Judge makes plan for parties seeking evidence of asbestos attorneys' misconduct

By John O'Brien | Mar 27, 2014

CHARLOTTE, N.C. (Legal Newsline) - A bankruptcy judge has denied motions to unseal evidence cited in a landmark ruling that said asbestos attorneys strategically withheld evidence because he hopes it will lead to guidance from a higher court.

Thursday, Bankruptcy Judge George Hodges denied motions filed by Ford Motor Company and Legal Newsline that sought evidence that Hodges referenced in a January order. He didn't deny the motions on their merits.

Instead, he denied them "in the hopes you can get that joined with the present appeal."

Hodges suggested to parties at the hearing they appeal his denial so their motions to unseal the evidence can be heard in U.S. District Court.

There, Legal Newsline 's appeal of Hodges' decision to close his courtroom last year during introduction of the evidence is pending.

"Get all of these things done at once," Hodges said. "I don't know about y'all, but I would find that helpful."

The evidence sought by Legal Newsline and the companies was introduced during an estimation hearing in Garlock Sealing Technologies' bankruptcy proceedings. Hodges was tasked with determining how much money Garlock should put in a trust for present and future asbestos claims.

His January order spurned asbestos attorneys who requested Garlock place more than $1 billion in the trust.

Hodges instead ruled 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 exposure evidence in order to maximize recovery against Garlock.

He ruled that Garlock needed to put $125 million in its bankruptcy trust and that math produced by plaintiffs attorneys wasn't reliable because Garlock had suffered large jury verdicts as a result of claimants previously focusing their lawsuits on Garlock while losing evidence to other asbestos exposure in the process.

"This occurrence was a result of the effort by some plaintiffs and their lawyers to withhold evidence of exposure to other asbestos products and to delay filing claims against bankrupt defendants' asbestos trusts until after obtaining recoveries from Garlock," Hodges wrote.

Garlock brought evidence to the bankruptcy hearing demonstrating that the last 10 years of its participation in the asbestos litigation system "was infected by the manipulation of exposure evidence by plaintiffs and their lawyers."

According to Garlock's evidence, one firm issued to its clients 23 pages of directions on how to testify. Evidence also showed one lawyer stated, "My duty to these clients is to maximize their recovery, okay, and the best way for me to maximize their recovery is to proceed against solvent viable non-bankrupt defendants first, and then, if appropriate, to proceed against bankrupt companies."

Hodges permitted Garlock to bring evidence proving that roughly 220 settled cases withheld evidence. Then after settlement, clients made claims against roughly 20 companies' bankruptcy trusts.

"It appears certain that more extensive discovery would show more extensive abuse," Hodges continued. "But that is not necessary because the startling pattern of misrepresentation that has been shown is sufficiently persuasive.

"While it is not suppression of evidence for a plaintiff to be unable to identify exposures, it is suppression of evidence for a plaintiff to be unable to identify exposure in the tort case, but then later to be able to identify it in Trust claims. It is that practice that prejudiced Garlock in the tort system."

But Hodges sealed specific evidence of the behavior he cited. Legal Newsline and Ford filed motions to unseal it, and Crane Co., Honeywell and Volkswagen joined in Ford's motion. The four companies are frequent asbestos defendants that want to see if they've been subject to the same treatment as Garlock.

The Official Committee of Asbestos Personal Injury Claimants is opposing the requests to unseal the evidence. It argued that because Legal Newsline's appeal is before the district court, the bankruptcy court had no jurisdiction to grant the recent motions to unseal.

Committee attorney Trevor Swett said the issues in the appeal and the motions to unseal were the same because both seek access to the evidence Hodges cited.

"That's the evidence they want to get at, that they're excited about," Swett said.

Hodges said he was not prepared to unseal anything at this point.

"The practical problem I have is... if I granted the motions to unseal... it would essentially moot the appeal," he said.

Nothing has been filed in Legal Newsline's appeal since November. The case was waiting on a redacted version of the trial transcript, but Hodges said Thursday that it is ready to be filed.

From Legal Newsline: Reach editor John O'Brien at jobrienwv@gmail.com.

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