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FRICTION MATERIALS STANDARDS INSTITUTE, INC., E 4, PARAMUS, N.J. 07652 MINUTES OF THE ANNUAL M of the FRICTION MATERIALS STANDARDS INSTITUTE. INC. Wednesday and Thursday, June 16 and 17, 1982 at Sawgrass, Ponte Vedra Beach, Florida ACTIVE MEMBERS PRESENT Abex Corporation Bendix Corporation Brasshestos Manufacturing Corporation Certified Brakes, Lear Siegler Company Delco-Moraine Division Guardian Corporation Nutura Corporation P. T. Brake Lining Company, Inc. H. K. Porter Company, Inc. Raybestos-Manhattan, Inc. Reddaway Manufacturing Company, Inc. Thiokol Corporation Virginia Friction Products S. K. Wellman Corporation Wheeling Brake Block Mfg. Co., Inc. OTHERS PRESENT Abex Corporation Bendix Corporation Cougar Automotive Corp. (Regional) Delco-Moraine Division H. K. Porter Company P. T. Brake Lining Company Raybestos-Manhattan, Inc. Reddaway Manufacturing Company Wheeling Brake Block Asbestos Compensation Coalition Legal Counsel Friction Materials Standards Institute REPRESENTATIVES Robert E. Nelson, Vice President Francis E, Messier William Simon, Treasurer Robert J. Andersen Donald L. Emrick Norman Morse Larry DeFrance Stuart Cotnins W. Max Sleeth David E. Cunningham John M. Moore John P. Gallagher Thomas Kennedy Gordon A. Carrigan, President Lee Burgess (6/16) Philip H. Grim, Jr. James W. Armstrong Alex Tqjbori Fred Yost George J. Bohrer Steve Doyle Ben Kublin Donald J. Testa F. William Barton Rob Burgess (6/16) Dave Pullen (6/16) Dennis Ross (6/16) Robert P. Gorman* Counsel Edward W. Drlslane, Secretary Mr. Carrigan, President, called the meeting to order at 1:30 PM, June 16, 1982. As the first order of business, Mr. Carrigan called for a roll call. FMSI 07154 u ( Minutes of Annual Minutes -t June 16-17, I$82 Mr. Robert E. Nelson, Abex Corporation ' Mr. Gordon A. Carrigan, S, K. Heilman Corporation _ ' / ~ Mr. F. William Barton," Reddaway Manufacturing Company ' . -/ . Mr. David E. Cunningham^ Raybestos-Manhattan,"Inc..- Mr.' Carrigan,'President, called;for .hominations" from tbelfloori Mr " I. r Condns offered the name'of^Mr^Iforaan Morse^of/Guardiah^Gorporatira.^ in nomination. Mr. Morse "declined the nominatioii.' J " I '" '` " *'~y' j i rrr ^' r V j.' r ^ Upon motion duly made,* seconded'and unanimously passed, * it was: j 3 c * RESOLVED: That nominations for the'Board of_ Directors be closed. * ................ '" ~ The Secretary was directed to cast one ballot for the election of Mr. Robert E. Nelson, Mr.- Gordon .A. Carrigan,-Mr. F. William Barton, . .. . and Mr. David E. Cunningham to the Board of Directors. ^The Secretary , . advised that the ballotsj had been so cast.,,.The'Presidentf advised that with' the election of these four Directors' that, the Board" had the -. required seven Members. \' ` " . "' "". '" \ `_ . JVi. ` " : ! ="* ' ...... o~ 1 * '' Mr. Messier advised the Membership that it was. the Committee s intention to recommend the following slate, of Officers!for election.at.the'Board r r of Directors meeting following, the. first .Menbership ses.sion: j . .,-' 71- For President . - For Vice President 1 - For Treasurer I ' - For Secretary ,- Mr. Robert E. Nelson ' Mt. Stuart Comins Mr. William Simon. Mr. Edward W. Drlslane HEALTH AND ENVIRONMENTAL AFFAIRS COMMITTEE Mr. Armstrong, Chairman of the Health and Environmental Affairs Committee, presented this report. Refer to EXHIBIT 9. .^ . . Mr. Armstrong noted actions taken by the. Committee and the Institute Office since earlier meetings. ...Be noted in .particular , that concern was rising relative to .litigation in the asbestos area, and proposals ..for Federal, - , Legislation in'the Compensation area.~ . Based on this concern, the Committee ., met with representatives of the. Asbestos Condensation Coalition relative . to its activities, and recommended that a representative of this Coalition .- address the full Membership at this Meeting. He also noted the concern with landfill and waste disposal -requirements. At its meeting, this Committee asked that the Board of ;Directors Approve 8 :y request to the Federal EPA on approved landfills for friction materials ' waste, and asked that the Board suggest the means for making such a . request. Mr. Armstrong reviewed general OSHA and EPA activities In areas of concern to friction materials manufacturers and noted that the Institute had written N10SH for either a final report or a status of the NIOSH contract for "Health Hazards in Brake Lining Repair and Maintenance Workers Occupationally Exposed to Asbestos." FMSl 07155 Minutes of Annual Meeting -8- ,!r, June 16-17, 1982 Mr. Armstrong discussed litigation and it was noted that if an Individual, was covered by workmens compensation, that party then could become a plain tiff in a third party suit against a supplier of asbestos or asbestos prod ucts. The problem with landfills Was that.their-availability..Y^s^dxyi^tg up, and sites and waste, transport eis'' wete-less^ accessiblei ^hii. consideirably.. more ex pensive. The waste' problem "probably 'more'b'f.a chemical. problem with phenols formaldehyde, solvents .and the; like. - It was noted-that representatives of the Asbestos Compensation" Coalitioh were at the/meeting,,and'their presentation' -" might answerJ'nuestiohs',in<thei'iiifeation! dna insurance-ar^as.."b ' ,,"'*r ' . r ` *. *v . fc . * .. ...... V .if . *. . ; Urpon motion duly made, secondrevd, and'unanimously .passed, it was: ... uv. *.c, **csp nu';'-,, RESOLVED: To accept thereport df'the.Healthend Environmental Affairs Committee as written.1' ` *' "V* * . | . 4-- r^ % t O' . .) J ^ *' " ; ASBESTOS COMPENSATION COALITION "~'J ... The President welcomed Mr. Dave; Puileh' bf the^Asbestbs 'Compehsation Coalition to the Meeting/ noting thap Mr./PulTenfha'd_been/irivite'd to addx^ss^ the/Menijership after' earlier con t acts wi th * Mr. Arirds fcrfang/ s He aith,~and ^vljtonment'ai' Af fairs Committee. Mil Cardigan' felt' it was timely' that the;iCo?li^^on n^d/accepted this invitation to bur Meeting because of the increased concernjpn .1ftigatj^dh and' insurance relative to. asbestos exposure cases^ Mr. Puflep introduce.^'Mr. Dennis Ross tjho is also withf the' Coalition. , Both, Mr./Pullenjand Mr./Ross presented the Co^iitibh's '.lip-datte on'" the compensation issua^ and,\aitein^ted in this pre sentation. For background, it' was noted that theJ folipying.y.^re^bmbars df the Coalition: CeloteX' Division ofrJim Walter,-' Asarco;;Pittsburg Corning,' ;Unarco, Johns-Manville, Raybestos-Manhattan, Aiaatex, and Eagie Pitcher. The earlier legislative initiatives were noted including.- the Hart Billj^the Fenwick Bill and the Miller Bill. The Coalition saw merits and shortcomings in .each of these, and felt that while they did not have; a complete package, to ofter at this time, they needed broader support and would encourage, meaningful input from Institute Members and others. It was stated that there are now 18,000 lawsuits in the asbestos area, and there;.Ate-more asbestos-related lawsuits in .the! courts than car accident shits. ,The allegations are that asbestos products manufacturers knew of the health problem and. did npt warn the. exposed worker. Lately, the issue of "strict liability" has arisen where .it; ^ould not matter if the manufacturer didn't know bf the"health hazards--lie could be held liable ih any '4ventIJ^Siirs'equeai'^p the' Meeting*vfox, instance,..pn-. July 1982 the Hew' Jersey^Subreme Court '(in Beshada v/; Johns-Manville Prb'ductS'Corp.) .held manufactuiets; J J J^ regardless that yt knjown of .the bp The increase in litigation has several roots. There hast) pen an.eros ion in the .exclusivity of workmens compensation as the*remedy Incases of' exposure. T'U^T'Wl W tinV fooe'-flT*fl,v that claims he'filed within' two'or three-years, of exposure. SOtte State plaits tow m6Vingrt '!tt-bA V'rA'eAq.vul.i'lr-en-mmAeAn*t-SP .'''Aoff ttw.ToA,/'ttoAy'ftVhirreaeD^..WyeO^Orrse aaffttOeVr inanifes tatibn ,of thtee disease: ; .... ' - /- ; .... r . . ... ... - J! - r-.-f v ... - : - -'--."S .- - - . v' : . v -i y- f FMSI 07156 Minutes of Annual Meeting -9- June 16-17. 1982 gnl.-iii. ... jo huiuuU' Mr. Pullen suggested the poor distribution of funds to the injured party with distribution of a typical $100,000 award. Such an award could go up to $60,000 in feds,' $5,000"in tcosts, $10,000 -to 1repay Workmens Compensation, and the final^$25,000 to the injured party for"lifetime medical costs.`-Counting the costs of: 'the'defendant parties ^arid including the'-costs B`6f;'ddfehdihg'shccessfully where' no award!.i's .rciade,' it may cost''$200,000 sto get-$i.5rOGO to the "injured party,' This "systeirrof awards~is: wasteful, aiid it is'sliggest e3ythat Some other system shquidf'befetterf"XA suggestion- that'there'-be -fifty^uniform laws7 in this area:'for\'tfieu50 States' is ri>ot'fi?'wiriilist:ic-'ia8d:jcc?lyi,^itfiiai suggested additionally 'that;,such' uniform plans rin: the 50JStates do notrbring the United States Government ih^as-a-participant when the?Governmen't-run-1 ship- .yards of World War II.have been responsible for a majority-of the cases litigation'today. "Mr. Ptillen .'arid ~Mr 7 Ross` suggested that if a;State-by-State approach is not the solution/-that the solution may Ve:the Federal ^Government, acting on Four Principles* ^ - ;3-~ .Idii cr.'l i-M.-rr ri i nin.03. cr!:? :u 1. Settlement be prompt, adequate and equitable 2. Proof of injury would be'o'n'clearly'defined medical evaluation' : (avoiding 'the: "Black Lung" theorywhererIany 'exposure"-ife suf- -svasj; . - - ficient proof);1- -:V'3 cco :..p. bluow jjoidlliidb 'site nails - `-'3: 1 Costs "would :nbt-be Jdumped` on thet axpavers--the"burdenn must' be . on th os e'tesp oris lblei - ri - f - rr-rymaeezaB 3/:nj h*3<.-n er.w '4. - Such Settlement would provide the exclusive-,:'remedyV'prohibit ing third party litigation. . r;luewr.I gnlbnaq The Government'would'itself ;beaf : 50% of the'-total costs;--as Toughly 50%lof exposure occurred'in shipyards' at'wartime;"^'.: ' - ^gnlr,:. pr,,r n- Mr. Pullen'noted the three Jeaf'li'er-legislative initiatives on ^asbestos icorapensation: S1643 - the Eart'Bill, HR5224 - the Fenwick Bill, and HR5735i-rc the Miller Bill. - Both- rthe~Hart Bill and the'Fenwick Bill are dead.-'--Whiled the Miller Bill is technically alive, it is probably politically deader 3; :> The Coalition has-'leconnBended a;'new legislative approach.;-''Among ;the.:ad-.: ri:> vantages would be^ that it does'not federalize'workmens compensation, but okld rather works'within^the1 existing 'State-workmens condensation- framework.- It. would safeguard the funding, as the implementing resolutions would have :a .it limited life of five or ten years, and the entire resolution could be terminated -if"the pay-out- -exceeded^the funds aval lab le,. rwhi'cht would .rein- 2 2 state tort litigation -as -theitemedy. ' In dther iwords, rlhls wouldavoid possible unlimited fuh'ding which-could "result' from legislationcofiTthe:;,,black lung'1 variety. , 7" - ---: _o. 1 ?: 1 ' n. -' ...2i t - j.s :tp Ovs cj;; RUsijzn:- 3. ct; sn;) . j ` :J Copies of a- "Summary of .theOccupational" Disease ^Compensation, Improvement or Act and the Implementing ^Resolution ifOr .Asbestos Related Diseases" ,-were : i ' j distributed. .The Coalition .had-prepared these Summaries .pO'describe.oi: rn.; generally the legislative approach recommended;: -.The ;Act7would rberair-rT . generic approach not limited to asbestos which could function for a range of -occupationalrdiseases. -/This would'irelate ;to the types ;of diseases^; the; ` provision :of benefits, ^interaction between Federal and State'Programs/ rand ; financing-of'-the vfund. i The proposed :Act would .provide'that .this remedy was the exclusive remedy dEor those injured by the occupational disease. The Act would provide for Implementing Resolutions.for the different occupational diseases and these resolutions'would provide Ifor,a limited life-of thei ;. ;; resolution and -that -the resolution could be terminated if the vpay-out ^exceeded available funds ;absent enadting additional authorizations, ucadi-i. a" . ` FMSI 07157 Minutes of Annual Meeting -10- June 16-17, 1982 i-'n It was suggested that if the existing system .of-tort liability is not ` , changed that there, will be bankruptcies within this industry. There may . even be bankruptcies by;the insurance .carriers, as there;now are 400 to 500 new cases being litigated monthly. . It was noted .that solutions to this . , | . problem were , conplex, and that if there.is no solution many asbestos products manufacturers may.gooutof.business. The.Coalition at this time requests ,, input from any Interested party^nd that vheh]*rdraft`,bf'.the legislatibii.i.8 - available, the Institute and tits Members might helpwith constructive. criticism of the proposed Act. Now is,.the.time to discuss the plan, and as . nothing is now cast in concrete, this'is- the best time for input.It ".Was , r , stated that 'the Coalition should have the languageready in the next month , or so and would hope to have copies ready for the Institute and other. . interested parties at that time. They would hope to have7 the proposed Act . in the legislative hopper by late 1982. . The Coalition's proposals were opened for questions and discussion. In answer to a question on cooperation with the. Coalition, Mr.-Pullen noted that the Coalition would welcome applications for Membership in the Coalition from Interested parties. Questions were asked on financing the fund and it was noted that assessments would be made on a formula based on each manufacturer's defendant settlements and judgements and on the number of pending lawsuits. .rrii i .jl - ! .. Mr. Pullen noted that it was .possible that his company-(Johns-Manville) might end iip being assessed a higher proportion of the costs-of- tHe fund, but that such a program would compensate those funding it with Injured parties giving up tort rights. The efficiency.of such a program would be that up to 85%, of the costs now consumed in tort litigation could -be eliminated.! He noted that currently about 2% of cases go to verdict.and about 65% have been . defendant verdicts; ' As some other than Johns-Manville cases have had 85% defendant verdicts, Johns-Manvi lie may end up paying a higher percentage fee than others. It was noted that one defendant had won 16 -out of 18 cases, - and rthat the process of settlement has. increased .litigation. Some defendants .-. may reappraise their litigation strategy and prefer going to verdict rather than settling, : :. ' .. ` . It was noted that :Dr.; Selikbff had-predicted 10,000 excess 'lung cancer deaths _> per year from asbestos exposure along with. 2,500 asbestosis cases arid 2,000 to 3,000 mesothelioma cases. ' While-most-observers-believe Dr, Selikoff's projections are too high, this is an indicator of the scope of possible litigation. One party questioned if an alleged victim of asbestos exposure could readily make`his claim .through the Intended compensation fund, wouldn't this open even more'claims than tort :litigation.' -ih'rresponse, it was noted that some observers-feel the "jackpot" settlement:cof fort: litigation is more attractive to the -alleged victims. . :r - + ' ! - . . ' With this open discussion concluded, Mr. Armstrong, Chairman of the Institute's Health and Environmental Affairs Committee, suggested that Mr.`Pullen's and Mr. Ross's presentation had/given the Members a broader perspective on the.. issues, and he asked for more participation -of the Members iri the work of his committee. It was stated that some Members may wish to participate as in- .. dividual Members of the'Coalition, and that the Institute wished the Coalition _ to-maintain liaison with the Institute through its Health and Environmental Affairs Committee. It was asked that the 'Coalition place .the Institute on its mailing list, and that the Institute would forward data on to its Members. Mr. Pullen and Mr. Ross projected that the draft of the proposed new legislation would be availble ^ two or three weeks, and that a draft would be sent to : . FMSI 07158 Minutest of' Annual' Meeting ^11- -.Junte': 16-17? "1982! the Institute at that^'tiinei.-lln 'fespAhjse to-^a-iquestion; it was noted that - there was no sponsor for such proposedlegislation at this tine.. ; ; . ... > .<-7-ii. 1" -.,/ "j'. J."` ' ' ,7 ..!!?.- -- V V...--:-t i ' . , ' ** ' ' . r'* v4 T / '.`r'- ' i.. The President thanked Mr. Pullen ana Mr. 'Ross for their efforts on this ' presentation of position by the Asbestos Compensation. Coalition. ,, -.2 ... .ri'i'z %yJnr.-it 'tn/jj i-sst// sysgsa r frd;J.r.i. ill Upon motion :diily made, 'seconded r^d:'Waift'lnouBly ^assed^'it^wafi t* V "^r^T-.r. "" .. :;ji t>/j sipu:rfeW:gffll!-fces2' it? fiais s/53 tihpo bAd' vi.'v'iios t -t_ y-1 RESOLVED:' * 'To thank Mr`.` Pulle'n~ahd'1.Mri' Soss of "the Earlier in the' meeting, -the MetnSers 'discussed "a proposed increase -'in the'V \ annual fee-with a''chdhge'in'^tii'^fee'formula. ` .It was moved 'that this itemW^ be tabled- until After presentations by the Health and Environmental Affairs Committee and members of the Asbestos Condensation Coalition.J'The President called for additional discussion on this agenda item. . :r.c - `li .L&.1 i?Ar.o-'"hr. ? .lZ.?: 'll'- :. s;o*:c.< r. -r The Board of Directors had voted to. increase the annual fee by a change in the fee formula as follow}*^3 r<J-r i o-. :CJV Active Member: Basic Fee Increase from $1,150 -to $1,300, with no change in the category.assessment Regional Member with Active Member rights: Same fee increase , - <-* ' ". as for Active 'sr \ - 1 ' - rr ran Regional Member (Regular) Increase from $1,450 to $1,600 .. . -*_:&& -Regional 'Member (Association) Increase from .$2^.400 ito~$2,6Q0 r L Licensee: :V ''Increase''from $550 to $600 i ' i ;V[` ~ As indicated earlieri tlie Board wished to "establish .;a ""reserve" with the : / additional fee payments to plan fbr that time' wben additional Tmmijes. mayi:1,1;; ? have to he spent >on consultants' Hoir cftiyet [hosts .to help solve .prdblams i^' v- % the waste disposal area,; arid other' area's' "of environmental concern.. Sudh ' reserves' hould only he built to V^rt'aik`,:^'oint, and if funds were not[ y" | expended the Reserve 'could he closed and [monies^ 'made "available "for general, purposes---'in effect reducing'the''fees.'^/fen^rn was ;expre6s6d;hh creation; of such a reserve' when' the- Institute''Had been 1 generating sn; excess .of income -',^ over expenses for the past several years. * J............ Upon motion duly' made, 'sVconded snli r pasBe'd with ten Members,. , - )iJ- ' In favor arid'fiVfe Memb&rs opposed, it was:'" , ' .,, . ..j RESOLVED:-' -'To adopt the following fee formula for, : . . (' ;< - '-1982-83: Active Metdbeirs and Regionals - - '''j- ./"ic :! - -T . ' Vith-Active Menber fights': "Basic Fee , . ; ` .- : ' ' $1,300; Category Fee' $7t)b;' Regional ; :. / , .. Member (Regular): Fee $ 1,600{ Regional ;'f ? -y ' , Menber-(Association)f Fee $2,600;' - ` - Licensee: Fee: $600. . FMSI 07159 Minutes of Annual Meeting -lfl- June 16-17, 1982 his suggestions for more participation! pi or to next year's meeting. The President thanked the Chairman fon hip work on this year's Tournament, the presentation of awards, and his suggestions for increased participation in the golfing. Upon motion duly made, seconded and unanimously passed, it was: RESOLVED: To accept the report of the Golf Tournament Committee as read. CREDIT REPORTING SERVICE The Board of Directors considered a suggestion for a credit reporting service at Its earlier meeting. After discussion at the Board meeting, it was rec ommended that Members individually list the individuals at their companies who should be contacted for credit Information. This list would include name, address and telephone number, and those submitting this information would have access to the Institute compiled list. The Board asked that this subject be an agenda iten at the Membership Meeting. Mr. Comins was asked to present background on this concept. He indicated that since Institute Members dealt with the same customers and were aware of the credit capabilities of these parties, that it would be advantageous to those extending credit to have access to this Information. The idea of a service such as that provided Members of MEMA or CFS was discussed. The original suggestion was for the Institute to set up a credit reporting system for its Members similar to the MEMA and CFS plans. Some possible shortcomings of such a plan were noted should the plan send out information on a customer which turned out to be incorrect. One party asked what was wrong with Dun & Bradstreet and It was indicated that was a good service but when someone is going under, it is usually too late with the information. The Members generally concurred in an exchange of information on who should be contacted in their organizations for credit information. This would be done with a filing of information with the Institute as to who should be contacted for credit Information giving name, address and telephone number. The Institute would ask for this information and would then distribute a "master list" to those who provided the information. The Institute Office was instructed to review this with Legal Counsel before proceeding ***** There being no additional business brought to the attention of the Menfcership, upon motion duly made, seconded and unanimously passed, it was: RESOLVED: To Adj ourn Adjourned at 9:40 AM E. W. Drlslane Secretary FMSI 07160