CHARLOTTE, N.C. (Legal Newsline) - A consultant tapped by attorneys representing claimants suing Garlock Sealing Technologies for asbestos exposure estimated the gasket manufacturer would need to devote more than $1.365 billion to a trust to settle pending and future claims against the company during testimony given Thursday.
Mark Peterson, a lawyer with a Ph.D. in social psychology who does estimations for trusts, said based on litigation trends from the past five years, the company would need to devote at least that much money to cover liability Garlock would likely face from people who will develop cases of mesothelioma in the coming years.
Judge George Hodges will ultimately decide how much money the company will need to devote to escape bankruptcy. The bankruptcy trial, which began two weeks ago at the U.S. Bankruptcy Court for the Western District of North Carolina and is expected to end on Tuesday, will determine the estimated liability of the company for current and future asbestos claims.
Peterson's estimation is in stark contrast with that of a Garlock consultant who came up with a figure of about $270 million in his own estimation. Charles Bates, chairman of the economic consulting firm Bates White LLC and former assistant professor in the economics department at Johns Hopkins University testified about an estimation report his firm created to assess how much Garlock should put in the trust to compensate valid claimants.
Bates estimated $25 million was the net present value enough to sufficiently cover payouts for pending asbestos claims with $100 million being the net present value to cover claims by future mesothelioma victims. He said he arrived at that figure by taking into account factors such as the estimated number of future claimants. He said he used an epidemiological model to estimate how many more mesothelioma claims are likely to arise.
In his testimony, Peterson disputed these conclusions. He said Garlock settled the bulk of its claims because the costs of losing verdicts have consistently trended upwards because of other asbestos manufacturers who could have shared liability all filing for bankruptcy. He added that trends in the nature of asbestos litigation itself would make showing Garlock liable easier.
Peterson also said the drive to settle often came from plaintiffs themselves suffering from the terminal disease who didn't want to risk dying before finding a resolution in the courts. He said Garlock had a policy of appealing all decisions against them, which could postpone any monetary award for years. Most mesothelioma victims die within six months of developing the cancer.
To come up with his billion dollars plus estimation, Peterson said he used data from the past five years including the number of claims multiplied by percentages defendants paid out times the average settlement value. He only went back five years because those figures would give a more accurate figure for future claims than more historical data. He called his forecast "conservative." He criticized Garlock's estimation saying Bates failed to figure in actual verdict trends and for not being peer reviewed.
Claimants' attorneys also resumed the testimony of a former asbestos defense attorney for a major asbestos manufacturer who said many of the defenses Garlock previously relied on to escape liability verdicts were now significantly less effective.
Paul Hanly Jr., a partner with the firm Hanly Conroy Bierstein Sheridan Fisher Hayes who previously represented the former asbestos manufacturing company Turner and Newall, testified that companies such as Garlock that were sued along with other asbestos manufacturers for years up until around 2000 were forced to the forefront of litigation after lingering on the periphery once insulation companies began filing for bankruptcy. Plaintiffs in the 1980s and 1990s used to focus on "low hanging fruit" defendants such as asbestos insulation manufacturers, he testified.
The periphery defendants got a "free ride" by downplaying any of their own potential liability and pointing the finger at the much easier to target insulation companies, he said. Once those companies dropped out of the litigation, plaintiff attorneys began focusing their attention on gasket manufacturers and developed medical and scientific expertise to bolster their cases against these periphery defendants, he said.
Claimants' expert in Garlock trial suggests $1.3 billion settlement figure
