Madison - St. Clair Record

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Asbestos claimants’ reps fight against unsealing of information in Garlock case

By John O'Brien | Mar 24, 2014


CHARLOTTE, N.C. – A group that represents claimants harmed by asbestos says two recent requests for sealed information that led to a landmark ruling in Garlock Sealing Technologies’ bankruptcy case should have to wait.

On March 14, the Official Committee of Asbestos Personal Injury Claimants asked a bankruptcy judge to strike a legal publication's (Legal Newsline) most recent request for access to evidence submitted during a 2013 trial.

Legal Newsline is a sister publication of the Madison-St. Clair Record.

That evidence led U.S. Bankruptcy Judge George Hodges to rule that plaintiffs attorneys had been withholding their clients’ exposure evidence in order to maximize recovery against Garlock in civil lawsuits.

Legal Newsline and Ford Motor Company are both seeking the evidence cited by Hodges in his January ruling. Honeywell joined Ford’s motion on Monday.

During the 2013 trial, Legal Newsline appealed Hodges’ decision to close the courtroom to the public. That appeal is pending in U.S. District Court.

“The central issue before the District Court in the appeal is the same issue that Legal Newsline’s Second Motion purports to place – again – before this Court: the extent, if any, to which the public has a right of access to the Estimation Hearing,” the committee argued in its response.

“Specifically, Legal Newsline’s Second Motion argues that the public has a right of access to certain testimony and exhibits received by the Bankruptcy Court during closed portions of the Estimation Hearing that underlie certain findings made by this Court in its Order Estimating Aggregate Liability.

“Plainly, the key issues in the Appeal and the Second Motion are the same… This Court was divested of subject matter jurisdiction over the Second Motion when Legal Newsline filed its Notice of Appeal.”

Hodges was tasked with determining how much money Garlock should put in a trust for present and future asbestos claims.

His January order spurned asbestos attorneys who requested Garlock place more than $1 billion in the trust.

Hodges instead ruled that the amount of previous awards and settlements paid by the company in the civil justice system were not reliable because plaintiffs attorneys had withheld exposure evidence in order to maximize recovery against Garlock.

He ruled that Garlock needed to put $125 million in its bankruptcy trust and that math produced by plaintiffs attorneys wasn’t reliable because Garlock had suffered large jury verdicts as a result of claimants previously focusing their lawsuits on Garlock while losing evidence to other asbestos exposure in the process.

“This occurrence was a result of the effort by some plaintiffs and their lawyers to withhold evidence of exposure to other asbestos products and to delay filing claims against bankrupt defendants’ asbestos trusts until after obtaining recoveries from Garlock,” Hodges wrote.

Garlock brought evidence to the bankruptcy hearing demonstrating that the last 10 years of its participation in the asbestos litigation system “was infected by the manipulation of exposure evidence by plaintiffs and their lawyers.”

According to Garlock’s evidence, one firm issued to its clients 23 pages of directions on how to testify. Evidence also showed one lawyer stated, “My duty to these clients is to maximize their recovery, okay, and the best way for me to maximize their recovery is to proceed against solvent viable non-bankrupt defendants first, and then, if appropriate, to proceed against bankrupt companies.”

Hodges permitted Garlock to bring evidence proving that roughly 220 settled cases withheld evidence. Then after settlement, clients made claims against roughly 20 companies’ bankruptcy trusts.

“It appears certain that more extensive discovery would show more extensive abuse,” Hodges continued. “But that is not necessary because the startling pattern of misrepresentation that has been shown is sufficiently persuasive.

“While it is not suppression of evidence for a plaintiff to be unable to identify exposures, it is suppression of evidence for a plaintiff to be unable to identify exposure in the tort case, but then later to be able to identify it in Trust claims. It is that practice that prejudiced Garlock in the tort system.”

Ford, a frequent defendant in asbestos suits, is seeking the same information referenced in Hodges’ order as Legal Newsline is. It is wondering if, like Garlock, it has paid more than it should have.

The committee’s response to Ford’s motion says the company has presented questions that are pending in Legal Newsline’s appeal.

“Having reviewed the scant information presently available, it appears that Ford may have been induced into inflated settlements in some of the same cases examined by this court,” Ford is arguing.

“This Honorable Court having found that ‘(i)t appears certain that more extensive discovery would show more extensive abuse,’ Ford must be granted access to the information currently under seal. Indeed, this pattern of misrepresentations may have affected Ford in circumstances not yet ascertainable.”

Health insurer Aetna is also seeking access to certain records because it says it has subrogation rights against Garlock for health care costs it has paid to those it insures who were harmed by Garlock.

A hearing on all three motions is scheduled for Thursday.

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