Did a Cost-Benefit analysis lead to a $322 million asbestos verdict?
The popular press is giving a lot of attention to an asbestos verdict out of Mississippi last week. The Mississippi jury awarded a single defendant $322 million dollars in a lawsuit brought against Union Carbide Corporation and Chevron. (The breakdown was $22 million in compensatory damages, and $300 million in punitive damages.) The plaintiff was an oil field worker who mixed drilling mud with raw asbestos fibers. The reason this verdict is interesting to me isn’t because the jury awarded a large sum of money, but because of why the jury did so. Part of why the jury did so may be because of a handwritten note that indicates one of the defendants engaged in a cost-benefit analysis that concluded it was OK to give people cancer as long as the profit exceeded the cost of the ensuing lawsuits.
First, the note contains the statement that “ACGIH et al asbestos is a carcinogen!" (That's the American Conference of Industrial Hygienists.) Next, it contains the statement "Asbestos - causes cancer." So the author of the note knew that asbestos causes cancer. No surprise there, since this memo was written in 1983 and the carcinogenic properties of asbestos had been known for many decades by that point.
The surprise comes at the handwritten formula the author used to determine whether or not to sell a carcinogenic product. Fans of the movie Fight Club might remember the scene in which Edward Norton discusses “The Formula.” I couldn’t find a link to that scene on Youtube, but I found a very clever video that uses a custom animation along with the original dialog from the film. Go ahead and watch it – I’ll wait.
In Fight Club, the auto manufacturer doesn’t recall a defective vehicle if the cost of the recall is less than the cost of litigation. Here, someone decided to sell a known carcinogen because it believed it was more profitable to sell the product and settle lawsuits than it was to either reformulate the product or exit the market:
Defenders of cost/benefit analyses always point out that EVERY product carries with it certain risks of injuring consumers. That’s true, and there can be a legitimate use for such an analysis. But they are only appropriate if the product actually has enough utility to justify the sale of the product. Raw asbestos is so incredibly dangerous that it simply should not be sold regardless of whether doing so is profitable.
Now, I wasn’t privy to all of the evidence introduced in this trial. The jury may not have considered this to be an important piece of evidence. I suspect that it was because it was forwarded to a friend of mine by a member of the trial team. Here’s the entire note in PDF format.
