RETHINKING THE LANDSCAPE OF TORT REFORM: LEGISLATIVE INERTIA AND COURT-BASED TORT REFORM IN THE CASE OF ASBESTOS*

Justice System Journal, 2007 by Barnes, Jeb

On its face, the asbestos case seems a quintessential example of the obstacles to enacting major tort reform in the United States, even when judges repeatedly ask for legislative relief and tort law is demonstrably costly and inconsistent. However, a closer look reveak that, since the early 1980s, judges and lawyers have been implementing "court-based tort reform": the creative use of existing rules and procedures to alter the litigation process. Understanding this institutional capacity, in turn, broadens leading conceptions of the landscape of American tort reform in terms of both the possibilities for change and the politics of change.

Judges have been urging Congress to pass major asbestos litigation reform for years. In 1991 the Judicial Conference called for "congressional action to establish a national asbestos claim resolution system" (Judicial Conference, 1991:31). InAmchem Products v. Windsor (1997), Ortiz v. Fibreboard ( 1999), and Norfolk & Western Railway Co. v. Ayers (2003), the Supreme Court reiterated the need for federal action, arguing that "the elephantine mass of asbestos cases . . . defies customary judicial administration and calls for national legislation" (Ortiz:821).

Following the 2004 elections, Congress finally seemed poised to act (Stern, 2004, 2005). On April 13, 2005, Senator Arlen Specter (R-Pa), chair of the Senate Judiciary Committee, announced he was "very close" to reaching an agreement on the Fairness in Asbestos Injury Resolution Act (the FAIR Act), which proposed to replace tort litigation with a $140 billion no-fault trust fund that would compensate asbestosinjury victims according to detailed medical criteria. Senator Patrick Leahy (D-Vt), ranking Democrat on that committee, one-upped his colleague's enthusiasm, stating, "I think we are very, very close to a bill." Wall Street shared the senators' optimism, as stock values of companies with significant asbestos-litigation exposure, such as Armstrong Holdings and Owens Corning, jumped over 80 percent (Higgins, 2005).

Almost immediately, however, opposition emerged (Stern, 2006). Conservatives warned that the trust would grow and become a permanent fixture in the federal bureaucracy. Liberals argued that the bill was underfunded and overly restrictive and that it tilted toward big business. Another sticking point was that the FAIR Act would allow victims to return to court upon the trust's insolvency, a real possibility given the difficulty of estimating future asbestos claims. The United Auto Workers reportedly called this provision "essential" (White House Press Bulletin, 2005). Some insurers and business groups balked, arguing that it would deny them certainty about future asbestos liability.

By summer, opposition had hardened (Inside OSHA, 2005). Long before hurricanes Katrina and Rita blew many initiatives off Congress's agenda and the Senate turned to the confirmation of two Supreme Court justices, Senate Minority Leader Harry Reid (D-Nv) quipped, "If anyone thinks they can bring up the asbestos bill and get it passed, I think we can get them a magic show in Las Vegas" (Knight, 2005). Reid was right. Although proponents were able to push the bill out of committee, the FAIR Act was defeated in a procedural vote on February 14, 2006.

The demise of the FAIR Act was "déjà vu all over again" (CQ Weekly, 2003). Over the past thirty years, Congress has consistently failed to enact major asbestoslitigation reform, despite a growing expert consensus that asbestos litigation is woefully inefficient and fails to serve other values, such as deterring corporate misconduct or providing individualized treatment to victims (Kakalik et al., 1983; Hensler et al., 1985; Carroll et al., 2002, 2005). In the absence of federal legislation, the states have taken some action, passing damage caps and other laws that seek to deter or delay the filing of lawsuits. These piecemeal measures, however, do not change the structure of the litigation process; they merely aim to reduce the volume of cases.

On its face, the case of asbestos seems to illustrate a recurrent theme in the scholarly literature on the battle over tort law in the United States: once it takes hold, the litigation process is very difficult to replace, even when it is inefficient and unpredictable (Burke, 2002, 2001; Kagan, 2001, 1994; Barnes, 1997; see also Hathaway, 2001). The point is not that tort reform is impossible; rather, reforms will tend to work only at the margins, as they seek to reduce the amount of litigation while preserving core attributes of the tort system that engender cost and uncertainty, such as juries, open-ended rules, and adversarial contestation and dispute resolution.

This article challenges this conventional interpretation and argues that legislative inertia tells only part of the asbestos story. Since the early 1980s, judges and lawyers have been implementing "court-based tort reforms"-the adaptation of existing rules and procedures by lawyers and judges to change the standards and enforcement mechanisms governing who decides, who pays, how much, and when. Most strikingly, judges and lawyers have used these tools on an ad hoc basis to create independently administered trust funds with their own rulemaking power and funding sources, actions typically associated with legislatures, not courts. The point is not an academic quibble over the proper description of the case of asbestos. Court-based tort reforms have not merely worked at the margins of asbestos-injury compensation. They have altered its structure in both pending and future cases and affected the resolution of hundreds of thousands of claims and the distribution of billions of dollars. Moreover, court-based tort reforms have had significant political implications, casting a shadow over attempts to create a comprehensive federal response to what has been called "the worst industrial accident in U.S. history" (Cauchon, 1999:4).