LEGAL NEWSLINE

CHARLOTTE, N.C. (Legal Newsline) – As part of the unsealing process in the Garlock Sealing Technologies bankruptcy proceeding, several oppositions to sealing requests were recently filed, claiming that the motions were too vague.

In Legal Newsline’s opposition filed Oct. 2, it notes that the debtors’ motion was the only one to comply with the requirements of the Protocol Order by identifying specific documents or portions of documents that should remain sealed or redacted and why no less restrictive alternatives are adequate.

Rather than seeking to seal specific documents, the motions seek to seal or redact certain kinds of personal information, Legal Newsline's attorneys explained.

Legal Newsline became involved in the case when U.S. Bankruptcy Judge George Hodges closed the courtroom doors to one of its reporters while Garlock submitted evidence of what it felt was fraud on the part of asbestos attorneys.

Hodges sealed the evidence but cited it when he ruled Garlock needed to put only $125 million in an asbestos trust - roughly $1 billion less than asbestos plaintiffs attorneys requested.

Hodges ruled that the history of settlements and verdicts against Garlock was skewed because of manipulation by asbestos attorneys. Legal Newsline appealed his decision to seal the evidence and recently won a court order from a district judge that said the information should not have been sealed in the manner it was.

The parties were required to file motions to seal any information they want kept sealed. If Hodges does not agree, the information will become public.

The debtors, in response, added that none of the motions specify which documents the movants are referring to, therefore failing to meet the standard requirement.

Oppositions to debtors’ motion to seal

Several parties filed oppositions to the debtors’ motion to seal. The most notable opposition, however, came from the Official Committee of Asbestos Personal Injury Claimants, or ACC, which was filed on Oct. 2.

The ACC seeks to prevent the debtors from sealing their Major Expenses Authorizations, or MEAs, and Trial Evaluation Forms, or TEFs, along with testimony and other materials relating to those documents.

MEAs are “internal corporate records of the debtors that memorialize the reasons why the debtors settled mesothelioma cases for the amounts they did.”

TEFs are “standardized evaluations of cases proceeding to trial provided to the debtors by their outside counsel.”

The ACC argues that the MEAs and TEFs will “provide an important window” by disclosing why the debtors chose to settle certain asbestos cases during prior litigation. It believes the debtors’ allegations of fraudulent activity within the plaintiffs’ bar by withholding additional asbestos exposure is not true.

The ACC opposes the debtors sealing request, calling it an “attempt to sweep evidence under the rug.”

It adds that the debtors have been “enthusiastic advocates” of disclosure for the public until their own information was at stake, stating that sealing should not be used to slant publicly-available information.

“Now, without any sense of irony, the debtors maintain that their own documents – critical pieces of the full story – should remain sealed and shielded from public scrutiny,” the response states.

“The debtors must not be allowed to use sealing as a way to skew the public dialogue about this case."

The ACC claims the debtors have cast themselves as the “guardians of justice” in an attempt to unveil any wrongdoing by the plaintiffs’ bar, which would then help their strategy to avoid asbestos liability.

“The debtors’ attempt to seal their own documents – evidence that undermines their narrative – reveals that their commitment to openness applies only when it serves the debtors’ interests,” the response states. “Of course, openness goes both ways.”

The ACC went as far as admitting that the public deserves to know about the plaintiffs’ bar allegedly withholding evidence of exposure, and added that it equally deserves to know about why the debtors settled cases.

“Any attempt to keep the public debate one-sided by suppressing these materials should be denied,” the ACC wrote. “Moreover, one of the important purposes of public access is to promote the public’s ability to oversee and monitor the workings of the Judicial Branch. Hobbling public access by sealing material that supports one side of an issue hinders that purpose.”

Furthermore, ACC argues that the court previously waived any privileges that may have protected these documents.

It explains that the debtors’ attorneys testified about settlement decisions in support of their argument that settlement values were inflated when plaintiffs’ attorneys allegedly concealed evidence of exposure.

While the debtors argue that communications between the debtors and their counsel discussing the reasons they chose to settle claims is protected by the attorney-client privilege and work-product doctrine, the ACC contends that the attorneys’ testimonies waive those privileges.

Debtors’ opposition

The debtors filed their opposition on Oct. 2 against the various motions seeking to seal names of adult asbestos claimants and the amounts of settlements, as well as questionnaires and the information reflecting trust claim submissions.

The debtors argue that the motions should be denied because the movants failed to satisfy a “heavy burden to overcome the presumptive right of access to bankruptcy court records.”

The debtors claim the movants failed to provide specific reasons to redact adult asbestos claimants’ names, especially since many of the names in the estimation record have open claims and are creditors in the case.

They explain that bankruptcy courts are typically reluctant to allow creditors to remain anonymous unless the creditor is able to prove that he or she will be specifically targeted as a result of such disclosures.

“Movants’ assertions about identity theft amount to nothing more than generalized or speculative assertions of risk that do not constitute the requisite ‘extraordinary circumstances’ justifying anonymous appearances by creditors,” the opposition states.

Additionally, the debtors contend that the adult asbestos claimants already made their names publicly available when they chose to pursue tort actions against Garlock.

“Unsurprisingly, the motions to seal cite no authority for the proposition that a plaintiff who publicly files a legal action against a debtor is entitled to withhold his or her name from public disclosure in a subsequent bankruptcy proceeding,” the opposition states.

Furthermore, the debtors argue that the motions failed to provide justification for sealing questionnaires and trust claim data.

“The motions to seal do not argue that redaction or sealing of such materials is warranted … nor could they since such information is not competitively sensitive, is not scandalous or defamatory, and does not place an individual at undue risk of identity theft,” the debtors argue.

Various asbestos defendants’ opposition

Roughly 12 common asbestos defendants filed their joint opposition on Sept. 25.

Like the debtors, the asbestos defendants first take issue with the requests to seal adult asbestos claimants’ names, arguing that such information is not confidential and has already been voluntarily disclosed.

The defendants argue that Belluck & Fox did not meet its burden proving the names should be redacted from the sealed evidence because it failed to show that “extraordinary circumstances” support the pseudonyms.

“This is unsurprising given that there is absolutely nothing inherently confidential about the names of adult asbestos claimants, and, upon information and belief, the adult asbestos claimants whose names appear in the sealed evidence have already made their identities public by asserting claims against one or more of the debtors in the past,” they argue.

Additionally, the asbestos defendants note that several of the claimants names have been disclosed publicly when it suited their lawyers’ interests in marketing campaigns.

For example, Belluck & Fox published the name, disease information and physical images of asbestos claimants on its website as a marketing tool, it says.

“The public has an interest in the disclosure of the names of adult asbestos claimants as set forth in the sealed evidence because only by matching the names of claimants who asserted claims against Garlock to claimants who asserted claims in other forums against other sources was the court able to discern the widespread misrepresentations that it discusses at length in the estimation order,” the defendants concluded. “In other words, the names themselves are at the very heart of the issues addressed in the estimation order.”

The asbestos defendants also oppose sealing the questionnaires, trust claim forms and settlement amounts, arguing that the movants have not met their burden of proving that these materials should remain confidential.

They argue that the movants’ argument that disclosure would discourage settlements, thus going against a “strong public policy” to encourage settlements, is insufficient.

Legal Newsline’s opposition

Legal Newsline explained that when determining whether the First Amendment provides a right of access to particular proceedings, it applies the “experience and logic” test, which focuses on the nature of the particular proceeding.

The experience requirement is satisfied here because bankruptcy proceedings have a “deep-seated” tradition of being open to the public, it argues.

As for the logic requirement, Legal Newsline, quoting Hodges, stated that the “public’s oversight of the courts will be assisted by disclosure of the extent to which there was evidence at the estimation trial relating to the court’s conclusion that a ‘startling pattern of misrepresentation’ and ‘suppression of evidence’ by asbestos claimants and their lawyers that ‘had a profound impact on a number of Garlock’s trials and many of its settlements such that the amounts recovered were inflated.’

“That oversight is the very purpose that the presumptive right of access is intended to protect.

“Citizens’ ability to understand and evaluate judicial decisions requires access to the evidence on which those decisions are based.”

Furthermore, Legal Newsline opposes the movants’ argument that asbestos claimants relied on their discovery responses being kept confidential permanently. It explains that the claimants were legally required to provide the information, they did not negotiate the terms of their production and the protective and confidentiality orders recognized the possibility that access might be allowed in the future.

“Although no balancing of interest is necessary, and movants’ inability to demonstrate a compelling governmental interest is fatal to their request to seal any settlement information, it should be recognized that evidence regarding settlements appears to have played a key role in many of the court’s most important findings,” the opposition states.

“Public access to that settlement information is particularly important to be able ‘to understand the grounds and motivations of [the court’s] decision.”

Legal Newsline also opposes requests to seal or redact adult asbestos claimants’ names, arguing that the names were disclosed in the litigation and other proceedings that were the subject of the evidence.

Movants rely on arguments of identity theft and privacy interests, but these “vague and generalized assertions fall far short of the proof of immediate and assured harm needed for the extraordinary relief sought by movants,” Legal Newsline explains.

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