. Following the Supreme Court ruling, he hopes to get a state judge to hear arguments that there is no scientific evidence linking asbestos brake pads and cancer.
Perhaps agreeing with that assessment, Wall Street isn't taking the threat to automaker profits very seriously.
''You can't ignore asbestos liability,'' says Scott Sprinzen, Standard & Poor's auto analyst. But, he adds, ''The nature of exposure to plant workers and mechanics makes it hard to prove liability.''
The tire case goes back to the 2000 recall of millions of Firestone tires on Ford Explorers after hundreds of accidents in which tires lost tread and the SUVs rolled over.
The plaintiffs who had sought class-action status own Explorers and Firestone tires but suffered no injuries or property damage.
Plaintiff lawyers now will seek class-action status in state courts. They expect to be before judges in Arkansas and California in the next few weeks.
Their cases charge that the owners were harmed because they paid too much for products that weren't as safe as advertised and that they were put at risk of injury or death.
Mississippi attorney John W. ''Don'' Barrett said he didn't expect the Supreme Court to overturn a federal appeals court decision last year against the class-action status. But he said plaintiff lawyers hope a state judge will certify a class action that would allow plaintiffs from any state to participate.
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