CSR Faces Asbestos Lawsuits in US and Australia ----------------------------------------------- Published October 03, 2002 CSR Ltd. reports that claimants alleging personal injuries due to exposure to asbestos have named it and several CSR GROUP entities as defendants in litigation in Australia and the United States. Claimants generally seek compensatory and punitive damages. Australia Asbestos Litigation The involvement of CSR and its subsidiaries in asbestos litigation in Australia arises from the mining of raw asbestos fiber by one of CSR's subsidiaries, as well as the sale by CSR and by certain of its subsidiaries of asbestos-containing products. Claimants include former employees, contractors and carriers of raw fiber, and users of asbestos products. The first claim naming CSR or a subsidiary as a defendant in Australia was asserted in 1976. As at March 31, 2002, CSR and its subsidiaries had been named in approximately such 1,700 claims, of which, 141 were commenced in 1997, 87 in 1998, 72 in 1999, 28 from January 1 to March 31, 2000, 140 during fiscal 2001, and 121 during fiscal 2002. At March 31, 2002, approximately 988 Australian claims had been settled and a further 170 had been dismissed voluntarily or by a successful CSR defense and the total costs of settlements and judgments were approximately A$82 million and legal and related fees totaled about A$42 million. There has been a single punitive damages award, in the Rabenalt case, which was against a subsidiary in the amount of A$250,000. It was entered in 1989. At March 31, 2002, there were approximately 558 asbestos claims pending against CSR and its subsidiaries in Australia. U.S. Asbestos Litigation The involvement of CSR and its subsidiaries in asbestos litigation in the United States arises from sales of asbestos fiber mined by an Australian subsidiary of CSR and sold by CSR acting as its subsidiary's sales agent. The last such sale occurred in 1966. Prior to 1990, the vast majority of the asbestos claims against CSR were commenced by or on behalf of employees of Johns Manville Corporation, the principal purchaser of asbestos fiber sold by CSR as sales agent for its subsidiary. Plaintiffs generally claimed exposure to such fiber during the course of their employment at the Johns Manville plants where the fiber was used in the manufacture of certain asbestos cement pipes. In the early stages of the litigation, settlements by CSR of U.S. asbestos claims for the most part involved Johns Manville Plant-worker Claims. CSR has entered into a number of global settlements of such claims with various claimants' counsel. Beginning in late 1990, CSR began to be named as a defendant in U.S. lawsuits brought by persons alleging occupational exposure to finished asbestos products, particularly specialty gasket material and asbestos cement pipe. CSR has defended itself from the claims, saying: (1) there is no evidence that asbestos fiber supplied by CSR was incorporated into the particular products to which these claimants were allegedly exposed; (2) there is no personal jurisdiction over CSR; (3) CSR did not owe a duty to warn users of finished products manufactured by Johns Manville, a sophisticated and knowledgeable asbestos company in its own right, of the potential consequences under certain circumstances of the inhalation of asbestos fiber; and (4) any alleged failure by CSR to warn Johns Manville of such potential consequences was not the cause of claimants' injuries. CSR believes that the primary reason for its inclusion in the claims is the bankruptcy in 1982 of John Manville and the consequent unavailability of a full remedy against Johns Manville for injuries allegedly caused by its products. The first U.S. asbestos claims naming CSR or a subsidiary as a defendant were asserted in 1980. As at March 31, 2002, CSR and its subsidiaries had been named in approximately 3,000 plant-worker claims and approximately 128,000 finished product claims. Of the approximately 3,000 plant-worker claims, 48 were asserted in 1997, 23 in 1998, 25 in 1999, 0 from January 1 to March 31, 2000 28 during Fiscal Year 2001, and 39 during Fiscal Year 2002. As at March 31, 2002 approximately 2,848 plant-worker claims had been settled or decided and 150 were pending. As at March 31, 2002 the total of the cost of settlements and judgments was approximately A$77 million. Of the approximately 128,000 finished product claims, 4,655 were asserted in 1997, 9,829 in 1998, 4,120 in 1999, 172 from January 1 to March 31, 2000, 1,359 in fiscal 2001 and 14,165 in fiscal 2002. As at March 31, 2002, approximately 125,384 finished product claims had been settled or decided and 2,121 were pending. As at March 31, 2002 the total of the cost, both paid and committed, of settlements and judgments was approximately A$57 million. The total defense costs, relating both to plant-worker claims and finished product claims, was approximately A$44 million. The only judgments entered to date against CSR in the US asbestos litigation occurred in August 1993 in the Abrams case in Mississippi. That case involved Johns Manville Finished Product Claims by nine shipyard workers claiming exposure to Johns Manville gasket material allegedly containing fiber supplied by CSR as sales agent. In that case, a jury verdict was entered against CSR in favor of four of the former shipyard workers for compensatory damages totaling US$2,150,000 and punitive damages totaling US$215,000. In addition to deciding the claims of the nine shipyard workers, the jury in Abrams also decided certain common issues with respect to approximately 6,700 of the approximately 16,000 claims then pending against CSR in Mississippi. The jury found that the Johns Manville gasket material had been used at the shipyard where the claimants were employed; that CSR may be liable for injuries caused by such material; and that punitive damages in the amount of 10 percent of compensatory damages were appropriate against CSR. CSR has reached settlements of all claims made in Mississippi with various claimants' attorneys. While the attorneys' clients have the right to opt out of the settlement, it is CSR's belief that relatively few, if any, claimants will choose to do so, and none has done so to date. An integral part of the settlement agreement provided for and resulted in the shipyard worker specific and common issues verdicts being vacated. Although claims have been brought against CSR in 34 states, the bulk of the claims have been Finished Product Claims in four particular states: Mississippi (16 percent), West Virginia (19 percent), Texas (26 percent) and Ohio (20 percent), each as at March 31, 2002. Each of these states permits so-called "mass trials" of claimants' claims. Although CSR does not believe these or other Johns Manville Finished Product Claims are meritorious, given their large number; the risk of adverse rulings, particularly in mass trial states; and the costs of defending the claims, CSR in July 1995 and May, 1996, settled a total of 17,056 West Virginia claims for US$6,329,900; in March, 1996, settled 32,100 Texas claims for US$10,572,694; in April, 1996, settled 18,319 Mississippi claims for US$13,300,000, and in March and April 1997 and in August 1999 settled 14,735 Ohio claims for US$2,397,550. CSR has continued to move to settle such claims where the prevailing circumstances cause it to believe that it is commercially advantageous to do so. CSR has entered into a number of agreements with various claimants' counsel pursuant to which the parties will attempt to resolve the counsels' future claims on an agreed upon basis prior to litigation. At March 31, 2002, there were approximately 2,271 asbestos claims pending against CSR in the United States. Insurance Issues On March 3, 1995, in settlement of litigation commenced by CSR and for the assumption by CSR of certain indemnity and other obligations, CSR received an undissected lump sum payment of A$100 million in full and final settlement of all present and future claims CSR has or may have had against certain insurers issuing liability policies to it from 1955 to at least 1978. Subsequent to the settlement of these coverage and damages claims, CSR and its subsidiary Rinker Materials commenced litigation in the United States District Court for the District of New Jersey against other insurers that issued policies to CSR from approximately 1979 to 1986, seeking, among other things, coverage for US asbestos claims against them and damages. Some of the insurers then commenced their own litigation against CSR and Rinker Materials in the Supreme Court of New South Wales, seeking, among other things, a declaration that the insurers have no obligation to provide any such coverage. The Supreme Court of New South Wales issued a preliminary injunction barring CSR and Rinker Materials from prosecuting the U.S. coverage suit without further order of the Supreme Court of New South Wales. CSR and Rinker Materials successfully appealed to the High Court of Australia against that injunction. The High Court lifted the injunction and ordered that the proceedings commenced in New South Wales be stayed pending the outcome of the U.S. coverage suit. On April 24, 2001, the New Jersey court denied motions brought by the insurers to stay or dismiss the US action. Discovery is continuing and no trial date has yet been set. COMPANY SNAPSHOT CSR Ltd (OTC: CSRLY) 9 Help St., Level 1 Chatswood, New South Wales 2067 Australia Phone: +61-2-9235-8000 Fax: +61-2-9235-8044 Web site: http://www.csr.com.au Employees : 16,057 Revenue : $ 3,725,600,000 Net Income (Loss) : $ 294,800,000 Assets : $ 4,240,900,000 Liabilities : $ 2,051,600,000 No. Of Asbestos Claims : 2,829* (For the year ended March 31, 2001) (*As of March 31, 2002) Description: CSR Ltd is a maker of construction and building materials. It also refines sugar (about 10% of sales), but it plans to sell that business. Most of its revenue comes from materials such as concrete pipe, plasterboard, pre-mixed concrete, roof tile, cement, and clay brick. CSR has also sold its timber operations and divested a large chunk of its aluminum business. The company is focused on increasing its presence in the United States, mainly through acquisitions such as its planned purchase of aggregates producer Kiewit Materials Co. CSR operates about 650 plants in Asia, Australia, New Zealand and North America. ------------------------------------------------------------------- LitigationDataSource.com