Mold has been the subject of much discussion lately within the insurance industry, as well as by others affected in their own right, such as lawyers, environmental consultants and consumer groups. And it seems like every time the subject comes up, it doesn't take long for someone to chime in that mold is the 'next asbestos.' It's not. While mold is certainly a cause for legitimate concern by the insurance industry, there are several reasons why the stars are not aligned for mold to warrant such an ambitious label.
Before examining these reasons, consider what it will take for mold, or any toxic tort, to become the 'next asbestos.' According to an April 10, 2002 article in The New York Times - front page and above the fold - American companies and insurers have spent over $30 billion to defend and settle asbestos lawsuits. Moreover, The Times cites industry analyst predictions that the total bill for asbestos could exceed $250 billion.1 If mold is going to be the 'next asbestos,' it certainly has big shoes to fill.
1. The Volume Of Mold Claims Will Not Enable Duplication Of The 'Asbestos Business Model'
There are numerous factors that have caused asbestos litigation to reach the dollar levels that it has. Most significantly is the unparalleled volume of claims. This has resulted in a fundamental change in the entire approach to litigation - to the tremendous advantage of plaintiffs. The number of mold claims, on the other hand, will not reach the same stratospheric heights as asbestos. Therefore, mold will not provide plaintiffs with the same tactical advantages that they have been able to exploit so successfully in the asbestos arena.
Faced with thousands, and sometimes even hundreds of thousands of asbestos cases pending against an insured, along with dozens of other defendants, not to mention the associated defense costs required to navigate such litigation labyrinths, insurers have been left with little choice but to apply novel approaches to the problem. To avoid becoming suffocated by the volume of asbestos cases, the interested parties, with the complete blessing, if not at the insistence, of courts, have been forced to dispense with some of the traditional requirements of tort law. Enter the 'global settlement' - the biggest thing to happen to tort law since Helen Palsgraf decided to take the train to Rockaway Beach.2
In a global asbestos settlement, hundreds, if not thousands, of asbestos cases are resolved with-out strict proof that a plaintiff's asbestos-related injury was caused by exposure to a specific defendant's asbestos or asbestos containing product. Instead, generally speaking, causation will likely be deemed satisfied as long as there is an overlap between the plaintiff and the defendant's asbestos or asbestos containing product being present at the same location. Never mind that the asbestos at issue may not have been friable or, if it was, that the plaintiff may not have been in a position to actually inhale the specific settling defendant's asbestos. Never mind that the amount paid by the defendant to settle, compared to other settling defendants, may not be in equal pro-portion with the extent of exposure by the plaintiff to the two settling defendants' asbestos. And never mind that the plaintiff's decision to smoke a couple of packs of Lucky Strikes a day for 30+ years might have had something to do with that shadow on the chest x-ray, if there is even a present injury at all.
Provided that a plaintiff's case has enough evidence to defeat the defendant's theoretical motion for summary judgment on lack of causation - which, by the way, will likely be deposition testimony of the plaintiff, recalling the details of specific workplace events from 40 to 50 years ago - it will likely make it into the global settlement. There is a price that must be paid to resolve a backlog of thousands of asbestos actions, and this sleight of hand approach to causation is it.
Herein lies the secret (although it is certainly not a secret) to the success of asbestos for plaintiffs' attorneys - the asbestos business model. Individually, each asbestos case may have several weaknesses that would prevent it from being economically worthwhile to pursue. But when thousands of such cases are filed against a single defendant, it becomes an extremely daunting and expensive task to identify such weaknesses. What's more, if the cases can not be dismissed on motion for summary judgment, then any insurer wishing to take a hard-line position on non-meritorious claims is forced to try each and every case individually (to the probable displeasure of the trial judge, who is likely being judged him or herself on how many cases he or she clears off the docket). The result is the global asbestos settlement.
To be fair, the global asbestos settlement is not without consideration for insurers either. In exchange for settling multiple cases in this manner, insurers are relieved of the tremendous defense costs that would be incurred if each case were to be separately handled, on its own, start to finish. As well, insurers are also relieved of the risks of taking their insured's cases to trial. Time and time again it has been proven that even a defendant with a strong case on both causation and damages is rolling the dice when putting an asbestos case before a jury. Not to mention, if there was an offer to settle before trial that was rejected, the insurer is also risking potential liability for the excess verdict. These are the benefits of the bargain for an insurer that agrees to settle a case for, say, a few thousand dollars, even if the payment feels like extortion.
Additionally, insurers that enter into global settlements typically must be satisfied that they are receiving an adequate discount from the plaintiffs. After all, the insurers are agreeing to settle cases earlier than they would otherwise be scheduled for trial, with significantly reduced effort and expense on the plaintiffs' part and pursuant to this relaxed standard of causation. However, lots of companies achieve success by selling their products cheap and making up the difference in volume. Given the extraordinary number of cases in their "inventory" (yes, this is actually the term that asbestos plaintiffs' attorneys use to describe their clients), asbestos plaintiffs' attorneys can afford to follow this same business model.
On the other hand, mold does not lend itself to hundreds of thousands of plaintiffs suing dozens of defendants through the use of form complaints and other pleadings and cookie-cutter discovery (more on this in reasons 2 and 3). Therefore, mold is not likely to provide the plaintiffs bar with the ability to attempt to settle such claims en masse, based on fictional causation and other corner-cutting of decades of jurisprudence that has attempted to keep the tort playing field level.
Instead, mold claims are much more likely to have to be litigated in the more traditional manner. In other words, plaintiffs' attorneys will have to incur significant effort and expense to prepare each case for trial or settlement. If each mold suit must be 'worked-up' in the traditional manner, then it is unlikely that such claims will...