Judge stays order granting access to Rule 2019 filings in Garlock case

By Heather Isringhausen Gvillo | May 15, 2014

CHARLOTTE, N.C. (Legal Newsline) - Just one day after granting Ford Motor Company's request for access to Rule 2019 filings in the Garlock Sealing Technologies bankruptcy proceeding, U.S. Bankruptcy Judge George Hodges stayed the order.

Hodges' stay will be imposed while an appeal by the Official Committee of Asbestos Personal Injury Claimants is pending.

Hodges originally granted access to Rule 2019 filings on May 6 after previously denying the same request from several defendant companies that believe they may have been victimized what Hodges called in January a pattern of misrepresentation.

Hodges then granted the motion to stay on May 7, which prohibits the release or access to any Rule 2019 filings pending the outcome of any appeals regarding the access.

The ex parte motion to stay the order granting access to Rule 2019 proceedings was also filed on May 6 by the Official Committee of Asbestos Personal Injury Claimants.

In its motion, the committee requested the stay in order to "preserve the ability of affected persons" to appeal.

The committee cites United States Bankruptcy Rule 8005, saying the bankruptcy judge may suspend proceedings while an appeal is pending in order to protect the rights of all interested parties.

The committee adds that the "court is already keenly aware" of the interests at stake for claimants and "the irreparable nature of the harm they may suffer should this court's order not be stayed."

Rule 2019 filings contain personal identification and medical information relating to asbestos bankruptcy trust claimants, and once that information is released to the defendants, it is "essentially released to the public," the motion explains.

The group added that during the March 27 hearing with respect to motions to unseal, Hodges explained that "'once the genie's out of the bottle, it's out of the bottle and there aint no putting it back ... if I granted the motions to unseal that are filed by Ford [and others], it would essentially moot the appeal.'"

"'Given the history of having initially sealed the information, the only fair thing to do would be to stay such an order so that the Committee could appeal,'" Hodges continued. "'Because to not do so would essentially be to deny them a right to appeal.'"

According to the motion, the movants suggested the same considerations should apply to Rule 2019 filings.

"Indeed, irreparable injury is frequently held to exist where the order appealed from would result in the disclosure of documents," the committee wrote.

The movants also argued that equities favor the committee rather than Ford. Ford is seeking access to Rule 2019 fillings in order to evaluate whether it has suffered any harm in the past, they assert.

For those reasons, the committee contended it is unlikely Ford would suffer any "obvious" injury if its access is stayed. However, the committee would suffer "immediate and irreversible" harm if the order is not stayed.

According to the motion, public interest could be impacted based on the appellate court's decision on the appeal, but no public interest would be affected by granting a stay.

In March, Aetna Health Insurance was granted access to Rule 2019 Filings filed in the Garlock bankruptcy case.

Aetna moved for access in an effort to recover medical expenses from claimants who have been paid for the same costs through litigation.

At the time, however, Hodges denied similar requests from the movants who were later granted Rule 2019 access, including Ford and Volkswagen, among others.

Hodges ultimately concluded that the Rule 2019 Filings are public record available for examination.

He added that granting access was appropriate because no improper purpose with the information exists.

According to the Federal Rule of Bankruptcy Procedure 2019, lawyers are required to make certain disclosures about clients' claims against the bankrupt company, including prices paid for the debt and the date of acquisition.

Ford responded to the stay order by filing its own notice of appeal on May 7 to the U.S. District Court for the Western District of North Carolina regarding the order to stay its previous order granting access to Rule 2019 filings.

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

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