Owens Corning

ALTHOUGH OWENS Corning, organized in 1938, sold less than 1 percent of all asbestos products, by 2000 it had been driven to bankruptcy by the settlement of 243,000 asbestos-related claims, with more claims pending. Owens-Illinois manufactured and sold Kaylo, a high-temperature calcium silicate pipe insulation which contained asbestos, from the late 1940s through the early 1950s. At that time Owens Corning agreed to sell the asbestos product. In the late 1950s, Owens Corning purchased Kaylo assets and began to manufacture and sell the product.

Following indications of potential health problems, Owens Corning, Johns-Manville, and other asbestos products manufacturers put warning labels on their products, and in 1972 Owens Corning removed asbestos from Kaylo, although it did continue to make that product with only calcium silicate. In 1980, the Occupational Safety and Health Administration (OSHA) began to require warnings on products that contained asbestos and to regulate their use.

In 1978, two shipyard workers who had developed asbestosis, an asbestos-related lung disease, filed a class-action lawsuit on behalf of 5,000 other workers against Toledo, Ohio -based Owens Corning and 14 other asbestos producers. The suit claimed these companies knew the hazardous nature of the mineral as early as 1938 but did not do enough to protect people working with it.

Huge settlements were awarded in asbestos-related suits, including an $18 million award for punitive damages to each of three New York victims. The amount was said to have been settled on because [Page 597]the number 18 symbolizes life in Hebrew. There was an additional $1.2 million in compensatory damages awarded in this case. Johns-Manville, who had an estimated 40–50 percent share of U.S. asbestos liability, filed for bankruptcy in 1982.

Over the next few years, companies with asbestos-related liabilities and their insurance carriers formed and disbanded organizations in attempts to control fallout from the issue. More of these manufacturers filed bankruptcy, and Owens Corning took its second major reserve ($1.1 billion) on its financial balance sheet with which to pay litigants in 1996.

Also in 1996, Owens Corning filed a Racketeer Influenced and Corrupt Organizations (RICO) suit against three testing laboratories, claiming the Mississippi, Louisiana, and Alabama companies manipulated medical tests so they would give false indications of asbestos injury. At the time the suit was filed, Owens Corning stated they had paid $2.6 billion for asbestos claims. This included some of the 40,000 claims which were from allegedly false lab reports.

In July 1997, Owens Corning acquired Fibreboard, another manufacturer of asbestos products. They filed suit against tobacco companies four months later, claiming that asbestos workers who smoked had a much higher rate of asbestos injury than those who did not, and asked that the tobacco companies be required to pay part of the settlements. This claim was dismissed by a Mississippi Circuit court in 2001. By the middle of 2000, Owens Corning had resolved over 243,000 asbestos claims and had another 27,000 pending. With these financial draws on the company and a weakening economy, Owens Corning's long-term debt grew to over $2 billion in 2000. The 62-year-old company filed for Chapter 11 bankruptcy on October 5, 2000.

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