By that time, Sullivan was with Pacor. "Pacor started cleaning up its operation -- started to phase out of asbestos whenever it was possible -- in 1969," Sullivan notes. "When I joined the company in 1969, it was doing about $3.5 million in sales," Sullivan recalls. "It was a good healthy company; each year it had some growth. The former president had run a one-man show, but I made everyone accountable, and we went from $8 million in 1977 to $20 million last year. And we could expand further, but why bother? The plaintiffs might take it all away from us."
The troubles began in 1975, when the first lawsuit appeared on Sullivan's desk. "We had heard some suits were being filed against manufacturers," he says, "so it wasn't a complete surprise. But we had no idea what was coming. By 1977, we knew that we were into some real problems." In most of the 1,800 suits filed against Pacor to date (by the time you read this, the number may have passed 2,000), the company is named as one of 15 to 25 defendants, along with manufacturers and other firms that handled the product. In only about 25 cases has the company been sued by former employees.
Approximately 350 of the suits have already been settled."A plaintiff might be 55 years old, with five kids, and eight months to live. Now how do you think a defendant is going to do in a case like that?" asks Sullivan. "So the insurance companies began advising us to settle out of court." Of the 350, only 4 have made it to trial, and none has gone before a jury. "The typical case takes two years, and the negotiations go down to the wire; the attorneys wait until the day they're going to pick a jury, and then they settle it," he explains. The final figure, which the defendants share on the basis of a percentage agreement hammered out in negotiations, has been averaging $85,000. The only alternative has been to ignore the insurance company's recommendation, go to trial, and, in the event of an unfavorable decision, pick up the difference between the award and the proposed settlement.
Recently, some of the big manufacturers have taken their cases to trial, and have even won a few; large firms, or small firms facing a handful of suits, can do that, but the small business confronting a mountain of litigation can't afford the additional risk. Pacor's last insurance policy was canceled in 1979 because of the asbestos problem. "We'd gone through a couple of carriers," Sullivan says. "We'd keep one for a year, then have to go to another one... and another. Now we're not able to do anything except insure ourselves." The coverage he had purchased will take care of legal expenses and damages resulting from about the first 600 suits, but, beyond that, every dollar comes out of Pacor's own pocket.
Sullivan estimates that if the suits don't begin coming in even more quickly over the next five years, Pacor may be able to hold on. "We could make it," he says, "because the settlements would be spread over years. But, I don't care how big you are, you just can't keep spending that kind of money and keep your operation going. There's only so much profit."
Other distributors and insulation manufacturers face similarly grim outlooks. Ted Brodie, the head of an $18 million holding company in the Boston area that owns the New England Insulation Co., has been named in 43 lawsuits. "We're sitting on a time bomb," he says. J. T. Hunter, chairman of the board of Greensboro, N.C.'s Starr Davis Co. Inc., a $13 million firm that handled asbestos insulation, notes, "We've been sued 48 times in the last two and a half years, but only three or four of our suits have come to court, and there has still been no decision against us." And Johns-Manville, the Giant of the industry (1981 revenues, $2.2 billion), has been taking a beating: David Pullen, manager of U.S. government affairs for the firm, says the company now confronts a specter of no less than 11,000 suits.
Everyone, it seems, is suing everyone else. Injured employees are suing distributors and manufacturers; distributors are suing manufacturers; manufacturers are suing insurance companies. Only the attorneys are profiting (generally, the attorney for the plaintiff walks away with half of the settlement or award). The action has become so frantic that plaintiffs' lawyers sometimes mimeograph complaints and mail them off at random. "Half of our suits came out of a shipyard that our company never did any work for," says Brodie. Explains Hunter: "If you're in the insulation business in a certain part of the country, then you are presumed to have been a supplier in any particular situation." But even such groundless suits require expensive legal representation; defense attorneys have to go to court and argue for dismissals.
All of this has made an impossible situation even more painful. "Look," exclaims Sullivan, has frustration surfacing, "I can't sit here and say, 'We're all goodies and everybody that's suing us is wrong.' That's not the case; there are some legitimate suits, and some very sick people out there. The problem is that the people who were really injured aren't being treated fairly; some of them are going to die before these things get to court. And what happens if Pacor goes under? Then there's no money for anyone."
In short, the problem has grown far larger than the available remedies. No one any longer denies that asbestos, when breathed for an extended period, may cause mesothelioma or asbestosis, a respiratory disease that results when asbestos fibers block air passages.Who knew about the danger and how long ago they knew about it varies from company to company, and from telling to telling.James Vermeulen, 55, founder and executive director of Asbestos Victims of America, adopts the hard line: "They knew it was going to kill me before I was born, and they never told me about it," he says. "In 1898, Henry Ward Johns, the founder of Johns-Manville, died of a lung disease that doctors now believe was asbestosis; in 1918, life insurance companies stopped selling life insurance policies to asbestos workers." The charges go on and on, but many of the people made out to be the villains, men like Sullivan, simply had no idea how dangerous asbestos was. If they had, they wouldn't be dying of asbestos-related diseases today.
