Johns-Manville Board of Directors Minutes on Asbestos Litigation and Insurance (1980–1982)

Excerpts from the minutes of six meetings of the board of directors of Johns-Manville Corporation and, after the company's reorganization in late 1981, its new parent Manville Corporation, between July 31, 1980 and August 4, 1982. They record the Legal Department's reports on the asbestos suits and the insurance litigation, the chairman's reports, and at the last meeting the creation of a Special Committee of directors to assess "the potential future impact on the Corporation of pending and anticipated asbestos health cases," including "the possible need for creation of materially large reserves."

What it shows

July 31, 1980. At the board's meeting at the Old Baldy Club in Saratoga, Wyoming, G. E. Parker, senior vice president for law, and R. B. Von Wald, corporate counsel, reviewed the Legal Department and gave "a detailed analysis of the Company's asbestos health litigation." The charts they used are written up separately in this set.

March 6, 1981. Chairman John A. McKinney reported that the company had received defense verdicts "in four consecutive trials" since the start of the year and that management meant "to continue to vigorously defend these cases," with a larger trial staff. He also reported on a meeting with Dr. Irving Selikoff of Mount Sinai Hospital. The minutes do not say what was discussed.

July 30, 1981. Von Wald "reviewed all aspects of the asbestos related health litigation, pending, threatened and potential, the applicable insurance coverage and the ability of Johns-Manville Corporation to meet those liabilities." Parker and Von Wald again reported on the legal proceedings, including the insurance litigation.

February 5, 1982. McKinney described talks with the insurance brokers Marsh and McLennan about settling the litigation and buying more insurance, and "the negative impact on possible settlement opportunities of the insurance company litigation."

March 5, 1982. The board authorized management to settle J-M's coverage litigation with the Home Insurance Company "as Management deems appropriate."

August 4, 1982. Parker reviewed the growth of the asbestos suits since 1975, how they had been disclosed in the company's filings with the Securities and Exchange Commission, and projections of asbestos disease by former Health, Education and Welfare Secretary Califano, Dr. Selikoff and others. Von Wald described a Litigation Analysis Group of inside and outside counsel, which had decided "some time ago" that the company needed to project the future growth of the suits. McKinney told the board that the outside consultants had reported their findings to counsel within the past week, and the results were presented. On his recommendation the board created a Special Committee, J. P. Schroeder (chairman), W. F. May, W. D. Tucker and C. J. Zwick, to oversee a review of the consultants' work and to report on reserves and "the strategic and financial options available to the Corporation" if new cases came at the forecast rates. The board then approved a news release announcing the studies and the committee.

Beside the public statements

Between these meetings the company told investors, in its 1980 filings, that its liability could not be estimated and that it was optimistic about its defenses. The minutes show the board hearing about the company's ability "to meet those liabilities" in July 1981, and in August 1982 setting up a committee to weigh large reserves and other options. Three weeks later Manville filed for reorganization under Chapter 11.