Asbestos firm appealing ruling to U.S. Supreme Court

John O'Brien Apr. 5, 2011, 2:22pm


WHEELING, W.Va. (Legal Newsline) - An asbestos law firm has indicated that it will appeal a ruling in the fraud lawsuit against it to the U.S. Supreme Court.

Peirce, Raimond & Coulter of Pittsburgh asked for - and received - an order staying discovery in a lawsuit brought by CSX Transportation, which says the firm conspired with a radiologist to fabricate asbestos claims. U.S. District Judge Frederick Stamp granted the stay, which was also supported by the plaintiff.

Stamp wrote on March 8, one day after a status conference, that the Peirce firm plans to ask the U.S. Supreme Court to review a ruling by the U.S. Court of Appeals for the Fourth Circuit that says CSX did not miss the statute of limitations when it filed the fraud case.

"(T)he plaintiffs stated that while they disagree with the substance of the defendants' argument, they agree that engaging in discovery during the pendency of the Supreme Court's consideration of the petition for certiorari would be a misallocation of time and energy if the Supreme Court were to ultimately take the question," Stamp's order says.

The Peirce firm had asked for a review by the entire Fourth Circuit judicial roster after a three-judge panel ruled for CSX in December.

CSX argued the statute of limitations did not begin running until the lawsuits it used as examples were found to be meritless.

"The district court, however, conflated the filing of the various underlying suits as, in and of themselves, putting CSX on notice of the fraudulent scheme underlying the RICO counts," the Fourth Circuit's opinion says.

"However, nothing 'clearly appears' on the face of the complaint to show that the filing of these suits by the lawyer defendants, as well as the settlements, establish that CSX knew or ought to have known by July 2003 that the alleged fraud was afoot.

"Additional factual development may or may not prove that premise, but it is not plainly apparent on the face of the complaint."

CSX's complaint said Peirce hid nine fraudulent claims among other lawsuits filed by the law firm in West Virginia.

The complaint noted that radiologist Ray Harron, who was found by a Texas federal judge in 2005 to have created fradulent silica claims, lost his license in 2007. Many of the Peirce firm's diagnoses were made by Harron.

The nine lawsuits were filed and settled from 2000-2006. U.S. District Judge Frederick Stamp ruled the four-year statute began when the Peirce firm began targeting CSX.

Allegations arising out of Peirce's representation of Earl Baylor were found to have been timely made. One of the lawsuits CSX tried to include in its second amended complaint was filed with the Baylor claim.

"(V)iewing the evidence in the light most favorable to CSX, a reasonable jury could find that the lawyer defendants at worst fraudulently manufactured the claimed exposures, or at least lacked a good faith basis to file an asbestos injury claim because they knew it lacked the necessary element of occupational exposure," the opinion says.

"Consequently, a jury could find that the lawyer defendants committed fraud by filing the lawsuit because there was no evidence upon which they could have believed that Baylor was exposed to asbestos-containing products in the course of his employment with CSX.

"Consequently, a reasonable jury could find CSX relied to its detriment on the defendants' alleged fraud as the basis of the Baylor claim."

CSX notified the Fourth Circuit in July of the dismissal of 1,400 asbestos lawsuits by a West Virginia judge who had implemented new rules requiring plaintiffs to certify they were aware of their lawsuits, that their claims were "well-founded in fact" and that they wished to continue pursuing litigation.

"That order also required the production of 'all materials... relating to Plaintiff's alleged exposure to asbestos,' including 'medical records' and 'materials relating to occupational illness screenings sponsored by the Peirce firm and attended by Plaintiff,'" Dan Himmelfarb of Mayer Brown in Washington, D.C., wrote.

"Rather than making the necessary representations on behalf of the remaining plaintiffs, the Peirce firm moved to voluntarily dismiss the 1,400-plus claims --except for 62 malignant cancer claims and two non-malignant claims -- and ultimately stipulated that the claims should be dismissed with prejudice."

All the dismissed cases alleged asbestos disease but not malignancy. The Peirce firm continues to pursue 62 malignancy claims in Recht's court and claims the dismissal of the 1,400 claims had nothing to do with the fraud lawsuit.

"The dismissal order contained no findings that the dismissed claims lacked merit and no findings as to whether the dismissed plaintiffs may have recovered amounts from third-party defendants," wrote Walter DeForest, of DeForest Koscelnik Yokitis Kaplan & Berardinelli.

"This is simply factual information that is not in the record, which CSX is improperly trying to place before the court, without context, for the apparent purpose of attempting to influence the court's review of rulings of the district court that were made before the events recited in CSX's letter."

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