The Judge’s Ruling

On July 2, 2002, U.S. Bankruptcy Court Judge Randall J. Newsome ruled in favor of Armstrong World Industries, Inc. and denied class certification for either residential or commercial property owners alleging property damage from Armstrong asbestos-containing floors. The ruling followed a day-long class certification hearing in Wilmington, Delaware on June 28th.

In his 15-page ruling, Judge Newsome found the class representatives had "inherent conflict" with the goals of the suit and wrote the conflict, "is serious and disqualifying...It would be difficult to concoct a group of class representatives with greater conflicts, or less incentive, to vigorously represent the class."

The class representatives filed suit in August 2001 on behalf of all current or former owners of properties containing Armstrong asbestos-containing floors. The class sought to have Armstrong pay for a national advertising campaign alerting all U.S. property owners to the alleged hazards of asbestos flooring. They also requested that Armstrong establish testing centers, where property owners would send floor samples, to determine whether they were an Armstrong product containing asbestos.

Commercial property owners also requested that Armstrong bear the cost of removing and replacing any asbestos-containing floors. The class members argued that damaged or abraded Armstrong asbestos-containing floor tile could release asbestos fibers and cause property damage.

In denying the claims, Judge Newsome also wrote, the plaintiff’s "real interest is in obtaining reimbursement for their abatement costs and damages for diminution in the value of their property," not representing a class for purposes of a class action suit.

Armstrong’s Side of the Case

Armstrong has always maintained its floors meet all safety regulations and that properly maintained asbestos-containing floors are non-friable, which means they will not release asbestos fibers under normal use with the flooring in place. Armstrong stopped making asbestos-containing floors in the U.S. in 1982.

"To date, this is the most significant win in Armstrong’s Chapter 11 case," said John Rigas, Armstrong senior vice president, secretary and general counsel. "It puts Armstrong a step closer to resolving its Chapter 11 case."

Armstrong’s Next Steps

With this favorable ruling, Armstrong can now move forward to resolve about 600 remaining individual property damage claims that were filed before the bar date. The March 20, 2002 bar date, set by Judge Newsome, means no other asbestos property damage claims can be filed against Armstrong. The existing claims allege more than $852-million dollars in damage related to asbestos-containing flooring. Armstrong vigorously disputes these claims. Resolving these claims is the subject of future hearings with the bankruptcy court.

Armstrong attorneys are also working toward a plan of reorganization, which details how the company will emerge from bankruptcy protection. Armstrong filed for Chapter 11 reorganization in December 2000 to resolve the tens of thousands of claims alleging personal injury from exposure to its asbestos insulation. However, the biggest legal battles in the case so far were with building owners claiming property damage from asbestos flooring.

To date, a total of 4,500 claims have been filed so far against Armstrong in its bankruptcy case, seeking a total of $6.0 billion. The court has disallowed 1,100 claims totaling $1.5 billion. The court has not yet set a deadline for filing asbestos personal injury claims against Armstrong. .

Contact
Dorothy Brown Smith
Director, Corporate Communication
(717)396-5696