John O'Brien Mar. 4, 2014, 5:00pm
CHARLOTTE, N.C. (Legal Newsline) - Legal Newsline is asking a North Carolina federal court to make public the evidence cited in a January order that showed asbestos lawyers were manipulating the recovery system.
On March 3, attorneys for Legal Newsline filed a motion to unseal the trial testimony and exhibits on which a bankruptcy court based its January order. That order spurned asbestos attorneys who requested Garlock Sealing Technologies place more than $1 billion in a trust for present and future asbestos claimants.
Judge George 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.
But during the 2013 trial, Hodges closed his courtroom when that evidence was introduced.
"The Estimation Order constitutes a landmark decision with major implications for the national debate regarding the conduct of asbestos litigation," Legal Newsline's motion says.
"By recounting a pattern of misconduct by plaintiffs and attorneys who brought asbestos claims against Garlock, the Court's ruling raises serious questions about the manner in which claims have been prosecuted against other targets of asbestos lawsuits."
Hodges ruled in January 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."
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."
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.
"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."
Legal Newsline appealed Hodges' decision to close the courtroom in August.
"(T)he only way to enable the public to evaluate the accuracy of the Estimation Order's description of the evidence is to unseal trial testimony and exhibits on which the Court based its ruling, and to make that evidence available to the public and media organizations like Legal Newsline," the motion says.
"The presumptive right of access to the bases of judicial decisions, grounded in both the First Amendment and the common law, calls for nothing less."
Recently, health insurer Aetna also asked for records that were privately filed in the case.
Aetna says it is the health insurer of many asbestos claimants and thus has subrogation rights for claims against Garlock. Aetna says it has provided millions of dollars in benefits to plan members to treat their asbestos-related diseases.
"The public is presumptively entitled to access judicial records," attorneys for Aetna and The Rawlings Company wrote.
"Rule 2019 Statements, along with the exhibits filed but not placed on the electronic docket, are judicial records. There is no countervailing interest to overcome the presumption that movants, as members of the public, are entitled to access the Rule 2019 Statements."
Garlock has filed sealed lawsuits against the asbestos firms it alleges committed fraud. The lawsuits were filed under seal because they contained information previously determined by Hodges that should remain confidential.
From Legal Newsline: Reach editor John O'Brien at email@example.com.