A West Virginia jury found Dow Chemical Co.'s Union Carbide unit responsible for causing asbestos injuries to workers, opening the possibility of millions of dollars in future judgments against the company.
The verdict came in the first phase of a Charleston, W. Va., trial involving more than 2,000 plaintiffs who had filed lawsuits against Carbide, claiming they had been injured by exposure to asbestos from the company's products or by working around asbestos at the company's facilities.
Dow's stock plunged on news of the afternoon verdict, falling $2.57, or 9.3%, to $24.97 in 4 p.m. composite trading on the New York Stock Exchange.
The verdict followed Dow's release of its third-quarter financial results, in which it doubled its profit from a year earlier. After lowering expectations earlier this month, Dow, Midland, Mich., reported net income of $128 million, or 14 cents a share, compared with $57 million, or six cents a share, a year earlier. The latest quarter included two cents a share of acquisition-related costs, compared with 10 cents a share of similar costs in last year's period.
Sales rose 4.6% to $7.04 billion from $6.73 billion.
The West Virginia case originally included claims by 8,000 plaintiffs against 259 defendant companies, which were consolidated into one trial in an effort to speedily clear the Kanawha County court's overcrowded asbestos docket. The case attracted national attention when defendants led by Exxon Mobil Corp. appealed to the U.S. Supreme Court to stop the trial because it was unfair to try so many cases at once.
After the Supreme Court refused to consider that request, all the defendants settled out of court except Dow, which stayed to fight the claims alone.
John Musser, a spokesman for Dow's Carbide unit, described the verdict as a partial victory, since the jury limited Carbide's product liability to workers exposed from 1964 to 1972 and denied punitive damages for any product exposure, which involves about 80% of the claims. However, the jury ruled on a separate group of claims that Carbide had operated unsafe facilities from 1945 to 1980, potentially entitling workers to punitive damages three times any compensatory damages awarded in those claims.
Despite the plunge in Dow stock, UBS Warburg analyst Andrew Cash said Dow made significant progress in the case, succeeding in having many claims dismissed and limiting its liability in the others.
"Dow's got guts," he said. "They're coming out fighting. This is a showdown between the plaintiff's bar and Dow Chemical."
The second phase of the trial will consider whether Carbide caused the injuries against individual workers who have filed claims. Dow said it will strongly defend those cases. But first, Dow's Mr. Musser said, the company has "innumerable appellate issues to take up with the West Virginia Supreme Court."
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