Johns-Manville Form S-7 Registration Statement for $100 Million in Notes: Litigation (1979)

The cover and the "Litigation" section of the registration statement Johns-Manville filed with the Securities and Exchange Commission on April 20, 1979, to sell $100,000,000 of notes due 1985. The section describes "numerous legal actions" over asbestos-containing products without giving their number, repeats that the average paid in 290 cases disposed of was "less than $20,000," and reports that "Twelve cases have been tried; of the last eight cases tried, six have resulted in verdicts for the defendants." It concludes that the pending cases "will not have a material adverse effect" on the company.

What it shows

The S-7 condenses the litigation section of the 10-K filed a few weeks earlier for investors buying the notes. Where the 10-K gave 1,370 suits, the S-7 says "numerous," and it reports trials differently: the 10-K counted eleven trials (five plaintiff verdicts, five for the company, one awaiting decision on appeal), while the S-7 gives twelve and the last eight. The Legal Department's August 1979 chart lists the same twelve trials as six verdicts each way.

The company said it had "substantial defenses," "resulting in part from its prompt warnings of possible hazards" after "the 1964 publication of scientific studies linking pulmonary disease in insulation workers to asbestos exposure." As in the 10-K, it said insurance would cover what it might owe, with the possible exception of punitive damages and suits by its own employees, and that punitive damages would not be material.

G. Earl Parker, J-M's vice president and general counsel, is named on the cover as agent for service, with a copy to William D. Tucker, Jr., of Davis Polk & Wardwell.