CSX: U.S. SC helped fraud case against attorneys

John O'Brien May 4, 2010, 5:35pm

Robert Peirce

RICHMOND, Va. (Legal Newsline) - CSX Transportation is using a recent U.S. Supreme Court decision in an attempt to get its fraud case against a Pittsburgh law firm going again.

CSX, a frequent defendant in asbestos cases, filed a notice of supplemental authority with the U.S Court of Appeals for the Fourth Circuit Friday to remind the court of a statute-of-limitations issue that was decided April 27 by the U.S. Supreme Court.

The justices unanimously ruled a class action lawsuit against Merck & Co. was filed timely. CSX's lawsuit against law firm Peirce Raimond & Coulter was dismissed when a federal judge ruled it was filed after the statute of limitations expired.

"Merck supports CSX's position," the company's notice says. "That case holds that a federal securities-fraud claim does not accrue until the plaintiff knows or should know both that the defendant made a false statement and that the defendant did so with the requisite mental state.

"So too here, a meritless lawsuit, by itself, does not automatically tell us whether the lawyers who filed it did so in good faith or bad faith."

Former Bridgeport, W.Va., radiologist Ray Harron was accused of diagnosing lung disease in patients who did not have it. CSX says Peirce, Raimond & Coulter then hid those plaintiffs with thousands of others, preventing it from being able to adequately investigate each complaint.

In 2005, federal court judge Janis Graham Jack made national headlines when she uncovered duplicate and fraudulent silica diagnoses in her Texas courtroom. Many of those diagnoses were made by Harron and were made on plaintiffs who had already brought asbestos claims.

In Jack's opinion dismissing the claims, she said "These diagnoses were driven by neither health nor justice - they were manufactured for money."

Following Harron's admission that he did not even make the diagnoses of the patients whose x-rays he read, Jack noted that most of "these diagnoses are more the creation of lawyers than doctors."

Attorneys for the Peirce firm say CSX misinterpret the Merck decision.

"Merck's reasoning confirms the legitimacy of concerns that requiring discovery of scienter in (Racketeer Influenced and Corrupt Organizations Act) and common law fraud claims would render defendants subject to claims for 'acts taken long ago,' pointing out that (federal law) contains an 'unqualified' bar on actions instituted five years after the 'violation,'" says their reply brief, filed Tuesday.

Earlier this year, a federal jury in Mississippi found fraud on the parts of two asbestos lawyers.

On March 10, the jury ordered William Guy and Thomas Brock to pay Illinois Central Railroad $420,000, with half of that classified as punitive damages.

The jury found the attorneys failed to disclose their clients' previous involvements in another case, an asbestos mass action filed in Jefferson County, Miss.

From Legal Newsline: Reach John O'Brien by e-mail at jobrienwv@gmail.com.

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