EDWARDSVILLE - Before lawyer Randy Gori lost his life he issued a dire forecast in an email to his asbestos firm and demanded that employees work harder and stop talking about anything else.
His email message of Jan. 2, 2020 didn’t match his circumstances, for Gori lived like a prince in the fashion of asbestos lawyers across the land.
He specifically announced the bankruptcy of Ferro Engineering as if somehow it represented a greater threat than dozens of previous asbestos bankruptcies.
In fact it did.
Ferro Engineering had adopted a daring strategy of Georgia Pacific, which turned a bankruptcy case into an investigation of asbestos lawyers.
Georgia Pacific suspects that some plaintiffs allege one set of exposures in civil court and another set in private proceedings of bankruptcy trusts.
Firms have begun responding to questionnaires that Georgia Pacific entity Bestwall designed to detect double dipping.
If asbestos lawyers figured that Bestwall’s progress would inspire imitation, they figured correctly.
CertainTeed, a subsidiary of French manufacturer Saint-Gobain, created an entity that petitioned for bankruptcy protection three weeks after Gori died.
Gori was murdered in his Edwardsville mansion on Jan. 4, 2020. A murder trial that began with jury selection Oct. 4 ended before opening arguments when the accused Timothy Banowetz entered a guilty plea to first degree murder charges.
CertainTeed had paid about four percent of asbestos recoveries over the years, and it faced 32,000 active claims and 28,000 inactive ones.
Trane copied Georgia Pacific five months later, filing a joint bankruptcy petition for entities of two subsidiaries facing more than 80,000 claims.
Evidence of double dipping has surfaced for years.
In 2014, Garlock Sealing Technologies found enough of it in a small sample to bring about a settlement with asbestos firms.
In 2017, Georgia Pacific executed a “divisive merger” under Texas law.
It created New GP, and assigned assets and operations to it, and created Bestwall, and assigned asbestos liabilities to it.
Bestwall petitioned for protection in bankruptcy court at Charlotte, North Carolina, where Garlock resolved its claims.
Asbestos firms challenged bankruptcy jurisdiction, claiming Georgia Pacific acted in bad faith to the prejudice of current and future claimants.
Bankruptcy judge Laura Beyer expressed reservations but retained jurisdiction.
Bestwall moved for estimation of its liabilities, and asbestos firms argued that it could simply base its estimate on past settlements.
Bestwall pounced on that point, claiming fraud inflated past settlements.
Beyer granted estimation, and earlier this year she authorized Bestwall to send personal inquiry questionnaires to about 800 asbestos firms.
The firms argued that Bestwall should send a subpoena to each client, but Beyer said she didn’t believe they wanted clients answering the questionnaires.
Her order provided that anyone seeking to challenge any part of it would do so by motion in her court.
She set a June 26 deadline for responses.
Asbestos firms appealed to District Judge Robert Conrad, who denied the appeal.
Near deadline, at U.S. district court for Southern Illinois, four firms sued to overturn Beyer’s order.
Beyer warned them of consequences, and three firms backed off.
The Maune Raichle firm of St. Louis persisted and suffered double defeat.
District Judge Staci Yandle dismissed the suit and Beyer imposed a $402,817.70 penalty on Maune Raichle to reimburse Bestwall for costs it incurred in Illinois.
As of Sept. 29, most firms ignored the questionnaires, returned them with objections, or answered every question except the pertinent ones.
At a hearing on that date, Bestwall counsel Richard Worf of Philadelphia said, “These claimants do not get to accomplish by veto what they could not accomplish by direct appeal or by the collateral attack in Illinois.”
“We should not forget that the purpose of this discovery is ultimately for the benefit of claimants,” Worf said.
“If at the end of the day some group of claimants are unwilling to comply with the order, then they should lose their right to claim against the trust.
“We are structuring a trust that will last for decades and we need to know how many claimants there are so that enough funds can be put in the trust to ensure that it will be sufficient.”
Tom Waldrep of Winston-Salem, North Carolina, representing claimants, told Beyer her questionnaire order was not a valid decree.
At the end of the hearing, Beyer set a schedule for conferences and briefs. She said she would consider appropriate steps at a hearing on Nov. 18, including sanctions for claimants who still haven’t complied.
Bankruptcy judge Craig Whitley, Beyer’s colleague in Charlotte, presides over the bankruptcy of CertainTeed entity DBMP.
The entity moved to examine settlements in courts and trusts last year.
This January, claimants moved to lift the automatic stay that bankruptcy imposes on court proceedings.
Whitley denied the motion by order in August, opening on a skeptical note.
He found CertainTeed’s divisional merger might constitute fraudulent transfer or be subject to attack under doctrines of alter ego and successor liability.
He also found that:
-A bankruptcy trustee must assert such an action and that causes of action contesting the merger would also be subject to the automatic stay.
-Claimants sought an end to the case, which was a problem because there was no pending motion to dismiss.
-The reorganization might not bear fruit but DBMP was entitled to try to persuade claimants to join it in establishing a trust.
-DBMP stated an intention to resolve all current and future claims permanently, globally, and fairly.
-Since 2002, CertainTeed incurred about $2 billion in expenses defending and resolving more than 300,000 personal injury suits.
-Current and future claims would receive payment under a consensual trust or they would be dismissed and returned to the tort system.
-Fiduciaries with good faith and earnest desire could provide a more efficient means to resolve claims.
Whitley closed with a note that whether actions were undertaken in good faith would be sorted out in this case.
Two weeks before he issued the order, DBMP moved for estimation.
In a brief for the motion on Sept. 27, Garland Cassada of Charlotte claimed DBMP attempted to initiate discussions with the claimant committee.
“Claimant representatives have not accepted any of the debtor’s multiple invitations to discuss a consensual resolution of this case,” Cassada wrote.
“Accordingly, estimation is the next logical step to move this case forward and promote eventual consensus.”
Whitley has set a hearing on discovery about settlements Oct. 21 and 22.
He also presides over the joint bankruptcy of Trane entities Aldrich Pump and Murray Boilers.
Their counsel John Miller of Charlotte moved for estimation on Sept. 24, to determine that aggregate liability is no more than $125 million.
In the motion, Miller wrote that Aldrich and Murray obtained dismissal without payment in about two thirds of the mesothelioma cases against them.
He also wrote that:
-Average plaintiffs accepted settlements in the mid five figures.
-Aldrich and Murray resolved 99 percent of mesothelioma claims for less than $250,000. They nevertheless paid nearly $100 million a year to defend and resolve asbestos claims.
-They commenced Chapter 11 cases, “to effectuate a more rational resolution of their asbestos liabilities than was possible in the tort system.”
-They agreed with representatives of future claimants to fund a trust with $545 million.
-The agreement contemplated that no less than $125 million would be available to pay current claims.
Miller moved for questionnaires last year, stating that Aldrich and Murray had little or no information as to the basis of liability in many cases.
He wrote that answers might fully explain a claimant’s disease and demonstrate that Aldrich and Murray didn’t substantially contribute to it.
He also wrote that payments by other entities to settle claims from other exposures would impact liability for Aldrich and Murray.
He attached a complaint naming 172 defendants, and wrote that it contained three short and general statements for each defendant.
“Complaints with such threadbare allegations are common in the cases filed against the debtors,” he wrote.
Ferro Engineering’s bankruptcy, the one that upset Gori, proceeds in Pittsburgh.
Ferro’s petition for protection quoted a Rand Institute study finding claimants receive 42 cents for every asbestos litigation dollar.
It showed lawyers split the rest about evenly.
The case hasn’t developed as quickly as those in North Carolina due to disputes over insurance.
On Sept. 20, Fireman’s Fund Insurance notified bankruptcy judge Carlota Bohm that it resolved a discovery dispute with the court’s claimant committee.
Fireman’s Fund stated it didn’t respond to all requests but satisfied the committee that it provided sufficient documents for purposes of upcoming mediation.