Future of W.R. Grace Hinges on Unique Legal Strategy

Trying to determine the best way to emerge from bankruptcy and face the 100,000 asbestos claims forged against the company, asbestos insulation manufacturer W.R. Grace and Company is betting on a unique strategy that’s rarely been used by other companies facing staggering losses due to asbestos.

While most industrial companies have paid out billions of dollars in compensation to those harmed by exposure to asbestos, Grace is asking a bankruptcy judge to declare many of the claims filed against the company to be invalid.

According to an article in the Washington Post, in order for Grace to exit bankruptcy, “the judge must rule on what liabilities the company faces, and that means deciding how many of the claims are valid and what they might total. The judge’s decision does not resolve the individual claims, but it could set a standard for further litigation.”

“This case and this trial present the first opportunity for a federal court to set a standard on the basis of which the tens of thousands of asbestos claims that are being pursued can be resolved based upon their merit,” said David Bernick, a lawyer representing Grace who has a long history defending companies against similar lawsuits.

Experts claim that Grace is taking a great risk by using this strategy. Basically, the judge will decide whether the company emerges from bankruptcy and continues or whether control of the company shifts to the asbestos claimants.

Opposing lawyers say Grace’s move is “flawed” because it is defying a decade of tradition in which state courts with juries have settled asbestos lawsuits on a case-by-case basis.

“I don’t think anybody would dispute that a personal injury claimant would be entitled to a jury trial,” said lawyer Roger Frankel. “That’s being done away with this approach. And you can do that if you get the consent of the claimants. But you can’t do that over their objection.”

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