Jessica Karmasek Jun. 25, 2015, 9:37am


CHARLOTTE, N.C. (Legal Newsline) - Garlock Sealing Technologies has employed a nationally recognized firm to provide notice -- by way of newspaper supplements, magazines, television and even the Internet -- to potential asbestos claimants as part of its bankruptcy proceeding.

The advertising is part of the notice program for the deadline to file proofs of claim, usually called a “bar date.”

In order for Garlock to bind its creditors to the bar date -- which is a prelude to confirmation of a chapter 11 plan and the company’s exit from bankruptcy -- the creditors must receive sufficient notice of the bar date to satisfy the requirements of due process.

Due process can be provided through actual notice or constructive notice.

Constructive notice for unknown creditors may exist where the debtor publishes notice to the world in a way reasonably calculated to apprise interested parties of the pendency of the bar date, even if not all potential creditors actually see the notice.

Bankruptcy attorney David Christian, founder of the David Christian Attorneys law firm and not an active participant in the Garlock bankruptcy case, explained that historically debtors have sought to satisfy this standard, with some success, through publication of a notice -- approved by the bankruptcy court -- in widely circulated newspapers in areas where the debtor did business or in industry publications relevant to the particular claims in a case.

In this case, Garlock and its fellow debtors -- Garrison Litigation Management Group Ltd. and The Anchor Packing Company -- also are providing notice via television and Internet banner ads.

“With the growing use of other means by which people acquire information, including the growth in use of the Internet, some debtors are supplementing traditional publication notice with the use of other media,” Christian said, calling it a “new trend.”

“Garlock is attempting to make sure that the orders emanating from its bankruptcy case actually bind everyone.”

Last year, U.S. District Judge George Hodges ruled in favor of Garlock, ordering the gasket manufacturer to put $125 million in its bankruptcy trust, which is more than $1 billion less than what plaintiffs’ attorneys requested as Garlock’s liability.

Hodges found 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 evidence of their clients’ exposure to asbestos-containing products manufactured by other companies in order to maximize recovery against Garlock.

Garlock has proposed a $358 million settlement.

According to court documents, the debtors have hired Kinsella Media LLC, a legal notice firm located in Washington, D.C.

KM specializes in the design and implementation of notice programs that reach unnamed class members in matters such as consumer protection and antitrust and claimants in bankruptcy and mass tort litigation.

The firm is well-known, developing and directing some of the most expansive notice programs undertaken in the fields of antitrust, bankruptcy, consumer fraud, mass tort and product liability. The cases have spanned a broad spectrum of products, including asbestos, breast implants, home siding and roofing, infant formula, pharmaceuticals, polybutylene plumbing and tobacco.

KM, to date, has developed or consulted on more than 800 notice programs and has placed more than $350 million in paid media.

The Garlock notice program, according to a proposal filed by KM with the bankruptcy court last June, employs three methods to provide notice in both the United States and Canada:

- Direct notice: mailed notice directly through attorneys to all identifiable asbestos claimants represented by counsel whose names and addresses have been determined by the debtors, or to claimants directly if not represented by counsel;

- Paid media notice: broad national and local published notice through the use of national and local paid and earned media; and

- Third-party notice: notice by direct mail to third-parties who are likely to have contact with asbestos claimants.

But the core of the notice program is paid media.

Among those paid media outlets recommended by KM were American Profile and Parade, supplements that are inserted into weekend or Sunday edition newspapers nationwide. American Profile appears in 1,035 papers and Parade appears in 750 papers.

KM also suggested ads be placed in consumer magazines such as AARP Bulletin, National Geographic, People and Reader’s Digest.

In addition, online media - including Internet banner ads on Weather.com, Advertising.com, Yahoo! and social media website Facebook - was recommended.

Local newspapers also were recommended by the firm, in particular those in areas where Garlock’s asbestos-containing products were manufactured and potentially used.

Information provided by the debtors indicated that those key areas include: Sodus, N.Y., and Palmyra, N.Y., where the vast majority of Garlock’s products were designed, manufactured and sold; and oil refineries, steel mills and shipbuilding sites that used the company’s products during the 1940s through the 1970s.

KM also recommended the use of sponsored links, which appear when Internet users search keywords on search engines such as Bing, Google and Yahoo!

Although an exact cost of running all of the ads could not be found in court documents, Christian said the debtors easily could have paid $50,000 for such a notice program -- and quite possibly more.

Judge J. Craig Whitley, for the U.S. Bankruptcy Court for the Western District of North Carolina, approved the notice program, including a few revisions by KM, in April.

He wrote in his order that it was “reasonably calculated” to provide notice to known and unknown claimants of Garlock’s bankruptcy plan, voting deadlines and confirmation hearing.

Under the court’s current schedule, objections to the confirmation of the plan that do not depend on the results of voting are due Oct. 6 and confirmation objections that do depend on such results are due Dec. 18.

The confirmation hearing -- the hearing on the confirmation of the plan -- is set for June 20, 2016.

Members of the Official Committee of Asbestos Personal Injury Claimants, referred to as the ACC, argue that the proposed trust amount in the bankruptcy proceeding is “defective, deficient and unfair” to individuals holding claims against one or more of the debtors.

The committee, which is tasked with protecting the interests of individuals with known asbestos injuries, sent out a news release earlier this month urging asbestos victims to vote “no” on the reorganization plan.

The ACC said it “unanimously opposes” the plan and is litigating to defeat it in bankruptcy court because, in its view:

- The plan does not provide enough money to compensate asbestos claimants;

- The plan would limit Garlock's liability for asbestos claims at much less than it can afford; and

- The plan does not comply with the bankruptcy law Congress wrote specifically for the reorganization of asbestos defendants such as Garlock.

The committee is made up of plaintiffs’ attorneys for 12 asbestos victims appointed by the bankruptcy court.

Each of the following plaintiff law firms represents a member of the ACC: Belluck & Fox LLP; Cooney & Conway; The Jaques Admiralty Law Firm; Kazan, McClain, Satterly & Greenwood PLC; Lipsitz & Ponterio LLC; Motley Rice LLC; Paul, Reich & Meyers PC; Simmons Hanly Conroy LLC; Simon Greenstone Panatier Bartlett LLP; Thornton & Naumes LLP; and Weitz & Luxenberg PC.

Attorneys Steven Kazan and Joseph F. Rice are co-chairs of the committee.

Rice, in an “urgent” update posted to his firm’s blog last week, said the plan is “not beneficial” to asbestos victims.

Christian said opponents of a bankruptcy plan are allowed to lobby against it.

“Certainly, private actors have a First Amendment right to advocate against it,” he said of Rice’s blog post.

“It’s really the debtor that’s under a restriction before it starts soliciting.”

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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