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Policy: Law

Legal Newsline scores big win for asbestos transparency: Examiner Editorial

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Opinion,Editorial,Law,Washington Examiner,Asbestos,Tort Reform

Garlock Sealing Technologies, founded in 1887, originally produced seals for rods in locomotive steam engines. Over the years, it used asbestos in gaskets and valves. When the age of asbestos lawsuits began, it was deluged with nearly a million claims. Although Garlock defended such cases for years -- at times successfully -- the company succumbed in 2010 and entered bankruptcy with 100,000 asbestos and 4,000 mesothelioma claims pending.

Garlock's products never represented a high-risk of asbestos exposure, as some others do. George Hodges, the federal judge presiding over the bankruptcy, noted that Garlock products “resulted in a relatively low exposure to asbestos to a limited population and … its legal responsibility for causing mesothelioma is relatively de minimis.”

It was an especially lucrative scheme for the trial lawyers who collected millions of dollars in hourly fees.

But then, how did Garlock become one of America's most-sued companies? Thanks to a court ruling last week, the public will see the ugly details. Unscrupulous trial lawyers exploited the asbestos claims system to push Garlock to the edge, all the while hiding that their clients had probably become sick from other sources of asbestos.

Then, after winning judgments or settlements from Garlock, they would seek out additional compensation by making claims against those other companies' asbestos claim funds. These claimants weren't just double-dipping. On average, the cases scrutinized in this bankruptcy case had dipped into 19 further sources of asbestos cash after their Garlock cases were resolved. It was an especially lucrative scheme for the trial lawyers who collected millions of dollars in hourly fees.

Judge Hodges stumbled upon this scheme as he was trying to determine how much the company should be made to set aside to cover future asbestos claims. Depositions of 15 previous Garlock plaintiffs revealed that every single one had concealed evidence of other sources of asbestos exposure at trial, only to cite those alternative sources later when claiming compensation elsewhere. As Judge Hodges noted, “It appears certain that more extensive discovery would show more extensive abuse.”

Based on this, Hodges sharply reduced the amount Garlock had to set aside in bankruptcy for future asbestos claims. Garlock also launched RICO lawsuits against five of the asbestos law firms that had been churning out bogus claims. Unfortunately, Hodges also closed the trial and sealed the evidence that led him to his ruling, which has had the effect of protecting the perpetrators of the scam from the public eye.

But last week, Legal Newsline, a publication owned by the U.S. Chamber of Commerce's Institute for Legal Reform, persuaded a federal district judge to order the unsealing of at least some of the records to the news media and the public. Trial lawyers who file bogus, bottom-feeding asbestos claims harm legitimate claimants. They also cause real damage to the nation's economy.

This particular story may have a happy ending, but the public deserves a closer look at how these scams work, because there are surely many others not yet detected. The more people know about these abuses of the tort system, the greater the chances state and federal governments will pass better laws to rein control them.

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