# Findley v. Falise

> District Court, E.D. New York · January 19, 1995 · 878 F. Supp. 473

URL: https://www.frixlaw.com/law-library/cases/8712535

## Case

- **Full name:** In re JOINT EASTERN AND SOUTHERN DISTRICTS ASBESTOS LITIGATION. Bernadine K. FINDLEY, as of the Estate of Hilliard Findley, Uma Lail Caldwell, as of the Estate of Odell Caldwell, Edward Lindley, Joseph C. Jones, and James William Barnette, Jr., on behalf of themselves, and all others similarly situated as beneficiaries of the Manville Personal Injury Settlement Trust v. Robert A. FALISE, Louis Klein, Jr., Christian E. Markey, Jr., and Frank Macchiarola, not individually but solely in their capacities as Trustees of the Manville Personal Injury Settlement Trust, In re JOHNS-MANVILLE CORPORATION, Debtors
- **Court:** District Court, E.D. New York
- **Decided:** January 19, 1995
- **Citations:** 878 F. Supp. 473; 1995 U.S. Dist. LEXIS 928
- **Precedential status:** Published
- **Opinion:** Opinion of the court by Weinstein
- **Judges:** Also, Eastern, Lifland, Southern, Weinstein, York
- **Cited by:** 8 later opinions in the Frix Law Library

## Citator (automated)

- **Red flag:** Vacated in part, on other grounds by a later decision, 78 F.3d 764 (1996).
- Negative treatments: 1
- Distinguished by: 0
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/8712535

## How later opinions describe it (automated extraction)

- explaining why the already severe limitations on a trust beneficiary mean that a representative action will do little to diminish a beneficiary’s rights

## Opinion text

AMENDED MEMORANDUM, ORDERS AND FINAL JUDGMENT
Table of Contents
I. Introduction........................................................................479
II. Prior Proceedings..................................................................485
A. Trust’s Initial Operating Difficulties..............................................485
B. Class Action and First Settlement...............................................487
C. Appeal and Remand............................................................487
III. Present Proceedings................................................................488
A. Proceedings on Remand ........................................................488
B. Amended Complaint............................................................489
C. Settlement Negotiations.........................................................491
1. Notice of Settlement and Hearings...........................................492
2. Summary of Settlement.....................................................493
a. Pro Rata Shares .......................................................493
b. Removal of Trust from Tort System.....................................494
c. Scheduled Disease Values................................................495
d. Settlement of Claims Outside Trust Distribution Process...................496
[1.] Codefendants’ Claims........................................... 496
[2.] Distributors’ Claims............................................ 496
3. Amendments During Fairness Hearings.......................................497
D. Rule 706 Court-Appointed Panel Projections of Future Claims.....................498
1. Background and Role of Panel...............................................498
2. Panel Projections...........................................................498
3. Impact of Trust and Rule 706 Projections....................................501
E. Graphic Representations of Effect of Settlement..................................502
F. Objections to the Settlement....................................................509
G. Amended Memorandum, Orders and Final Judgment..............................510
1. Request by Berlack, Israels & Liberman on Behalf of the Keene Corp..........511
2. Motions to Intervene........................................................511
3. Motions for Additional Findings of Fact in Relation to USF & G..............512
4. Motion to have the Courts Disapprove the MaeArthur Fund...................512
5. Motions to Eliminate Escrow Requirements for Trust Payments in Maryland----512
6. Motions to Authorize Claims Payments Starting February 1, 1995 .............. 512
IV. Power to Modify Trust Payments Under New York Law..............................512
A New York Substantive Law Applicable...........................................512
B. Origins of Trusts in English Equity.............................................515
1. Development of Equity Jurisdiction......................,.....................515
2. Trusts in Equity............................................................517
C. Equity Antecedents in New York................................................518
1. History of Equity Courts....................................................518
2. Reception of English Substantive Law........................................521
3. Equity in Twentieth Century New York......................................524
D. Aspects of Equity Substantive Jurisprudence in Modern Adjudications..............525
1. Equity is Flexible...........................................................525
2. Equity Provides Remedies to the Otherwise Remediless .......................526
3. Equity is Equality..........................................................526
4. Equity Fills the Vacuum Created by Failure to Legislate......................527
5. Limitations on Modem Equity Jurisprudence..................................527
E. New York Trust Law Permits Deviation.........................................528
1. Consent of Ml Beneficiaries Not Needed.....................................530
2. Benefits of Deviation to Most................................................533
3. Administrative vs. Distributive Provisions.....................................535
*478 F. Trust Law in Other States......................................................536
1. Case Law..................................................................536
2. Statutes....................................................................538
G. Application of Trust Law to the Facts...........................................540
V. State and Federal Law on Contribution and Settlement.............................540
A. Varied Approaches .............................................................540
B. Problem Solved by Settlement...................................................545
VI. Maryland Contribution and Set-Off Issue .......... 546
A. Choice of Law.................................................................547
B. Contribution Among Multiple Tortfeasors.........................................548
C. Dispute Among the Parties .....................................................550
D. Proposals......................................................................553
1. Plaintiffs...................................................................553
a. Maryland Plaintiffs......................................................553
b. Plaintiff Class..........................................................553
2. Third Party Defendants.....................................................554
a. Distributors ............................................................554
b. Codefendants...........................................................554
3. Manville Trust..............................................................555
E. Resolution by Maryland State Courts............................................556
VII. Fees.....................................................................1........556
A. Adoption of 25% Maximum......................................................557
B. Authority to Limit Attorneys’ Fees..............................................558
1. Obligations to Review Fees Under Rule 23 ...................................558
2. Court Authority to Limit Fees in Future Claims..............................559
a. Power of the Courts to Regulate Attorney Conduct.......................559
b. Courts as Protectors of Litigants ........................................560
VIII. Satisfaction of Procedural Requirements..............................................562
A. Jurisdiction...................................................’.................562
B. Class Action...................................................................562
1. Rule 23 Prerequisites.......................................................562
a. Numerosity.............................................................563
b. Commonality...........................................................563
c. Typicality..............................................................563
d. Adequacy of Representation .............................................563
2. Limited Fund ..............................................................564
3. Future Beneficiaries.........................................................565
C. Fairness, Reasonableness and Adequacy..........................................565
1. Notice to Class.............................................................565
2. Standards..................................................................566
3. Settlement Provisions .......................................................567
4. New York Trust Law........................................................569
5. Hard Fought, Arms-Length Negotiations.....................................569
6. Opinion of Counsel and Reaction of Class Members...........................569
7. State of the Litigation and Risk if It Continues...............................570
8. Public Interest ........................................................ 570
9. Suffering Claimants.........................................................570
IX. Amendment to Bankruptcy Statute ..................................................570
A. Statute........................................................................570
1. Future Reorganizations......................................................571
2. Existing Plans..............................................................571
B. Compliance by Settlement.......................................................572
C. Continuing Injunction...........................................................572
D. Implications as to Corpus.......................................................572
X. Appointments......................................................................573
XI. Future of Trust....................................................................573
XII. Orders and Stays ..................................................................573
XIII. Fee Applications ...................................................................574
*479 XIV. Conclusions........................................................................574
Addendum A Settlement Stipulation
Addendum B Amendments to Settlement Stipulation
WEINSTEIN, Senior District Judge:
I. Introduction
It is time to end the incredibly convoluted and complex Manville asbestos litigation. It is now terminated, subject to appeals.
This non-opt-out diversity class action was brought by Beneficiaries of the Manville Trust, most of whom are persons claiming to be injured by asbestos produced by the Johns-Manville Corporation (“Manville” or “Corporation”). Hundreds of thousands of workers and others have been seriously harmed by Manville and other vendors of asbestos products who had long known of the dangers of their products, but had failed to warn properly or to take other adequate protective steps. The resulting national disaster led to Manville’s bankruptcy. During the bankruptcy proceedings, the Manville Personal Injury Settlement Trust (“Trust”) was organized under New York law. Most of the Corporation’s assets — primarily 80% of its equity and the proceeds of its insurance policies — were assigned to the Trust. The Corporation itself was set free of its liability; all claims were to be made against the Trust. See In re Johns-Manville Corp., 68 B.R. 618, 635 (Bankr.S.D.N.Y.1986), aff'd, 78 B.R. 407 (S.D.N.Y.1987), aff'd sub nom. Kane v. Johns-Manville Corp., 843 F.2d 636 (2d Cir. 1988).
As a result of low estimates of potential claims, the Trust’s assets immediately proved grossly inadequate. See In re Joint E. & S. Dist. Asbestos Litig. (Findley v. Blinken), 129 B.R. 710, 754-60 (E. & S.D.N.Y.1991) [Findley I], vacated, 982 F.2d 721 (2d Cir. 1992) [Findley II], modified on reh’g, 993 F.2d 7 (2d Cir.1993) [Findley III]. When the distribution plan was confirmed in 1986, it was estimated that the Trust would receive approximately 83,000 to 100,000 claims over the course of its life into the middle of the next century. To date, the Trust has received approximately 240,000 claims and it is expected to receive hundreds of thousands more. Moreover, the projected value of the claims was but a fraction of what had to be paid to each claimant. Unforeseen litigation expenses — running at the rate of $52 million per year — and heavy Trust administration expenses further depleted the assets. Current projections indicate that, in the absence of a settlement, over 400,000 claimants, representing over $18 billion in claim liability, will never receive any compensation for their injuries from the Trust. See Figure 1. Figure 1 and subsequent figures in this Memorandum were prepared by the Trust. They reflect reasonable assumptions borne out by the record of these proceedings. See Table 2, below, comments to the assumptions in that table and other tables and graphics based upon these assumptions.
*480 [[Image here]]
Settlement of a Rule 23(b)(1)(B) non-opt-out class action was approved to ensure some payment to all claimants. See Findley I, 129 B.R. 710 . The Court of Appeals rejected the first Settlement because additional subclasses needed to be organized. Findley II, 982 F.2d at 739-44 . Although the Court of Appeals remanded for designation of new subclasses, it otherwise approved certification of the non-opt-out class action. Findley II, 982 F.2d at 739 . It also found subject matter and personal jurisdiction under 28 U.S.C. § 1332 , and in rem and quasi in rem jurisdiction over the Trust and its Beneficiaries. Findley II, 982 F.2d at 734-35 .
*481 Following designation of new subclasses and strenuous negotiation among them, and extensive trials and motions, a new. Stipulation of Settlement (“Settlement Stipulation”) was submitted. Fairness and other hearings were held.
All federal procedural requirements have now been complied with. The only serious open question remaining is a substantive one: since, under Erie doctrine, New York law applies, would New York courts have the power to authorize the Trust to pay all unpaid present and future claimants — probably in the order of about 500,000 — an equal percentage of the values of their claims from limited Trust assets? Or would New York courts hew to the literal procedures of the original trust instrument, paying a few tens of thousands of claimants and their lawyers the billions of dollars they have not yet taken from the Trust, leaving many hundreds of thousands of equally deserving claimants with nothing?
The answer is not disputable. Acting under Rule 23 of the Federal Rules of Civil Procedure, covering applicable procedural requirements, and New York state substantive doctrines of trusts, federal courts have both the power and the obligation to approve and enforce the new Settlement. The purpose of the Trust is “to use the assets in the trust estate to deliver fair, adequate and equitable compensation to bona fide beneficiaries, whether presently known or unknown, without overpaying or underpaying any claims.” Trust Agreement, § 2.02. Due to unforeseen circumstances, it is now impossible to achieve that purpose absent a modification in the trust distribution procedures. The Courts have the power under New York law to permit deviation from a trust’s terms where the trust’s purpose cannot be achieved without such deviation. The subclasses, representing all parties with an interest in the trust, have agreed via the Settlement that a pro rata distribution of trust assets achieves that purpose. The Courts concur.
The parties have asked the Courts to decide separately the issue of the effect of the Settlement on claims “arising under Maryland law.” Settlement Stipulation, ¶ 4. Applying standard rules of conflicts and deference to state courts, this matter is left for resolution by the Maryland courts.
The decisions in the class action are made by the district courts for the Eastern and Southern Districts. They are concurred in by the Bankruptcy Court for the Southern District of New York since that court has continuing oversight of the Trust. The word “Courts” in the opinion is to be construed to mean the district court or courts, the bankruptcy court, or all three, when applicable. Where power, may be exercised only by less than all of the courts, that court or courts is deemed referred to by the term “Courts.”
Before the United States District Courts for the Eastern and Southern Districts of New York is a motion seeking final certification of a class and subclasses consisting of present and future Beneficiaries of the Man-ville Personal Injury Settlement Trust, and approval of a settlement among the class, the subclasses and the trustees of the Trust. Also pending are motions before the district courts and the bankruptcy court for the Southern District of New York for various appointments related to the Settlement.
Settlement follows almost four years of litigation and negotiations. It resolves the impasse arising from the deep insolvency of the Trust and its resulting inability to carry out the purposes for which it was created. Many of the issues raised by the Settlement were fully covered in the Courts’ prior detailed and extensive decision, Findley I, 129 B.R. at 710-976 . Findley I is adhered to by the Courts. Since only issues raised by the Court of Appeals in Findley II and Findley III or strongly urged now need to be addressed, the discussion below is attenuated.
Because of substantial infusions of cash made largely through payments by Manville to the Trust pursuant to the 1990 settlement agreement, prudent financial management by the new trustees and Trust employees, and a sharp reduction in legal fees and costs of administering the Trust, there is ample cash to carry out the new, 1994, Settlement. The realistic settlement provisions now before the Courts are workable, fair and sound.
Table 1, prepared by the Trust, demonstrates the projected impact of the Settlement, particularly its goal of ensuring that all claimants are compensated equitably given the Trust’s limited resources.
*482 Table 1
Estimated Projected Impact of Proposed Settlement
Key Results 1988-2049 With Settlement Without Settlement
Cumulative amount paid $4,994,000,000 2,615,000,000
Cumulative claims paid 503,921 71,641
Payment percentage
1994-1997 10.0 100.0%
Final percentage 13.6 100.0%
Cumulative unpaid liability $18,510,000,000
Cumulative unpaid claims 432,280
Table 1 and all of the graphics are based upon assumptions prepared by the Trust, summarized in Table 2, and found supportable by the Courts.
Table 2
Projected Impact of Proposed Settlement Assumptions Underlying Graphics and Calculations
With Settlement Operations Without Settlement
Date stay on claim payments is lifted January 1, 1995 January 1, 1996
Payment order Firsh-In-First-Out (FIFO) Trial Docket
Method of payment 10.0% of liquidated claim value from 1995-1997. Increased to 13.6% from 1998-2049 100% of liquidated claim value at time of settlement
Year Trust’s assets are exhausted 2049 2000
Annual maximum claims paid 75,000 7,500
Operating costs per claim: 1995-2000 (excluding ADR & litigation costs)_ $164 2,321
Total ADR & Litigation costs: 1995-2000 $7,000,000 $212,000,000
*483 Liabilities
Claims settled as of 12/31/92 29,407 29,407
Backlog of unsettled elaims12/31/92 171,725 171,725
Future claim filings 1993-2049 302,789 302,789
TOTAL 503,921 503,921
Average liquidated value per claim (1995-2000) $42,820 $42,820
Claim Inflation 4.2% beginning in 1997 N/A (since the Trust would exhaust its assets by the year 2000, the unpaid liability is expressed in current dollars)
Assets
Year Manville common stock is sold 1996 1998
Selling price per share $12.71 $7.00
Value of 20% profit sharing rights $306,000,000 $159,000,000
Year of Schuller Note sale 1994 1994
Schuller Note net proceeds (000,000 $369,000,000
Year proceeds received on second bond 2013 and 2014 2000 (assumes consent of Manville Corp. and Manville Property Damage Trust)
Proceeds received on second bond $150,000,000 $32,300,000
Rates of return on assets
Pre-stock sale 5.50% 5.50%
Post-stock sale 8.89% 5.50%
See also assumptions in Fairness Exhibit F15. The figures attributed to the sale of the Schuller notes require some explanation, Exhibit F15 assumed that the Trust would sell a Trust Bond (approximately $400 million) in 1994 and 1995. The Trust actually *484 exchanged the Bond for notes of Schuller International Group, Inc. (approximately $379 million) with the intention of selling the notes for approximately $369 million (net) in a public offering.
Ultimately, the above assumptions result in a greater than 10% pro rata share. Because of the uncertainty of many key assumptions, a lower initial pro rata share of 10% payment was incorporated into the Settlement. The projections assume a review in 1998 of the pro rata calculations, a future increase in the pro rata share to 13.6% and a supplemental payment to all previously settled claimants to bring their pro rata percentage to 13.6%.
The form of the Settlement — in light of subsequent statutory changes — substantially enhances the value of the Manville stock since there is full assurance against any asbestos claims being made against Manville and assets can be disposed of at a time, and under conditions, most favorable to the Trust. This in part accounts for the differences between the Trust’s projected selling prices of the stock given the Settlement ($12.71/share) and in the absence of the Settlement ($7/share).
In the Courts’ view, the Trust’s assumptions, charts and figures showing the projected selling price for the stock under the Settlement may be based on an overly optimistic view of market behavior, while those depicting the stock’s selling price in the absence of the Settlement may be based on overly pessimistic assumptions. Nonetheless, the 10% initial payment and opportunities for adjustment in the pro rata share assure the adequacy of the Settlement even if the assets of the Trust turn out to be more or less valuable than expected. A fairer estimate of the value of the stock without the Settlement might be about $10 a share, and with the Settlement might be about $12 a share. At the Courts’ request, the Trust prepared an additional summary of the projected impact of the Settlement assuming a price of $10 a share, reproduced in part as Table 3, below. This change in assumptions narrows the difference between the total amounts paid with and without the Settlement, but there remains a difference in favor of the Settlement in the order of over a billion dollars. The graphics and tables supplied by the Trust are used in this Memorandum, even though they include the Trust’s assumptions in Table 2, because they clearly illustrate the situation for visual purposes with and without the Settlement.
Table 3
Estimated Projected Impact of Proposed Settlement (assuming sale of stock at $10 a share in 1996)
Key Results 1988-2049 With Settlement Without Settlement
Cumulative amount paid $4,499,000,000 $3,128,000,000
Cumulative claims paid 603,921 83,618
Payment percentage
1994-1997 10.0% 100.0%
Final percentage 12.0 100.0%
Cumulative unpaid liability $17,997,000,000
Cumulative unpaid claims 420,303
II. Prior Proceedings
The Trust was established by a trust agreement dated November 28, 1988 (the “Trust Agreement”) executed pursuant to the Second Amended and Restated Plan of Reorganization (the “Plan”) of the Johns *485 Manville Corporation and affiliated entities. The Plan was confirmed as fair and equitable pursuant to 11 U.S.C. § 1129 . In re JohnsManville Corp., 68 B.R. 618, 635 (Bankr. S.D.N.Y.1986), aff'd, 78 B.R. 407 (S.D.N.Y. 1987), aff'd, sub nom. Kane v. Johns-Manville Corp., 843 F.2d 636 (2d Cir.1988).
Pursuant to the Plan and the Trust Agreement, the Trust assumed all liabilities for all health claims and for “Other Asbestos Obligations” of Manville. Further litigation of these claims against Manville was enjoined to protect the value of Manville’s equity, most of which was contributed to the Trust. The principal purpose of the Trust is “to use the assets in the trust estate to deliver fair, adequate and equitable compensation to bona fide beneficiaries, whether presently known or unknown, without overpaying or underpaying any claims.” Trust Agreement, § 2.02. Beneficiaries of the Trust include persons suffering, or persons who in the future will suffer, from asbestos-related diseases caused in whole or in part by exposure to Manville asbestos or asbestos-containing products (generally, “Asbestos. Health Claimants”). Other Beneficiaries include entities formerly joined with Manville as defendants in tort litigation brought by Asbestos Health Claimants, including other manufacturers of asbestos and asbestos-containing products who have claims against Manville for contribution (“Codefendants”); and distributors of Manville asbestos or asbestos-containing products who have claims for indemnity or contribution against Manville (“Distributors”).
The Plan was approved by the Manville creditors, including more than 90% of the members of the class of Asbestos Health Claimants, and a Legal Representative for Future Claimants appointed by the Bankruptcy Court. The Trust was established in November 1988. Immediately, it became apparent that the Trust would be unable to compensate the vast majority of Trust Beneficiaries, and that, unless the distribution process were changed, a comparatively small number of Beneficiaries and their attorneys would receive all of the Trust’s assets. In addition, the assets would be seriously depleted by heavy litigation expenses and excessive Trust administration costs.
The settling parties have long agreed that the Trust is incapable of. meeting all its obligations and that the operation of the Trust and the rules by which it compensates Trust Beneficiaries must be adjusted if all of the Trust’s Beneficiaries are to be treated equitably. Until now, however, they have been unable to agree on the form that the adjustments should take. The Courts must now determine whether the instant action meets the requirements of Rule 23 governing class actions, including whether the Settlement proposed by the parties is fair, reasonable and adequate.
A. Trust’s Initial Operating Difficulties
Upon consummation of the Plan on November 28, 1988, the Trust received from Manville and its insurers insurance proceeds, cash, accounts receivable and accrued interest totaling $869 million. The Trust also received 80% of Manville’s common stock, and. beginning, in 1992 became eligible to receive up to 20% of Manville’s annual profits. In addition, Manville executed two bonds with an aggregate face value of $1.8 billion and a $50 million note; the bonds were payable in annual installments of $75 million commencing in August 1991 and extending through 2014.
When the Plan was confirmed on December 18,1986, the Disclosure Statement issued in connection with the Plan estimated that over its life, the Trust would receive approximately 83,000 to 100,000 claims which would be liquidated at an average cost of $25,000 per claim; with the cost increasing four percent annually after 1986. While the architects of the Plan recognized that the actual amounts, numbers and timing of future demands could not be determined precisely, they believed that the Trust would be able to make full payment of the liquidated value of all claims, provided the timing of claims coin *486 cided with the-timing of payments from Mancille to the Trust and the number and the cost of claims did not exceed then current estimates.
The number of claims filed and the settlement amounts of claims resolved during the initial period of Trust operation were, however, substantially greater than had been estimated. During 1989, its first year of operation, the Trust settled 14,000 claims at an average value of over $40,000, far in excess of the $25,000 originally estimated. By March 31,1990, the Trust had received over 140,000 claims, substantially more than the estimate expected over the life of the Trust stated in the Disclosure Statement. As of October 30, 1994, approximately 240,000 claims had been filed with the Trust. Of these, the Trust has settled approximately 30,000, while over 200,-000 remain pending. The Trust was not only spending far more to satisfy claims than had beén expected, but receiving far more claims as well.
In addition, a high volume, of litigation against the Trust in courts across the country rapidly exhausted the Trust’s available cash. This resulted, in large measure, from two factors. Under the Plan’s Claims Resolution Procedures, Annex B to the Trust Agreement, an Asbestos Health Claimant could sue the Trust if it did not process the claim within 120 days. Because of the unexpectedly large number of claims filed, claims processing often took longer than the 120 days allowed. As a result, many claimants were entitled to sue the Trust, and the Trust found itself scheduled to participate in hundreds of trials each month.
Second, pursuant to the Co-Defendants’ Procedures, Annex F to the Trust Agreement, governing Codefendants’ claims for indemnity and contribution against the Trust, Codefendants were permitted to implead the Trust into pending lawsuits against the Co-defendants 240 days after consummation of the Plan. The Codefendants impleaded the Trust into tens of thousands of cases.
As a result of both the Asbestos Health Claimants’ and the Codefendants’ rights to force the Trust into litigation, the Trust had been named in over 90,000 eases in state and federal courts by the Spring of 1990. This exacerbated the Trust’s cash-flow problems since the Trust spent in excess of $40 million on outside defense counsel fees dining part of 1990 alone and would, if no action were taken, be spending more than $52 million a year for counsel on litigation expenses. Added to the amounts paid to claimants and excessive costs of administering the Trust, these expenditures materially diminished the Trust assets available to compensate Beneficiaries.
To staunch this rapid depletion of the Trust’s assets, a district judge sitting in the United States District Courts for both the Eastern and Southern Districts of New York, and the Chief Judge of the United States Bankruptcy Court for the Southern District of New York, after consulting with Justice Helen E. Freedman of the supreme court of New York (supervising asbestos litigation in New York City) and other trial judges, entered several stay orders in July and August of 1990. These stays prevented the Trust from paying any Trust Beneficiaries except for claimants who could prove exigent health circumstances or extreme economic hardship.
On September 18, 1990, the Trust moved for an order determining that the financial assets of the Trust were so limited that there existed a substantial risk that payment of present and prospective asbestos-related claims for personal injury and wrongful death would be placed in jeopardy. The Courts referred this issue to Special Master Marvin E. Frankel who, after evidentiary hearings, reported on November 3,1990. He concluded that the Trust was “deeply insolvent” and that its assets and expectations of future receipts were so limited that there was a substantial risk that payment of claims asserted by Beneficiaries, including present and prospective asbestos-related claims for personal injury and wrongful death, were in jeopardy. Special Master’s Report dated *487 November 3, 1990, reprinted in In re Joint E. & S. Dist. Asbestos Litig., 120 B.R. 648, 661-68 (E. & S.D.N.Y.1990).
Special Master Frankel’s conclusions are still fully applicable. There have been no relevant substantial changes since he issued his .report.
B. Class Action and First Settlement
On November 19, 1990, the instant action was commenced when five plaintiffs who had previously asserted Asbestos Health Claims against the Trust filed suit on behalf of themselves and on behalf of all Trust Beneficiaries. The plaintiffs’ complaint invoked the Courts’ diversity and bankruptcy jurisdiction and sought to establish an equitable restructuring and allocation of the Trust res among all Beneficiaries. Simultaneously with the filing of the complaint, the parties filed a proposed stipulation of settlement providing the terms on which the parties believed the matter should be resolved. See generally In re Joint E. & S. Dist. Asbestos Litig., 120 B.R. 648 & Findley I .
The Courts appointed the five plaintiffs as class representatives. The plaintiffs retained as counsel the firms of Rose, Klein & Marias, of Los Angeles, California; Ness, Motley, Loadholt, Richardson & Poole, P.A., of Charleston, South Carolina; Baron & Budd, of Dallas, Texas; Wilentz, Goldman & Spitzer, of Woodbridge, New Jersey; and Cartwright, Slobodin, Bokelman, Borowsky, Wartniek, Moore & Harris, Inc., of San Francisco, California. Class counsel retained Caplin & Drysdale, Chartered, of New York, New York and Washington, D.C., as of counsel. All these counsel are highly skilled and well known specialists in the plaintiff mass tort bar.
Following notice and extensive hearings on class action certification and the fairness of the proposed settlement, the Courts, on February 13,1991, certified the plaintiffs’ suit as a mandatory non-opt-out class action under Rule 23(b)(1)(B) of the Federal Rules of Civil Procedure. The February 13th Order also certified the class, which is defined as all Beneficiaries of the Trust “each of whom has or will have a claim either for wrongful death or personal injury caused by exposure to asbestos, or a claim for warranty, guarantee, indemnification or contribution arising from an obligation of the Trust for the payment of a death or personal injury claim.” See Findley I, 129 B.R. at 776 . On June 27,1991, the Courts issued a final judgment approving the settlement, making permanent the prior stay of proceedings against the Trust, and reaffirming an injunction contained in the'Plan that enjoined suits against Manville.
Objecting Asbestos Health Claimants and Codefendants who opposed the settlement filed appeals. They challenged the Courts’ diversity jurisdiction and bankruptcy jurisdiction, the certification of a non-opt-out class action and the approval of the settlement. The MaeArthur Company, a former distributor of Manville products, and its affiliated companies (“MaeArthur”) also appealed, arguing that the class was not properly certified and that MacArthur’s rights under a stipulation and order (the “MaeArthur Stipulation”) could not be altered by the settlement.
C. Appeal and Remand
The United States Court of Appeals for the Second Circuit held that although bankruptcy jurisdiction did not lie, diversity subject matter jurisdiction existed over the class action and that the Courts’ in rem and quasi in rem jurisdiction allowed the Courts to exercise personal jurisdiction over the Beneficiaries and the Trust. Findley II, 982 F.2d at 735 . The Court of Appeals also indicated that a Rule 23(b)(1)(B) non-opt-out class would be proper in this action, provided that subclass designations appropriate to the unique facts of this case and the terms of the proposed settlement were made to ensure that “the consent of groups of claimants who are being treated differently by the settlement is being given by those who fairly and adequately represent only the members of each group.” Findley II, 982 F.2d at 739 .
The Court of Appeals vacated the judgment approving the settlement and remanded the ease for further proceedings, having *488 concluded that. appropriate subclasses had not been designated and thus proper consent to the settlement had not been obtained. Findley II, 982 F.2d at 751 . Specifically, in connection with the then-proposed settlement, the Second Circuit held that separate subclasses would be required for: (1) the Codefendants; (2) MacArthur; (3) those health claimants who had filed claims against the Trust “sufficiently early ... to assure the full payment of their claims before the trust runs out of money”; (4) those health claimants who had not filed early enough to claim an early place in the “FIFO (First In First Out) queue” ensuring that they would receive payment of their claims before the Trust ran out of money; (5) “Level One” health claimants (those with the most serious diseases); and (6) “Level Two” health claimants (those with non-debilitating conditions). Findley II, 982 F.2d at 739-44 . The panel’s ruling depended in part on the panel’s then view that the settlement drew distinctions between categories of Beneficiaries which required separate representation for them.
On rehearing, the Second Circuit panel modified its conclusions by holding that Rule 23 did not require the creation of subclasses of health claimants based on their position in the FIFO queue because, based on the evidence submitted on rehearing, a claimant’s place in the FIFO queue was' never intended to confer a substantive right to payment of his or her claim. Findley III, 993 F.2d at 11. Subclasses based on FIFO standing were therefore not required.
III. Present Proceedings
A. Proceedings on Remand
On remand the Courts conditionally certified six subclasses and, after consultation with all parties, appointed subclass representatives. The plaintiff class representatives and their appointed counsel continued as representatives of the entire class of Trust Beneficiaries, subject to representation by subclass representatives with respect to those issues on which the interests of the class and the subclass diverged. The Courts continued the appointment of a Legal Representative of Future Claimants and designated the following subclasses: Codefendant Manufacturers, Manville Distributors, MacArthur, Present Claimants, Future Claimants and Claimants with Pre-November 19, 1990 Settlements and Judgments — the date the class action was commenced. No subclasses were certified for “Level One” and “Level Two” claimants because the parties advised the Courts that any future settlement would not distinguish among Asbestos Health Claimants in ways requiring separate representation.
The Codefendant Manufacturers subclass representatives are Owens-Corning Fiberglas Corporation, Owens-Illinois, Inc., and the members of the Center for Claims Resolution, Inc., each of which is a former manufacturer or distributor of asbestos products which was sued regularly as a codefendant with Manville or the Trust. But for the stays, Manville or the Trust could still be a codefendant in asbestos litigation now brought against members of the Codefendant subclass. Each Codefendant subclass representative has contribution claims against the Trust typical of the claims of other codefendant manufacturers. Lead counsel for the Codefendant subclass are Roger E. Podesta and Anne E. Cohen of Debevoise & Plimpton, of New York, New York. These highly skilled counsel have represented the interests of the Codefendants throughout this litigation including serving as court-appointed representatives of Codefendant beneficiaries with respect to the first settlement of this case. They and théir firm have substantial experience in complex and “mass tort” litigation and represent a major manufacturer defendant in asbestos litigation around the country.
The Distributors subclass representatives are the E.J. Bartells Corporation and J.T. Thorpe Co., both of which were major distributors of asbestos-containing products manufactured by Manville. Both have claims for contribution and indemnity against the Trust typical of those of other Manville distributors. The Distributors subclass is represented by Katherine Steele of Steele & Sales, P.S. of Seattle, Washington, and Francis Lawall.of Pepper, Hamilton & Scheetz, a *489 major national law firm headquartered in Philadelphia, Pennsylvania. Both counsel are highly skilled. Ms. Steele has represented E.J. Bartells for more than eight years in its asbestos-related litigation, and has ably asserted the Distributors’ position in this ease since 1991. Mr. Lawall represented Pacor, Inc., a substantial Manville distributor, in its bankruptcy and in connection with claims against the Trust and has substantial expertise in complex bankruptcy and mass tort proceedings.
MacArthur Co. represents the MacArthur subclass, which consists solely of it and two affiliated companies. Its claims are substantially identical to those of its affiliates. The MacArthur subclass is represented by MacArthur’s long-time counsel, John Faricy. Mr. Faricy has skillfully and tenaciously asserted MacArthur’s interests throughout this litigation. He also represents other distributors in connection with claims against asbestos manufacturers.
The present claimants subclass is represented by Perry Weitz of the firm of Weitz & Luxenberg, in New York, New York. Mr. Weitz has represented thousands of plaintiffs in asbestos and other mass personal injury suits, including cases in which Manville or the Trust was a defendant. He is a highly skilled member of the mass tort plaintiff bar.
Leslie Gordon Fagen is the Legal Representative of Future Claimants. He and his large firm, Paul, Weiss, Rifkin, Wharton & Garrison, New York, New York, represent the future claimants subclass. Mr. Fagen and his firm have no conflict of interest with any Beneficiary. He and his partners are nationally known and highly skilled litigators in complex eases.
Lani A Adler, formerly of Grais & Phillips, New York, New York and now an independent practitioner, represents those preNovember 19, 1990 judgment and settlement claimants who did not accept certain settlements with the Trust modified during the pendency of this class action, described below. Ms. Adler is a highly skilled litigator, fully familiar with complex federal practice.
David Austem, the Trust’s General Counsel, assisted by Patricia Dansbury, and the Trust’s outside counsel, James L. Stengel of Donovan, Leisure, Newton & Irvine, assisted by Laurie S. Dix, Richard De Marco and Steven Fink, conducted the litigation with great skill and with full fiduciary sensitivity to the rights of all claimants, present and future. These attorneys ensured that the Trust’s interests were well represented in court and in the complicated negotiations leading to the Settlement.
All counsel in the ease have ably and diligently represented their clients’ interests. The many tens of millions of dollars of legal fees expended in the original bankruptcy and subsequent proceedings, including those following Findley III, were required by the emphasis of our judicial system on due process and strict compliance with procedural rules designed for less complex litigation.
B. Amended Complaint ■
The named plaintiffs filed a “First Amended Class Action Complaint,” captioned Findley v. Falise, (the “Amended Complaint”) on October 8, 1993. The complaint seeks “an equitable distribution of the assets of the Trust among all Trust Beneficiaries.” See Settlement Stipulation 2 (emphasis added). It alleges, as did the original complaint, that the assets of the Trust are insufficient to permit the Trust to continue to pay all claims in full without jeopardizing the payment of claims of other Trust Beneficiaries. Amended Complaint, ¶21. It seeks an equitable allocation of the Trust’s assets among its Beneficiaries based on New York trust law and a restructuring of the Trust’s procedures to substantially reduce Trust expenses. Id., ¶ 22. The Courts’ jurisdiction over the action and the parties is predicated on diversity of citizenship pursuant to 28 U.S.C. § 1332 and the Courts’ jurisdiction over the Trust and the Trust res. Id., ¶¶ 3 and 4.
The Trust filed an Answer to the Amended Complaint on October 22, 1993, and the Co-defendant subclass filed an Answer on February 11, 1994. In December 1993, counsel for the Subclass of Manville Distributors and the Legal Representative of Future Claimants successfully moved to intervene as representatives of their respective subclasses. A subclass complaint was filed by the Legal *490 Representative- of Future Claimants on November 19,1993, to which Answers were filed by the Trust and the Subclass of Codefendant Manufacturers. A number of Trust Beneficiaries then-.moved for judgment on the pleadings dismissing the Amended Complaint. The Courts, by Orders dated December 19, 1993, denied the motions, as well as an application by some claimants for leave to appeal from that interlocutory order pursuant to 28 U.S.C. § 1292 (b).
On March 15, 1994 a full trial of all issues raised by the pleadings commenced before the Courts. It continued with adjournments until July 25, 1994, when, as noted below, it was aborted by a settlement.
Because certain issues concerning claims arising únder Maryland law were not resolved by the Settlement, with the consent of all parties a separate trial of the “Maryland Issue” was held by the Courts. It was intended to resolve the “issue of appropriate set-off rules that should be developed with respect to Manville or the Trust in connection with claims arising under Maryland law in the context of a fair and adequate resolution of these proceedings.” Settlement Stipulation, ¶4. The Maryland claimants did, however, approve all other aspects of the Settlement. This narrow issue, by the consent of all parties, was severed from the rest of the issues resolved by the Settlement and tried on August 2, 1994. It is resolved, as indicated in greater detail below, by allowing Maryland courts tó decide and apply Maryland law in individual litigations. Where, under Maryland conflicts law, the law of another state governs, the Settlement provisions applicable to that other state will apply to the extent that Maryland’s choice of law rules provide.
The Courts relied on evidence in all proceedings involving the bankruptcy of Man-ville and actions against the Trust in the Courts, including the fairness hearings. That evidence demonstrated the following:
As of the commencement of the instant proceeding, the Trust had paid $679 million to approximately 15,700 claimants. By September 30, 1994, the Trust had paid $1.072 billion to approximately 29,010 claimants, including approximately $14 million to eight codefendants and distributors.
Of this amount, approximately $343 million was paid during 1994 to approximately 11,300 plaintiffs who had either settled with, or won a judgment against, the Trust prior to November 19, 1990. These claimants argued that because their claims had been finally determined prior to initiation of the instant class action, they were entitled to full payment. They ultimately accepted payments equal to approximately 70% of their claims’ full value. These payments were challenged by some present claimants whose claims had not been settled or reduced to judgment prior to November 19,1990. Payments were upheld on appeal. In re Joint E. & S. Dist. Asbestos Litig., 14 F.3d 151 , 154-57 (2d Cir. 1994). Those relatively few persons who have not yet accepted these discounted payments constitute the Subclass of Claimants with Pre-November 1990 Settlements and Judgments.
The Trust retained the Resource Planning Corporation (“RPC”) to prepare an estimate of future claims to be received over the life of the Trust. RPC has determined, to an acceptable degree of probability, using standard and well accepted statistical methods, and based on the Trust’s experience, that between 303,000 and 328,000 claims will be filed against the Trust between 1993 and 2049. The settling parties acknowledge that there is inherent uncertainty in these predictions and that there is a possibility that the number of claims actually received may fall outside any projected range. RPC recommended that the estimate be reviewed at least every three years. This recommendation has been incorporated into the Settlement and provides the best assurance possible of fair and equal compensation to all Trust Beneficiaries.
The Trust and RPC have also undertaken an analysis of the likely liability associated with current and future claims. Using a sample drawn from approximately 167,000 then-current claims, current liabilities were projected as being in excess of .$6.7 billion. Based on reasonable assumptions about claimant behavior, claim inflation and other factors affecting claim valuation, the Trust’s *491 experts estimate the Trust’s total liability for future claims to be between $21 billion and $25 billion in nominal dollars, ie., not reduced to present value.
The Trust retained Houlihan, Lokey, Howard & Zukin (“HLH & Z”) as experts to analyze the likely value of the Trust’s assets under a variety of scenarios. Based upon HLH & Z’s analysis, a reasonable valuation of the Trust’s assets ranges from $1.8 billion to $2.5 billion. See Asset Analysis dated 2/28/94, Exhibit B to Expert Witness Statement of Donald V. Smith.
A committee appointed by the Courts pursuant to Rule 706 of the Federal Rules of Evidence has made a comprehensive study leading to predictions of future claims using a more sophisticated analysis than did the RPC. The panel examined a wider variety of assumptions than RPC and concomitantly found a much wider possible variation in future claims. Reasonable extrapolations from the Rule 706 Panel conclusions are, however, quite close to those of the RPC. This independent .work of the Rule 706 Panel, as well as the procedures for regular reevaluations of claims and assets, furnishes strong assurance that the debacle of lack of adequate assets to pay current claims will not be repeated.
Comparison of the range of liability totals and the estimates of the value of the Trust’s assets shows that: (1) the Trust remains a limited fund; and (2) the only means by which the equivalent treatment of similarly situated claimants can be assured is by a pro rata reduction in the amounts paid for claims, that is, by paying each claimant the same percentage of damages suffered.
Evidence of Trust assets and liabilities provides a prudent basis for the agreement of the parties on an initial pro rata payment of 10% of the value of claims. The “deep insolvency” of the Trust found by Special Master Frankel continues. Unless the manner in which the Trust operates and pays claims is restructured to include a pro rata payment scheme, the Trust will be unable to fulfill its purpose of delivering “fair, adequate and equitable compensation to bona fide Beneficiaries, whether presently known, or unknown, without overpaying or underpaying any claims.”
C. Settlement Negotiations
The parties began new settlement discussions in 1993 shortly after the Court of Appeals handed down its revised decision after rehearing in 1993. Those negotiations continued for more than a year. Each of the subclasses appointed by the Courts, the Class Counsel, the Trust, and any other person who wished to be heard, participated actively in the negotiations. There were many face-to-face meetings among the parties and numerous telephone conferences. Draft settlement papers were repeatedly circulated among the parties. Many lawyers and lay persons also communicated views to the class and subclass representatives.
The negotiations were hard-fought, with each attorney vigorously representing the interests of his or her constituents. As the Settlement demonstrates, the negotiations were extraordinarily complex and required the settling parties to reach consensus on a panoply of issues. The principal problems included:
• developing efficient claims resolution procedures;
• developing consensus on scheduled disease categories and values;
• deciding how the Trust would be removed from the tort system;
• satisfying existing indemnity and contribution claims by the distributor and co-defendant manufacturer Beneficiaries and determining treatment of future claims for contribution by codefendant Beneficiaries and future claims for indemnity by distributor and other Beneficiaries;
• dealing with MacArthur’s claim of rights under the MacArthur stipulation; and
• resolving Trust management and continuing oversight issues;
By September 1993, the parties had made substantial progress with respect to the development of efficient claims resolution procedures and scheduled disease categories and values, but other issues remained substantially unresolved. On September 28, 1993, *492 after hearing reports of the negotiations, the Courts fixed a trial date of February 1,1994, and set a schedule for motions and for discovery under the supervision of Magistrate Judge John L. Caden. As the trial progressed, settlement discussions continued. Just before the Codefendants were to present their ease, the parties sought and obtained an adjournment to continue negotiations. Intensive bargaining followed, leading to the Settlement now presented.
Mark Peterson, the Special Advisor appointed by the Courts, participated in every stage of the discussions. He testified at the fairness hearings that he had ample opportunity to observe the intense hard-fought negotiations and their arms-length, non-collusive nature. The Settlement was not the product of fraud or collusion.
Class counsel and counsel for each of the subclasses made substantial efforts to inform and consult class or subclass members concerning the ongoing negotiations. Because of the close-knit nature of the bars of the plaintiffs, defendants and insurers, all those lawyers whose clients’ rights were affected were aware of these negotiations. As a practical matter, any of them had access to the. negotiations had they wished to participate, be heard or be informed. The .Courts were at all times open to any motions, including any to intervene.
Drafts of the proposed settlement documents were widely circulated among class and subclass members. In June 1993, a draft of a proposed Trust Distribution Process (“TDP”) was circulated to all lawyers representing claimants against the Trust and to all pro se claimants. The Amended Complaint included a draft TDP as an attachment. The Complaint and the proposed TDP were reported on in Medley’s Litigation Reporter: Asbestos and Andrews Publications’ Asbestos Litigation Reporter, leading periodicals in the field. They made copies available to their readers. See Findley Fairness Hearings to Run First Week of November, Meale/s Litig.Rep.: Asbestos, Oct. 7, 1994, at 4; Findley Parties Announce Basic Terms of Settlement, Asbestos Litig.Rep., Aug. 5, 1994, at 30,339; Weinstein, Lifland Approve Notice to Class, Set Fairness Hearing, Asbestos Litig.Rep., Sept. 2, 1994, at 30,532. In addition, class and subclass counsel disseminated drafts of the TDP to interested class members. Counsel for the class and each subclass made themselves available to respond personally to inquiries from class members and others throughout the negotiation process.
On July 25, 1994, a stipulation of settlement signed by the Trust, all class and subclass representatives and the J.T. Thorpe Company, (the “Settlement Stipulation”), together with various annexed exhibits, was filed. See Addendum A, attached to and made a part of this Memorandum, Orders and Judgment. The settling parties filed a motion on August 18, 1994 seeking an order setting a hearing to determine whether the agreement embodied in the Settlement Stipulation should be approved as fair, adequate and reasonable, and asking the Courts to order a proposed form of notice to the class of the Settlement and of the fairness hearings. The motion was heard on September 1,1994. The Courts then finally certified the class and subclasses, approved the proposed form of notice and scheduled fairness hearings to begin on November 1, 1994 to determine whether the Settlement should be approved as fair, adequate and reasonable.
1. Notice of Settlement and Hearings
Pursuant to the Courts’ order of September 1, 1994, widespread notice of the Settlement and the fairness hearings was disseminated. The notice described the nature of the class action, indicated the time and place of the fairness hearings and described in substantial detail the principal features of the Settlement. The notice also stated that the Settlement, if approved, would be binding on all class members, and that any class member or other person could appear at the fairness hearings and present objections to the Settlement.
Between September 30, 1994 and October 12, 1994, the notice was published twice in the following publications: USA Today (National Edition); New York Law Journal; New York Times; Washington Post; New Orleans Times Picayune; San Francisco Chronicle; Dallas Morning News; Atlanta *493 Journal and Constitution; Chicago Tribune; Los Angeles Times; Baltimore Sun; and Philadelphia Inquirer. The notice was also published in general circulation newspapers in Seattle, Washington; Houston, Texas; Miami, Florida; Charleston, South Carolina; Norfolk, Virginia; Boston, Massachusetts; St. Louis, Missouri; Cleveland, Ohio; Kansas City, Missouri; and Detroit, Michigan. In addition, thirty- and sixty-second public service announcements (“PSAs”) were distributed to radio stations. It is estimated by News/Broadcast Network, the company hired to distribute the PSAs, that the PSAs were heard by 18 million people between the middle of September and the end of October 1994.
Finally, a package containing the notice and the Settlement Stipulation was sent by first class mail to all plaintiffs’ attorneys who represent Trust Beneficiaries; all attorneys representing Codefendants; all members of the Manville Distributors subclass; all pro se claimants; all other persons or organizations listed on the class action service list; the “Property Damage Trust” created in connection with the Plan; the Manville Corporation; all subscribers to the Professional Negligence Law Reporter; all subscribers to the Association of Trial Lawyers of America’s Products Liability Law Reporter; and the National Asbestos Victims Action Organization Committee.
Pursuant to the Courts’ order, any member of the public who appeared was heard at the fairness hearings. Any documents offered were made part of the record.
2. Summary of Settlement
The following summary is designed to assist the reader. The actual Stipulated Settlement and TDP, attached as Addendum A, as amended by Addendum B, governs.
Under the terms of the Settlement, the rights and duties of all class members and the rights and duties of the Trust with respect to class members are governed by the TDP, except that certain contribution claims, certain indemnity claims, the claims of the members of the MacArthur Subclass and the claims of the J.T. Thorpe Company (a member of the Manville Distributor Subclass) based on an agreement with the Trust dated April 29, 1989,’will be resolved as described below. All other claims of Trust Beneficiaries, including claims for contribution and indemnity, are to be processed and paid under the TDP. Payment under the TDP constitutes complete and total satisfaction of such claims under the bankruptcy reorganization plan and thus provides additional protection against suits naming Manville as defendant — suits which can only lessen the value of the Trust’s assets.' ■ ■
The ultimate goal of the Settlement is for all claimants to share equally in the burdens imposed by the Trust’s limited fund status. The TDP seeks to accomplish that goal by paying all claimants — whether Asbestos Health Claimants, Codefendants or Distributors — over time as equivalent a share as possible of their claims’ values, and by adopting numerous measures designed to reduce significantly the Trust’s operating and litigation expenses and to maximize the amount the Trust can obtain from its assets and pay to Beneficiaries.
a. Pro Rata Shares
To ensure equitable treatment of all claimants, present and future, in light of the Trust’s deep insolvency and inability to pay all Beneficiaries in fall, the TDP provides that each claimant will receive a pro rata— equal percentage — share of his or her claim’s liquidated value. The percentage to be paid will be set by the Trust with the concurrence or consultation of a number of persons outside the Trust. They are first, the Selected Counsel to the Beneficiaries (“SCB”), a group of lawyers representing health claimants appointed by the Courts under the Plan. The SCB is .charged with representing the interests of Trust Beneficiaries, and toward that end is granted- certain rights vis-a-vis management of the Trust. Second, the Special Advisor, the successor to the Advisor to the Courts, in effect a Special Master. Third, the Legal Representative, the successor to the attorney for the subclass of future claimants.
The percentage of a settled claim to be paid will be set in the future by the Trust with the concurrence of the SCB and the *494 Legal Representative, after-consultation with the Special -Advisor. The SCB is, as of now, essentially the representative of present plaintiffs. The Special Advisor is Mark Peterson. The Legal Representative is Leslie Fagen. See Part X, infra. Provision for future replacements, if necessary, is provided. This system of checks and balances will not inhibit the Trustees from managing-the Trust and its assets efficiently. It will ensure that all Beneficiaries, present and future, are protected and treated equally.
The same pro rata share applies to present and future Asbestos Health Claimants, Codefendants, Distributors and all other Trust Beneficiaries. Thus, no future claimant can justifiably object to the plan’on the ground that conflicts of interest prevented his or her interests from being fully protected.
The initial pro rata share of 10.% agreed to among the parties is based on a conservative and sound present valuation of the Trust’s assets and present expectations about the value of present and future Trust .liabilities. The TDP provides that periodically (at least every three years, or more frequently if desired by the Trust, the SCB or the Legal Representative) the Trust shall reevaluate its assets and expected liabilities to determine whether the pro rata share should be increased or decreased. If it is increased, the TDP provides for equalizing payments to be made to claimants who previously liquidated claims at a lower percentage. If the pro rata share is decreased, however, claimants who have been paid at.a higher percentage will not be required to refund any money to the Trust. These procedures will provide reasonable assurance that the Trust will value, and will be in a financial position to pay, present and future claims in substantially the same manner.
This flexibility is essential since no one can project claims and assets into the future with certainty. As time passes the divergences between expected and actual results can constantly be adjusted to protect beneficiaries. The Rule 706 Panel results demonstrate that such an adjustment is essential in view of the wide differences between possible high and low numbers of future claims.
b. Removal of Trust from Tort System
The goal of reducing the Trust’s litigation and operating expenses is addressed in a number of provisions. The Settlement relieves the Trust of the burden of attending and participating in litigation brought by Asbestos Health Claimants against Codefendants and Distributors. Moreover, the TDP should substantially replace the time-consuming and costly process previously employed by the Trust in which it individually negotiated every claim filed.
Section H of the TDP .provides the means by which the Trust is removed as an active party from the tort system. It requires all Trust Beneficiaries to dismiss all actions presently pending against the Trust, enjoins them from filing any new actions, requires them to pursue claims against the Trust only in accordance with the TDP, and provides that “the Trust will make no appearance in any court,” except in very limited circumstances.
Section H also governs the resolution of claims for contribution and indemnity in litigation between Trust Beneficiaries, as well as the calculation of set-offs. Resolution of these issues was extremely difficult. First, as noted in some detail below, settlement had to take account of the different laws of all fifty states. Second, settlement had to resolve the problem of whether plaintiffs, other manufacturers or distributors would take or share the losses due to payment of Manville claims at only a percentage of their value. In most asbestos litigation there are many codefendants. The law regulating the shares of settling and non-settling defendants and possible contributors and indemnitors is complex and in many states unclear. The presence of bankruptcies and limited asset trusts complicates the problem which involves possible shifting of billions of dollars in assets and liabilities from one set of parties to another.
To promote preservation of the Trust’s assets, Section H provides that set-offs “shall be the preferred method of satisfying Co-defendant claims,” and permits Codefendants to obtain set-offs for the Trust’s share even where an Asbestos Health Claimant has not yet liquidated his claim against the Trust. *495 Set-offs mil be measured by reference to applicable local law. When applicable law measures a set-off by reference to the amount paid by a settling defendant, that amount will be the pro rata share of a claim’s liquidated value that has been or actually will be paid by the Trust, or, in a case where the plaintiff has not liquidated his or her claim against the Trust, the pro rata share of the scheduled value assigned by the TDP to the plaintiff’s scheduled disease.
As an alternative, Codefendants may also file claims for contribution with the Trust. Such claims will be valued as if the Codefendant had stepped into the claimant’s shoes and will be processed in the same fashion as an asbestos health claim.
Section H also provides that “[i]n return for limiting the right of Co-defendants to implead the Trust ..., the Trust shall be treated in litigation between Beneficiaries of the Trust as a legally responsible tortfeasor under applicable law, without the introduction of further proof.” TDP § H.l.(d). There is one exception to treatment of the Trust as a legally responsible tortfeasor, applicable in the event that a health claimant, in a jurisdiction in which the judgment against a joint tortfeasor is reduced with reference to the apportioned liability share of released or absent parties, waives his or her claim against the Trust.
Section H also provides that “[i]n any litigation between Trust Beneficiaries, all Beneficiaries shall retain their respective rights provided by applicable law to introduce evidence at trial in state or federal court.” TDP § H.l(b). It permits Trust Beneficiaries to assert third-party claims against the Trust “for the sole purpose of listing the Trust on a verdict form or otherwise as necessary to ensure that any verdict reduction in respect of Manville (or Trust) liability share is made pursuant to applicable law.” TDP § H.l.(c).
c. Scheduled Disease Values
The TDP contains numerous provisions intended to reduce significantly the Trust’s operating expenses. It establishes a schedule of asbestos-related disease categories and values that will enable most claims to be resolved more quickly, while retaining for each claimant the right to elect individual claim evaluation. See TDP § D. This “matrix” process permits the vast majority of claims to be evaluated by the application of “scheduled” values for defined disease and claimant categories. It will substantially increase the rate at which-the Trust processes claims and materially reduce per claim transactional and processing costs.
The Trust has already instituted new procedures for handling claims under the TDP matrix. It has implemented procedures which will enable it to make matrix offers on some 100,000 claims in the first twelve month period after the Settlement is approved.
The disease categories and values were extensively negotiated by the parties. The scheduled values were established based on the Trust’s experience in settling claims and the values at which plaintiffs’ claims are presently being liquidated in the tort system. They are intended to reflect the full and fair settlement value a claim against Manville would have if pursued individually with the Trust or settled prior to trial in the tort system. Since claimants can obtain these full values for their claims (subject to pro rata reduction as described above) without the need for individual evaluation and negotiation or resort to the tort system, the parties expect that most claimants will settle their claims at scheduled values.
The scheduled diseases and their corresponding scheduled values are as follows:
Category Scheduled Disease Value
I Bilateral Pleural Diseases $12,000
II Nondisabling Bilateral $25,000 Interstitial Lung Disease
III Disabling Bilateral $50,000 Interstitial Lung Disease
IV Other Cancer $40,000
V Lung Cancers (One) $60,000
VI Lung Cancers (Two) $90,000
VII Malignant Mesothelioma $200,000
The detailed criteria that a claim must meet to receive an offer for the scheduled value for one of the seven scheduled disease categories are set forth in Section D of the TDP.
The TDP provides that the claimant or the Trust may elect to have the claim individual *496 ly evaluated by the Trust. The liquidated value of a settled claim cannot exceed the “maximum value” for a relevant disease category unless the claim is deemed “extraordinary.” An “extraordinary claim” is one in which a claimant with- an asbestos disease was exposed only to Manville asbestos products, where Manville asbestos products constituted the overwhelming majority of the claimant’s asbestos exposure, or where special damages are exceptionally large. An extraordinary claim may be individually valued and liquidated for an amount in excess of the maximum value for the particular Scheduled Disease.
All unresolved disputes over categorization and valuation of claims are subject to arbitration under procedures set forth in the TDP. Claimants whose valuation disputes are not resolved by non-binding arbitration may elect to enter the tort system. If and when a claimant enters the tort system, initial payment of any judgment will be limited to the pro rata share multiplied by the maximum value provided for the disease category in which the claim is placed by the Trust and the claimant or by arbitration (or, for extraordinary claims, the pro rata share times the greater of the Trust’s last offer and the arbitrator’s award).
The excess amount, if any, of any judgment will be payable from a second pool of funds that will not become available until all claimants have received 50 percent of the liquidated value of their claims. It appears doubtful that the second pool will ever be funded.
The maximum values are as follows:
Maximum Category Scheduled Disease Value
I Bilateral Pleural Disease $ 30,000
II Nondisabling Bilateral
Interstitial Lung Disease $ 40,000
III Disabling Bilateral Interstitial Lung Disease $300,000
IV Other Cancer $200,000
V Lung Cancers (One) ■ $400,000
VI Lung Cancers (Two) $400,000
VII Malignant Mesothelioma $500,000
d. Settlement of Claims Outside Trust Distribution Process
[1.] Codefendants’ Claims
Some claims asserted by the various subclasses and certain of their members are resolved by the Settlement separately and apart from the claims governed by the TDP. Contribution claims by Trust Beneficiaries arising from judgments or verdicts entered against Trust Beneficiaries on or before July 25, 1994 will be paid from a fund of $35 million established and held by the Trust (the “Codefendants’ Fund”); this fund will be'distributed only to pay Codefendants’ obligations to Asbestos Health Claimants in áecordance with the Statement of Codefendants’ Distribution Principles, Exhibit B to the Settlement Stipulation. The Codefendants’ evidence demonstrated that they have sustained well over $500 million of judgments in asbestos cases from July 9, 1990 (when the Courts first stayed payments by the Trust) to July 25, 1994 which would give rise to contribution claims against the Trust. Over $80 million in judgments were sustained pri- or to November 19, 1990, which the Codefendants claimed entitled them to be paid similarly to plaintiffs who obtained judgments or settlements against the Trust prior to that date. See In re Joint E. & S. Dist. Asbestos Litig., 14 F.3d at 154-57.
In all, many billions of dollars have been paid by Codefendants and their liabilities have been substantially increased by the Manville and other bankruptcies. The result has been that the tort system has — arguably unfairly — shifted to some of the most responsible and well-financed defendants the costs attributable to the most culpable. The TDP could not solve this problem, but it sought to avoid exacerbating it.
[2.] Distributors’ Claims
Distributors’ claims are settled by a variety of formulae. Given the size of the claims, potential for future claims and need to avoid litigation, the details are necessarily complicated.
Indemnity claims by members of the Man-ville Distributors Subclass arising from loss *497 es paid by them on or before July 25, 1994 will be satisfied from a fund of $9.5 million established by the Trust (the “Distributor Fund”), the assets of which will be distributed in accordance with the Manville Distributor Subclass Settlement Fund Distribution Procedures, Exhibit C to the Settlement Stipulation. The $9.5 million fund for Distributors resolves all Distributors’ indemnity claims for asbestos-related losses paid before the date of settlement. The Distributors have demonstrated that they incurred more than $100 million in losses defending, settling and paying judgments in asbestos-related cases prior to July 25, 1994. Some $18 million of such losses were incurred prior to November 19, 1990. Like the Codefendants, the Distributors asserted that this entitles them to be paid in a fashion similar to plaintiffs who had judgments against or settlements with the Trust before that date. Even if all Distributor Indemnity Claims were paid at the 10% pro rata share, these claims have a potential value in excess of the $9.5 million proposed settlement.
J.T. Thorpe Co., a representative of the Manville Distributors Subclass, contends that an April 29,1989 letter agreement (the “Letter Agreement”) between it and the Trust (Exhibit D to the Settlement Stipulation) provides it with the right, separate and distinct from the rights of other members of the Manville Distributors Subclass, to unlimited and full payment of its claims against the Trust. J.T. Thorpe Co.’s additional rights against the Trust created by the Letter Agreement will be extinguished by the Trust’s payment of $1.2 million to J.T. Thorpe Co. and the processing of its indemnity claims at a fixed “Distributor Indemnity Claim” percentage of 100%, as defined and set forth in Section H of the TDP. Thorpe argued that the April 25, 1989 agreement could not be modified in this restructuring to provide for pro rata payments. If that argument were to succeed, the Trust would be liable for the $7 million in asbestos-related losses already incurred by Thorpe as well as all future losses.
MacArthur contends that the Stipulation and Order entered on June 30, 1988 by the U.S. Bankruptcy Court for the Southern District of New York in the Johns-Manville bankruptcy provides it with unique rights, including the right to full payment of its claims against the Trust. To resolve MacArthur’s claims, the Trust will pay $10 million to a segregated fund (the “MacArthur Fund”) which will be used by MacArthur for, inter alia, the payment of expenses to be incurred by MacArthur in litigation and claims seeking to enforce insurance rights. The purposes of the MacArthur Fund, its governing principles and the uses to which its assets can be put are set forth in the MacArthur Fund Principles, Exhibit E to the Settlement Stipulation. MacArthur in return forever waives and releases any Trust Claims it has asserted and also waives and releases any claims it has or may have, now and in the future, against the Trust or Manville, except claims for a breach of the Settlement Stipulation and claims to a share of the Codefendants’ Fund.
MacArthur’s evidence showed that it has incurred in excess of $75 million in losses in defending, settling and paying judgments in asbestos cases for which it asserts claims for contribution and indemnity against the Trust. MacArthur believes that it will incur many millions of dollars in additional such losses in the future.
3. Amendments During Fairness Hearings
During the fairness hearings, a number of amendments to the Settlement Stipulation were proposed and agreed on by the parties and the class and subclass representatives. See Addendum B, attached to and made a part of this Memorandum, Orders and Judgment. The hearings were kept open to permit comment by anyone interested.
“[Ejxeept insofar as the Court finds technical, perfecting, and non-substantive changes necessary and reasonable,” a settlement should be approved without alteration. Liddell v. Board of Educ., 567 F.Supp. 1037, 1047 (E.D.Mo.1983). The parties “have the power to agree upon changes” and the court may approve changes in connection with a fairness hearing. Bronson v. Board of Educ., 604 F.Supp. 68, 73 (S.D.Ohio 1984).
*498 Here, the changes, are technical, perfecting and non-substantive. They were agreed to “during arms-length negotiations, such - as those that proceeded [sic] the drafting and the approval of [the] agreement,” Bronson, 604 F.Supp. at 73 , by all of the parties who drafted the original Settlement. The amendments were widely publicized by giving notice to all persons interested in the litigation. The Courts considered them during continuations of the fairness hearings. All interested parties have had the opportunity to object. None have done so. The amendments are approved as technical amendments which are fair, reasonable and necessary.
D. Rule 706 Court-Appointed Panel Projections of Future Claims
1. Background and Role of Panel
On December 7, 1990, the Courts, during the Findley v. Blinken litigation, found that a panel of neutral experts was required to determine the feasibility of developing a statistical model that would ensure reliable projections of future claims against the Trust. The Courts appointed Professor Margaret A. Berger as an expert pursuant to Federal Rule of Evidence 706 on December 7, 1990. Professor Berger was charged with reporting on the feasibility of developing such a model, as well as the procedures required to produce the projections, and was empowered to aid the Courts in selecting a panel of experts to perform such a task under her supervision. She consulted with many members of the academic and non-academic community in preparation for the panel’s work and during its activities.
Professor Berger testified at the fairness hearings considering the Findley v. Blinken proposed settlement on January 22, 1991, and was subject to examination by the parties. She commented on the difficulty of estimating future claims, but expressed the view that reasonably accurate estimates could be made and that a panel of experts should be appointed. Professor Berger subsequently produced and filed with the Courts an Interim Rule 706 Report on April 2, 1991, setting forth the procedures necessary for such projections. It recommended the impanelment of experts to undertake the assignment.
She proposed that studies be conducted by Professor Kenneth G. Mantón, Research Professor of Demographic Studies at Duke University, supervised by Dr. Joel E. Cohen, Professor of Populations at Rockefeller University, and that the other panel members be identified at a later date. On April 22, 1991, the Courts adopted Professor Berger’s recommendations in their entirety.
On July 15,1991, Professor Berger submitted a Second Interim Rule 706 Report naming the additional individuals she proposed for the Rule 706 Panel. The Courts approved her recommendation on August 8, 1991, and the Rule 706 Panel was assembled. The 706 Panel’s combined expertise is unprecedented in litigation of this sort, and its findings reflect a combination of the best scholarship in the area and the Panel’s remarkable dedication.
2. Panel Projections
The Rule 706 Panel developed a series of projections from a model using statistical information obtained from the National Cancer Institute (whose program, Surveillance Epidemiology and End Results (SEER), identifies cases of cancer throughout the country) and the Trust claims experience, as well as other sources. It then made various assumptions about the model components for which data are lacking or for which alternative assumptions are equally plausible. The Panel subsequently submitted two reports to the Courts during the Findley v. Falise litigation setting forth its results, the second report incorporating additional computations and data analysis. Dr. Kenneth G. Mantón and Professor Eric Stallard authored the reports, with significant supervision from Dr. Joel E. Cohen.
Professor Stallard and Dr. Cohen as well as Professor Berger testified at the trial and were available for cross-examination as to their methodology and findings before the Courts on March 15 and May 11, 1994. The Rule 706 Panel testified that although the exact number could not be determined, plausible projections of future claims ranged from 176,000 to 619,000 for the time period *499 1993-2049, with the Rule 706 Panel’s preferred projection of future claims being 314,-000. A preferred projection in this context is not the projection deemed most likely to come true, but the projection for which each component in the model is the best estimate of that component. The breakdown by alleged diseases for the Rule 706 Panel projection of 314,000 future claims is set forth below in Table 4. It reflects the changing percentages of the more serious diseases based largely on differences in latency periods.
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*501 In his May 11, 1994 testimony, Dr. Cohen concurred with the parties in stressing the necessity of periodically re-estimating the future claims against the Trust in order to utilize fully the Rule 706 Panel projections. The Settlement is consistent with that recommendation.
3. Impact of Trust and Rule 706 Projections
The opinions of both the Resource Planning Corporation and the Rule 706 Panel were considered by the Courts in evaluating the fairness of the Settlement. The wide variation in the Panel’s estimates reflects the difficulty of predicting future events. Nevertheless, courts have to make such decisions constantly in connection, for example, with cases in which infants, structured settlements, and future disabilities are involved. The fact that it is impossible to achieve a perfect estimation is not a basis for failing to decide. Courts must consider all the available information and decide the ease as best they can.
In deciding to rely on the consistent projections advanced by Resource Planning Corporation and the 706 Panel, the Courts need not find that they are “more probable than not.” What is required is a reasonable projection, which is distinct from the preponderance standard used in tort litigation. The Courts decide this issue not as factfinders, though if they were, they would use the computations of the 706 Panel which are based on appropriate scientific and statistical standards. Cf Daubert v. Merrell Dow Pharmaceuticals, Inc., — U.S. -, -, 113 S.Ct. 2786, 2798 , 125 L.Ed.2d 469 (1993). Rather, the Courts are accepting for fairness determinations the best estimates of the best experts and of the many lawyers and parties who hammered out the Settlement terms using their enormous experience and judgment.
The Courts’ decision to accept the figures is based upon an “intuitive” analysis, relying in part upon their own wide experience. Cf, e.g., James L. Kainen, The Rationalist Tradition at Trial, 60 Fordham L.Rev. 1085, 1085 (1992) (distinguishing between “narrative holists” and “logical atomists”) (reviewing Terence Anderson & William Twining, Analysis of Evidence: How to Do Things with Facts Based on Wigmore’s Science of Judicial Proof (1991)); Peter Tillers, Mapping Inferential Domains, 66 B.U.L.Rev. 883 (1986). See generally James S. Liebman, Relevance and Scientific Proof Revisited: Probabilistic Proof and Decisionmaking, in Second Supplement: The Rules of Evidence 5 (materials compiled in Fall 1994 course supplement for Columbia Law School evidence class) (on file in the instant case); James S. Liebman, Psychological Perspectives on Lay Factfinding Under Conditions of Uncertainty: Heuristics and Holistics, in Second Supplement: The Rules of Evidence, supra, at 236. Courts cannot wait for the near certainty that may come with a post hoc perspective. While there is a wide range of plausible outcomes, the two sets of experts consulted in this case reasonably agreed on similar outcomes as most likely, and the parties concur. The Courts in this case have evaluated critical assumptions in the experts’ analyses and have supplemented the evidence in their assessment of the Settlement with their own extensive experience with asbestos litigation, knowledge of the bar and the financial incentives affecting its behavior, and some knowledge of the future capital and managerial demands on the bar’s energies.
If there is any deviation from the projections, it will soon become obvious and be accommodated by an adjustment in the “pro rata share” percentage. The Settlement provides, as already emphasized, for the Trust to re-estimate the value of its total assets and its total liabilities at least every three years and to determine whether a revised pro rata percentage should be applied. See TDP § G.l(d).
The Settlement and the experts’ work, particularly that of the Rule 706 Panel, are examples of how science and law can be related in a complex matter with legal, technical and social ramifications of the kind before the Courts. Cf, e.g., Jean Macchiaroli Eggen, Toxic Torts, Causation, and Scientific Evidence After Daubert, 55 U.Pitt.L.Rev. 889 (1994); Joseph Sanders, Scientific Validity, Admissibility, and Mass Torts After Daubert, 78 Minn.L.Rev. 1387 (1994); Amy *502 Schütz, Note, The New Gatekeepers: Judging Scientific Evidence in a Posh-Frye World, 72 N.C.L.Rev. 1060 (1994).
E. Graphic Representations of Effect of Settlement
The Settlement will ensure an equitable distribution of the Trust’s funds and avert the financial disaster which would otherwise cause the Trusts’ limited assets to go solely to a relatively small number of plaintiffs and their attorneys who filed first.
It is estimated that in the absence of a settlement, the Trust’s assets would be exhausted within a few years following payments to the first 71,641 claimants (many of whom have already received 100 cents on the dollar). The Settlement will enable the Trust to compensate over 500,000 claimants, including those whose illnesses have not yet been manifest but which may be just as serious as those suffered by claimants who filed earlier. Figures 2 and 3, prepared by the Trust, demonstrate the projected effect of the Settlement on the Trust’s ability to meet its obligations to individual claimants in terms of annual claims paid and overall claims paid. The increased number of claimants paid results partly from the smaller payments made pro rata to each claimant and partly from the increased assets available because of reduced Trust expenses, increased value of Trust’s monetized assets and interest spread over many years. See Figures 3, 4, 5 and 6, below.
*503 [[Image here]]
*504 [[Image here]]
*505 The Settlement also will increase the assets available for distribution to claimants. Factors leading to this result are: 1) reductions in operating costs as claims are speedily processed under the TDP’s matrix system; 2) reductions in litigation costs as the Trust is removed from the tort system; 3) interest accrued over the extended payment period; and 4) greater proceeds from liquidation of Trust assets. The last factor follows from the ability of the Trust under the Settlement to sell its assets over the course of a period of years in ways that will maximize revenue (e.g., perhaps in securing a “control premium” for the transfer of a significant bloc of Manville stock). See discussion in Part IX.D,' infra, on the effect of the bankruptcy statute amendments. In the absence of the Settlement, the Trust would be forced to dump its Manville assets at firesale prices to satisfy legally enforceable judgments against it. Figure 4, prepared by the Trust, demonstrates the projected effect the Settlement will have in maximizing payments to claimants and minimizing operation and litigation expenses. Figure 5, prepared by the Trust, demonstrates that the Settlement is projected as making available an additional $2.4 billion of Trust assets for claims payment. Of that figure, $800 million is attributed to an increase in Manville’s equity, $1.4 billion is attributed to an increase in investment income and $200 million to a reduction in expenses.
*506 [[Image here]]
*507 [[Image here]]
*508 The TDP is designed neither to overcompensate nor to undercompensate claimants. As Figure 6, prepared by the Trust, demonstrates, the last dollar of trust assets mil be exhausted by compensation of the last claimant — to the full extent of the Trust’s liability to that claimant as provided under the TDP. No money mil be left when the Trust closes down, and no claimant will go uncompensated. As indicated in Part XI, infra, consolidation with other bankruptcy trusts and use of insurance-type disbursement agencies would enable early suspension of the Trust’s activities with the savings in administrative costs available to pay claimants.
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*509 As indicated previously, the projections described above and the graphics that represent the effect of the Settlement depend on assumptions of the Trust found generally acceptable by the Courts, but doubtful in some respects that do not affect the fairness of the Settlement. See text accompanying Tables 1,2 and 3, in Part I, supra. The TDP' provides for revision of the pro rata percentage applied to claims in the event that the projections diverge from the actual experience of the Trust.
F. Objections to the Settlement
The Courts have considered all objections made to the Settlement. Since the Settlement is sound and necessary in view of the financial condition of the Trust and consistent with the law described below, the objections must be rejected as without merit.
A small number of lawyers representing much less than one percent of the class, as well as a small number of lay persons, object to the Settlement on the following grounds: the Courts lack power to modify the trust, but see Part IV, infra (demonstrating that power to modify does exist); more money should be obtained from Manville, but see Part IX, infra (indicating that protection of the Corporation increases its value for the claimants); pre-bankruptcy claimants must receive more than later claimants, but see Findley III, 993 F.2d 7 (holding that FIFO is not mandated); parties should be permitted to opt out because a limited fund class action is illegal, but see Findley I, 129 B.R. at 830-34 , approved on this ground, Findley II 982 F.2d 721 (approving a non-opt out 23(b)(1)(B) class action); further subclasses are needed because more seriously ill claimants should receive a greater proportion of funds, but see Parts III.C.2.a & c, supra (describing payments based on historical differences in value and equal percentages for all claimants); and the states should be permitted to interpret their contribution laws to protect plaintiffs, but see Part III.C.2.d, supra, and Part V, infra (indicating that the Settlement takes into account the multiplicity of state laws in a reasonable way).
Some claimants believe that they would do better to opt out of the class or to forego their claims against the Trust entirely, thus enhancing their claims against other defendants by avoiding a set-off. On November 22, 1994, a full hearing was conducted on a motion to opt out of the class action brought by claimants from the District of Columbia.
The instant proceeding is a non-opt-out class action pursuant to Federal Rules of Civil Procedure 23(b)(1)(B). See Findley I, 129 B.R. at 830-34 (denying earlier opt out requests); Findley II, 982 F.2d at 735, 739. The class action binds all parties and no one can be permitted to opt out without destroying the delicate balances and fairness created by the Settlement. Cf. Waldron v. Raymark Indus., Inc., 124 F.R.D. 235 , 238 n. 1 (N.D.Ga.1989) (terming the “idea of a mandatory class action with opt out rights ... oxymoronic”).
Individual claimants who desire to forego their claims against the Trust are free to do so in individual cases; except where the TDP provides otherwise, see TDP § H.3(d)(ii)(B), the consequences of that decision are a matter of state law to be decided in the light of the Settlement The Courts are satisfied that all the procedural requirements for approving the class action settlement have been met (see Part VIII, infra) and that all parties have been adequately represented.
United States Fidelity & Guaranty (“USF & G”) objects to the use of Trust assets to create a fund supporting litigation by MacArthur against various insurance companies. Members of the MacArthur subclass have asserted that USF & G has insurance coverage 'obligations for. the subclass members’ asbestos-related claims and that USF & G had notice of these claims from at least August, 1991. USF & G has denied any obligation to pay asbestos-related claims of any members of the MacArthur subclass.
USF & G had notice of the instant litigation in early July, 1994, if not before. It could have asserted its interests while the case was being tried and the Settlement negotiated. In any event, the Courts have heard USF & G at length and find no merit in its contentions. Cooperation bétween and among defendants and plaintiffs to enforce bona fide insurance claims in order, to in *510 crease assets available for good faith settlements is an established and sound method of providing appropriate compensation- to the injured. See Part VIII.C.3, infra. USF & G may have no past or present subrogation or indemnity claim even remotely affecting Trust assets. It denies that it has any obligations toward MacArthur and, therefore, denies that it will have any future subrogation or indemnity claim. Conceivably, it might have such claims if it loses in litigation said to be pending elsewhere between it and MacArthur. That issue of insurance coverage is for other courts to decide.
It may be that in the pending litigation between insured and insurer, the insurer will be able to defend on the ground that the insured’s settlement was unreasonable or that it denied the. insurance company rights under the policy of subrogation. Cf. William S. Anderson, Comment, .Placing a Check on an Insured’s Bad Faith Conduct: The Defense of “Comparative Bad Faith”, 35 S.Tex. L.Rev. 485 (1994). Those and like issues can be decided by the court trying that litigation. The Courts have no information or warrant justifying an advisory opinion on such matters.
There is a strong policy in favor of settling disputes without full and expensive litigation. See, e.g., McDermott, Inc. v. Am-Clyde, — U.S. -, 114 S.Ct. 1461 , 128 L.Ed.2d 148 (1994); Carson v. American Brands, 450 U.S. 79 , 88 n. 14, 101 S.Ct. 993 , 998 n. 14, 67 L.Ed.2d 59 (1981); Kenneth R. Feinberg, Mass Torts: Cases and Materials, 6-1 (1994) (on file in the instant case); 6A Charles Alan Wright, Arthur R. Miller, Mary Kay Kane, Federal Practice and Procedure § 1525.1 (1990 & 1994 Supp.) (power of court to encourage settlement); id. § 1522, at 224-26 (same); Eric D. Green, Jonathan B. Marks '& Ronald L. Olson, Settling Large Case Litigation: An Alternative Approach, 11 Loyola L.Rev. 493 (1978); Francis E. McGovern, Resolving Mature.Mass Tort Litigation, 69 B.U.L.Rev. 659 (1989); David Rosenberg, Comment, Of End Games and Openings in Mass Tort Cases: Lessons from a Special Master, 69 B.U.L.Rev. 695 .(1989); cf. Fed.R.Evid. 408 (“Evidence of conduct or statements made in compromise negotiations is ... not admissible.”); Fed.R.Civ.P. 16(a)(5) (“facilitating the settlement of a case”). It would be contrary to public policy to permit an insurance company to interject itself into an enormous litigation involving hundreds of thousands of people in order to block a reasonable settlement in which it has no direct interest.
The Courts note their gratitude to the uncompensated lay persons who testified at the fairness hearings for their devotion to the many people injured by asbestos. The Courts are deeply touched by the stories of suffering recounted by non-lawyers at the fairness hearings and in correspondence. Were it possible for the Courts to obtain the additional funds that the lay objectors think is available, the Courts would happily pay every claimant 100% of his or her claim. Unfortunately, no additional source of assets is available. The past cannot be recreated.
G. Amended Memorandum, Orders and Final Judgment
The Courts issued a Memorandum, Orders and Judgment on December 15, 1994 (“December 15 Memorandum”). At the end of the Memorandum, the Courts noted that they “would appreciate any errors ... being promptly brought to their attention so that, if necessary, an amended document can be issued forthwith.” The instant Amended Memorandum incorporates suggestions made and issues raised by various parties and intervenors following issuance of the December 15 Memorandum, the more substantive of which are described below. In addition, a number minor alterations were made by the Courts on their own initiative which do not substantively alter the impact of the judgment on the parties.
All parties and individuals that had an interest in the litigation had the opportunity to bring issues to the Courts’ attention for inclusion in the Amended Memorandum. The December 15 Memorandum was distributed to the parties, to all individuals who appeared at the Fairness Hearings, and, via overnight service, to the 76 attorneys and other parties on the class action service list maintained by the Trust. In addition to the parties, the class action service list includes *511 representatives of claimants, pro se claimants, and individuals who, during the four-year history of this litigation, requested to be added to the list. Copies of the Memorandum were available through the asbestos newsletters. The Trust also sent, on December 16,1994, by regular mail, a memorandum to approximately 1,000 attorneys representing Trust claimants providing notice of the Memorandum’s issuance, a description of its contents, and the Courts’ request to bring any errors to their attention.
The December 15 Memorandum explained that there was no need for the Courts’ to impose a stay on Trust payments pending appeal insofar as “payments under the TDP only ‘become effective 30 days after the entry 1 of this Memorandum, Orders and Judgment.” December 15 Memorandum at 219. Once it became clear that various parties and individuals would be seeking amendments to the Memorandum, the Courts issued an order on January 3, 1995, consolidating all post-Memorandum motions for a hearing on January 17, 1995. That order also stated that the 30-day period provided for in the Stipulated Settlement would begin to run from the day of the Amended Memorandum’s issuance, and offered USF & G the opportunity to submit a motion to intervene if it believed that intervention might affect any appeal rights.
At the January 17, 1995 hearing, the Courts heard full argument and considered the following papers submitted by the parties and proposed intervenors: 1) a Stipulation and Order submitted by all the parties requesting various technical corrections; 2) a request submitted by Berlack, Israels & Liberman on behalf of the Keene Corporation that the December 12, 1994 “Clarification of the Administrative Procedures for the Contribution Claim Fund” be annexed to the Courts’ Memorandum, Orders and Judgment; 3) separate motions to intervene filed by USF & G and Porter Hayden Co.; 4) a motion by the Manville Trust, the Plaintiff class, and all the subclasses for additional findings of fact and amendments in relation to the USF & G posture with respect to its MacArthur obligations; 5) a motion by USF & G seeking to have the Courts disapprove the portion of the Settlement relating to creation of the MacArthur Fund, or in the alternative, to stay approval of that Fund until USF & G’s obligations to MacArthur are determined in litigation pending in a federal district court in the Northern District of California; 6) motions by the Plaintiff class and the Maryland Plaintiffs to eliminate the Courts’ escrow requirements for Trust payments in Maryland; 7) an Order to Show Cause filed by the Trust seeking authorization to pay claims starting February 1, 1995; and 8) other requests, supporting documents and briefs.
With respect to the issues considered at the January 17, 1995 hearing, the Courts made the following determinations. There-being no opposition, most of the proposed corrections submitted by the parties in their errata stipulation were accepted by the Courts and incorporated in this Amended Memorandum, Orders and Final Judgment. As to the other issues, they are addressed individually below.
1. Request by Berlack, Israels & Liberman on behalf of the Keene Corp.
Keene Corp. seeks to annex a clarifying memorandum to Exhibit B of the TDP, which together with the Stipulated Settlement is reproduced as Addendum A of the opinion. Keene originally objected to the Settlement on the grounds that the Distribution Principles for the Contribution Claims Fund discriminated against Chapter 11 debtors. The clarifying memorandum was developed by agreement of all the parties to resolve Keene’s objection. There being no opposition to Keene’s request, the clarifying memorandum now appears as part of Exhibit B, reproduced in Addendum A, infra.
2. Motions to Intervene
In the interest of ensuring a full hearing on the issues in dispute, USF & G’s and Porter Hayden’s motions to intervene are granted pursuant to Rule 24(b) of the Federal Rules of Civil Procedure, providing for permissive intervention in the court’s discretion. Permissive intervention is appropriate where “an applicant’s claim or defense and the main action have a question of law or fact *512 in common” and where intervention will not “unduly delay or prejudice the adjudication of the rights of the original parties.” Fed. R.Civ.P. 24(b). The Courts express no opinion on USF & G’s or Porter Hayden’s standing to appeal.
3. Motions for Additional Findings of Fact in Relation to USF & G
Various movants have requested that the Courts issue additional findings of fact in respect of USF & G’s history in this litigation. USF & G opposes this effort in part because such findings might affect litigation pending in California which will determine USF & G’s obligations to Western MacArthur. There is no reason or warrant for the Courts to interject themselves into the ongoing litigation between USF & G and members of the MacArthur subclass.
4. Motion to have the Courts Disapprove the MacArthur Fund
USF & G seeks to have the courts disapprove that portion of the “Proposed Settlement” relating to the MacArthur Fund. Alternatively, it requests that the Courts stay approval of creation of the MacArthur Fund until a federal case pending in California determines USF & G’s obligation with respect to Western MacArthur. Courts considering stipulations of settlement can either approve them or reject them, but they cannot modify them in substantial ways. See Huertas v. East River Housing Corp., 813 F.2d 580, 582 (2d Cir.1987); Jeff D. v. Andrus, 899 F.2d 753, 758 (9th Cir.1989); see also Part III.C.3, supra. Therefore, the Courts decline USF & G’s invitation to modify the settlement provisions as they relate to Mae-Arthur. With respect to USF & G’s request for a stay pursuant to Rule 62 of the Federal Rules of Civil Procedure, the Courts have considered the arguments presented and for the reasons stated orally on the record conclude that there is no reason to issue a stay.
5. Motions to EKminate Escrow Requirements for Trust Payments in Maryland
In the December 15 Memorandum, the Courts noted that “[tjhere may be a question, under Maryland law of whether Maryland Plaintiffs or Codefendants or Distributors are entitled to the 10% payments attributable to Maryland claimants.” The Courts therefore directed that the amount attributable to Maryland claimants under the Settlement, estimated as $50,216,000, see Fairness hearings court exh. 2 (Letter from David T. Austera, General Counsel, Manville Personal Injury Settlement Trust, dated November 23, 1994), be escrowed pending resolution of the “Maryland Issue” by the “Maryland Courts.” Having heard full argument on this issue, the Courts are now persuaded that there is no reason to escrow these funds because there is no dispute over how that money will be paid. The vast majority of money will be paid to claimants who will not have judgments resulting from trials against codefendants or distributors, so the contribution and applicable set-off issue will not arise. Where a claimant does in fact obtain a judgment after trial against codefendants, the judgment codefendants will receive credit for the Trust’s payment. The question is not whether credit for the Trust’s payment will be given, but how much the set-off will be. Thus, permitting these payments to be made will not adversely affect any other litigant.
6. Motions to Authorize Claims Payments Starting February 1, 1995
The Trust seeks to pay claimants beginning January 16, 1995, or, alternatively, on February .1, 1995. The motion is denied. See Part XII, infra.
IV. Power to Modify Trust Payments Under New York Law
A. New York Substantive Law Applicable
Federal courts sitting in diversity apply the substantive law of the forum state on outcome determinative — ie., substantive — issues. Erie R.R. v. Tompkins, 304 U.S. 64, 80 , 58 S.Ct. 817, 823 , 82 L.Ed. 1188 (1938); 28 U.S.C. § 1652 (1988). This includes choice of law principles governing substantive law that a state court sitting in the forum state would apply. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 , 61 S.Ct. 1020, 1021-22 , 85 L.Ed. 1477 (1941).
*513 The trust of personal property was created in New York. New York law would therefore apply in interpreting the. trust instrument. See Est.Powers & Trusts Law § 7-1.10 (McKinney 1992) (practice commentary by Margaret Valentine Turano).
In the instant case, the Courts’ determination that New York law applies is supported by the fact that the original trust agreement specifies that New York law is tó govern. Trust Agreement, § 6.11 (“This Trust Agreement shall be governed by, administered under and construed in accordance with, the laws of the State of New York.”). New York generally gives effect to choice of law clauses in trust instruments where some substantial contact with New York has been shown. Cf. N.Y.Est.Powers & Trusts Law § 7-1.10 (governing choice of law clauses in trusts created by non-New York domiciliaries); Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 , 111 S.Ct. 1522 , 113 L.Ed.2d 622 (1991) (upholding application of forum selection clause in personal injury case).
Another reason for utilizing New York law is that a majority of the trustees— three of the five trustees — resides in the state. New York law applies to trusts created by non-domiciliaries which specify that New York law is to govern, if “the trustee of the trust is a person residing in this state.” N.Y.Est.Powers & Trusts Law § 7-1.10(a)(2). A fortiori, New York law applies under the same circumstances, but where the trust was created by a domiciliary. See generally 8 Harold L. Korn & Arthur R. Miller, New York Civil Practice, ¶ 7701.10 (1992) (describing conflict of laws in trust context). Here the bankruptcy court sitting in New York, the equivalent for this purpose of a domiciliary, created the Trust.
Before applying the law of the forum state, the federal court must determine what the law is. The greatest weight is given to decisions of the highest court, in this case the New York Court of Appeals, as well as the state’s constitution and statutes. Erie, 304 U.S. at 78 , 58 S.Ct. at 822 ; Travelers Ins. Co. v. 633 Third Assocs., 14 F.3d 114, 119 (2d Cir.1994). Where state law is uncertain or ambiguous, the district court must predict how the highest state court would resolve the uncertainty or ambiguity. Travelers Ins. Co., 14 F.3d at 119 ; In re E. & S. Dist. Asbestos Litig., 772 F.Supp. 1380, 1388-91 (E. & S.D.N.Y.1991), rev’d in part on other grounds sub nom. In re Brooklyn Navy Yard Asbestos Litig. (Joint E. & S. Dist. Asbestos Litig.), 971 F.2d 831 (2d Cir.1992). In making this prediction, the district courts are not bound by lower state court precedents that they believe would not be affirmed on appeal. Commissioner v. Estate of Bosch, 387 U.S. 456, 465 , 87 S.Ct. 1776, 1782 , 18 L.Ed.2d 886 (1967). The court may consider any material that a state court would consider, including how other jurisdictions have approached the issue and ‘“scholarly works and other reliable data tending to indicate how the New York Court of Appeals would resolve the [issue].’” Travelers Ins. Co., 14 F.3d at 119 (quoting In re E. & S. Dist. Asbestos Litig., 772 F.Supp. at 1391 ).
In New York, district courts are in a somewhat different position from the federal Court of Appeals since the latter can certify a question to the state’s highest courts. The District Court is left to research and reason alone. See In re E. & S. Dist. Asbestos Litig., 772 F.Supp. at 1397 (describing when certification of questions by federal courts is appropriate).
The instant case represents a massive illustration of the use of equity. The federal procedure is essentially equitable. Rule 23 represents a prime example of the victory of equity over law under modern federal rules. See Eileen B. Hershenov, The Effect of Equity on Mass Tort Law, 1991 U.Ill.L.Rev. 269; Stephen N. Subrin, How Equity Conquered Common Law: The Federal Rules of Civil Procedure in Historical Perspective, 135 U.Pa.L.Rev. 909 (1987). These procedural issues have been resolved in favor of a settlement of this class action. Findley I, 129 B.R. at 830 -34 and Findley II, 982 F.2d 721 passim.
What remains now are the substantive equitable issues. A trust, once set up with the approval of the bankruptcy court, becomes an independent entity subject to the law of the state which controls it.
*514 The Court of Appeals for the Second Circuit did not extensively address the question of New York substantive law of trusts, emphasizing instead the bankruptcy nature of the proceedings. See Findley II, 982 F.2d 721 . Its passing reference to the Courts’ power to modify the trust and its operations merely highlighted the issue for future treatment by the trial court. Findley. II, 982 F.2d at 744-45. Thus it cited only In re Albert, 111 Misc.2d 884 , 445 N.Y.S.2d 355 (Sup.Ct.1981), a trust case, non-controlling on the substantive equity issue we must now address. Albert has been cited in court opinions only twice since it was handed down in 1981 — by this court in Findley I, and then again by the Second Circuit Court of Appeals in Findley II .
Albert related to a spendthrift trust de-. signed specifically pursuant to specialized New York statutes and case law to protect beneficiaries such as children of settlors from their own incapacity by limiting trust modification: It involved a trust set up by a father in 1960 and funded by 2&% treasury bonds probably worth less than $50,000, to provide a college education for his son. After his father’s death, the son sought reinvestment of accumulated income. The court in Albert held only that' it had no power to authorize reinvestment contrary to the terms of the trust, an authority less, it suggested, than its power to permit invasion of principal for the benefit of an income beneficiary — which it refused to exercise because of the absence of any “emergency.” Albert, 445 N.Y.S.2d at 358 , 362 (citing practice commentaries in N.Y.Estates, Powers & Trusts Law (McKinney) by Patrick Rohan and I. Leo Glasser, 445 N.Y.S.2d at 360-61 ).
A spendthrift trust, such as that in Albert , is quite different from the instant Trust. It is to the Manville Trust what a horse and buggy is to a space shuttle.
With respect to trusts of the nature of those before us, the Courts stand in the position of a state court with the historical powers of the Chancellor. There is some confusion in federal case law about the courts’ powers over trusts for bankruptcy and other federal substantive purposes. See In re Secured Equip. Trust of Eastern Air Lines, Inc., 38 F.3d 86, 88-91 (2d Cir.1994) (discussing confusion and lack of agreement on what constitutes a business trust); Cutler v. 65 Sec. Plan, 831 F.Supp. 1008, 1014-19 (E.D.N.Y.1993). These federal precedents are of little utility in analyzing the New York law of trusts relating to protection of beneficiaries and a trust corpus. To understand the present New York substantive law of trusts it is necessary to set forth in some detail the history and governing principles.
The central issue in this ease is not whether the Settlement is fair — it is — or whether the Courts are required to protect the interests of current and future Beneficiaries — as to this there can be no doubt that the answer is yes. The issue is whether the Courts have the power to act equitably to protect all those claimants against the Trust who were injured by Manville asbestos. This subject requires an extended discussion of ■ the substantive power of New York courts — and thus of federal courts acting as state courts under Erie.
Since New York, as one of the original thirteen colonies, received English law at the time of the Revolution, there is no way of avoiding a brief survey of English equity which evolved smoothly into New York’s law of trusts. After all, “[t]he Common Law of England is the substratum of American jurisprudence.” 1 Alden Chester, Courts and Lawyers of New York 3 (1925); see also, Henry W. Scott, The Courts of the State of New York 56 (1909) (“From the. first formal English possession, the English common law has received judicial sanction and controlled the decisions of the New York Courts.”); cf. Julius Goebel, Jr., Cases and Materials on the Development of Legal Institutions 311 (1946) (noting that the experience in this respect of the. Western states was different from that in the original colonies). An attempt to understand this history in interpreting the law “is not a duty, it is only a necessity.” Oliver Wendell Holmes, Jr., Learning and Science, in Collected Legal Papers 138, 139 (1920), quoted in Harold J. Berman, The Origins of Historical Jurisprudence: Coke, Selden, Hale, 103 Yale L.J. 1651 , 1738 (1994).
*515 B. Origins of Trusts in English Equity
The modern trust is uniquely the product of over half a millennium of the exercise of equity jurisdiction. See T.J. Moss Tie Co. v. Wabash Ry., 11 F.Supp. 277, 284 (S.D.N.Y. 1985) (“[TJrusts are creatures of courts of equity.'...”). Correlatively, modern equity jurisdiction owes its vitality in large part to the extraordinary historic popularity of trusts.
1. Development of Equity Jurisdiction
Modern equity jurisdiction emerged as a result of the inability of the rigid early English common law to accommodate the transition from a feudal society to an increasingly complex social order. A number of aspects of the early common law are singled out by commentators as particularly hastening its relative decline, and equity’s concurrent rise.
One factor was the constricting limitations of the common law courts’ jurisdiction, stemming in part from their dependence on the writ system. See 1 John Norton Pomeroy, A Treatise on Equity Jurisprudence § 21 (1881); see also Subrin, supra, at 915-18. The jurisdiction of the common law courts was dependent on the central authority’s power to issue royal writs, which was constrained once Magna Carta was granted by ■King John in 1215. See Charles Herman Kinnane, A First Book on Anglo-American Law 288 (2d ed. 1952). The writ system of Westminster, it must be recalled, was one of the King’s techniques for drawing power to himself by providing a better form of justice than the traditional courts. See Goebel, supra, at 33. Issuance of new writs was almost completely ended in 1258 by the Provisions of Oxford, which transferred much of the power to grant new legal remedies to the Parliament. 1 Pomeroy, supra, § 21. Parliament, however, was disinclined to fashion novel remedies due to its conservatism and general unfamiliarity with the field. There were only a limited number of writs, and those that existed could not be readily adapted to create new causes of action. If no existing writ corresponded substantially with the action the plaintiff sought to bring, then no remedy was available. Id.
Another factor that contributed to the early common law’s inadequacy was the courts’ “blind conservativism,” evidenced by their unrelenting adherence to precedent. Id. § 16. One historian explains that “there is no parallel in civilized jurisprudence to the dogged conservativism with which the common-law judges perpetuated injustice by adhering to the bad as well as the good rules of the early common law____” Kinnane, su pra, § 105(b), at 290. The courts’ tendency to inflexibility was exacerbated by the severe punishment meted out by Edward the First, in the latter part of the thirteenth century, to those judges who dared to depart from the established course. Id. § 105(a). For other factors that led to equity’s rise, see 1 Pomeroy, supra, §§ 18-20 (describing the common law’s antagonism to Roman law, and Chancery’s absorption of Roman principles).
The King’s Council’s “extraordinary jurisdiction” developed to accommodate the inability of the traditional courts to resolve satisfactorily the legal disputes both within and beyond their limited jurisdiction. See George Spence, “The History of the Court of Chancery,”' reprinted in 2 Select Essays in Anglo-American Legal History 224-32 (1908) (compiled and edited by a committee of the Association of American Law Schools). In King Edward I’s time, the members of the Council were prelates and barons, the judges of the King’s Bench, Common Bench, and Exchequer, and the masters or.chief clerks of the chancery. Frederick W. Maitland & Francis C. Montague, A Sketch of English Legal History 114 (1915). The Council might exercise jurisdiction when a party sought its intervention to rectify the errors of the lower courts, or when the ordinary rules of law were insufficient to provide a remedy. Id. at 115-16. In some instances intervention occurred where justice in the common law courts could not be expected due to the imbalances in power between the parties. Kinnane, supra, § 107(a); Maitland & Montague, supra, at 122; see also Spence, supra, at 242 (describing the Chancellor’s extraordinary jurisdiction to protect the poor, weak and friendless).
The Chancellor, a member of the King’s Council, became the instrument through *516 which this extraordinary jurisdiction was exercised. A number of theories attempt to account for the King and Council’s delegation of the jurisdiction to the Chancellor. The Chancellor was the King’s first minister, president of the council and its most learned member. Maitland & Montague, supra, at 120; see also Spence, supra, at 232 (“[TJhis great officer was the principal actor as regards the judicial business which the Select Council, as well as the Great Council, had to advise upon or transact.”). Because he was typically a high churchman, and thus assumed to be experienced in issues of conscience and morality, the Chancellor appeared to be well suited to the position. Kinnane, supra, § 107(b). One explanation advanced for the Chancellor’s role in equity is that delegation to him was simply the most convenient way to handle the crush of cases that fell outside the common law. Id. (citing Plucknett, A Concise History of the Common Law 138-39). In any event, the Chancellor’s office had some familiarity with the administration of justice because it was his office that issued the writs that were the foundation of the common law system. Id.; Spence, supra, at 224.
The justice dispensed by the Chancellor was initially throug

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/8712535. Public record. Not legal advice.