Federal-Mogul was created in 1899 through a partnership between a metal ball bearing manufacturer and a bushing producer. In the decades that followed, Federal-Mogul diversified and purchased scores of companies, including Turner & Newall, now known for its widespread and reckless use of asbestos. The United Kingdom-based T&N was one of the first companies in the world to industrialize asbestos.
In purchasing many of these companies, Federal-Mogul knew the potential liabilities from asbestos and set aside $2.1 billion to settle claims. As asbestos claims began, Federal-Mogul attempted to dodge bankruptcy by laying off employees and closing manufacturing plants. The company grossly underestimated the extent and cost of the claims and, in 2001, filed for Chapter 11 bankruptcy protection. By 2007, the U.S. Bankruptcy Court confirmed the fourth amended joint plan of reorganization. Today, Federal-Mogul operates in 34 countries through 169 manufacturing, distribution and technical facilities.
Federal-Mogul’s core company did not involve asbestos use, but the company exposed itself to asbestos liability after purchasing several businesses that dealt directly with asbestos products. Some of the Federal-Mogul jobs most at risk for asbestos exposure include the following:
- Factory and plant workers
- Railroad workers
- Boiler operators
- Shipyard workers
- Refinery workers
- Refractory plant workers
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Though these jobs put workers directly in harm’s way, it also had similar consequences for their families. As asbestos workers returned home, these small asbestos fibers latched to their clothing and made their way into the home.
The size of the asbestos particles and longevity of the product gave it a strong potential to linger long after it was introduced to the house. Once the contaminated clothes were washed in the house, family members assumed similar risks of asbestos-related disease.
Amount of Money in Trust
As a result of the bankruptcy, Federal-Mogul was ordered to establish trusts for its subsidiaries facing the most asbestos liabilities. There are at least four Federal-Mogul trusts funded with a total of $635 million: Federal-Mogul Products, Turner & Newall, Fel-Pro and Vellumoid.
Like other asbestos trusts, Federal-Mogul pays claimants of 8.5% the requested funds. This ensures there will be enough money for current and future claims.
Asbestos Lawsuits Against Federal-Mogul
Federal Mogul acquired multiple companies throughout their years in asbestos like, T&N, Flexitallic and Ferodo. Acquiring these companies did two things successfully. It put Federal Mogul on the Fortune 500 list and it also led to hefty payments by the company to asbestos victims.
Federal Mogul thought at the time of filing bankruptcy that setting aside $2.1 billion would be enough to pay claims, but quickly realized it wouldn’t be. Due to the large number of acquisitions by the company, lawsuit claims quickly added up to around 350,000 by the time the company filed for bankruptcy.
The company was ultimately protected in most of these cases. For example, a case involving 22 Texaco factory workers, led to a $35 million payout. $1.6 million per employee, as a result of asbestos exposure, was to be paid by the former owners of Flexitallic before it became a part of Federal Mogul.
Products Containing Asbestos
The products made from the variety of Federal-Mogul businesses and affiliates predominately focus on automotive, construction and mechanical parts. Many lawsuits have focused on asbestos-containing automotive parts, building materials and manufacturing supplies. Known Federal-Mogul asbestos-containing components and equipment include:
- Flexitallic spiral wound gaskets – Used in steam engines and boilers to insulate and seal engine parts.
- Fel-Pro gaskets – Used in automobile and truck engines.
- Vellumoid Velbestos – Gaskets used in automobile and aircraft engines.
- Turner & Newall Limpet Spray – Used for structural fireproofing.
- Turner & Newall Trafford Tile – Asbestos cement sheets used in construction.
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- EWG. ASBESTOS: THINK AGAIN: CASE STUDY: FEDERAL MOGUL. Retrieved from https://www.ewg.org/research/asbestos-think-again/case-study-federal-mogul
- Federal Mogul Asbestos Personal Injury Trust. Documents. Subfund Claim Instructions Page. Retrieved fromhttp://www.federalmogulasbestostrust.com/wp-content/uploads/2018/09/POC-Instructions-_D0181549_-FINAL-updated.pdf
- Halcom, Chad. Automotive News. “Former Federal-Mogul unit loses suit to have asbestos-related claims paid.” Retrieved from http://www.autonews.com/article/20110711/OEM10/110719981/former-federal-mogul-unit-loses-suit-to-have-asbestos-related-claims
- Rand Institute for Civil Justice. Asbestos Bankruptcy Trusts. Retrieved from https://www.rand.org/content/dam/rand/pubs/technical_reports/2010/RAND_TR872.pdf
- U.S. Bankruptcy Court. Federal-Mogul Global Chapter 11. Retrieved from http://www.fmoclaims.com/courtproperty.pdf