CHARLOTTE, N.C. (Legal Newsline) - After originally denying several defendants' requests for access to confidential information from the Garlock bankruptcy proceedings, U.S. Bankruptcy Judge George Hodges has granted access to Rule 2019 Filings.
Hodges ruled in January that asbestos attorneys have been withholding evidence while pursuing claims against Garlock, ordering that the amount sufficient to satisfy the company's asbestos liability is $125 million, roughly $1 billion less than what plaintiffs' representatives felt was proper.
As a result of the bankruptcy ruling, several asbestos defendants and insurance companies, that believe they may have been victimized by the withheld evidence, have fought for access to sealed information.
Hodges filed his order May 6 in the U.S. Bankruptcy Court for the Western District of North Carolina.
Ford Motor Company sought relief, moving for access to Rule 2019 Filings and requested Hodges to unseal evidence of "demonstrable misrepresentations" in March.
Defendants Honeywell International Inc., Volkswagen Group of America, Inc, Crane Co., Resolute Management, Inc, AIG Member Companies, Mt. McKinley Insurance Company's and Everest Reinsurance Company's all filed joinder requests.
The Official Committee of Asbestos Personal Injury Claimants objected to the motion. However, Hodges concluded that the Rule 2019 Filings are public record available for examination.
He added that granted access was appropriate because no improper purpose with the information exists.
According to the Federal Rule of Bankruptcy Procedure 2019, lawyers are required to make certain disclosures about clients' claims against the bankrupt company, including prices paid for the debt and the date of acquisition.
Lawyers are not required to submit Rule 2019 Filings unless ordered by the court.
Hodges wrote that the movants did not seek, and are therefore not entitled to access, any forms of agreement where the filing law firms were empowered to act on behalf of their clients.
Hodges further ordered the defendants to destroy any 2019 retention agreements that may inadvertently be provided with the allowed information.
The movants are also entitled to the last four digits of the social security numbers contained in the Rule 2019 Filings, but they are ordered not to review any additional digits that may accidentally be provided.
In March, Aetna AET was granted access to Rule 2019 Filings filed in the Garlock bankruptcy case.
Aetna, and several other insurers, moved for access in an effort to recover medical expenses from claimants who have been paid for the same costs through litigation.
At the time, however, Hodges denied similar requests from the movants in this motion for access, including Ford and Volkswagen, among others.
During the bankruptcy trial, Garlock brought evidence to the hearing demonstrating that the last ten 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 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."
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