Johns-Manville Form 10-K for 1978: Legal Proceedings (1979)

The cover and "Item 5. Legal Proceedings" of Johns-Manville's annual report to the Securities and Exchange Commission for the year ended December 31, 1978. As of March 1, 1979, the company was a defendant in 1,370 suits over the health of people exposed to its asbestos fiber or products; it had settled or otherwise disposed of 279 cases, and of eleven tried, five went for the plaintiff and five for the company. The average paid in the 290 cases disposed of was "less than $20,000." The company told investors the suits would "not materially adversely affect" its financial position.

What it shows

The filing describes the typical case as a failure-to-warn claim and answers it with the company's central defense: "The Company maintains that there was no basis for any warning until publication of scientific studies in 1964, following which appropriate warnings were given." It adds that during the years of heavy exposure "the Company, government officials and medical and scientific authorities" believed insulation workers' dust levels "presented no appreciable hazard." Two months before this filing, in January 1979, a J-M public relations executive had told the chairman that the company's public positions did not match the facts, including the position that it lacked knowledge of cancer hazards before 1964 (Linke to McKinney, 1979).

The section lists the cases with the most money at stake: about 500 former Raybestos-Manhattan employees in New Jersey, 309 of them seeking $1,000,000 plus $1,000,000 in punitive damages each; suits by J-M's own workers at Pittsburg and Lompoc, California, each plaintiff seeking $10,000,000 in punitive damages; a Manville, New Jersey case seeking $500,000,000 per plaintiff; and indemnity claims by a former company contract physician who had been sued by J-M employees for not telling them they had lung disease. Seven suits were brought as class actions, including one for workers at the Todd Pacific and Long Beach Naval shipyards seeking the defendants' profits from asbestos sales since 1938, "estimated by the plaintiffs to exceed $1 billion."

Insurance and punitive damages

The company said its insurance would cover what it might have to pay "with the possible exception in some cases of punitive damages directly alleged against the Company and the direct actions by employees and former employees of the Company." It gave its opinion that punitive damages, "if any, will not be material," and that for its own employees workers' compensation was the exclusive remedy. A handwritten note at the foot of the copy appears to mark this as the first mention of punitive damages.