UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE . . . . . . . . . . . . . . . IN RE: . . SPECIALTY PRODUCTS HOLDING . CORPORATION, et al., . . Debtors. . . . . . . . . . . . . . . . .

SPECIALTY PRODUCTS HOLDING . CORP., BONDEX INTERNATIONAL,. INC., . . Plaintiffs, . . v. . . THOSE PARTIES LISTED ON . EXHIBIT A TO COMPLAINT AND . JOHN AND JANE DOES 1-1000, . . Defendants. . . . . . . . . . . . . . . . .

Case No. 10-11780(JKF)

Adv. Pro. No. 10-51085(JKF)

5414 U.S. Steel Tower 600 Grant Street Pittsburgh, PA 15219

January 10, 2013 8:34 a.m.

TRANSCRIPT OF ASBESTOS LIABILITY ESTIMATION TRIAL BEFORE HONORABLE JUDITH K. FITZGERALD UNITED STATES BANKRUPTCY COURT JUDGE

Audio Operator:

Janet Heller

Proceedings recorded by electronic sound recording, transcript produced by transcription service ______________________________________________________________ J&J COURT TRANSCRIBERS, INC. 268 Evergreen Avenue Hamilton, New Jersey 08619 E-mail: jjcourt@jjcourt.com (609) 586-2311 Fax No. (609) 587-3599

2 APPEARANCES: For the Debtor: Jones Day By: GREGORY GORDON, ESQ. DANIEL B. PRIETO, ESQ. THOMAS R. JACKSON, ESQ. 2727 North Harwood Street Dallas, TX 75201 Evert, Weathersby, Houff By: C. MICHAEL EVERT, JR., ESQ. 3405 Piedmont Road, Suite 200 Atlanta, GA 30305 Evert, Weathersby, Houff By: EDWARD F. HOUFF, ESQ. 120 E. Baltimore Street, Suite 1300 Baltimore, MD 21202 For the Committee of Asbestos Personal Injury Claimants: Montgomery, McCracken, Walker & Rhoads By: NATALIE RAMSEY, ESQ. MARK B. SHEPPARD, ESQ. K. CARRIE SARHANGI, ESQ. KATHERINE M. FIX, ESQ. 123 South Broad Street Philadelphia, PA 19109 Montgomery, McCracken, Walker & Rhoads By: MARK FINK, ESQ. 1105 North Market Street Wilmington, DE 19801 Motley Rice LLC By: NATHAN D. FINCH, ESQ. 1000 Potomac St. NW, Suite 150 Washington, DC 20007 Waters Kraus Paul By: SCOTT L. FROST, ESQ. 222 N. Sepulveda Blvd., Suite 1900 El Segundo, CA 90245

3 APPEARANCES (Cont'd): For Future Claimants Representatives: Young Conaway Stargatt & Taylor LLP By: EDWIN J. HARRON, ESQ. SHARON ZIEG, ESQ. JOHN T. DORSEY, ESQ. ERIN EDWARDS, ESQ. The Brandywine Building 1000 West Street, 17th Floor Wilmington, DE 19801 Thorp, Reed & Armstrong By: WILLIAM M. WYCOFF, ESQ. JERRI A. RYAN, ESQ. One Oxford Centre 301 Grant Street, 14th Floor Pittsburgh, PA 15219

For RPM International:

TELEPHONIC APPEARANCES: For the Debtors: Jones Day By: JOHN H. CHASE, ESQ. 2727 North Harwood Street Dallas, TX 75201 Richards, Layton & Finger, P.A. By: DANIEL DeFRANCESCHI, ESQ. ZACHARY SHAPIRO, ESQ. 920 North King Street Wilmington, DE 19801 For the Committee of Asbestos Personal Injury Claimants: Montgomery, McCracken, Walker & Rhoads By: LAURIE KREPTO, ESQ. DAVIS L. WRIGHT, ESQ. 123 South Broad Street Philadelphia, PA 19109 Otterbourg, Steindler, Houston & Rosen, P.C. By: ANDREW M. KRAMER, ESQ. ROBERT GONNELLO, ESQ, 230 Park Avenue, 29th Floor New York, NY 10169

For Wachovia Capital Finance Corp.:

4 TELEPHONIC APPEARANCES (Contd): For Honeywell: McDermott Will & Emery By: NAVA HAZAN, ESQ. 340 Madison Avenue New York, NY 10173 The Blackstone Group By: JAMIE OCONNELL PAUL SHEAFFER DANIEL CASIERO 345 Park Avenue New York, NY 10154 Klehr, Harrison, Harvey & Branzburg By: DOMENIC PACITTI, ESQ. 919 Market Street Wilmington, DE 19801 Orrick, Herrington & Sutcliffe By: JAMES W. BURKE, ESQ. JONATHAN P. GUY, ESQ. KATHLEEN A. ORR, ESQ. RICHARD H. WYRON, ESQ. 1152 15th Street, N.W. Washington, D.C. 20005 Hughes, Hubbard & Reed LLP By: LAUREN ASCHER, ESQ. One Battery Park Plaza New York, NY 10004 Dryvit Systems By: NIKKI WAKEMAN James F. Humphreys & Associates By: BRONWYN RINEHART, ESQ. United Center, Suite 800 500 Virginia Street East Charleston, WV 25301 Thorp, Reed & Armstrong By: KAREN GRIVNER, ESQ. 824 N. Market Street Suite 710 Wilmington, DE 19801 - - -

Financial Advisors for the Debtors:

Interested Party:

Interested Party:

Interested Party:

Interested Party, Dryvit Systems: For Asbestos Plaintiffs:

For RPM International:

5 I N D E X WITNESSES DR. LAURA WELCH Direct Examination by Mr. Finch Cross Examination by Mr. Houff Redirect Examination by Mr. Finch MARK IOLA Contd Direct Examination by Ms. Ramsey Cross Examination by Mr. Jackson Redirect Examination by Ms. Ramsey Recross Examination by Mr. Jackson JEFFREY BLAKE SIMON Direct Examination by Ms. Ramsey Cross Examination by Mr. Jackson Redirect Examination by Ms. Ramsey DR. MARK PETERSON Direct Examination by Mr. Sheppard Cross Examination by Mr. Evert PAGE 7 41 76 83 102 131 135 137 156 171 177 271

EXHIBITS ACC/FCR/M-128 ACC/FCR/M-127 ACC/FCR/M-129 ACC 1015 ACC-1016 ACC-1017 ACC-1016(a) ACC-388 ACCE-85 ACC/FCR 1019 ACC 1020 ACC 1021 ACC 1022 ACC 1023

ID CV of Dr. Welch Bondex Report Rebuttal Report of Dr. Welch Slides Chart from Kanarak report Pira paper Published paper in Pira Document CV of Dr. Peterson Slides Peterson report dated 5/31/10 Peterson rebuttal report, 10/2012 Peterson rebuttal report, 1/3/2013 Peterson chart drawn in courtroom

EVD. 8 8 8 8

78 78 80 134 184 185 270 270 270 270

184

6 1 2 3 THE COURT: MR. FINCH: THE COURT: Good morning, please be seated. Good morning, Your Honor. This is the continuation of the

4 estimation trial in the SPHC case pending in the District of 5 Delaware. Participants by phone are Lauren Ascher, James

6 Burke, Dan Casiero, John Chase, Daniel DeFranceschi, Robert 7 Gonnello, Karen Grivner, Jonathan Guy, Nava Hazan, Andrew 8 Kramer, Laurie Krepto, Jamie OConnell, Kathleen Orr, Domenic 9 Pacitti, Browyn Rinehart, Zachary Shapiro, Paul Sheaffer, Nikki 10 Wakeman, Davis Wright and Richard Wyron. 11 in counsel in court this morning? 12 MR. FINCH: Jonathan George from the Waters & Krause This is Nathan Are there any changes

13 firm will be with me at the outset, Your Honor. 14 Finch for the Asbestos Claimants Committee. 15 16 17 THE COURT: MR. DORSEY: THE COURT: All right. Any others?

None for the FCR, Your Honor. Okay. Mr. Iola -- do you have any

18 housekeeping matters first? 19 20 21 MR. FINCH: THE COURT: MR. FINCH: We do have a housekeeping matter. Yes, Mr. Finch. Your Honor, when we concluded at the end

22 of yesterday, Mr. Iola was still in his direct examination. 23 24 THE COURT: MR. FINCH: Yes. By agreement of the parties, we have

25 agreed that we will suspend Mr. Iolas direct examination and WWW.JJCOURT.COM

7 1 do, complete the direct and cross examination of Dr. Laura 2 Stewart Welch and then resume and conclude with Mr. Iolas 3 examination. 4 5 6 Is that agreed? Yes, Your Honor. All right. Thank you.

MR. HOUFF: THE COURT: MR. FINCH:

At this time, Your Honor, the Asbestos

7 Claimants Committee calls Dr. Laura Stewart Welch to the stand. 8 9 10 11 12 13 BY MR. FINCH: 14 Q 15 A 16 Q 17 A 18 Q 19 A 20 Q 21 A 22 Q Good morning, Dr. Welch. Good morning, Mr. Finch. Are you a medical doctor? I am. Where are you licensed to practice medicine? In the State of Maryland. Is ACC/FCR/M-128, your curricula vitae, in front of you? Yes, it is. And is that a current and accurate summary of your THE COURT: Good morning. Please raise your right hand.

COURT CLERK:

DR. LAURA WELCH, WITNESS, SWORN COURT CLERK: Please be seated. DIRECT EXAMINATION

23 professional biography? 24 A 25 Q Yes, it is. And it ACC/FCR/M-127 a copy of your Bondex report and what WWW.JJCOURT.COM

Welch - Direct/Finch 1 we call the big affidavit, which is the additional opinions? 2 A 3 Q 4 case? 5 A 6 Q I just moved everything around up here. Yes, it is. Yes, it is. And, is ACC/FCR/M-129 your rebuttal report in the Bondex

And did you help to prepare a set of slides to summarize

7 your testimony, Dr. Welch? 8 A 9 Q Yes, I did. And is what has been marked Exhibit ACC for demonstrative

10 purposes 1015 the slides you helped to prepare? 11 A 12 Yes. MR. FINCH: Your Honor, at this time we would offer

13 for substantive purposes Dr. Welchs curricula vitae, which is 14 ACC/FCR/M-128 and for demonstrative purposes only the two 15 Bondex reports which is ACC/FCR/M-127, ACC/FCR/M-129 and the 16 slide show for demonstrative purposes only, ACC 1015. 17 18 19 MR. HOUFF: MR. FINCH: THE COURT: No objection, Your Honor. May I approach? Yes. Exhibit 128 is admitted and 127,

20 129 -- thank you, and 1015 are accepted as demonstratives. 21 Q Dr. Welch, could you briefly describe your educational

22 training through medical school? 23 A Yes. I got a bachelors in biology from Swarthmore College

24 in Pennsylvania and I graduated from the State University in 25 New York at Stony Brook, with an MD degree. WWW.JJCOURT.COM

Welch - Direct/Finch 1 Q

Have you published any papers in the peer-reviewed medical

2 literature that are original research epidemiology studies 3 concerning asbestos exposures and mesothelioma? 4 A 5 Q Yes, I have. Could you describe for the Court the experience you have

6 had with researching the epidemiology of asbestos-related 7 diseases and the publications that you have done in that 8 regard? 9 A Yes. One large study that Ive been conducting since 1986

10 is a longitudinal cohort study of sheet metal workers which is 11 one the main construction trades, looking -- originally were 12 looking primarily at asbestos-related disease and weve 13 expanded it to look at other lung disease and published results 14 on that, that look at change in X-ray over time, cause of death 15 among sheet metal workers, prevalence of asbestos-related 16 disease and some other ancillary studies. 17 I conducted a case control study of peritoneal

18 mesothelioma when I was at the Washington Hospital Center 19 looking at the relationship between asbestos exposure, or the 20 prevalence of asbestos exposure among the cases. And, in

21 addition, I manage a large medical surveillance program for 22 construction workers who have worked for the Department of 23 Energy building atomic weapons over the years. And one of the

24 predominant exposures to all the different construction trades 25 is asbestos. So we also looked in that cohort for WWW.JJCOURT.COM

Welch - Direct/Finch

10

1 asbestos-related disease, including prevalence of lung disease 2 and mortality as well. 3 Q And the cohort study for the sheet metals workers you

4 described is one of the largest cohort studies of asbestos 5 exposed workers ever assembled? 6 A 7 Q Thats correct. And youve been publishing papers in the peer-reviewed

8 literature over the years, describing disease incidents seen in 9 cohort? 10 A 11 Q 12 A 13 Q Yes. Including mesothelioma? Correct. And have any of your peer-reviewed papers, original

14 research on the epidemiology of asbestos-related diseases been 15 cited by the International Agency for Cancer Research in its 16 latest monograph on asbestos? 17 A Yes. The one I mentioned about the relationship between

18 asbestos exposure and peritoneal mesothelioma was cited by IARC 19 in their assessment of peritoneal mesothelioma for the Volume 20 101. 21 Q 22 A 23 Q Are you board certified in any medical disciplines? Both in internal medicine and in occupational medicine. Have you held any faculty positions at any medical

24 schools? 25 A Yes. When I finished my residency I was on the faculty at WWW.JJCOURT.COM

Welch - Direct/Finch 1 Albert Einstein in New York.

11

And then I was on the faculty at

2 Yale University School of Medicine for about four years in the 3 1980s. Then I was at George Washington University, full time I stayed on the faculty there as

4 faculty, from 85 till 1997.

5 voluntary faculty and supervised students in their research. 6 Q Were you ever the chief of any sections at George

7 Washington? 8 A Yes. When I first started at George Washington University

9 I helped establish the program in occupational medicine and 10 then was the chief of that and then was the head of the section 11 on occupational environmental health in the School of Public 12 Health. I also helped establish that department and then

13 became the chair of that department. 14 When I left GW, I worked for a large hospital in

15 D.C., the Washington Hospital Center and did, essentially, the 16 same thing there. I set up and occupational medicine program

17 and was chief of that program at that hospital, as I continued 18 in my faculty appointment at George Washington. 19 Q 20 A And where are you now? I work for an organization called the Center for

21 Construction Research and Training, which is in Silver Spring, 22 Maryland. And the focus is to improve health and safety for

23 construction workers in the United States, through advanced 24 research and intervention studies and training. 25 Q How long have you had experience as a medical doctor with WWW.JJCOURT.COM

Welch - Direct/Finch 1 workers in the construction industry? 2 A 3 Q 4 A 5 Q 6 A Since, maybe 1980. And would that include drywall workers? Yes.

12

And Dr. Welch, have you ever been a consultant to the NIH? Yes. I had the pleasure of being a consultant to the They were

7 brain aging section of NIH when I was at GW.

8 interested in looking at impact of a range of neurotoxins on 9 development of dementia. So I helped them with occupational

10 histories and with -- it can be a little be hard to assess 11 people with dementia, so it was a challenge and really a 12 privilege. 13 Q Have you been a peer reviewer for any journals that

14 specialize in industrial occupational medicine? 15 A Yes, for quite a few. I peer review regularly for the

16 Journal of Industrial Medicine, the Scandinavian Journal of 17 Work Environment and Health and the Journal of Occupational 18 Environmental Medicine. And then occasionally have

19 peer-reviewed for pretty much all of the other ones, 20 Occupational Environmental Medicine in the U.K. 21 Health Perspectives here in the U.S. and others. 22 Q How man papers have you published in the peer review Environmental

23 medical and scientific literature? 24 A 25 Q Its probably 75, something in that range. And how many of those deal with asbestos specifically? WWW.JJCOURT.COM

Welch - Direct/Finch 1 A 2 Q Oh, 12, 15, something like that.

13

In addition to your research and publications, do you have

3 experience in the diagnosis and treatment of asbestos-related 4 disease? 5 A 6 Q Yes, I do. And how many patients have you diagnosed and/or treated

7 for asbestos-related disease? 8 9 10 11 12 Q 13 A 14 Q 15 A Okay. Okay. How many patients have you -You know, I, at one point estimated it was about a MR. FINCH: (Pause) How do I -Logging off is not good.

UNIDENTIFIED ATTORNEY: THE WITNESS:

Shutting down is not good.

Just keep going.

16 thousand patients that Ive individually examined and 17 interviewed and done a physical for, over the course of my 18 career. 19 workers. 20 sources. And those include shipyard workers, construction Theyre referred to me from all sorts of different Their own physician. I would get referrals from

21 OSHA and EPA to evaluate people who have called in on their 22 hotlines. Some referrals from lawyers and the proportion that But it was always -- maybe 25

23 was coming from lawyers varied. 24 percent at most from lawyers. 25 their co-workers.

Mostly from their own doctors or

WWW.JJCOURT.COM

Welch - Direct/Finch 1 Q

14

Have you ever testified before the United States Congress

2 on asbestos disease and causation? 3 A 4 Q Yes, on two different times in 2003 and 2005. Have you ever been recognized by state or federal courts

5 as an expert in internal medicine, occupational medicine, the 6 epidemiology of asbestos-related diseases and the causation of 7 mesothelioma? 8 A 9 Q Yes. In all those areas I have been so recognized.

And have you been recognized by this court as an expert in

10 asbestos-related issues? 11 A 12 Q Yes, I have. Have you ben recognized by Judge Obrino, who oversees the

13 entire federal asbestos MDL, as an expert in asbestos-related 14 epidemiology and causation? 15 A 16 Yes. MR. FINCH: Your Honor, at this time we would proffer

17 as an expert, Dr. Welch, as an expert in internal medicine, 18 occupational medicine, the epidemiology of asbestos-related 19 diseases and the causation of mesothelioma. 20 21 Honor. 22 Q 23 24 25 Dr. Welch could we -THE COURT: MR. FINCH: THE COURT: All right. Dr. Welch is so certified. MR. HOUFF: I have no voir dire at this time, Your

May I proceed, Your Honor? Yes. WWW.JJCOURT.COM

Welch - Direct/Finch 1 Q

15

Dr. Welch, could we agree that any opinions you offer here

2 today are to a reasonable degree of medical and scientific 3 certainty? 4 A 5 Q Yes. Do you have an opinion, to a reasonable degree of medical

6 certainty, as to whether chrysotile asbestos causes 7 mesothelioma in humans? 8 A 9 Q 10 A Yes, I do have an opinion. And what is that opinion? That chrysotile asbestos does cause mesothelioma in

11 humans. 12 Q Dr. Brody testified that the predominant fiber type found Why is that important from a

13 in the pleura was chrysotile.

14 perspective of a medical doctor? 15 A Well, if were talking about mesothelioma, the pleura is So that the presence of fibers in the

16 where the tumor arises.

17 lung, thats not the place where the injury is occurring, its 18 in the pleura. 19 Q 20 A 21 Q 22 A So, knowing --

Do you have a slide that sort of shows that? Yes, I do. Okay. So, this is a diagram of the lung with -- it shows the

23 ribs surrounding the lung, the body of the lung and then 24 between -- Your Honor, people may have done this for you 25 before, the anatomy of the lung, but between the lung and the WWW.JJCOURT.COM

Welch - Direct/Finch 1 chest wall theres a space or potential space, called the 2 pleural space.

16

Both sides lined with pleural lining and thats And thats a different kind

3 where the mesothelioma develops.

4 of cell, that are on the pleural lining, the mesothelial cells 5 and the cells in the body of the lung itself. So knowing that

6 chrysotile fibers get to the pleura is very important when 7 were looking at the whole sort of cascade of causation, you 8 know. Does chrysotile cause mesothelioma. One of the valuable

9 points is knowing that you can find those fibers in the pleura 10 and that theyre preferentially translocated to the pleura 11 based on some research thats been done. 12 Q Dr. Welch, we have heard it suggested that in 1997 the

13 Quebec cohort studies demonstrated that the mesotheliomas and 14 the chrysotile miners in Canada was caused only by amphibole 15 asbestos. 16 studies? 17 A 18 Q 19 A 20 Q 21 A 22 Q 23 A 24 Q Yes, I am. Who helped to fund those studies? The Quebec Mining Association. And what is the Quebec Mining Association? Its an organization of mine owners in Quebec. The mining of what, asbestos? Oh, yes, sorry. Mining asbestos. Since 1997 First of all, are you familiar with the Quebec miner

And has that organization -- strike that.

25 have there been any studies that demonstrate an increased risk WWW.JJCOURT.COM

Welch - Direct/Finch 1 of mesothelioma in chrysotile workers? 2 A 3 Q 4 A 5 Q Yes, actually quite a few and they -Do you have a slide that lists out some of the studies? I do. If you could continue your answer, you were going to say

17

6 quite a few. 7 A Quite a few, yeah. And, you know, some -- and I will

8 talk about it a little bit later, some of the studies that -9 the big studies that were referred to as the chrysotile cohorts 10 have also been followed forward in time and those arent 11 necessarily all listed here. 12 world. But these are from all over the

I mean theyre from Italy, from Lithuania, from the

13 U.S., from Egypt, from China, from Spain, looking at cohorts of 14 workers exposed to chrysotile asbestos not working with 15 amosite. 16 Q And these are all studies that have been published in the

17 peer-reviewed literature? 18 A Yes. And you can see that, you know, really were looking And It

19 at this that are published in the 2000s, primarily.

20 theres reasons that theres more and more information. 21 takes a long time between exposure and development of 22 mesothelioma.

So if we have plants that started producing in

23 the 40s, you need to follow them till 85 before youre going 24 to be finding their deaths. So its not surprising were

25 seeing so much more coming out now than we had in the 1970s. WWW.JJCOURT.COM

Welch - Direct/Finch 1 Q Dr. Welch, it has been suggested there is not one

18

2 epidemiology study showing an increased risk of mesothelioma in 3 a cohort of people exposed to only -4 5 too fast. THE COURT: Im sorry, Mr. Finch, youre going way

I cant even hear you that fast, and I can listen So if you would slow down, please. Im sorry, Your Honor. Were on

6 faster than I can type. 7 MR. FINCH:

Sure.

8 the clock, so Ill slow down even though we are -9 THE COURT: Well, Im sorry. I need to hear your

10 questions or I dont understand the answers. 11 12 Q MR. FINCH: Thats fine. It is -- I am sorry.

It has been suggested that there is not one epidemiology

13 study showing an increased risk of mesothelioma in a cohort of 14 people exposed to only chrysotile, uncontaminated by amphibole 15 asbestos. 16 A 17 Q Is that correct?

No, thats not correct. Do you have a slide listing out the key epidemiological

18 studies that chrysotile fibers cause mesothelioma? 19 A 20 Q Yes, I do. And do you have a slide -- these are the three -- this is

21 the Balangero, Italy cohort? 22 A 23 Q Right. And do you have a slide describing what that study

24 demonstrates? 25 A I do, yes. WWW.JJCOURT.COM

Welch - Direct/Finch 1 Q

19

Describe briefly for the Court what is the significance of

2 the Balangero, Italy cohorts that have been published about in 3 the peer-reviewed medical literature. 4 A Okay. Well, this is studying workers who worked in a

5 large open air chrysotile mine in northwest Italy, in the 6 Piedmont section of Italy, which opened in 1916. 7 no tremolite contamination in that mine. And theres

So this is what -- if

8 we want to say its a chrysotile mine, free of tremolite, which 9 I think was one of the questions thats been raised so far in 10 this proceeding. 11 This mine has no tremolite.

And in 1990, the first study of this mine was But then it was

12 recorded, which found two mesotheliomas.

13 extended in 2009 with an additional 15 years of followup, which 14 means an additional 15 years in which those workers could have 15 died. And theyre up to five mesotheliomas in that cohort.

16 And that just reinforces what I said before, that as we go 17 forward in time, theres more time for people to develop and 18 die from mesothelioma. 19 Q Youve also listed the Mirabelle study on this slide.

20 What does that show? 21 A So, the Mirabelle study looked -- it used the tumor

22 registry in that area of Italy to look at all the 23 mesotheliomas. The Pilotta and Pira were only looking at the

24 workers who were employed by the mine but Mirabelle looked at 25 all the cancers and they found a lot more that were related to WWW.JJCOURT.COM

Welch - Direct/Finch 1 the mine, even though they werent direct employees of the 2 mine. 3 mine. They found some that occurred in office workers in the They were miners. They found some that occurred in

20

4 miners who werent working directly for the mine, they were 5 working for a subcontractor. 6 Then they found 13 outside of the mine itself, three

7 in workers processing the ore in that area but not directly at 8 the mine and then they thought were due to environmental 9 contamination around the mine. So, were up to, I think thats

10 27 mesotheliomas related to that plant, expanding from what was 11 two identified, you know, 20 years ago. 12 Q 13 A 14 Q And is this study an amphibole free chrysotile study? Yes. And is the balangeroite ever been shown -- the ore thats

15 called the balangeroite or theres some discussion on that, has 16 that ever been shown to cause mesothelioma? 17 A 18 Q No. The author has concluded that its the chrysotile thats

19 causing the mesothelioma and not the balangeroite. 20 A 21 Q 22 A Thats correct. Very briefly, whats the Loomis cohort? Okay. Well, the Loomis -- this particular paper is a And, again, this group of

23 textile factory in North Carolina.

24 researchers has been studying this factory over a number of 25 years. This particular cohort worked in two different -- had WWW.JJCOURT.COM

Welch - Direct/Finch 1 two different plants. They call it Plant 3 and Plant 4. So

21

2 this had whats essentially eight mesothelioma cases in a 3 chrysotile, textile cohort, where whatever tremolite 4 contamination exists there is tiny. And its been -- the

5 exposures there have been really well documented and studied. 6 So we know a lot about these workers. 7 So then Plant 3 had a small amount of amosite used in So we had five of these workers who were never

8 one department.

9 in Plant 3 and three of them worked in Plant 3 where the 10 amosite was used but they were not in those departments at all. 11 So these are, in my opinion, are eight mesotheliomas exposed to 12 chrysotile, not exposed to amosite. 13 Q And in 2011 was there a paper published about a peritoneal

14 mesothelioma from a person who had worked in the part of the 15 mines in Quebec where there was little or no tremolite 16 contamination? 17 A Yes. From an individual who worked in the Carey Mine for And he developed peritoneal mesothelioma. The

18 over 40 years.

19 case was reviewed and reviewed by the Celotex Trust in Canada 20 and he was awarded compensation as due to the asbestos in the 21 mine. And he had no other exposure of other asbestos work.

22 So, again, in my opinion, this is a chrysotile mesothelioma 23 without any tremolite or other amphibole contamination. 24 Q Dr. Welch, are you aware of any studies that talk about

25 how little asbestos it takes to mesothelioma? WWW.JJCOURT.COM

Welch - Direct/Finch 1 A 2 Q 3 A 4 Q Yes. And have you prepared a slide to show that? Yes.

22

And very briefly, are Iwatsubo and the Rodelsperger paper

5 case control epidemiology studies that demonstrate an excess 6 risk of mesothelioma at very low levels of exposure to 7 asbestos? 8 A 9 Q 10 A Yes. Whats the Greenberg Davies case series? Well, its a case series of, you know, really a number of And that

11 mesothelioma cases where they did detailed histories. 12 case series as well as Borro (phonetic) and Skameritz

13 (phonetic) and others that I could mention, they all have -14 many of these case series have cases where the exposure was 15 short. 16 Q 17 A How short? A couple of months. And, actually, in the Skameritz one

18 which you dont have on the slide, it was in the order of days. 19 Q And was the Greenberg Davies study in the order or -- as

20 short as three weeks? 21 A Right, yes. So, you know, there are a number that are

22 under a year and then a number that are under a few months and 23 then usually a couple in every one of these big case series 24 that are in the order of days and weeks. 25 Q Have there been any studies that have demonstrated how WWW.JJCOURT.COM

Welch - Direct/Finch 1 little chrysotile asbestos it takes to cause mesothelioma? 2 A Yes. There are two I think that are really very helpful

23

3 for that.

One is by Madkour from Egypt and one is by Pan which

4 was done in California. 5 Q Okay. Do you have a slide that illustrates the key points

6 of the Madkour study? 7 A 8 Q Yes. And could you just take us through briefly what this study

9 shows and what that slide shows? 10 A Okay. Well, this was a study looking at the prevalence or

11 presence of mesothelioma around a chrysotile asbestos plant in 12 Egypt. And what the table at the bottom shows is the number of So

13 mesothelioma cases related to the distance from the plant.

14 the closest and then the map above really shows the concentered 15 circles that visually display those distances. 16 So living within 100 meters of the plant, there were

17 39 mesothelioma cases, but if you run down to the bottom, there 18 were four mesothelioma cases that occurred over a mile from the 19 plant. 20 Q People who lived at --

Two point five kilometers is over a mile away of living --

21 or a mile away from the chrysotile plant, people getting meso. 22 A 23 Q Correct. And this was a study that was published in the

24 peer-reviewed medical literature. 25 A Yes. WWW.JJCOURT.COM

Welch - Direct/Finch 1 Q And the Pan study briefly, what is that study about?

24 The

2 Pan study from California. 3 A So that was -- what Pan did was, used cases of

4 mesothelioma in California and looked at their residents and 5 mapped how close they lived to serpentine deposits which is 6 what we call naturally occurring asbestos and serpentine is the 7 rock from which chrysotile is mined. And in California, they

8 have identified geologically where these naturally occurring 9 outcroppings of asbestos are. 10 So Pan basically mapped the cases and found that

11 there was a relationship between where the serpentine 12 outcroppings were and where the mesothelioma occurred. And the

13 closer people lived to the outcroppings, the more likely they 14 were to develop the mesothelioma. 15 Q Dr. Welch, its been suggested that no epidemiology

16 studies demonstrate that people who work with asbestos 17 containing joint compound are at an increased risk of 18 mesothelioma. 19 A 20 Q Is that true?

Not in my opinion. Have you prepared a slide that discusses some of the

21 things youve looked at to examine that question? 22 A 23 Q 24 A Yes. And what does this slide show? Okay. Well, here I have listed two papers, one by Stern

25 and one, its a case series out of the National Occupational WWW.JJCOURT.COM

Welch - Direct/Finch 1 Mortality Survey. And then four papers that talk about rates So, Stern looked at the union,

25

2 of mesothelioma in painters.

3 thats the operative plasterers and cement masons and did 4 whats called a PMR study. He collected all the deaths of a And they had to have been

5 specified cohort of that union.

6 active due paying members of the union at the time that they 7 died to be able to be included in the study, just part of the 8 methods. Which meant that they were long term plasterers and

9 cement masons. 10 And he found mesothelioma among the cohort and there

11 were more of them among the plasterers than the cement masons. 12 Q 13 A And whats the NOMS database? Thats run by NIOSH, the National Institute of And state health departments

14 Occupational Safety and Health.

15 send in mortality information they collect, for which they have 16 occupation -- its not every state, but I think at the time, by 17 now there are 29 states that contribute to it. And then if

18 theres occupation on the death certificate, youre able, Im 19 able, were all able to look in the database to see what 20 diseases are associated with which occupation. 21 So if you look for drywall worker, there are three

22 cases in the National Occupational Mortality Survey of 23 mesothelioma among drywall workers. 24 Q 25 A Out of 3,000 deaths, roughly. Roughly, yes. WWW.JJCOURT.COM

Welch - Direct/Finch 1 Q And is that -- are there limitations on the ability of

26

2 epidemiology to detect risks of a rare disease like 3 mesothelioma generally? 4 A Generally, yes. If you want to do a cohort study, which

5 in some ways gives you more rich data, you identify a group of 6 workers, follow them forward in time, youll often know more -7 you dont have to interview them to know where they worked or 8 information about the plant because thats usually part of the 9 cohort study. But you need a really big study to find Were

10 mesotheliomas because the mesotheliomas is a rare tumor. 11 talking generally, you know, without significant asbestos 12 exposure incidents, of one in a million people. 13 a big, big study. 14 Q 15

So, youd need

On the order of hundreds of thousands of people sometimes. THE COURT: Mr. Finch, we have to terminate, so Im Well be in recess until

16 sorry, well reconvene around 9:30. 17 9:30. 18 19 20 21 22 Honor. 23 24 Mr. Finch. 25 THE COURT: No yet. THE COURT: MR. FINCH: MR. FINCH: Okay.

Thank you, Your Honor. (Recess)

Please be seated. Whenever youre ready to proceed, Your

Waiting for everyone to come in,

Dr. Welch are you ready? THE WITNESS: I am. WWW.JJCOURT.COM

Welch - Direct/Finch 1 2 3 Q THE COURT: MR. FINCH: All right, Mr. Finch, thank you. Thank you, Your Honor.

27

Dr. Welch, when we stopped you were talking about the

4 difficulties or -- not the difficulties, the limitations on 5 epidemiologys ability to detect mesothelioma. And could you

6 explain how that relates to joint compound work specifically? 7 A Yes. Well, you know, I had made this slide to illustrate

8 workers exposed to joint compound, but there really isnt a job 9 classification for drywall installer. Maybe there is, but like

10 when Dr. Robinson at NIOSH did a large study of construction 11 workers, they included 60,000 construction workers. There are

12 only about 300 that were registered as drywall workers. 13 Generally, drywall workers are plasterers, painters or 14 carpenters. So trying to do a study just of drywall workers is

15 not really possible. 16 So the studies that I was using here are the closest

17 workers we can find that use drywall compound, even though 18 their name is not -- theyre not classified as drywall workers, 19 like plasterers and painters. 20 In addition, as I think weve talked about, it was

21 talked about earlier during the hearing, that workers tend to 22 have more than one exposure. People who work with drywall

23 compound, they will also be working with and around other dust 24 containing materials. So its very hard to isolate either the

25 joint compound exposure and particularly hard to isolate the WWW.JJCOURT.COM

Welch - Direct/Finch 1 drywall workers themselves.

28

But theres reasons that painters

2 are a pretty good proxy, which is why I put painters on the 3 slide. 4 Q Okay. Before we briefly discuss painters, is there, in

5 fact, a study called the Fischbein study of just drywall 6 workers? 7 A 8 Q 9 A Yes, yes. And what did that study find and why is it significant? So thats a study in New York with what we call a cross

10 sectional study, where the investigators went out and 11 interviewed the individuals and classified them as drywall 12 workers. And in that particular union in New York, they could So in some local unions that may And what they did was look at

13 identify the drywall workers. 14 be a specific classification.

15 the degree of asbestos-related disease, not necessarily 16 mesothelioma but asbestosis, pleural plaque and found a lot of 17 asbestos-related disease on chest X-ray in drywall workers, 18 which means they have a lot of exposure to asbestos. 19 Q And to just -- that was a study about 115 to -- in the

20 hundreds, hundreds of people, less than 200 people and about, 21 what, 40 percent of them had a radiologically detectible 22 asbestosis? 23 A 24 Q Yes. And Dr. Irving Selikoff was one of the authors of the

25 study? WWW.JJCOURT.COM

Welch - Direct/Finch 1 A 2 Q Correct. And in terms, just generally, in terms of how much

29

3 exposure you need to get asbestosis versus how much exposure 4 you need to cause mesothelioma, how do the two relate? 5 A Well, you need, comparatively, a lot more exposure to get A lot of people think theres some threshold below

6 asbestosis.

7 which you dont get asbestosis and, you know, I mean, if youre 8 doing fiber year counts, maybe 25 fiber years, some people say 9 100 fiber years to get asbestosis. And I know there was

10 testimony yesterday talking about, is there a safe level of 11 exposure to asbestos for mesothelioma and theres really not. 12 When you go down to levels, some of the studies were talking 13 about with low dose, theyre talking about a cumulative fiber 14 exposure of .15 not a hundred. I mean, its much, much -- so

15 if you get asbestosis, youre exposed at a level that puts you 16 at really significant risk for mesothelioma. 17 Q And was the amount of asbestosis seen in this cohort of

18 people that worked with joint compound high compared to what 19 you might see in the ordinary population? 20 A Oh, yeah. You dont see, you know, people unexposed to And the rates of

21 asbestos, you dont see those X-ray findings.

22 disease they were finding were similar to what they were -23 that other Selikoff studies were finding in trades we know have 24 high exposures, like insulators. 25 Q Okay. You mentioned four studies of painters on there WWW.JJCOURT.COM

Welch - Direct/Finch

30

1 that showed an odd ratio or increased risk of mesothelioma, is 2 that right? 3 A Right. When its a case control study, its really the So, say in

4 risk of the mesothelioma being exposed to asbestos.

5 Rake and Peto, which was a study, I think, from the U.K., 6 painters were 14 times more likely -- painters with 7 mesothelioma were 14 times more likely to have been exposed to 8 asbestos than the comparable groups. 9 Q 10 A Now, painters arent -- why did you pick painters? Well, painters dont have, in their regular work, they are They dont use They do use

11 not using other asbestos containing compounds.

12 pipe covering, they dont use spray-on insulation. 13 joint compound.

And there was an analysis of the kind of

14 exposures that construction workers have, looking at all the 15 materials, a pretty detailed analysis, and basically it said 16 that the only asbestos containing material that painters use is 17 joint compound. 18 Q Now, thats not to say that painters cant sometimes be I mean it --

19 exposed to other types of asbestos is it? 20 A Correct. Right.

If theyre working in the vicinity of

21 somebody else using those materials, other materials, they 22 could get bystander exposure. 23 Q 24 A 25 Q But you think that painters is a useful study to look at. Definitely. There was a discussion of fiber potency differences. WWW.JJCOURT.COM The

Welch - Direct/Finch

31

1 differences on a per fiber basis between chrysotile and some of 2 the amphiboles. 3 A 4 Q 5 A 6 Q 7 A 8 Q Yes. Okay. Yes. And have you published a peer review paper about it? Yes. And what is your opinion about the fiber potency Have you analyzed this, yes or no? Do you recall generally that testimony?

9 differences, Dr. Welch? 10 A I think theres evidence that there is a difference in

11 fiber potency with crocidolite being more potent than amosite 12 and amosite being more potent than chrysotile. If I were to

13 put a number on the amosite/chrysotile relationship, Id 14 probably say amosite is twice as potent as chrysotile. 15 16 number. But I think its really, really, really hard to get a And the numbers that we have that date back to 2000,

17 say, when Hodgson and Darnton did an analysis, are out of date 18 because the cohorts that were used to assess chrysotile have 19 been followed forward in time and theres a lot more 20 mesotheliomas in there. 21 Q 22 A 23 Q Do you have a slide that illustrates this? Yes. And what -- could you explain to the judge what this slide

24 is showing and what has happened to the cohorts of chrysotile 25 that have been used in the attempts to quantify fiber potency? WWW.JJCOURT.COM

Welch - Direct/Finch 1 A Right.

32

So if you -- theres maybe, I think its around 30

2 studies that have been used and people keep using the same 3 studies in these risk analyses, trying to figure out the 4 potency differences, whether chrysotile is less potent. 5 four of them are considered chrysotile only cohorts. And

So, were

6 really looking when were having this big discussion about 7 potency, really about these four studies and weve already 8 talked about the Balangero, Italy study. 9 mine thats known to be tremolite free. Thats the chrysotile And what Ive noted

10 there is from the original study, Ive had on the previous 11 slide, the Piolotta (phonetic) study, there were two 12 mesotheliomas reported. 13 for that population. And thats the rate of mesothelioma

Its been included in the risk

14 assessments that date back to the 90s. 15 There are now 27 mesotheliomas, so thats a really

16 big change and that makes chrysotile appear much more potent 17 than what it was in the 1990 analysis before the two updates 18 were published. 19 Q And has there been a significant -- a similar -- not

20 similar, but there has been additional mesotheliomas in other 21 chrysotile cohorts? 22 A Right. So the one thats Connecticut is an asbestos

23 textile plant in Connecticut which was reported to have none, 24 but now is known to have five. And North Carolina, we talked

25 about the Loomis one, which has gone from two to eight and in WWW.JJCOURT.COM

Welch - Direct/Finch

33

1 Quebec, theres that one additional case we talked about thats 2 been added to the Quebec miner study. 3 extended the way the other ones have. That study has not been So there could be more

4 mesotheliomas, but that study, we havent extended the 5 mortality on that study. But, really, were seeing that the

6 other ones are going up ten fold, four fold, ten fold. 7 So that the rate of mesothelioma in chrysotile

8 exposed populations is much higher than what it was when the 9 Hodgson and Darnton risk assessment was done. 10 Q And in the summer of 2008 did the Environmental Protection Go out and collect

11 Agency convened a science advisory board.

12 people from around the world with expertise is asbestos issues 13 to try to look at one of the models that have been developed 14 for attempting to quantify on a fiber-per-fiber basis the 15 differences between the fiber types. 16 A Yes. EPA regulates environmental contamination and if

17 chrysotile were less dangerous, theyd like to know that 18 because it might affect the way they mandate cleanup or 19 containment. So they had a contractor put together a risk

20 analysis and got together an expert committee to look at that 21 risk analysis to see whether they could determine, on a 22 scientific basis, that chrysotile was or was not safer than 23 amosite. 24 Q And what ultimately did the science advisory board

25 conclude? WWW.JJCOURT.COM

Welch - Direct/Finch 1 A They concluded they were going to stay with the risk

34

2 assessment that EPA had always used, which did not 3 differentiate by fiber type. The data that was presented in

4 this model was not sufficient, strong enough, robust enough to 5 be able to say that chrysotile was less potent that amosite. 6 Q And you submitted written testimony in connection with

7 this hearing, is that right? 8 A 9 Q I did, yes. And then following that hearing, you and Dr. Richard Lemen

10 who was -- a little bit of testimony about him yesterday, who 11 was a noted epidemiologist, and Michael Silverstein published a 12 paper in the peer-reviewed literature talking about the 13 difficulties in distinguishing between fiber types, is that 14 right? 15 A 16 Q Yes. We heard briefly yesterday some discussion of how many

17 fibers per cubic centimeter there might be in the air from 18 breathing joint compound and we heard Dr. Brody talk about if 19 you had a fiber that gets into your lungs what happens. Just

20 from a medical perspective, if someone is working with joint 21 compound where theyre mixing it and sanding it, or just even 22 sanding it and sweeping up after it, how many fibers would they 23 inhale in one day? And you dont need to be this precise

24 calculation, I know youve done the math, but are we talking 25 about a few hundred fibers, are we talking about thousands of WWW.JJCOURT.COM

Welch - Direct/Finch 1 fibers? 2 A What are we talking about?

35

Were probably talking six million fibers if theyre

3 working at one fiber per cc. 4 Q 5 A In one day? In one day, if theyre doing physical work which, If they

6 obviously, youre doing if youre doing drywall work.

7 were just sitting still at a desk in the room where somebody 8 else was doing it right next to them, theyd get three million 9 fibers. And then it goes up. As your activity goes up, you So it could be even higher

10 breath faster and breath deeper. 11 than that. 12 Q

Latency, the judge, Judge Fitzgerald has heard the term

13 latency, which is the time from first exposure until the 14 development of mesothelioma, do you agree with that? 15 A 16 Q 17 A Thats correct. What is the median, or average, latency for mesothelioma? Well, its -- the average is over 40 years in all the You know, some

18 studies that are looking at it now, but longer.

19 studies the average is in the 40, 42, 43, which includes cases 20 that are as long as 60 years after first exposure. And if

21 people are really young when theyre exposed they could be in 22 their 80s when theyre getting mesothelioma from the exposure 23 they had in their teens. 24 Q 25 A Is there any upper limit? No. WWW.JJCOURT.COM

Welch - Direct/Finch 1 Q Are there cases in the medical literature where

36

2 mesotheliomas have occurred 70, 75 years after first exposure? 3 A 4 Q Yes. We talked about dose response and Im not going to try to Cumulative exposure, could you

5 draw dose response per again.

6 illustrate for the Court on the white board the concept of 7 cumulative exposure? 8 A Sure. We need to turn that so you can see it. If I

9 dont drop everything. 10 Q Actually, why dont we do it on the flip chart so theres

11 a record of it. 12 A 13 14 speaking? 15 THE WITNESS: I guess thats a good idea. Ill try Okay. COURT CLERK: Dr. Welch, are you going to be

16 not to make terrible noises. 17 18 THE COURT: Just so it doesnt rub against -If I hold it and work with my other

THE WITNESS:

19 hand maybe thatll work. 20 21 THE COURT: Sure. Im not doing anything complicated.

THE WITNESS:

22 So, basically, if we were to say, this is the box that 23 represents any individuals exposure to asbestos, its going to 24 be made up of some different boxes and the boxes could be a 25 job. It could be a particular product. WWW.JJCOURT.COM It could be -- well,

Welch - Direct/Finch 1 yeah, basically a task, a job, different product.

37 So if were

2 thinking about products, you could have someone say, whos -3 their total exposure was to one product. Thats extremely

4 unlikely because people are doing jobs not product specific 5 things. People who work in a factory and stay there their

6 entire life, could have exposure to really one, the product 7 theyre making but the end users are really being exposed to 8 multiple products that may contain the same form of asbestos 9 but often are mixed exposures. 10 So the most common occupational history is someone

11 whos had -- may have a predominant exposure, but they have 12 other exposures as well. 13 Q And in your opinion, Dr. Welch, if someone has exposure, a

14 portion of which is to chrysotile and a potion of which is to 15 chrysotile mixed with an amphibole and a portion of it which 16 might be insulation which is chrysotile with amosite in it, is 17 it fair to exclude the chrysotile as contributing to -- as 18 medical matter, as contributing to cause the mesothelioma? 19 A No, not in my opinion. I mean, I think its very well

20 established that chrysotile causes mesothelioma, as well as 21 amosite. So that would be part of their cumulative dose, the

22 chrysotile, the amosite in whatever combination that person was 23 exposed. 24 And, you know, in the U.S., of asbestos used in the So, even if amosite is

25 U.S., 95 percent has been chrysotile.

WWW.JJCOURT.COM

Welch - Direct/Finch 1 more potent, theres been much more exposure -2 Q 3 A Wait till you get seated, Dr. Welch. So even if amosite is five times as potent on a

38

4 fiber-by-fiber basis, but 95 percent of the exposure is 5 chrysotile, then amosite still is not as important in their 6 total cumulative dose. 7 Q Youve written the words individual susceptibility on this Explain how individual susceptibility relates to the

8 slide.

9 causation of mesothelioma. 10 A Well, for all cancers, we know that there has to be some

11 individual susceptibility because individuals even exposed to a 12 very high dose, say people who smoked two packs a day for 50 13 years, they dont all get lung cancer. And the same is true

14 with mesothelioma, maybe more so because you have populations 15 like insulators or textile workers and you could get ten 16 percent of them getting mesothelioma, but the majority do not. 17 Now, we dont know what those factors are, but we

18 know just based on everything we know about the biology of 19 cancer and the epidemiology of mesothelioma, that theres going 20 to be individual susceptibility. 21 Q Meaning some people with a little bit of exposure could

22 get mesothelioma whereas other people with a ton of exposure 23 never get it. 24 A 25 Q Yes, correct. Dr. Welch, do you still see patients on a regular basis? WWW.JJCOURT.COM

Welch - Direct/Finch 1 A I do.

39

I take off every Friday from my paying job and work

2 as a volunteer to take care of people in my community who dont 3 have health insurance. 4 Q How many times do you come into courtrooms and testify at

5 the request of an individual mesothelioma plaintiff in a 6 lawsuit, generally speaking? 7 A You know, its probably, Id say in the last ten years, At most, three times a year.

8 its probably been twice a year. 9 Q

And how does the amount of time you spend doing that, how

10 does that compare to the amount of time you spend actually 11 seeing patients? 12 A I spend more time on my mobile van than I spend in court,

13 Im sure, if I added it up. 14 Q 15 A 16 Q Your mobile van is where you see your patients? Right. Dr. Welch, in the real world if you were seeing patients,

17 if you were presented with a patient with mesothelioma, who 18 told you that they had used asbestos containing joint compound 19 back in the early 70s as a do-it-yourselfer at a level that, 20 say a half dozen times a year that was banned by the CPSC, the 21 CPSC ban on joint compound and that was what they told you, 22 what would you conclude about that persons mesothelioma and 23 what caused it? 24 MR. HOUFF: Object to the form. Incomplete

25 hypothetical. WWW.JJCOURT.COM

Welch - Direct/Finch 1 2 Q THE COURT: I agree, sustained.

40

Dr. Welch, if the only -- if you were presented with a

3 person with mesothelioma and the only exposure they had in 4 their life was to asbestos containing joint compound, what 5 would you conclude? 6 7 8 A MR. HOUFF: THE COURT: Objection. Overruled. Same --

Id conclude that that -- the asbestos in that joint

9 compound was the cause of their mesothelioma. 10 MR. FINCH: No further questions, Your Honor. Ill

11 pass the witness. 12 13 14 15 MR. HOUFF: THE COURT: MR. HOUFF: Your Honor, can I have about two minutes? Yes, sir. Thank you. Excuse me, Judge, apparently the last The

COURT CLERK:

16 two objections did not get picked up on the record. 17 microphone wasnt on. 18 UNIDENTIFIED SPEAKER:

Yes, its on, he just doesnt

19 get close enough -20 THE COURT: Mr. Houff, when youre making objections

21 you have to make sure youre speaking into the microphone. 22 Theyre not being picked up. So let me restate what they were.

23 Mr. Houff first objected on the basis that the hypothetical was 24 not complete. I sustained that objection. He then renewed

25 that objection after Mr. Finch added some additional facts to WWW.JJCOURT.COM

Welch - Cross/Houff 1 the hypothetical and I overruled that objection and then the 2 witness answered. 3 4 5 6 7 8 9 10 11 BY MR. HOUFF: 12 Q 13 A 14 Q Good morning, Dr. Welch. Good morning. Is that a fair restatement, Mr. Hough? Certainly fine with me, Your Honor. All right. Thank you. Thats exactly correct, Your Honor. All right. May I proceed, Your Honor? Yes, please. CROSS EXAMINATION

41

MR. HOUFF: THE COURT: MR. HOUFF: MR. FINCH: THE COURT: MR. HOUFF: THE COURT:

You have been the -- I guess its the medical director of

15 the sheet metal workers screening program since about 87, 16 1987? 17 A 18 Q Yes. Okay. Im a consultant to their institute, yes. And thats a position you had continuously since

19 about 1985 or 87? 20 A 21 Q Yeah. Okay. Yeah, somewhere around there, yeah. And in the sheet metal workers, I guess now its

22 called the Sheet Metal Occupational Health -23 A 24 Q Institute Trust. -- Institute Trust. Okay. And they have a website,

25 correct? WWW.JJCOURT.COM

Welch - Cross/Houff 1 A 2 Q Yes. Okay. And Im just going to see if I can get this up.

42

3 And does that look reasonably familiar as the home page -- Im 4 sorry, nobody can read it. 5 A And I dont have my computer glasses on, so I have to kind

6 of move myself back. 7 Q 8 A 9 Q 10 A The SMOHIT, thats their logo, correct? Yes, that is their log. And this is their -- like their home page? Yeah. They just revamed their home page and I dont --

11 but this is certainly from SMOHIT. 12 Q 13 A Well, I printed it this morning. Yeah. So then -- I havent seen their new -- thats what

14 I was going to say because I havent seen all their new home 15 pages. I was just looking at it recently. I thought, wow, But,

16 they did all this new -- so I dont know whats on there. 17 hopefully, its good. 18 Q And, in fact, one of the other pages under resources

19 includes a page that is entitled Motley Rice contact info. 20 see that? 21 A 22 Q 23 A 24 Q 25 A Once you stop moving it, Ill look at it. All right, sorry. Yes. Okay, sure. I apologize.

You

And you recognize that? Yeah. Like I said, this is -- the website is new, but I WWW.JJCOURT.COM

Welch - Cross/Houff

43

1 do know that SMOHIT has a relationship with the Motley Rice law 2 firm and has since the beginning. 3 Q Well, and, in fact, theyve had a relation -- and Motley

4 Rice law firm is Mr. Finchs law firm, correct? 5 A 6 Q Correct. Okay. And, in fact, the Motley Rice law firm has had a

7 relationship with the Sheet Metal Workers Institute and the 8 screening program since it was originated in 1985 or 87, 9 correct? 10 A Thats correct. The -- you know, diagnosing

11 asbestos-related disease through the program so that the union 12 felt they needed to have a way if individuals wanted to pursue 13 a claim, to have a network of attorneys available to them. 14 Motley Rice sets up that network. 15 Q Okay. Now, this is a little bit truncated on the right The Institute has established And

16 side and Im going to read this.

17 and monitors a legal referral program for sheet metal workers 18 suffering from asbestos exposure. Referrals are made to

19 attorneys who handle claims against asbestos product 20 manufacturers. The program is coordinated by one the premier

21 asbestos litigation firms in the county and with good reason it 22 is estimated that tens of millions of dollars will be recovered 23 from asbestos companies over the next five years for the 24 damages caused by asbestos, including loss of income, medical 25 expenses, damaged health and shortened life expectancy. WWW.JJCOURT.COM So

Welch - Cross/Houff

44

1 thats whats on the website about Motley Rice and the referral 2 program, correct? 3 A 4 Q True. Now, in addition to that, screenings are, in fact,

5 conducted by the Sheet Metal Workers Trust, correct? 6 A 7 Q Yes. Okay. And Im going to show you this -- Ive got about a Im going to show you

8 three page document, or so, maybe four. 9 one page at a time.

Again, let me pull it back down a little

10 bit, do you recognize the logo here? 11 A 12 Q Yes, I do. Okay. And this asbestos screening program is a medical

13 evaluation and an educational session, correct? 14 A 15 Q 16 A 17 Q Correct. Its not the same as a physical. Right. And they talk about, this website goes on to talk about Part of the screening is -- let me turn

18 the education session.

19 it down here, an educational session about the potential 20 health affects of asbestos and how to avoid future exposure. 21 It also -- an opportunity to ask about other work hazards, 22 correct? 23 A 24 Q Correct. Okay. Now, it says, what if the screening test show a

25 problem -- if screening test show evidence of asbestos-related WWW.JJCOURT.COM

Welch - Cross/Houff 1 disease, we suggest you schedule a followup meeting with the 2 union. Information will be shared regarding continuing care

45

3 and legal rights with physicians and attorneys on-hand to 4 answer questions, correct? 5 A 6 Q Correct. Okay. Now, the next section talks about diseases from

7 asbestos, correct? 8 A 9 Q Correct. And, there are several medical diseases it says that occur Ones of greatest concern and

10 as a result of asbestos exposure.

11 importance are pleural plaques, asbestosis, lung cancer, colon 12 cancer and mesothelioma, correct? 13 A 14 Q Correct. Okay. Now, Doctor, you have talked about, and Mr. Finch

15 talked about IARC and IARC has recently published information 16 that concludes that the evidence epidemiologically for the 17 relationship between asbestos and colon cancer and 18 gastrointestinal cancer is insufficient, correct? 19 A 20 Q 21 A 22 Q Correct. And thats a proposition with which you agree, correct? Correct. And so, yet, it still appears on the website of an

23 organization of which you are the medical director, that there 24 is a higher incidence of cancers of the gastrointestinal tract 25 in asbestos workers and doesnt this imply that this is an WWW.JJCOURT.COM

Welch - Cross/Houff 1 asbestos-related disease? 2 A Yes.

46

And that fact sheet was written when we started the And although you actually pointed this out to me in

3 program.

4 my deposition, or someone did, and I have not yet updated it, 5 but I plan to, to make is consistent with IARC. 6 Q 7 A 8 Q Now, if I turn to your report on Page 25, if you have it. I do. Ill just --

Where it says, chrysotile exposure causes peritoneal

9 mesothelioma, correct? 10 A 11 Q Hold on one second. It says, there is no epidemiologic study that has

12 determined that exposure to chrysotile asbestos without 13 concomitant exposure to amphiboles causes peritoneal 14 mesothelioma. 15 A 16 Q 17 A 18 Q Yes. And is that what you believe? Yes. Okay. And you talked about -- well, let me ask you also, Is that correct?

19 while were here, to turn to Page 30 of your report. 20 A 21 Q Okay, Im with you. Toward the bottom of the page, it says occupational

22 exposures to asbestos in the United States are known to have 23 been primarily a mix of fiber types and sizes, correct? 24 A 25 Q Correct. We can generally assume that any individual worker in the WWW.JJCOURT.COM

Welch - Cross/Houff 1 U.S., was exposed to a mix of fiber types and sizes, correct? 2 A 3 Q 4 A 5 Q 6 A 7 Q Yes. And you know Dr. Stayner, dont you? I do. Dr. Leslie Stayner is a Ph.D Epidemiologist? Yes. And he was, in fact, named as a witness in this case,

47

8 correct? 9 A 10 Q 11 A 12 Q 13 A 14 Q 15 A 16 Q I think thats true, yes. And you have written papers with Dr. Stayner, correct? One, I think. One.

Or in the process? We have one thats in press. Okay. Yes. Now, if Dr. Stayner says that there is convincing

17 epidemiological evidence that chrysotile is less potent than 18 the amphiboles with respect to mesothelioma, you agree with 19 that, correct? 20 A Yes. I think the issue is -- I mean at some point in time

21 maybe it wont be convincing, but Ive addressed that in my 22 direct. I think its hard to get an exact number but I think

23 its reasonable to say amphibole is probably more potent. 24 Q And I think weve covered this, but do you agree with Dr.

25 Stayner when he says that everything we have studied including WWW.JJCOURT.COM

Welch - Cross/Houff 1 what we consider chrysotile exposed workers really, in fact, 2 had some mixed exposures because theres really not pure 3 chrysotile thats generally been contaminated with amphiboles 4 or something similar like geroite (sic) in Italy and the 5 tremolite in Canada. So the factual fact of the matter is,

48

6 everything weve studied has been a mixed exposure. 7 A Well, no, I dont think that the Italian cohort is a mixed

8 exposure. 9 Q 10 A Okay. Well --

I actually think that there may be some tremolite in the

11 Carolina textile plants but its so small that you really have 12 to understand how small it is when you start to talk about that 13 as a mixed exposure. 14 Q Well, you were here yesterday, were you not, when whoever

15 was cross examining Dr. Anderson, I guess it was Mr. Frost? 16 A 17 Q No, Mr. Finch. Mr. Finch, I apologize. Showed this particular document

18 to Dr. Anderson, correct, the Turci study, the role of 19 associated mineral fibers and chrysotile asbestos health 20 affects, the case of balangeroite? 21 A I remember they were talking about it, so I dont remember

22 whether particular paper went up, but Im familiar with the 23 paper. 24 Q 25 A Youre familiar with paper. Yes. WWW.JJCOURT.COM

Welch - Cross/Houff 1 Q And, in fact, balangeroite has a lot of iron in it,

49

2 doesnt it? 3 A 4 Q Do you have a copy of that paper that you can toss to me? I can give you this one. I didnt have a copy made. May

5 I approach, the witness, Your Honor? 6 A Just because I think it does address that in there. So

7 instead of trying to remember what it said.

When they list the

8 chemical structure of balangeroite they do list it as an iron 9 containing compound. I dont know if its a lot because my

10 chemistry is a long time ago. 11 Q Mine is longer. In fact, this paper does indicate that

12 these authors believe that there is a contributing role or a 13 potential contributing role for balangeroite in the induction 14 of the mesotheliomas at this location, correct? 15 A I dont think they say it as strongly as you did.

16 Theyre really talking about -- what theyre talking about is 17 that it doesnt appear to act like tremolite, it doesnt 18 persist in the lung the way tremolite does. 19 write what they say at the beginning. 20 Q 21 A I think its like the last sentence in the abstract. So they say, we feel that based on the general knowledge And that -- let me

22 previously acquired on this mineral, and on the additional 23 experimental results, we may rule out the idea that the 24 balangeroite occasionally associated to chrysotile, might be 25 largely responsible for the health affects found in humans, as WWW.JJCOURT.COM

Welch - Cross/Houff 1 claimed in some epidemiology surveys and discussions. 2 They point out that balangeroite has a crystal

50

3 structure different from amphiboles and exhibits an echo 4 persistence and a durability in body fluids of the same order 5 and magnitude of chrysotile. And it says, was ever detected

6 but I know they must mean never detected in exposed workers, 7 the balangeroite because it never has been. 8 Q 9 A Okay. Under such circumstances, it may slightly contribute to

10 the overall toxicity but cannot be considered responsible for 11 the excess of mesothelioma found in Balangero in past and more 12 recent studies. 13 Q Okay. Thank you. Doctor, chrysotile particles are

14 removed from the lungs within a year, generally, correct? 15 A 16 Q 17 A Chrysotile fibers? Yes. You know, most of that is done, its not based on human

18 data, and so, youre extrapolating from animal data and 19 dissolution studies, so I dont actually have a number that Im 20 comfortable with for that. 21 persistent that amphiboles. 22 Q On Page 3 of your report, Doctor, dont you say, at the But theyre definitely less

23 stated rate, chrysotile particle would be removed from the 24 lungs by dissolution in less than a year. 25 A Yeah, and thats based on the animal studies. WWW.JJCOURT.COM And thats

Welch - Cross/Houff 1 based on, Im quoting from the Institute of Medicine. 2 Q 3 not? 4 A 5 Q Getting to the pleura, yes. Getting to the pleura, right. And you talked about reaching the target spot, did you

51

Now, youre not suggesting

6 that amphibole asbestos doesnt cause mesothelioma, are you? 7 A 8 Q No, Im not. And youre not suggesting that amphobile asbestos doesnt

9 get to the pleura, correct? 10 A 11 Q No. I presume it does because it does cause mesothelioma. Well, and its been clearly and unequivocally demonstrated

12 in the epidemiology that amphobile asbestos causes mesothelioma 13 in the pleura and peritoneum, correct? 14 A Well, I would say, you know, if you want --- all of the

15 information we have, not just the epidemiology, because to go 16 from association in epidemiology to cause, you need to go 17 through those Hill, Sir Bradford Hill criteria. But all the

18 evidence we have is that amphobile has caused mesothelioma, 19 yes. 20 Q Well, in fact, the very first study that connected

21 asbestos to mesothelioma with Dr. Wagner in 1960 was 22 crocidolite, correct? 23 A 24 Q Correct, from South Africa. And, Dr. Selikoff in 1965 showed mesothelioma as an

25 amosite factor, correct? WWW.JJCOURT.COM

Welch - Cross/Houff 1 A 2 Q 3 they? 4 A 5 Q 6 A Youre saying, youre implying compare to chrysotile? Yes. I dont really want to talk about the minerology. Correct.

52

And both amosite and presitolite are heavy in iron, arent

Im not

7 an expert in geology. 8 Q 9 A Are you aware that theres any iron in chrysotile? Ive seen some of the studies about iron information but

10 -- well, actually the structure, I think the structures of them 11 are here in this Turci paper. 12 just looking at it. When I was looking at it, I was

So on this one theyre talking about the

13 structure of the chrysotile from the Balangero mine and there 14 is iron in it. They talk about the balangeroite as being iron

15 rich which we talked about and then tremolite has iron in it. 16 And this other -- another chrysotile specimen has iron in it. 17 So it does contain iron. 18 Q 19 A 20 Q And do you recall -- did you see Dr. Feingolds testimony? No, I did not. Okay. Now, iron released from some types of asbestos can

21 serve as an oxidation reduction catalyst to produce free 22 radicals, correct? 23 A 24 Q Thats correct. And the persistent inflamation response of the asbestos

25 fiber leads to the release of reactive oxygen, correct? WWW.JJCOURT.COM

Welch - Cross/Houff 1 A Well, thats one of the things that is a part of a

53

2 persistent inflammatory response, is free radicals.

Theres a

3 lot of cellular activity and cellular cytokines that are 4 released from any kind of injury, that bring in inflammatory 5 cells. So not all the mechanism is free radical but thats

6 part of it. 7 Q Well, the long thin needles of amosite and chrysotile can

8 get into the farthest reaches of the lung, correct? 9 A 10 Q 11 A 12 Q 13 A 14 lung. The -Amosite and chrysotile -That would be true for chrysotile as well. But my question was -I mean, the long thin fibers are transported into the Any fiber can get into the deep reaches of the lung.

15 Sorry, Im jumping ahead of you, I guess. 16 Q Well, the fact of the matter is, that the amosite and

17 chrysotile because they are long and straight line up in 18 laminar flow in the airways and can reach the farthest reaches 19 of the lungs, essentially in tact, correct? 20 A A fiber can line up in the laminar flow and get to the far And we know that can happen for chrysotile even When its a

21 airways.

22 though chrysotile in its native habit is curly.

23 fiber, a single fiber, its not a curly fiber, its a straight 24 fiber. 25 Q Chrysotile fibers are much more likely to get impacted in WWW.JJCOURT.COM

Welch - Cross/Houff 1 the branch points of airways and not reach the ovular space 2 than amphiboles, correct? 3 A 4 Q I dont know that as a fact, no. When one sees asbestos bodies in the lung, asbestos body

54

5 is an iron coated fiber, correct? 6 A Yes. Its the reaction of the lung to the persistent

7 presence of the fibers to coat it. 8 Q Right. And about 98 percent of the time, these are formed

9 on amphiboles, correct? 10 A Yeah, I think thats right. I dont know the number, but

11 definitely predominantly amphiboles. 12 Q Now, you talked about the preferential area, the

13 preferential location of short chrysotile fibers in the pleural 14 space, correct? 15 A I didnt say short. I said that some of the Suzuki

16 studies suggest that theres preferential translocation of 17 chrysotile. 18 Q Well, there are problems with the Suzuki study, arent

19 there? 20 A 21 Q 22 it? 23 A 24 Q Do you want to be more specific? Well, in the fact -- in the 2003 EPA draft of the Theres problems with any study, I guess. Well, its been criticized pretty significantly, hasnt

25 technical support documents for a protocol to assess asbestos WWW.JJCOURT.COM

Welch - Cross/Houff 1 risk, the Suzuki study was characterized as having used a 2 non-standard technique without any controls? 3 A 4 Q Well, Im not familiar with that criticism.

55

And do you also know whether or not as was asserted there,

5 that water was used during the digestion process and that water 6 can contain as many as 30,000 fibers per liter of small 7 asbestos fibers? 8 A I know that was a concern and I somehow thought that that

9 was resolved and -- I mean, yes, water can contain asbestos but 10 I dont think there was any evidence that the water he used 11 contained fibers. 12 Q Well, wasnt it suggested that his reports were

13 contaminated because most of the fibers he found were either in 14 pleural plaques or tumor? 15 16 17 18 A THE COURT: MR. HOUFF: THE COURT: Or what, Im sorry? Were found in pleural plaques or tumor. Tumors, okay. Thank you.

But that still tells you that the chrysotile is out in the

19 pleural space, so I dont really understand why thats a 20 problem. 21 Q Well, there was a more rigorous study by Boutin,

22 B-o-u-t-i-n in 1996 in the parietal pleural that found a 23 mixture of fibers including long amphibole fibers among living 24 patients with asbestos-related conditions, correct? 25 A Yes. I think youd expect to find amphibole fibers in the WWW.JJCOURT.COM

Welch - Cross/Houff 1 pleura as well. 2 Q

56

And the mere presence of short chrysotile fibers does not

3 imply causation, correct? 4 A Thats -- I dont really understand your question. If I

5 were looking at an individual person that had pathology and had 6 short chrysotile fibers in their pleura, that would be one of 7 the things I could take into account in making my opinion. 8 Q No single experiment or epidemiological study can provide

9 decisive data on the effects of a toxin on people, correct? 10 A No, I wouldnt say that absolutely. Some things are so --

11 one study could be definitive, but generally, you know, when -12 there was some discussion previously about the Bradford Hill 13 criteria and one of them is consistency, you know. 14 finding is repeated in other studies. The same

So, its generally what You

15 we like to see, but usually I dont like to say never. 16 know, that can never happen because there could be a 17 circumstance where thats the case. 18 Q

Well, on Page 14 of your report, dont you say, no single

19 experiment or epidemiological study can provide decisive data 20 on the effects of a toxin on people? 21 A Yes. I was just looking to see if that was a quote from Yes, thats me.

22 anybody, but no. 23 Q

Dont you also agree that studies in humans are likely to

24 be confounded by variables other than the one of interest and 25 for this reason every study must be scrutinized not only for WWW.JJCOURT.COM

Welch - Cross/Houff

57

1 such confounders, but for defects in study design, data quality 2 and the strength of statistical correlations? 3 A Generally thats what youd look for. I mean, you go into

4 a study, an epidemiologic study, things that are confounders 5 which are other factors that could cause the effect youre 6 looking at, you do your best to collect data on that. And if

7 you cant, you know, if, for example youre doing a cohort 8 study of lung cancer and you cant get information on 9 individual smoking, then you can do your best to understand the 10 impact of smoking without that. 11 perfect. 12 But, you know, I just was thinking that in the So, in every -- no study is

13 Netherlands they did an updated risk assessment of exposure to 14 asbestos and potency. And they looked at all the available

15 studies and used only the highest quality ones, which then gets 16 you fewer cases, but higher quality exposure assessments and 17 the potencies came closer together and were higher. 18 Q 19 A And what study was that? Its a -- theres two papers. Theres Birdoff and I think

20 its -- its either Leytner (phonetic), its L-e-y-t-n-e-r or 21 L-e-t-y-n-e-r, from I think 2009. 22 Q Well, Doctor, on Page 15 of your report you do say what Studies in humans are likely to be

23 Ive just said, correct?

24 confounded by variables other than the one of interest and for 25 this reason, every study must be scrutinized not only for such WWW.JJCOURT.COM

Welch - Cross/Houff 1 confounders but for defects in study design, data quality and 2 the strength of the statistical correlation. 3 A 4 Q 5 A 6 Q 7 A 8 Q 9 A 10 Q 11 A 12 Q Are you on Page -Fifteen. Fifteen.

58

So thats probably a quote out of Dr. Kassirer?

It looks like it. Its under assessing evidence and causality, right? Right. Yeah. So thats a quote out of his book.

Well, do you agree with it? Yeah, generally, yeah, I do. And you agree that just because a study has been published

13 in a prestigious peer-reviewed journal is no assurance that its 14 results or conclusions are correct, right? 15 A 16 Q Yes. And as corollary to that, just because a famous person

17 publishes something doesnt mean its necessarily correct, 18 right? 19 A Yeah. I think thats probably true. I mean famous people

20 get a -- they get a head start.

You say, whoa, that came from But they could be wrong.

21 Dail & Peto, Id better read that. 22 Q Right.

Well, you talked about Dr. Lemen and Dr. Lemen

23 testified for years for asbestos plaintiffs, didnt he? 24 A I dont know about Dr. Lemens testifying. I know he has,

25 but I dont really know years or how much. WWW.JJCOURT.COM

Welch - Cross/Houff 1 Q And, Dr. Nicholson also testified for years for

59

2 plaintiffs, correct? 3 A 4 Q I dont know that at all, one way or another. Now, on Page 40 of your report you say that in

5 occupational epidemiology classification of the exposure is 6 obviously very important, correct? 7 A 8 Q 9 A 10 Q You said four zero, 40? Yes, 40. Yes, sure. Now, you talked for a moment -- well, I dont need to talk You talked about Dr. Eaglemans (phonetic) case

11 about it.

12 report, correct? 13 A 14 Q Yes, I did. And that is a case report, it is not an epidemiological

15 study, correct? 16 A 17 Q 18 A 19 Q Correct. Now, do you know Dr. Eagleman? I do. And do you know that his opinion testimony on causation

20 has been ruled out in acetyl cases? 21 A 22 Q 23 A 24 In what cases? Acetyl. Popcorn lung cases. No, Im not aware of that. Objection to the relevance of popcorn

Oh, okay.

MR. FINCH:

25 lung, Your Honor. WWW.JJCOURT.COM

Welch - Cross/Houff 1 MR. HOUFF: Your Honor, my point is that what the

60

2 reputation and what the history of the witness testifying or 3 publishing a document, in publishing a case report is relevant 4 to how much weight you should give it. 5 THE COURT: Im sorry. How much weight should be

6 given to a peer-reviewed versus non -7 8 MR. HOUFF: THE COURT: No, to this case report. Oh, to the case report. Okay. Does the

9 case report deal with popcorn lung cases? 10 11 MR. HOUFF: THE COURT: No. The case report deals with drywall.

Well, then why is that relevant to a

12 popcorn lung opinion? 13 14 Honor. 15 16 17 18 THE COURT: MR. FINCH: THE COURT: MR. FINCH: Well, I -- okay. I dont know. Ill -MR. HOUFF: Because its the same opinion, Your

I object to that characterization. Well, I dont -A popcorn lung opinion being the same as

19 an opinion relating to chrysotile. 20 21 THE COURT: MR. HOUFF: Okay. I dont have any -Ill

Ill withdraw the question.

22 proceed, Your Honor. 23 24 Q THE COURT: Okay. That was

Doctor, you talk about the Rolland study.

25 published twice, correct? WWW.JJCOURT.COM

Welch - Cross/Houff 1 A 2 Q 3 A The which study? The Rolland, R-o-l-l-a-n-d. Oh, Rolland, yeah.

61

Actually, I dont think I talked about

4 it, but its in my report. 5 Q 6 A 7 2006? 8 Q 9 A Right. Those -- as far as I know, those particular -- what he Its one of your lists, correct? The one I was referring to as an abstract, I think, from

10 presented in the abstract has not been published. 11 Q Right. And, in fact, he did make a publication of the

12 same data that did not include a dose, correct? 13 A Thats -- his abstract was talking about the French

14 mesothelioma surveillance system and theres been multiple 15 publications about that cohort. But as far as I know, hes not

16 published the one that included the dose information. 17 Q Right. And the Loomis case that you talked about is a

18 publication by Dr. Stayner, correct? 19 A Hes probably one of the authors. That group is Loomis,

20 Hines, Stayner, Dement and some other people. 21 Q Right. And they could not find a dose response

22 relationship for mesothelioma in that study, could they? 23 A No. Theres too few cases to do dose response if you only

24 have four mesos and four pleural cancers. 25 Q Now, one of the things that you cited as well was the Li WWW.JJCOURT.COM

Welch - Cross/Houff 1 paper, L-i? 2 A Its in my report.

62

I dont think we talked about it in my

3 direct. 4 Q Right. And thats entitled Cohort studies on cancer

5 mortality among workers exposed only to chrysotile asbestos: a 6 meta-analysis, isnt it? 7 A 8 Q 9 Q Is that the 2004 paper that youre talking about? Im talking about the one that you cited. I dont actually have it in front of me so -- and Ive got

10 a lot of references in here, but Ill see if I can find it. 11 Yes, thats from -- in 2004. 12 Q Okay. And in the 25 articles that supposedly talk about

13 workers exposed only to chrysotile asbestos, they include the 14 1982 Acheson report on gasmask workers, correct? 15 A 16 me. 17 Q Okay. And do you remember that they also included the I dont remember that. I dont have the paper in front of

18 1989 report by Newhouse and Sullivan that showed the brake 19 factory, all of the mesothelioma cases were attributable to 20 crocidolite? 21 A Theres two questions there, but I dont remember if Li

22 had Newhouse in there, that analysis, without looking at the 23 paper again. 24 Q 25 A Okay. Now, do you know Dr. Victor Roggli?

I dont think weve met, but I certainly know of him. WWW.JJCOURT.COM

Welch - Cross/Houff 1 Q

63

He is a respected researcher in the field of asbestos and

2 disease, correct? 3 A 4 Q Yes. And he has published a number of books relating to the

5 results of his research, correct? 6 A Well, he has a book on pathology of asbestos-related

7 disease which I think has several editions and Im familiar 8 with that book. 9 10 Honor. 11 12 A 13 Q MR. HOUFF: Sorry. If youd bear with me one moment, Your

May I approach the witness, Your Honor? Yes.

THE COURT: Thank you.

Doctor, are you familiar with whats been marked as

14 Debtors Demonstrative Exhibit 61? 15 A Yes. I havent looked at it in a while, but Ive seen it

16 in the past, yes. 17 Q And this is a study entitled Malignant Mesothelioma and

18 Occupational Exposure to Asbestos: A clinicopathological 19 correlation of 1445 cases, correct? 20 A 21 Q 22 A 23 Q Thats correct. And it is a peer-reviewed publication? Yes. And, briefly, what occurred here, according to the paper,

24 is that the study reports findings in 1445 cases of 25 mesothelioma with a known exposure history, 268 of these also WWW.JJCOURT.COM

Welch - Cross/Houff 1 had a fiber burden analysis.

64

Fiber burden analysis is when one

2 takes lung tissue and processes it and then isolates the 3 asbestos fibers and counts them and classifies them, correct? 4 A 5 Q Correct. And that is then -- that result is then compared with a

6 known or the background for that laboratorys studies and 7 conclusions can be drawn then about whether the exposure or the 8 levels seen are above, below or at background, correct? 9 A Yeah. I would say its the fiber levels because you have

10 to then have a discussion about how that relates to exposure. 11 But, yes, youre able to compare the fiber levels in any 12 individual to what that lab says is an unexposed background 13 level from fibers. 14 Q 15 A 16 Q Right. Yes. And they found that and they compared their results with a They also did asbestos body counts, correct?

17 control group of 19 lung tissue samples, correct? 18 A 19 Q Correct. And median asbestos body counts and levels of commercial

20 and non-commercial amphibole fibers showed elevated levels for 21 each of the 19 exposure categories that they identified, 22 correct? 23 A 24 Q 25 A Yes. And chrysotile fibers were detectible in 36 of 268 cases? Correct. WWW.JJCOURT.COM

Welch - Cross/Houff 1 Q And all but two of these 36 cases had above background

65

2 levels of commercial amphiboles, correct? 3 A 4 Q Correct. Their conclusion was that commercial amphiboles are

5 responsible for most of the mesothelioma cases in the United 6 States, correct? 7 A 8 Q 9 A Thats the conclusion in the abstract, correct. Well, thats their conclusion in the paper, too, isnt it? Probably, because the abstract comes right out of the

10 paper. 11 Q 12 A 13 Q Right. Now, on Page 13 of your report --

Okay, Im there. Okay. You say at the bottom, to determine causality the Was the individual Does the agent

14 following questions must be resolved. 15 exposed to the toxic agent?

General causation.

16 cause the type of disease present in the individual and 17 specific causation, was the individual exposed to this 18 substance at a level where disease has occurred in other 19 settings and have other competing explanations for the disease 20 been excluded. The word been is not in there but Ill insert

21 it, with your permission. 22 A 23 Q 24 A 25 Q Thanks. Thats your statement, correct? Correct. And that can only be decided in an individual case, WWW.JJCOURT.COM

Welch - Cross/Houff 1 correct? 2 A Well, the general causation not necessarily, but this is

66

3 laid out as an approach for an individual. 4 Q Right. This is -- you have three elements, one of them is

5 certainly established as far as youre concerned, which is the 6 middle one, Number 2, and then you have to deal with the other 7 two, which are the exposed and the level of exposure in the 8 context of an individual case, correct? 9 A And youre referring generally to an asbestos mesothelioma

10 case probably. 11 Q 12 A 13 Q 14 A 15 Q 16 A 17 Q Thats correct. Yes, okay. Thats correct. Yes. Now, if I turn to Page 22 of your report -Okay. -you say that with respect to mesothelioma at the top

18 of the page, each exposure increases the likelihood of 19 developing an asbestos-related disease, correct? 20 A 21 Q 22 A Im quoting the EPA on that, yes. Is that your opinion? Yes. And when Im saying exposure, Im not really talking

23 about a fiber because as I talked about with Mr. Finch, you can 24 -- a single day of work gives you millions of fibers, but 25 generally its my opinion that each exposure, which would be a WWW.JJCOURT.COM

Welch - Cross/Houff 1 job or a task or a period of time, increases the risk of 2 disease, yes. 3 Q Well, in fact, on Page 24 of your report you say that

67

4 certainly each dose of asbestos that has been shown to cause 5 mesothelioma if occurring alone would be a substantial 6 contributing cause if it occurred in conjunction with other 7 exposures. 8 A 9 Q 10 A No. Okay. Im just saying if you -- you know, if you know that If Should there be an even if in there?

11 working as an insulator increases the risk by itself.

12 someone was also an insulator and a factory worker, the 13 insulator would add to the risk of the factory worker. 14 Q And lower down on that page you say that we can use the

15 analogy of dropping pennies into a glass of water until the 16 water spills over the edge of the glass. 17 the water to spill over the top? Which penny caused

The last penny would not have

18 caused the spill without the contribution of each of the other 19 pennies in the glass, correct? 20 A Right. Its just a visual example of adding multiples

21 exposures together to get someones cumulative dose. 22 Q 23 A 24 Q Okay. Now, on Page 38 of your report --

Okay, Im there. -- you say, we do not need an epidemiologic study of

25 exposure to a specific asbestos containing product to conclude WWW.JJCOURT.COM

Welch - Cross/Houff 1 that product can cause asbestos-related disease, correct? 2 A 3 Q Correct. Thats correct.

68

And you say its these respirable asbestos fibers that

4 cause disease and an asbestos fiber is the same fiber if it is 5 released from joint compound insulation materials, friction 6 products or any other asbestos-containing material, correct? 7 A 8 Q Correct. And you agree that background exposures to asbestos in the

9 ambient air are not contributory to mesothelioma? 10 A No. Actually I have testified that I wouldnt attribute

11 it in an individual case because I dont necessarily know that 12 an individual had those exposures. We can really only identify

13 exposures that individuals have that are related to point 14 sources. But I think that in an individual even background

15 exposures add to their cumulative dose. 16 Q Now, Mr. Finch talked about the courts in which you have

17 been accepted and your opinions have been accepted as an expert 18 witness. Are you familiar with the fact that on June 29th,

19 2012, the Court of Special Appeals of Maryland in a reported 20 opinion rejected your every exposure opinion? 21 A I am a little bit familiar with that. Yes. I know that I havent

22 theres some additional review or, I dont know. 23 followed it, but I do know that happened. 24 25 MR. HOUFF: THE COURT:

Your Honor, may I approach Yes. WWW.JJCOURT.COM

Welch - Cross/Houff 1 2 MR. HOUFF: MR. FINCH:

69

- and offer up the (indiscernible) page? Your Honor, Im going to object to the

3 use of this as an exhibit with this witness unless Mr. Houff 4 lays the foundation that shes ever seen it before. 5 THE COURT: All right. Well, well give him an What Ive been handed is

6 opportunity to lay that foundation. 7 Debtors Demonstrative 62. 8 foundation. 9 MR. HOUFF:

Go ahead, Mr. Houff, to lay the

Well, Your Honor, actually Im not sure I

10 need to lay a foundation because this is a reported public 11 opinion in the courts and is judicially noticeable by Your 12 Honor. 13 THE COURT: I can take judicial notice of it, but not Its hearsay. Its just

14 of the truth of the matter therein. 15 an opinion of another court. 16 17 MR. HOUFF: THE COURT: Okay.

So Im willing to take judicial notice of

18 the fact that it is entered as an opinion of that court. 19 20 Q 21 A 22 Q 23 A 24 Q 25 MR. HOUFF: Okay.

So Dr. Welch, have you ever read this opinion? No. Nobody has given it to you? I dont think so. Okay. MR. HOUFF: Well, Your Honor, I proffer that I would WWW.JJCOURT.COM

Welch - Cross/Houff

70

1 proceed through the opinion and demonstrate to the Court and to 2 Dr. Welch the reasons why the Court rejected her every exposure 3 opinion and reversed the case. 4 MR. FINCH: Your Honor, I would object to that.

5 First of all, what the - the Dixon case is on appeal to the 6 Marylands highest court. Secondly, Your Honor, what the Court

7 actually held was that her opinion as to a substantial 8 contributing cause in a particular case wasnt admissible in 9 that case. Theres been no foundation laid with this witness

10 shes ever seen the opinion or the rationale of what some 11 Appellate Court wrote in some opinion. I dont see how she can

12 possibly expected to ask questions about what a Court wrote in 13 its opinion when shes just testified shes never seen it. 14 THE COURT: Well, I cant either, but I guess the

15 more relevant question for me is was this a chrysotile asbestos 16 case 17 18 19 compounds? 20 MR. HOUFF: It was a brake case, Your Honor. I dont MR. HOUFF: THE COURT: Yes, it was -- and was it relevant to joint

21 know if the witness can say, but it was in fact a chrysotile 22 exposure case. 23 Q 24 A Is that correct, Dr. Welch? I have to admit I wouldnt remember the details of the

25 case without going back and looking at it. WWW.JJCOURT.COM

Welch - Cross/Houff 1 Q 2 A 3 4 Honor. 5 THE COURT: All right. Okay. Im sorry to say I MR. HOUFF: Ill make that representation, Your

71

Well, Im not certain at this But, in any event, I

6 point how thats going to be relevant.

7 believe that the law will support my view that an opinion of 8 another Court is pure hearsay. 9 take judicial notice of it. So as I said Im willing to

If you want me to read the opinion

10 Im happy to read the opinion for whatever its worth, but not 11 for the truth of the matter as asserted unless you can 12 substantiate from another witness (a) what they are, and (b) 13 how theyre relevant. 14 15 ruling. MR. HOUFF: Well, I - and I accept Your Honors

The only thing - and I would ask the Court to read And the only thing I would say is that it is an I think that

16 the opinion.

17 enunciation of the law of the State of Maryland.

18 does not constitute hearsay by a - the second highest 19 appellate court and it does constitute the law of Maryland at 20 this time. 21 MR. FINCH: Your Honor, first of all I would dispute

22 with Mr. Houff that it constitutes the law of Maryland 23 24 25 THE COURT: MR. FINCH: THE COURT: Is your microphone on? Your Honor, I would dispute No. You just turned it off.

WWW.JJCOURT.COM

Welch - Cross/Houff 1 2 3 MR. FINCH: THE COURT: MR. FINCH: May I approach the Its okay now. Okay.

72

I would dispute that its the law

4 of Maryland now.

There was a subsequent case from the same

5 intermediate appellate court, different panel of judges called 6 Georgia Pacific v. Farrar that criticized the Dixon in a 7 footnote. And in the context of the Dixon case itself it said

8 that substantial contributing factor is a legal/medical 9 question not a pure medical question. 10 This is a medical witness. She is not being offered

11 - she has not been asked to answer the question in this case 12 by me, was something a substantial contributing cause of 13 something else? That might be appropriate in some In other jurisdictions all

14 jurisdictions in front of a jury.

15 you could ask is, as a medical matter, whats the cause of 16 mesothelioma? 17 So I think this is very far afield.

And as to his argument that this is somehow something Each of us have

18 the Court should read, you can cite cases.

19 cited cases in our briefs, but its not proper substantive 20 evidence and its not proper to cross examine this witness with 21 this piece of material. 22 THE COURT: Well, I agree with all of the above. You

23 may certainly substitute - not substitute, but supplement the 24 record with respect to any other cases that you choose to 25 submit. I agree with Mr. Finch. I will take this as a

WWW.JJCOURT.COM

Welch - Cross/Houff 1 demonstrative because you can argue it in your brief, and I 2 expect that thats where it will come up.

73

But for purposes of

3 factual presentation by this witness, I believe that this is 4 hearsay. She cant identify it, she hasnt see it, you need a So I will not accept this as an exhibit

5 different witness.

6 with this witness on the stand. 7 8 MR. HOUFF: THE COURT: Thank you, Your Honor. But you may certainly, you know,

9 incorporate the material in your brief. 10 MR. HOUFF: Thank you, Your Honor.

11 BY MR. HOUFF: 12 13 A 14 Q Q No. Okay. Doctor, in this particular case you did nothing Do you know Dr. John Maddox?

15 with the PIQs, correct? 16 A 17 Q 18 A Thats correct. I did not look at the PIQs.

You did not look at them, correct? Right. I did not - I dont have them, I didnt look at So as you said I had nothing to

19 them, nobody sent them to me. 20 do with them. 21 Q

And you were not asked to analyze them or attempt to

22 analyze them, correct? 23 A 24 Q Correct. You have no idea how many defendants were sued in addition

25 to Bondex or SPHC in any case thats covered by a PIQ, correct? WWW.JJCOURT.COM

Welch - Cross/Houff 1 A 2 Q

74

The PIQ is something specific to this proceeding, correct? Yes. Let me proffer to you that a plaintiff information

3 questionnaire is a form that was ordered by the court to be 4 completed by every pending mesothelioma claimant which listed 5 their occupational history, their exposures, and the people 6 they sued and the bankruptcy trust that they had made claims 7 against. 8 A 9 Q 10 A But just for this bankruptcy. For this bankruptcy. Because if it had been the case for every bankruptcy, that

11 would have been a very hard question to answer even though I 12 dont know the answer. Im just trying to figure out the

13 universe that the question applied to. 14 Q And in fact these apply only to the pending mesothelioma

15 claimants against Bondex and SPHC, okay? 16 A 17 Q Okay. That helps.

With that background, you then have no idea how many

18 defendants were sued in every case? 19 A 20 Q 21 A 22 Q No, I dont know. Or in any case. Thats correct. I dont know that information.

And you have no idea how many bankruptcy trusts claims

23 were submitted to. 24 A 25 Q Thats correct. I dont know.

And youve made no attempt to quantify any exposures of WWW.JJCOURT.COM

Welch - Cross/Houff 1 the population of claimants or to stratify those exposures in 2 terms of any epidemiological or industrial hygiene system, 3 correct? 4 A Not of the individual people. No.

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The only information I

5 have about epidemiology and exposures is from the published 6 medical literature. 7 Q You have no idea what those PIQs demonstrate about any

8 alleged Bondex joint compound exposure, if any, correct? 9 10 horse? THE COURT: Mr. Houff, arent you beating a dead How can she answer any of these

She hasnt seen them.

11 questions but for no? 12 13 A MR. HOUFF: Okay.

I mean, the only thing I know about them is what Dr.

14 Anderson and Dr. Feingold put in their reports. 15 Q So you cannot say to a reasonable degree of medical

16 certainty that anyone of the claimants against Bondex who 17 completed a PIQ actually have a meritorious claim for any 18 Bondex product, correct? 19 A No. I have not looked at any individual claims at all.

20 So I have no opinion on those. 21 MR. HOUFF: Thank you. I have no further questions

22 at this time, Your Honor. 23 24 25 MR. FINCH: THE COURT: MR. HOUFF: Brief redirect, Your Honor? Yes. Do I need to get all my stuff out of the WWW.JJCOURT.COM

Welch - Redirect/Finch 1 way? 2 3 BY MR. FINCH: 4 Q Dr. Welch, you were asked some questions on cross Do you go on to REDIRECT EXAMINATION

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5 examination about peritoneal mesothelioma.

6 explain in your report why it is you have the opinion that 7 chrysotile asbestos causes mesothelioma - peritoneal 8 mesothelioma? 9 A 10 Q Yes, I do. And do you talk about something called the weight of the

11 evidence approach? 12 A 13 Q Yes. And could you describe for the Court what that is, and how

14 you reached the conclusion that chrysotile asbestos causes 15 peritoneal mesothelioma? 16 A Yes. Basically its not really - you cant really do a We

17 study of chrysotile asbestos and peritoneal mesothelioma. 18 already talked about how - what the limited data is on 19 chrysotile exposure and mesothelioma in general. And then

20 peritoneals are only about ten percent of all mesotheliomas. 21 So I had estimated, and its here in the report, youd have to 22 include about 300,000 workers in the cohort study to find a 23 doubling of risks for peritoneal mesothelioma. 24 really impossible. 25 Q And WWW.JJCOURT.COM And thats

Welch - Redirect/Finch 1 A 2 Q 3 A So Go ahead.

77

So I was going to say, so then - and I dont really think

4 we need it, because we have information that chrysotile causes 5 mesothelioma, and I think thats really indisputable. 6 talking about it earlier. We were

And peritoneal mesothelioma appears When we look at the ones, say,

7 in these chrysotile cohorts.

8 were talking about - well, we have that one case from Canada 9 and the other cohorts that are listed as being chrysotile 10 exposed cohorts. There are peritoneals. Theres a paper by -

11 lets get his name right. 12 Q 13 A 14 Q 15 A Boffetta? I was thinking Kanarek or Marty Kanarek? And Boffetta as well. Boffetta talks about peritoneal

16 specifically and Kanarek has a table of the chrysotile 17 populations. And when you look at the tables there are And maybe not every single

18 peritoneals in those populations. 19 one, but a number of them.

So the epidemiology supports the

20 relationship as well as the biology supporting the relationship 21 between chrysotile exposure and peritoneal mesothelioma in 22 particular. 23 Q And just as a medical matter is - where is - what are The

24 the cells that peritoneal mesothelioma involves? 25 mesothelioma cells? WWW.JJCOURT.COM

Welch - Redirect/Finch 1 A Its mesothelioma cells.

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So that -- what we talked about

2 pleural mesothelioma occurring in the mesothelioma cells that 3 line the lung, and these are the same cells that line the 4 abdomen. 5 Q So is it fair to say that peritoneal mesothelioma is the

6 same disease as pleural mesothelioma, its just occurring in a 7 different area of the mesothelial cells? 8 A 9 Q Correct. And is this table which Im going to mark as ACC

10 Demonstrative Exhibit 1016 the chart out of the Kanarek report 11 -- and well give Your Honor a copy - that you were talking 12 about that shows peritoneal mesotheliomas in various chrysotile 13 cohorts? 14 A 15 Q 16 A 17 Q Yes. And included in that is the Pira paper? Correct. Right. The Balangero Mine cohort.

And the Balangero Mine cohort, the Pira paper itself which

18 Im going to mark as ACC Demonstrative Exhibit 1017 thats 19 actually an analytical epidemiology study, correct? 20 A 21 Q Thats correct. And for pleural and peritoneal cancers combined, there is

22 an excess risk of mesothelioma, correct? 23 A 24 Q Correct. And this is the Balangero cohort with chrysotile without

25 any tremolite in it, right? WWW.JJCOURT.COM

Welch - Redirect/Finch 1 2 3 THE COURT: MR. FINCH: THE COURT: Im sorry, Mr. Finch. Sure. Again, youre getting beyond me.

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Can you

4 - first of all, can you make it bigger so I can read it? 5 6 7 A 8 Q 9 Q MR. FINCH: This Sure. Yes.

So that there - thats the Let me just THE COURT: Just everyone stop for a minute. Just

10 stop the clock so I can catch up with where everyone was, 11 please. 12 MR. FINCH: Let me know when youre ready to proceed,

13 Your Honor. 14 ready. 15

All right, Your Honor, the - whenever youre

THE COURT: Thanks.

Okay.

Im ready.

Thank you.

You can

16 start again. 17 18 Q

MR. FINCH:

Okay. What I have marked as

Lets take this in pieces.

19 ACC/FCR Exhibit 1017 is a study called Pira, is that right, Dr. 20 Welch? 21 A 22 Q Thats correct. And that is an analytic epidemiology study relating to the

23 Balangero miners in Italy. 24 A 25 Q Correct. Chrysotile without tremolite in it. WWW.JJCOURT.COM

Welch - Redirect/Finch 1 A 2 Q Correct. And what they found is a significantly excess risk of

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3 pleural and peritoneal cancers combined. 4 A 5 Correct. Q And Ill mark as - what Ive marked as ACC Exhibit

6 1016 is a chart out of the Kanarek paper that talks about the 7 Pira, is that right, Dr. Welch? 8 A It includes Pira as one of the many studies with Correct.

9 chrysotile exposure. 10 Q

And Im going to mark as ACC demonstrative only 1016(a).

11 Thats the published paper in a peer reviewed journal entitled 12 Mesothelioma from Chrysotile Asbestos, an Update by Marty 13 Kanarek, correct? 14 A 15 Q Correct. And thats the paper that you were referring to which

16 theres been an errata sheet that he fixed a couple of typos in 17 the chart that talks about the various chrysotile cohorts, some 18 of which have peritoneal mesothelioma in it, correct? 19 A 20 21 of these. 22 23 Q Correct. MR. FINCH: And well provide Your Honor with a copy

For demonstrative purposes only. THE COURT: All right.

Dr. Welch, does chrysotile persist in the body long enough

24 to cause asbestosis? 25 A Yes. WWW.JJCOURT.COM

Welch - Redirect/Finch 1 Q Does chrysotile persist in the body long enough to cause

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2 pleural plaques? 3 A 4 Q Yes. Does chrysotile persist in the body long enough to cause

5 asbestos-related lung cancers? 6 A 7 Q Yes. Is there other examples of things that cause cancer which

8 do not persist in the body for any length of time at all? 9 A Yes. Actually all the other IARC known human carcinogens

10 for lung cancer which I think there are a dozen, nickel, 11 chromium, diesel exhaust, radon, cigarette smoke, theyre not 12 persistent in the lung. Theres no reason to say that

13 something has to be persistent in the lung to cause cellular 14 injury. 15 Q So does that mean it doesnt have to be persistent in the

16 lung to cause mesothelioma in the pleura? 17 A I would not think so. No. I think, you know, it has to

18 get to the pleura.

So fibers are more suited to get to the

19 pleura than say cigarette smoke which is why cigarette smoke 20 doesnt cause mesothelioma and asbestos does. 21 Q And what Dr. Brody talked about yesterday was chrysotile

22 fibers getting to the pleura. 23 A 24 25 Honor. WWW.JJCOURT.COM Correct. MR. FINCH: Thats all the questions I have, Your

Iola - Contd Direct/Ramsey 1 2 3 MR. HOUFF: THE COURT: MR. FINCH: No redirect - no recross. Sorry.

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Will you be using Dr. Welch later? No, Your Honor. And weve also - were

4 not going to be calling Dr. Leslie Stayner due to the 5 constraints of time. I think my co-counsel would kill me if I So with that, may I be

6 put on another medical science witness. 7 excused from the courtroom?

I may stay, but may I be excused

8 from formally sitting at counsel table? 9 10 11 excused? 12 13 14 Dr. Welch. MR. FINCH: THE COURT: May the witness be excused as well? The witness may be excused. Thank you, THE COURT: MR. HOUFF: Yes. More importantly, may the witness be

You may be excused, too, Mr. Finch.

Lets take a

15 five-minute recess and then you can call your next witness. 16 17 18 THE COURT: MR. FINCH: Thank you, Your Honor. (Recess) Mr. Iola, I have to remind you youre

19 still under oath, sir. 20 21 22 MR. IOLA: THE COURT: Yes, sir - yes, maam. All right. Thank you. Ms. Ramsey.

CONTINUED DIRECT EXAMINATION OF MARK IOLA

23 BY MS. RAMSEY: 24 Q Mr. Iola, welcome back. When we broke yesterday you were

25 responding to a question that I had asked about Dr. Mullins WWW.JJCOURT.COM

Iola - Contd Direct/Ramsey

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1 theory that certain defendants including Bondex who remained in 2 the tort system after certain other co-defendants asbestos 3 4 to you? 5 6 adjust it. 7 8 9 10 11 12 Q THE WITNESS: MS. RAMSEY: THE WITNESS: MS. RAMSEY: THE WITNESS: Oh, okay. Sorry. THE COURT: No. Actually dont touch it. Well THE WITNESS: Can you move that mic a little closer

Should I start again? No, I mean Is that better? - you were asking me about -

I was asking - we were addressing Dr. Mullins

13 thesis that certain defendants including Bondex which remained 14 in the tort system after other defendants had filed for 15 bankruptcy were then picking up the share of those defendants 16 in joint and several jurisdictions. And you had answered that

17 question at the end of yesterdays testimony, but I was going 18 to ask you if you could answer that question again, please. 19 A Well, both legally and factually its false. And legally

20 its false in this respect.

In those jurisdictions that are

21 several liability, the law only allows me to recover from the 22 defendant for their several responsibility. In those cases

23 where its joint and several, the law allows me to collect all 24 of my money from any of the joint and several defendants and 25 then they have the right to go under the state law and file WWW.JJCOURT.COM

Iola - Contd Direct/Ramsey 1 contribution indemnity claims if they believe there are other 2 responsible parties that contribute to the harm. 3 And I find it interesting in this whole discussion

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4 here that I am unaware that Bondex ever filed or prosecuted 5 cross claims for contribution or indemnity in any of my cases 6 against anyone. 7 for anyone else. And the reason for that was they never paid They just paid for their responsibility under

8 whatever the law was in a given state whether it be several or 9 joint and several. 10 11 130. 12 Q 13 A 14 Q 15 16 17 18 Do you recognize this document, Mr. Iola? Can you give me the original so I have the name? Yes. UNIDENTIFIED ATTORNEY: MS. RAMSEY: Ive got one. Oh. MS. RAMSEY: Im going to ask that we pull up Exhibit

You have it.

UNIDENTIFIED ATTORNEY: THE COURT: Yes.

Your Honor, may I? While youre paused,

Thank you.

19 everybody who is handing up exhibits today, please, first of 20 all I will need the ones that were shown by Mr. Finch earlier 21 today, but the reporter has asked if you could please provide 22 her with a set, too. So can you please make a complete set for Thank you.

23 the realtime court reporter, Barbara. 24 25 Q MS. RAMSEY: Will do.

Thank you.

Mr. Iola, have you had a chance to take a look at that WWW.JJCOURT.COM

Iola - Contd Direct/Ramsey 1 document? 2 A 3 Q 4 A 5 Q 6 A I have. And can you tell me who is released under that document? Im sorry, who is the what? Who are the released parties under that document? The released parties here are the Reardon Company, RPM,

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7 Inc. and/or Bondex International including without limitation 8 any and all claims. 9 Q And was that a typical release in your experience form of

10 release 11 A 12 Q 13 A It was. - that you have in front of you? Regardless of which of the companies we sued, Bondex

14 insisted upon releasing the whole family of defendants. 15 Q And was anyone other than Bondex released as part of that

16 release that you have 17 A 18 Q Absolutely not. You mentioned that RPM, Inc. and International released as Did you

19 well - or the successors and assigns of RPM, Inc.

20 typically or ever name RPM, Inc. or RPM International in the 21 lawsuits that you brought on behalf of plaintiffs against 22 Bondex? 23 A Yes, we did. As soon as we realized that what we believed

24 to be the case, which is that the real party in interest that 25 was responsible for Bondex asbestos-containing products was WWW.JJCOURT.COM

Iola - Contd Direct/Ramsey

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1 actually not Bondex but the parent, we started suing RPM, Inc., 2 RPM International, Inc., and Bondex. And when we would set for

3 a hearing our motion to hold them as a successor, the real 4 party in interest, they would run to me and ask me if I would 5 stipulate that RPM, Inc. and RPM International, Inc. would 6 stand behind anything that we got against Bondex whether it was 7 settlement or verdict, and entering into that stipulation 8 allowed me to pull down my motion and them not face the Court 9 dealing with the legal question of who was really responsible 10 for this liability. 11 It was my conclusion and it remains my conclusion

12 today that the reason they did that is that they did not want 13 courts around the country to look at the issue and determine 14 that the real party in interest was not Bondex, but the parent. 15 Q And did - typically was Bondex the payor under your

16 settlement agreements with 17 A 18 that. 19 Q 20 A 21 Q Okay. Never, ever saw a check. Did you understand that any party other than Bondex stood If youre asking me who wrote the check, I cannot tell you

22 behind that payment? 23 A Every settlement we did with Bondex was guaranteed

24 essentially through our stipulation by the whole family of 25 companies that stood on top or to the side, if you will, of WWW.JJCOURT.COM

Iola - Contd Direct/Ramsey 1 Bondex. 2 Q

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Do you recall whether RPM, Inc. or RPM International were

3 represented by different counsel in the lawsuits that you 4 brought? 5 A 6 Q To my knowledge never. Always same counsel.

And did they -- either of those companies raise any

7 defenses that were different or separate from Bondex? 8 A 9 Q Never. Talking about the settlement process, going back to that

10 process, was your experience in settling cases with Bondex -11 and by that I mean the Bondex entities including what was then 12 RPM, Inc. now is PHC, and International -- was your experience 13 in settling cases with those entities that they ever raised 14 what has been called here the chrysotile defense? 15 A 16 Q Yes. And what impact did that defense have on your settlement

17 negotiations, if any? 18 A None. But let me give a little perspective here. I

19 started in this business in 1982 and principally my inventory 20 of cases at that time were nonmalignant cases, and the 21 defendants from the very first moment I was in the litigation 22 took the position that chrysotile did not cause nonmalignant 23 disease, because that was the bulk of the cases at the time. 24 Then as the cases became lung cancer cases the defendants 25 migrated the defense to lung cancer cases, and then they WWW.JJCOURT.COM

Iola - Contd Direct/Ramsey 1 migrated the defense to mesothelioma cases. 2

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In all the years that I tried cases I never, ever had

3 a jury tell me that they bought the defense that there were bad 4 asbestos that killed people and there was good asbestos that 5 never did harm to anyone. And I found it interesting overtime

6 that they abandoned the position -- and I heard it from Dr. 7 Feingold -- they have abandoned the position that chrysotile 8 doesnt cause nonmalignant disease. They now agree it does. And the only reason

9 And they now agree it causes lung cancer.

10 they dont agree that it causes meso is those are the cases 11 they confront in the litigation. 12 Whatever that defense means, whatever it means to

13 both of us is reflected already in the price of settlement. 14 Its my view that if they really believed the defense, they 15 would not have paid me $80 million on my cases. They would

16 have gone in front of juries and they would have aggressively 17 tried to sell their position and they wouldnt have paid the 18 money. I never really believed that they believed it. In

19 fact, I had a lot of discussions with national coordinating 20 counsel where I understand the need for them to defend 21 themselves and they have every right to do so, but I dont 22 believe for one minute that anybody at my level who was dealing 23 with these cases in the manner we were dealing with them truly 24 believed the defense was meaningful. Because if that was the

25 case, then why would you pay $2 million in a mesothelioma case? WWW.JJCOURT.COM

Iola - Contd Direct/Ramsey 1 Why wouldnt you come and tell the jury its not our product, 2 we dont belong here? 3 Q Did you ever encounter Dr. Feingold in any of your

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4 underlying 5 A 6 Q 7 8 9 10 11 12 13 14 15 16 17 Q 18 A Many times. - litigation? MS. RAMSEY: THE COURT: MS. RAMSEY: May I approach, Your Honor. Yes. Can we have Exhibit 385, please? What number, Im sorry?

UNIDENTIFIED ATTORNEY: MS. RAMSEY: 385.

UNIDENTIFIED ATTORNEY: THE COURT: MS. RAMSEY: THE COURT: MS. RAMSEY:

Thank you.

Is this an asbestos committee exhibit? This is an ACC exhibit ACC Exhibit. - Your Honor. Yes.

Do you recognize that document, Mr. Iola? Well, I dont recognize the document. The document is

19 actually national coordinating counsels letter to their client 20 about evaluation of a particular case. 21 do recognize. 22 Q 23 A Have you seen the document before? You may have shown it to me or it may have been shown to But I usually wouldnt be copied on their The particular case I

24 me at my deposition.

25 lawyers assessment to their client as to what they think about WWW.JJCOURT.COM

Iola - Contd Direct/Ramsey 1 what my case is worth. 2 Q If you turn to Page 5 of that document in the final If we could have that larger.

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3 paragraph.

Is this such a case

4 where you were testifying that Dr. Feingold was involved in the 5 underlying litigation? 6 A 7 Q One of many. Yes.

And rendered an opinion that the injury to the plaintiff

8 could not have been caused by Bondexs product? 9 A Yes. And Ill tell you as an aside every time that Dr.

10 Feingold was in one of my cases I kept telling them, please, 11 just believe him and let me try my case. 12 Q 13 A And why was that? Well, because juries - in my experience juries found him Because -

14 to be an advocate and they typically didnt really believe what 15 he had to say because it, you know, it doesnt make any sense. 16 Q Moving to Bondexs other defenses that they have argued

17 here, do you recall Bondex ever attempting to defend a case on 18 the basis that it had a small market share? 19 A 20 Q Never. Do you recall Bondex ever arguing that it did not have

21 successor liability for the time period when - before the 22 purchase of Reardon when Reardon was putting products into 23 commerce? 24 A 25 Q Never. Turning back to Dr. Mullins estimation testimony. WWW.JJCOURT.COM Dr.

Iola - Contd Direct/Ramsey 1 Mullin, I think you were here, he testified yesterday, during 2 portions of that testimony. Were you here when Dr. Mullin

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3 testified that the relative costs between a plaintiff and 4 defense when theyre trying these asbestos cases means that the 5 costs are less to the plaintiffs than they are to the defense? 6 A I heard it and it was part of my conclusion that he

7 doesnt understand our business. 8 Q 9 A Okay. And tell me what you mean by that.

Well, I actually have as much cost, if not more cost, in At the beginning of I have to

10 prosecuting my case to trial than they do.

11 my case, Ive got extensive investigative expense.

12 go out and Ive got to probe and Ive got to send my 13 investigators out to interview as many people as are identified 14 who might have relevant knowledge. And by the time I get to

15 trial, trial in these matters cost hundreds of thousands of 16 dollars for us, just in hard cost. Not even taking into

17 consideration whatever time lost from the lawyers or anything 18 of that nature, because obviously we dont bill on an hourly 19 basis. 20 But to try a case in the tort system to verdict today The expert

21 costs anywhere from 200,000 to $350,000 or more.

22 costs are high, the transaction costs are high, the 23 investigative costs are high, the hotel costs are high, the 24 trial support guys cost a lot of money. 25 amount of money to try these cases. It costs an incredible

And its part of the

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Iola - Contd Direct/Ramsey 1 consideration in my discussion with the client about what do 2 you want to do when we get to the end and you got one or two

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3 defendants left and maybe we are a little bit apart on what the 4 cases were. I have to evaluate that gap in the context of what

5 its going to cost my client to bridge the gap. 6 And many times at the end of the case -- and Bondex

7 took advantage of this particularly in joint and several 8 jurisdictions where they waited to the end, they had a big 9 credit, they knew it would be expensive for me to try the case, 10 they knew that I might not be able to get over the dollar for 11 dollar offset and so it became a consideration for us in the 12 resolution of the case, much more for us, I believe, than for 13 them. But the idea that somehow we could try the cases without

14 laying out the same amount of money that they lay out is not 15 true. 16 Q And do you think that your experience in trying these

17 cases is - do you know whether your experience trying these 18 cases is typical of other asbestos law firms that try cases 19 mesothelioma cases? 20 A I have a unique position in the litigation in that Im not And so I have - I get to work

21 - I dont have my own cases.

22 with some great law firms across the country who hire me to 23 perform what I do for them and so I get a very, very good look 24 at a cross section particularly at the top layers in a 25 litigation who are actually litigating their cases one-by-one WWW.JJCOURT.COM

Iola - Contd Direct/Ramsey 1 against the defendants, and trying to do the job that were 2 ethically required to do. And so I do believe that the

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3 experience that Ive just testified to is very much whats 4 common and typical in the marketplace. 5 Q And do you have an opinion about why it would be that

6 Bondex would engage in group settlements in an effort to avoid 7 those litigation costs or as a matter of implicit legal fees, 8 as Dr. Mullin would term it, as opposed to trying those cases 9 if the costs are relatively equal? 10 A Well, I would say that the group settlements represent They represent a business

11 something a little different, okay.

12 transaction between those firms that have a lot of cases and 13 Bondex. Bondexs motivation in doing those was they didnt The

14 want those lawyers to apply scrutiny to the cases. 15 objectI've of those deals was business. 16 flow agreement.

They wanted a cash

They wanted to know with this firm that has a

17 lot of volume were going to pay you this much a year and its 18 going to cover this many cases. 19 convenience. That was - it was a matter of

And for them what it really was is, they were

20 delighted to enter into agreements like that because the 21 plaintiffss lawyers didnt get to analyze the product ID, look 22 at it one-by-one. 23 I guarantee you if each of those cases in any one of

24 those agreements would have been picked apart, you would have 25 had some that were dismissals, and you would have some that are WWW.JJCOURT.COM

Iola - Contd Direct/Ramsey 1 multimillion dollar cases. Now how many would be one or how

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2 many we be the other, I wouldnt be able to tell you without 3 pulling apart and going through each of those cases. But the

4 idea was to avoid the plaintiffs doing what I do which is 5 really pulling down a given case and looking at the merits of 6 it and determining what their real liability is. So thats a

7 business choice that those firms made on behalf of their 8 clients with Bondex, and thats all that represents. 9 Q Do you believe that settlement values reflect the true

10 liability on individual cases? 11 A 12 Q In my practice I believe they do. Do you believe it across the board as youre familiar with

13 the settlements in asbestos litigation? 14 A I do not. I do not believe that a mass agreement, a group

15 settlement where every single mesothelioma gets, Im going pick 16 for the purpose of discussion, $50,000, I do not think that 17 represents a merit-based evaluation by either side, by Bondex 18 or the other side. In fact, I think what it really represents

19 is a desire for neither side to actually look at the merits of 20 the case. They wanted to make a business choice to evaluate Thats not my practice.

21 risk in a cash flow way. 22

I think if you really want to know what the value of

23 Bondexs liability is for mesothelioma cases, the cases that 24 you should really look at and the Court should look at is my 25 practice, because we were the most aggressive, we were the most WWW.JJCOURT.COM

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1 knowledgeable, we put the most pressure on Bondex, we exercised 2 the most discovery practice, we allowed Bondex to develop fully 3 their defenses whether they be product ID or credibility or, 4 you know, chrysotile or whatever they wanted to talk about, and 5 with very excellent lawyers on their side, and I think pretty 6 good lawyers on our side. That represents the true value, in I do not think the

7 my opinion, of what these cases are worth.

8 group settlements reflect in any way what the true value of 9 those cases are. 10 Q Do you think there are individual settlements where

11 amounts are reached in settlement that do not reflect a merit 12 based determination? 13 A In my practice I would say no. I think that across the

14 country undoubtedly there are cases like that. 15 Q Turning now, Mr. Iola, to asbestos trust. Do you have any

16 experience with the asbestos trusts that have been established 17 in other bankruptcies of asbestos manufacturers? 18 A I was asked to be part of the Trustee Advisory Committee

19 of the National Gypsum Trust back in 1994 and I have remained 20 in my capacity as a TAC member to this day. And, of course,

21 that trust is one of the very few trusts that actually tried to 22 verdict in front of the bankruptcy judge in a contested matter 23 the determination of the TDP and the qualifications for 24 submission. And I was an active participant and tried that

25 case for eight or nine months. WWW.JJCOURT.COM

Iola - Contd Direct/Ramsey 1

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In addition, Ive played a role when Leslie Controls

2 and CIRCOR filed for bankruptcy because they were defended 3 again where a lot of the money had come through settlements 4 with firms that I was involved with. I played a meaningful

5 role in the negotiation, if you will, of the resolution of the 6 case, but once that negotiation was done, the nuts and bolts of 7 the bankruptcy process and the TAC I was not on. And the only

8 other real involvement was that I participated in the trial of 9 the B&W estimation trial whenever that was, in - not exactly 10 sure when now. 11 Q 12 A 13 Q In the 90s maybe. Maybe its the 2000s.

Early 2000s. Im not sure. And so that would be my familiarity.

And based upon that experience, in your opinion, if this

14 trust in this case were funded at a level of 125 million, which 15 is the estimate that is reached if you accept Dr. Mullins 16 calculation of what a true merit based value of Bondexs 17 liability would be, would that trust be sufficient to enable 18 fair payment - payment consistent with the tort system to your 19 clients? 20 A 21 Well, let me ask MR. JACKSON: Your Honor, I object. I dont think he

22 has the foundation to answer that question. 23 THE COURT: I think youre going to have to lay a Sustained. Ill withdraw that

24 foundation for that. 25 Q

Let me ask a different question.

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Iola - Contd Direct/Ramsey 1 question for now. In your experience, are trusts faced with

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2 the same types of claims and settlement decisions that a tort 3 defendant is faced with? 4 A 5 Q 6 A Different. Different. And explain how different.

Well, in the tort system the rules are set by the rules of

7 evidence, by the procedural rules of the state, and by the 8 substantive law of the state. 9 which were evaluating cases. And thats the framework in And really what Im doing and

10 what Bondex is doing is, were evaluating what evidence do we 11 believe is admissible and what does that evidence show, and how 12 do we evaluate those facts? 13 The trust distribution process is a tradeoff. Its a

14 tradeoff of efficiency, if you will, for price.

In none of the

15 trusts do they accurately reflect what that defendant really, 16 their liability is in the tort system. And its even more

17 egregious than that now because theyre all paying a fraction 18 of what they evaluated their risk to be. Even though that

19 evaluation was wrong, theyre now paying a fraction of that. 20 Like, B&W, I think, is paying single digit payment percentage. 21 And they were a huge defendant in the marketplace. 22 So I dont think the trust represent - I dont think

23 the trusts are trying to replicate the responsibility or the 24 price that the defendants liability is in the tort system. If

25 that was the case, every single one of the trust is underfunded WWW.JJCOURT.COM

Iola - Contd Direct/Ramsey 1 by multiples, two, three, four, five, six, ten. Every single

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2 time a court picks a number and we vote on it and it gets voted 3 out, what happens? Within two or three years the payment

4 percentages go from 100 to 60 to 20 to 18 to 6. 5 And then future victims get totally screwed because

6 were going to have mesothelioma -- all these witnesses have 7 been talking about all these mesothelioma people that are going 8 to come forever, and what kind of money are they really going 9 to get? Do you really think that $17,500 for a mesothelioma

10 from the Johns Manville Company represents their share 11 responsibility? No way. And the reason its there is because And its the same for

12 it wasnt properly funded at the top. 13 everyone of them. 14 same problem.

You can pick any one of them, its all the

And itll be the same problem here no matter

15 what number you pick. 16 Q So your testimony is that these trusts are all underfunded

17 to begin with 18 A 19 Q 20 A 21 Q Hundred percent. - and that the problem becomes worse over time Everyday. - is that correct? Okay. The debtors seem to be taking

22 the position that a plaintiff who received money from the THAN 23 Trust should receive less from Bondex because theyve been paid 24 for - by the provider of the asbestos to Bondex. 25 do you agree with that proposition? WWW.JJCOURT.COM Is that -

Iola - Contd Direct/Ramsey 1 A 2 No, I think thats MR. JACKSON: Your Honor, I object.

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Its calling for

3 a legal conclusion. 4 to decide. 5 THE COURT:

I think this is a question for the Court

Well, I think its a - perhaps a

6 question for me to decide, but Im not sure where were headed 7 with this, Ms. Ramsey. 8 youre going? 9 MS. RAMSEY: Yes, Your Honor. How about if I do it Can you give me a proffer as to where

10 this way and maybe itll be easier. 11 Q Mr. Iola, was THAN typically a defendant in state court

12 litigation when Bondex was named? 13 A 14 Q They were. And in your experience did both THAN and Bondex provide

15 settlements in your cases? 16 A 17 Q They did. And do you recall Bondex ever asking for a discount

18 because a plaintiff had received money from THAN? 19 A Not only did they not ask for one they wouldnt be The law in the several liability

20 entitled to one.

21 jurisdictions says that the jury gets to determine how much 22 THAN is responsible for and how much Bondex is responsible for. 23 And Bondex was more than welcome in the system to assert that 24 THAN holds their liability and that you shouldnt hold me 25 responsible because they sold me the fiber and theyre really WWW.JJCOURT.COM

Iola - Contd Direct/Ramsey 1 the ones who are responsible. 2 arguments. 3 defendants. And they would make those

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Those are share arguments between the variety of That happens in every case. But Bondex never paid They both have

4 for THAN, and THAN never paid for Bondex.

5 independent liability both in several liability jurisdictions 6 and joint and several liability jurisdictions. 7 Q And just to conclude, to get back to your testimony about Do you believe that

8 why parties settle in the tort system. 9 trial results are predictable? 10 A 11 Q No.

And what has been your experience with respect to

12 prediction of trial results? 13 A I hate to admit it, but Ive tried some cases I should

14 absolutely hundred percent won and that I hundred percent lost. 15 And Ive tried some cases that I probably shouldnt have won 16 that I have - that I did. 17 I think that the tort system represents the best But its

18 system on earth for the resolution of claims. 19 unpredictable.

You take 12 people and you put them in a jury

20 box and you try to convince them and sometimes you can and 21 sometimes you cant. 22 I think that trials play a role in forcing If I

23 credibility on the defendant as to the real verdict risk. 24 wasnt willing to try my cases, they would impose upon me 25 different settlement numbers because they could. WWW.JJCOURT.COM

So trying

Iola - Contd Direct/Ramsey

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1 cases allows me to have credibility with the defendant that if 2 we dont reach an agreement that makes sense to me and my 3 client, then its just one of those cases we have to go try and 4 what happens, happens. 5 If I go and get a 25 or $30 million verdict against

6 Bondex, it doesnt change a single discussion afterwards, 7 because I cant say to the Bondex - the next case that comes 8 along, I just got $30 million in that other case so you owe me 9 $30 million in this case. It would be equally absurd for them

10 to say to me well, I got a defense verdict last time so I dont 11 owe you any money here. 12 Thats not the way the business works.

The people I dealt with, Mike Evert, Pat Haggerty, Okay. They were

13 Glenn Bowers, they were terrific lawyers.

14 very good at what they do and they understand that we try cases 15 when we have to try cases, because maybe my client has an 16 unrealistic view, maybe their client has an unrealistic view. 17 But whatever happens in that trial makes little difference to 18 what happens in the future in any other given case. 19 And Ill add one more thing. Im not really at

20 liberty to discuss with my clients what other clients have 21 received from a defendant. The defendants always have this

22 belief, and they always want to evaluate cases by looking at 23 what the history - what weve settled before, and they always 24 in the early days tried to say well, this guy that you settled 25 over here for X dollars, you know, he was 56, and this guys 56 WWW.JJCOURT.COM

Iola - Cross/Jackson 1 so why isnt it the same? 2 I - my approach from the very first day I got in

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3 litigation is that is irrelevant, because I cannot talk with 4 that about my client. I cannot say to - if you were my

5 client, I could not say to you Ive had other clients and they 6 received X and Y and Z from this defendant and therefore I 7 think you should get, you know, B. 8 discussion. I cant have that And so thats not the way

Those are confidential.

9 I discuss it with the client. 10 Instead, I look at the totality of the case, I try to

11 evaluate where does this defendant fit into the total case, 12 whats the case worth, and whats the contribution that this 13 defendant needs to make regardless of what theyve paid any 14 other client in my practice, ever. As Mike Evert knows, I

15 dont even keep a list of what the historicals are for any 16 defendant, because they are not relevant to me. I cant use

17 them in any way, and they dont define anything in a given 18 case. 19 20 21 22 23 BY MR. JACKSON: 24 Q I guess its still morning. Good morning, Mr. Simon MS. RAMSEY: THE COURT: No further questions. Mr. Jackson, cross examine? Yes, Your Honor. CROSS EXAMINATION

MR. JACKSON:

25 (sic), how are you? WWW.JJCOURT.COM

Iola - Cross/Jackson 1 A 2 Q 3 A 4 Q 5 A 6 Q Im Mr. Iola. Mr. Iola. Simon is supposed to be next.

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Jeffreys much taller and much better looking. And hes supposed to be next. And younger. I always get ahead of myself. Lets start with one of the

7 points you made towards to the end and you talked about this 8 question of THAN. In some jurisdictions its the jury that Did

9 gets to decide the responsibility of the various parties. 10 I hear you correctly on that? 11 A

That would be true in a several liability jurisdiction.

12 Correct. 13 Q And in order to get that decision from the jury youve got

14 to go all the way to the trial and have the verdict rendered, 15 right? 16 A 17 Q I disagree with that. So the jury can render that opinion without going to

18 trial? 19 A The jury cant. But the only way that the parties can

20 ever evaluate resolution of the case prior to verdict is by 21 looking at what the responsibility of a given defendant is in 22 the context of all of the defendants and exposure in the case. 23 So I would say that the concepts of several liability, although 24 not determined by the jury until you try the case, are 25 certainly an active piece of what both Bondex and I were WWW.JJCOURT.COM

Iola - Cross/Jackson 1 evaluating. 2 Q So in the settlement discussions you would have with

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3 Bondex the question of the liability of, lets say, U.S. Gypsum 4 or National Gypsum or somebody else would be part of that 5 discussion? 6 A 7 Q 8 A No question. Okay. Because -- Ill give you a good example. If Ive got a

9 guy who only has exposure to joint compound hes unlikely only 10 to have exposure to Bondex, okay. And lets say the case is in

11 California where its several liability where bankrupt 12 defendants get on the verdict form and a jury gets the 13 opportunity to put a percentage responsibility. If in that

14 given case the guy identified Bondex, USG and National Gypsum, 15 lets say thats his total exposure, I know at the get-go that 16 the - that whatever the percentage thats attributable to 17 National Gypsum and USG Im not going to get. Im not going to So in

18 get it from Bondex, and I dont ask for it for Bondex.

19 that kind of a case what I would be evaluating is only what is 20 Bondex going to be responsible for in the context of what I 21 think the total value of the case is. 22 Q So let me see if I understand then, sir. What I

23 understand you to be telling me is that you look at a 24 particular case -- and you do this in each individual case, 25 right? WWW.JJCOURT.COM

Iola - Cross/Jackson 1 A 2 Q Absolutely.

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What you do is you look at the respective responsibilities

3 in your view of each of the defendants that you have chosen to 4 file on behalf of that particular individual, is that 5 A 6 Q 7 A No. Thats not correct. Correct me.

All right.

I choose - I look at the total exposure picture.

8 Whatever the evidence develops whether I develop it or whether 9 you develop it as Bondex I have to evaluate in a several 10 liability jurisdiction what your percentage is likely to be of 11 the total piece. 12 sued them or not. And in that case it doesnt matter whether I I dont have to sue a defendant for the

13 defendants to get them on the verdict form and have a jury 14 apportion responsibility to them. 15 And by the way, when the jury writes 25 percent for

16 USG and 25 percent from National Gypsum, by definition that 17 means that Im only going to be able to get half of my money in 18 the value of the case, because youre not paying for them. 19 Theyre determined already by the jury. And thats my point.

20 Its wrong to say that Bondex ever paid for anybody elses 21 responsibility, because thats not what the law allows me. 22 Q So the distinction you were making between the way I

23 phrased my question and your answer I gather is that regardless 24 of whether or not a particular responsible party is part of a 25 litigation you look at the situation holistically to try and WWW.JJCOURT.COM

Iola - Cross/Jackson 1 figure out what the Bondex portion is. 2 A I dont know what holistically means in that context.

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3 look at the total exposure, okay. 4 Q 5 A Lets use total exposure. I try to determine what your responsibility is if youre

6 Bondex in the total picture of the case. 7 Q And thats something that you do based on your experience,

8 right? 9 A 10 Q Yes. Now, talking about the cost of trying the case from your

11 perspective, if I understand your new business model you are 12 now - were trying to negotiate cases than try cases, is that 13 fair? 14 A 15 Q 16 A 17 Q Well, its not new, but thats correct. Well, and how long have you been doing that? For about 13, 14 years. All right. Well, so youve been doing it for a while.

18 When is the last trial experience you would have had in which 19 Bondex was a player? 20 A It would - I second chaired a number of trials that we

21 tried for Wise & Julian with Shep Hoffman in Madison County and 22 I would guess in the mid-2000s. 23 Q 24 A 25 Q Like 2005 and before? Yeah. Okay. Probably. Now, when youre talking about the cost from the WWW.JJCOURT.COM But I cant -

Iola - Cross/Jackson 1 plaintiffs side thats the total cost of trying the case

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2 regardless of the number of defendants that are involved, isnt 3 it? 4 A If youre asking me whether or not the number of

5 defendants involved makes a difference in the cost I would say 6 it could, but maybe it doesnt always. 7 asking me? 8 Q Im sorry. I appreciate you for I can certainly Is that what youre

Thats exactly what Im asking you.

9 - feel free to fix my questions at any time. 10 use all the help.

Ive only just met you in this process this

11 week, but it seems to me that youre fairly passionate about 12 your cases, is that fair? 13 A Well, I mean, are there any more deserving victims in any

14 personal injury cases anywhere in the country than mesothelioma 15 victims? 16 Q And I gather from the recitation you did with Ms. Ramsey

17 of your history youve always been working on the plaintiffs 18 side of that equation, is that fair? 19 A 20 Q 21 sir? 22 A 23 Q I hope so. Now, every time Bondex is named as a defendant in a case Thats correct. And you try to work very hard for your clients, dont you,

24 in which youre affiliated its going to cost Bondex money to 25 defend that case, right? WWW.JJCOURT.COM

Iola - Cross/Jackson 1 A 2 Q I believe so.

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And in fact I thought, if I understood the discussion you

3 had with Ms. Ramsey a minute ago, Bondex in those cases has to 4 work those cases quite heavily to put all their defenses and 5 engage in discovery, is that fair? 6 A In my practice I expected, and the reality was that Bondex

7 did in fact hire very good lawyers and litigate their cases 8 aggressively. And thats what I expected of them, and thats

9 what I want them to do, because were trying to figure out 10 whether they belong in the case, and if so at what level. 11 Q Now, I think I also recall from yesterdays testimony you

12 used a phrase of about 50 percent of the cases in which you 13 were involved with Bondex had been dismissed. 14 that? 15 A Well, I believe that Mike Evert and I had a discussion Do you recall

16 where he said that he had looked at the cases I was involved 17 with and about 50 percent of them ended up in dismissal. And I

18 respect Mike a lot and Im certain that if he told it to me it 19 was true. 20 comment. 21 Q And is it consistent or inconsistent with your And so thats the basis on which I made that

22 recollection? 23 A To be honest with you I really didnt have a recollection I mean, I wouldnt have been able to put a I do know that there were times when we thought we WWW.JJCOURT.COM

24 of that.

25 percentage.

Iola - Cross/Jackson

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1 had a case against Bondex and the discovery process indicated 2 that we didnt and I tried to get them out of the case. 3 Q And in a circumstance in which you eventually determined

4 or those that you were working with determined based on your 5 advice that Bondex was not a responsible party in that case 6 there was never an offer to pay Bondex back for any of the 7 expenses it incurred in the case, was there? 8 A 9 Q 10 A 11 Q I dont believe Bondex ever asked me for that. And you never offered. Oh no, definitely not. Now, youre not saying, by the way, in the testimony you

12 gave yesterday that the very first case against Bondex was the 13 one that you were involved with with Steve Cripps, was that the 14 name? 15 A 16 Q Steve Cripps. In 99 and 2000. Youre not saying thats the first case,

17 are you? 18 A Im not saying thats the first case against you. Its

19 the first case of my involvement with Bondex. 20 Q Understand. But you understood that Bondex had been

21 defendants in cases all the way back to 1980, did you not? 22 A 23 Q 24 A I did not know that at the time. You know it now? I have some understanding based upon what Ive heard in

25 here that you had a limited experience in the tort system prior WWW.JJCOURT.COM

Iola - Cross/Jackson 1 to 1999. 2 Q And did you - all right. Thanks. I appreciate that.

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Do

3 you know how many parties have pending claims against Bondex in 4 this proceeding in which you have some connection? 5 A 6 Q 7 A I have absolutely no idea. There are like 2,000 and some-odd PIQs that were received. Tom, as I said in my deposition I didnt even know what a

8 PIQ was. 9 Q And you dont know how many of the people that you have -

10 now I understand that youve over time had a particularly close 11 relationship with Waters and Kraus folks, is that fair? 12 A 13 Q I have. And youve done a lot of the settlement negotiations in

14 their behalf over time, is that right? 15 A 16 Q 17 A 18 Q All of them. Yes.

Youve done all of them? All of them. Theres been about 95 such cases according to the Waters and Kraus -

19 database, does that sound right? 20 A 21 on.

Of Waters and Kraus, to be honest - well, maybe I - hold Let me see if I can tell you that. I think that that is

22 about right.

I think it actually might be a little bit more Thats correct.

23 than that, 97, 98, but in that range. 24 Q 25 A In that range? Yes.

WWW.JJCOURT.COM

Iola - Cross/Jackson 1 Q 2 A 3 Q Okay. Of Waters and Kraus, not including Wise & Julian. No, no. Understood. Just Waters and Kraus.

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And I think

4 you told Ms. Ramsey yesterday that you had about 130 total 5 settlements with Bondex, was that right? 6 A I told Ms. Ramsey I had about 130 total mesothelioma That was what I was asked about. And you probably should just assume that all

7 settlements. 8 Q

Understood.

9 of my questions are focused solely on the mesothelioma 10 (indiscernible). 11 A I just wanted to clear it up because we havent talked

12 about lung cancer and asbestosis. 13 Q No, no. Understood and I can understand another context But for

14 where that distinction might be important for you.

15 this proceeding, assume all my questions are specific to 16 mesothelioma claims - cases. 17 A 18 Q Okay. Because one of the things it will do is keep me from

19 having to say mesothelioma very often. 20 A 21 Q Okay. And you dont know how many Waters and Kraus clients have

22 pending claims? 23 A 24 Q I do not. Now, one of the things that we watched yesterday was we

25 watched about 40 minutes worth of video clips of two former WWW.JJCOURT.COM

Iola - Cross/Jackson 1 Bondex employees. 2 A Do you recall that part of the process?

112

I dont know how long they lasted, but I know that we

3 watched clips from Julius Nemeth and Mr. Bedros (phonetic). 4 Q And based on the comments you made thereafter I had the

5 feeling that you liked the clips, is that fair? 6 A I thought those depositions were devastating to the

7 company. 8 Q And you expressed your view in fairly strong terms, did

9 you not? 10 A Im a pretty frank guy, but if thats how you want to

11 characterize it, okay. 12 Q 13 A 14 Q 15 A 16 Q No, I Yes. I just want to be accurate. Yes. And your view was that those clips would put Bondex in a

17 bad light in front of a jury, is that right? 18 A 19 Q Yes. And in jurisdictions where punitive damages were available

20 that would help the argument that such damages should be 21 awarded, was that right? 22 A Thats true, but punitive damages were never part of a I never brought them up.

23 discussion about settlement. 24 Q 25 A

You never brought that up? No. Because the defendants have educated me over the WWW.JJCOURT.COM

Iola - Cross/Jackson 1 years that they dont have any coverage for punitive damages

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2 and so all of our settlement discussions were always couched in 3 terms of their compensatory risk. We all understood that in

4 certain jurisdictions there was additional risk on the punitive 5 side, but I wasnt asking Bondex or any company in the 6 litigation to pay for a punitive risk. You only have to pay

7 for a punitive risk if you decide that you evaluate the case 8 differently than I do, and my client decides they want to try 9 the case against you and I get a verdict and I have the 10 opportunity. 11 relevant. Thats the only place where punitives are

And Id also add theyre very difficult to collect.

12 So theyre not a meaningful driver in the marketplace is my 13 point. 14 Q Well, and you already told us in your conversation with

15 Ms. Ramsey that you didnt think verdicts were all that 16 relevant to the settlement discussion processes, right? 17 A I dont really. I think that putting people at risk is

18 relevant for credibility, but I dont think that the results 19 are necessarily - I dont think any experienced lawyer would 20 think that a given cases result in front of a jury gives any 21 real impact on another case with different facts. 22 Q And as you were going through the list of the, sort of,

23 the points that you would make coming out of the video clips 24 that were played yesterday, am I to assume that the Bondex 25 lawyers would simply agree with you and theyd make no counter WWW.JJCOURT.COM

Iola - Cross/Jackson 1 arguments? 2 A Well, I dont know how to answer the question youve I know from my

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3 asked, but let me answer this question.

4 discussions starting with Glenn Bowers, moving to Gail Jenkins, 5 moving to Pat Haggerty and moving to Mike that all the national 6 coordinating counsel that I negotiated with were aware of the 7 risk that those liability depositions presented to the company, 8 and I believe it was a factor for both of us in the evaluation 9 of the cases. 10 Q Did they have arguments to make as to why they might or

11 might not be in a given case that persuasive? 12 A Well, always. I mean, Mike Everts a very persuasive guy. I

13 I mean, he could almost sell me ice if I was in Alaska. 14 mean, hes a very good lawyer.

And so I was aware that in

15 every case Mike and the lawyers like him would stand up and 16 sometimes be able to persuade a jury that what they see and 17 here might not be as bad as what it appears to be. 18 Q Now, we can agree, I assume, that the video clips didnt

19 have anything to do with the asbestos content of Bondexs joint 20 compound products, right? 21 A 22 Q I disagree with that. Mr. Bedros does.

Well, Mr. Bedros talks about his ability to reformulate.

23 He doesnt talk about what - that the content somehow changed 24 by virtue of that, does he? 25 A Well, he said he reformulated it. WWW.JJCOURT.COM It wasnt that he just

Iola - Cross/Jackson 1 removed it, that he reformulated it. 2 understand your question. 3 Q So I guess I dont

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Well, my point is, as youre trying to prove a case in the

4 underlying tort system, you wouldnt be able to play either one 5 of those video clips to make the point that the asbestos 6 content and the Bondex joint compound product is somehow higher 7 than it was according to the formulas. 8 formulas. 9 A Lets put it that way. If It didnt change the

I dont know how to answer your question as asked.

10 youre asking me did I believe when Bondex originally answered 11 the interrogatories telling me what they told me about what 12 products contained asbestos and how much asbestos was in them 13 the answer is, I did not believe them. 14 discovery. 15 Now, if youre asking me that in a given batch And thats why we did

16 formula if I had a formula card that spoke to the issue as to 17 that batch how much asbestos was in it would I believe it? 18 That would be more reliable evidence for me. And if Jack

19 Fleming, for example, had personal knowledge and was able to 20 testify that, you know, I know because I was on the line in 21 1974 we put this much asbestos in the product then I would 22 typically believe that. All I was trying to do was evaluate

23 the evidence I had and whether I thought it was credible and 24 complete and reliable. 25 Q And these depositions that you played the clips of, they WWW.JJCOURT.COM

Iola - Cross/Jackson 1 were taken in 2000, is that correct? 2 A I believe that Mr. Bedros was taken in February of 2000

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3 and Mr. Nemeth was taken March of 2000. 4 Q And there were other depositions taken, sort of, in that

5 same general time period, were there not? 6 A 7 Q 8 A 9 Q Yes. Of Bondex employees. Yes. And in the course of that process you learned that the

10 main manufacturing facility for Bondex was in St. Louis, right, 11 or East St. Louis, to be precise? 12 A Well, I learned that there were three plants at which

13 Bondex made product, St. Louis, Toms River and to some lesser 14 degree Los Angeles. 15 Q And you learned that as between Toms River and East St.

16 Louis, East St. Louis was by far the largest, didnt you, sir? 17 A 18 Q 19 A 20 Q 21 A 22 Q 23 A Largest how? In terms of manufacturing capacity. I dont know about manufacturing capacity. In terms of employees. I have no idea about employees. Well, didnt you take the deposition I did, but I dont recall whether or not the Toms River If

24 facility had more employees than the St. Louis facility.

25 youre trying to ask me whether or not they made more joint WWW.JJCOURT.COM

Iola - Cross/Jackson 1 compound in St. Louis than they did in Toms River the answer 2 is, I believe thats probably true. 3 Q Well, and also in terms of the number of employees East

117

4 St. Louis had approximately two dozen employees and Toms River 5 had about eight, does that ratio ring any bells with you? 6 A 7 it. 8 Q If you represent to me that thats accurate Ill accept I dont have a recollection of that. Okay. Now, we can agree, cant we, that asbestos is a

9 silicate? 10 A 11 Q Yeah. And can we also agree that the OSHA violations that you

12 talked to Mr. Nemeth about resulted in a fine of $2,000? 13 A Youd have to show me. I dont remember exactly how much.

14 But I know that it reflected in a fine and that I know that I 15 deposed a man who said that there was no fine and then his 16 signature was on the check. 17 powerful moment. 18 Q Let me ask you to take a look at whats been marked as And its a horrible copy of the check, but its I thought that was kind of a

19 ACC/FCR-E-145.

20 beautifully labeled as check for payment of OSHA 21 22 23 Q COURTROOM DEPUTY: MR. JACKSON: Get closer to the microphone. I got too far away.

Sorry.

Im going to show you whats been marked as ACC/FCR-E-145

24 which is described as a check for payment for an OSHA citation, 25 and its in the amount of $2,000. WWW.JJCOURT.COM

Iola - Cross/Jackson 1 2 approach? 3 4 A 5 Q THE COURT: Yes. MR. JACKSON:

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So, Your Honor, if I approach - may I

Youre right about it being a terrible copy. About the only things that are really visible from that

6 particular copy is the amount $2,000 and its given to the 7 Missouri Department of Labor. 8 A Do you see that?

I cant even read the Missouri Department of Labor part.

9 What I can read 10 Q 11 A Its in the stamp. - on this is its $2,000 on Bondex International and a Thats about all I can read.

12 check date and number 20 -- 2949. 13 Q 14 A 15 Q 16 A 17 Q

And you see the exhibit sticker? Exhibit 38? Yes. Now - sorry, Ill wait until youre finished.

No, Im good. No Courts ever held that Mr. Nemeth lied about anything

18 in the video - that you showed of the video clips, has it? 19 A 20 lied. 21 Q 22 A And there Those are - we present evidence to juries and juries make Well, no Court was ever asked to determine if Mr. Nemeth

23 their own determination as to what they think, whether its a 24 lie or misrepresentation or whatever. 25 Q Ms. Ramsey started asking a few questions about the WWW.JJCOURT.COM

Iola - Cross/Jackson 1 verdict history of Bondex. 2 history? 3 A I was made aware at my deposition.

119

Are you aware, sort of, the verdict

You guys provided me a

4 list that you said represented a complete universe of all the 5 verdicts and you asked me some questions about it. And that

6 was pretty much my knowledge of the totality of your verdicts. 7 Q Well, but you were generally familiar with Bondexs

8 verdict history, were you not, sir, at the time you were 9 negotiating with them? 10 A I was aware that we had tried cases against them and other And I was aware that they

11 people had tried cases against them. 12 had won some and lost some. 13 Q Yes.

And you were aware that they won more than they lost, were

14 you not? 15 A 16 Q I would expect them to win more than they lose. And if they tried 29 and won 18, that wouldnt surprise

17 you at all? 18 A Not at all. Because the cases being tried are selected by

19 you not by me. 20 Q 21 A Well, you dont think you have a role? Youre going to pay all - Bondex is going to pay all the

22 good cases, and 23 Q You have no role in the process of whether a case goes to

24 trial? 25 A Not - well, I have a role only in the sense that I could WWW.JJCOURT.COM

Iola - Cross/Jackson

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1 - if you thought it wasnt a very strong case and you offered 2 me a small amount of money my role was, did I want to take the 3 small amount of money or did I want to take my verdict 4 opportunity? Thats the role I played. But you decided which

5 cases got tried because if I had a really good case you were 6 going to pay me the money. The only cases that got tried are

7 cases where you thought you had a legitimate opportunity to 8 win. 9 Q And, sir, in your view you never made a request for an

10 amount of money on a case that Bondex would have been unwilling 11 to pay in terms of its valuation of the case? 12 A Oh, there were times when we disagreed. Yes. Absolutely.

13 Respectfully disagreed. 14 Q

Now, yesterday in your discussions with Ms. Ramsey you

15 went through four specific case evaluations, do you remember 16 that? 17 A I dont know whether they were four, but, yes, I went

18 through several. 19 Q 20 A 21 Q 22 Do you still have them up there in front of you? I dont have any of that stuff. Its 176 MR. JACKSON: Ms. Ramsey, do you have the copies that

23 were there yesterday? 24 25 MS. RAMSEY: MR. JACKSON: Yes. I think its 176, 196, 386, and 390. WWW.JJCOURT.COM

Iola - Cross/Jackson 1 Ill get them for you. 2 A 3 4 5 6 7 8 9 originals? 10 11 12 Q MR. JACKSON: THE WITNESS: These are the originals. Okay. Good. Good, good. MR. JACKSON: THE COURT: Okay. I believe you. MR. JACKSON: THE COURT: Your Honor, can we hit pause? We can hit pause. (Pause) Your Honor, may I approach?

121

Yes.

Yes. Are these the redacted or the

THE WITNESS:

Thank you.

And to avoid that whole problem of, sort of, keeping the

13 names out of the record Im going to just refer to them by the 14 exhibit number, if thats something thats acceptable to you, 15 Mr. Iola? 16 A 17 Q Thats fine. Okay. Now, am I correct that of the four reports that you

18 went through, three of them were in Madison County? 19 A 20 Q 21 A 22 Q Yes. 176, 196, and 390 were all Madison County cases? Correct. And the other case was an El Paso, Texas case, is that

23 right? 24 A 25 Q Thats correct. Now if I understood correctly three out of the four of WWW.JJCOURT.COM

Iola - Cross/Jackson 1 these settled at some number above $400,000, is that right? 2 A You would have to remind me of the numbers again, but I

122

3 believe thats correct. 4 Q It was your testimony yesterday, sir, if you recollect,

5 great, if not. 6 A Youll remember that I asked Natalie to refresh my But I accept your representation.

7 recollection on the dollars.

8 I believe thats absolutely correct. 9 Q And I assume you have no idea how that would have compared

10 to the total number of cases over $200,000 even that Bondex 11 would have paid in the years 2000, 2002? 12 A Youre asking me if I know what dollars Bondex paid to

13 everybody else in the years 2000 to 2002 and how these compare 14 to that? 15 Q Im asking if you know the number of cases that Bondex

16 paid that were over 200,000 in 2000 or 2002? 17 A 18 Q In my practice or to everybody in the country? I assume you could only talk about your personal So if you could just tell me what you know.

19 knowledge, sir. 20 A

Yeah, but your question implied - I dont know anything

21 about everybody else, and I could look at a spreadsheet and 22 tell you how many cases settled for more than $200,000 in those 23 years. 24 Q 25 A Okay. But I cant tell you that off the top of my head. WWW.JJCOURT.COM No.

Iola - Cross/Jackson 1 Q

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Madison County, Illinois has more asbestos cases than any

2 jurisdiction in the country, doesnt it? 3 A 4 Q I dont know that to be true. Well, as we talk about Bondex in particular, 35 percent of

5 all cases since 2003 have been filed against Bondex in Madison 6 County, does that sound right to you? 7 A I would have no knowledge of that, but Ill accept your

8 representation. 9 Q Well, you understand its a large number of cases have

10 been filed against Bondex based on your own practice, isnt 11 that right? 12 A Well, we only settled - I mean, we only settled and

13 filed, I think, a total of about 26 mesos in Madison County so 14 youre asking me to comment on what other people were filing. 15 I dont know the answer to that. 16 Q Okay. Im sorry. Do you have any idea what

And thats a good point.

17 the total number of case filings against Bondex was in total? 18 A 19 Q No. Okay. Now, is it your understanding or position, sir,

20 that all of the claims that were filed - and lets just 21 broaden it to Illinois so we can talk Cook County, Madison 22 County and wherever in Illinois -- that all of the claims filed 23 in Illinois against Bondex were being filed by Illinois 24 residents? 25 A I would - my - I would believe that not to be the case. WWW.JJCOURT.COM

Iola - Cross/Jackson 1 Q And it would also be your experience, wouldnt it, that

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2 those filing claims in either Cook County or Madison County 3 were not claiming that the exposure occurred in Illinois. 4 A Some of the time they were, but not always. And thats

5 what the Illinois law allowed. 6 Q 7 A 8 Q Could you look specifically at 196, Exhibit 196? Yes. Now, Exhibit 196 is a situation in which the plaintiff

9 testified in - prior to his death in February of 2000, right? 10 A 11 Q Yes. And at the time of his testimony according to this

12 document the only thing he could recollect was USG exposure, 13 isnt that right? 14 A 15 Yes. 16 Q And it also notes that at the time - that at that time Do you know when USG filed for bankruptcy? Well, I didnt write this, but thats what this says.

17 USG was bankrupt. 18 A

I dont have a recollection off the top of my head when

19 they filed for bankruptcy. 20 Q Does it sound about right? 2000, by 2000 they were

21 bankrupt? 22 A 23 Q 24 A 25 Q I dont want to guess at that. All right. I dont know.

At any event thats what it says here.

That is what it says. And it wasnt until 2002 that other depositions were taken WWW.JJCOURT.COM

Iola - Cross/Jackson 1 that suggested Bondex had a role, is that right? 2 A 3 Q 4 A 5 Q 6 A No, thats not According to this? Well, you mean in this case? Yes. Yeah. I think that discovery continued in the case and

125

7 co-workers provided product identification as to Bondex. 8 Q Well, actually if you look at Page 3 I think the - youll

9 see that the additional product identification came from a 10 brother and a son. 11 A 12 Q Yes. Not unusual.

And that happened two years after the plaintiff in 196 had

13 passed away, right? 14 A I think the plaintiff passed away, a case was filed,

15 discovery commenced, and the kids and the co-workers were 16 deposed and identified. 17 discovery. 18 Q Now, of the 130 cases that you talk about having settled Yes. The ordinary process of

19 with Bondex, were those joint compound cases? 20 A 21 Q Define that term as youre using it in your question. Im using it in the sense that it is used generically in Not trying to be - not

22 the industry as a joint compound. 23 trying to be funny with it. 24 A

Well, I mean, look, Bondex made some asbestos-containing

25 products that were not technically joint compound, but they WWW.JJCOURT.COM

Iola - Cross/Jackson 1 were spackling or tape and bed products. So we identified a

126

2 number of different Bondex asbestos-containing products that 3 became the subject of litigation. 4 were Bondex joint compound. I think the bulk of them

But there were other

5 asbestos-containing Bondex products identified in individual 6 cases I feel certain. 7 Q Well, of the 130 cases youve settled, can you give us any

8 approximation of the percentage breakdown? 9 A 10 Q Im sorry, I couldnt, Tom. No way.

But in your view the majority of those would have been

11 joint compound? 12 A 13 Q I would think so. Yes.

Youve been fairly selective in the selection of cases

14 that you work with, is that fair, or the firms that you work 15 with? 16 A 17 Q Absolutely. You mentioned yesterday Shep Hoffman seminars. Do you

18 recall them? 19 A Yes. The plaintiff says asbestos litigation seminar Yes.

20 commonly referred to as PALS. 21 Q

In connection with that if I understood correctly you

22 suggested that Mr. Hoffman at one of those seminars had shared 23 sort of basically the case against Bondex, is that fair? 24 A 25 Q Correct. According to the videos that we saw, at least parts of. WWW.JJCOURT.COM

Iola - Cross/Jackson 1 A 2 Q Yes.

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And by doing that what Mr. Hoffman was doing was making it

3 cheaper and easier for other plaintiffs lawyers to prosecute 4 cases against Bondex, wasnt he? 5 A Well, youve added some qualifiers to your question. Let

6 me answer it back this way. 7 Q 8 A Okay. Mr. Hoffman was making the information that we had

9 developed about Bondex and the asbestos containing products 10 that they manufactured and the liability case against them 11 available to everyone in the bar. 12 or not I dont know. Whether it made it cheaper

But it certainly provided the bar -- and

13 a lot of people in the bar had no idea of Bondex -- a new 14 defendant that they could inquire about with their clients to 15 determine whether they were an appropriate defendant in their 16 cases. 17 Q Well, cheaper in the context that the plaintiffs lawyer

18 that had been given the information from Mr. Hoffman no longer 19 had to go out and independently develop that information, 20 right? 21 A Well, he probably wouldnt have had to go out and All he would have had to have

22 individually develop it anyway.

23 done if a guy identified Bondex is sue you and send you 24 interrogatories and request for admissions and request for 25 production of documents, and in most courts around the country WWW.JJCOURT.COM

Iola - Cross/Jackson

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1 you would have had to produce all the previous depositions of 2 any of your corporate people. And so in that respect they The only thing that

3 could have gotten the same material.

4 Sheps seminar did is, it disseminated it more widely in a 5 quicker way. 6 Q And we can agree, I assume, that a claim by a plaintiff

7 only arises when that plaintiff is actually exposed to a Bondex 8 product, right? 9 A 10 Q 11 A 12 she. Theres a lot more factors than that to have a claim. Well, it starts with that, doesnt it? Well, no, it starts with, does he have mesothelioma or And then if they have mesothelioma is Bondex identified

13 as part of the total dose of asbestos they were exposed to? 14 And in that respect those would be the two factors. 15 Q So at some point in that equation theres no claim unless Lets broaden

16 in fact there was exposure to a Bondex product. 17 it out that far. 18 A

I have hundreds and hundreds and hundreds of cases that

19 Bondex was not involved in 20 Q 21 A Sure. And -

- including many joint compound cases where Bondex was

22 not involved in. 23 Q 24 A And in those cases Bondex wasnt sued, right? Correct. I tried to do my best at not suing them unless I

25 thought they were responsible in the case. WWW.JJCOURT.COM

Iola - Cross/Jackson 1 Q 2 A But even so half the time you were wrong? Well, not half the time I was wrong.

129

I would say that you

3 guys have very good lawyers and you do a very good job of cross 4 examining my co-workers and many times you did a very effective 5 job at eliminating what I thought was ID and it turned out it 6 wasnt. And I thought the responsible thing to do at that

7 point was to dismiss you if you no longer belonged in the case. 8 And I wouldnt have sued you unless I thought I had a good 9 faith basis at the top. 10 Q 11 A 12 Q 13 A 14 Q 15 A 16 Q 17 A Whats it cost to file a complaint? Youre asking me? Yes, sir. I have no idea. A couple hundred dollars? I have no idea. Long time since you filed one? Its a long time since I participated at that level. I dont know the answer to that.

18 Lets put it that way. 19 Q

Both of us being from Texas I assume youll agree with me

20 that the Texas law on causation and proof of causation changed 21 fairly significantly over time, wouldnt you? 22 A 23 Q Thats true, and a lot of other things in Texas changed. It changed such that by 2007 a claim that was worth

24 upwards of $2 million would have no value at all. 25 A Yes. WWW.JJCOURT.COM

Iola - Cross/Jackson 1 Q Now you told us you were on the National Gypsum Trust

130

2 board. 3 A 4 Q The Trustee Advisory Committee. Trustee Advisory Committee. And one of the things I

5 believe you told us - well, maybe you havent told us this 6 yet, but am I correct that you - one of the things that you do 7 at the meetings is you look at the investments of the trust? 8 A Well, at the meetings these very sophisticated financial

9 people discuss what the investment strategy is and where the 10 money is invested and what the return is and what the risk is 11 and I listen to those presentations. Thats not really the

12 focus of my expertise, but, yes, I participate in meetings 13 where Ive heard those presentations. 14 Q And theyre talking about the value of the trust and the

15 value of the investments. 16 A 17 Q Yes. And do you know what - how well National Gypsum has done

18 on its investments? 19 A 20 I think weve - my understanding is weve MS. RAMSEY: Objection, Your Honor, I believe this is

21 beyond the scope of my direct. 22 23 THE COURT: Mr. Jackson. Honestly, Your Honor, I cant tell you I heard him talk about

MR. JACKSON:

24 whether he talked about it or not.

25 being on the Trust board of National Gypsum. WWW.JJCOURT.COM

Iola - Cross/Jackson 1 THE COURT:

131

Well, I think it is beyond the scope of

2 direct, but it is also cross examination and some factors do 3 affect credibility. So Ill allow you to pursue it, Mr.

4 Jackson, for a little. 5 MR. JACKSON: Its one question and one answer hes

6 either going to know or hes not. 7 8 A THE COURT: All right.

The only real understanding I have is that I know that

9 during the period of time when the market collapsed during the 10 recession, a lot of the trust lost a lot of money because they 11 were invested in higher risk investments in an attempt to 12 recoup money for the trust because they were having more claims 13 in a declining revenue stream. 14 National Gyp never engaged in that. The TDP did not

15 allow us to invest in, for example, equities or those kinds of 16 things. Judge Felsenthal in his original order had limited the

17 investments to - I mean, Im not an investment guy, but, you 18 know, Grade A Plus kind of things. 19 things are. I dont know what all those

And I think that as a result we certainly lost

20 money, a little bit in the trust corpus during the reduction, 21 during the recession of all the markets including the bond 22 market. But I think that in comparison to people that invested

23 in riskier things I think we did a lot better. 24 Q 25 A Would seven percent for 2010 sound about right? I have - that would be well beyond my WWW.JJCOURT.COM

Iola - Redirect/Ramsey 1 Q 2 A 3 4 questions. 5 6 7 8 BY MS. RAMSEY: 9 Q Mr. Jackson made a point, Mr. Iola, discussing cases in THE COURT: MS. RAMSEY: Redirect? Very briefly, Your Honor. REDIRECT EXAMINATION At that level of detail you cant say? No. Im sorry. MR. JACKSON: Your Honor, I have no further

132

10 Madison County and El Paso and suggesting that a large number 11 of cases - larger than would expected number of cases are 12 filed there. Do you know why those jurisdictions are subject

13 to more suits for Bondex? 14 A Well, I mean, Madison County has a history. They had an

15 open jurisdiction law that allowed cases that were not from 16 Illinois to be filed in Illinois particularly if you sued an 17 Illinois defendant who wanted to remain in Illinois because 18 thats their home. 19 these cases. John Crane is a meaningful player in all of

They make a ubiquitous product, a gasket product.

20 Theyre an Illinois company, and they wanted their cases to 21 stay in Illinois. 22 And so as a result of the open jurisdiction there

23 were a lot of cases from outside of Illinois that got filed in 24 Madison County. There still are a lot. But today the

25 defendants dont even move to remove those cases, because the WWW.JJCOURT.COM

Iola - Redirect/Ramsey 1 value of those cases in Madison County now is so much lower 2 than they would be in their real jurisdictions that the 3 defendants are more than happy for cases to be stacked up in 4 Madison County because the resolution cost there is so low. 5 Q Are you familiar with Bondex having filed motions to

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6 change venue or motions to dismiss based upon jurisdiction in 7 those jurisdiction in the cases youve been involved in? 8 A 9 Q 10 A Yes. They did file such motions.

And are you familiar with the outcome of those motions? I believe they were denied by Judge Byron or - and then

11 later whoever the next judge was because the Illinois law 12 allowed them to be there. And I would also add, I mean, my

13 ethical responsibility is to place the case in the jurisdiction 14 where I believe I can maximize the value for my client. And if

15 I thought that Madison County was an appropriate venue under 16 the law and that it was the best place for the case then its 17 my ethical obligation to file it there. 18 Q Two more questions. First question is, Mr. Iola, you

19 mentioned that you had pursued claims generically for joint 20 compound that were made and distributed by Bondex under other 21 names, is that correct? 22 A 23 24 25 Q Yes. MS. RAMSEY: THE COURT: Okay. Yes. Do you Can I approach, Your Honor?

And this is Demonstrative Exhibit ACC-1018. WWW.JJCOURT.COM

Iola - Redirect/Ramsey 1 recognize these names, Mr. Iola? 2 A 3 Q I do. And this was a chart that related to your testimony

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4 yesterday I think generally reflecting - prepared by my office 5 reflecting the delays in identification of product by Bondex of 6 various naming of products that they had liability for. I

7 think you testified to that yesterday, you were aware of that? 8 A I was - this reflects in a graphic and visual way that

9 Bondex was less than candid, frank and truthful originally in 10 the identification of all of the asbestos-containing products 11 that they manufactured, sold, distributed or were responsible 12 for that contained asbestos. And, of course, from the very

13 beginning in 1999 when I filed my first case against them, that 14 question was part of our interrogatory answers in each and 15 every case. 16 Q 17 18 19 20 Honor. 21 22 23 the name? 24 25 original. WWW.JJCOURT.COM MS. RAMSEY: Actually, I can hand Mr. Iola my THE COURT: Okay. Can I have the original so I can see And one final question. MS. RAMSEY: THE COURT: MS. RAMSEY: If I could have Document 388, please. Whats the exhibit number, Im sorry? Im sorry. Its ACC/FCR-388, Your

THE WITNESS:

Iola - Redirect/Ramsey 1 THE WITNESS: Yeah. Just let me see the name and

135

2 then you can 3 4 MR. JACKSON: THE WITNESS: Okay. First of all, Mr. Iola, can No, no, thats fine. Show me the name and then Ill give it

5 back to you. 6 Q

I just have two questions.

7 you identify the jurisdiction in which this case was brought? 8 A 9 Q Los Angeles, California. And the second question is, if you turn to the second

10 page, the second full paragraph and the third full paragraph, 11 can you identify the product that this indicates that you 12 pursued the claim on behalf of against Bondex? 13 A Can you blow up the paragraph before this one as well?

14 All the way up to where it says, the only Bondex testimony. 15 Thank you. 16 Q 17 A Yes. Im well aware of this dispute here.

And can you identify the product for the record, please? Yeah. Its - my client identified a Wards textured paint

18 that he had bought from Montgomery Ward, and it turned out 19 after much back and forth and having to take some additional 20 testimony from the corporate people they ultimately finally 21 admitted what I thought was the case from the beginning which 22 is they were the exclusive manufacturer of that product and 23 that it contained asbestos. 24 25 questions. WWW.JJCOURT.COM MS. RAMSEY: Thank you, Mr. Iola. No further

Iola - Recross/Jackson 1 2 3 4 came in. 5 6 BY MR. JACKSON: 7 Q Mr. Iola, no Court ever found Bondex in contempt for RECROSS EXAMINATION MR. JACKSON: THE COURT:

136

Just a couple if I might, Your Honor.

Mr. Jackson. Since we got a new demonstrative that

MR. JACKSON:

8 failing to disclose information in discovery, did they? 9 A I dont believe I ever would have filed such a motion.

10 That was not my relationship with Bondex. 11 Q And do you know, by the way, in 1980 when Bondex 200-B All

12 Purpose Joint Cement which is there on the first page of that 13 exhibit was disclosed how many cases were filed in the next ten 14 years on that product? 15 A 16 Q I have no idea. How about for any of the ones in which the yellow lines

17 are here, do you know how many cases were filed immediately 18 after the disclosure of that product? 19 A 20 Q 21 A I dont. Or in any period of time thereafter? But I would tell you that the fact that you were going to

22 get sued doesnt mean that you couldnt be - that you werent 23 required to be truthful in your interrogatory answers. 24 dont understand the connection. 25 Q My question is real simple. Can you tell us the number of So I

WWW.JJCOURT.COM

Iola - Recross/Jackson 1 cases that were filed against Bondex after - on any of the 2 yellow lines that you have after that product was, in your 3 mind, identified? 4 A 5 6 further. 7 8 9 10 11 12 13 14 lunch. 15 16 17 18 19 seated. THE COURT: THE COURT: MS. RAMSEY: THE COURT: MS. RAMSEY: THE COURT: Ms. Ramsey. Nothing further, Your Honor. Will you need Mr. Iola again? No, Your Honor. Youre excused, sir. Thank you, Judge. Thank you. No. MR. JACKSON:

137

Thank you, Your Honor, I have nothing

THE WITNESS: THE COURT:

I think we might as well stop here for

So well reconvene at 1:20. MS. RAMSEY: THE COURT: Thank you, Your Honor. All right. Were in recess until 1:20.

(Recess) All right. Good afternoon, please be

Were back on the record in Specialty Products case.

20 Ms. Ramsey. 21 MS. RAMSEY: Thank you, Your Honor. Our next witness

22 is Jeffrey Simon. 23 24 25 JEFFREY BLAKE SIMON, PLAINTIFFS WITNESS, SWORN COURTROOM DEPUTY: Please be seated.

DIRECT EXAMINATION WWW.JJCOURT.COM

Simon - Direct/Ramsey 1 BY MS. RAMSEY: 2 Q 3 A 4 Q 5 A 6 Q 7 A 8 Q 9 A 10 Q Mr. Simon, would you please state your full name. My name is Jeffrey Blake Simon. And where do you reside? I live in Dallas, Texas. And what is your profession? Im a lawyer. What kind of law do you practice? Product safety on the plaintiffs side. And do you have any particular specialty within that

138

11 practice area? 12 A I have for the last 20 years specialized in representing

13 people with asbestos disease and certainly over the last 12 or 14 13 almost exclusively mesothelioma cases with the exception of 15 some lung cancer cases. 16 Q Okay. I apologize, Mr. Simon, but I have been told that I So were going to have to move fairly quickly And as a result Im going to dispense Im also going to hand you now a

17 have 15 minutes.

18 through your testimony.

19 with some of the background.

20 list of unredacted - a set of unredacted exhibits that we may 21 be talking about, and I have a set for debtors as well. 22 Mr. Simon, during the course of your experience

23 representing personal injury and wrongful death claimants 24 against asbestos defendants, have you had occasion to represent 25 those plaintiffs in cases against Bondex or SPHC? WWW.JJCOURT.COM

Simon - Direct/Ramsey 1 A 2 Q Yes. Many.

139

And how many of those cases would you estimate went to

3 trial? 4 A Where I took some speaking role in the case either live or

5 by video or I negotiated on the case? 6 Q 7 A 8 Q Yes. Im sure over 100 taken collectively. And I want to focus particularly in on your trial Can you tell me what factors you considered

9 experience.

10 important in taking a case all the way to trial as opposed to 11 being able to settle the case the way that Mr. Iola described? 12 A 13 Q 14 A With Bondex? Yes, with Bondex. Well, in my practice it would be essential to have

15 confirmed the diagnosis of mesothelioma, to know whether or not 16 the product identification of a Bondex asbestos-containing 17 product was sufficiently grounded to survive summary judgment 18 and directed verdict. And if those things were true and my

19 client had a desire to try that case to verdict then the issue 20 is the liability case against Bondex which was quite 21 compelling. 22 Q And in those cases what series of factors resulted in

23 Bondex not settling those cases before they went to trial? 24 A Bondex always defended the cases I was involved with on That was the issue. WWW.JJCOURT.COM It was disputing,

25 product identification.

Simon - Direct/Ramsey 1 when they could, that my client had accurately described an 2 asbestos-containing product made or sold by Bondex 3 International or Reardon before that. 4 Q

140

And Id like you to turn first to the exhibit in front of

5 you, 228. 6 A 7 Q Could I trouble you just to tell me what it is? Oh, okay.

This is the memo to Kelly Tompkins from Chip Collins dated

8 June 13, 2007. 9 A 10 Q Yes. And the re on that is Bondex and RMP 2006 trial summary,

11 is that correct? 12 A 13 Q Yes. And if you look on the first page under Kevin Sandel, is

14 that a name you recognize? 15 A 16 Q I tried that case to verdict in January of 2006. And if you turn to Page 2 and look at the key issues in

17 the case -- if we could have that a little larger on the screen 18 -- the first issue addressed is product identification. Is

19 that consistent with your testimony that product ID was the 20 most important issue in the cases that you tried against 21 Bondex? 22 A 23 Q 24 A 25 in. WWW.JJCOURT.COM Yes. And was that always the case? Absolutely. Thats how Bondex defended the cases I was

Simon - Direct/Ramsey 1 Q Did Bondex ever defend on the basis of the chrysotile

141

2 defense? 3 A As part of the trial they would put up somebody to say

4 that chrysotile doesnt cause mesothelioma or that it only does 5 so in exotically high exposures. 6 was. But thats not where the case

That was an afterthought in the way they really defended

7 the cases I was in. 8 Q 9 A Did Bondex ever prevail on the chrysotile defense? Ive never had a jury say that they didnt believe The federal government banned And so I

10 chrysotile caused mesothelioma. 11 it for that reason.

Specifically for that reason.

12 dont think that typically is the persuasive or dispositive 13 argument. 14 I think it softens, damages if it works. Now, of course, I find the opposite to be true. I

15 have found that the chrysotile defense - now Im an advocate, 16 but I find it to be a contrivance, a longstanding one, and I 17 like it when they argue that chrysotile doesnt cause 18 mesothelioma because I think it strains credibility. 19 Q When Bondex would raise the chrysotile defense you said

20 that they would hire experts, did you say, who would come in 21 and testify that Bondex did not cause - Bondexs asbestos 22 content did not cause mesothelioma, is that correct? 23 A 24 Q Yes. Principally Allan Feingold.

And so you had personal experience where Dr. Feingold was

25 the debtors expert in your underlying tort cases? WWW.JJCOURT.COM

Simon - Direct/Ramsey 1 A 2 Q A lot.

142

If I can direct your attention now to ACC/FCR Exhibit 386 This is a case that Mr. Iola discussed. Did

3 the Kwasnik case.

4 you have any involvement in this case? 5 A 6 Q I was the lead trial lawyer in the Douglas Kwasnik case. And when you took this case to trial what was the result

7 at trial? 8 A The case ultimately settled for - I dont know if Im

9 permitted to say how much - substantially upwards of $20 10 million. 11 Q And when you were trying this particular case what were

12 the, in your - on behalf of the plaintiff, what were the 13 issues that you were presenting to the jury that you were 14 expecting would result in a favorable plaintiff verdict? 15 A Douglas Kwasnik and his wife were not just people

16 suffering with the disease and with a compelling story to tell 17 about the impact of a very premature death, but they were 18 incredibly loving and altruistic people who had adopted a 19 number of children with special needs. And so the number of

20 people who required not only parental guidance and care, but a 21 special kind who were reliant upon Douglas Kwasnik for - to 22 live a long time was important. 23 And that case was about a man who was a pipefitter

24 plumber who had been exposed to the full array of asbestos 25 products as we understand in the industry. WWW.JJCOURT.COM He had been exposed

Simon - Direct/Ramsey 1 to asbestos cement pipe which contained crocidolite asbestos 2 along with chrysotile.

143

Hed been exposed to a lot of thermal

3 insulation that contained amosite asbestos, and he was exposed 4 to a lot of products that contained chrysotile asbestos like 5 the joint compounds and gaskets and so forth. 6 And so what was interesting about that trial, and I

7 remember this not just for its damage consequence, but just it 8 was -- from the standpoint of the industry it was something of 9 the theater of the absurd. There were 11 different defense

10 experts who attributed the cause of the mesothelioma to 11 different asbestos products excluding their own. In other

12 words, you have the chrysotile defendant saying it was entirely 13 the asbestos cement pipe because it had crocidolite in it. You

14 had experts for the asbestos cement pipe defendants saying that 15 somehow the crocidolites encapsulate in the product and it was 16 in fact the joint compound and gasket exposures which were 17 consequential. And so when we were in pretrial in that case I

18 had a big chart which simply said the eye is in the beholder. 19 It was that kind of case. 20 Q And if you can turn to Page 19 of Exhibit 386 and under And read that report - this

21 the section plaintiffs demand.

22 is a report by defense counsel advising Bondex that the - any 23 settlement demand was likely to be higher than normal and 24 making a point that it was not due to the quality or quantity 25 of product identification in this particular case. WWW.JJCOURT.COM When

Simon - Direct/Ramsey

144

1 product identification was not the key issue what was the key 2 issue in the cases, in your estimation? 3 A Well, according to this its the damage component in the Its well

4 case, and then of course its comparative fault.

5 look at the array of asbestos products to which he was exposed 6 and arent we going to get some minority share. 7 Q And did you have in your experience cases against Bondex

8 or SPHC that you tried to verdict or that you settled where 9 there was poor -- relatively poor product ID? 10 A Yes. They typically settled the better product ID cases Theres no

11 and did not settle the cases, when they got tried.

12 question that when we disagreed about price it was because they 13 were going to dispute the product ID. 14 about that. 15 Q Because of the quickness of our examination Im going to How did - I think Theres no question

16 turn now to the actual trial experience.

17 you were in trial yesterday when Mr. Iola was testifying about, 18 and we played video clips of, some of the corporate designee 19 depositions that were taken in connection with the Marfice 20 (phonetic) and Cerniglia cases. Did you ever use those

21 corporate designations as part of your trial work? 22 A 23 Q 24 A Yes. How often would you say? Well, every time. But the way I did it is, in the early And then because John

25 going I played the videos themselves.

WWW.JJCOURT.COM

Simon - Direct/Ramsey

145

1 Fleming the corporate designee of Bondex International and RMP, 2 Inc. and so forth had relied upon that testimony to inform him 3 I would simply cross examine him with that testimony and boiled 4 it all down ultimately into a video I took in March of 2009 of 5 Jack Fleming. 6 Q And what was the impact of those designations or that

7 testimony on juries from your perspective? 8 A I think juries were very angry about the fact that Bondex

9 International and RPM probably never warned on joint compound. 10 Theres substantial evidence that they never warned, that they 11 knew in 1972 that they had to put caution labels on the 12 products, and they knew that the caution labels themselves that 13 they should put on would be inadequate, because they say avoid 14 creating dust which with the joint compound that youre mixing, 15 sanding or sweeping would be impossible. And the evidence that

16 they didnt warn came from several things. 17 The first is that in the Marfice and Cerniglia cases

18 the plant manager in St. Louis, Thomas Phipps (phonetic) said I 19 saw the packages of these joint compounds all day long from 20 1969 to 1981 and I never saw a caution label. And he was

21 responsible for manufacturing in that facility. 22 Jack Fleming says that the earliest he can swear Ive never been in

23 there was any caution label on it was 1974.

24 a single trial where a layperson came up and said I have no dog 25 in this fight, Im testifying because its true or because Ive WWW.JJCOURT.COM

Simon - Direct/Ramsey

146

1 been subpoenaed and Ive seen a caution label on a Bondex joint 2 compound. 3 from 1977. You know, in 2001 or 02 it wasnt that far removed Such people would exist if the caution label was

4 either there - its more than being there - if it was there, 5 uniform and conspicuous. 6 Secondly, Julius Nemeth, and we didnt see it in the

7 testimony yesterday, but what I consider to be one of the more 8 compelling parts of his testimony and I featured in liability 9 case against the debtor is Julius Nemeth knew in 1976 that 10 theres no known safe level of asbestos exposure. Theres no

11 level below which we say at that level you wont get 12 mesothelioma. And knowing that subjectively he still appealed

13 successfully the consumer product safety commission to delay 14 the ban so that they could then sell a product that didnt have 15 a caution label on it, having no security whatsoever in science 16 or logic that those extra exposures for the extra six months 17 wont cause mesothelioma in people. 18 very much. 19 So we had a lot to talk about. The more they Jurors didnt like that

20 defended the liability case, the more defending it in that way 21 could be put on trial, because it was best summarized by their 22 own vice president Doug Wood who in the OSHA inspection that 23 was being described by the violations is reported to have said 24 to an OSHA inspector that he had to chuckle at the big asbestos 25 scare in the United States. If youre trying to prove that

WWW.JJCOURT.COM

Simon - Direct/Ramsey 1 this company had a conscious disregard for the health and

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2 safety of people who used its asbestos-containing products you 3 only had to quote them to achieve that. 4 Q With respect to other defenses that were raised by Bondex,

5 did Bondex raise a market share defense in your defense to your 6 trial work? 7 A No. So market share liability is - has not been for the

8 basis of my career a basis upon which we could prove liability 9 in the tort system. Were not allowed to say well, if you only

10 have - if you have 11 percent of the market share - well, the 11 same is true. In the tort system they did not put on evidence, What they did

12 well, were only two, three, five, 11 percent.

13 do, in fairness, is say well, were in the home remodel 14 specialty business. 15 Now, that said, you know, I used to use the Bondex

16 corporate witness Jack Fleming to explain under oath that they 17 sold joint compound all over the United States from their St. 18 Louis plant, that it was profitable to do it in order to 19 dispute the claim of other joint compound defendants who 20 claimed that it was not profitable to sell joint compound more 21 than 250 miles from the manufacturing facility. So in fact it

22 was the far reach of Bondex joint compound that I put forth 23 with their compliance in some cases. 24 Q And with respect to other matters that youve learned

25 about Bondex, did you discover anything else that you thought WWW.JJCOURT.COM

Simon - Direct/Ramsey 1 that you would be able to use or were using at trial against

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2 Bondex that you thought would be damaging in the juries eyes 3 to them? 4 A 5 Q Yes. And if I could ask you to turn to ACC/FCR Exhibit 230.

6 Could you explain to the Court what this exhibit is? 7 A Yes. That is a test of Reardon SX joint cement that I had I

8 commissioned after purchasing this box of joint compound.

9 had it tested by a material scientist to determine if it was 10 asbestos containing. 11 Q 12 A And what did you learn? Well, I learned a couple of important things. The first

13 was, yes, it was Reardon joint compound, it contained all the 14 constituent parts of it just like it says. The second is that

15 it was from 1955 which is important, because Bondex had sworn 16 that Reardon only made asbestos-containing joint compound 17 beginning in the early 1960s. 18 times. They changed their answer a few

Once it was 1967 in some interrogatory responses, then And in the end Jack Fleming

19 it was 1961, then it was 1960. 20 settled on 1960. 21

And then I go out, a plaintiffs lawyer and buy a And

22 1955 box of Reardon SX joint cement containing asbestos.

23 its the most profound example of a defendant misrepresenting 24 the length of time in which it made an asbestos-containing 25 product that Ive ever experienced. It was also problematic

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Simon - Direct/Ramsey 1 because you can see that its green, the box is green. 2 Q 3 A Yes.

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The way Bondex defended joint compound cases on product ID

4 was to say that prior to 1968 the five pound box of joint 5 compound had a red swatch on it, red paneling with black 6 letters. And they defended cases that way. Youd get

7 affidavits in depositions from Jack Fleming that says if it 8 wasnt red and its 1966 or 5 or 7 its not us and that the 9 only time they made a product with green paneling was on a 10 four-pound box or an 18-pound bag that contained tape in it and 11 only beginning in 1968. 12 self-evidently green. 13 Q And, Mr. Simon, did you ever play the Longo video that we This is a 1955 five-pound box and its

14 played here that illustrated the application of joint compound 15 in any of the trials that you were in? 16 A I dont specifically remember except to say that what it

17 conveys is the joint compound is an extremely dusty activity 18 whether youre mixing or sanding or sweeping. 19 did play it for that visual presentation. 20 Q And one last couple of questions because were over time With respect to settlements reached with Bondex weve And I probably

21 already.

22 heard a lot about group settlements and the dynamics of those 23 group settlements. Did you engage in any group settlements -

24 your office engage in any group settlements with the debtors 25 during the course of your representation of plaintiffs? WWW.JJCOURT.COM

Simon - Direct/Ramsey 1 A We settled more than one case in one negotiation. But they were all individually negotiated. That So in

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2 happened.

3 that sense they were a group of cases.

But they were not group

4 settlements in the way that that buzz word is sometimes used 5 pejoratively. 6 Q And are you a member of the asbestos committee in this

7 bankruptcy case? 8 A 9 Q 10 A 11 Q Yes. On behalf of your client - which client? Roy Leggett. Roy and Wanda Leggett.

And what is the nature of Mr. Leggetts claim against

12 Bondex? 13 A Mr. Leggett built a home in Killeen, Texas where he lived

14 and he used Bondex joint compound. 15 Q 16 A 17 Q 18 A 19 Q 20 A 21 Q And was Mr. Leggetts case settled before the bankruptcy? It was. And when was that settled, approximately, if you remember? 2009. And was Mr. Leggetts case settled with other cases? Yes. And as part of the settlement with Mr. Leggetts case were

22 there cases that settled for less than $50,000? 23 A 24 Q Sure. And you have heard, I believe, Dr. Mullin testify that he

25 believes that any case that settled for less than $50,000 was WWW.JJCOURT.COM

Simon - Direct/Ramsey 1 not a merit-based settlement, but was a settlement instead 2 based upon cost of litigation.

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Were the cases that you settled

3 that were less - that settled for less than $50,000 settled on 4 the basis of not a consideration of merit, but instead a cost 5 of litigation? 6 A 7 here. With the caveat that I didnt hear his testimony, I wasnt But assuming it to be true, no, they were not settled as They were settled on the basis of their

8 a cost of litigation.

9 merits which in a less than $50,000 case had some merit, but 10 less merit than the Leggett case which settled for, you know, 11 something exponential of that. 12 Q Can you give us an example of a case that might settle for

13 less than $50,000 that would not be a cost of litigation 14 settlement or why the defendants would pay - or the plaintiff 15 would take less than $50,000 on a claim, and why the defendants 16 might pay that other than to simply remove the case as a matter 17 of cost of litigation? 18 A If I have Bondex or Reardon ID the plaintiff believes it

19 in good faith, but on cross examination it just turned out that 20 he or she being sick or he or she having failing memory or he 21 or she just having all the conditions of trying to testify 22 sometimes for multiple days while suffering from mesothelioma 23 describe Bondex as a joint compound that they used or were 24 exposed to, but thats it. They couldnt provide any other

25 details, they couldnt provide the kinds of details which would WWW.JJCOURT.COM

Simon - Direct/Ramsey 1 make that perhaps, you know, a stronger trial case.

152 Maybe they

2 didnt provide enough details to win summary judgment or there 3 was risk that they wouldnt survive it. 4 And in cases like that we would negotiate a

5 settlement if they thought there was enough there to survive 6 whatever audit process or whoever they need to satisfy, there 7 was sufficient product ID to pay the claim and otherwise they 8 wanted a release rather than to try their luck at summary 9 judgment and it was a negotiated settlement, based on the 10 merits albeit the merits being weaker than some other cases. 11 Q Why was Mr. Leggetts claim still unpaid as of the

12 bankruptcy? 13 A 14 Q 15 A Why was it? Yes. Because they had asked us to pace out the payments so -

16 they could only spend so much money during certain parts of the 17 calendar year and they needed to space out the payments. 18 Q Do you recall when the last payment you received on the

19 Leggett case was? 20 A 21 Q No. With respect - returning to product ID briefly, youve

22 testified that product ID was the most important issue. 23 Theres been a suggestion that product ID, because it relies so 24 heavily on memos - or on memory, you see this in the various 25 case evaluations that weve looked at with Mr. Iola, that WWW.JJCOURT.COM

Simon - Direct/Ramsey 1 product ID is questionable sometimes because of someones 2 memory. 3 work? 4 A 5 Q Yes.

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Do you typically deal with memory issues in your trial

And tell me how a jury reacts to problems with a persons

6 memory? 7 A Bondex was always trying to put forward the notion that it

8 is unlikely that anybody would ever remember the details or any 9 details of a home remodel. And we would try to put forth, Not in

10 especially in closing argument, reasons why they would. 11 all cases.

I no more believe that everybody remembers all the

12 details of a home remodel from 30 or 40 years ago than I 13 believe that nobody would. People are different and they have

14 different memories in different stages. 15 And we would point out that joint compound work is We often had pictures of people covered in dust

16 very dusty.

17 from joint compound because its a momentous kind of thing, 18 its an exotic thing. And there would be pictures of them, you

19 know, covered in dust and, you know, in hair and bandanas, all 20 those kinds of things. And I would point out in closing

21 argument that, you know, memory is -- its not something you 22 can just categorize as one thing. 23 And I, you know, it may sound dopey, I hope it

24 doesnt, but I used to tell jurors, I said, you know, when I 25 was a kid I ate Trix cereal, you know, Trix are for kids. WWW.JJCOURT.COM And

Simon - Direct/Ramsey 1 then I remember the white rabbit and the slogan.

154 And I havent

2 eaten them in 35 years, I have not, but I absolutely did eat 3 them. 4 right? And I dont have a single receipt to show for that, And I cant tell you every friends house I ate it in I can tell you who my

5 or actually which friends they were.

6 friends were and who I likely ate it in, but I cant swear 7 thats what happened. 8 Trix. I cant tell you how many times I ate

I cant tell you how many little Trix balls there were And I never considered it consequential when I

9 in the bowl.

10 was nine years old to remember 30 or 40 years hence whether I 11 did eat Trix, but it is a fact that I did. 12 Why do I remember it? Because I do. Because I do.

13 And its no less true that I remember it if I stood to profit 14 by it now than if I didnt. 15 doesnt. Or if it caused cancer or it And sometimes wed But jurors

And jurors would relate to that.

16 win that issue and sometimes wed lose it. 17 understand that. 18 19 questions. 20 apologize. 21 Q MS. RAMSEY:

Thank you, Mr. Simon, no further I

Oh, Im sorry, I do have one -- Im sorry. I do have one other set of questions.

During your deposition in this case, Mr. Simon, you had

22 been asked a question about the costs that it took to take a 23 case to trial for your firm and your answer, Im going to read 24 it into the record, was, It cost me at least 25,000 to try a 25 lawsuit, sometimes more, in terms of flying expert witnesses in WWW.JJCOURT.COM

Simon - Direct/Ramsey 1 and out, hotels, rental cars, litigation support. I presume

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2 the defendants have similar costs to try their case to verdict 3 and I know some of their experts -- and I know what some of 4 their experts make through cross examination on issues of bias 5 and it can be heavy. 6 We have heard by comparison yesterday in Dr. Mullins

7 testimony about a comparison between $25,000 it takes for a 8 plaintiff to take a case to trial as opposed to $300,000 that 9 Dr. Mullin contends that it took Bondex counsel to take a case 10 to trial. Is it correct to say that it took your firm only

11 $25,000 to take a case to trial? 12 A No, I wasnt trying to say or imply that if we try a case I was trying to explain that

13 to verdict we only spend $25,000.

14 trial costs vary and they vary substantially depending upon the 15 length of the trial. If I try a case for a month, which is not But I was

16 uncommon, thats going to cost us over $100,000.

17 trying to make the point that just to start the trial, just to 18 show up for jury selection I have sunk a bunch of costs just on 19 the trial, forget all the work up because I have to procure 20 experts, I have to have a litigation support team like the 21 people behind you, I have to have hotels, I have to arrange 22 travel. 23 And I was simply trying to make the point that before

24 we really have done anything in the trial, weve already sunk a 25 bunch of money and it certainly -- if we go to verdict, its WWW.JJCOURT.COM

Simon - Cross/Jackson 1 going to be something exponential of that. 2 Q Do you have an estimate of what it takes your firm

156

3 generally to take a case all the way through trial? 4 A Its in the six figures but it depends upon -- were

5 talking about going to verdict? 6 Q 7 A Going all the way to verdict. You know, in Texas I can try a case in three weeks and in There seems to

8 California no case gets tried in three weeks.

9 be a law requiring a minimum of six and, you know, and in some 10 special privilege if it gets to go eight, so, you know, youre 11 just paying for all of these costs and they billow up and its, 12 as I say, its well into the six figures but its not a 13 one-size-fits-all proposition. 14 Q And have you ever taken a case up on appeal or have you

15 ever prosecuted a case on behalf of a plaintiff that has been 16 taken up on appeal against Bondex? 17 A At Waters and Kraus for sure. I think the Ralph Harvey

18 case which we got a verdict in may have been appealed but it 19 may have been settled subsequently. 20 Q Do you have any estimate about what it would take to take

21 to take it through -- a case through appeal following a 22 verdict? 23 A Thats a hard question to answer. We dont charge for

24 attorney time but there certainly are a lot of costs associated 25 with the process of continuing to carry costs through appeal. WWW.JJCOURT.COM

Simon - Cross/Jackson 1 2 questions. 3 4 5 6 BY MR. JACKSON: 7 Q 8 A 9 Q Good afternoon, Mr. Simon. Im Mr. Iola. No, Im just kidding. THE COURT: Mr. Jackson? Yes, Your Honor. CROSS EXAMINATION MS. RAMSEY: Okay, all right, I have no further

157

MR. JACKSON:

Now, if you had been here from the beginning, youd

10 understand that I get every other witness right. 11 A 12 Q Its a pleasure to meet you, sir. You have to do it somewhere. Did I understand you

13 correctly to tell us that youve always represented the 14 plaintiffs side of the case? 15 A 16 Q Yes, sir. And I know you talked about the case, Mr. -- is it

17 Leggett? 18 A 19 Q Yes, sir. -- that is one of the pending claims that fall in the

20 category as settled but not (indiscernible) claim, right? 21 A 22 Q Yes, sir. And how many claims do you have where you represent folks

23 with pending claims, those that have not yet settled? 24 A 25 Q I dont know. Do you have some? WWW.JJCOURT.COM

Simon - Cross/Jackson 1 2 Q (No audible response) Do you recall filling out PIQs on behalf of any of the

158

3 folks that you represent, sir? 4 A I admit to you that I did not. That was done by my office

5 and if theyre a part of the case, I dont dispute any of it. 6 I just didnt myself. 7 Q Now, do you have Exhibit 228 up there in the pile of Its the June 13th, 2007 memo from

8 materials in front of you? 9 Bowers Orr. 10 A 11 Q Yes, sir.

I believe Ms. Ramsey talked to you about the Kelvin Sandel

12 case, is that right? 13 A 14 Q 15 A 16 Q Yes, sir. And thats one that you recollect? Yes, sir. Is it correct that the initial demand that was made to

17 Bondex was $3 million? 18 A 19 Q I dont know. The final offer before trial was 500,000. Does any of

20 this ring any bells? 21 A I didnt do that. Mr. Iola did. I think that Mr. Iola

22 would have handled that.

I admit that I dont remember the

23 negotiation if I was involved. 24 Q Okay. You do know what happened though in the terms of

25 the verdict, right? WWW.JJCOURT.COM

Simon - Cross/Jackson 1 A 2 Q 3 -4 A 5 Q 6 A 7 Q Right. -- on a verdict of 2.9 million? Right, yes, sir. -- which as to Bondex was either going to be $9,900 or Sure.

159

And what happened was Bondex was found nine percent liable

8 $300,000 depending upon the result of an argument as to how 9 allocations of settlements occurred, right? 10 A The reason I dont know is because the last thing I ever

11 did professionally for my friends at Waters and Kraus where I 12 was then working was try that case and I literally tried that 13 case for this fine family and the verdict came in and on the 14 following day I went to work at the law firm of Simon, Eddins 15 and Greenstone which was me and two of my law partners from 16 Waters and Kraus so I dont know what happened post verdict. 17 Q I knew you opened your new firm in 2006. I just didnt

18 know what part of the year. 19 A 20 Q Thats what happened. All right, so you dont know about the settlement offsets

21 and all that and how that -- how that sort of -- do you know 22 that the case finally settled for 100,000? 23 A I actually learned that in connection I think with At my deposition I did not

24 something I was presented at the deposition. 25 in this case somebody presented me with that. WWW.JJCOURT.COM

Simon - Cross/Jackson 1 actually know that. 2 didnt know it. 3 Q 4 A 5 Q 6 A So would you call this a Bondex loss? A Bondex loss? Yes, sir. I think a jury concluded that Bondex products were a

160

I mean Im glad they got something but I

7 substantial factor in causing a deadly disease in a young man 8 and that if I were Bondex, I would consider that a failure. 9 Q Well, if the last demand before trial was 500,000 and they

10 tried the case and ended up paying 100,000, consider that a 11 loss? 12 THE COURT: Im sorry, was Bondex -- Bondex

13 settlement was for 100,000 -14 15 16 17 18 19 20 21 Q MR. JACKSON: THE COURT: Yes, maam.

-- total settlement was for 100,000. Bondex alone.

MR. JACKSON: THE COURT:

-- Bondex settlement, okay? Yes, maam.

MR. JACKSON: THE COURT:

All right. Well --

THE WITNESS:

I just want to know the way you view wins and losses in

22 this arena. 23 A I think there is a terribly essentially human component

24 that gets lost in trying to debate whether a half million 25 dollar demand or $100,000 settlement means the company that WWW.JJCOURT.COM

Simon - Cross/Jackson 1 paid it won or lost.

161

I think that if I made a product that a

2 jury of 12 thought gave somebody a lethal death before his 50th 3 birthday, nobody lost more than him but I lost it. 4 I believe. 5 Q Lets go to a broader question and perhaps I can get an Thats what

6 answer to and that is the absolute verdict history of Bondex, 7 are you aware of it? 8 A 9 Q 10 A The verdict history? Yes, sir. I was shown a spreadsheet to that effect but I dont claim

11 independent knowledge apart from those cases that I was a part 12 of or knew of at Waters and Kraus and then the same thing at my 13 law firm. 14 Q But you were here when I was asking questions of the other

15 Mr. Simon, right -16 A 17 Q 18 A 19 Q Yes, yes. -- to sort of flipped your joke? Yes. And you heard the numbers I used there, 29 trials, 18

20 defense verdicts? 21 A 22 Q 23 A 24 says. 25 Q Yes, sir. Does that sound about right to you? It sounds right insofar as thats what the spreadsheet I have not accounted independently one way or the other. Do you have 386, Exhibit 386 up there in front of you? WWW.JJCOURT.COM

Simon - Cross/Jackson 1 Its the Jenkins and Martin May 20th, 2002 letter. 2 A 3 Q Im sorry, would you repeat that please, sir?

162

Yes, its the -- on the Jenkins and Martin letterhead May

4 20, 2002, its Exhibit 386. 5 A 6 Q 7 A 8 Q Yes, sir. Its the Kwasnik case, do you have that? Yes, sir. Listening to you describe this case, I take it to be this

9 was a case that you thought had tremendous value, is that 10 right? 11 A 12 Q Yes, sir. And I think you told us that the trial started but the

13 case settled prior to a jury verdict, is that right? 14 A 15 Q Thats true, sir. And you made the note -- you made the comment that the

16 case settled for $20 million, do you remember that? 17 A Upwards of that. It was -- I believe it was in the range

18 of around 28 million. 19 Q Understood, but youre not trying to say that Bondex paid

20 20 or $28 million, are you? 21 A 22 that. 23 Q 24 that. I just want to make sure I got the Bondex component out of I dont think it was all that clear and so I wanted to I think they paid two-and-a-half million. Im not sure of

25 make sure we got -- and is it true that if you go to the WWW.JJCOURT.COM

Simon - Cross/Jackson

163

1 plaintiffs demand on Page 19, did Waters and Kraus ever make a 2 settlement demand before this case went to trial? 3 A I wouldnt know. I knew once but Mark Iola would have

4 handled that and I knew once whether there was an outstanding 5 demand but I knew it 11 years ago. 6 Q And remind me because my recollection of the dates of the In 2002

7 Texas law on punitive damages are not all that great.

8 was an uncapped punitive damage a possibility or was it capped 9 by then? 10 A That was right in the middle of that activity and I dont

11 remember one way or the other. 12 Q But punitive damages were a part of what was being sought

13 in this case, right? 14 A 15 Q Im sure. And the punitive damage question would have been something

16 that you would have had in discussions with the Bondex folks 17 about resolving the case, right? 18 A 19 Q 20 A Not me. Mr. Iola would have done that? Well, I heard him say it was not typical of them to have

21 those discussions but I certainly agree that the possibility of 22 punitive damages was part of the prevailing current of such 23 cases. 24 Q I agree with that.

It would have something to do with peoples efforts to try

25 and value the case, right? WWW.JJCOURT.COM

Simon - Cross/Jackson 1 A

164

I would certainly consider as a defendant whether or not I

2 was at risk for punitive damages. 3 A Now, do you remember having a short conversation with Ms.

4 Ramsey about your actual trial experience and sort of 5 commenting on the various defenses that were raised by the 6 Bondex lawyers in the cases in which you were involved? 7 A 8 Q Yes, sir. Like I asked Mr. Iola earlier, let me ask you the same Is it the case that the Bondex lawyers would simply

9 question.

10 listen to your arguments and go, sir, youre absolutely right 11 and theyd give up? 12 A No. Is that what happened?

They certainly were very zealous advocates and very

13 capable and they disagreed with my description of what I 14 believed happened on issues that they felt they might win the 15 day. 16 Q And just like you were a zealous advocate, they also were

17 zealous advocates, right? 18 A I think they were extremely well represented and I think

19 that they did so with great effort. 20 Q You made one comment about Mr. Phipps deposition and Are you sure he was the plant

21 about him being a plant manager.

22 manager or was it Mr. Wood that was the plant manager? 23 A If I remember the history of it, Mr. Wood was the vice

24 president of Bondex International and in that respect he had 25 overall responsibility for its manufacturing operations WWW.JJCOURT.COM

Simon - Cross/Jackson

165

1 including but not limited to St. Louis but that actually Thomas 2 Phipps was the man on the ground plant manager and, moreover, 3 was responsible for plant safety though he had never heard 4 asbestos was dangerous before the 1990s. 5 Q And just coincidentally, I read his deposition again last If he said that he was basically in

6 night for another purpose.

7 charge of maintenance and safety in that context, are you 8 telling me that I misread it and that Mr. Wood was the plant 9 manager? 10 A I would say that you probably read beautifully but whether

11 I interpret it the way you do would depend on the language 12 which I would be happy to look at with you but I just dont 13 have a photographic memory of it. 14 Q All right, understood. You talked about Mr. Nemeths

15 (phonetic) efforts to get a delay from the CPSC, right? 16 A 17 Q 18 A 19 Q Yes, sir. CPSC agreed to delay the implementation, did they not? They did, sir. You also talked about the widespread sales of Bondex

20 products, do you recall that? 21 A 22 Q Its national distribution, yes, sir. Right. And you werent trying to suggest that at any

23 point Bondex sold more than $1 million worth of joint compound 24 in any given year, were you? 25 A I have no idea. WWW.JJCOURT.COM

Simon - Cross/Jackson 1 Q

166

I just want to make sure you werent trying to translate

2 that into some kind of sales volume. 3 MR. JACKSON: Can we get -- can I ask you to put up

4 Exhibit 230, the page with the copyright -- I'd ask you to put 5 up Exhibit 230, the page with the copyright date? 6 Q Do you have 230 in front of you, sir? This one.

Its that report

7 you had done. 8 A 9 10 That one. 11 Q If I understood you correctly in your conversation with Yes, sir. MR. JACKSON: No, one more. Keep going. That one.

12 Ms. Ramsey, you referred to the 1955 on the bottom of this is 13 suggesting thats when this product was made, is that right? 14 A 15 Q 16 A 17 Q More than suggesting, yes. Its a copyright registration date, isnt it, sir? I see the logo that youre referring to. And the trademark and the copyright refers to the name

18 Reardons with an apostrophe s, does it not? 19 A Im not seeing where youre looking. I simply just see

20 that it -- the highlighted. 21 22 page? MR. JACKSON: Its down. Flip on -- can we flip back to this Its the next to

Its further down, sorry.

23 the last page of the exhibit. 24 Q See the trademark copyright signal right there by the word

25 Reardons and the brand name of this product? WWW.JJCOURT.COM

Simon - Cross/Jackson 1 A 2 Q I do. Reardons was acquired by Bondex when? When did Bondex

167

3 acquire the Reardon company? 4 A Well, when Republic Powdered Metals acquired the Reardon

5 company in 1966. 6 Q We talked about the corporate history already. Its

7 shorthanded and I apologize for that.

Youre correct in terms Now, the

8 of the identification of proper names, proper times.

9 last thing Id like to talk to you about -- well, maybe the 10 last thing, lets see. One of the things we ought to talk

11 about, Ms. Ramsey read your testimony from the deposition about 12 the it cost me at least 25,000 to try a case and sometimes 13 more. 14 A 15 Q She read that correctly, didnt she? Yes, sir. And you understood at the time the question was being

16 asked it was all in the connection were trying to compare the 17 plaintiffs cost with the defendants cost of trial, did you 18 not? 19 A I dont remember what the question was. I think it was --

20 in other words, I didnt know what the strategic concern was in 21 asking the question. I simply was answering the question in

22 the context I understood it. 23 Q Id be happy to refresh your recollection if youd like to

24 look at the page right before. 25 A Please. WWW.JJCOURT.COM

Simon - Cross/Jackson 1 2 3 Q 4 A 5 6 A 7 Q Okay. MR. JACKSON: THE COURT: Your Honor, may I approach?

168

Sure.

Just to see if we can some agreement. Sure, all right. (Pause)

Does that help refresh your recollection that the context

8 that the answer that she read was in connection with questions 9 about the cost for the defendants to try a case and you were 10 doing a comparison between the two when you answered? 11 A I understood the context to be whether or not the

12 defendants fee, what theyre paid, was built into their cost 13 of defense to which I basically said, if I recall -14 Q 15 A You can read it. Feel free.

I said do you know in polite company I dont talk to them And I said, you know,

16 about what theyre going to get paid.

17 Ill refer to the cost of defending the claim in a general 18 sense sometimes. 19 Q The question was whats it going to cost them to try a

20 case, do you see that, Page 98, Line 16? 21 A 22 Q Yes. And in responding to that, thats where the answer that we

23 were read -- that Ms. Ramsey read comes into play, right? 24 A 25 Q Right. Im looking at Line 23, Page 98.

Okay, and we can agree, dont we, that defendants in the WWW.JJCOURT.COM

Simon - Cross/Jackson 1 personal injury process like Bondex paying their defense

169

2 counsel fees whereas plaintiffs had their case on a contingent 3 fee basis, right? 4 A That is part of the over generalization I was trying to In other

5 admit I dont speak to as intelligently as I might.

6 words, some attorneys on the defense side are paid by a flat 7 fee I am told. They get paid the same no matter what the case I remember having that conversation

8 ultimately -- how it ends. 9 with your colleague.

Some of them are paid hourly and thats

10 what I was trying to say here is, is in polite company we 11 havent discussed those issues and I dont claim to know them. 12 Q Now, the firm that you formed in 2006 your business model

13 is to focus only on the most serious disease claims, right? 14 A 15 Q 16 A 17 Q Im sorry, sir, Im sorry, would you please repeat that? Did I change gears too fast? Thats okay. I apologize. Let me slow up. The business model of the

18 new firm that you formed in 2006, the one that youre the 19 first- named partner in, your business model is to focus on the 20 most serious disease claims, right? 21 A 22 Q Yes, sir. And you have suggested to the defendants in the past that

23 cases can be segregated by categories, right? 24 A 25 Q Disease entity? Im sorry.

Disease entity, by exposure, by product ID, all of those WWW.JJCOURT.COM

Simon - Cross/Jackson 1 categories can be, similar cases, can be placed into similar 2 categories, havent you? 3 A 4 Q 5 A Can I make sure I understand your question? Absolutely. Is your question that Ive had discussions with defense

170

6 attorneys in the past, this man was a drywaller for seven years 7 and is of this age and weve had a case where some of the facts 8 were comparable and they were both mesothelioma cases and does 9 one case provide some context to the other perhaps? 10 had those conversations. 11 Q And youve suggested that those cases could be resolved on Yes, Ive

12 similar terms in order to save the cost of defending those 13 cases for that defendant, havent you, sir? 14 A 15 Q Yes, sir, I have. And I think you told us that you dont engage in what we You only

16 call docket settlements in this context, right? 17 settle individual cases? 18 A

I have settled a whole docket of cases, say the next month

19 of our trial settings against a particular defendant but on an 20 individual case basis, yes. 21 Q With respect to Bondex have you ever settled any on a

22 docket basis since you started your own firm because I know 23 before that, Mr. Iola was in charge? 24 A I got that.

Yes, the reason I -- trust me, Im not trying to be too I just want to make sure were not talking past each WWW.JJCOURT.COM

25 careful.

Simon - Redirect/Ramsey 1 other. 2 Q 3 A Understood. I have settled more than one case with the lawyers for

171

4 Bondex but on an individual basis rather than we got X dollars 5 and, you know, well just resolve these claims. 6 Q Now, if the Bondex database is correct, after 2006 your

7 firm has had 74 cases involving Bondex, does that sound about 8 right? 9 A 10 Q 11 A 12 Q 13 A 14 Q 15 A 16 Q 17 A 18 Q I have no reason to dispute it. Okay, and of those, 13 of those cases were dismissed? Okay. Fifteen of them were settled for less than $50,000? Okay. Fifteen were settled between 50 and 200,000? Okay. And 21 at 200,000 plus? Okay. And according to the database, you have at least ten

19 pending claims? 20 A 21 Q 22 A 23 24 25 Okay. Do you have any reason to dispute any of those numbers? No, sir. MR. JACKSON: THE WITNESS: THE COURT: Thank you very much for your time. Thank you, sir. Stop the clock for a minute

One second.

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Simon - Redirect/Ramsey 1 please. 2 3 4 redirect? 5 6 7 BY MS. RAMSEY: 8 Q Mr. Simon, with respect to Exhibit 230 when did you MS. RAMSEY: One or two, Your Honor. REDIRECT EXAMINATION THE COURT: (Attorney discussion)

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Ms. Ramsey, do you have any questions on

9 receive the report, the science report, on this product that 10 was the subject of your testimony earlier? 11 A 12 Q A few weeks before Bondex then filed for bankruptcy. If you look at the first page of that agreement, its

13 dated March 9th, 2010, is that correct? 14 A 15 Q Yes. Had you ever used this product in any lawsuit that you had

16 filed against Bondex? 17 A No. What happened was is I found the product, I had it I then called an attorney who represented Bondex who I I brought the matter to his attention. He appreciated that something

18 tested.

19 respect a great deal.

20 He took it seriously as such. 21 was problematic here.

He was going to look into it he said,

22 but shortly thereafter Bondex filed for bankruptcy. 23 24 25 MS. RAMSEY: THE COURT: Thank you. Mr. Jackson? Nothing further, Your Honor, thank you. WWW.JJCOURT.COM No further questions.

MR. JACKSON:

Simon - Redirect/Ramsey 1 2 3 4 5 THE COURT: Will anyone need this witness again? Not on our side.

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MR. JACKSON: THE COURT:

Youre excused, Mr. Simon, thank you. Thank you, Your Honor. Your Honor, before we move to our next

THE WITNESS: MS. RAMSEY:

6 witness, Id like to move the admission of a number of 7 exhibits. Some of these were used with respect to Mr. Iola and

8 Mr. Simon and others were provided on a list yesterday at 9 debtors counsel. And I understand all of these are to be Exhibits ACC/FCR, all of these are

10 admitted without objection.

11 ACC/FCR exhibits unless otherwise noted, 1-50. 12 13 14 15 16 17 THE COURT: MS. RAMSEY: THE COURT: MS. RAMSEY: THE COURT: MS. RAMSEY: Are you using Es or Ms? Es, Im sorry, yes, Your Honor. All right, E-1 to 50. E-1 to 50, 65 to 84. All right. 94, 95, 97 to 101, 113, 123, 130, 140 to

18 154, 176, 179, 196, 226 to 228, 230 to 244, 276, 287, 304, 305, 19 307, 309, 334, 342, 365, 376, 385, 386, 388, 390, 408, 414, 20 422, 426, 427 and wed also like to move the admission of our 21 Demonstrative Exhibit-1018. 22 23 24 25 evidence. WWW.JJCOURT.COM THE COURT: MS. RAMSEY: THE COURT: As a demonstrative? As a demonstrative. All right, some of these already in

Simon - Redirect/Ramsey 1 MS. RAMSEY: Oh, I apologize, Your Honor.

174 These were

2 on our list as not having been admitted. 3 THE COURT: Some of them are but Ill repeat to make Is there any

4 sure that Ive got them all in any event. 5 objection? 6 MR. EVERT:

Your Honor, my apologizes.

In the course

7 of preparing pretrial, the ACC and the FCR reduced their 8 exhibit list to their expected list of exhibits that they 9 intended to put in reserving the right to go back to their 10 original list. As a result, we never met and conferred -- Im

11 sorry, many of these documents are on their original list, not 12 on their reduced list and as a result, we never met and 13 conferred about a number of these documents. 14 I have no reason to believe that they dont fall into

15 categories that weve already discussed under which the 16 documents might be admissible. So what I would ask the Court

17 is if we could have some time to go through the list that Ms. 18 Ramsey gave and even obviously even post trial we could submit 19 any objections that we have to the documents that they seek 20 admission. 21 22 tomorrow. 23 24 MR. EVERT: THE COURT: Okay. We ought to go through any objections to But its -THE COURT: Well, I think we should do it at least

25 these exhibits.

But, Ms. Ramsey, what list are we using? I was WWW.JJCOURT.COM

Simon - Redirect/Ramsey 1 given a list at the start of trial. 2 that list? 3 4 5 6 7 8 9 form. 10 11 12 MS. RAMSEY: MR. EVERT: MS. RAMSEY: Your Honor -Your Honor, thats the reduced list. That is the reduced list, Your Honor. MS. RAMSEY: THE COURT: MS. RAMSEY: THE COURT: MS. RAMSEY: THE COURT: On the original list, Your Honor.

175

Are all these exhibits on

Well, I dont know what original means. Okay -On the list was broken down from E-51 -Thats --- mine starts with E-51, the blank PIQ

13 The original list of documents we had an agreement with the 14 debtors and we can talk about this offline, Your Honor, but we 15 had an agreement with the debtor that there would be certain 16 categories of documents that were like the PIQs that the 17 debtors admitted yesterday or like the reliance materials of 18 the experts would be listed by category because we didnt 19 expect to have specific questions about those documents as we 20 went along. 21 We had others out of those categories that we

22 expected to specifically ask witnesses about and our 23 understanding was that we were going to provide the Court with 24 those exhibits that Your Honor would need because we would be 25 using them in connection with testimony. WWW.JJCOURT.COM

Simon - Redirect/Ramsey 1 THE COURT:

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So the list that I got at the beginning

2 of the trial was only exhibits that you expected to use at 3 trial? 4 MS. RAMSEY: Our original list I think was in

5 November, Your Honor, and that contained the entire list of all 6 of these documents, Im sorry. 7 THE COURT: Yes, but when I got this new list that

8 these were the exhibits that were going to be used for 9 everything. I thought the rest of the exhibits essentially I thought thats what I was told. I perhaps

10 were withdrawn. 11 misunderstood. 12

MS. RAMSEY:

Thats not -- yes, thats not what our

13 understanding was, Your Honor. 14 THE COURT: I need a list from both of you as to what Forget the original list.

15 youre actually using at this trial. 16 Forget the supplemental list.

Give me a list of what youre

17 actually planning to introduce at trial tomorrow so that we can 18 all be on the same page and look at objections because its not 19 going to be workable like this. I wont know what youre

20 withdrawing and what youre not withdrawing. 21 22 MR. EVERT: THE COURT: Your Honor, you have that list from us. I dont care. Do it again so that I have

23 one set of list, one from the debtor, one from the ACC and FCR. 24 If its duplicative, it is, but I would like one list handed up 25 tomorrow so that for the record I know what Im looking at WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 because right now, I dont know. 2 3 MS. RAMSEY: THE COURT: Well take care of that, Your Honor. All right, in any event, let me repeat

177

4 these exhibits, Ms. Ramsey, to make sure I have the complete 5 list. These are all E exhibits, 1 to 50, 65 to 84, 94, 95, 97

6 to 101, 113, 123, 130, 140 to 154, 176, 179, 196, 226 to 28, 7 230 to 34, 276, 287, 304, 305, 307, 309, 334, 342, 365, 376, 8 385, 386, 388, 390, 408, 414, 422, 426, 427. 9 substantive exhibits. 10 MS. RAMSEY: Those are the

And then Demonstrative-1018. There was one correction, Your Honor. I

11 think you read 230 to 234? 12 13 14 15 16 17 18 19 20 THE COURT: MS. RAMSEY: THE COURT: MS. RAMSEY: THE COURT: MS. RAMSEY: THE COURT: MS. RAMSEY: THE COURT: Yes. It was 230 to 244. 230 to 244? Correct. Okay, is that the only change? Yes, Your Honor. Okay, thank you. Thank you. All right, so Ill hear objections to

21 that list tomorrow. 22 23 24 witness? 25 MR. SHEPPARD: Your Honor, if you give me one second. WWW.JJCOURT.COM MR. EVERT: THE COURT: Thank you, Your Honor. Mr. Sheppard, are you ready for your next

Peterson - Direct/Sheppard 1 I just want to get the exhibits. 2 ACC would call Dr. Mark Peterson. 3 4 5 6 7 8 9 10 BY MR. SHEPPARD: 11 Q 12 A 13 Q Good afternoon, Dr. Peterson. Good afternoon. I understand that youve testified before Her Honor in THE COURT: Dr. Peterson? Please raise your right hand. Thank you, Your Honor.

178 The

COURTROOM DEPUTY:

DR. MARK PETERSON, WITNESS, SWORN COURTROOM DEPUTY: MR. SHEPPARD: THE COURT: Please be seated.

Now, Your Honor?

Yes. DIRECT EXAMINATION

14 other matters but would you please just for the record just 15 introduce yourself to the Court? 16 A 17 Q 18 19 Q Yes, sir. Im Mark Peterson.

And, Dr. Peterson, youre here to -AUDIO OPERATOR: Come closer.

Dr. Peterson, can you give us a little bit of your --

20 briefly give us a little bit of your background please? 21 A Yes. Im a lawyer and a behavioral scientist. I have

22 graduated from the University of Minnesota, Harvard Law School. 23 I got my doctorate in experiential social psychology at the 24 University of California, Los Angeles. And Ive worked

25 basically in the field of research on legal matters since 1977, WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 1976. 2 Q And that was going to be my next question, doctor.

179

3 Briefly can you run through your employment in this field? 4 A Yes. I practiced law while I was in graduate school but -

5 - and before, but when I got my doctorate the year before, I 6 joined the research staff of the Rand Corporation in Santa 7 Monica and I worked there throughout my entire career almost 8 exclusively on matters of public policy and empirical research 9 on the legal systems for several years, in the criminal justice 10 area. And then when Rand formed its Institute for Civil

11 Justice in the early 1980s, I was one of the founding members 12 of that and I worked there for 20 years. 13 Q Doctor, let me stop you right there. I think most people

14 might recognize Rand. 15 is and what it did? 16 A

Would you just briefly tell us what Rand

Its a public policy research corporation that strives to

17 be non-partisan and does a lot of defense work but it also has 18 substantial research programs, a number of them, in various 19 areas of domestic issues. 20 Q Okay, and you mentioned the Institute for Civil Justice. What is the Institute for Civil

21 You were a founding member. 22 Justice? 23 A

It was formed in the early 80s at the request of and with But to

24 substantial seed money from the insurance industry.

25 their credit theyve for a long time kept a very neutral WWW.JJCOURT.COM

Peterson - Direct/Sheppard

180

1 approach with regard to the work and its funding has become a 2 little more widespread since then. It does empirical research

3 in public policy, research on issues of civil justice in our 4 civil justice system. 5 Q Now, at some point, Dr. Peterson, did your research in the

6 field take you to analyzing and researching mass torts in 7 general? 8 A 9 Q 10 A Yes. And when was that, sir? Probably beginning in the period at Rand of 1982, 83 I was doing other work on basically civil jury, studies

11 maybe.

12 of civil juries prior to that -13 Q 14 A 15 Q Okay -- Im sorry. -- but went into this area. And when did you in the course of that, Dr. Peterson,

16 first get exposed to asbestos case? 17 A It was probably pretty much in that period of 83 to 85.

18 I began to do work on matters of asbestos litigation, the 19 primary area. Ive done research in mass torts but Ive worked

20 on research generally on mass torts for basically the remainder 21 of my career at Rand. I also began to do some consulting work

22 about that period of time on mass torts. 23 Q And before we get to the consulting work, Dr. Peterson,

24 lets talk about you were a special master working for federal 25 district and bankruptcy courts during that time in asbestos WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 cases, correct? 2 A

181

Special master or a courts expert, a neutral expert, for

3 four federal judges or bankruptcy judges, yes. 4 Q Okay, can you briefly describe what your duties were in

5 those cases to the extent they can be generalized? 6 A In the mid 80s I began working -- Francis McGovern asked

7 me if I would work on what was called the Ohio Litigation 8 project, he was the special master. My colleague, Dan Relles,

9 Pat Ebner (phonetic) and I were courts experts in that case to 10 -- my initial work was to develop an expert system as to how 11 lawyers estimate the values of asbestos claims. And that work

12 involved interviewing defense lawyers, plaintiffs lawyers and 13 insurance adjusters in the Cleveland area about how they 14 evaluated and estimated and settled asbestos claims and then 15 providing that information to the court so the court could use 16 it in trying to facilitate settlements. 17 That later branched into obtaining data on

18 settlements for the court and analyzing the values of claims 19 based on the similar cases filed in the past and settled in the 20 past in that court. And I probably worked on that through most

21 of the rest of the decade of the 1980s. 22 Q Okay, and then you mentioned you also got involved in Was that for your --

23 private consulting. 24 A

Do you want me to describe my other consulting for the

25 courts? WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 Q 2 A Sure, sorry.

182

I worked for Judge Parker in Texas, East Texas, on a big Again, we collected data from defense and

3 class action there.

4 plaintiffs lawyers about their pending asbestos claims, 5 compiled systematic data for that that the court provide, the 6 parties could share. I worked also on the Dalkon Shield case,

7 not on asbestos but in the A.H. Robins bankruptcy, again as a 8 court neutral, my colleagues and I in collecting an enormous 9 set of data about Dalkon Shield claims in the past and 10 currently to facilitate analysis of the values of those claims. 11 12 In 1990 Judge Weinstein approached me at a conference

13 at Yale and asked me if I would consider working for him as an 14 expert in helping to restructure the Manville trust. He

15 basically seized the Manville trust, stopped payment by it 16 because it had become insolvent. 17 insolvent. The trust itself had become And

It was paying claims 100 cents on the dollar.

18 he asked me if I could help him develop and structure a 19 restructuring of that organization. And I did. I worked on

20 that for about five years, both providing technical and 21 quantitative analyses for Judge Weinstein and also Judge Burton 22 Lifland. They both appointed me. And also, that work evolved

23 into being essentially a special master in developing a 24 settlement of the class action that was in that case. 25 describes those. WWW.JJCOURT.COM That

Peterson - Direct/Sheppard 1 Q

183

And in connection with those retentions, Dr. Peterson, did

2 you ever testify? 3 A I testified in the Manville matter. The others, not. The

4 Courts preferred not to have their expert testify. 5 Q 6 A 7 Q You were admitted as an expert in the Manville matter? Yes. Judge Weinstein had recognized me as an expert.

And its fair to say in those matters at least you were You

8 not representing one party or another in the litigation. 9 were assisting the Court? 10 A

I was working for the Court but working with the parties

11 and dealing closely with them on both sides, yes. 12 Q Now, you also testified earlier that you also are involved

13 in private consulting through your company, LAS, is that 14 correct? 15 A Yes, Legal Analysis Systems. I formed that 20 some years

16 ago and I began working on mass tort litigation, collecting 17 data, analyzing data, estimating claims, working for trusts 18 that were subsequently set up, estimating liabilities. And

19 that work by the early part of the 1990s came to really use up 20 all of my time, my time at Rand diminished. 21 became my exclusive employer. 22 Q Okay, and have you been involved in asbestos bankruptcy Eventually it

23 matters? 24 A 25 Q Yes, many. Okay, and do you recall in those cases, Dr. Peterson, were WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 you as admitted as an expert? 2 A In every case where I was offered, I was, yes.

184

Some cases

3 I didnt testify. 4 Q Approximately how many cases were you involved in? Lets

5 take it that way first. 6 A 7 Q 8 A 9 Q 10 A 11 Q 12 A 13 Over 30. I kind of haven't kept a current count.

And by cases, I mean asbestos bankruptcy matters. Yes, I understand that. Okay, and in how many cases do you believe you testified? I think I testified in over 20 of them. Dr. Peterson, did you give me a copy of your CV? I have. MR. SHEPPARD: Your Honor, wed like to hand up or

14 move into evidence ACCE-85 -15 16 17 vitae. 18 19 20 21 THE COURT: Its admitted. Thank you, Your Honor. MR. EVERT: No objection, Your Honor. -- which is Dr. Petersons curriculum

MR. SHEPPARD:

MR. SHEPPARD: THE COURT:

Thank you. And at this time, Your Honor, we would

MR. SHEPPARD:

22 also tender Dr. Peterson as an expert in the field of 23 evaluation of asbestos mass tort liability. 24 MR. EVERT: Your Honor, as youll recall, we made an

25 extensive motion to exclude Dr. Petersons testimony under Rule WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 702 and it's Daubert and its progeny.

185

Rather than belabor the

2 Court, what well renew at this time that motion and object to 3 the tender. 4 THE COURT: Well, the motion is denied and if there

5 is an objection to the witnesss qualifications, do you want to 6 voir dire? 7 MR. EVERT: Your Honor, Ill ask the witness

8 questions in cross examination and renew my motion at the end. 9 THE COURT: All right, the witness is qualified to

10 express an expert opinion in the valuation of asbestos mass 11 tort liabilities and is accepted in that capacity. 12 13 Q MR. SHEPPARD: Thank you, Your Honor.

Now, Dr. Peterson, you were engaged by the ACC in this

14 matter, correct? 15 A 16 Q 17 A Yes. Okay, when were you engaged? Some time shortly after June of 2010. I dont know the

18 precise date. 19 Q 20 A 21 Q Shortly after the filing of the bankruptcy? Yes. Okay, and were you asked, Dr. Peterson, to render an

22 opinion in this case? 23 A 24 Q 25 A Yes. And did you render an opinion in this case? One big opinion and a number of sub opinions, yes. WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 2 Q MR. SHEPPARD: Okay, can we have 27 please?

186

Dr. Peterson, Ive put up on the screen and Im going to

3 at this time identify for the Court ACC/FCR Demonstrative-1019, 4 Your Honor, which is a series of PowerPoint slides numbered 1 5 through 38, I believe. 6 7 8 9 Q THE COURT: All right. Counsel has been given a copy.

MR. SHEPPARD: THE COURT:

All right, thank you.

Dr. Peterson, you were asked to evaluate the present and

10 future asbestos liability of the debtors in this case, correct? 11 A Yes, thats the general subject matter that I was I think we will see during the course of my

12 requested to do.

13 testimony what is meant by the word liability has some 14 ambiguity. But basically the liability or the costs using

15 liability in a colloquial sense. 16 Q My fault, Mr. Peterson. I should have been more precise.

17 But would you tell the Court what it is that was your 18 understanding that you were asked. 19 A Essentially what you said but I interpreted that as what

20 would be the cost that the debtor would have paid had it 21 continued in asbestos litigation not filing bankruptcy in order 22 to resolve its asbestos liabilities. Its really the amount it

23 would cost him to relieve the liabilities whether you want to 24 call that the liability payment or not, Ive come not to say 25 that. WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 Q

187

And were you able to reach an opinion within a reasonable

2 degree of scientific certainty, sir? 3 A 4 Q 5 A I was. Okay, and what was that opinion, Dr. Peterson? That its liabilities is in the range of about 1.2 billion

6 and a quarter to about a billion, I believe, its here, a 7 billion four. 8 Q These numbers are on -- being displayed now.

Dr. Peterson, Id like to talk a little bit about how you

9 got to those numbers. 10 A 11 Q 12 A Actually, let me correct that. Certainly. The range would be from about 1.1 billion to a billion and

13 a quarter and probably most likely centering around a billion 14 and a quarter. 15 16 Q MR. SHEPPARD: Your Honor, give me one second.

And I believe you testified to this, Dr. Peterson, but I You have -- youve actually

17 just want the record to be clear.

18 given two possible ranges in this case as part of your opinion, 19 isnt that right? 20 A Well, we have a range of values of four but Ive also

21 provided a range of what I regard as reasonable settlements 22 based on sensitivity analyses thats broader. I believe these

23 are the most reasonable and appropriate but there are other 24 values that the liability of an asbestos defendant in a 25 situation like this is clearly highly uncertain. WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 Q Im sorry, and based upon the work that youve done in

188

2 this case, of these two potential ranges, youre recommending 3 which range, sir? 4 A Well, theres the specific of the four forecasts that we The specific one that I believe is the most

5 have here.

6 reasonable and most appropriate is the $1.255 billion. 7 Q 8 A 9 Q Thank you. Thats net present value. Thank you, Dr. Peterson. That was going to be my next

10 question. 11 A 12 Q Yes.

Thats present value?

Dr. Peterson, lets talk about how you got to those How do you begin this process of asbestos estimation? We obtain the database We

13 numbers. 14 A

Acquiring information basically.

15 that the debtor had maintained about its asbestos claims.

16 obtained over the course of the case many documents about the 17 debtors handling of asbestos claims, the nature of those 18 claims and its -- how you evaluated its liability. 19 talked to whomever would talk to me. 20 lawyers about this. We -- I

I talked to plaintiffs

I did not have access to defense lawyers

21 other than reading their depositions. 22 I studied the nature of the products, the asbestos

23 containing products, and other bases of liability for these 24 debtors. And I looked at the history of its litigation, tried

25 to look at that within the context of the broader asbestos WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 litigation basically to try to understand, not only have the 2 data, but understand as well as I could the context of those 3 liabilities in the ways Ive described. 4 Q So you start by getting the history and the facts

189

5 together, the experience of the debtor in the tort system, 6 right? 7 A Yes, its basically the same way I would do research and Its important not only to obtain

8 obtain as much information.

9 the data, but to understand what the data means, to go to other 10 documents and to talk to other people. If youre going to

11 examine data, you want -- I describe it as getting dirty with 12 the data. You just have to really get dirty and dig down and

13 find out what the data might mean so you can understand and do 14 more appropriate analyses and to reach more appropriate 15 conclusions. 16 Q And as you dug into the data here and got dirty, what did

17 you find was significant about the history, the tort litigation 18 history of Bondex? 19 A Bondex had a -- at the time that its litigation really Its an

20 ripened and became a mass tort, it was very late. 21 unusual defendant.

If you look at the history of Bondex

22 litigation until the late 90s, beginning 98 and 99, 2000, as 23 Mr. Tompkins testified, its litigation was basically -- its 24 asbestos claims were a part of its ordinary litigation, its 25 ordinary tort litigation. It wasnt a mass tort.

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Peterson - Direct/Sheppard 1

190

My experience basically in recent years is that there This really looks

2 are very few other defendants like that.

3 like what other defendants were in the early 1980s before the 4 litigation ripened against them. 5 Q 6 can. Let me stop you there and let me just back up a step if I Can you talk to me about the types of products that

7 Bondex had and who their target demographic was? 8 A For the most part they had construction products, home

9 improvement products, surfacing materials including a high 10 concentration of drywall cement, drywall joint compound. Ive

11 drywalled myself and we called it mud but thats what they were 12 doing. That was a substantial part of the business. But they

13 had spackling, they had other filler products, they had a whole 14 range of these. And as I heard earlier today, they had Those are ubiquitous in homes, all of those

15 textured painting.

16 products and that was their market. 17 Q That was going to be my next question. Why is the target

18 demographic of Bondex significant to someone like you in terms 19 of what youre doing? 20 A Well, they targeted, for the most part, not exclusively,

21 but for the most part, targeted a fairly narrow market of 22 people exposed to asbestos, quite a broad range. And they

23 targeted do-it-yourselfers, home improvement people, people who 24 worked on their own projects. And they also -- and they sold

25 through retail companies, paint stores, hardware stores, major WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 national retailers.

191

And they sold primarily to both homeowners

2 and individuals and small handymen, but also to painting and 3 constructions contractors, carpenters, people like that that 4 would do drywalling routinely. 5 So it was basically both in homes and in commercial

6 establishments, but it was basically small construction 7 projects and companies -- entities that were small themselves, 8 small businesses. Those were people who generally -- the

9 people who were exposed in those ways were not exposed by 10 Bondex in commercial settings, in big construction, in 11 factories and other places like that. Some of them, a

12 substantial number of them, had asbestos exposures on the job. 13 Probably do-it-yourself projects are more common and

14 frequent among blue collar workers and people that might have 15 exposures. But Ive done it. Im a lawyer and Ive done my And as far as

16 own drywalling.

So its not exclusively those.

17 I know, Ive had no other asbestos exposures, nor have a lot of 18 these people. Those are people that were not participating in

19 the asbestos litigation prior to the wave of, for the most 20 part, prior to the wave of advertising that plaintiffs lawyers 21 unleashed in the late 90s and have continued through to 2000. 22 Q And based upon your review of the data in this case, were

23 you able to get some idea of the market in terms of the United 24 States that Bondex reached with its products? 25 company, was it national? WWW.JJCOURT.COM Was it a local

Peterson - Direct/Sheppard 1 A It was a national company. It sold nationwide. It It

192

2 manufactured its product in both coasts in the Midwest. 3 sold to retailers that are nationwide. 4 Q

Did you see anything that indicated to you, Dr. Peterson,

5 that there was not a jurisdiction in the 48 contiguous states 6 where Bondex was not sold? 7 A 8 9 Q I dont know. MR. SHEPPARD: Lets go to Slide 1 please.

You started to do this before, Dr. Peterson, and Im sorry

10 I cut you off, but now Id like you to tell us a little bit 11 about the litigation history, if you would, and why that was 12 important. 13 A Well, Ive started with the period 1996. I presented five

14 years.

This is the period of transition from an ordinary, The experience prior to 1996

15 routine litigation to mass tort.

16 looks basically like it does in this period and were looking 17 just at mesothelioma claims here. But even across all

18 diseases, it was getting relatively few claims and it was 19 settling and paying relatively few. 20 So in 1996 it received 11 mesothelioma filings, it As you can

21 paid six and the average resolution was $1,750.

22 see, all of those numbers go up over the course of the 23 remainder of the decade. And in 2000 its number of claims

24 began to grow in 1999 and grow even more, tripling between 1999 25 and 2000. The number of settled claims grew but were still WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 quite small.

193

This was a defendant that didnt have to settle a

2 lot of claims primarily because the case against them hadnt 3 been made. Weve heard testimony previously that a law firm They have to develop a case of liability

4 has to make a case.

5 against the defendant and until they do, they dont have a 6 basis for really obtaining significant money. 7 Q Okay, now, you have two numbers up there that are in red Is that the time period that youre

8 for 1999 and 2000.

9 understanding that these cases began to be made against Bondex? 10 A Thats when the litigation began to break open. It was

11 the period of time when Iola and his colleagues were beginning 12 to do -- get the discovery that they had and the settlements 13 began to rise there. 14 and 2000. 15 ninefold. So this is a sharp change between 1996

The number of claims went up tenfold basically, The number of settlements were up threefold. The

16 values went up enormously up to a half million dollars in the 17 last two years shown here. 18 Q Okay, now, by this point, 1999/2000, the asbestos

19 litigation was fairly mature, isnt that right? 20 A It was -- yes, it was mature against other defendants but This -- basically, Bondex was a late arriver.

21 not this one. 22 Q 23 A

And why was that, Dr. Peterson? For two reasons primarily, I think. One is that no

24 defendant had invested the money or time to make the case 25 against them. WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 Q 2 A You mean plaintiff? Plaintiff, Im sorry, no plaintiff to make the case Mr. Iolas colleagues did that and they

194

3 against them.

4 demonstrated to the debtors that they had a good case as weve 5 heard described in this courtroom. 6 became known more widely. And so now that -- and that

As Mr. Iola bemoaned, he no longer

7 had a monopoly on this but that was inevitable. 8 But the other thing was basically the nature of the

9 kinds of people exposed, do-it-yourselfers, people at work for 10 small painting and construction companies werent the routine 11 or typical kind of persons filing asbestos claims. And the

12 reason why that happened is that how people get involved in 13 litigation is typically through social networks. 14 friends. They have

If you got mesothelioma and you were a do-it-

15 yourselfer in this era, you probably wouldnt have had an idea 16 that you could file a lawsuit against a company like this. But

17 if you got mesothelioma and you were a pipefitter, your union, 18 your colleagues, your co-workers, other victims, your doctor 19 would tell you about it. 20 And so thats how those people -- how lawyers reached That network And the only

21 those people or those people reached lawyers. 22 didnt exist for this population of claimants.

23 way that they were eventually reached in mass was advertising. 24 When advertising went on and described if you have mesothelioma 25 and you worked ever with asbestos, you may have a lawsuit. WWW.JJCOURT.COM And

Peterson - Direct/Sheppard 1 that advertising grew enormously both on television and

195

2 increasingly in the internet in the latter part of the 1990s. 3 It continues to grow throughout since then and that reached 4 people. 5 So now its pervasive knowledge in this country that

6 there is such a thing as mesothelioma, that its related to 7 asbestos. If you get it, you may have a lawsuit and you should So the kinds of people that before never would

8 call a lawyer.

9 have had a chance to know about it, never knew they had an 10 opportunity for compensation, now know they have and so weve 11 seen the claims grow enormously in recent years. But this

12 began earlier and you finally reached a target of the business 13 that Bondex was in. 14 Q Okay, and is that whats on the graphic thats up there How does that -- how does this help us

15 now, the second table?

16 understand what youre talking about? 17 A Well, it explains why the number of claims increased in Thats the primary thing. And youre beginning I

18 this period.

19 to see the effects of both making the case and advertising.

20 think primarily the slide shows a somewhat different matter and 21 thats that the stakes for Bondex grew enormously in this 22 period of time. 23 Q And I was going to ask you about that, Dr. Peterson.

24 Theres a couple of extra columns here from the prior chart 25 that we looked at. Whats the difference between the chart WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 that we just had up and this one? 2 A

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Well, Ive added -- the left side, the resolved claims, we

3 saw the data, the first two columns previously, but I basically 4 just multiplied the average settlement costs times the number 5 of settlements in order to get the cost of settlements. That

6 total amount of money that Bondex paid to resolve asbestos 7 claims grew to $8.3 billion, which was far greater -- in 2000 8 -- far greater than 1999 and enormously greater than around 9 $10,000 in the first part of this period. Of course, we all

10 know they can thank Mark Iola for that, but thats what was 11 going on. 12 The right side shows that its exposure, its

13 potential liability was far greater because they were not 14 resolving a whole lot of claims as weve seen. 15 backlogging more and more claims. They were

And those claims had the They

16 potential of having the values that they were paying out. 17 may or may not, but they had that potential.

And if you take

18 the average settlement costs and the average fraction of 19 resolved claims that get paid and multiply that -- in each year 20 and multiply it by the number of claims you get the second 21 column from the right, the potential expected total of costs. 22 Q Let me stop you there in my never ending effort to make

23 sure were precise with our words because cost is another one 24 of those words thats been thrown around during this hearing. 25 What do you mean by costs here? WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 A Well, I use it twice in -- or three times. Cost of

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2 settlement its how much it actually costs the debtor to be 3 relived of the liability in those claims in each year. The

4 expected total cost is the amount they might have to pay if 5 their averages of that period of time continue to apply to the 6 remaining claims. Thats how much they would have to pay. And

7 the cost of all claims is the sum of those two numbers and it 8 reaches over $63 million in 2000 as opposed to 59,000 in 1996. 9 This had become a significant financial issue for Bondex. 10 Q So Bondex is becoming a player and its litigation is

11 certainly trending upward long before the bankruptcy wave, is 12 that right? 13 A I think thats a key point here and thats why I prepared The --

14 the chart. 15 Q 16 A

Thats why I asked the question. Yes. Good. Our prior discussions helped. The

17 bankruptcies -- they were eight major bankruptcies in 2000, 18 2001, but as of October -- the beginning of October 2000 there 19 were only two. And that was not uncommon. There had been

20 other instances in the past where there were two bankruptcies 21 filed among asbestos defendants. That was not unusual. Two

22 more were filed at the end of the year and then four more the 23 next year. But for most of 2000 there had not been any impact

24 of the bankruptcies and if there was any at all it would have 25 only been people foreseeing there might be a potential WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 increased problem for defendants. 2

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So, these results predate the effects of any -- the It shows that the -- the asbestos It

3 bankruptcies might have had.

4 litigation against Bondex broke open before the bankruptcy. 5 was already growing. All the seeds were there and the

6 subsequent increase we see is not -- is in part, of course, 7 influences by the bankruptcies. Its also influenced by the

8 advertising that brought more and more people in all the time. 9 But its also greatly influenced by this explosion of 10 liabilities that really came from what Mark Iola and his 11 colleagues developed and became known why (indiscernible). 12 Q Okay. So, at this point -- and I believe you testified

13 just a few minutes ago that this is becoming a significant 14 problem for Bondex. Based upon your review of the database and

15 the records here, what did Bondex -- how did Bondex respond to 16 that? 17 A It basically ended up changing its litigation approach At this point in time it was If they

18 over the next several years.

19 primarily treating these cases as ordinary litigation. 20 didnt have to they wouldnt settle a claim. 21 it sitting.

Theyd just leave

If they were forced to they would be willing to But

22 try and prepare it for litigation and sometimes try it.

23 the consequences of that strategy became the source of the 24 problem we just saw on the last page. So, the size of their

25 potential liability exposure as well as now the sheer volumes WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 of claims forced them to change their policies. 2 obviously it was clear to them -3 Q 4 A 5 Q All right, lets stop -It was --

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-- that they couldnt continue doing what they were doing. Okay, let me stop you there because I want to make sure I We have red bars

6 understand the graphic that we just put up. 7 and blue bars. 8 A Tell us about the red bars.

Well, the red bars are the average -- this chart shows the

9 number of -- the percentage of claims that they had pending 10 that were resolved. 11 Q 12 13 A Are you having a hard time seeing that, Dr. Peterson? MR. SHEPPARD: No, I can see it. Is there any way we can zoom that in? Thats fine. I can turn around and

14 look, too. 15 glasses. 16 This is

Its just -- its the middle distance for my

The -- they were resolving relatively few claims. how many claims were resolved in a year. Basically,

17 as a result of the pressures that they faced Bondex changed its 18 strategies and it adopted strategies that were -- that had been 19 proved to have been successful by other asbestos defendants 20 previously. 21 22 that. Owens Corning had found that. W.R. Grace had found

Most major defendants found that an aggressive They had to go to They

23 litigation approach was too expensive. 24 settlements.

And the -- they could buy out settlement.

25 could buy out liabilities cheapest if they settled quickly WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 before the plaintiffs had invested a lot of money, developed

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2 their case, before codefendants preceded them in settlements, 3 leaving them with perhaps a potentially large share of the 4 liability, of the risk. And so they moved -- that table shows

5 that between that period of time they settled more and more 6 claims. They settled many. They -- more than double the

7 number of claims they were settling the first year. 8 Q Now, Dr. Peterson, they werent settling each and every

9 one of these claims within one year by looking at every claim 10 and individually reviewing it, were they? 11 A Well, yes, they had to move to a group settlement process

12 and because they -- again they could buy out claims more 13 cheaply if they settled in a group. Historically and certainly

14 historically for this defendant, group settlements -- you can 15 get a -- you can resolve cases more cheaply in a group. You

16 can resolve more cases and relive yourself from liability for a 17 large number of claims with one fell swoop. And that, again,

18 had been proven sound by the CCR in its NSP Program, by Owens 19 Corning in its SSP Program. 20 1988. And CCR had been doing this since

So thats the way, basically, that any asbestos

21 defendant with mass claims has to deal with these claims and 22 to deal with it in the most cost effective way. 23 that quite quickly once it saw its dangers. 24 Q Okay. Now the Court has already heard a lot about group And Bondex did

25 settlements and I guess we should talk about how youre WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 defining group settlements here. 2 A Yes.

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There are several attributes of group settlements.

3 Theyre typically with one lawyer who either has his own claims 4 or the claims of several firms and theyre resolved at the same 5 time. Theyre resolved concurrently as part of a settlement And we also find that typically

6 deal, a group settlement deal.

7 in a group settlement there are only -- there -- most claims 8 settle at -- for certain fixed values, $10,000, a hundred 9 thousand dollars, $50,000. 10 that. Youll see multiple people getting

And virtually every settlement has three zeros at the Theyre just kind

11 end of it because theyre rounded numbers. 12 of even numbers.

All of those are attributes of settlements, So we searched the database and we said,

13 group settlements.

14 okay, how many instances can we find and how many claims were 15 resolved in an aggregate with a number of other claims with 16 that same plaintiffs law firm on the same date. 17 Q So, you created a graphic here that across the top has

18 percents within a year by group size and then you have a number 19 of columns, individual, two to five, six to twenty. 20 what that is. 21 A Well, those are -- the far left is claims that -- theyre The two Tell us

22 the only claim that a law firm resolved in that day.

23 to five means that the law firm resolved between two and five 24 claims in that day and six to twenty is they resolved between 25 six and twenty and so on. These are claims of all diseases,

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Peterson - Direct/Sheppard 1 not just mesothelioma.

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Group settlements generally were across Some were meso, some not.

2 whatever diseases were involved.

3 But this shows that in each of these years, the number in red, 4 thats the most -- most claims were resolved in 2003 in groups 5 of a hundred and one or more, large settlement. That would be

6 one -- basically one or two -- actually, there must have been 7 two when youre looking at the number of cases. 8 9 to five. In 2001, most claims were resolved in groups of two For purposes of my analysis in this report we regard

10 settlements in group of two to five as an individual settlement 11 because we dont know if it was a group with these other 12 characteristics I described or was just a bunch of cases 13 settled. 14 Q Several cases settled individually on the same day.

So in other words, youre giving the benefit of the doubt

15 here that they -16 17 THE WITNESS: MR. SHEPPARD: Oh my God, of all people -We again move Dr. Peterson in

18 contempt, Your Honor. 19 20 THE WITNESS: (Laughter) This time I might agree with you, but

21 can I testify first? 22 MR. SHEPPARD: As long as you dont run five minutes

23 off the clock. 24 THE WITNESS: Can I ask someone to bring this out of

25 the room for me, please? WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 2 3 4 5 6 7 8 9 THE COURT: Yes, sure. May I approach?

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MR. SHEPPARD: THE COURT:

Yes, you can just take it. Thank you. I apologize, Your Honor.

MR. SHEPPARD: THE WITNESS: THE COURT:

Its all right. Im sorry, your last question? You got me.

THE WITNESS: MR. SHEPPARD: THE COURT:

You were giving the benefit of the doubt

10 with respect to the settlements in the two to five per day 11 range to -12 A Well, yes, with that uncertainly I think its more For reasons that will kind of be clear later we

13 appropriate.

14 regard them as individual settlements. 15 Q 16 A 17 Q 18 A Its a conservative step is my point, right? I dont know. Okay. I think theres one other thing I should say about this, In 2001 -It just seems an appropriate step.

19 is that over time the size of these groups grew.

20 well, first of all, theres two points about the content of 21 this table. The individual settlements constituted the third

22 and -- in 2001 and another 60 percent in groups, so over 90 23 percent of the claims were resolved basically -- probably 24 individually. After 2001, we see that that number goes down

25 and the number of individual settlements never gets above 16 WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 percent thereafter. It continues to go down. But more

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2 significantly, as time passes, and fairly quickly, the debtors 3 move to the larger groups, 50 to a hundred and a hundred and 4 above, so they were moving not only to group settlements, but 5 large group settlements. 6 as quickly as possible. And again, they were settling these For most cases they were resolved in That was

7 the first or second year of having been filed. 8 clearly a strategy of the debtor. 9 Q 10 A 11 Q 12 A And those are the -And both of --Im sorry. Im sorry.

Those are the numbers in red, right?

The numbers in red are the most frequent of the size

13 groups in each year. 14 Q And what was the effect of this for Bondex in moving to

15 this change in their litigation strategy? 16 A It lessens their liability because the amount you can These are --

17 settle a case for is lower as the value goes up. 18 Q Theres that word again.

Lets make sure we understand

19 what were talking about. 20 A The cost of resolving claims is -- yeah, Im using it in a The amount of money

21 colloquial sense unless I otherwise say.

22 that Bondex had to pay would be lower per claimant in a large 23 group. 24 Q 25 A And so they had an incentive for doing that. And did it also have a stabilizing effect? The data show that. Thats in Bondex data --

Okay.

Im sorry.

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1 shows that the average settlements go down as you go up in the 2 size. 3 Q 4 A Did it also have a stabilizing effect? Well, it was stabilizing in that it let the debtor It certainly

5 eliminate big numbers of claims and liability.

6 stabilized and clarified and limited the exposures they had. 7 If you can get rid of a hundred claims at a time its much 8 better than six or two. 9 Q 10 11 A 12 Q So -- and right on cue we have a new slide. UNIDENTIFIED SPEAKER: Five.

This -- well, you want to question it. Dr. Peterson, can you tell us whats depicted in this

13 graph? 14 A This shows the effects of these changes. Its settlement

15 averages went down sharply from the period 2001 and 2002, when 16 it only began to use group settlements, and basically stated in 17 a very narrow range -- well, not a very narrow, but a 18 relatively stable level across the next -- the rest of the 19 decade. And so these group processes both reduced and

20 stabilized the amount they had to pay. 21 There are two columns here because -- and the only

22 differences are in the latter years, 2008, 09 and 10, and 23 thats because as another strategy that well -- I assume well 24 be talking about later -- that the trust began making large 25 settled, but not documented, they call them -- basically, WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 settlements. Those are settlements of -- they liquidate the And the terms of the

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2 claims, but they dont pay them.

3 settlement is the payment is to be deferred for some period of 4 time. And those settlements in 2008, 09 and 10, mostly 2009,

5 the payments were to be made after the date of the bankruptcy. 6 So those cases are -- theyre settlements, but Its not clear they will be

7 theyre conditional settlements.

8 paid because as weve heard, there are the requirements of the 9 plaintiffs to establish that they have an exposure and if they 10 dont they dont get paid. 11 Q And thats why we have the two different columns here

12 between paid or unpaid and paid only, right? 13 A Yes. Theres greater uncertainty about these SBND claims.

14 So if you include them they settle for somewhat less money, but 15 its not clear that those are all settlements. 16 really what was quite going on with those. 17 THE COURT: Im sorry. Did you say that Bondex was Its not clear

18 requiring some proof of exposure before the payments were made? 19 THE WITNESS: Yes. Thats been shown in court with

20 regard to the documents, the releases, and even in some of the 21 -- in the settlement agreements, the -- almost all of those -22 all of them that we seen, as is typical in one of these cases, 23 the defendant has to provide some proofs that they were exposed 24 to a Bondex product to get paid. 25 dont get paid. WWW.JJCOURT.COM If they dont do it they

Peterson - Direct/Sheppard 1

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So, you see in many of these group settlements that

2 the plaintiffs lawyers will acknowledge that they cannot 3 provide that documentation and so they will dismiss the claim. 4 The Lanier claims have lists of that. 5 claims. I have those documents. Its one of the 17 That is

Ive looked at them.

6 typical of what the group settlements were.

Everything Ive So, there

7 seen here in the case, thats what they were doing.

8 has to be a demonstration of at least prima facie exposure to a 9 potential liability on the part of the defendant in order to 10 pay it. 11 Its a condition to payment. THE COURT: So, the lists of claimants who were paid

12 from, for example, one group Lanier settlement, that does not 13 include any dismissed cases, it generally starts with a nominal 14 number of a thousand dollars and goes up from there, for 15 particular people do not include all of the plaintiffs who were 16 included in the group settlement? 17 THE WITNESS: There are -- Lanier -- Im sorry, The first is that the initial

18 theres two responses to that.

19 list of claimants is different -- who were on the deal, is 20 different from those that get paid. 21 22 THE COURT: Thats what I was asking. In part because some claimants are

THE WITNESS:

23 dropped from the list, but typically they maintain the deal so 24 that the Lanier firm says, okay, we will instead with your 25 consent substitute another claimant and heres his or her WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 exposure. So the total value of the deal is -- sometimes it

208

2 changes, but they try and maintain the value of total cost to 3 the debtor of the deal by just switching one with another. But

4 there are people that get dropped because they havent shown. 5 The Lanier settlements also explicit identify people That is

6 who will be dismissed at the time of the settlement. 7 an explicit listing of people in their documents.

Typically

8 these group settlements -- or frequently they do involve 9 negotiants not only of the payment of terms for a group of 10 claimants, but the plaintiff agrees to dismiss a number of 11 claims and say, okay, Ive got these 30 claims and Im sorry, I 12 just have not been able -- and Im sorry youll like it -- I 13 have not been able to develop the exposure for this case so I 14 am dismissing them as part of this arrangement. Sometimes

15 theyre listed in the deal, sometimes theyre not. 16 But, we find that among the claims that plaintiffs

17 resolve in group settlements, among the hundred percent of 18 claims that are resolved on that day with that law firm 36 19 percent of them are closed without payment. Theyre dismissed.

20 So, the dismissal of claims, the acknowledgment that there is 21 no liability is a common feature of these negotiations that 22 produce group settlements. The identity of those particular

23 payments may or may not be covered in the list, theyre not 24 going to get paid anything, but they are dismissed. 25 So, that is an element. Group settlements -- in two

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Peterson - Direct/Sheppard 1 ways group settlements do not pay anyone just for walking in 2 the door.

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The parties agree to dismiss certain claims and the

3 agreements themselves have a condition subsequent of 4 demonstrating and providing some document supporting the claim 5 of exposure to Bondex. 6 7 8 Q MR. SHEPPARD: THE COURT: May I, Your Honor?

yes.

Dr. Peterson, we put up another slide, Slide Number 6, Is that a graphic

9 which -- well, Ill let you tell me.

10 depiction of what youve just been describing? 11 A It is. The green line is the average settlement value It shows the sharp drop in early 2000 and The blue and red

12 across years.

13 basically substantial stability thereafter.

14 lines Ive added in there to show the impact of the settled, 15 but not documented agreements that are still unpaid, 16 technically still open. And it shows the -- these show the

17 average values of all claims resolved each year is the green 18 line. The red line is the average value of a settled, but not

19 documented claims, which is -- which are less than the average. 20 If you delete the settled, but not document, regard them as 21 being incomplete settlements, and so just calculate the average 22 value without those claims you get the blue line and then the 23 values of them -- among the actual truly really resolved claims 24 by Bondex they agree to a value and theyve paid it that claim 25 is closed, its the blue line. The green line represents a

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1 mixture of claims that are closed and those that are subject to 2 this condition subsequent. 3 Q Okay. So it looks to me like then the settlements are

4 starting to trend back up, is that right? 5 A If you exclude the settled, but not documented theyre If you include them they end up at a place that

6 trending up.

7 theyve basically been all decade long. 8 Q Okay. And thats different than what Dr. Mullen told us

9 the other day? 10 A I -- if you drew a linear line about it you might have But, to me given the

11 some lien going down slightly.

12 uncertainty in the nature of asbestos litigation this is 13 essentially a stable -- particularly in light of the ambiguity 14 with regard to the SBND claims, my assumption is this is 15 basically a stable pattern of settlement values across years. 16 Q Okay. Dr. Peterson, weve pretty much covered now the

17 litigation history and the facts that you felt were important 18 in the formulation of your estimation opinion. Ive put up on

19 the screen and Im going to ask you to describe for the Court, 20 is this your methodology? 21 A 22 Q Yes, it summarizes the methodology. Okay. Its --

Can you briefly summarize it here as we start to

23 walk through this? 24 A Its arithmetic basically. You have the number of claims,

25 you multiply them by the percent of those claims that will get WWW.JJCOURT.COM

Peterson - Direct/Sheppard

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1 paid times the percent of -- times the average value when they 2 get paid and the reflects the liability. I mean, the trick is

3 in calculating those three boxes, of course. 4 Q 5 A 6 Q 7 A And by -Thats where the science comes in. Okay. This is math.

So the number of claims is not tricky, or is it? Theres nothing simple in this

Oh, of course it is.

8 world. 9 Q And, in fact, I think Dr. Watson took -- criticized you

10 and Dr. Vasquez because you couldnt agree on the number of 11 claims. 12 A 13 Q 14 A Is that unusual in these cases?

Youre talking about the number of pending claims? Yes. Yeah. We also disagreed about the number of future I would say

15 claims.

But, were basically very similar.

16 theyre within the range -- we would each agree that each 17 others is in the range of reasonableness. The issue with

18 regard to the claims database is theres often ambiguities and 19 errors and other things in them. Its a large set of data And each analyst has

20 thats just inherent -- so its data. 21 their own way of doing it. 22

For example, there are in excess of -- there are 50,

23 I believe its John Smiths or James Smiths, in the database and 24 so theres confusion as to is that one person thats in there 25 50 times or are there 50 different persons. WWW.JJCOURT.COM When theyre

Peterson - Direct/Sheppard 1 unique names its not such a problem, but with these unusual

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2 names you have to make judgments about whats a duplicate name. 3 One of the steps in dealing with these databases is to -4 Q Fortunately in this case, Dr. Peterson, you, Dr. Mullen

5 and Dr. Vasquez pretty much have identified close to the same 6 number, right? 7 A Theyre not precisely identical, but theyre -- I would

8 say theyre not material ly different. 9 Q Okay. All right. And then that leaves us with the other

10 three boxes, which is were going -- which were going to get 11 to right now. 12 A 13 Q The first one there is percent paid, right?

Yes, that -- well, we go through this in sequence. Right. So, what are we talking about here when were

14 talking about determining the percent paid? 15 A Thats the -- we look at the historic experience of

16 Bondex, over the course of the years among the claims that were 17 resolved what fraction of them are resolved with a settlement 18 payment. 19 Q 20 A Okay. The average settlement is the -- among those claims is the Its the average amount paid. And I just want to back

21 -- weve looked at that. 22 Q 23 up. Okay.

Now, lets goo to eight.

Im sorry I jumped ahead.

This is the number of meso

24 claims that you identified in the database? 25 A There are -- yes, there are 8,489 meso claims of which WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 5,409 were either dismissed or settled. 2 Q 3 A Okay. Liquidated means?

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Liquidated.

These are the SBND claims, theyre liquidated

4 and unpaid. 5 Q 6 A 7 Q And the unresolved are the open claims? Yes. Okay. And then the next slide, Number 9, you do another

8 adjustment to this number, right? 9 A Yes. There are -- among the pending claims there are a The

10 number of claims that have been around for a long time.

11 likelihood -- the history -- the database history shows that 12 the claims are unlikely to be resolved if they have been around 13 more than five years. So we eliminated from our calculations

14 the 156 pending claims that were -- have been around for more 15 than five years, and that yields a result of 2,168 pending 16 claims that were going to evaluate and estimate. 17 Q Okay. When you call them old claims, are they basically

18 the same idea as Dr. Mullens stale claims? 19 A 20 Q 21 A 22 Q 23 A 24 Q 25 A Its the same idea. Same idea. Yes. To be conservative? Yes. Okay. Yes. Lets go to the next slide. This is the Nicholson curve. WWW.JJCOURT.COM its -- Your Honor has And youre excluding those, as well, right?

Peterson - Direct/Sheppard 1 heard about this again and again. 2 for mesothelioma.

214

This is the Nicholson curve

Hes forecasting the number of asbestos --

3 the number of persons who were occupationally exposed to 4 asbestos and died from mesothelioma. So these are -- Judge,

5 Mr. Mullen had some uncertainty -- Dr. Mullen had some 6 uncertainty about that. 7 Q Okay. Those are deaths.

And you may want to get into this later, but just

8 -- Dr. Mullen used a version of the Nicholson curve and Dr. 9 Vasquez used the Peto method, but are -- I understand theyre 10 different -11 A 12 Q Theyre similar. -- but theyre very similar in terms of the shape, shape,

13 right? 14 A Theyre similar. And as he found and as I found, if you

15 -- whichever version of the epidemiology you use is a pretty 16 immaterial difference. 17 percent. It might make a difference of five

This is how you forecast the number of future claims It starts with Nicholson. The

18 and thats shown on this chart.

19 green line at the top is Nicholsons curve. 20 we start.

And thats where

The black line at the left are the number of pending

21 claims, thats just a -- that were filed each -- excuse me, I 22 have to restate it -- the number of claims that were filed each 23 year for mesothelioma. 24 Q The blue line is our actual forecast. We got the

All right, so let me just stop you there.

25 black line going up pretty sharply there, a couple squiggles, WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 right? 2 A 3 Q Yes. And then you got the green line up there, which is

215

4 Nicholson? 5 A 6 Q 7 A 8 Q Yes, and its going down at this point. And the blue line is your forecast? Yes. Now, my eyesight isnt all that great either, but it looks

9 to me like the blue line is starting out lower than the top of 10 the black line. 11 A 12 Q 13 A Yes, it is. Why is that? We forecast that beginning in the last part of 2010 and

14 2011 the number of filings against Bondex will be lower than 15 they were at the time before they went into bankruptcy. 16 they go down because Nicholson goes down. And

One other point

17 about this, if you look before the line, which indicates the 18 date of the bankruptcy, the Nicholson estimate of the number of 19 deaths, the incidence of mesothelioma is going down, the claims 20 against Bondex are still going up. That means that a higher

21 and higher proportion of claimants -- a higher and higher 22 proportion of asbestos mesothelioma victims are making claims 23 against Bondex. 24 Q Okay. All right. And just briefly to cover why you chose

25 Nicholson as opposed to some of the other epidemiological WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 models. 2 A Next slide.

216

Well, first of all, its the only one thats Peer

3 Reviewed. 4 Q 5 A Okay. Its done by an epidemiologist, secondly. And third, its

6 been confirmed by 30 years of data. 7 Q 8 us? 9 A Yes. The red line is the Nicholson forecast. The blue Im sorry. And thats what this graph is trying to show

10 line are data that are collected by the US Government from -11 called the SEER data. 12 in nine sites. They collect data of all cancer deaths

State of Ohio is -- State of Iowa is a site, From that they

13 Los Angeles -- Long Beach is a site.

14 extrapolate to the country as a whole the number of 15 mesothelioma deaths. 16 He has a forecast. For 30 years Nicholson has tracked that. So his

He made a forecast is 1982.

17 forecast has been incredibly well confirmed by the subsequent 18 data and thats why Dr. Mullen and others, I think, regarded it 19 as the seminal work. More recently the United States

20 Government has been collecting data on mesothelioma deaths from 21 49 pf the 50 states. 22 Q 23 A 24 Q 25 A Green line? Thats the green line. Very good. And that fits the Nicholson model even closer, although WWW.JJCOURT.COM Basically its --

Peterson - Direct/Sheppard 1 its a bit higher.

217

So Nicholson may be under-forecasting the

2 number of mesothelioma deaths. 3 Q Let me stop you there just briefly. And weve all heard

4 about Nicholson.

Nicholson based his study -- it was

5 occupational, right? 6 A 7 Q Yes, only. Okay. And does that tell us anything about why that green

8 line might be higher than the Nicholson curve? 9 A Yes. Well, higher and also, the trend in recent years,

10 Nicholson is going down, but both of these counts are going up 11 slightly. Nicholson doesnt include home exposures, doesnt Those

12 include wives and children exposed to their husbands.

13 kinds of exposures, particularly the home exposures, the 14 do-it-yourself kind of projects at home, are not really -15 deaths from that mesothelioma is not something thats being 16 forecast by Nicholson. 17 We expect that the rate will be fairly consistent

18 with Nicholson, but it may be that those numbers will continue 19 to rise in the current and near future, whereas the more 20 traditional thermal occupation, commercial exposures 21 down. will go

If thats the case Nicholson will be underestimating the

22 incidence and our forecast relying on Nicholson will be 23 conservative. 24 claims. Well be forecasting too few future mesothelioma

Its one of a number of steps throughout this forecast They underestimate rather than WWW.JJCOURT.COM

25 that are conservative.

Peterson - Direct/Sheppard 1 overestimate liabilities. 2 Q Okay. And Im sorry, can you go back to the slide. And thats exactly the target

218

Just

3 to finish up the point.

4 demographic that you found in your review of the records here 5 that Bondex was going after, correct? 6 A Target demographic and a substantial number of the Bondex

7 claims only had those kinds of exposures. 8 Q 9 A Okay. Now, Dr. Peterson, were back to the boxes again. You will hear -- youve This

This just shows the calculations.

10 heard about -- Dr. Mullen talked about propensity to sue. 11 shows how theyre calculated. Its the number of claims

12 divided by the incidence, so the number of claims in a year 13 filed against Bondex divided by the Nicholson incidence equals 14 the propensity to sue. You then multiply the propensity to due

15 times the future incidence to get the number of future claims. 16 Thats the calculations. 17 Q Okay. Now the next slide we have some red bars again and

18 this is graphically showing the propensity to sue that youve 19 -20 A 21 Q 22 A No, these are filings. Okay, Im sorry. This shows how the -- weve seen this already in other The number of Theyre actual filings.

23 slides, but this just makes it clear.

24 mesothelioma claims jumped greatly in 2002 and have basically 25 been going up ever since. Theres a consistent upward trend

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1 across the two thousands and that trend has increased prior to 2 the bankruptcy. 3 Q 4 5 And it doesnt seem -THE COURT: This is just against the debtor? This is against the debtor, yes, Your

THE WITNESS:

6 Honor, Bondex only. 7 8 9 Q Okay. MR. SHEPPARD: THE WITNESS: Im sorry, Your Honor, I apologize. These are Bondex claims.

And I dont perceive that theres whole lot of

10 disagreement among the experts on this tend? 11 A No, these are the data. We dont -- the heading says

12 2010, but we dont have 2010 because its only a partial year. 13 Q Now very briefly, Dr. Peterson. Dr. Mullen used the

14 fiscal year, you use a calendar year, why is that? 15 A We use a calendar year because Nicholson is calendar year, The

16 so its easier to make the calculations and its standard.

17 -- we use the same method across every case that were involved 18 with and different defendants have different fiscal years. 19 find it more convenient to use the calendar year. 20 Q Okay. Now, 2010 isnt there. We had some data from 2010 We

21 because they -- the debtors didnt file until May, right? 22 A 23 Q 24 A Thats right. Okay. But you didnt include that in this bar chart here? One, youd have to extrapolate up

Yeah, for two reasons.

25 and estimate what would have happened for the last seven months WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 of the year. And the second, this is the year they entered I mean, not only

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2 bankruptcy and thats a disturbing event.

3 Bondex, but certainly other people were beginning to get -4 suspect that that was going to happen. And that affects your

5 filings, your settlements, its just -- you get unusual actions 6 that you would not want to use as a basis for forecasting 7 future claims as you near the date of a bankruptcy filing. 8 So we just stick with 2010 here. We used 2009 for

9 propensity to sue. 10 estimate.

And I hate making an estimate based on an

When you extrapolate the full years claims from

11 just five months basically youre making an estimate and youre 12 using that and then making your estimate. I -- that just --

13 that two-step process doesnt appeal to me. 14 Q So youd rather rely on the hard data than an estimate on

15 an estimate? 16 A 17 Q Yes. Okay. All right. Now, when were talking about the

18 calculation for the propensity to sue you have the claims and 19 then you have to pick a period of time, right? 20 A 21 Q 22 A Yes. Okay. Yes. And thats our next slide? And thats a matter of judgment now. As Dr. Mullen

23 said, its a matter of judgment based on your expertise and 24 thats now the beginning of the contribution of the scientific 25 -- and all the work that weve done for all this period of WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 time. This shows the propensity to sue the fraction of

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2 diseased mesothelioma victims who filed claims from 2001 3 through 2009. And as you can see, its going up, obviously.

4 Nicholsons either remain constant or have gone done in recent 5 years while the claims have been going up. 6 the annual number of claims. And so this shows

One of the judgments you have to

7 make is what period of time youre going to use to calculate 8 the propensities to sue for your forecast. 9 Q And what does -- and what are you looking for there in

10 terms of choosing that period? 11 A You want to -- the point of this is you want the past

12 experience that you think is going to be the best indicator of 13 what to expect in the future. And typically that experience is Thats why we

14 whats closest in time, the most recent period. 15 used 2007, 08 and 09.

The length of that time you -- really

16 in some sense you want to start with the 44.8 of 2009, because 17 thats where they were when they went into bankruptcy. But

18 typically we use a somewhat longer period of time, a couple 19 more years, in order to get more stable data, because at least 20 among some defendants those fines can go up and down rather 21 erratically and so you want to smooth it out. Here it doesnt

22 make that much difference because theres a pretty steady 23 pattern here. 24 Q 25 A Eleven. So thats why we use that period. WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 Q And then when you said pretty steady pattern I took you

222

2 back to Slide 11.

Thats that black line there that looks like

3 its going up, right? 4 A Yes, its going up and we use the last three periods.

5 Its not reasonable to expect, given the nature of the 6 litigation and this defendant, that the lower levels of 2003 7 and 04 are going to be indicative of the level of claim 8 filings in 2011, 12 and 13. 9 Q 10 A Okay. So, lets --

The more recent claims are the more likely and thats why

11 we use the recent years and a limited number of them. 12 Q Okay. So, lets try to finish up with 15. The red bars

13 there, thats the period of time that you chose, and you ended 14 up with 39.5 percent -15 A 16 Q 17 A Yes, which is lower than --- as the average? Yeah. Its lower that the actual propensity to sue in

18 2009 by about five percent. 19 Q And again, by averaging those numbers youre also adding

20 another layer of conservativeness, right? 21 A 22 Q Yes. Okay. Now, people are going to ask why didnt you choose

23 a longer period of time? 24 A For the reasons I said. As you go back more remotely in

25 time its a period thats different from what was going on at WWW.JJCOURT.COM

Peterson - Direct/Sheppard

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1 the time they filed bankruptcy and less likely to be what its 2 like in the future. 3 Q And does the fact that their litigation strategy changed

4 over that period of time factor into that decision, Dr. 5 Peterson? 6 A 7 sue. It doesnt have much of an impact on the propensity to The propensity to sue is a function of the behavior of

8 lawyers and claimants. 9 Q 10 A Okay. Theyre who determine who files claims. So, thats

11 primarily decisions by lawyers and claimants that are governing 12 this. And the litigations strategies of the defendants have a

13 significant impact on the settlement values, but not so much in 14 this because it was -- there werent -- gross changes in the 15 behavior of a plaintiff -- of a defendant might, but we dont 16 see anything like that here. 17 Q Now, Dr. Peterson, did you also do an alternative

18 propensity to sue forecast? 19 A Well, we did two. One of them is just to take that 39.5

20 percent and run it out for all future years, assume it never 21 changes. But I dont think thats the most reasonable forecast

22 because the -- excuse me -- both the propensities to sue and 23 the number of claim filings were increasing steadily throughout 24 the two thousands. And, in fact, that rate if increase was

25 increasing itself at -- before they went into bankruptcy. WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1

224

There are two attributes of the past trends that you need

2 to look at, whats the level, absolute level, and we looked at 3 that on the last slide of claim filings. But the second is, When its

4 whats the motion, direction, whats the trend.

5 going up its not reasonable to expect that that upward trend 6 would suddenly disappear or reverse. Its most likely that

7 that trend weve seen would continue to go up in the future and 8 so weve estimated that that trend -- weve -- I concluded as 9 an expert based on looking at this in lots of other cases as 10 well as here that the forecasted number of claims here is 11 likely the continue, the propensity to sue is likely to go up, 12 in the near term. But I dont think its going to continue to

13 go up at the rate it has in recent years and I -- its clearly 14 not going to go up forever, primarily because Bondex has a 15 limited amount of exposure. 16 It only had one type of product in it, one -- mostly And so it doesnt -- it

17 in people with one kind of exposures. 18 didnt expose everybody.

Theyre not going to get near a And so for that reason we

19 hundred percent of all the claims.

20 didnt increase at the rate that the data show. 21 We did a lower rate. Again, a conservative step. We

22 estimated that over the course of five years it would go up 20 23 percent. 24 percent. Twenty percent of these numbers, not adding 20 And thats lower than the rate. That 20 percent

25 number is -- doesnt have a particular empirical calculation. WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 Its a judgment.

225

And it could be that its going to go up 23 How much

2 percent or 18 percent, but I expect it will go up. 3 were not certain of. 4 weve said?

And will it stop after five years like It might go up for another seven

Perhaps not.

5 years or three years.

Those are uncertainties you cant know.

6 Theyre not -- they would not greatly change the forecast. 7 Theres uncertainty in that. But by using lower rates than

8 were in there historically were using conservative estimates. 9 If you assume theres no increase youre making an assumption, 10 a rather radical assumption, that this is going to completely 11 stop and go down, even if there had been no bankruptcy. 12 think thats an unreasonable assumption. 13 Q This is where Im glad youre the expert and Im not. It And I

14 says stable and decreasing, but stable to me appears like its 15 going up and decreasing looks like its staying the same. 16 you just explain that briefly? 17 A Sure. This is actually -- we changed our terminology in Its because in a situation like this the Can

18 the W.R. Grace case.

19 propensities to sue go up, but the claim filings actually 20 remain level and at a point lower than they were getting 21 before. So, the stability refers to the stability in the

22 forecast of the number of filings, not the propensity to sue. 23 The propensity to sue is increasing, but that results in a 24 stable, flat forecast of the number of claims over the next 25 several years. And thats shown in the next slide, I think. WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 2 Q MR. SHEPPARD: And the next slide, please, 70.

226

And that was my question, is that whats shown in the next

3 slide there, Dr. Peterson? 4 A Im a mind reader. Yes. If you look at this, the green

5 path on the right side -- the left, again, is the number of 6 historic claims. 7 forecast. the right is our forecast, the range of our

The high end of the green is our stable forecast, The bottom of that area is the number of And

8 our larger forecast.

9 claims we forecast under our decreasing propensity to sue.

10 as you can see, our stable model is basically stable across the 11 first few years and then it, too, goes down. The decreasing is

12 a sharp change in direction from sharply going up to sharply 13 going down. 14 Q Okay. Thats less plausible. Now the next slide that were going to put up is

15 from Dr. Mullens report, right? 16 A 17 Q 18 A Yes. From his rebuttal report, to be precise. Yeah, this is an exact reproduction of a figure in his

19 report. 20 Q 21 A 22 Q Okay. And the blue bars are claims?

Those are past filings according to him. Filed claims. It looks like its pretty steadily going

23 up, right? 24 A 25 Q Yes. And he fit some lines to that trend there, correct? WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 A Yes.

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Hes using filings in fiscal year because he uses -He says

2 well, he has ambiguous, Im not sure what the year is. 3 that. 4 Q Okay.

And, in fact, Dr. Mullen criticizes you for not

5 having, you know, an empirical basis for your propensity to 6 sue, doesnt he? 7 A Yes, he does. He said if wed use an empirical basis we I dont

8 would have got the dashed line or the green line. 9 understand where he got the green line. 10 our stable model is the orange line. 11 Q 12 A

But our forecast for

So hes criticizing you for being below the line? Yes. He said I should have forecast a larger liability.

13 And he also apparently criticizes the fact that were -- we 14 stopped at a five year increase because he continued to run his 15 increase out beyond that. 16 Q Which brings us to this rainbow chart, I call, which

17 graphically shows what, Dr. Peterson? 18 A Well, I mean, this just -- I took his advice. I ran -- if

19 I had used the empirical using a regression analysis to 20 determine the rate of future -- estimate the rate of trends and 21 future claim filings youd get the five lines at the top, 22 depending upon the years you use to calculate that trend. 23 go up. 24 below. They

Our forecast, again, is the red and blue lines down Its a much greater forecast, much greater liability.

25 And they curve and go down because by that point in time WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 theyve hit Nicholson going down. 2 kind of odd shape. 3 more liability. 4 And Dr. Mullen recognized in his testimony in this Thats why they have that

228

But the point of it is that they have far

5 case that its impractical, unreasonable to think that the -6 this trend would go all the way to include every mesothelioma 7 claim. But the mere -- the fact of the rate of his increase I dont believe

8 would have produced a much larger forecast. 9 that thats reasonable.

I dont believe its reasonable to The

10 expect that this increase would go on for a long time. 11 litigation is changing in ways.

Advertising is having less

12 effect in ways that are not going to make that likely. 13 Q Okay. So, weve got now -- thats the box on propensity

14 to sue, right? 15 A 16 Q 17 A 18 Q 19 A 20 Q 21 A Yes. So now we have to take a look at the rate of payment? Yes. Thats the next slide? Its the next component of the forecast, next parameter. Okay. And this shows the historic propensity -- the historic

22 payment rates, what -- among resolved claims, what fraction get 23 paid, from 2001 to 2010. Its very high at the first years,

24 but is relatively stable thereafter. 25 Q Okay. And its really high in the earlier years, why, Dr. WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 Peterson? 2 A Because they werent resolving many claims. They were

229

3 basically not resolving claims unless they -- in the litigation 4 process put them in a position where they had to then they 5 resolved -- they paid most of them and dismissed some. When

6 they later went to the group settlement process -- this is an 7 interesting point -- when you go to a group settlement process 8 you actually get rid of more claims, not fewer, than when you 9 have a litigation process in the way they were conducting it in 10 the early two thousands. 11 change in strategy. That drop corresponds with their

And basically across this period of time

12 they averaged from 2001 to 2010 or 2003 to 10, about 57 13 percent of resolved claims end up with a payment. 14 Q Now again, Dr. Peterson, you need to pick a range here in

15 order to come up with the payment rate, right? 16 A 17 Q Yes. And those are the red numbers or years and percentages at

18 the bottom there? 19 A 20 Q Yes. Okay. 2001 to 2010, 2003 to 2010. Why those two periods,

21 Dr. Peterson? 22 A Well, first of all, they dont make much difference But the

23 because theyre both fifty-seven point something.

24 reason we show them both is they correspond to the years that 25 we selected for estimating the average values of claims in the WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 future, which years -- historic years will be included. 2 theyre picked to correspond with that and I show both 3 basically. 4 Q Okay. So

230

It doesnt make any difference which one you use. And, Dr. Peterson, did you observe the timing of I believe you testified earlier that they were

5 these payments?

6 settling most of their cases within one year, is that right? 7 A One or two years. They had moved to settling more and But they settled more claims in the

8 more in the first year.

9 second year than in the first year. 10 Q Okay. And then I guess that last number in 2010, the 35.7

11 percent, why is that so low? 12 A Well that, again, is they didnt resolve a whole lot of I mean,

13 claims in the last year because of the bankruptcies.

14 if they were going to go into bankruptcy in a couple of months 15 they -- they were kind of cleaning out the books. They were

16 getting rid of a bunch of old claims and they didnt -- if they 17 didnt resolve it it wasnt going to affect them because they 18 were going to -- they knew they were going to be in bankruptcy 19 in a couple months. 20 reliable number. I dont regard that as a particularly

I wouldnt have used it, except we have such

21 a long period, it doesnt make much difference. 22 Q And why, Dr. Peterson, was it important that this range

23 reflect stable data, that the data be stable in the range? 24 A Well, its helpful to -- its helpful for the choice and

25 it doesnt become an issue of which parameter -- which level of WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 parameter you use. 2 Q Okay.

231

It makes this a non-controversial choice.

So then this becomes the number by which you

3 multiply, right, the number -4 A You multiply the number of claims by this percent and that Its important to Bondex got

5 gives you the number of compensable claims.

6 note that this is just a little over 50 percent.

7 1,200 claims in its last year before it went into bankruptcy. 8 Were forecasting somewhat lower than that, but in excess of a 9 thousand claims per year. 10 statement. And I think its an appropriate

They probably dont -- really have responsibility

11 for a thousand mesotheliomas in this country, but theyre only 12 paying about a little over half of them, so the actual rate of 13 payment is not reflected by the filing. The filings do not Its the

14 indicate the number of claims they end up paying.

15 multiplication of the filings times the payment rate that does. 16 Q Okay. So having determined that percentage, were now to

17 the next box, average settlement value, is that right? 18 A 19 two. 20 Q 21 A 22 Q This just revisits the calculation. Were on the third. Right. Yes. Thank you. Twenty-one. Okay, Dr. Peterson, here we have, So were on average settlement values now? Weve done the first

23 again, two different periods for 2001 to 2010, 2003 to 2010, 24 and then the average settlement values. 25 A Why those periods?

We took a longer period here for than for the propensity WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 to sue. Theres no A priority reason why they should be the

232

2 same because as I described, the behaviors that are responsible 3 for the number of claims coming in are different than the 4 behaviors involving the averages. Lawyers and claimants -The

5 lawyers and victims determine how many claims get filed.

6 debtor and law firms together jointly determine the values. 7 There are different dynamics, different considerations that 8 affect each of those choices. 9 the same period of time. 10 We pick these two particular times, which are longer Theres no reason that they have

11 than I ordinarily use, because as weve heard repeatedly 12 throughout the prior testimony in this case, the debtor changed 13 its litigation strategy and settlement strategy throughout the 14 decade. And Dr. Mullen is suggesting its going to change

15 again towards more litigation, a more litigative approach to 16 settling claims. 17 Q 18 A Individual review of claims? Yes. Individual litigation of claims he calls it. We

19 dont know precisely what kind of strategy they would have used 20 had they not gone into bankruptcy. And so if we just take the

21 most recent years, the 2007 to 10, were sampling from one of 22 the sets of behaviors of the debtor, but given the 23 considerations theyve had that was -- would have turned out to 24 be a fairly expensive strategy for them to have. 25 Q Can I stop you right there, Dr. Peterson. WWW.JJCOURT.COM They -- the

Peterson - Direct/Sheppard

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1 litigation strategy youre talking about toward the end of the 2 period right before they filed for bankruptcy was to settle 3 cases, but not pay them, right? 4 A Well, thats a different -- thats a -- yet another So, because -- the amount of

5 strategy that they had done.

6 money that Bondex had to pay to resolve claims depended on 7 strategy, was it litigating, was it doing group settlements, 8 was it doing small group settlements, was it doing large group 9 settlements, how quickly was it resolving claims, was it using 10 settled but not documented claims. These all affect how much

11 theyre paying and thats shown by -- as you look over the -12 in the next slide, the period of time. 13 The red bars at the beginning were when they were

14 mostly in a litigation mode, either not paying or litigating. 15 They moved towards a mixture of that in some group settlements 16 in 2001 and 02. Thereafter they used group settlements. When By

17 they went from 2003 to 04 they used larger settlements.

18 2009 they had the settled but not documented program they were 19 doing that produced smaller settlements, but it wasnt clear 20 those were all going to really be settlements. 21 back up. 2010 it went So, its

They didnt have many settlements in 2010.

22 less -- Im less comfortable relying upon that as being a 23 source of argument. But basically across the decade these

24 values remained relatively constant, but they did change some 25 as the strategies changed. WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 And so, both of those reasons say its most

234

2 appropriate to use a long period of time because I want to 3 sample the settlement values for the -- the values of claims 4 for this defendant based upon the whole range of settlement 5 strategies they use because Im uncertain what theyre going to 6 do -- would have done after June 1st, 2010, if they continued 7 in litigation. In order to address that uncertainty I take a And I used two periods of time, 2003 to

8 longer period of time.

9 09, and its mostly just variance on a settlement strategy. 10 11 A 12 13 A MR. SHEPPARD: Next one, please.

I used 2001 and on because -MR. SHEPPARD: No, no, no, Im sorry. Excuse me, 25.

-- that included a period of kind of mixed litigation, If they do I

14 which Dr. Mullen suggested they would now do. 15 expect their liabilities would have risen. 16 Q 17 A 18 Q Okay.

Their costs for eliminating claims would have risen. And, Dr. Peterson, the next slide then is youre applying

19 your forecast equation to the pending mesothelioma claims here, 20 correct? 21 A 22 Q 23 A This is just -- this is doing the arithmetic weve seen. This is the math. The number of liquidated claims is a given number. The unresolved Thats

24 just the value of the liquidated claims.

25 claims is just based on -- differs depending upon which of WWW.JJCOURT.COM

Peterson - Direct/Sheppard

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1 these values we use, which period we use for selecting it, and 2 its range is between 200 million and $213 million. 3 4 group? 5 6 7 8 with you. 9 THE COURT: No, its not. MR. SHEPPARD: THE WITNESS: THE COURT: Thanks. MR. SHEPPARD: Your Honor, theres going to be one Im sorry, Your Honor. Its Slide Number 25, Your Honor. Okay, Im back up Im sorry, is that the next slide in the

All right, thank you.

10 more slide out of order and Ill try to let the Court know. 11 Im sorry. 12 apologize. 13 Okay. I thought that copies had been changed. I Q And just for the record, Dr. Peterson, can you tell

14 me what your forecast is for the pending mesothelioma claims? 15 A 16 Q 17 A A hundred and nine -- $200 million to $213 million. So -I think more likely it would be $200 million, but, you

18 know, if theyre going to do what Dr. Mullen suggested it might 19 be up to 213. 20 Q 21 A And is that at net present value? No, because these -- were estimating these values in

22 terms of 2010 dollars. 23 Q 24 A Okay. So, thats basically one of the results. We do assume

25 that it would take one year on average to resolve this many WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 pending claims and we have a 2.5 inflation for one year. 2 Q 3 A 4 Q 5 A Oh, so you put an inflation 2.5 percent factor in? For one year, yes. Okay.

236

That means that basically a third of them would settle in

6 one year, a third in another year, a third and a third. 7 Q 8 A 9 Q Which brings us then to the future claims, right? Yes. And how does the equation change for the future claims, if

10 any, from the pending claims equation? 11 A The -- well, you dont know numbers. Its the same,

12 except you dont know numbers.

You can count the numbers

13 subject to the kinds of uncertainties we talked about earlier 14 for pending claims. Future numbers need to be forecasted.

15 Otherwise its the same. 16 Q 17 A 18 Q 19 A 20 21 22 Q 23 A So you dont know the first box? Thats right. Okay. Now, up there is Chart 26. Im sorry, 27.

Its actually 26. MR. SHEPPARD: Could we go to the next one, please. Yes.

UNIDENTIFIED SPEAKER:

Again, this is just the math? Well, 27 is the sum of the liability for the pending and

24 future claims, 26, which was up before, was the liability 25 estimate for future claims. WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 Q 2 A For just the pending claims?

237

No, 26 was future -- 25 was pending claims, 26 is pending

3 -- is future claims, 27 is pending plus futures. 4 Q Okay, Im sorry. So, what is your forecast for the future

5 claims, Dr. Peterson? 6 A 7 8 A Could you put 26 back up? MR. SHEPPARD: Twenty-six, please. And of Thats

It ranges from $903 million to $1.154 billion.

9 those I think the most likely estimate is the 1.055.

10 the stable propensity to -- stable future claim filings and the 11 2003 to 2010 values, the lower values. 12 Q 13 A 14 Q 15 A 16 Q 17 A Okay. It is. And what discount rate did you apply? 3.7 percent. And why did you apply that rate? We were given that number by the financial analyst Jimmy And that, Dr. Peterson, it at net present value?

18 Sinclair. 19 Q Okay. And then we go to the next slide, 27. We combine

20 the two here? 21 A 22 Q Yes. Okay. So were putting the pendings with the futures and

23 this is the final number, right? 24 A Yeah, this is the range I talked about earlier, 1.1

25 billion to 1.4 billion, with 1.25 being, I think, the most WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 appropriate forecast. 2 Q Okay. So the 1.255 in the middle there is the one that

238

3 you believe is the most appropriate? 4 A 5 Q 6 A 7 Q Yes. Okay. Yes. And is this opinion, Dr. Peterson, rendered within a And that was for the reasons we discussed earlier?

8 reasonable degree of scientific certainty, sir? 9 A 10 Q Yes, it is. All right. So you got your number and you got your Do you just stop there? What do you

11 estimate, Dr. Peterson. 12 do? 13 A

Well, this is our best forecast, but we also -- as Ive

14 mentioned throughout, there are a number of uncertainties 15 involved in forecasting and a number of assumptions we had to 16 make, so we -- make -- we made a sensitivity analysis. 17 a way to evaluate uncertainties in forecasts. Thats

What we do is we

18 would change an assumption ands see what impact it had on our 19 forecast. So we ran a number of those and I prepared a table

20 showing those. 21 Q Okay. And is that standard in your field, to run those

22 kinds of sensitivity analysis? 23 A 24 Q 25 A Generally it is, yes. Analyses. Yes. Its the typical way to assess uncertainties and it WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 provides the Court with alternative assumptions. Should she

239

2 think that maybe an assumption should be changed, shell know. 3 Q And I believe Dr. Mullen testified about running similar Did you

4 types of sensitivity analyses that gave him comfort.

5 run analyses that gave you comfort, Dr. Peterson, that your 6 numbers were accurate? 7 A Oh, it certainly reassured us that our numbers were within Yes,

8 this range and within, kind of, the center of the range. 9 I think it shows a stability of the assumptions. 10 Q Okay.

So this table on 28, can you tell us what that is

11 and what you did? 12 A Yeah, Ill try and briefly go through it. The top line is The next

13 our -- the forecast that I prefer, 1.255 billion.

14 block is what if we used a different year for calculating the 15 propensities to sue. 16 use, which is in red. We didnt use 2007 or 09 -- which we did If we used 2006 to 09, we would have a Thats the row just above it. And

17 liability of 1.212 billion. 18 so forth.

As you go back to earlier years when the claim

19 filings were less the propensity to sues are less, but that 20 seems unlikely. If you use the 2008 and 09, the 1.3 -if you use just 2009, it would

21 liability would go up to 1.3, 22 be 1.4 billion. 23 Q

And I apologize that its so small and

hard to read on

24 the PowerPoint.

But, of all the different alternatives under

25 our red two -- one two five six, it says Nicholson Construction WWW.JJCOURT.COM

Peterson - Direct/Sheppard 1 and other, do you see that? 2 A Yes. Well, thats just using the alternative They dont make much difference.

240

3 epidemiology.

We did -- we

4 used Nicholson forecasts by industries. 5 construction product. 6 construction industry.

This was a

Most of the people were exposed in a That -- if we were going to pick one

7 industry that would be the most appropriate category and that 8 generates a liability that's about $50 million more. 9 Q But why the construction plus other, as opposed to just

10 construction? 11 A Well because -- I'm sorry. Because a lot of these people

12 had other exposures.

A lot of them had household exposures, so

13 that just captured a broader range of the claims that he was -14 of the persons he was looking at that would increase liability. 15 Neither one makes a terribly great difference. 16 Q In other words though, the DIY market and other exposures

17 outside the normal occupational exposures that Dr. Nicholson 18 was talking about, correct? 19 A Well that would add to all these numbers, but using the

20 variance of kinds of occupational groupings that Dr. Nicholson 21 provided wouldn't change the liability significantly, nor would 22 using the KPMG model. 23 Q Okay. All right. Then we go to the next slide. This is

24 your sensitivity analysis continued, right?

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Peterson - Direct/Sheppard 1 A 2 Q 3 A Yes. The --

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What did you do next? Well, we looked at Dr. Mullin's suggestion. What if we

4 had used the 2007 and '09 trend in filings of claims and 5 extended it out until it intersected the Nicholson? That would

6 produce a liability of 2.046, that's basically what we took to 7 be his suggested -- suggested what we should have done, rather 8 than what we did do. 9 If you just take that rate, that higher rate and stop

10 it after four years like we do, the liability would have 11 increased to 1.6. This is just a quantification of how much

12 using Dr. Mullin's suggestions, in his rebuttal report, would 13 have increased our liability. 14 forecasting. 15 And the last block is, what if we used a different And here, as you use -Again, we're doing conservative

16 period of time for calculating values?

17 if you use a more recent and shorter period of time, the 18 liability estimates go up, but even if -- using 2010, or '09, 19 '10, I think is inappropriate. It's such short period of time,

20 and 2009 was infected by the -- both -- 2008, '09, and '10 were 21 infected by this subtle but not documented issue. But even

22 with 2008 to '10 the liability estimate is modestly lower than 23 ours, it's within the range. 24 I think any of these numbers on here, other than the The reason I say

25 extrapolation numbers, I call it uninformed.

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Peterson - Direct/Sheppard 1 uninformed because they were just based on the numbers. 2 aren't based on any analysis of what's going on.

242 They

You just

3 simply run a mathematical equation and run the number out, not 4 thinking about what -- would these go on forever? Would they

5 go on at the same rate, which I think is an unreasonable 6 assumption. 7 Q Which is one of the criticisms leveled against you by Dr.

8 Mullin and -9 A 10 Q 11 A Yeah. I mean I --

-- Professor Watson, right? We chose the period of time for calculating the Visul

12 claims, and for our propensities to sue, and the rate of change 13 purposely. We did it to try and match what we think would be

14 the continuation of past experience by Bondex and plaintiffs' 15 lawyers in the future. 16 Q 17 A 18 that. Okay. And just simple mathematical calculations don't give you You want to make informed decisions. Those forecasts I

19 don't regard as being really reasonable, and I don't think 20 using the 2009 to '10, or 2010 values would be reasonable, but 21 they say anything else on there is a reasonable alternative 22 forecast. 23 MR. SHEPPARD: Okay. Your Honor, the next slide is

24 going to be 23. 25 Q

But not yet, that was just to let people know.

Let me finish up with this, Dr. Peterson, if I may.

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1 Having run the sensitivity analyses, what affect, if any, did 2 that have on the confidence that you have in your opinion that 3 you just expressed a few minutes ago? 4 A I think we have an appropriate range. I think our And I

5 estimate, basically, is in the middle of that range.

6 think it's also the most reasoned approach, based on my 7 experience in asbestos litigation, and in dealing with this 8 trust now. And -- but even if you run alternatives, I think

9 the range of liability would between about a billion dollars 10 and a billion four. And again, it's a reasonable range, but It's

11 it's unlikely of the liability of being less than that. 12 probably and unlikely it would be any more than that. 13 Q 14 A Okay.

Although, frankly, the risk is it would be higher than And that's the experience of virtually every asbestos

15 lower. 16 trust. 17 Q

So in addition to the sensitivity analyses that you and

18 LAS ran, did you also review Dr. Mullin's report? 19 A 20 Q 21 A 22 Q I did. His --

And his criticisms --- several reports, yes. -- yeah, his rebuttal report. His criticisms of you in

23 his rebuttal report? 24 A 25 Q Yes. And is -- can you tell me about what's depicted on the

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Peterson - Direct/Sheppard 1 slide that's on the screen now, Slide 23? 2 A Well, a basic and kind of pervasive criticism that Dr.

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3 Mullin made of both our work and Dr. Vasquez' work was that our 4 forecast were unreasonable. He called it, Dr. Peterson

5 forecast an immediate implausible deviation from historical 6 experience. That's just a wrong statement. The historical

7 experience he's talking about here is, how much Bondex was 8 willing to pay each year. It wasn't paying its full potential This does not include the

9 liability, it's full expected cost. 10 cost for pending claims.

Its settlement strategy was to pay The number of pending claims grew

11 (indiscernible) for others. 12 over time. 13 Q

Dr. Peterson, for us lay people, that's not necessarily So let me just walk you

14 evident from the chart up there. 15 through it, okay? 16 A 17 Q 18 A Sure.

You got the blue bars on the left, what is that? That's -- the blue bars on the left are Dr. Mullin's

19 statement of the amount of money, that in each fiscal year, 20 paid by Bondex to resolve its liability. 21 Q So Dr. Mullin was basing part of his analysis on the

22 amount of money that the debtors chose to pay, and that's the 23 blue bars, right? 24 A 25 Q That's the blue bar. Okay. Then we go over to the red bars because that's post

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Peterson - Direct/Sheppard 1 bankruptcy, right, that's the forecast part, correct? 2 A 3 Q Yes. Okay. Now let's go to the next slide, 24, please.

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What

4 did we do here, Dr. Peterson? 5 A We're forecasting the number -- the aggregate costs that

6 Bondtex would have to pay to relieve itself of all of its 7 liabilities, not just the amount of money that fits within its 8 annual budget. Both the pending and future -- the pending and

9 resolved claims all need to be taken into account. 10 So what we've done is, we've added to values of the

11 claims filed in each one of these years that's still pending. 12 The green bar is the estimated value of the pending claims that 13 were filed in each of those years. You notice it stops in 2004

14 -- 2003 and '04, because that's more than five years before the 15 bankruptcy. 16 claims. 17 Q 18 A We estimate that there's no value to any pending

But in the --

So -- so --- other years, these are the claims filed in the years There's -- and when you --

19 sill pending, we put a value on it.

20 there's another difference, Dr. Mullin's bars for his -21 Q 22 A Twenty-three, please. -- his red -- his bars from the previous slide for what He's

23 they paid in the past, is not adjusted for inflation.

24 comparing payments in 2003 dollars with payments in 2010 25 dollars. Those are very -- those are different monetarily.

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Peterson - Direct/Sheppard 1 It's like trying to compare a $100 to a 100 Euros. 2 the same thing.

246 They're not

And so you have to put these on the same real

3 value, the same 2010 dollars. 4 So we've made that adjustment in our forecast -- in He didn't. And his comparison is both wrong and

5 our document.

6 exaggerated because he doesn't adjust for inflation within the 7 past, and he doesn't include the pending claims liabilities. 8 Q And that's what I was going to ask you, Dr. Peterson. So

9 his exclusion -- Dr. Mullin's exclusion of the claims that 10 Bondex chose not to pay immediately prior to bankruptcy, and 11 the fact that he didn't -- that's he's comparing 2003 dollars 12 to 2010 or 2020 dollars, doesn't that exacerbate that gap 13 between the red and the blue? 14 A Yes, and also it makes the comparison meaningless. Both

15 a 2006 dollars is not the same thing as a 2010 dollar, as a 16 2003 dollar, and you can't compare them without adjusting for 17 the intervening inflation. 18 Q And when you correct for those errors, what you get is a

19 chart that looks like this, right? 20 A Yes. Our forecast is simply a continuation of what their

21 payments were in the future. 22 Q 23 A Which looks a lot like that curve we saw before, right? Yes. It was. It is. It's supposed to be. I think

24 there's one other thing to note that in nowhere else shows up 25 in these materials, and that's the amount of settled, but not

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Peterson - Direct/Sheppard 1 documented liability. 2

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The pink graph, the pink bars on these graphs, is the The

3 amount of the settled, but not documented claims.

4 liquidated settlements that have not been paid, and were to be 5 paid after the bankruptcy, and have not yet been paid. So you

6 can see it's a significant component of the costs, expected 7 costs in liabilities of defendant each of these years. It

8 dominates the 2009 and -- 2009 and '10, the last two red bars, 9 so it's a significant component here. 10 Q 11 A 12 Okay. That's money they didn't pay. THE COURT: Why don't we take a ten-minute recess and I think I'm starting to notice that So let's take a stretch

13 then we'll reconvene.

14 everybody is getting a little edgy. 15 break for ten minutes. 16 17 18 19 20 THE COURT: MR. SHEPPARD: THE COURT:

Thank you, Your Honor. Thanks.

All right.

(Recess) Please be seated. I hope it wasn't me who was fidgeting,

MR. SHEPPARD:

21 Your Honor. 22 THE COURT: No. After several hours of sitting --

23 after four days and several hours of sitting, I think it gets 24 to everyone. 25 So, Dr. Peterson, are you ready? I am, yes.

THE WITNESS:

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Peterson - Direct/Sheppard 1 2 Sheppard. 3 4 Q Okay. MR. SHEPPARD: Thank you, Your Honor. THE COURT: All right. Whenever you're ready, Mr.

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Dr. Peterson, we were talking about Dr. Mullin's

5 report and did you also, sir, file a rebuttal report in 6 connection with his methodology? 7 A 8 Q Yes. Okay. What was your opinion of Dr. Mullin's theories in

9 this case? 10 A Well I thought that, basically, they ignored the reality His implicit defense costs --

11 of the tort litigation system.

12 because I understand and recognize, and indeed have even 13 written about it in a peer review -- RAND report, about 14 considering how lawyers on each side, plaintiffs' and defense 15 lawyers, consider the anticipated future costs in reaching 16 settlement, and it causes each of them to compromise somewhat 17 on their values. And so that's an issue that I recognize, but

18 I disagree with him very completely with regard to his 19 assumption that that only applies to defendants. 20 Q 21 A 22 Q Let me stop you -It's bilateral. Okay. Let me stop you right there. We're talking about

23 now the implicit defense cost portion of his theory, right? 24 A Yes. As an example of this kind, of the lack of reality I think that runs throughout

25 in the assumptions he's making.

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Peterson - Direct/Sheppard 1 that whole set of analyses he's done. 2 Q And when you say, bilateral, what do you mean by

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3 bilateral? 4 A Both plaintiffs and defendants have significant costs, It affects their judgment. It causes them

5 anticipated costs.

6 to compromise, in a way that effectively cancels out at a point 7 in time when cases are being settled, in the first and second 8 year, of these litigations. 9 At that point in time, the costs of the plaintiffs' And the costs

10 lawyers will have been greater than defendants.

11 over the next year or two of the litigation that is likely to 12 take place, they are either equal or greater for plaintiffs, 13 and that's primarily because the plaintiffs' lawyers have to 14 develop the case. 15 During the initial stages of litigation the defendant I mean, at some point they'll

16 is reactive and responsive.

17 begin to do their own investigation and so on, but initially, 18 it's up to the -- the burden's on the plaintiff to prove the 19 case, and that requires a more investment of time and money. 20 And a lawyer's time is a valuable commodity. The time the If

21 lawyer spends on the case, the notion of opportunity costs. 22 the lawyer isn't working on that case, he'll be working on 23 another one. 24 That's the cost they give up.

And more over, as we've heard here today, lawyers

25 hire other lawyers to represent or work with them on cases.

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Peterson - Direct/Sheppard 1 That's an out-of-pocket cost.

250

But even the -- just simply the

2 cost of the lawyer's time is an important cost to the plaintiff 3 and the plaintiffs' lawyer. 4 aggregate, together. You have to view them in

It's the cost that affect both of them.

5 So those are significant, and indeed, during the early stages 6 of the litigation, are particularly significant for the 7 defendant -- for the plaintiff rather. By the time you get

8 into a settlement discussion, which is typically the first or 9 second year, even then the anticipated costs over the next year 10 are likely to be great for the plaintiff. Because if they

11 can't settle the case in that first instance, they've got to 12 develop their case and strengthen it in order to be able to 13 persuade defendant to settle the case. Again, the burden is

14 still on them, they have to do discovery of -- not formal 15 discovery, they have to investigate the case, and deal with all 16 those kinds of matters. 17 So it's not at all clear to me. And in discussing

18 this issue with -- here and previously with plaintiffs' and 19 defense lawyers. I think there's a recognition that these

20 costs vary somewhat in time, but they end up being relatively 21 similar for plaintiffs and defendants. So to the degree that

22 it affects the defendant's decision, it's also going to affect 23 the plaintiff's decision. 24 Q And if they're similar, or if they're relatively the same,

25 what does that do to Dr. Mullin's theory?

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Peterson - Direct/Sheppard 1 A

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Well, if he wants to take defendants' anticipated costs in

2 account, he needs to take plaintiffs' anticipated costs. 3 Q 4 A 5 Q 6 A And does he do that, Dr. Peters (sic)? No, he ignores it. Okay. He also ignores an even more important matter. I mean, Both

7 there's all kinds of things that affect the positions.

8 sides have an idea, they have their own private estimate of the 9 value of a claim, and they'll compromise from that because of 10 other considerations in the system, such as anticipated costs. 11 12 money. 13 people. An extremely important one is the time value of The asbestos plaintiffs are old, working class, sick Mesothelioma claimants are often the survivors of a They need money. There's ample

14 working class person.

15 demonstration in the kinds of decisions the plaintiffs make 16 when they're offered cash today or larger deferred payment 17 later. Some trusts have done that. I've run analyses of it.

18 They -- plaintiffs put a great value on getting money now. 19 They're willing to give away a lot of money in a year or two 20 they might get, in order to get paid immediately. 21 So an early settlement is a very important matter to

22 asbestos plaintiffs and that's one of the things they buy, in 23 settling early, but they got to pay for it. And because the

24 defendant holds the money in the meantime, and they're earning 25 cash on it. That is a more important consideration than any of

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Peterson - Direct/Sheppard 1 these costs. 2 But to the degree that they are costs, which there

252

3 certainly are, each side bears them, each side has them, and it 4 causes each side to move from their estimate of the value 5 towards each other, because they know they're avoiding costs by 6 settling. 7 Q And this is going to be a gross oversimplification, I'll

8 now apologize to Dr. Mullin in advance, but basically his 9 theory here is that you start with the settlement payment, the 10 value, the costs, what he calls costs, and he's subtracting 11 this implicit defense fees construct, which we just talked 12 about, and then he's going to subtract out also his joint and 13 several piece, right? 14 A 15 Q Well, each -- yes, he does. And part of the key component there is his analysis of the

16 group settle, isn't that correct? 17 A 18 Q 19 A Well, let me make one point -Sure. -- on your premise. Each of those steps is unrealistic He It's

20 and his analysis and discussion of it is unscientific.

21 assumes that each case has an underlying liability value.

22 not what each side thinks it is, it's the real value, and he 23 starts with that. That's not true, that's just not the way There is no liability value until there's

24 litigation is done.

25 a judgment, anything in the meantime is each side's opinion of

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Peterson - Direct/Sheppard 1 it. You can't calculate that. He seeks to estimate that.

253

2 It's inestimable.

He acknowledges that there's no data that The same thing with regard to implicit And all throughout these

3 would let him do that.

4 costs, there's no data to do that.

5 deps, he's trying to analyze things that don't -- my experience 6 in the litigation world study is they don't exist, and there's 7 no scientific -- you cannot do a scientific analysis on 8 something you can't observe or measure, and you can't observe 9 or measure any of these things. 10 Q I'm sorry. I want to make sure I heard you. Did you say

11 there's no data for his conceptual variables, is that what you 12 said? 13 A No. There's no data on the underlying liability, because But even if it existed, he acknowledges he There's no data on implicit No one

14 it doesn't exist.

15 can't -- there's no data on that. 16 defense costs.

You don't know how much money that is.

17 ever says, okay, my costs are this and I'm going to demand that 18 you reduce my settlement for that amount. 19 phenomenon. 20 Same thing with regard to several liability. He says It's an unobservable

21 that, most states have joint and several liability. 22 states don't have joint and several liability.

No, most

But even in

23 states that do, he says, well other states and those states 24 people are settling under -- they're settling a joint and 25 several liability value. I have no idea, really, what he has

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Peterson - Direct/Sheppard 1 in mind about that.

254

He then says he can reduce it to what the You can't

2 several liability share of it should have been. 3 measure that.

There's no subset of one settlement that has -It's an unmeasurable

4 is a joint -- is a several liability. 5 item. 6 Q 7 A It doesn't exist.

And so, if you can't --

When Bondex -- let me --- see something and measure it, you can't study it Science is about real world phenomenon. Let me ask you, Dr. Mullin also has his

8 scientifically. 9 Q All right.

10 analysis of group settlements, and we talked about it earlier, 11 how you believed he excluded a far greater amount of group 12 settlements than he included in his analysis? 13 A It's a fundamental assumption in his multiple regression

14 -- in his regression analysis, that is the basis for -15 remember, he doesn't -- because he doesn't have an underlying 16 liability or implicit defense, he develops a proxy. 17 I'm interested in what's the implicit liability. 18 measure it. He says,

I can't

I can't even measure the real, real value, the

19 underlying liability value of a claim, but I'll do a proxy. 20 Since I can't measure it, I can't see it, I can't run an 21 analysis on it. 22 Q 23 A 24 Q 25 A And that proxy -Age is a proxy. Age was a -- and that proxy was age, right? He said age, yes. Differences in age will represent the

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Peterson - Direct/Sheppard

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1 difference in liability, and so he runs a regression analysis. 2 When he does that he says he excludes 17 group claims. And

3 arbitrarily selected 17 group of claims because all the rest of 4 those claims are individually reviewed, and they're the only 5 things that would reflect this relationship. 6 those cases, he's not picking them all. 7 arbitrarily excluding many. 8 Q 9 A 10 Q 11 A So very briefly, Dr. Peterson -Okay. Quickly, can you tell us what that chart is? This chart -- he used 100 -- 806 claims to run his He claims they're all individually But when he picks

He's, again,

12 regression analysis.

13 litigated, that's after excluding the 17 group settlements from 14 Madison County. 15 We looked at those cases and we looked at how many of We find

16 them had group settlements, as I discussed earlier.

17 that -- these results, about half of them are either settled 18 individually or settled in small groups which we treat as 19 individual claims, but about half of them are in group 20 settlements. One of the group settlements has 69 cases. That

21 case certainly was not settled individually. 22 as a group.

It was a settled

Most of these cases, if they're in group

23 settlements, were settled without the kind of litigation 24 approach that he says -- the individual litigation approach, 25 that he says that they were.

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Peterson - Direct/Sheppard 1

256

So we corrected his analysis, and we only did it on

2 the one, the individual settlements here, and the small group, 3 two to four. The rest of these he said he shouldn't include. We said you should

4 He excluded some of them, some of them.

5 have excluded these, rather than 802 cases, I think it was 432 6 of them were either in individual settlement or small group. 7 Q 8 A And what was the effect of that? It just completely changed his results. There's some

9 graphics there that I can describe them, or you can have me 10 draw one of them. 11 Q 12 A 13 Q Well -I mean, I can draw them both. Since we're -- we don't you go ahead and draw us, since

14 we're -15 A 16 Q 17 A Let me draw them and then I'll come back to it. Do you have a marker up there? I'll do that and come back to the mic, I'll be silent

18 while I'm drawing them. 19 Q Okay. And what you're going to draw for the record, Dr.

20 Peterson, is these regressions you were talking about -- oh, 21 here, wait a minute. 22 23 fast? 24 25 A Oh, this is it. (Pause) I have it. Your Honor, can we use the ELMO real

MR. SHEPPARD:

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Peterson - Direct/Sheppard 1 Q Okay. All right. So what I'm showing you now, Dr.

257

2 Peterson, is defendants' -- I'm sorry -- debtor's Demonstrative 3 Number 38. 4 A 5 Q Yes. All right. This is -You remember that?

This is the one with the bubbles, or one of the ones with

6 the bubbles? 7 A This is the result of his regression analysis. And

8 basically he found that it has three different lines, the first 9 of which is -- applies to claims between $1 and 50,000. 10 Q 11 A 12 Q 13 A Stop. The age and settlement regression, right?

Age and settlement regression. This is whether age is a proxy for settlement, correct? Yes. Age and settlement, yes. Age is a proxy for

14 liability, underlying liability, and it's his regression of 15 age. He found that there was no difference in the value of the

16 settlement, the actual settlement, for claims that were paid 17 under $50,000. That's on the left part. If it's a settlement

18 between 50 and $200,000, he found there was some relationship. 19 As people age, their settlement values went down. 20 result of his regression analysis. 21 If the settlement was for more than $200,000 that That was the

22 line drops more steeply, that means there's a steeper, a 23 stronger relationship, a steeper drop in values as people age. 24 And from those he calculated his reductions and his conclusions 25 that they only reason they're dropping, since the underlying

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Peterson - Direct/Sheppard 1 liability is invariable, it never changes, that's his 2 assumption. 3 world. 4 case.

258

Which is of course contrary to the real litigation

The liability of a claim changes all the time in any It changes based on the rulings of the court, on new

5 evidence, on a number of matters, but he assumes there's no -6 the only thing that can change is going to be the underlying -7 is the implicit defense costs. 8 And so, he assumes based on this, there is no such It's all

9 thing as liability paid to a claim in under $50,000. 10 implicit defense costs.

Between the two of those, he has a

11 substantial amount of the settlement, it's not for liability. 12 And he urges the Court not to recognize that, but his implicit 13 defense cost, and he basically doesn't have -- he has a flat, 14 not terribly significant, adjustment for large cases. 15 his results. 16 analysis -17 Q Okay. Let's hold on. Let me stop you right there. But That's

They're -- when you change his regression

18 that is what allows him to draw these arbitrary lines at 19 200,000, 50,000, right? 20 A This is the key regression, right? These

Well, he'll say that the points are not arbitrary.

21 are the points at which the curves change direction. 22 Q 23 A 24 Q 25 A All right. So what did you --

Those are his blind points. Okay. So what did you do with this regression?

Well, we ran it on only the claims that were individually

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Peterson - Direct/Sheppard 1 reviewed. Which he said was the purpose of his regression,

259

2 eliminating the rest of the group settlements that he 3 acknowledged existed, but that he didn't include, and that 4 reduced the number of people we were adding in the regression 5 from 802 to 432. 6 7 object. And I've drawn -- we -Your Honor, at this time I rise to

MR. EVERT:

Neither this graph nor this analysis was in Dr.

8 Peterson's rebuttal report, or any report he has issued in this 9 case. This is the very first time we are hearing of this

10 analysis. 11 THE COURT: Are you talking about D-11, or D -- I D --?

12 think that's -- I'm sorry, what's the number? 13 14 15 UNIDENTIFIED SPEAKER: THE COURT: MR. EVERT: D-38? No. Thirty-eight.

What he's about to say, Your Honor,

16 this graph that he has drawn here on the board, and the graph 17 that we were given in a demonstrative last night with Mr. 18 Sheppard, was about to put up on the ELMO, none of this was in 19 his rebuttal report. We have no working papers. We don't know

20 how this graph was calculated. 21 rules. 22 THE COURT:

It's not in compliance with the

Well, he's here as a rebuttal witness. He's rebutting what Dr.

23 Dr. Mullin has already testified. 24 Mullin has said.

How would he give you a rebuttal graph to Dr.

25 Mullin's testimony when Dr. Mullin just testified?

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Peterson - Direct/Sheppard 1 MR. EVERT: We had a deadline in the case, Your

260

2 Honor, to issue initial reports and then issue rebuttal 3 reports. 4 5 THE COURT: MR. EVERT: Yes. Dr. Peterson issued a rebuttal report to

6 Dr. Mullin's initial report. 7 8 THE COURT: MR. EVERT: Yes. He did not give us the working papers or So I have no idea

9 the calculations that support this graph. 10 how to cross examine him on it. 11 of his report. 12 MR. SHEPPARD:

It's not within the confines

Your Honor, we're responding to many

13 of the demonstratives that Dr. Mullin used in his direct 14 examination that we have never seen before either, and there 15 were numerous demonstratives there. And Dr. Peterson should be He is, as you

16 permitted to respond to this demonstrative.

17 said, rebutting Dr. Mullin's direct opinions here, and he's 18 certainly capable and qualified to do so. 19 MR. EVERT: Your Honor, this graph was in Dr.

20 Mullin's affirmative report, D-38. 21 22 23 THE COURT: MR. EVERT: THE COURT: Yes. Was in his report. Yes, I understand. I don't what it is I know Dr.

24 that wasn't in the report.

I haven't seen it yet.

25 Peterson has approached the board and has drawn something, but

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Peterson - Direct/Sheppard 1 I don't yet know what it is. 2 3 MR. EVERT: THE COURT: Okay.

261

It's just something on the board, but it And if

4 seems to me that rebuttal is appropriately rebuttal.

5 you need additional time to take a look at whatever it was you 6 were given last night to prepare for cross examination, Dr. 7 Peterson, will you be here tomorrow? 8 9 THE WITNESS: THE COURT: I will. You'll have time

He'll be here tomorrow.

10 to take a look at it and discuss it with your experts tonight. 11 MR. EVERT: Thank you, Honor. If we could get the

12 calculations that support what this is, so that we can try to 13 mimic them and understand them? 14 15 16 THE COURT: MR. EVERT: THE COURT: All right. If we could get that tonight? Dr. Peterson, I don't what it is we're

17 talking about yet but, apparently, it has some calculation 18 behind it. Will you be able to provide that calculation to the

19 debtor's council? 20 THE WITNESS: Yes. Can I make two comments on this,

21 or would you not want to hear it? 22 23 24 25 THE WITNESS: THE COURT: Well, I -I'd rather you wait for a question. (Laughter) Why change?

MR. SHEPPARD:

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Peterson - Direct/Sheppard 1 THE COURT:

262

Well, all I'm concerned about is whether

2 or not Dr. Peterson can provide the calculations? 3 4 5 THE WITNESS: THE COURT: Yes. Yes, Your Honor. Then -Dan, is there -- ? We We can do that.

All right.

THE WITNESS:

Wait a minute.

6 can do that. 7 THE COURT: Yes. Okay. Yes, you will get the

8 calculations tonight.

Dr. Peterson will be here tomorrow, so

9 that if you need cross examination on this point, you will have 10 that opportunity tomorrow. So Dr. Peterson, even if you finish

11 tonight, you will be subject to recall tomorrow for that 12 purpose. 13 14 15 16 17 Q THE WITNESS: MR. EVERT: THE COURT: Thank you, Your Honor.

Thank you, Your Honor. All right. Go ahead.

MR. SHEPPARD:

Thank you, Your Honor.

Dr. Peterson, before you go over to draw your -- or

18 continue drawing your chart over there, let me just direct your 19 attention to the screen. 20 regression analysis. 21 A No. You said that you reran Dr. Mullin's

Did you change the regression in any way?

We -- other than we -- he had -- we ran exactly the My partner is Daniel Relles, who's a He

22 same regression. 23 statistician.

He ran the regression that Dr. Mullin did.

24 replicated it and got precisely the same results. 25 same regression, that was the 806 claims.

It's the

We then reduced it

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Peterson - Direct/Sheppard 1 to simply the individually reviewed claims, the individually 2 settled claims, which is 432.

263

It's exactly the same analysis, That's the only thing The

3 it's just for a smaller group of claims.

4 that was changed, and that changed the results enormously.

5 biggest -- there are big effects throughout the whole thing. 6 For claimants above $200,000, Dr. Mullin found a For

7 significant negative effect, we found no -- little effect.

8 the claims between 500,000 and 200,000, we found a much bigger 9 change. Actually, we found that there was an increasing With the 500,000 to

10 relative effect of age within that group. 11 200,000 there was a much bigger effect.

But most

12 significantly, for under $500,000 he found that there was no -13 that he had a coefficient reflecting the amount of change 14 between these two variables, when you change one how was the 15 other changed. He found really no effect of that. We found

16 that there was a significant positive effect. 17 I've drawn on the board. 18 Q

And that's what

I've shown what the -- how --

So let's go back to the board so you can explain the

19 effect of that? 20 THE COURT: All right. Let me get one thing I

21 corrected first.

You're saying between 500,000 and 200,000.

22 think you mean between 50,000 and 200,000 -23 24 25 THE WITNESS: THE COURT: Yes. I'm sorry. Yes.

-- and under 50,000? Yes.

THE WITNESS:

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Peterson - Direct/Sheppard 1 2 THE COURT: All right. Thank you.

264

THE WITNESS:

Thank you, Your Honor.

I sometimes get

3 sloppy with numbers. 4 Q 5 A 6 7 Q Yes. All right. So Dr. Peterson, you'll --

I know that's reassuring, but -(Laughter) It certainly makes me feel better. So Dr. Peterson,

8 you'll recall, in defendant's demonstrative D-38 -9 A 10 Q Yes. -- and that was that nice, kind of -- that's the type line

11 that -12 A Well I tried to draw that, but, I mean, Dr. Mullin's

13 production obviously speaks for itself. 14 Q And those are the kinks that Dr. Mullin testified about

15 where he drew his lines, right? 16 A Yes. There were two points where he said that these lines They are flat here, going down there, going

17 change direction. 18 down more steeply. 19 Q All right.

Now, if you do the regression properly what

20 does the line look like? 21 A Well, when you do it properly, accordingly to Dr. Mullin,

22 this isn't our standard of it, he said it's supposed to be done 23 on individual reviewed claims. 24 we found this pattern. When we restricted it to that,

Rather than being a flat line, it goes That means, in fact,

25 up for, basically, claims under $50,000.

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1 it goes up further than that, for most claims the values that 2 they were paid in settlement increased with age, not decreased 3 as he's asserting. They increase. And then they reach a peak, Dr.

4 but there's only one where these lines change direction. 5 Mullin found two of them.

This analysis showed there was only

6 one place where it changed, and then they went down. 7 This is consistent with the pattern of what he found Among the biggest claims, the most

8 for the biggest claims.

9 heavily litigated claims, the settlement values tend to go down 10 as claimant's age, and that's a -- but that's a well-known 11 result. I mean, I've demonstrated that myself in the Owens The -- but this is -- these --

12 Corning case and subsequently.

13 his results change enormously and the patterns change. 14 The basic conclusion of that, I'm not asserting that

15 this regression is correct, I don't think that age is a proxy. 16 I know that age is not a proxy for liability, but what it shows 17 is the instability of results. He's relying upon an analysis

18 that changes greatly when you change the claims that are put 19 into it according -- in order to satisfy the requirements that 20 he states. It's an unreliable analysis, and it renders his

21 whole set of conclusions about the underlying liability, his 22 calculations -23 Q 24 One last slide, Dr. Peters. THE COURT: Wait. Wait. Can you remove one of the

25 microphones, please, because all we'll get will be feedback.

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Peterson - Direct/Sheppard 1 Thank you. 2 Q One last slide, Dr. Peterson.

266

And -- but, you were just

3 testifying to about how it completely changes everything, take 4 a look at the last graph. 5 6 7 8 9 10 11 Q 12 A THE COURT: Where is this? This is Number 36, Your Honor. Thirty-five.

MR. SHEPPARD: COURT CLERK: THE COURT:

Thirty-five. Thirty-five, sorry. Thank you.

MR. SHEPPARD: THE COURT:

Okay.

What is depicted here, Dr. Peterson? This shows that Dr. Mullin, when he makes his adjustment

13 for underlying liability and for taking the several out of 14 joint and -- taking the joint out of joint and several, it 15 compares his results, which are red lines at the bottom, 16 that's what he, in his report, what he estimates are the values 17 of claims. 18 claims. The green lines are the actual. These are for past

These are past settlements.

The total amount that That's the green line. The red

19 Bondex paid in each of these years.

20 That's their actual payments, according to Dr. Mullin. 21 lines is the result of the adjustments he made. 22 Q The adjustments that Dr. Mullin makes based upon

23 regressions like the one you just talked about? 24 A On this and the analysis they did for joint and several

25 based on Texas law, which is -- he admitted is far from

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Peterson - Direct/Sheppard 1 perfect. It is a hopelessly inadequate analysis because he

267

2 ignores all these concurrent confounding effects, and he just 3 makes inappropriate use of the data. 4 That's not a forecast.

It's a very bad analysis, which he admits himself is

5 not perfect, and yet he uses it as a basis for forecasting. 6 And in every state in the country, an enormous amount of the 7 settlements have to be disregarded, because he thinks that they 8 -- rather than settling under joint and several liability 9 regime they should have been settled under a several liability 10 that exists in only 11 states. 11 Q And as result of those analyses you end up with a green

12 bar, which is the actual settlement payments that were made, 13 and a fictional red bar, which is Dr. Mullin's theory? 14 A The green bar is the actual total amount that Bondex paid That's the reality.

15 in each year. 16 Q 17 A Right.

The red bar is the subject of his adjustments, which do

18 not reflect the realities of the tort litigations system as it 19 exists. 20 21 22 notes. MR. SHEPPARD: THE COURT: Nothing further, Your Honor.

I think there's something wrong with your If you

I think there's something wrong with the notes.

23 take a look at -- can you see your screen? 24 25 UNIDENTIFIED SPEAKER: THE COURT: Yeah. What's wrong?

It doesn't look like your fingers are on

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Peterson - Direct/Sheppard 1 the right keys. 2 3 4 UNIDENTIFIED SPEAKER: THE COURT: Okay. Oh. Mine looks fine.

268

MR. SHEPPARD:

Your Honor, can I mark this drawing as

5 Demonstrative Exhibits -- what number are we up to? 6 7 8 9 10 UNIDENTIFIED SPEAKER: UNIDENTIFIED SPEAKER: UNIDENTIFIED SPEAKER: UNIDENTIFIED SPEAKER: UNIDENTIFIED SPEAKER: Nineteen. Nineteen.

One thousand nineteen. Twenty. Twenty.

Twenty-four. Twenty. This is the -- this

11 whole packet is regarded as one. 12 13 UNIDENTIFIED SPEAKER: MR. SHEPPARD: Okay. Twenty.

Your Honor, I'd also ask to move that

14 demonstrative exhibits, Dr. Peterson's report, his report in 15 chief, his rebuttal report. 16 THE COURT: Give me the numbers, please. And you've

17 already used Exhibit 20, you're up to 20 -- you've used through 18 56, as demonstratives. 19 20 21 22 23 sorry. 24 25 THE COURT: In fact, I've also got 61 and 62. Ten twenty-four. The demonstratives MR. SHEPPARD: THE COURT: So -I don't think so, Your Honor.

Well, that's what I've got marked down. Ten twenty-four. I'm

UNIDENTIFIED SPEAKER: MR. SHEPPARD:

Ten twenty-four, Your Honor.

MR. SHEPPARD:

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Peterson - Direct/Sheppard 1 we start at 1000. 2 THE COURT:

269

I don't have the debtors started at 1000.

3 I have the ACC started at 1000. 4 5 Honor. 6 7 8 THE COURT: Oh, I'm sorry. That's okay. MR. SHEPPARD: And this is the ACC Exhibit, Your

MR. SHEPPARD: THE COURT:

The ACC is marking as -- I apologize.

9 Let me get back to where to I belong here for a minute. 10 MR. SHEPPARD: You'll notice we didn't any of Mitch's

11 (sic) drawings. 12 THE COURT: All right. So you're using 1020 as an

13 ACC Exhibit. 14 MR. SHEPPARD: And Your Honor, at this time, we'd

15 also tender as demonstrative exhibits, under the previous 16 agreement, ACC-1020, 1021, 1022, which are the report, the 17 rebuttal report, and the rebuttal report to Dr. Mullin's THAN 18 report dated January 3rd, 2013. 19 20 THE COURT: I'm sorry. 1021 is his report?

MR. SHEPPARD:

1020 is his report, 1021 is the

21 rebuttal dated October 2012. 22 THE COURT: No. 1021 is his report, correct? You

23 just told me that this exhibit is 1020. 24 MR. SHEPPARD: Oh, I'm sorry. That's 1020, this must

25 now be 1021.

I'm sorry, Your Honor.

These were marked before

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Peterson - Cross/Evert 1 that. Oh, no. That's 1024. Your Honor, that's 1024.

270 Except

2 that it should be 1023, so it's not even 1024. 3 4 THE COURT: Just pick one, so I know what it is. Okay. Let's start this way. 1020,

MR. SHEPPARD:

5 Dr. Peterson's report dated May 31st, 2010. 6 Peterson's rebuttal report, October 2012.

1021 is Dr.

And rebuttal report

7 of Dr. Mark Peterson dated January 3rd, 2013 is ACC 8 Demonstrative 1022. And we will mark the drawing that Dr. I appreciate Your Honor's

9 Peterson did as Demonstrative 1023. 10 indulgence. 11 Pass the witness. All right.

THE COURT:

Stop the clock for -- if you

12 haven't already. 13 14 Honor. 15 16 THE COURT: All right. Thank you. All right. 1020 is 1022 is MR. JACKSON: It's been stopped throughout, Your

So to be clear, make sure I have this right. 1021 is the October 2012 report.

17 the May 2010 report.

18 the rebuttal to Dr. Mullin's report, and 1023 is this chart 19 that Dr. Peterson has prepared here in the courtroom. 20 21 MR. SHEPPARD: THE COURT: That's correct, Your Honor. Thank you. They're all marked and Mr. Evert? Does the Court want

Okay.

22 now I'm ready if you're ready. 23 MR. EVERT:

All right.

I'm am, Your Honor.

24 to take a short break, or do you want to go ahead? 25 THE COURT: Do you need a break?

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Peterson - Cross/Evert 1 2 3 MR. EVERT: We've got about -No. I don't, Your Honor.

271

MR. SHEPPARD: MR. EVERT:

-- we've got about an hour and ten

4 minutes left in the day. 5 6 break. 7 8 9 BY MR. EVERT: 10 Q 11 A 12 Q Dr. Peterson, good afternoon. Good afternoon. I want to start with your qualifications if I can, You THE COURT: Let's just go unless somebody needs a Mr. Evert?

Everyone all right? MR. EVERT:

Thank you, Your Honor. (CROSS EXAMINATION)

13 especially in light of the discussions that we just had. 14 are not a statistician, correct? 15 A 16 Q 17 A 18 Q 19 A 20 Q I am not. You're not an economist, correct? I am not. You're not an econometrician? No.

And when you say you ran regressions of Dr. Mullin's data,

21 what you really mean is Dan Relles of your office ran 22 regressions of Dr. Mullin's data, is that a fair statement? 23 A No. Legal Analysis System ran and I participated in it

24 and Dr. Durtusos (phonetic), who is an economist, we all 25 participated in it.

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Peterson - Cross/Evert 1 Q Okay.

272

You did not run the regressions because you're not

2 an economist or an econometrician, is that right? 3 A Oh, I use economic -- I use -- I'm multi-disciplinary, and I don't often do it. I've

4 I've been trained in statistics.

5 got -- my partner is a Ph.D. statistician.

But I -- and my

6 understanding of statistical issues is, it's certainly not as 7 great as Dr. Relles and certainly not as Dr. Mullin, but I am 8 knowledgeable about statistics to some degree, enough to know 9 that if you run the same regression with a different sample, 10 that the only thing you're doing is running a different sample. 11 I understand the implications of that. 12 Q So for example, in describing Dr. Mullin's work you talked

13 about some of his uses of age, can you describe to the Court, 14 from an econometrics perspective, what an instrumental variable 15 is? 16 A I had that discussion with Dr. -- it's a variable that is

17 related to the dependant variable that you're interested in, 18 but independent of the error term. 19 Q 20 A And how would use that in econometrics? The argument is that you can use it to try and reduce the

21 effects of the error term. 22 Q 23 A And that's how you used it here, is that right? We did not use an instrumental variable unless it was used Whatever was in there, in that We did exactly the same steps.

24 in the original forecast.

25 calculation, was what we did.

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Peterson - Cross/Evert 1 Q

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So you took his econometric forecast and you just changed

2 it, is that effectively right? 3 A We took his econometric forecast, and we didn't change it.

4 We just ran it on a smaller, more appropriate set of cases. 5 Q 6 A I see. The forecast, the model, the method, all the assumptions

7 were exactly the same. 8 Q 9 A 10 Q And you change -You'll see that when we give it to you. I would appreciate that. And you change the inputs,

11 that's where we are? 12 A We reduced the number of inputs consistently with what he Which he only said, by the way, in his

13 said should be done.

14 statement in testimony, so we had no opportunity to run this 15 before last night. 16 morning. 17 it. 18 Q Dr. Peterson, the graph that you put up on the screen was We ran this about two or three in the

We would have given to you then, if you knew wanted

19 in Dr. Mullin's original report, was it not? 20 A The graph was in there, but his description of how it had

21 to be limited to only the individually reviewed claims was not 22 a matter that we were aware of prior to his testimony, and 23 that's the issue. We're not disputing, or changing, or doing We're saying, since he said it

24 anything about his analysis.

25 was supposed to be limited to a certain group of claims, he

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Peterson - Cross/Evert 1 didn't do that.

274

He acknowledged he didn't do that, and yet he They're not all

2 claimed they're all individually litigated. 3 individually litigated.

So we corrected his assumption, his

4 data, his data for his analysis, to what he said it should be. 5 We didn't change the analysis in any other way. 6 did. 7 Q So good, this helps me. So do you dispute, Dr. Peterson, That's all we

8 that Dr. Mullin's analysis included all of the claims against 9 Bondex from 2007 to 2010 with the exception of the 17 described 10 Simmons, Cooney, and Lanier settlements? 11 correct? 12 A That's my understanding. I think there might have been That is what he did,

13 another exclusion, and I just can't -- I don't have it in mind 14 at the present moment. 15 Q But this is -- that's off -- I'm either right or awfully

16 close, will you agree with me? 17 A What he said he did, was exclude those 17 cases. So say

18 -- cases in that group of 17 settlements, and it's our 19 understanding in appearance that that's what he did do, but he 20 didn't exclude all group settlements. 21 Q I understand that's your view. But I just want to be

22 clear, he excluded the 17 identified Simmons, Cooney and Lanier 23 group settlements, correct? 24 A 25 Q That's my understanding, yes. Thank you, sir. We'll talk more about that in just a few

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Peterson - Cross/Evert 1 minutes, so let me just cover a few more qualifications. 2 A 3 Q 4 A 5 Q 6 A 7 Q 8 A 9 Q 10 A 11 Q 12 A Sure. You're not an industrial hygienist, is that correct? No. You're not an epidemiologist? No. You're not a pathologist or a medical doctor? No. No and no.

275

You are a licensed attorney however, is that correct? I am. You were inactive, I think, at the time? I haven't taken my CLE's. I'm not technically inactive,

13 which means something you apply for, and you get to pay lower 14 dues. I pay the full dues, but since I don't practice law, I I haven't conformed with the CLE

15 haven't taken the CLE.

16 requirements, so I don't represent people. 17 Q 18 A 19 Q You have never tried an asbestos case, am I correct? I have not. You've never represented a party in the asbestos

20 litigation, or in the settlement of an asbestos case, have you? 21 A 22 Q I've never represented one as a lawyer, no. Have you ever managed any parties' asbestos litigation or

23 mass tort litigation? 24 A 25 Q No. You have a -- I'm sorry.

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Peterson - Cross/Evert 1 A Wait, wait.

276

I have, to the degree that that's a role of a I mean, that's litigation and we're -But other than in an actual tort

2 trustee in due trust.

3 as a trustee, I oversee that.

4 litigation, fortunately, we haven't been taken to court since 5 Judge Weinstein restructured the Manville trust. 6 Q Not in tort litigation, I think is your answer to my

7 question, right? 8 A 9 Q Tort litigation, that's true. Thank you. We've had other litigation.

You have a doctorate in experimental social

10 psychology, is that right? 11 A 12 Q Yes. Do you consider your work in this case science, or an

13 application of the scientific method? 14 A 15 Q Certainly. Is it appropriate, in your view, to judge your work

16 according to accepted scientific standards? 17 A In the field that I work in it's -- I'm not an economist.

18 You can't judge it by what an economist says that an economist 19 should do but, I'm known, I'm a recognized expert and scientist 20 in applying social science methods to law, and I've been that 21 for over 30 years. 22 Q Is it appropriate to judge your work according to accepted

23 scientific standards? 24 A In the field in which I work, certainly. But not -- I

25 don't do astrophysics, so you can't judge it by the rules of

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Peterson - Cross/Evert 1 astrophysics. 2 Q Does that include, in this instance, concepts like

277

3 predicted value, and reproducibility? 4 A The essential element of -- two essential elements of

5 science is that you based observation of the facts, and that 6 you -- there are a number of requirements. In that -- that the

7 -- that you make forecasts, and the forecast can be evaluated. 8 You make predictions. Reproducibility is if someone else does

9 the same set of analysis they should get the same results. 10 What was your term? 11 Q 12 A 13 Q Reproducibility and predicted value. Well, that's what I -- the first point I made. Okay. Your answer was a little different. Dr. Peterson,

14 do you remember testifying in the W.R. Grace case? 15 A 16 Q I did. Do you remember being deposed in this case, Dr. Peterson,

17 on November 1, 2007 in the United States Bankruptcy Court for 18 the District of Delaware in the W.R. Grace case? 19 A I don't recall the date, but I was deposed in that case in I'll accept the date, and accept

20 West Lakeland (phonetic). 21 that this is a transcript. 22 Q

I would ask you to look at Page 32 of the transcript, and

23 I would ask you if the following was the question in that case, 24 and if this was your answer. 25 A Wait a minute. Question --

Let me get there please.

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Peterson - Cross/Evert 1 Q 2 A 3 Q 4 A 5 "Q Excuse me. I'm sorry.

278

Page 32, what line? Line four. Thank you. Now would you agree that reproducibility is an important

6 test to apply to your work? 7 "A 8 Q 9 A 10 Q 11 "Q I think it's an element of any scientific work, yes." Was that your answer? Yes, and it's my answer today. Okay, and if you look at Line 18. Do you agree that predicted value, that is the value of

12 your model in being predicted, do you believe that's an 13 important test for your work?" 14 A 15 Q 16 A 17 Q Sure. And your answer was yes? Yes. I agree with that, and I said that today. You can hold on to that, just in case we

Thank you, sir.

18 need it again.

Have you had your methodology subjected to peer

19 review in the context of submission to academic or scientific 20 journals? 21 A 22 Q 23 A I have not. And you have testified, am I correct, in four bankrupt -Wait a minute. Would you repeat the last question,

24 please? 25 Q Sure. Have you had your methodology subjected to peer

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Peterson - Cross/Evert

279

1 review in the context of submission to academic or scientific 2 journals? 3 A Well elements of it, of the kinds of work in studying the

4 asbestos litigation, and mass torts in general, and describing 5 the processes of it are, have been discussed in a number of 6 RAND reports, to see if they're the same methods I use here. 7 Those are peer reviewed an published. 8 Q Dr. Peterson, do you remember testifying in this case, and

9 giving your deposition in this case? 10 A 11 12 13 14 please? 15 MR. EVERT: Your Honor, Dr. Peterson was deposed on I remember being deposed, yes. MR. EVERT: Do you need a copy of the transcript? No. I can I just go from here.

MR. SHEPPARD: THE COURT:

What's the date of the deposition,

16 November 16th, 2012. 17 18 THE COURT: MR. EVERT: Thank you. In the case, In Re: Speciality Products

19 Holding Corp. 20 Q And Dr. Peterson, did you -- if you would look please at

21 line -- Page 64, Line 3? 22 A 23 Q 24 "Q I see it. And were you asked this question and gave these answers? Has your methodology ever been published in an academic or

25 scientific journal?

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Peterson - Cross/Evert 1 "A There have been publications of the method, but I don't

280

2 think, in what I would describe, in an academic or scientific 3 journal. 4 "Q Certainly they've been published.

And in those publications, where it has been published,

5 has the work been peer reviewed for those publications? 6 "A I don't think those have been peer reviewed documents, no,

7 those publications." 8 Q 9 A 10 11 Was that the answer you gave? I would like to see the preceding questions. MR. SHEPPARD: MR. EVERT: I can't see the prior questions. I'll get you a copy of

Oh, I'm sorry.

12 the transcript. 13 14 what page? 15 16 17 A THE COURT: Sixty-four. Thank you. The MR. SHEPPARD: Mr. Evert, I got it here. I'm sorry,

MR. SHEPPARD:

I have a difficulty with your question, then and now.

18 difficulty that I hope to be clarified by the proceeding 19 transcript. 20 Q 21 it. Dr. Peterson, I'm sorry to interrupt you. You can explain

The question I have for you is, were you asked those

22 questions and were those your answers, in the deposition? 23 A All right. I'd like to -- I would like to add to my prior

24 response, but it -- the -- I was asked and answered these 25 questions. But the term methodology is an ambiguous term and

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Peterson - Cross/Evert 1 I'm not sure what you mean then or now. 2 Q Okay. Thank you, sir.

281

Now, Dr. Peterson, you indicated

3 that you had testified previously in asbestos related 4 bankruptcy cases, is that right? 5 A 6 Q Yes. Now by my count, you have testified in four bankruptcy

7 cases involving asbestos in which contested estimation opinions 8 have ultimately been rendered. And by my count, just to help

9 you recall whether that's correct, that would be the Armstrong 10 case, the Federal-Mogul case, the Owens Corning case, and the 11 Eagle-Picher case, is that correct? 12 A 13 Q 14 A 15 Q Would you repeat the list? Armstrong, Federal-Mogul, Owens Corning, Eagle-Picher? That's an incomplete list. All right. What other cases in which there has been an

16 estimation opinion rendered in the case, a contested estimation 17 opinion, have you testified? 18 A National Gypsum, ACMC -- I'd have to review my vitae on

19 that -20 Q 21 A Okay. -- but I know at least those two were contested cases. Is it in a contested

22 The Celotex -- he'll -- I'm sorry. 23 bankruptcy case? 24 Q 25 A Yes. Okay.

Because there were contested cases dealing with the

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Peterson - Cross/Evert 1 same issue. BMW, Hillsborough Holding Company, I testified

282

2 there in the -- I testified there. 3 Q And in any those cases, Dr. Peterson, was it the debtor

4 that was contesting the estimation or what it other parties? 5 A 6 Q Both. And in which cases was the debtor contesting the

7 estimation? 8 A 9 Q Celotex. Okay. Now as I understand it of that list, in the Owens

10 Corning case, your opinions were rejected by the Court, is that 11 right? 12 MR. SHEPPARD: Objection, Your Honor. That's a

13 mischaracterization of the opinion. 14 15 A MR. EVERT: Okay.

He didn't use my forecast, and he criticized certain

16 assumptions that I had, but I don't know -- you know, he didn't 17 rely upon it. 18 that. 19 Q Well if you would turn to Page 65 of your deposition in Just to make sure our terms So I don't know how you want to characterize

20 this case, please, Dr. Peterson?

21 are correct, and I'll ask you to look at Line 9. 22 A 23 Q Page 65, Line 9. Yes, sir. And were you asked this question, and did you

24 give this answer? 25 "Q Have the results of your methodology ever been rejected by

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Peterson - Cross/Evert 1 a Court? 2 "A I think I just said that. There are courts that have

283

3 accepted -- well, it's hard to answer that because typically 4 courts, as we all know, courts like to split babies. But I

5 know that Judge Fullam explicitly rejected my forecast in the 6 Owens Corning case, not because of the basic method, but 7 because I wouldn't speculate about potential changes with the 8 effects of changes in the Texas legislation." 9 Q 10 A 11 Q 12 "Q If you look at the next page, on Page 66. Excuse me. Yes, sir. In fact, he said, in my opinion, Dr. Peterson has failed I closed it. I'll get back to it. Thank you.

13 to adequately take into account the changes in the asbestos 14 litigation landscape which have already occurred and which will 15 likely continue. 16 "A That's what he said. But I should point out that

17 subsequently my forecast proved to be right and his -- his 18 decision wrong. So while it's interesting what the judge said,

19 as a scientist I regard my forecast as having been the best of 20 those in that case and the one that was confirmed empirical -21 probably empirically, and hes never -- Ive never communicated 22 with him for obvious reasons about that. 23 24 A 25 yes. Q Is that right?

Thats the transcript and I believe I recall saying that,

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Peterson - Cross/Evert 1 Q

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And subtly you brought up the Babcock & Wilcox fraudulent

2 conveyance case, is that right? 3 A Actually, I brought up the Babcock & Wilcox estimation

4 hearing after the fraudulent conveyance case where I testified 5 -- I testified as a witness for both the debtor and the ACC, 6 and that occurred after the fraudulent conveyance case. 7 what youre asking me about, but I did testify in the 8 fraudulent conveyance case. 9 Q And in the fraudulent conveyance case, your opinion was Thats

10 rejected by the Court, is that right? 11 A No, I wouldnt say that. I think I did say that once, but

12 that was in error.

The Court decided that my opinion and that

13 of Dr. Florence did not address what he felt was the issue in 14 the case. He felt that what the real liabilities were at the It is what

15 time the transactions occurred was not the point. 16 the debtor believed the liabilities were. 17 testimony was not relevant. 18 his decision was.

So that -- the

Thats my understanding of what He

I dont think he rejected my opinion.

19 just didnt regard it as relevant. 20 Q The judge chose not to accept your forecast. Would that

21 be the right way to say it? 22 A 23 Q 24 A 25 Q I dont know from what youre reading. Im reading your deposition transcript. In what case? Well, in the Armstrong case.

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Peterson - Cross/Evert 1 A

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I said once I testified that he had rejected it, I think, I was subsequently corrected by the Thats not true. You didnt --

2 and thats not correct.

3 lawyers involved in that case. 4 thats a misstatement.

I should have gone back and corrected What I describe here is what He did not find

5 the record in Armstrong. 6 happened.

He did not object the method.

7 anything implausible about it.

It simply wasnt relevant he

8 felt to the issues in that case. 9 Q 10 A 11 Q Your forecast was not accepted, correct? No, I wouldnt characterize it as such. Okay. And you were incorrect when you testified to that

12 previously? 13 A In Armstrong, I wasnt careful in what I said. Thats why

14 Im trying to be careful here. 15 Q Okay. You will agree with me, will you, Dr. Peterson,

16 that there is not one single technique or methodology that is 17 universally recognized as the only accepted methodology for 18 estimating asbestos liabilities? 19 A There are multiple methods that are accepted and regarded There are also methods that are regarded as

20 as reasonable. 21 unreasonable. 22 Q

But theres not one single methodology thats considered

23 the methodology, is that correct? 24 A 25 Q Yes, I just said that. All right. And in this case or in any other case, you

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Peterson - Cross/Evert

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1 dont attempt to measure the number of mesotheliomas that have 2 been caused or contributed to by exposure to the debtors 3 products, is that right, thats not what youre trying to 4 estimate? 5 A No, I dont attempt to do that. I dont think thats

6 possible to do. 7 Q And in this case, as you have in other cases -- I think

8 you said on direct -- you estimated the cost that Bondex would 9 have to spend in the tort system to obtain a release of the 10 claims against it, isnt that right? 11 A 12 Q Yes. So your methodology does not seek to predict a debtors

13 legal liability of the tort system, is that right? 14 A 15 Q What do you mean by legal liability? Im asking you, does your method seek to predict a

16 debtors legal liability in the tort system? 17 A I heard the question. What I want to know is what it is

18 that you mean.

Theres ambiguity in that, and I dont want to I get into trouble answering liability and

19 make an assumption.

20 other ambiguous terms. 21 Q Would you take a look at your deposition in this case,

22 please, Dr. Peterson? 23 MR. SHEPPARD: Your Honor, thats improper

24 impeachment. 25

He hasnt even answered the question yet. I think thats true. He hasnt answered

THE COURT:

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Peterson - Cross/Evert 1 the question yet. 2 3 Q 4 5 A 6 Q 7 8 question. MR. EVERT : Okay.

287

Have you answered the question in the past? MR. SHEPPARD: I dont recall. Well -THE COURT: Hes asking for a clarification of the Thats not -- objection.

If youd like to clarify the question for him, he

9 may be able to give you an answer. 10 11 Q MR. EVERT: All right.

You have defined legal liability, Dr. Peterson, as

12 immeasurable, is that correct? 13 A I dont recall, and I dont know the context in which I As I said, liability is an ambiguous term as Ive I slip

14 said it.

15 demonstrated repeatedly in my testimony in this case. 16 and fall into using it in a colloquial way.

Legal is an

17 adjective that applies to it, but in the present circumstances, 18 I want some precision in how these terms are being used so that 19 they wont be misused -- my answer wont be misused. 20 Q 21 A 22 Q Fair enough. And I dont feel that Im in that position. Fair enough, Dr. Peterson. Ill move on because the last

23 thing I want to do is for you to feel like youve been misused. 24 A 25 Q I would hope so. And in the tort system, would you agree with me that

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Peterson - Cross/Evert

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1 bankruptcies of co-defendants have the affect of increasing the 2 payments of viable defendants to resolve claims? 3 A 4 that. Oh yeah, I said that in this case already. I agree with

Its not the exclusive reason for changes, but its one

5 of many. 6 Q And speaking of the bankruptcies of co-defendants, did you

7 look at the average number of trust claims disclosed by the 8 claimants who submitted PIQs in this case? 9 A 10 it. 11 Q 12 was? 13 A 14 Q Thats correct. Okay. Would your -- well, would you look at Page 129 of All right. If you looked at it, you dont recall what it I think I may have looked at that number. I dont recall

15 your deposition in this case please, sir, so I could maybe 16 refresh your recollection? 17 A 18 19 20 21 A 22 Q 23 Q Surely. UNIDENTIFIED SPEAKER: MR. EVERT: 129. Thanks. Sorry, was that 129?

UNIDENTIFIED SPEAKER: I am at Page 129. 129, Line 5.

On the PIQs plaintiffs identified, plaintiffs identified

24 whether they had made or were going to make claims against any 25 trust?

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Peterson - Cross/Evert 1 A 2 Q Yes.

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Did you make any analysis of the average number of trusts

3 Bondex claimants were making claims against or claims to? 4 A 5 A 6 Q No, I did not. I see that. Was that your answer then? Was that the question and

7 answer you gave at that time? 8 A 9 Q It was. Thank you. How much money, Dr. Peterson, is sitting in

10 asbestos trusts today available to compensate claimants, 11 roughly? 12 A I dont have a -- I would not venture a rough guess.

13 Theres been a substantial amount of money put in, but theres 14 been a substantial amount of money thats left and, in the 15 financial circumstances of the country as a whole, I dont know 16 from how it varies from trust to trust, how its changed. 17 cant -- I wouldnt posit even a general guess about it. 18 Q 19 A 20 Q Would you agree with a range of 15 to $20 billion? I have no opinion about that range. All right. Dr. Peterson, would you look at Page 131 of And if you would look at Line I

21 your deposition in this case? 22 11, please? 23 A 24 Q 25 Q I see that.

And were you asked this question and gave this answer? How much money is currently sitting in trust funds to

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Peterson - Cross/Evert 1 compensate claimants in asbestos litigation? 2 A 3 Q 4 A I dont have a precise number. A ballpark number?

290

Its probably around 15 to 20 billion, but thats just a

5 rough estimate. 6 Q 7 A 8 Q 9 A 10 Q Was that your answer at the time? Its a very rough estimate. Thank you. Thats what I said.

In regard to the PIQs, since were --

I shouldnt have said it by the way. In regard to the PIQs, since we were just talking about

11 the PIQs, is it your view that the PIQs ordered by this court 12 in this case did not add meaningful information and made the 13 task of estimation more difficult? 14 A Thats probable. I think I said that. I think thats too Weve

15 strong.

It does add some information about some issues.

16 looked at that certainly, but it doesnt assist the 17 forecasting, and it does complicate the forecasting. 18 Q I think you might have also phrased it that the PIQs in Is that a fair statement?

19 your view were not informative. 20 A

Theyre not informative for purposes of forecasting. The

21 Theyre informative about certain elements of claims.

22 information they do provide is problematic because it isnt 23 clear what to do with the information theyre providing. 24 Thats why I answered in the way that I did. 25 Q So they did not perform a meaningful part of your

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Peterson - Cross/Evert 1 evaluation of these cases? 2 A They were not informative?

291

Well -- an example, a number of the claimants said they

3 didnt have mesothelioma, and so they should not have been 4 included in the sample. They shouldnt have been sampled. The

5 database from the debtor is incorrect. 6 in our forecasts of pending claims.

Those cases are counted

The reason we did that is

7 because weve again and again compared the databases of 8 multiple defendants, and when you get different information 9 from different sources about diseases, what we find is that 10 there are some claimants that we think have mesothelioma 11 because theyre so identified in the debtors database, and 12 they do not have mesothelioma is provided by subsequent 13 information. 14 But conversely, there are other claims that are not

15 called mesothelioma in the database, and other sources show 16 theyre mesothelioma, and our experience is that those 17 basically cancel out, and in fact, if anything, theres usually 18 more in the database. So finding out that there are some

19 people that dont have mesothelioma, for that individual, its 20 relevant to the value of their claims. But for the purposes of

21 forecasting, if we excluded them without adding back the people 22 who would have if they were sampled with -- remember the PIQ 23 only went to identify mesothelioma claimants. 24 If we sent it to others, to all claimants, some of

25 them would turn out to have mesothelioma, and we would need to

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Peterson - Cross/Evert 1 correct that, as well.

292

So your only making one adjustment when Thats the problem with the It has information, but There

2 you need to make two adjustments. 3 PIQ.

Thats why its not informative.

4 its not informative in the way that helps forecasting. 5 are other examples to that. 6 Q Thank you.

Has information but not informative, thats

7 what you just said? 8 A 9 Q 10 A 11 Q Not for forecasting. Okay. Its been informative in other ways. Great. Now, Dr. Peterson, in this case, you have chosen

12 to use, under your two scenarios, two alternative periods of 13 time to calculate the average settlement value, is that 14 correct? 15 A 16 Q 17 A 18 Q I have. You used 2001 to 2010 and 2003 to 2010, is that right? I have. And did you do any sensitivity analysis -- I think you

19 showed it on the board -- concerning other years? 20 A 21 Q Yes. And for each -- well, lets just take a look at that And I think you testified, if I heard your testimony

22 actually.

23 correctly and please correct me if Im wrong, that any of the 24 numbers in here would be a reasonable analysis in your view, is 25 that what you said?

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Peterson - Cross/Evert 1 A 2 Q No. Im sorry. Then I must have misunderstood. Well, then

293

3 let me ask you this way. 4 period, is that correct? 5 A 6 Q 7 A 8 Q 9 A 10 Q Yes. For your -Primary analysis. -- primary analysis?

You elected to use the 2003 to 2010

Yes, yes, yes, thats correct. And that resulted in a liability estimate of $1.255

11 billion, is that right -12 A 13 Q Thats right. -- if Im reading this chart correctly? 2004 to 2010

14 would have been a lower estimate, is that right? 15 A 16 Q Yes. 2005 to 2010 would have a been a lower estimate, is that

17 right? 18 A 19 Q Yes. So every time period that is more recent to the bankruptcy

20 filing would have resulted in a lower estimate, is that right? 21 A 22 Q Thats correct. Now, in the past, you have said that your methodology

23 draws on data and events closest in time to the period you seek 24 to forecast? 25 A Thats a principal that I, when its appropriate, I use as

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Peterson - Cross/Evert 1 I described in calculating propensities to sue.

294 In this case,

2 there were unusual circumstances that made that -- that is not 3 a necessary condition for forecasting. 4 thats important. Its a consideration

Here there are other important reasons, and That the values

5 Ive described them in my testimony on direct.

6 of claims are responsive to the method the debtor uses in 7 addressing its litigation and settlements. Its to a

8 substantial degree under the control of the defendant. 9 The defendant changed how it did this over time, and

10 as I described, we dont know what theyre going do in the 11 future, and the objective here is to try and forecast what they 12 would be doing in the future and what its affect upon liability 13 is. Were uncertain of that. Thats why we used a wider

14 range. 15 But I would, as I said in my direct, most of those I think that

16 elements, I believe, are reasonable forecasts.

17 the most appropriate one, for the reasons that I said, based 18 upon my research and work as a social scientist in the area, is 19 that the period I chose, 2010 -- 2003 to 2010, is the most 20 appropriate because it samples broadly over the various 21 strategies that the debtor has used and might use in the 22 future, either alone or in combination. 23 Q Dr. Peterson, do you have some water? I didnt want to be

24 drinking water in front of you? 25 A I do have. No, thats fine.

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Peterson - Cross/Evert 1 Q 2 3 4 bottle. 5 Q Okay. UNIDENTIFIED SPEAKER: THE WITNESS: Your Honor, may I? I have a full

295

No, I have water.

Ben, it was kind of you.

Thank you.

In fact, in the past you have said it is, quote, common

6 sense, unquote, to use the most recent period of litigation for 7 your calculations, is that correct? 8 A 9 Q When did I say that? Armstrong, I think you still have the Armstrong transcript

10 up there, doctor. 11 A 12 Q I have -- youve never given that to me. Im sorry, my apologies. Im sorry. Thats because Ive

13 only got one for which I apologize. 14 A 15 Q 16 17 18 Q 19 A 20 Q 21 22 23 A 24 Q Im happy to look over your shoulder. But -MR. EVER: THE COURT: This is Page 91. Thank you. Yes, sir. UNIDENTIFIED SPEAKER: MR. EVERT: Sixteen? Yes, in response to the incredibly articulate question, Ninety-one? Page 91, counsel? If its okay with the Court -Thats fine.

Ninety-one, Line 16.

25 what did you do next?

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Peterson - Cross/Evert 1 A 2 3 4 A 5 6 that. 7 A

296

Just a second, let me look at the cover to understand -(Laughter) UNIDENTIFIED SPEAKER: I missed the joke. MR. EVERT: That was -Then it was probably a weird question. All right. There By Mr. Finch. Im sorry, it doesnt say Who asked that question?

8 were many Armstrong cases by the way. 9 estimation hearings. 10 you. 11 Q 12 A 13 Q And this is.

There were two Thank

This is Judge Newsome, all right.

Just tell me when youre ready, Dr. Peterson. Im sorry, is this the hearing transcript? If you look at the first page, this is on November 17th,

14 2003 before Judge Newsome. 15 A 16 Q 17 A 18 Q 19 A 20 Q Yes. So this is the hearing and not a deposition?

Yes, sir. Thank you. Okay. Page 91 --

Yes, sir, Line 16. Thats my answer. Let me read the question.

Yes, what did you do next is the question, not terribly

21 informative. 22 A 23 Q 24 A Let me read above it then. I beg your pardon? Or you can ask your question, but Ill need to read above

25 it to get the context.

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Peterson - Cross/Evert 1 Q 2 A 3 Q 4 5 Q Please, go ahead. Thank you. Mm-mm. (Pause)

297

Did you have the chance to read the question and answer,

6 Dr. Peterson? 7 A Oh, Im sorry. No, Im still reading the answer. Its

8 rather long. 9 Q 10 sir. 11 A 12

So it must mean --

I cant tell you that thats atypical in your transcripts,

Mr. Sheppard has completely reminded me of that. THE COURT: I think if you can restate the question

13 and point Dr. Peterson to the two lines, it may expedite 14 matters. 15 16 Q MR. EVERT: Thank you, Your Honor.

Dr. Peterson, I asked you if you testified in the past

17 that its, in fact, common sense to use the most recent 18 experience, and I think -- Im generally referring to the Line 19 20 through Line 24. 20 A 21 Q I see that. Do you agree it was common to use the most recent

22 estimates? 23 A Well, I do use the most recent estimate -- the most recent I include not 2009 and 10.

24 data here. 25 Q

And in Owens Corning you used 2009 -- Im sorry, you used

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Peterson - Cross/Evert 1 the last two years, 1999 and 2000, is that right? 2 A 3 4 You mean -THE COURT: MR. EVERT: That was Armstrong. Im so sorry, Your Honor. Thats

298

5 correct, Armstrong. 6 A 7 Q I did. And in Owens Corning you used the last four years, 1996 to

8 2000, I think, if Im correct, is that right? 9 A 10 11 A I dont recall. (Attorney/attorney conversation) I dont know if its necessary for me to read what

12 preceded this. 13 Q Okay. So you seem to recall you used 1996 to 2000 in the You used the last four years, is that

14 Owens Corning case. 15 agreeable? 16 A 17 Q 18 A 19 Q 20 A

In that case, I think -- can I read the whole statement? Yes, sir, Im sorry. Can I read it on the record? Sure. The Court asked me is there any particular reason why the Do you have any figures

21 period of 1996 to 2000 was chosen. 22 from earlier than 1996?

I answered yes, it goes all the way They show what it

23 back, and these were provided in my report. 24 is.

The reason we picked 19 -- we picked 96 to 2000 was a One was that generally -- generally you want the most

25 couple.

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Peterson - Cross/Evert 1 recent experience. 2 to be.

299

We try to forecast what the future is going

The future is more likely to be recent -- similar to

3 the most recent past rather than the middle or old past. 4 Looking at what they were settling for -- claims for in 1990 is 5 not much of a guide. 6 7 Q 8 A Let me read -Sure, absolutely. I dont want continue reading this. Ill look at the

9 record. 10 Q 11 A 12 Q 13 A Okay. What page is this on? Forty-six. I think thats sufficient, thank you. Thats my

14 testimony, and I endorse here.

I think its a perfectly

15 appropriate statement, and what Im doing here is consistent 16 with it. 17 Q Yet here you use ten years of data or seven years

18 depending upon which forecast youre talking about. 19 A Yes, because here it was the appropriate thing to do. You

20 have to make -- there is no rule that applies to different 21 circumstances. Ive learned that in my research. You have to

22 look at whats most appropriate for the circumstances of a 23 particular litigation. In that case, that was the appropriate Here, the most

24 period of time for the reasons I describe.

25 appropriate time is a longer period of time because of two

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Peterson - Cross/Evert 1 reasons, the essential stability of the settlement values in

300

2 this period and, two, more importantly, the sampling across a 3 variety of periods where the debtor used a variety of methods 4 for evaluating and settling claims. 5 it is here. 6 Q That was not true there,

Thats a critical difference.

Dr. Peterson, lets talk about propensity to sue for just And in propensity to sue, you used more recent

7 a minute.

8 years, is that correct? 9 A 10 Q Yes, as I explained in my testimony, yes. Yes, and you used the last three years average, is that

11 right? 12 A 13 Q 14 A 15 Q Yes. But those three years ended in 2009, correct? Correct. And I think this is one of the demonstratives that you

16 used in your direct testimony which is the graph of 17 mesothelioma filings and it ends in 2009, is that correct? 18 A 19 Q Yes, I commented on that in my testimony. Now, you actually estimated the filings that would have

20 been made against the debtors in 2010 in your report, did you 21 not? 22 A 23 Q Thats not entirely correct. Okay. But the one 1,062 2010 filings that appears in your

24 report is not correct? 25 A No, how you characterized it wasnt correct.

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Peterson - Cross/Evert 1 Q Im sorry.

301

You estimated in your report that the debtors

2 would have had 1,062 claims filed against them in 2010, is that 3 right? 4 A 5 Q 6 A I dont want to play games. Okay. There were claims filed through May. We made an estimate Let me tell you what I did.

7 of the claims that would be filed for the balance of the year. 8 We added them together, and thats the number you said. 9 was partially an estimate, partially the data. 10 Q 11 A All right. So we accepted the filings that were there at the time of So it

12 the bankruptcy and just forecast for the balance of the year. 13 Q Well suffice it to say then on this graph, Ive drawn a

14 little line and roughly where I think 1,062 would have been. 15 Is that -- did I get at least in the ballpark based on your 16 estimation, Dr. Peterson? 17 A 18 Q More or less. And will you agree with me, sir, that if you had used your

19 2010 estimate and used the last three-year average using your 20 2010 estimate, your propensity to sue would have been lower? 21 A I didnt have a years worth of data for 2010. You asked -- thats an impossibility. So your estimate of 1,062 filings in 2010, if I couldnt

22 do it. 23 Q

All right.

24 you had used it for your three-year average, your propensity to 25 sue would have been lower, is that correct?

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Peterson - Cross/Evert 1 A To me thats a meaningless hypothetical question that I

302

2 cant answer because you would be asking me to forecast 3 something that I didnt do and wouldnt do, and I cant answer 4 that. 5 Q I wouldnt have done it. You chose to estimate the number of filings in 2010, and Is that a fair statement?

6 then you didnt use it. 7 A 8 Q No, thats wrong. All right.

Well, Dr. Peterson, now Im confused.

Its

9 not in your propensity to sue calculations, and youve told me 10 that would have been inappropriate. 11 you didnt? 12 A Yes, but Im answering your question. We used the So either you used it or

13 forecast for the balance of 2010 as part of our estimate of 14 liability. The values of those claims were included in our

15 estimated liability, so we used it. 16 Q What Im asking you, Dr. Peterson, is did you use your

17 estimate of 1,062 mesothelioma claims that would have been 18 filed against the debtor in 2010 which was the most recent 19 year? 20 A Did you use that in your propensity to sue calculations? We didnt do that because it would have been wrong. We

21 would be forecasting based upon our forecast and also because 22 your question is in error. 23 Its a recent partial year. 24 Q 2010 is not the most recent year. The last complete year is 2009.

And if you had used your estimate -- I understand you

25 think it would have been wrong -- if you had used your

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Peterson - Cross/Evert

303

1 estimate, your three-year propensity to sue average would have 2 been lower, is that correct? 3 A I just told you I cant answer that question because I

4 would never have done it. 5 Q 6 A 7 Q Well, its just math, isnt it, Dr. Peterson? No, its an abuse of a method. Okay. Fair enough. These are your propensity to sue I mean --

8 calculations, am I correct, Dr. Peterson? 9 A Yes, historic propensity to sue calculation and the

10 average from 2007 to 09. 11 Q And based on the graph that we just looked at, I think you

12 will recall and Ill be glad to put it up again, that the line 13 I drew where the 1,062 would roughly be was roughly in the same 14 range as the 2007 filings, would that be right? 15 to see it again, sir? 16 A 17 Q Yeah, I need to see it. Okay. Does that line look about even to somewhere between Would you like

18 07 and 08, is that fair? 19 THE COURT: Are you asking that if the 10,62 were an

20 actual number as opposed to a hypothetical number, whether it 21 would have fallen in this chart close to where the 2007 line 22 would have been? 23 24 A MR. EVERT: Yes, Your Honor.

I would need to see my full set of documents because I

25 dont believe that this is -- we have the number drawn on our

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Peterson - Cross/Evert

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1 report, and I could see what our estimate number of claims for 2 2010 is, and I dont accept this as necessarily correct. 3 Q 4 A All right. Strikes me -- my recollection is the value was somewhere But -- so

5 between 2008 and 2009, so it would be above that. 6 now I am confused about this. 7 8 9 Q 10 A 11 Q MR. EVERT: THE COURT:

May I approach the witness, Judge? Yes.

Page 21 of your report, Dr. Peterson, is a table. Yes, it is. Its a table.

And next to 2010 annualized meso filings is the number

12 1,062? 13 A 14 Q But thats not our forecast. Dr. Peterson, look, all I could do is read the report. So

15 Im trying to figure out -16 A 17 Q Well, you read it wrong. Okay. Its not our forecast.

So you did not estimate or annualize the 2010

18 filings at 1,062 mesothelioma claims even though thats the 19 number in your report? 20 A Thats a different question. Thats actually a compound

21 question, but we did annualize the numbers, but thats not our 22 forecast. We just said okay, if the claims are going to be

23 coming in at the rate they were coming in in the first part of 24 the year, what would the number? Thats not our forecast. I

25 would not have used that as the forecast, so I withdraw my

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Peterson - Cross/Evert 1 earlier answer about whether that would be -- did we use it.

305

2 No, we didnt use it because thats not a forecast number that 3 we rely on. Your questions have been, to me, confused and

4 misleading throughout. 5 Q Well, I am quite apologetic about that because I really

6 did not intend to mislead you. 7 A I accept that. I dont think you did. I think it was

8 just a mistake. 9 Q So can we agree that -- I know you think its wrong --

10 that if you had used that number that this calculation, if it 11 was 2008 through 2010, would resulted in a lower propensity to 12 sue? 13 A 14 Q It would have, but I still wouldnt have done it. A very fair answer. Thank you, sir. Conversely, you used

15 the 2000 -- well -- strike that.

Now, in your propensity to

16 sue calculations, Dr. Peterson, as I appreciate, you had a 5 17 percent increase in the propensity to sue each year for 2010 to 18 2013, is that right? 19 A Thats not precisely correct. You want me to tell you

20 what we did? 21 Q 22 A Sure. I need to turn to that part of the report. Its shown on

23 Page 23 of my report. 24 Q 25 A Okay. Thats precisely what we did. 2010 is -- most of 2010 is

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Peterson - Cross/Evert 1 a forecasted year. For the balance of 2010, we did not

306

2 forecast the propensity to sue for that balance of the year 3 would be any different than the historic rates. 4 up by anything. You did not go

So for that stub year, it remained at the same

5 rate it was, the 39.5 I believe it was. 6 Q 7 A Yes, sir. In 2010, then we raised it 5 percent in each respective So we went to 5 percent increase, 10 percent, 15, Thats precisely what we did. So what

8 until 2014.

9 20 percent cumulative.

10 troubled me was how we -- I know how we dealt with the stub 11 year, but I dont think that was quite what you asked. 12 didnt raise it in 2010. 13 2014. 14 Q 15 A Okay. We really increased it for only four years, but we did it So we

We basically raised it from 2011 to

16 over a five-year period. 17 Q And again you engaged in this formula notwithstanding the

18 fact that your annualized number for 2010 for mesothelioma 19 filings was actually a down number from the previous year, is 20 that correct? 21 A 22 Q I dont know. Okay. I never bothered to compare them.

And your choice in 2014 to stop the increase, I

23 think you previously told us, was arbitrary, is that right? 24 A That particular selection of year was arbitrary. The

25 decision to end it within the reasonable near future was not

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Peterson - Cross/Evert 1 arbitrary. 2 Q 3 A Theres a reasoned scientific decision.

307

Based on your judgment? Thats what Im here for. As Dr. Mullins said, were

4 experts. 5 Q

We make expert judgments.

And what data did you use to support that reasoned

6 scientific decision? 7 A I use data such as what was the level of claim filings

8 against Bondex at the time, my knowledge about the -- this is 9 actually where the PIQ was somewhat helpful -- the distribution 10 of the kinds of claims that were being filed and would likely 11 be filed in the future, those assisted my assumption that you 12 would be, at some point, running out of the number of potential 13 claimants here and not likely to see them continue. 14 Q 15 A And that data pinpointed 2014 versus 2013 or 2015? Well, but that was precisely what I said. Is that there

16 were -- I think I specifically said that in my direct -- there 17 was no specific data to do that. The point was that I expected

18 the propensities to sue would increase at a lower rate because 19 the nature of the products here and the nature of the exposed 20 population, and by now, relative maturity of the litigation. 21 It would have abated somewhat because advertising is less 22 effective now than it was. Those both contribute to my

23 conclusion about the expected rate of increase in future years. 24 So that was a reasoned judgment. The particular number, 5

25 percent a year, the particular length of time, I did not have

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Peterson - Cross/Evert

308

1 any quantitative -- I didnt have any, as I said on my direct, 2 I did not have any of the empirical data to do those. I just

3 had the judgment -- the reasonable judgment this was not going 4 to continue at the pace that it did, and as I said in my direct 5 testimony, theres no way to predict precisely what it is. 6 Its the future. 7 Q Thank you, sir. I want to ask you a couple questions As you do your

8 about your incidence projections, if I can. 9 forecast, the propensity to sure -10 A

Im sorry, could you give me the -- I dont want you to Could you just restate what

11 have to read the whole question. 12 you did? 13 Q 14 A 15 Q Sure. Yes.

As you do your forecast --

-- the propensity to sue is multiplied by the expected

16 incidents to arrive at the expected number of claims to be 17 filed against the debtors, did I get that right? 18 A Yes, based on our particular propensity to sue

19 (indiscernible). 20 Q And you used Nicholson as your primary case for the

21 expected incidents, is that correct? 22 A 23 Q 24 A 25 Q Yes. This, I think, was your Slide 28? Yes. Again, its got some of my markings on it for which I

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Peterson - Cross/Evert 1 apologize, and I think this will be an easy one.

309 Am I reading

2 this correctly that had you used the KPMG estimate of future 3 claims, your conclusion, in terms of your forecast, would have 4 been roughly five percent lower? 5 A As Dr. Mullin said -- and this is the same range that he We always find this. It would have

6 found in his forecast.

7 been five percent, and I agree with his testimony that thats 8 not a material difference. Given the other inherent

9 uncertainties in here, these do not produce, in my mind, a 10 reasonable difference in the liabilities of this company, and I 11 think the Court could feel free to take any of those numbers. 12 Q Thank you, sir. Now, I want to ask you, if I can, about

13 some of your specific calculations, and Im going to try to get 14 through this before the end of the day, Dr. Peterson, but not 15 sure we can get there. 16 A 17 Q I can go as long as you can, so. You probably can go longer, sir, to be honest with you.

18 The core of your philosophy, I think, Dr. Peterson, on this 19 issue, if Im correct, is that tort system settlement payments 20 in the past is the best predictor of what tort system 21 settlement payments would be in the future, is that a fair 22 statement? 23 A I dont think thats entirely accurate. They are an

24 important source for it.

In some cases, I make the assumption

25 that theyre likely to change when -- just like when propensity

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Peterson - Cross/Evert

310

1 to sue have been going up, essentially, consistently prior to 2 the bankruptcy date. If the settlement values have been going

3 up, its appropriate to assume that that trend would continue 4 in the future just as the propensity to sue trend would likely 5 to increase in the future. 6 your starting point. So they are a key part. Thats

But the actual trends in the future and

7 the values maybe rely upon things more than the actual data 8 when you -- when my research on a particular case and the data 9 suggest that its appropriate to adjust those values for a 10 reason that I feel I could justify to the Court. 11 Q But at its core, your belief is the best data to help you

12 predict what future tort system payments would be would be 13 todays tort system payments, isnt that right? I dont think

14 Im really trying to say anything different from you. 15 A I would agree with you, but keep -- for this specific

16 defendant -- historic payments for this specific defendant and 17 its payments in the future. 18 this particular defendants. 19 Q You modify by defendant, as weve talked about today, Its not all tort payments. Its

20 right? 21 A Well, I dont modify it by defendants. The data are

22 different among defendants. 23 Q But as you say, sometimes you go way back, sometimes you You use your judgements in that regard,

24 use recent years.

25 isnt that what you testified today?

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Peterson - Cross/Evert 1 A 2 data. I misunderstood your question.

311

In both cases, we use the

What I believe is the appropriate data for those cases

3 may vary from case to case for reasons that I try to articulate 4 in each case as I have done here. 5 differences from case to case. 6 Q 7 A 8 9 10 11 12 Q 13 A 14 Q 15 A 16 Q All right. These are reasoned. MR. EVERT: THE COURT: MR. EVERT: THE COURT: May I approach, Your Honor? Yes. Demonstrative D-63. Thank you. These are not reasoned

Dr. Peterson, can you see that on the screen? Yeah, its kind of -Okay. -- out of focus. Its out of focus, and it really is. What did I do I wonder? Thats a very good

17 point. 18 A 19 Q 20 A 21 Q

There you go. There we go. Eye test. Wait a minute. Its not that easy. I tried to get your Much better.

22 formula correct.

Is that the mathematical equation that you

23 have used in your forecast? 24 A Yes, its done by year, and I dont use the word nominal.

25 Im not quite sure what you mean by it in this context.

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Peterson - Cross/Evert 1 Q Well, thats fair enough. I would say thats without

312

2 inflation and without discounting. 3 A 4 Q 5 A 6 Q 7 A 8 Q Oh, okay. Is that fair enough? Yeah, its okay. Okay. Okay. And so -I understand what youre doing. And will you agree with me that if we take the Fine.

All right.

9 average settlement value times the payment rate, that should 10 equal the debtors average resolution value? 11 A 12 Q Yeah, thats a term we use, yes. So it takes -- it sort of simplifies, I think, the

13 equation which is on D-64. 14 15 16 Q 17 18 A MR. EVERT: THE COURT: And this? THE COURT: Thank you. If I may approach, Your Honor? Yes.

Again, thats premised on using resolution which can be an

19 ambiguous term in the way youve specified it here and asked me 20 the question. 21 Q Well, its just math, isnt it, Dr. Peterson? The pay

22 rate times the average settlement value should equal the 23 average resolution value -24 A Oh no, I dont disagree with that. I was just making the

25 point that if youre going to -- if were going to be talking

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Peterson - Cross/Evert 1 about the average tort resolution value, you mean this 2 formulation that you have here, not some other meaning. 3 Q Okay.

313

So Ive tried to make sure I understand your future

4 forecast using this formula which is in the Demonstrative D-65 5 that is now on the screen. 6 7 Q THE COURT: Thank you. So Do

Let me make sure Ive got this right, Dr. Peterson.

8 your count of future filings against the debtors is 15,392. 9 you need to look at your report or do you -10 A 11 Q 12 A I think thats --- have that number? -- it looks to me like that would be a good idea.

I dont

13 actually give it in the report. 14 Q I think if you -- Page 23, Dr. Peterson. Im looking at

15 your base case here, your stable case I think as you called it. 16 No -17 A 18 Q 19 A 20 Q 21 A 22 Q I beg your pardon. -- youre decreasing case. Thats the no increase -- the decreasing, yes. Yes. I think in your report --

Yeah, yes, I agree with that. Okay. In your reports, you called it the no increase and

23 in your slide of today, you called it decreasing, right? 24 A 25 Q Yes, its the -Okay.

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Peterson - Cross/Evert 1 A

314

Well, theres no increase in the propensity to sue and the

2 filings were decreasing. It has that implication. 3 Q I see. So 15,392, well agree, is your count of future

4 filings under the no increase case, correct? 5 A 6 Q Yes. And your average tort settlement value that you used in

7 your report, if youll look just above or in the middle of the 8 slide, was a $126,340, is that right? 9 A 10 Q That was one of the values. Wasnt that the value you used to get to your base

11 forecast? 12 A 13 Q 14 A 15 Q 16 A I -- it may be, but I want to look at that. Well, thats fair enough, sir. No, thats not correct. Oh, Im sorry, youre right. It was lower, wasnt it? Thats the assumption

Yes, this is the 2001 to 10 model.

17 that if Bondex continued to move as Dr. Mullin suggests to an 18 increase litigation model, it would be -- in the future would 19 be paying higher values based on the 2001 to 2010. Thats

20 where we sample across that kind of tactic that they were using 21 in the earlier period. 22 Q 23 here? 24 A 25 Q I dont know. That remains to be seen. Yes, sir. So Ive made an error against my own interest

So this is your 2000 -- this is your forecast using the

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Peterson - Cross/Evert

315

1 2001 to 2010 averages, correct, rather than using your 2003 to 2 2010 which is a $117,161, is that right? 3 A 4 Q 5 Thats correct. Okay. THE COURT: Im sorry. I apologize. Could you give

6 me the two averages again from -7 8 9 10 11 Im -12 13 14 MR. EVERT: THE COURT: MR. EVERT: The 2001 to 2010 average is $126,340. All right. And the 2003 to 2010, which Im calling MR. EVERT: THE COURT: MR. EVERT: THE COURT: Im sorry. -- both periods? I went too fast, Your Honor. No, you didnt. I just didnt get it.

15 Dr. Petersons base case, is $117,161. 16 17 Q THE COURT: Okay. Thank you.

So, Dr. Peterson, ignore my -- well, not ignore -- even

18 taking into account my math error, your pay rate that you used 19 is 57.9 percent, is that correct? I think its also on Page 17 Is that

20 of your report for the 2001 to 2010 calculations. 21 correct? 22 A

Thats correct, and its also the appropriate payment rate They go to together.

23 to use for the dollar value youre using. 24 Q 25 A They do go together. Thats correct. So --

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Peterson - Cross/Evert 1 Q 2 A 3 Q So at least I did that right? Yes.

316

So if we multiplied those number together, then we get to

4 an estimate of $1.126 million nominal, no inflation, no 5 discount. Im sorry. What did I say? Oh, I said million.

6 Thats probably lower. 7 A

$1.126 billion, excuse me?

Yeah, actually, what you have here is 1,126 million, but

8 thats the same thing as what you said (indiscernible) it to 9 billions. 10 Q 11 A 12 Q Im trying to screw it up, but I -No, wait -So we would agree, I think, under the inputs, I think, And thats where your nominal Am I

13 Dr. Peterson are correct.

14 forecast comes without discounting and without inflation. 15 correct about that? 16 A 17 Q 18 A 19 Q 20 A I dont -So in 2010 dollars? I dont know. I dont have my calculator with me.

Will you trust me on that? Okay. I will accept your representation for purposes of

21 these questions. 22 23 6:00. MR. EVERT: And I tell you what, Your Honor, its I can bring a

I dont know if you want to stop.

24 calculator tomorrow.

Im in a reasonable stopping point.

25 Whatever your preference is.

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317 1 THE COURT: Thats fine. Lets work out -- what --

2 how long, Dr. Peterson, will it take to get the calculations 3 that you need to provide to debtors counsel tonight? 4 THE WITNESS: Well, I noticed that Dan Relles left

5 and I -- knowing Dan, hes busily doing it at the moment. 6 7 THE COURT: All right. But I cant -- he and I will also have So --

THE WITNESS:

8 different estimates of how long it takes him do things.

9 but I would expect we could get it in a reasonable time this 10 evening, not too late. 11 THE COURT: All right. Mr. Sheppard, can you work

12 out something with counsel for the debtor? 13 MR. SHEPPARD: Yes, Your Honor. We have a working

14 agreement where were exchanging documents at 9:00, so we would 15 try to stay within that agreement, for the next day. 16 17 18 that time. 19 20 21 22 23 24 25 THE COURT: All right. Okay. Thats fine. THE COURT: All right. I would expect we do it on or before

THE WITNESS:

MR. SHEPPARD:

If thats acceptable. The sooner the better.

UNIDENTIFIED SPEAKER: THE COURT: MR. EVERT: THE COURT: Okay.

Thats fine.

Sooner than last time. Anything else? As soon as we got it, well send it.

MR. SHEPPARD:

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318 1 THE COURT: All right. The other thing you folks

2 need to try to work out is a schedule for when youre going to 3 give me the missing exhibits, Mr. Finch. 4 you used this afternoon. 5 MR. FINCH: I need the exhibits

You have them here? Thats why I was

Yes, Your Honor.

6 approaching, Your Honor. 7 THE COURT: Okay. Dr. Peterson, you may step down so

8 that your off the stand, but I have to remind you, you will 9 still be under oath tomorrow. 10 testimony with anyone. 11 12 13 THE WITNESS: THE COURT: MR. FINCH: I understand. So please dont discuss your

Thank you. The exhibit, just for the record, the

14 exhibits that I used with Dr. Welch was ACC/FCR/128, which was 15 offered and admitted into evidence for substitave purposes. 16 Thats Dr. Welchs curriculum vitae. There was also ACC/FCR

17 Exhibit M-127, which was her initial report in the Bondex case 18 which consists of a two or three page cover report and then, 19 what she call, her big affidavit. 20 demonstrative purposes. That was offered for

Also for demonstrative purposes is

21 ACC/FCR/129, which is the rebuttal report to the reports of 22 Dr. Anderson and Feingold. 23 purposes. 24 exhibits. That was offered for demonstrative

Then there were four additional demonstrative Demonstrative Exhibit ACC-1015, 1-0-1-5, is the

25 slide show that Dr. Welch prepared and talked about in court

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319 1 this morning. ACC Demonstrative 10 -- and that was offered for

2 demonstrative purposes. 3 4 THE COURT: MR. FINCH: Yes. ACC Demonstrative 1016 was a chart from

5 -- an errata chart from a study that Dr. Welch talked about on 6 redirect, I believe. ACC Demonstrative 1016(a) is the article

7 from which the chart that I showed her on redirect came. 8 Thats for demonstrative purposes, as well. And finally, ACC

9 Demonstrative 1017 is the study by Pira, mortality from cancer 10 and other causes in the Balangero cohort of chrysotile asbestos 11 miners, that I showed Dr. Welch on redirect, Demonstrative ACC 12 1017. If it pleases the Court, I will approach and hand Your

13 Honor the copy of everything I just identified on the record. 14 THE COURT: All right. Thank you. Do you have a

15 second copy for Barbara? 16 MR. FINCH:

She was asking for a set.

I can e-mail her a set if I can get her

17 e-mail address. 18 19 Okay. 20 21 THE COURT: THE COURT: All right. Thats fine. Thank you.

Any other housekeeping matters for this evening? (No audible response) I think you folks should attempt talk --

22 thank you -- about any other scheduling matters that we have. 23 I know that Ive given you schedules for briefs and post-trial 24 arguments and so forth, but I dont know whether theres 25 anything else thats going to come up that you may need to

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320 1 discuss other than the witness -- or not witness, but exhibit 2 list that I need. 3 closes. 4 MR. EVERT: Yes, Your Honor. Weve got some So I would ask for those before trial

5 deposition designation deadlines that we need to agree on -6 7 THE COURT: Thats correct. So we will

MR. EVERT: -- and things of that nature.

8 try to do that. 9 10 THE COURT: MR. EVERT: All right. So that -- we can certainly talk to the

11 Court about that tomorrow. 12 THE COURT: Okay. How are you doing on your time

13 because I need to know whether I -- we need to start earlier in 14 order to accomplish these couple of housekeeping matters? 15 UNIDENTIFIED SPEAKER: The time remaining for the

16 ACCFCR is two hours and forty-seven minutes and for the debtors 17 is four hours and fifty-seven minutes. 18 THE COURT: Well, its up to you. Thats going to By the

19 push you five, six, seven, thats almost eight hours.

20 time you consider breaks, well be at the nine hours that weve 21 been in court for sure. Do you want to start a few minutes

22 earlier or just stay at 8:30 and assume that youll get 23 finished? 24 MR. EVERT: Your Honor, I think if we stay at 8:30, I

25 think well -- were going to be able to get finished, and then

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321 1 we can maybe -- if we can chat tomorrow about the -- or tonight 2 about the deadlines and certainly by mid-day tomorrow, we ought 3 to be able have a quick five-minute conversation with the Court 4 about that, would be my thought. 5 that. 6 7 THE COURT: MR. DORSEY: Okay. I was going to mention, Your Honor, that Unless people disagree with

8 in given the limited time we have remaining, our plan for 9 tomorrow was to proffer Mr. Braun, who was our expert on the 10 discount rate by declaration, which we already provided to 11 them, and to make him available for cross examination to 12 shorten. 13 14 15 Honor. 16 17 18 Honor. 19 THE COURT: Okay. Do you have a copy that I could UNIDENTIFIED SPEAKER: MR. EVERT: Yes. THE COURT: MR. EVERT: All right. Is that acceptable to you?

We had already worked that out, Your

We have the declaration, so yes, Your

20 read tonight? 21 22 MR. DORSEY: THE COURT: Yes, Your Honor. All right. Does anybody have an

23 objection if I read it tonight? 24 25 MR. EVERT: MR. DORSEY: Not at all, Your Honor. No.

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322 1 2 THE COURT: MR. EVERT: Okay. In fact, I think its already been filed

3 in the case. 4 UNIDENTIFIED SPEAKER: Yes, its the same as the

5 expert report. 6 7 THE COURT: It -- okay. Your Honor, its Exhibit 88 in

UNIDENTIFIED SPEAKER:

8 the binder. 9 10 11 12 else? 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: MR. EVERT: (No audible response) Were in recess till 8:30. Thank you, Your Honor. Thank you, Your Honor. Thank you, Your Honor. Thank you. THE COURT: All right. E-88. All right. Anything

UNIDENTIFIED SPEAKER: THE COURT: Okay.

Thank you.

MR. SHEPPARD:

UNIDENTIFIED SPEAKER:

* * * * *

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323 C E R T I F I C A T I O N We, ELAINE HOWELL, KIMBERLY UPSHUR, MARY POLITO, LORI AULETTA, MYRIAM LOPEZ and MELISA TULOTTA, court approved transcribers, certify that the foregoing is a correct transcript from the official electronic sound recording of the proceedings in the above-entitled matter, and to the best of our ability.

/s/ Elaine Howell ELAINE HOWELL /s/ Kimberly Upshur KIMBERLY UPSHUR /s/ Mary Polito MARY POLITO /s/ Lori Auletta LORI AULETTA /s/ Myriam Lopez MYRIAM LOPEZ /s/ Melisa Tulotta MELISA TULOTTA J&J COURT TRANSCRIBERS, INC. DATE: January 18, 2013

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