Policy: Law

North Carolina company accuses law firms of gaming system in asbetos cases, files lawsuits

|
North Carolina,Law

CHARLOTTE, N.C. – Garlock Sealing Technologies, the company that successfully argued asbestos attorneys were gaming the compensation system, has filed four lawsuits against law firms.

On Friday, federal bankruptcy Judge George Hodges ruled plaintiffs attorneys were withholding evidence of exposure to asbestos and delaying claims made against other companies in order to maximize recovery against Garlock, a once-solvent asbestos defendant that filed for bankruptcy in 2010.

The day before Hodges’ decision was issued, Garlock filed four lawsuits. Sued by the company were:

  • Waters & Kraus, a firm that handles asbestos claims and has offices in Dallas, Baltimore and El Segundo, Calif.;
  • Stanley-Iola, an asbestos firm with offices in Dallas, Oklahoma and California;
  • Simon Greenstone Panatier Bartlett, an asbestos firm with offices in Dallas and Long Beach, Calif.;
  • Belluck & Fox, an asbestos firm with New York offices in New York City, Clifton Park, Woodstock and Rochester; and
  • Shein Law Center, an asbestos firm with offices in Philadelphia and Pennsauken, N.J.

Hodges was tasked with determining an amount of money Garlock needed to place in a bankruptcy trust in order to pay out pending and future asbestos claims. He spurned plaintiffs’ attorneys request for more than $1 billion to be placed in the trust.

Hodges wrote their math 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 states.

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.”

Garlock was also able to bring evidence proving that some plaintiffs who settled cases for large sums withheld evidence. Then after settlement, clients made claims against roughly 20 companies’ 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.”

Ultimately, Hodges ordered a $125 million trust.

Garlock’s four recent lawsuits have all been filed under seal, pursuant to Garlock’s request. The company’s motion says the complaints and their exhibits reference information that was designated as confidential during its bankruptcy case.

The protective order regarding the information was issued in 2011 by Hodges.

Garlock sued Williams Kherkher Hart Boundas in 2012, alleging fraud. The case is still pending, with the defendant’s motion to summary judgment being recently denied.

Filed in June, the firm’s motion for summary judgment argued that it made no misrepresentations and that Garlock could not claim it relied on any of its representations. Hodges ruled against the firm in September.

Content from Legal Newsline, which is owned by the U.S. Chamber Institute for Legal Reform.

View article comments Leave a comment