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Pharmaceuticals giant Pfizer Inc. announced Friday, Sept. 3, a $965 million settlement to end all current and future asbestos litigation against the company and its Quigley Co. subsidiary. The agreement, which would involve putting Quigley in Chapter 11 protection, is the latest in which a company mired in asbestos litigation decides to settle with plaintiffs lawyers and then file for bankruptcy. ABB Ltd., Congoleum Corp. and Halliburton Co. have used similar prepackaged asbestos bankruptcies in an effort to put their asbestos problems behind them for good. Pfizer acquired Quigley in 1968, and the division sold asbestos-containing insulation products until the early 1970s. The proposed settlement calls for Pfizer to pay $430 million to 80 percent of existing plaintiffs. It will also place an additional $535 million into an asbestos settlement trust that will compensate future plaintiffs as well as the remaining 20 percent of current plaintiffs with claims against Pfizer and Quigley. Of that $535 million, $405 million is in a 40-year note from Pfizer, while $100 million will come from insurance policies. Pfizer will also forgive a $30 million note to Quigley. Pfizer said the proposed settlement had the support of plaintiffs lawyers representing 80 percent of asbestos claimants suing Pfizer and Quigley. Asbestos lawyers who represent a small subgroup of plaintiffs suffering with cancer have typically opposed asbestos settlements, especially those reached in prepack cases, complaining that most of the money goes to plaintiffs with minimal or no real illnesses. Elizabeth Magner, a lawyer who represents 17 such law firms, said her clients are mixed on the Pfizer plan. Some of them support it, while others still have questions. Magner’s group, for example, has appealed the prepack settlement reached by ABB after a bankruptcy and a district court approved it last year. Steven Kazan of Kazan, McClain, Abrams, Fernandez, Lyons & Farrise plc, one of the 17 plaintiffs firms Magner represents, said he supports the Pfizer plan because most of the $535 million in the asbestos trust will be used to compensate plaintiffs with cancer. “The futures trust will focus solely on cancer claimants, rather than give money to those without significant asbestos-related illnesses,” Kazan said. He noted that the settlement trust is set up to pay out $100,000 to cancer claimants but only $250 to plaintiffs diagnosed with asbestosis — thought to be a precursor to more serious illnesses — but without any lung impairment. Pfizer has faced asbestos suits for years, and it’s unclear why the company chose to reach a settlement now. Hamed Khorsand, an analyst at Los Angeles money management firm BWS Financial, suggested Pfizer struck a deal now because it could use the prospect of asbestos reform legislation to its advantage. The legislation would create a global trust fund financed by companies and insurers to compensate all future asbestos personal-injury claims. The fund would pay plaintiffs at a far lower rate than the deals their lawyers can get through litigation. Khorsand said asbestos reform legislation could pass before the elections in November, because the bill’s supporters and its opponents differ by only $5 billion on the amount of contributions that should be made to the fund. Kazan, however, said the prospect of legislation did not affect Pfizer’s decision. “The reality is that Pfizer, through its counsel, approached us,” he said. “Just like for any other company, having certainty is of great value.” Pfizer said it will take a $369 million before-tax charge in the third quarter in connection with the settlement. In February, a Texas jury awarded $5.2 million to the family of a man who died of mesothelioma, a cancer of the outer lining of the lung, after he was exposed to Quigley insulation material in his job at an oil refinery. Pfizer said Quigley was named in 171,611 lawsuits related to asbestos, silica or mixed dust as of July 31. Michael Rozen of Feinberg Group LLP, who had worked as deputy to the special master for the Sept. 11 victims compensation fund, represented Pfizer in the settlement talks. Copyright �2004 TDD, LLC. All rights reserved.

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