Johns-Manville Asbestos Lawsuit: 1982 Bankruptcy and Trust Claims

The Johns-Manville asbestos lawsuit is not a single case but a wave of tens of thousands of personal injury suits filed against the world’s largest asbestos manufacturer, litigation so overwhelming that in 1982 the company filed Chapter 11 and funneled every present and future claim into a court-supervised trust. That trust still operates. As of September 30, 2025, it has paid more than $5.3 billion to over a million claimants, at a current rate of roughly 5.1 percent of each disease’s scheduled value.¹

If you or a family member was exposed to Johns-Manville products, you cannot sue the company itself. A channeling injunction issued in the bankruptcy permanently redirects every asbestos claim to the Manville Personal Injury Settlement Trust.²

Who Was Exposed and to What

Johns-Manville, founded in 1858 and headquartered in Denver, was the world’s largest miner of raw asbestos and a Fortune 500 manufacturer of insulating cement, roofing shingles and felt, siding sheets, weatherproofing, and block and pipe insulation. Brand names included Thermobestos, Transite, Marinite, and Spray-Tex.³

Exposure reached well beyond the company’s own factories. Miners, factory workers, and textile workers handled raw asbestos directly. Tradespeople who cut, installed, or worked around Johns-Manville products picked up fibers on the job: carpenters, electricians, pipefitters, roofers, plumbers, insulators, boiler workers, and shipyard workers.⁴ The company was a primary supplier to the U.S. Navy during World War II, and many veterans were exposed aboard ships. Fibers carried home on work clothes exposed spouses and children. Residents near the company’s plant in Manville, New Jersey, reported asbestos “snow” settling on the ground.⁵

What the Company Knew

The suits that eventually broke Johns-Manville rested on evidence that its executives had known asbestos was dangerous for decades and hid it. The first asbestosis case was documented in England in 1906, and by 1930 U.K. studies had strongly linked asbestos exposure to lung disease.⁶

In 1935, the company’s general counsel Vandiver Brown wrote that “our interests are best served by having asbestosis receive the minimum of publicity,” and pressured the trade journal Asbestos to bury coverage of the disease. Company-funded research at Saranac Laboratories was conducted under contracts giving funders the right to decide whether findings would be published at all.⁶

By 1949, the company’s own medical director, Dr. Kenneth Wallace Smith, had documented asbestosis in workers who were not told. He wrote: “As long as a man is not disabled it is felt he should not be told of his condition so that he can live and work in peace.” Dr. Smith recommended caution labels on products in 1951; the company did not add them until 1964. Chest X-ray findings suggestive of asbestosis were withheld from employees until at least 1971.⁷

In 1970, the company partnered with Hill & Knowlton to create the Asbestos Information Association. An AIA pamphlet from October 1971 told the public that “low to moderate levels of exposure to asbestos do not lead to an increased rate of disease.” Matthew Swetonic, a former Johns-Manville public relations employee who became the AIA’s first executive secretary, privately acknowledged in 1973 that the “medical literature is full of solid evidence linking asbestos to disease,” citing more than 2,000 published articles.⁸

How the Lawsuits Grew

Before 1970, personal injury claims against the company were rare and mostly settled quietly. Only one, Vogel v. Johns-Manville Products Corp. in 1936, reached the appellate level.⁶ In 1969, 285 former employees sued together, alleging concealment of hazards known since the 1920s.⁴

The turning point came with Borel v. Fibreboard Paper Products Corporation. Clarence Borel, an insulation worker from 1936 to 1969 who died of mesothelioma and asbestosis before trial, sued eleven manufacturers including Johns-Manville. A jury found the manufacturers strictly liable in 1971 under Section 402A of the Restatement of Torts for failing to warn of foreseeable dangers, and the Fifth Circuit affirmed on September 10, 1973. The Supreme Court denied review in 1974.⁹ The ruling established that manufacturers owe a duty to warn end users of reasonably foreseeable dangers, are held to the knowledge of an expert, and cannot pass off that duty to intermediaries in the supply chain.¹⁰ Roughly 25,000 asbestos suits followed in the next decade.

Two later decisions cut off the company’s most useful defenses. In Johns-Manville Products Corp. v. Superior Court (1980), the California Supreme Court ruled that workers’ compensation did not bar a civil suit where an employer fraudulently concealed an employee’s asbestos disease. The plaintiff, Reba Rudkin, had worked at Johns-Manville for 29 years, and the court held that concealment was a separate wrong supporting compensatory and punitive damages.¹¹ In Beshada v. Johns-Manville Products Corp. (1982), the New Jersey Supreme Court held that in strict liability failure-to-warn cases, a manufacturer cannot defend by arguing the risks were scientifically undiscoverable at the time. Knowledge was imputed as a matter of law.¹²

New annual suits against Johns-Manville rose from 159 in 1976 to 792 in 1978. By 1981 the company was defending about 9,300 cases brought by roughly 12,800 plaintiffs, with defense costs averaging $23,400 per claim.⁶ By the early 1980s the company was named in roughly 13,000 of the 20,000 asbestos suits filed industry-wide, with new cases arriving at about 425 a month. Internal estimates put potential liability near $2 billion.¹³

The 1982 Bankruptcy

On August 26, 1982, Johns-Manville filed for Chapter 11 reorganization in the U.S. Bankruptcy Court for the Southern District of New York.¹⁴ The company was still profitable and not immediately insolvent.¹⁵ It filed because of what it saw coming. The 1978 Federal Bankruptcy Code allowed reorganization plans to account for estimated future liabilities and no longer required a debtor to prove insolvency to file. Johns-Manville was the first Fortune 500 company to use that opening.⁶

After more than four years of negotiation, the bankruptcy court approved a reorganization plan in December 1986. The Second Circuit confirmed it on October 28, 1988, and the company emerged from bankruptcy on November 28, 1988.¹⁶¹⁷ The plan created two trusts, one for personal injury and one for property damage. The personal injury trust was funded with $615 million in insurance proceeds, $1.8 billion in bonds, $200 million in cash, 20 percent of the company’s future profits, and 72 million shares of common stock representing 50 to 80 percent of the company. Total projected funding was $2.5 to $3 billion.⁶ In exchange, a channeling injunction permanently shielded the corporation from further asbestos suits and directed every claim to the trust.²

Filing a Claim With the Manville Trust

The trust ran into trouble at once. Paying claims first-come, first-served at 100 percent of settlement value, it settled more than 12,600 claims for nearly $500 million in its first year and was on course to run out. In July 1990, U.S. District Judge Jack B. Weinstein took jurisdiction and halted almost all payments. In November 1990 the trust was judicially determined to be a “limited fund.” After further litigation, including the class action Findley v. Falise, Judge Weinstein approved a settlement on January 19, 1995, that overhauled how claims are paid.¹⁶

Since February 21, 1995, the trust has used a Trust Distribution Process that pays a percentage of scheduled values for each disease category. The percentage is adjusted periodically so present and future claimants are treated equally.¹⁶ As of 2025 the payment percentage is 5.1 percent.¹

Scheduled Values and Current Payouts

Mesothelioma: $350,000 scheduled value, approximately $17,850 at 5.1 percent.
Lung cancer with asbestosis: $95,000 scheduled value, approximately $4,845.
Severe asbestosis: $95,000 scheduled value, approximately $4,845.
Other cancer: $45,000 scheduled value, approximately $2,295.
Moderate asbestosis or pleural disease: $25,000 scheduled value, approximately $1,275.¹

What You File

You submit a proof-of-claim form with medical documentation of an asbestos-related disease and evidence of exposure to Johns-Manville products. Claims can be filed on your own or through an attorney, and attorney fees are capped at 25 percent of the settlement. Most claims go through the scheduled-value system. Lung cancer cases and some unusual situations may receive individual evaluation, and a claimant who disagrees with the trust’s determination can pursue alternative dispute resolution.¹⁸

The trust is administered by the Claims Resolution Management Corporation, a wholly owned subsidiary formed in 1998. It is overseen by the U.S. Bankruptcy Court for the Southern District of New York and the U.S. District Court for the Eastern District of New York, and files certified quarterly financial statements with the court.¹⁹

The Trust Today

As of September 30, 2025, the trust reported total assets of about $635 million and net claimants’ equity of about $568 million. Since it opened in November 1988, more than 1.15 million claims have been filed, over 1.02 million have been settled, and total payments have exceeded $5.3 billion. The average payment is $5,159 per claim. In the third quarter of 2025 alone the trust paid about $12.7 million in claims and earned nearly $29 million in net investment income.¹

Why You Cannot Sue Johns-Manville Directly

The channeling injunction issued in the 1988 reorganization is permanent. Every asbestos claim tied to Johns-Manville products goes to the Manville Trust, not to the company. The Bankruptcy Act of 1994 included a provision that permanently shielded the reorganized company from asbestos liability.² Berkshire Hathaway completed its acquisition of the company at $13.00 per share in February 2001, and Johns Manville continues to operate as a wholly owned subsidiary headquartered in Denver, making insulation, roofing systems, and engineered products. It no longer uses asbestos.²⁰

Suits against other asbestos manufacturers whose products contributed to your exposure are a separate matter and are not blocked by the Manville injunction. Many of those companies have their own trusts, created after Johns-Manville and modeled on it.

Why the Case Still Matters

Congress codified the Manville approach in 1994 by enacting Section 524(g) of the Bankruptcy Code as part of the Bankruptcy Reform Act. It was explicitly modeled on the Manville reorganization.²¹ Section 524(g) lets a company facing overwhelming asbestos liability create a dedicated trust through its Chapter 11 plan. If the plan meets statutory requirements, including approval by three-quarters of known asbestos claimants and appointment of a future claims representative, the court issues a channeling injunction that permanently bars asbestos suits against the reorganized company and sends all claims to the trust. By statute, these injunctions are invulnerable to later collateral attack.²² Section 524(g) applies only to asbestos, so companies facing other mass torts have had to build similar structures through less settled legal routes.

The number of firms named as asbestos defendants nationwide grew from about 300 in 1983 to more than 6,000 by 2002, with over 90,000 new asbestos suits filed in 2001 alone. More companies filed for bankruptcy over asbestos liability between 1998 and 2002 than in the previous 20 years combined. By 2002 the Rand Corporation counted roughly 730,000 plaintiffs who had filed asbestos claims.²³ The Johns-Manville lawsuit did not end asbestos litigation. It set the pattern every case since has followed.

1
Manville Trust. Third Quarter 2025 Financial Report
2
Encyclopedia.com. Johns-Manville Corporation
3
Asbestos.com. Johns Manville
4
Sokolove Law. Johns Manville Asbestos Trust Fund
5
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6
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7
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8
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9
Texas State Historical Association. Borel v. Fibreboard Paper Products Corporation
10
Justia. Borel v. Fibreboard Paper Products Corporation, 493 F.2d 1076
11
Stanford Law School. Johns-Manville Products Corp. v. Superior Court, 27 Cal.3d 465
12
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13
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14
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15
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16
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17
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18
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19
Manville Trust. Quarterly Report – First Quarter 2012
20
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21
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22
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23
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