65,000 Asbestos Claims Likely to Be Combined : Manufacturing: A judge wants to consolidate cases against Eagle-Picher to break a litigation logjam. Many claimants oppose the move.

A federal judge is expected to consolidate 65,000 asbestos claims against Eagle-Picher Industries Inc. in a controversial step toward settling the nation’s biggest product liability issue, lawyers said.

But victims’ attorneys said Sunday that they would move immediately to appeal a class-action order by U.S. District Judge Jack B. Weinstein and try to block a proposed settlement plan that they say provides inadequate compensation.

Under the proposal, Eagle-Picher would place $625 million over 20 years into a settlement trust fund that also would contain at least 25% of Eagle-Picher stock. Plaintiffs lawyers said it offers too little money and lacks protection should the company default or declare bankruptcy.

The Cincinnati-based industrial products maker says it faces a Chapter 11 bankruptcy court filing if no solution to its asbestos liability is reached soon. Eagle-Picher has sold off millions of dollars in assets to pay claims, but says it no longer can meet its obligations.

Kenneth Feinberg, a mediator in the case appointed by Weinstein, said he expected the judge to approve a class action as early as today and tentatively accept the settlement--pending a series of hearings on its fairness. The hearings are to be held in New York, Cincinnati and another city and last from four to six weeks, he said.

People involved in the case said Weinstein also would freeze all litigation against Eagle-Picher and order the company to stop paying asbestos claims pending approval of a final settlement.

Weinstein wants to create a class action to settle all cases at once, which would eliminate costly trials that are diverting money that could be used to pay victims. Eagle-Picher’s case likely would be used as a model for other companies with large asbestos liabilities.

About 90,000 asbestos cases clog federal and state court dockets nationwide in what legal experts say is the biggest product liability issue in U.S. history. Another key step involves a reorganization of the Manville trust fund, which faces 130,000 claims but has run out of cash. That case also is pending before Weinstein.

Several plaintiffs lawyers said victims would receive more money if Eagle-Picher reorganizes under federal bankruptcy laws than under the proposed settlement. They said they would fight Weinstein’s class-action certification in the 2nd U.S. Circuit Court of Appeals.

“The plan under any kind of objective scrutiny by anybody familiar with business or familiar with asbestos litigation is grossly unfair to the victims,” said Gene Locks, a Philadelphia plaintiffs lawyer.

Under the plan, Eagle-Picher would pay $120 million of the $625 million from operations, $45 million to meet already negotiated settlements and the rest of the $460 million over 20 years. Payments would not begin until November, 1993.

The plan was negotiated and approved by only two of four attorneys appointed by Weinstein to negotiate with Eagle-Picher on behalf of victims. Plaintiffs attorneys nationwide met over the weekend to plan how to fight Weinstein, who they said appointed the two lawyers in an effort to force through a plan.

Attorneys said they would challenge Weinstein’s authority and handling of the case, as well as that of the two court-appointed victims’ lawyers who negotiated the settlement. The two attorneys have little experience in the 20-year-old asbestos litigation.

“There is a feeling among some plaintiffs lawyers that the judge is not objective and he is so much committed to finding a solution to the problem of asbestos litigation that the objective that should be there isn’t,” said Peter Angelos, a Baltimore lawyer who opposes the plan.

Lawyers said the law firm of one of the attorneys, Stanley Chesley of Cincinnati, had a conflict of interest because it represented Owens-Illinois Inc., a major asbestos defendant.

Chesley said his firm represented Owens-Illinois more than 20 years ago on a non-asbestos matter and the company was not a current client. He said his lack of experience in asbestos was irrelevant. “The issue is what’s best for the claimants from an independent viewpoint,” he said.

Eagle-Pitcher faces up to 175,000 current and future claims by victims of lung cancer and other respiratory ailments. The company has spent $540 million in the last five years on asbestos obligations, and its future claims are estimated at $600 million.