Heather Isringhausen Gvillo Nov. 20, 2014, 2:23pm

CHARLOTTE, N.C. (Legal Newsline) – As those paying close attention to the Garlock Sealing Technologies bankruptcy case await access to the previously sealed material from the estimation proceeding, bankruptcy attorney David Christian said anticipated access advances the goal of transparency but could still be “a double-edged sword.”

While Christian is not an active participant in the Garlock bankruptcy case and does not know what information is in the documents about to be released to the public, he said it is important to keep in mind that Garlock also wanted to maintain confidentiality for some information when the debtor filed a motion to seal.

It its motion, Garlock argued that its documents detailing the reasons why it settled lawsuits while in the tort system are subject to the attorney-client privilege or work-product immunity. It claimed the court compelled it to produce specific documents and testimony in order to prove the settlement approach was insufficient to determine the debtors’ liability.

“Sometimes the co-defendants have just as much resistance to sharing settlement data as plaintiffs,” said Christian, founder of the David Christian Attorneys law firm.

Therefore, while the transparency might encourage debtors follow in Garlock’s path by urging discovery and fighting against inflated liability estimations, “it might give pause to some debtors as well,” he continued.  

Regardless, Christian said it is still likely that the end result will be Garlock protecting its equity by reaching a settlement.

“Garlock may be allowed to keep its equity, and it has two drivers pushing towards a more honest and merit-based asbestos litigation system,” he suggested.

While the unsealing order furthers the case’s narrative as a potential game changer by advancing the goal of transparency, Christian said he expects “fisticuffs” over the settlements.

“I don’t expect peace to break out any time soon,” he said.

Bankruptcy Judge George Hodges unsealed essentially the entire estimation record when he ruled in favor of Legal Newsline after a lengthy battle over public access.

At an Oct. 16 hearing, Hodges ordered all documents pertaining to the Garlock bankruptcy proceeding to be unsealed and made available, effectively denying every motion to seal that had been filed by asbestos plaintiffs lawyers and Garlock before a Sept. 11 deadline. The documents at issue include evidence submitted by Garlock that allegedly showed a pervasive pattern of misrepresentation and suppression of evidence on the part of asbestos plaintiffs and their attorneys.

After considering the motions to seal, objections and replies, the court concluded that it was proper to unseal the estimation record with a few exceptions. Hodges held that specific personally identifying information is to be redacted before the public may have access.

The following information was ordered to be redacted and permanently sealed:

-Social security numbers (except for last four digits);

-Dates of birth (except year);

-Names of identifiable minors (except initials);

-Financial account numbers (except for last four digits); and

-Medical information (except claimed asbestos-related disease)

Since the order was filed, the time for appeals has passed. Now it’s just a matter of waiting for the redactions to be completed.

The action arose out of 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.

Christian added that he does not anticipate the estimation proceeding record to be reopened, which would be costly. At this point, he said the best way to conclude this bankruptcy case is to push forward rather than going back.

“I wasn’t present, but my reading of the situation is that Hodges has become increasingly skeptical over the course of the case about the claims and claimants’ counsel,” he said.

“While [the unsealing order] doesn’t definitely point to a resolution,” he added, “it makes me doubt that Hodges is inclined to reopen the estimation proceeding.”

The Asbestos Claimants Committee, or ACC, seeks to reopen the estimation record in order to conduct more discovery. A hearing on the issue has been scheduled for Dec. 4.

Counsels for Garlock and the ACC did not respond to several requests for comment.

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

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