Big Three Automakers Take Hit in Asbestos Litigation

A bid by U.S. automakers to consolidate thousands of asbestos-related lawsuits into the bankruptcy proceedings of an automobile parts manufacturer failed on Friday.

A bid by U.S. automakers to consolidate thousands of asbestos-related state-level into the bankruptcy proceedings of an automobile parts manufacturer failed on Friday.

Ford Motor Co., General Motors Corp., the Chrysler arm of DaimlerChrysler AG and a number of other companies, including Volkswagon, BMW and Honeywell, asked U.S. District Court Judge Alfred Wolin to consolidate as many as 20,000 asbestos-related injury and illness claims into the bankruptcy proceedings of Federal Mogul Corp. The claims, related to asbestos found in brakes, target 31 companies, and represent nearly all asbestos-related lawsuits against the automakers. Wolin ruled that he did not have jurisdiction to grant the request, and noted that such a move would hurt Federal Mogul's bankruptcy case. He also noted that consolidation would disrupt asbestos claims in state courts that are nearing trial.

If the order had been granted, the automakers planned to argue the claims should be dismissed as a group for lack of scientific evidence. An attorney for the automakers said that the ruleing will be appealed, but had no further comment.

Federal-Mogul Corp. on Oct. 1, 2001, filed for financial restructuring under Chapter 11 in an effort to separate its asbestos liabilities from its operating potential. Federal-Mogul subsidiaries in the United Kingdom also filed for Chapter 11.

In a statement, the company said the filings enable Federal-Mogul "to develop a plan to resolve its asbestos liabilities."

Federal-Mogul is one of more than 30 companies involved in asbestos-related litigation to voluntarily file for Chapter 11 since 1982. Ten companies involved in asbestos-related litigation have filed since January 1, 2000.

Honeywell received more bad news on Friday. A New York state jury awarded $53.5 million to the family of Stephen Brown, who died of illnesses related to his asbestos exposure. The jury ruled the family was entitled to damages from Bendix, a former unit of AlliedSignal, which has since merged with Honeywell.

Forty-seven other firms were involved in the asbestos lawsuit, with Honeywell's portion of the verdict being a little over $1 million, or 2.3 percent.

"This is completely covered by insurance," said a spokesman for Honeywell, which took out an insurance policy of more than $2 billion to cover asbestos liabilities. The spokesman added the company expects the verdict to be overturned.

by Sandy Smith (ssmith@penton.com)

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