CHARLOTTE - Bestwall, the company Georgia Pacific created to resolve its asbestos liability, served subpoenas for documents of 21 law firms on July 2 including the Gori firm, Flint Cooper, and Goldenberg Heller of Edwardsville.
The subpoenas represent a final step on a discovery trail that Bestwall counsel Greg Gordon of Dallas proposed to Bankruptcy Judge Laura Beyer in 2019.
Bestwall aims to prove to Beyer that some plaintiffs inflated their recoveries by alleging contradictory exposures in trust proceedings and state courts.
Gordon told Beyer, “There's a lot of information we need from current claimants and we're going to ask your honor to authorize personal injury questionnaires for that. There's information we need from trusts.
“There may be information we need from law firms.”
Beyer authorized questionnaires and Bestwall obtained a 10% sample of claims from trusts.
Bestwall moved slowly on the third front, serving subpoenas on two firms in 2021, two in 2022, and four last year including Maune Raichle of St. Louis.
Serving 21 firms at once alters the tempo and the temperature.
Beyer plans an estimation hearing similar to trial where she will decide how much money Bestwall must provide to establish a trust.
She hadn’t set a date as of July 15.
Georgia Pacific paid about $20 million a month on asbestos suits in state courts as of 2017 and about 60,000 suits remained open.
In November of that year, Georgia Pacific split into two companies, New GP and Bestwall.
New GP continued normal operations, Bestwall assumed asbestos liability, and they executed an agreement for funding a trust.
Bestwall petitioned for reorganization at bankruptcy court in Charlotte, where Beyer selected a committee to represent claimants.
The committee and a separate representative for future claimants moved to dismiss the petition for futility and bad faith.
They claimed Georgia Pacific created Bestwall to protect a solvent and prosperous company that couldn’t have filed for reorganization.
Beyer denied the motion in 2019, finding no futility in Bestwall’s petition.
She found it had the ability to establish a trust that would meet statutory requirements.
She found the volume of claims and the projected number to be filed through 2050 and beyond was sufficient financial distress for Bestwall to seek resolution under bankruptcy code.
She found no evidence that either party acted other than in full compliance with the terms of the funding agreement.
“Any issues and concerns about the funding agreement can be addressed in the plan confirmation process,” she wrote.
She found Bestwall owned assets, productive operations and millions in cash.
She found a trust could adjudicate claims fairly.
She found she didn’t need to reach the issue of bad faith.
“The court will ultimately have to rule on Bestwall’s good faith, albeit in a different context, at confirmation,” she wrote.
Settlement negotiations broke down and Bestwall moved for estimation of its liabilities for mesothelioma claims relating to joint compound products.
Bestwall counsel Garland Cassada of Charlotte wrote, “Estimation often fosters resolution of disputes and ultimately confirmation of a reorganization plan.”
He claimed plaintiffs pursued far more claims against Bestwall after bankruptcies of insulation manufacturers than was rational.
He claimed the number of cases in which Bestwall made a payment in the tort system increased almost eight fold after 2000.
He claimed many claimants downplayed or denied exposure to insulation products.
He claimed Bestwall defended cases in which it never should have been identified and claimants impaired its defense by depriving it of evidence.
He estimated that from 2012 to 2016 Bestwall was named in 70% to 80% of all mesothelioma cases filed in the country.
He claimed defending a case can cost more than $1 million and trying hundreds of claims each year or devoting sufficient resources to assess them would be prohibitively expensive.
He claimed Georgia Pacific was forced to settle as many cases as possible even though it believed any responsibility it had for the claims was minimal.
Claimant committee counsel Glenn Thompson of Charlotte responded that Bestwall proposed a lengthy road to nowhere.
He claimed the cost of this case was less than a tenth of what Bestwall would expect to spend in the tort system.
He claimed New GP saved millions and operated without restriction or oversight.
He claimed individuals suffered through horrible illnesses while being foreclosed from seeking compensation from a prosperous company that exposed them to the cause of their illness.
“The only way to value a claim is to let it proceed through litigation,” he wrote.
He claimed the proper basis for valuing liability was to determine what it would be outside of bankruptcy as determined by state courts which tackle this litigation every day.
Cassada replied that claimants ignored how long it would take to liquidate thousands of claims.
“Courts have long recognized that the tort system is not equipped to fairly and timely address mass asbestos claims,” Cassada wrote.
He claimed plaintiffs typically named many defendants and nothing prohibited them from proceeding against any remaining defendants in state court.
At a hearing Beyer said she was shocked by Bestwall’s statement that 75% of claims in state courts were pending for more than ten years and 55% for longer than 15 years.
Gordon said they considered 22,000 claims active.
“Some of them are just inactive," he said. "They've never been dismissed. They still sit on the dockets of courts around the country.
“We believe we're going to show that payments we made in the tort system do not even remotely reflect our actual liability.”
Claimant counsel Natalie Ramsey said, “Generally, when a plaintiff is up against a bar date the counsel files against all of the defendants that they might potentially have claims against.
“Over time, once discovery is completed and through the course of litigation, those defendants are voluntarily dismissed or they're dismissed on their own motion.”
“No party's going to learn anything new through an estimation proceeding.”
Beyer said, “If those unpleasant allegations are untrue, then that would bear out in the evidence presented at trial, right?”
Ramsey said, “And, and, your honor it, it, it may. What that would require is a deep dive into a lot of old history.”
At the next hearing Ramsey said Bestwall wanted to dig for a needle in a haystack that it could wave around to embarrass claimants and the bar.
“Why?" she said. "Because they want to put the victims on their heels, freeze them out, harass them, threaten them, all in the hope that at the end of the day they will take whatever the debtor and Georgia Pacific offer just to get out of this jail.
“It's sport to them. It's all about the money to them.
“To us it's about human life.”
In 2020, while Beyer deliberated estimation, Bestwall moved for authority to issue questionnaires to about 5,700 mesothelioma claimants.
Bestwall counsel Gordon stated they would seek information about diagnosis, occupation, industry, sites of exposure, products to which parties were allegedly exposed, and how they were exposed.
He stated they would seek information on exposures to products of other manufacturers.
He stated they would seek information concerning occupation at diagnosis, occupation before retirement, medical expenses, number of dependents, and economic loss.
He stated they would seek information on lawsuits, trust claims, and aggregate recoveries.
In 2021, Beyer granted estimation and authorized questionnaires.
She found questionnaires relevant to determination of liability, administration of the estate, formulation of a plan and confirmation of a plan.
Three years later Bestwall hasn’t posted any results from their research on the docket.
Claimants have lost every argument not only in Beyer’s court but also on appeals to district judge Robert Conrad and Fourth Circuit appellate judges in Richmond, Virginia.
Fourth Circuit judges currently preside over Beyer’s rejection of the bad faith allegation that claimants have persisted in asserting.
She certified direct appeal above the district court for her denial of a motion to relieve a claimant of the automatic stay that bankruptcy places on court proceedings.
At a hearing she said she and Bankruptcy Judge Craig Whitley, who presides over two asbestos bankruptcies, were clear about their desire for the Fourth Circuit to consider bad faith.
She said she and Whitley concluded that no cases have held that a sufficient degree of financial distress is a requirement for bankruptcy court jurisdiction.
Whitley bristled over a bad faith motion against DBMP, an entity of Certainteed, in May.
He said it was an absolute certainty that if he relieved two claimants from the stay it would lead to hundreds or thousands moving for relief.
He said DBMP owed less than what claimants think and, “They think they have been abused by bogus claims in the court system.
“The debtors also maintain they intend to pay all allowed claims. They just don’t think they owe as many of them.
“I would suggest not continuing to try to beat your head against a rock.”
Bestwall served subpoenas on the following firms:
Bauta and Associates of Miami
Bergman Oslund of Seattle
Bullock Campbell of Tomball, Texas
Clapper Patti of Mill Valley, California
Cohen Placitella of Philadelphia
Cooney and Conway of Chicago
Flint Cooper of Edwardsville
Goldenberg Heller of Edwardsville
Gori firm of Edwardsville
Kazan McClain of Oakland
Lanier firm of Houston
Lipman firm of West Des Moines, Iowa
Lipsitz Ponterio of Rochester, New York
Locks firm of New York City
Motley Rice of Mt. Pleasant, South Carolina
Nass Cancilliere of Philadelphia
O’Brien firm of St. Louis
Ruckdeschel firm of Ellicott City, Maryland
Shepard O’Donnell of Boston
Shein Law Center of Philadelphia
Worthington and Caron of San Pedro, California