Law professor’s testimony key in asbestos legislation

As Congress considers a landmark piece of legislation that would require greater transparency across the bankruptcy trusts established to compensate current and future asbestos personal-injury victims, a UB Law School professor’s expertise has proven to be crucial to the discussion.

Associate Professor S. Todd Brown, whose scholarly writings have included articles on the use of bankruptcy to resolve asbestos personal-injury litigation, testified on May 10 before the Subcommittee on Courts, Commercial and Administrative Law, part of the House Judiciary Committee. At issue is the Furthering Asbestos Claim Transparency (FACT) Act of 2012, which was introduced in April by Rep. Ben Quayle, R-Ariz.

Since the 1980s, more than 100 asbestos defendants have used federal bankruptcy law to manage their liabilities from asbestos products they manufactured or installed, resulting in 60 privately managed trusts that assume the corporations’ liability in asbestos lawsuits. The bill would require these trusts to file quarterly reports with the bankruptcy court and the U.S. trustee, listing each demand received from a claimant and how the claim was resolved, but limiting personal information to that normally required of creditors in bankruptcy generally. The legislation has been placed on Congress’ Union Calendar for consideration by the full House; the Judiciary Committee has recommended passage of the bill.

The Judiciary Committee’s report on the bill cited an article by Brown in the Columbia Business Law Review, as well as his testimony. “Fraud and abuse have been uncovered in virtually every compensation and relief program undertaken in modern America, whether privately funded or government sponsored,” the report stated, citing Brown’s testimony. It further noted: “As Professor Brown has observed, asbestos trusts are not ‘magically different’ from other compensation trusts; that asbestos trusts’ audits have uncovered no fraud whatsoever suggests that their internal controls are lacking.”

Brown argued that transparency is “sorely needed” in the asbestos trust compensation system to protect the interests of future asbestos victims.

Brown joined the Law School faculty in 2009. His recent scholarship focuses on the constitutional limits and institutional dynamics of aggregate litigation, including bankruptcy and federal multidistrict litigation. Most recently, he revisited the longstanding debate over the elevation of bankruptcy courts to Article III status following the Supreme Court’s decision in Stern v. Marshall, and outlined a basic institutional framework for understanding and controlling specious claim filings in global mass tort settlements.

At UB Law School, he also directs the Center for the Study of Business Transactions.