Heather Isringhausen Gvillo Jul. 9, 2014, 3:51pm

CHARLOTTE, N.C. (Legal Newsline) - The debtors in the Garlock Sealing Technologies bankruptcy proceeding have filed a heavily redacted opposition to reopening the sealed record of 2013's estimation hearing that led to only $125 million being placed in a trust for asbestos claimants.

The Official Committee of Asbestos Personal Injury Claimants has asked a bankruptcy judge to reopen the record, claiming the debtors misled and committed a fraud upon the court.

The debtors claim that the arguments presented by the committee in its motion provide no sound reason for reopening the estimation record as most arguments have already been rejected by the court.

"The committee has suffered no prejudice, and its motion provides no basis to question the estimation record or the court's decision," the debtors wrote. "The motion should therefore be denied in total."

The debtors - which include Garlock, Garrison Litigation Management Group and The Anchor Packing Company - filed their opposition on July 3 in the United States Bankruptcy Court for the Western District of North Carolina.

The action arises out of Judge George Hodges' Jan. 10 bankruptcy ruling in favor of Garlock, ordering the gasket manufacturer to put $125 million in an asbestos trust - roughly $1 billion less than what plaintiffs' representatives felt was proper. In his decision, Hodges noted how attorneys had been withholding evidence while pursuing claims against Garlock.

Just six days after an amended reorganization plan was filed, the committee filed its motion to reopen the record, claiming the debtors committed a "fraud upon the court."

Now the debtors are opposing the allegation of fraud, saying the substance in the committee's motion is "remarkably thin."

"The motion does not even mention, must less attack, the fundamental bases of the court's estimation opinion," the debtors claim.

"There the court found, on the basis of the scientific and social science evidence presented at the estimation trial, that 'it is clear that Garlock's products resulted in a relatively low exposure to asbestos to a limited population and that its legal responsibility for causing mesothelioma is relatively de minimus.'"

The debtors added that Garlock's products only exposed people to low doses of relatively less potent chrysotile asbestos, which typically occurred when people were simultaneously being exposed to higher doses of amphibole asbestos.

As a result, the court concluded that "the best evidence of Garlock's aggregate responsibility is the projection of its legal liability that takes into consideration causation, limited exposure and the contribution of exposures to other products."

The debtors also argue that the court found its expert to be reliable when taking these elements into account in the economic model that estimated Garlock's liability.

However, they contend that the committee's motion challenges none of these conclusions from the court. Rather, the motion challenges the court's decision to reject reliance on Garlock's settlements when calculating liability for mesothelioma claims, they say.

"It was, of course, the committee's burden at trial to prove that those settlements were a reliable proxy, and the court found the committee had not met that burden," they state.

These are the same settlements that Hodges said do "not accurately reflect fair settlements because exposure evidence was withheld. And Garlock's settlement data represents insignificant part cost avoidance rather than its liability."

The committee failed to provide any new evidence discrediting the ruling and showing that the settlements do actually measure Garlock's liability, the debtors say.

The debtors argue that the motion only concerns the court's finding that the last 10 years of Garlock's participation in the tort system was "'infected by the manipulation of exposure evidence by plaintiffs and other lawyers.'"

"Even here, the motion addresses only a small part of the 'substantial evidence' upon which the court based that finding," they wrote.

Additionally, the motion only provides lengthy discussions of two of the 15 cases where debtors were granted access to full discovery, which were each redacted, they wrote.

In fact, the committee "does not even deny that plaintiff firms failed to disclose exposure evidence in its featured cases," the debtors wrote.

The committee says Garlock failed to produce depositions and documents that would demonstrate that Garlock knew one plaintiff whose name is redacted was exposed to Unibestos on the U.S.S. John Marshall but didn't disclose it.

More than 10,000 claims were resolved against Garlock, and the company presented evidence from more than 200 during the estimation trial.

"On the basis of this presentation, Garlock persuaded the court to depart from precedent and draw the drastic conclusion that Garlock's real claims resolution experience was 'useless' for estimation," the committee says.

"It turns out, however, that Garlock failed to produce evidence that would not fit this revisionist account of its history in the tort system."

Garlock should be compelled to disclose evidence the committee sought during discovery, the committee argues. It adds that it has obtained key information from other sources on the first few cases Garlock featured as examples of fraud.

"Ironically, the new information reveals Garlock itself manipulating the evidence in the estimation proceeding in much the way that it claims plaintiffs' lawyers did in the tort system," the committee says.

The committee is represented by Trevor W. Swett and three other attorneys at Caplin & Drysdale, as well as Travis W. Moon of Moon Wright & Houston in Charlotte.

From Legal Newsline: Reach Heather Isringhausen Gvillo at asbestos@legalnewsline.com

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