Court Opinion

ID: 9472960
Source: CourtListenerOpinion
Date Created: 2023-08-05 04:15:39.793426+00
Date Added: 2024-06-11T17:43:14.868466
License: Public Domain

CLARK, Chief Judge, with whom GEE, GARZA, POLITZ and E. GRADY JOLLY, Circuit Judges, join,
dissenting.
The nub of the disagreement with the majority opinion lies in its essential premise that justice is too abstract, too all-encompassing a concept to serve as a basis for supplanting state substantive law in diversity cases. Therefore, the aim of this dissent will be to develop the values that support the premise that existing precedent creates a duty to ask the Supreme Court of the United States to instruct us on whether federal common law should be applied in this litigation.
The majority labels this a “Mississippi diversity case.” While this is literally accurate, it is misleading. Jackson is a seminal case that will control the rights of untold thousands of litigants in this court. The panel opinion cannot form a proper premise for dissent, for, like the majority, it too gave less than adequate consideration to the impact of the unprecedented volume of the asbestos litigation in the federal court system. The number of the claims is already legion and increasing at a geometric rate. Compensation for these actions, most of which are founded on the concept of liability without fault, must be paid by a finite and indeed limited group of business entities and insurers. These facts prevent consideration of James Leroy Jackson’s case in isolation. They also preclude our dealing with Jackson and his cohorts as a group of litigants whose cases should be governed by Mississippi law under ordinary diversity principles. The only just resolution this court can achieve here is to certify to the United States Supreme Court under 28 U.S.C. § 1254(3) the question of whether *1330federal common law must be developed to govern this uniquely interdependent mass of tort litigation.
I
In the fifteen years since the filing of the first suits, the field of asbestos litigation has exploded.1 We are confronted with an already astronomical and still growing number of plaintiffs seeking individual recoveries against a finite pool of assets belonging to a relatively small group of defendants. Because the insidious diseases giving rise to these claims have latency periods ranging up to forty years, the injuries of many plaintiffs will not become manifest for years to come. There is a real and present danger that the available assets will be exhausted before those later victims can seek the compensation to which they are entitled.2 This threat is exacerbated by inconsistent state policies pertaining to many elements of litigation. The clearest sources of this danger are the two major concepts at issue here: the availability of punitive damages and the propriety of restricting the accrual of each of the many distinct diseases that can result from asbestos exposure to the actual date of manifestation. In this unique context,' the continued case-by-case implementation of these policies on an inconsistent basis will permit initial plaintiffs, through disproportionate awards, to consume the only assets available to compensate later-filing but equally deserving plaintiffs.
Each of the many states touched by this litigation has a strong interest in ensuring that its citizens receive full compensation, regardless of when their individual claims accrue. Uncompensated victims could directly or indirectly burden the state itself. However, no state can control the tort law of another. A state seeking to protect its own citizens can only shape its law to maximize the recovery of its own early plaintiffs, so that at least those individuals will not be impeded in the legal scramble for a share of insufficient assets.
We do not deal here with a question of limited scope and impact such as the application of a state statute of limitations governing breach of trust actions as did Guaranty Trust3 on which the majority relies. As Justice Frankfurter pointed out, even before Erie such statutes generally governed diversity suits.4 Rather, we confront a sequence of massive tort claims that has unparalleled geographic and financial dimensions. We confront cases where the application of divergent governing principles can destroy the rights of similarly situated claimants. We confront no less than a challenge to our purpose as courts.
II
Just as the rote application of inconsistent state laws cannot resolve this problem, so too, any action by this inferior appellate court alone would be ineffective. Our creation of a federal common law to govern asbestos actions within the Fifth Circuit would only eliminate inequities among federal claimants in the area we serve. Courts outside our jurisdiction could continue to apply disparate policies. The question of resolving a proper federal common law rule must be certified to the Supreme Court of the United States — the only judicial forum capable of providing the right answer.
III
Modern strict liability and, indeed, almost all tort principles are products of state law. *1331Since Erie Railroad v. Tompkins state law principles have governed diversity trials. This dissent invokes no departure from that well established rule. However, there is equally authentic authority that federal forums must impose an overarching rule to accomplish justice in litigation where the application of inconsistent rules generated by states with conflicting interests can consume the purpose of the state law itself.5 Even in diversity cases we do not become courts of the states. That is why, with fidelity to the decision of the Supreme Court to apply state substantive law in diversity cases, it is necessary to remember that we always retain the duty to perform our tasks under our system of federalism.
The instances where the formulation of federal common law is justified are “few and restricted.”6 Federal common law only governs situations where “our federal system does not permit the controversy to be resolved under state law, either because the authority and duties of the United States as sovereign are intimately involved or because the interstate or international nature of the controversy makes it inappropriate for state law to control.”7 Here the competing state interests presented by the nationwide flood of asbestos litigation place this case well within the second category as the interstate nature of the controversy makes the application of state law inappropriate.
IV
The majority concludes that federal common law is available to resolve an interstate conflict only if the essential conflict is between the states as “discrete political entities.” I respectfully disagree. This conclusion ignores Justice Burger’s statement that the application of federal common law is not precluded in all matters involving only private citizens.8 It is inconsistent with Hinderlider v. La Plata River and Cherry Creek Ditch Co., 304 U.S. 92, 58 S.Ct. 803, 811, 82 L.Ed. 1202 (1938), the companion case to Erie in which Justice Brandéis announced the continuing vitality of federal common law under the proper circumstances.9 Hinderlider itself was an action to enforce private rights of a Colorado corporation.
The basis for Hinderlider was an earlier water apportionment case, Kansas v. Colorado, 206 U.S. 46, 27 S.Ct. 655, 665-67, 51 L.Ed. 956 (1906). In Kansas, the Court ruled that an interstate dispute over the water in a nonnavigable stream was necessarily subject to federal common law because there was no viable means of resolving the conflict under state law. Therefore, the Court was obliged to formulate a body of federal common law to “settle that dispute in such a way as will recognize the equal rights of both and at the same time establish justice between them.” Id. at 667.
Although both Hinderlider and Kansas specifically addressed the apportionment of water, their underlying rationale governs the equitable division of any scarce resource between citizens of different states where conflicting state interests make the use of either state’s law inappropriate. The asbestos cases present this precise quandary. The finite pool of assets avail*1332able to satisfy an infinite number of claimants is an. identical value to the limited water available to serve many riparian owners.
An equitable resolution of this nationwide competition for scarce assets is surely as important to the basic interests of federalism as the equities invoked to justify the formulation of a common law of nuisance to resolve the dispute between the several bordering states over the pollution of Lake Michigan.10
V
Although certainly not presuming to tell the Supreme Court what course of action to take, it is appropriate, in seeking instructions, to say what divides us. We are not just divided on whether to reach for a single judicial resolution through Supreme Court certification, but also on whether that resolution should be left to state law. Our uncertainty is demonstrated by the conflict between the reasoning of the panel and the en banc majority on the substantive issues posed.
In capsule, the panel found punitive damages inappropriate in a mass tort context. Repeated awards of “smart money” for the same conduct do nothing to deter socially undesirable behavior. The enormous liability imposed by the compensatory awards in these cases has already achieved such deterrence. Aside from the inequity resulting from the fact that some states do not permit such awards, they carry the seeds to ultimately defeat the basic purpose of product liability law — to ensure that the manufacturers of a dangerous product, not the injured consumers, bear the costs of the injury. If punitive awards to early-filing plaintiffs exhaust the assets, late-comers or their state health and welfare programs must bear the costs of the injury. These are values that no single-case application of any state’s law can be expected to consider.
The panel opinion also explains that separate accrual dates for a cause of action for each of the diseases which may result from asbestos exposure is vital to ensuring a rational and equitable distribution of available assets. In some cases asbestos exposure does lead to cancer. Present experience indicates, however, that the majority of individuals exposed do not develop the disease. If a plaintiff who does not have asbestos-related cancer is allowed to recover for cancer damage because he finds a medical witness who will opine that there is a reasonable probability that he may later develop the disease, that individual’s damage award will be a windfall if the disease never materializes. That windfall may leave later plaintiffs unable to secure compensation for diseases actually suffered. Without uniform rules to govern this accrual procedure courts cannot ensure that such assets as are available will be distributed to claimants in proportion to injuries suffered. Such claims must mature only as each disease is diagnosed so that each plaintiff may bring separate claims based on facts, not speculation, and receive proper compensation. Only a single source of authority can avoid the destruction of the rights of valid claimants by the application of inconsistent rules generated by forums with inconsistent and competing interests.
VI
The majority says, and we agree, that legislation would be the preferred solution to the dilemma of providing an adequate scheme for the proper distribution of compensation. But Congress has failed to enact any of the asbestos compensation bills proposed to date.11 Courts enjoy no com*1333parable ability to refuse to decide cases brought before them. We must decide Jackson’s claims. But it is not just Jackson’s rights which are at stake. Literally, the rights of tens of thousands of claimants in cases presently being litigated depend on what we do. Untold thousands more who have not yet manifested the symptoms of the insidious diseases that can result from asbestos fibre inhalation also depend upon our decision. We cannot wait to see if the impasse in Congress ultimately will be broken by lawmaking.
The Supreme Court, as the only institution other than Congress capable of imposing the uniformity necessary to resolve this problem in a just manner, should be afforded the chance to deal with the singular problem presented by these cases. That Court has the power to formulate federal common law which will ensure equitable compensation for all claimants. Its ability to address the controlling issues with a single voice is not only necessary for just resolution of pending litigation; it is even more important to expeditious and equitable settlement of claims. A uniform set of rules would not only protect the rights of individual claimants and the effective functioning of the judicial system, but would also aid the efforts of the asbestos companies and their insurers to develop an effective procedure for resolving these disputes on a rational basis without resorting to the courts. The potential for disparate outcomes in the different states could encourage many plaintiffs to remain in the courts rather than resorting to a unified nationwide facility for resolving these disputes.12
Making judicial rules will not preclude legislative resolution. If Congress does decide to act in this area, federal common law declared by the courts would be preempted. However, the possibility of a future legislative solution does not justify a refusal by this court to deal properly with the cases now before us.13
Rather than infringing the perogatives of Congress, immediate unified judicial action would enhance the ability of Congress to address a recognized problem. All the asbestos compensation legislation proposed is premised on the assumption that asbestos manufacturers will provide most, if not all, of the necessary funding. This option will be foreclosed if these assets are exhausted prematurely by excessive awards to current plaintiffs. Moreover, the interests of individual states in protecting their claimants with later maturing disease will be facilitated and any unseemly conflict between state law rules will be eliminated.
VII
Jackson’s legal rights have been a long time maturing. However, the overriding importance of their proper development makes the minor delay in certifying these issues to the single forum that possesses the power to provide an effective remedy relatively insignificant. A Supreme Court decision not to answer the questions certified, or an answer that a federal common law rule should not be applied can be quickly given. Because of the importance of an affirmative substantive response to the myriad asbestos cases confronting the federal courts, any delay resulting from a certification procedure that would deal with the merits certainly would be worth the wait. The decision not to ask is an opportunity irretrievably lost.
Since the majority is unwilling to request instruction, it should not certify the issues proposed to the Supreme Court of Mississippi. This court’s refusal to reconsider en banc its decision in Hansen,14 the issuance of its mandate in that case before today’s case was decided, coupled with loss of any chance to obtain uniform rules from the *1334Supreme Court, eliminate any need to consider such certification. Despite the absence of clear controlling state court precedent as to whether punitive damages should be available in product liability actions and as to whether actions can mature for diseases before they are diagnosed, there can be no doubt that the Supreme Court of Mississippi would hold that Mississippi citizens should not be denied the right to claim punitive damages awards and to seek recovery for probable future diseases equal to the protections of law now accorded to citizens in other states. Any possibility that the Mississippi court would take the approach predicted in the panel opinion is gone.
VIII
The matters discussed in this part are internal to this court and do not involve issues to be certified. Except for the following response to the majority’s discussion of the application of Rule 403 to the trial courts’ rulings on the admissibility of cancer evidence, the panel opinion sufficiently sets forth the reasons why we cannot concur in Part II A.
In Part II A.2 of its opinion the majority addresses the trial court’s ruling admitting cancer evidence. Relevance, probity, and prejudice are dealt with separately as they relate to three issues: (1) the scope of a product liability defendant’s duty to warn and test; (2) damages for mental anguish, and (3) damages due to cancer as a probable future consequence of asbestos exposure. Dealing with these issues as though they could be separated in result produces a tentative ruling that creates confusion without providing meaningful guidance to trial courts in terms of striking the Rule 403 balance. As we have explained above, the majority’s indefinite suggestion is written in the sand. If the Mississippi Supreme Court answers either of the certified questions in the affirmative, they will moot the suggestion.
Rule 403 provides: “Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, — ” The Advisory Committee notes that certain circumstances in a case can call for the exclusion of evidence which is of unquestioned relevance. In explaining the balancing test required by the rule, they classify evidence which might induce a decision on a purely emotional basis as the most harmful. “Unfair prejudice” is expressly defined as an undue tendency to suggest a decision on an emotional basis. Finally, the Committee note requires that consideration be given to the probable lack of effectiveness of a limiting instruction and the availability of other means of proof.
This circuit en banc has considered the application of Rule 403 in a criminal case context, United States v. Beechum, 582 F.2d 898 (5th Cir.1978), cert. denied, 440 U.S. 920, 99 S.Ct. 1244, 59 L.Ed.2d 472 (1979). There, we required courts to look at the “incremental probity” of the evidence in question in analyzing the offering party’s need to make this form of proof and the tendency of the questioned evidence to invite an irrational decision.
Applying these standards, we believe that as to each individual issue, and collectively for this single trial, unfair prejudice — a decision based on emotion not reason — outweighs probity — the need for the evidence to prove Jackson’s case.
As to the first issue — the scope of the defendant’s duty to warn and test — proof that the inhalation of asbestos fibers can cause cancer is clearly relevant, but not the sine qua non of plaintiff’s case. It has only incremental probity. He proved that inhalation of asbestos fibers has produced damaging, life threatening and life shortening consequence in his body. Conceding arguendo that the duty to warn or test could be heightened by the incremental difference in dangerousness of a product that caused only asbestosis as opposed to a product that could cause both asbestosis and cancer, the difference is one of slight degree. In the real world, the duty to warn and test would be substantially identical in either case. The other side of the problem — undue prejudice — flows from the fact that beyond doubt proof of cancer, a *1335dread disease because of its sequela and the lack of medical knowledge to control or cure it, is highly prejudicial and evokes the strongest of emotions. This prejudice must be coupled with the lack of effectiveness of any limiting instruction to eliminate the emotional reaction from the minds of the jury. Looking just at the first issue in Jackson’s case, we submit that as a matter of law the 403 balance should be struck in favor of excluding cancer evidence. In any event, the balance ought not rise or fall with how many witnesses are used to prove the carcinogenic propensities of the product.
Moving to the majority’s second element — the establishment of damages for mental anguish — we note at the outset that in the entire testimony of Jackson and his wife, the only witnesses who testified as to his mental state, neither consideration of an increased risk of contracting cancer nor the probability of contracting the disease was ever mentioned. Clearly, Jackson did not prove that he suffered any mental anguish because his work around and with asbestos had increased his risk of contracting cancer. While an increased risk of cancer could be critical proof where a plaintiff testifies to mental anguish based upon that hazard, Jackson established no need to prove that increased risk in this case.
The majority’s final compartment — damages for cancer as a probable future consequence of Jackson’s past injury — is one that in our view makes this whole discussion academic. If the reasons outlined in the panel opinion are accepted, Jackson’s cause of action for that future prospect has not yet materialized. Rule 403 would say that he should be able to make that proof only when and if he contracts cancer. Alternatively, if, for the reasons set out above, the question of maturity of a cause of action for cancer is certified to the Supreme Court of the United States, any ruling on admissibility of cancer proof under Rule 403 must await that answer. If the federal common law (or Mississippi law under the majority’s proposed certification) permits a present action for a potential disease, it will certainly change the other weighings discussed. If cancer evidence is admitted for any purpose, it brings the hair of prejudice with the hide of probity for all purposes.
IX
In sum, the asbestos-related litigation presents a flood of interrelated actions which cannot properly be decided as individual actions or under the legal rules of any single state. Unless the dependent rights of all present and future claimants are considered by the only forum capable of devising a single appropriate response to basic issues that affect the economic vitality of the compensation fund, disparate awards to early claimants can destroy the courts’ ability to do justice. The asbestos litigation presents one of the few and restricted instances where formulation of federal common law is justified under the strictures defined by existing precedent. Given our statutory right to seek instructions from the Supreme Court, our duty is not done unless we ask. Certification to the Mississippi Court will only produce delay.
X
We should certify the following questions to the Supreme Court of the United States under 28 U.S.C. § 1254(3):
1. Should federal common law limit or prohibit the award of punitive damages in litigation asserting strict liability or negligence rights against manufacturers and distributors of asbestos or products containing asbestos.
2. Should federal common law establish uniform rules for measuring the accrual of latent causes of action for separate diseases related to the manufacture and distribution of asbestos or products containing asbestos?
Because this court declines to so certify, we respectfully dissent.
APPENDIX
DIMENSIONS OF ASBESTOS LITIGATION
No other category of tort litigation has ever approached, either qualitatively or *1336quantitatively, the magnitude of the claims premised on asbestos exposure. By 1981, only eight years after the decision in Borel v. Fibreboard Paper Products Corp., 493 F.2d 1076 (5th Cir.1973), cert. denied, 419 U.S. 869, 95 S.Ct. 127, 42 L.Ed.2d 107 (1974), it had become the largest area of product liability litigation, far surpassing the number of cases generated by the controversies over Agent Orange, the drug DES, the Daikon Shield intrauterine device, or even automobile defects.1 Between the early 1970’s and 1982 the asbestos companies and their insurers expended over $1 billion in litigation expenses, damage awards and settlements.2 This figure does not include the costs incurred by state or federal governments, expenses and compensation in workers’ compensation claims, or the costs resulting from the Chapter 11 proceedings initiated by Johns-Manville, Unarco, and Amatex.3
I. The Claimants
In August of 1982, approximately 21,000 claimants had filed product liability suits alleging asbestos-related injuries. Seven months later by March of 1983, the figure had risen to about 24,000 claimants.4 Currently, new suits are being docketed at an average rate of 500 per month.5
A
There is no single authoritative estimate of the number of asbestos claims that ultimately may be filed. Recognized experts have produced widely disparate figures. Inconsistencies are understandable. Asbestos is pervasive throughout America. In the 1970’s alone the country consumed between 608,000 and 876,000 short tons of asbestos a year.6 The substance is used in over three thousand products commonly found in the home and work environments, including floor tiles, asbestos textiles, insulation, fireproof drapery, heat-resistant surfaces, acoustical ceilings, decorative building panels, and plaster or stucco.7 Any exposure to this substance, even to a relatively minute amount, can precipitate the development of asbestos-related disease.8 In particular, mesothelioma, an invariably fatal cancer, can result from extremely low exposure levels.9 The long latency periods for asbestos-related disease, usually ranging between 15 and 40 years,10 make it difficult to ever determine if all possible claimants exposed within a given time period have been identified. For example, many workers injured by asbestos exposure during World War II are only now filing claims.11
The problem is further complicated by the emergence of new and frequently unanticipated classes of plaintiffs. To date most cases have' been filed by shipyard workers, asbestos product factory workers, and insulation workers. Now new groups of plaintiffs from different points along the line of distribution of asbestos are emerging. Potential claimants include warehouse workers,- truck drivers, longshoremen, and spouses of workers exposed when *1337the worker returned home covered with asbestos dust.12
Another growing area of potential suits arises out of asbestos use in the construction trade. The Environmental Protection Agency estimates that approximately 20% of commercial, residential, apartment, and federal buildings contain friable asbestos,13 — asbestos in a form that can be reduced to powder by hand pressure, permitting the asbestos fibers to become dislodged and airborne.14 Asbestos was used most heavily in construction during the 1960’s,15 until such use was restricted between 1973 and 1978. Most individuals exposed to asbestos in building construction and maintenance will not begin to manifest the symptoms of asbestos disease until after the majority of those exposed during shipbuilding operations have already died.16 There are no firm estimates of the impact of asbestos materials on the occupants of buildings containing friable materials. However, Congress was sufficiently concerned about adverse health effects to mandate the removal of all friable asbestos from school buildings.17 According to the U.S. Department of Education, at least 14,-000 schools will be affected.18
B
Experts do not anticipate that the death rates from asbestos related diseases will begin to level off until after 1990.19 Estimates of asbestos-related deaths also vary widely. The Rand Corporation, in the Costs of Asbestos Litigation,20 a study prepared by its Institute for Social Justice, has summarized the results of the more prominent studies on this issue.
Dr. Irving Selikoff, in a 1981 study for the Department of Labor estimated that more than 21 million living American workers have been significantly exposed to asbestos during the past 40 years.21 More conservative estimates have placed the number of individuals who experienced significant exposure at between eight and eleven million22 or at over thirteen million.23
Dr. Selikoff anticipates 200,000 deaths before the year 2000 because of asbestos-associated diseases.24 Paul MacAvoy of Yale University forecasts excess mortality due to asbestos through 2015 will range between 154,600 and 450,600, with the most probable estimate set at 265,000.25 JohnsManville anticipates only 18,700 excess me*1338sothelioma deaths and 55,120 excess lung cancer deaths through 2009.26 These estimates chart only asbestos-related deaths, not disabilities.
C
Not all individuals who were exposed to asbestos or even all of those who will die of asbestos-related diseases will actually bring suit. The Epidemiology Research Institute has estimated that Johns-Manville faces between 30,000 and 120,000 suits, with 45,000 set as the most probable number.27 Paul MacAvoy has estimated that there will be over 200,000 new suits,28 while Conning and Company has placed between 83,000 and 178,000 by the year 2010.29 Despite substantial differences, all sources support the conclusion that asbestos producers and courts face an unprecedented number of claimants in the years to come.
As latent claims are developing over time, the likelihood that an injured party will go to court is increasing rapidly. Only 3% of the asbestos-related deaths between 1967-1968 resulted in law suits, but by 1975-76, this figure had risen to 32%.30 In estimating the numbers of future suits, experts are assuming that by 1992 all asbestos-related deaths will result in litigation.31 When this increasing propensity to sue is combined with mounting numbers of injured parties the burden on both producers and courts stemming from the asbestos litigation becomes staggering.
II. The Costs
A
The most comprehensive studies of past costs are the two Rand Corporation reports referred to throughout this Appendix.32 These studies calculate that the defendant asbestos companies and their insurers paid claimants and their lawyers approximately $400 million between 1970 and 1982. This figure encompasses trial awards, including punitive damages, and settlements.33 In appraising the economic impact of this figure, the reader must be aware that in recent years jury verdicts have been demonstrating a pronounced upward trend.34 Moreover, this does not include legal fees or litigation expense incurred by the producers themselves.
The average plaintiffs’ verdict after a trial was $388,000.35 The importance of limiting claims to those diseases actually diagnosed is demonstrated by these average jury verdicts: asbestosis — $205,000, lung cancer — $311,000, and mesothelioma— $469,000.36
The Asbestos Litigation Reporter determined that of the 147 asbestos cases tried a total of $39,468,002 in punitive damages had been awarded to 21 plaintiffs.37 The Rand Study also addressed the issues of punitive damages. During the sample period chosen, January 1, 1980 to August 26, 1982, nineteen plaintiffs, 27% of those whose trials resulted in a jury verdict, received a total of $4,934,000 in punitive dam*1339ages. The awards, which ranged from $4,000 to $1 million, averaged $260,000 per plaintiff receiving punitive damages. If this amount was apportioned between all plaintiffs with jury verdicts, the net effect would be to raise each plaintiffs average compensation by $70,000.38 These awards are not only becoming more numerous but also larger. By 1983, the number of punitive awards had risen to thirty.39 Ten such awards, averaging $616,000, have now been returned against Manville alone.40 The multiplication of these awards is demonstrated by a recent case in the Eastern District of Texas where a jury returned a punitive damage award of $1 million to each of the four plaintiffs.41 This one verdict almost equals the awards given over the entire period studied by Rand.
The Rand study also demonstrated how a state with liberal laws governing punitive damages effectively can gain a disproportionate share of assets through these awards. Citizens of Pennsylvania, whose laws encourage punitive awards,42 received two-thirds of the almost $5 million awarded during the eighteen month period studied.43 While only 14% of the plaintiffs nationwide whose trials began in the relevant period received punitive awards,44 34% of the Pennsylvania plaintiffs in this group were given punitive damages.45
B
The ultimate punitive liability which confronts the asbestos companies cannot be predicted reliably. Many studies have estimated the total liability confronting the industries and its insurers. Their estimates vary as widely as those attempting to predict the number of future deaths or law suits. The Rand study describes the results of three such studies. Paul MacAvoy anticipates a future compensation liability between $8 billion and $87 billion, with $38 billion as the most likely sum.46 Conning and Company has placed future liability for the insurance industry arising from asbestos exposure within the range of $4 billion to $10 billion.47 Manville Corporation, in its Chapter 11 proceedings, has estimated its own future liability at a minimum of $2 billion,48 but the presiding bankruptcy judge has observed that there are many indications that this figure is too conservative.49 The New York Academy of Science has estimated the social costs of the death and disability resulting from asbestos exposure at between $39 billion and $74 billion over the next 25 years.50
It is unclear whether these figures encompass liability arising from the use of asbestos in buildings. At present, removal of this material is mandatory only in schools. A recent study by the U.S. Department of Education estimates this involves some 14,000 schools and that removal costs will reach $1.4 billion.51 At least forty school districts have filed suit against the asbestos companies to obtain compensation for the removal of the asbestos. Many of these suits are also seeking millions of dollars in punitive awards.52
*1340III. The Defendants
This liability confronts a relatively small group of asbestos companies and their insurers. On the average, twenty defendants are named in each suit. Although more than three hundred different corporations have been sued, liability is actually focused on a very small group. Sixteen corporations are named in at least half of all the suits. Another group of fifteen are in one-quarter to one-half of the suits.53 Accordingly, the bulk of the 300 defendants play a minimal role in the overall amount of litigation.
Most asbestos producers claim to be covered by insurance for part or all of their exposure. About fifty insurers have some involvement, but only about twelve can be characterized as deeply involved in this controversy.54 The likely number of asbestos claims ultimately covered by insurance is uncertain in light of the widespread ongoing litigation over the coverage provided by the policies in question.55
No available assessment totals the combined assets of the asbestos defendants and their insurance companies. However, the Commercial Union Insurance Company, in their amicus curiae brief supporting a petition for certiorari in Insurance Company of North America v. Keene Corp., has estimated that the net worth of the insurance companies involved to be $9.7 billion and that of the asbestos companies as $25.6 billion, for a combined total of $35.3 billion.56 This is less than most of the liability estimates described in Part II B. Man-ville, the largest of the producers has an estimated net worth of only $1 billion dollars.57
IV. The Courts
Asbestos-related litigation is proceeding in at least forty-eight states. The largest proportion of the cases filed to date is found in those states where the shipbuilding industry is centered. On a national basis, slightly more than half of the claims closed by August of 1982 were filed in federal court. In two of the five states generating the most litigation, New Jersey and Texas, over 90% of the closed claims were brought in federal court, while in California and Pennsylvania, also within that group, over two-thirds of the closed claims were filed in state courts. All federal courts together have tried about 10% more suits than state courts.58 According to the Administrative Office of the Courts, as of June 30,1980 the asbestos cases were divided among the district courts in each circuit as follows:59
5th Circuit — 39%
1st Circuit — 24%
2d Circuit — 8%
4th Circuit — 8%
3d Circuit — 7%
6th Circuit — 4%
9th Circuit — 3%
11th Circuit — 3%
7th Circuit — 2%
Less than 1% of the cases are pending within the 8th, 10th, and D.C. Circuits.
V. An Industry Response
The asbestos producers and their insurance companies, under the guidance of Dean Wellington of Yale Law School recently have agreed to establish an Asbestos Claims Facility designed to settle claims arising from asbestos injuries. The Facility, would be a national institution to evaluate the existence and extent of asbestos-related physical impairment for each claimant. It would also assess the liability of those companies belonging to the Facility, *1341and consider any applicable defenses and setoffs. The terms of the agreement establishing the Facility also provide for the member insurance companies to reimburse the asbestos companies for claims paid according to a prescribed formula.60

. For the reader's convenience, factual information detailing the current volume of this litigation and its projected future impact has been placed in the Appendix.

. The reality of this danger is emphasized by the fact that three asbestos companies including Johns-Manville, the dominant figure in the industry, have entered Chapter 11 bankruptcy proceedings. All have cited the projected liabilities from the products suits liability as their reason for filing bankruptcy. In re Johns-Manville Corp., 36 B.R. 743, 745 (Bkrtcy.S.D.N.Y.1984); In re Amatex Corp., 30 B.R. 309, 310 (Bkrtcy. E.D.Pa.1983); In re U.N.R. Industries, Inc., 29 B.R. 741, 743 (N.D.Ill.1983).

. Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945).

. Id. at 1470.

. On the day Justice Brandeis wrote in Erie Railroad Co. v. Tompkins, "There is no federal general common law," 58 S.Ct. 817, 822 (1938) (emphasis added), in Hinderlider v. La Plata River and Cherry Creek Ditch Co., 304 U.S. 92, 58 S.Ct. 803, 811, 82 L.Ed. 1202 (1938), another case between private parties, he also wrote: "whether the waters of an interstate stream must be apportioned between the two states is a question of ‘federal common law’ upon which neither the statutes nor the decisions of either state can be conclusive."

. Wheeldin v. Wheeler, 373 U.S. 647, 83 S.Ct. 1441, 1445, 10 L.Ed.2d 605 (1963).

. Texas Industries, Inc. v. Radcliff Materials, 451 U.S. 630, 101 S.Ct. 2061, 2067, 68 L.Ed.2d 500 (1981).

. Miree v. DeKalb County, 433 U.S. 25, 97 S.Ct. 2490, 2496, 53 L.Ed.2d 557 (1977) (Burger, C.J., concurring).

. See Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 84 S.Ct. 923, 939, 11 L.Ed.2d 804 (1964).

. Illinois v. City of Milwaukee, 406 U.S. 91, 92 S.Ct. 1385, 1393-94 & n. 6, 31 L.Ed.2d 712 (1972).

. Asbestos Workers Recovery Act of 1984, S. 2708, 98th Cong., 2d Sess. (1984); Occupational Disease Compensation Act of 1983, H.R. 3175, 98th Cong. 1st Sess. (1983); Product Liability Act, S. 44, 98th Cong., 1st Sess. (1983); Occupational Health Hazards Compensation Act, H.R. 5735, 97th Cong., 2d Sess. (1982); Asbestos Health Hazards Compensation Act, S 1643, 97th Cong., 1st Sess. (1981); Asbestos Health Hazards Compensation Act, H.R. 5224, 97th Cong., 1st Sess. (1981).

. See Appendix at 13 for a discussion of the alternative dispute resolution mechanisms proposed by the asbestos companies and their insurers.

. See Illinois v. City of Milwaukee, 92 S.Ct. at 1395.

. Hansen v. Johns-Manville Products Corp., 734 F.2d 1036, 1040-42 (5th Cir.1984) (declaring that Texas state law controlled the availability of punitive damages).

. Nat’l L.J., Oct. 19, 1981, at 1, col. 1; id., Aug. 18, 1980, at 1, col. 1.

. Kakalik, Ebener, Felstiner, Haggstrom, & Shanley, Variation in Asbestos Litigation Compensation and Expenses v. (Institute for Civil Justice, Rand Corp. 1984) [hereinafter Variation in Asbestos Litigation Compensation and Expenses ].

. Id.

. Kakalik, Ebener, Felstiner, Haggstrom, & Shanley, Costs of Asbestos Litigation 12 (Institute for Civil Justice, Rand Corp. 1984) [hereinafter Costs of Asbestos Litigation ].

. Asbestos Litig. Rep. (Andrews) 9,101 (Oct. 19, 1984); see also Special Project, An Analysis of the Legal, Social, and Political Issues Raised by the Asbestos Litigation, 36 Vand.L.Rev. 573, 580-81 (1983).

. Special Project, supra, note 5, 573, 578 n. 7, (citing to Asbestos Litig. Rep. (Andrews) 181-82 (Apr. 27, 1979)).

. Id.

. Selikoff, “Asbestos-Associated Disease," in Asbestos Litigation 21, 48 (W. Alcorn ed. 1982).

. Id. at 36.

. Costs of Asbestos Litigation, supra note 4, at 3.

. Id.

. Selikoff, supra note 8.

. Asbestos in Buildings: A National Survey of Asbestos-Containing Friable Materials 2-3 (Environmental Protection Agency 1984).

. Id. at 1-1.

. Id. at 7-20.

. Washington Post, Asbestos’ Toll, Sept. 17, 1984, at C 1, col. 1 (quoting Dr. William Nicholson, an expert on asbestos related diseases).

. 20 U.S.C. § 3601(a)(3)(6). See Report of the Attorney General on Asbestos Liability, House Comm. on Education & Labor, 97th Cong., 1st Sess. (1982).

. Asbestos Litig. Rep. (Andrews) 8,147 (April 20, 1984).

. Special Project, supra note 5, at 580.

. Supra, note 4, at 8-11.

. Costs of Asbestos Litigation, supra note 4, at 9, (citing to I. Selikoff, Disability Compensation for Asbestos-Associated Disease in the United States, Environmental Sciences Laboratory, Mt. Sinai School of Medicine of the City University ' of New York (1981)).

. Special Project, supra note 5, at 580 n. 13 (citing National Cancer Institute and National Institute of Environmental Health Sciences, Estimates of the Fraction of Cancer Incident in the United States Attributable to Occupational Factors 1-2 (draft summary Sept. 11, 1978)).

. Occupational Health Hazards Compensation Act of 1982: Hearings before the Subcomm. on Labor Standards of the House Comm, on Education and Labor, 97th Cong., 2d Sess. 132 (1982) (statement of Mr. Harvey Martens, executive vice president, Commercial Union Insurance Companies, Inc.) (cited in Special Project, supra note 5, at 580 n. 13).

. Costs of Asbestos Litigation, supra note 4, at 9 (citing to Selikoff, supra note 22).

. Id. at 10 (citing to MacAvoy et al. "The Economic Consequences of Asbestos-Related Disease,” Yale University School of Organization and Management, Working Paper No. 27 (January 1982)).

. Walker, Projections of Asbestos-Related. Disease 1980-2009, Final Report, (Epidemiology Resources, Inc. 1982) (cited in Costs of Asbestos Litigation, supra note 4, at 11).

. In re Johns-Manville Corp., 36 B.R. 743, 746 (Bkrtcy.S.D.N.Y.1984).

. Costs of Asbestos Litigation, supra note 5, at 10, citing MacAvoy, supra note 20.

. Conning & Company, The Potential Impact of Asbestos on the Insurance Industry (1982) (cited in Variations in Asbestos Litigation Compensation and Expenses, supra note 2, at 4).

. Costs of Asbestos Litigation, supra, note 4, at 9.

. Id. at 10 n. 14.

. Variation in Asbestos Costs and Litigation, supra, note 2; Costs of Asbestos Litigation, supra note 4.

. Costs in Asbestos Litigation, supra note 4, at 17.

. N.Y. Times, January 10, 1983, D-2, col. 1 (cited in In re Johns-Manville, 36 B.R. at 746).

. Variation in Asbestos Litigation Compensation and Expenses, supra note 2, at 21.

. Id. at 30.

. Special Project, supra, note 5, at 707 n. 853 (citing Asbestos Litig. Rep. (Andrews) 5663-71 (Oct. 8, 1982)).

. Id. at 50.

. Brownstein, Asbestos Litigation: A Legal Nightmare That Congress is Being Asked to End, 15 Nat’l J. 1942, 1946 (1983).

. In re Johns-Manville, 36 B.R. at 746.

. Asbestos Litig. Rep. 9,169 (Andrews) (Nov. 2, 1984).

. Surrick, Punitive Damages and Asbestos Litigation in Pennsylvania: Punishment or Annihilation, 87 Dick.L.Rev. 265, 280-83 (1983).

. Variations in Asbestos Litigation Compensation and Expenses, supra note 2, at 71.

. Id. at 50.

. Id. at 71.

. Costs of Asbestos Litigation, supra note 5, at 10.

. Id.

. In re Johns-Manville, 36 B.R. at 746.

. Id.

. Special Project, supra note 4, at 581 n. 21.

. Asbestos Litig. Rep. (Andrews) 8,147 (April 20, 1984).

. Asbestos Litig. Rep. (Andrews) 9,253 (Nov. 16, 1984).

. Costs of Asbestos Litigation, supra note 4, at 12.

. Id.

. See Special Project, supra note 4, at 709-73.

. Asbestos Litig. Rep. (Andrews) 4364, 4367-69 (Jan. 8, 1982).

. Afelli, Management by Bankruptcy, Fortune 69, 69 (Oct. 31, 1983).

. Costs of Asbestos Litigation, supra note 4, at 10.

. Letter from David Cook of the Administrative Office of the United States Courts to Judge Charles Clark (Sept. 4, 1984).

. Asbestos Claims Facility Goes Public: Wellington Negotiations Succeed in Round One, 2 Alternatives to the High Cost of Litigation 2-5 (1984).