Johns-Manville Form 10-K for 1979: Legal Proceedings (1980)

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, 1979. At March 1, 1980, the company was a defendant in 2,857 asbestos health suits brought by about 4,000 plaintiffs; it had been named in an average of 146 new cases a month in 1979, against 66 in 1978. It reported 540 suits disposed of at an average of "less than $15,000 per case, exclusive of legal expenses," 22 purported class actions, and disputes with its insurers, including a suit it filed in San Francisco in March 1980.

What it shows

The filing restates the company's defense at more length. It sorts plaintiffs into three groups (people who handled J-M products, J-M's own employees, and employees of companies that bought J-M fiber) and notes that many in the first group were shipyard workers exposed "particularly during World War II." The company "maintains that there was no basis for product warnings or hazard controls until the results of scientific studies linking pulmonary disease in insulation workers with asbestos exposure were made public in 1964," and that the companies it sold fiber to "had the same limited knowledge" and so needed no warning from J-M.

On its own workers, it reports that a California trial court had let employees sue outside workers' compensation, that an appeals court had reversed, and that the California Supreme Court was reviewing the case; employees would win that right only if they proved "actual fraud on the part of the Company." Of the 22 class actions, eight were brought by J-M employees, including five for the Manville, New Jersey plant.

Insurance

A section headed "Matters Relating to Insurance Coverage" reports disputes with its excess insurers over how its policies should be read, and questions "as to the existence of insurance coverage in the 1934-1946 period." In March 1980 J-M filed a declaratory judgment action in San Francisco; the issues included "the dates of injury or occurrence of asbestos-related disease" and whether the company had met any duty to tell its insurers about asbestos claims. It was also in litigation with two primary insurers over Canadian coverage, and in federal court in Massachusetts over primary coverage for 1934 to 1946.

The company still concluded that its insurance would cover what it owed, apart from possible punitive damages and employee suits, and that the litigation "will not have a material adverse effect." The filing also restates the shareholder suit of May 4, 1979.