Heather Isringhausen Gvillo Nov. 5, 2014, 1:49pm

CHARLOTTE, N.C. (Legal Newsline) – An asbestos plaintiffs firm sued in one of Garlock Sealing Technologies’ racketeering cases has requested the lawsuit alleging fraud be transferred to Texas.

Waters & Kraus LLP and several of its plaintiffs’ attorneys filed the motion on Oct. 27 seeking to transfer the case to the U.S. District Court for the Northern District of Texas, calling it the “center of gravity for this matter.”

In fact, the defendants allege that other than the fact that Garlock’s bankruptcy case was filed in North Carolina, the district has no other connection to this lawsuit.

Plaintiffs Garlock and Garrison Litigation Management Group assert that the defendants committed fraud and engaged in a pattern of racketeering activity by allegedly failing to disclose certain information in discovery when representing clients in asbestos personal injury lawsuits, thus inflating settlements.

“Specifically, Garlock alleges that the defendants, through their representation of plaintiffs with asbestos-related injuries against manufacturers and distributors of asbestos-containing equipment, engaged in a scheme that involved willfully concealing material evidence in discovery in order to increase the potential for large judgments for their clients and to improve their clients’ positions in settlement negotiations,” the transfer request states.

The lawsuits came shortly before Bankruptcy Judge George Hodges’ Jan. 10 ruling in favor of Garlock, ordering the gasket manufacturer to put $125 million in its bankruptcy trust, which is roughly $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.

While evaluating Garlock’s proper liability, allegations surfaced that plaintiffs’ attorneys had engaged in “fraud, deceit and other activities prohibited by the Racketeer Influenced and Corrupt Organizations Act (RICO)” when settling asbestos plaintiffs’ claims with Garlock.

As a result, the plaintiffs filed several RICO lawsuits in the U.S. District Court for the Western District of North Carolina.

However, Waters & Kraus claim Texas is a more appropriate jurisdiction, arguing that it would be more convenient and the alleged misconduct occurred there

The defendants claim the parties in the case either reside in Texas or have connections to Texas.

More specifically, they argue that six of the eight defendants reside in Texas as well as employees of the defendants and third-party witnesses with relevant knowledge. Therefore, the defendants assert the parties would be inconvenienced by a trial in North Carolina.

“Transfer would be far more convenient for all defendants and for most, if not all, third party witnesses,” the motion states.

They claim that even Garlock has “strong” ties with Texas. Of the five companies that make up “The Garlock Family of Companies,” two are located in Texas and none are located in North Carolina, they say.

Additionally, the defendants explain that Garlock’s complaint alleges “an ongoing scheme by defendants to conceal material evidence throughout discovery for the mesothelioma cases in order to negotiate high settlement values for their clients” while in the tort system.

In regards to the allegations, the defendants claim that the third party attorneys who were actively involved in the mesothelioma cases at issue are located in Texas.

Furthermore, they add that nearly all of the alleged conduct occurred in Texas while none of the alleged actions occurred in North Carolina.

Specifically, the “bulk” of the legal representation in the underlying mesothelioma cases occurred in Texas, meaning those with personal knowledge of facts related to Garlock’s claims are located in that jurisdiction. A majority of the disputed settlement negotiations and agreements leading to the RICO allegations also allegedly occurred in Texas.

The defendants contend that transfer would not impose hardships on the parties.

“Even were transfer to cause inconvenience to Garlock, which it will not, courts have found some inconvenience to one party to be appropriate in light of the overwhelming convenience to other parties and witnesses that is present in this case,” the defendants concluded.

The defendants also believe interest weighs in favor of transfer to Texas.

“Although the convenience of the parties on its own supports transfer,” the request states, “the court may also transfer the case in the interest of justice.”

Waters & Kraus claims Texas has an interest in deciding the controversy and a trial in North Carolina will prejudice the defendants.

Because the RICO case has been withdrawn from the bankruptcy case, the defendants reassure the district court that the administration of the bankruptcy estate will not be affected by transfer.

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

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