Policy: Law

Garlock accused of fraud while alleging fraud by asbestos attorneys

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Law,Legal Newsline,Asbestos

CHARLOTTE, N.C. (Legal Newsline) – Another group is seeking more under-the-surface information in the Garlock Sealing Technologies bankruptcy case that has become known for a judge’s ruling that said asbestos attorneys had been withholding information.

Now, a group representing individuals who have asbestos claims against Garlock say Garlock has been withholding information and “has committed a fraud upon the court.”

Swett

Swett

The Official Committee of Asbestos Personal Injury Claimants on Wednesday asked Judge George Hodges to reopen the record of last year’s estimation proceeding.

It was during that proceeding that Garlock presented evidence that asbestos attorneys withheld information regarding their clients’ exposures to asbestos in order to maximize recovery in lawsuits against Garlock.

The committee, in turn, is arguing that Garlock did not present a full picture.

“The committee has discovered through its own outside efforts that Garlock has violated this court’s orders to produce documents to the committee, and that these violations permitted Garlock to present false testimony to the court at the estimation hearing – false testimony the court incorporated into its findings,” the committee’s memorandum says.

The committee is the latest to seek more information regarding Garlock’s bankruptcy proceeding:

-Legal Newsline has appealed Hodges’ decision to close the courtroom during the estimation trial when certain evidence was presented. It is also seeking access to the evidence cited in Hodges’ January ruling;

-Bondex, going through its own bankruptcy proceeding, have filed a motion to unseal the evidence and Rule 2019 statements filed by asbestos claimants;

-Ford Motor Company is seeking the evidence cited in Hodges’ ruling and is joined in its effort by Volkswagen, Crane Co. and Honeywell. Ford is also seeking Rule 2019 statements; and

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

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.”

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.”

However, the committee representing asbestos claimants says Garlock was also withholding evidence.

The committee says Garlock failed to produce depositions and documents that would demonstrate that Garlock knew one plaintiff whose name is redacted was exposed to Unibestos on the U.S.S. John Marshall but didn’t disclose it.

More than 10,000 claims were resolved against Garlock, and the company presented evidence from more than 200 during the estimation trial.

“On the basis of this presentation, Garlock persuaded the court to depart from precedent and draw the drastic conclusion that Garlock’s real claims resolution experience was ‘useless’ for estimation,” the committee says.

“It turns out, however, that Garlock failed to produce evidence that would not fit this revisionist account of its history in the tort system.”

Garlock should be compelled to disclose evidence the committee sought during discovery, the committee argues. It adds that it has obtained key information from other sources on the first few cases Garlock featured as examples of fraud.

“Ironically, the new information reveals Garlock itself manipulating the evidence in the estimation proceeding in much the way that it claims plaintiffs’ lawyers did in the tort system,” the committee says.

The committee is represented by Trevor W. Swett and three other attorneys at Caplin & Drysdale, as well as Travis W. Moon of Moon Wright & Houston in Charlotte.

From Legal Newsline: Reach editor John O’Brien at jobrienwv@gmail.com.

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