WILMINGTON, Del. (Legal Newsline) - Lawyers for bankrupt gasket maker Garlock Sealing Technologies exceeded a judge's limit for motions in a motion and failed to gain immediate access to spreadsheets on hundreds of thousands of asbestos claimants.
"I don't see anything procedurally correct," bankruptcy Judge Judith Fitzgerald told Garland Cassada of Charlotte, N.C., at a hearing on Feb. 14.
Cassada tried to hold his ground but she cut him off.
"No, Mr. Cassada, that's now how it's done," she said. "Do it the right way."
She set a second hearing on March 28.
Garlock owners petitioned for reorganization in North Carolina last year, declaring their liabilities from asbestos litigation exceeded their assets.
In January, in Fitzgerald's court, they moved to obtain statements and exhibits that asbestos firms regularly file on compact discs, off the public docket.
The CDs identify clients and summarize their claims.
Bankruptcy judges can post the records for public inspection or keep them under wraps.
Fitzgerald keeps them off the docket but posts a notice advising anyone who wishes for access to move for an order.
Garlock's motion, by local counsel Gregory Werkheiser, called for intervention in nine active bankruptcies and three Fitzgerald has closed.
Werkheiser alleged that comparison of asbestos exposure histories in bankruptcy courts to those of the same clients in state civil courts would prove lawyers lied.
He argued Garlock required the records for estimation of its liabilities in bankruptcy, and he argued for access as a public right.
Public right v. private interests
At the hearing, Fitzgerald called the second argument disingenuous.
She said Garlock's position didn't vindicate the public interest.
Cassada said Garlock's purpose wasn't relevant.
"Yes it is," Fitzgerald said.
She said health information is generally not available on the public record.
"How is Garlock entitled to that information?" Fitzgerald said.
Cassada said public access is a presumptive right. He said the public can intervene in closed cases.
She said she didn't have a motion to reopen, and he said it was in his motion.
Fitzgerald told Cassada she needed separate motions.
"I don't have a motion to reopen and I don't have a motion to intervene," she said. "You have to pay a fee to reopen a case."
Cassada said claimants sued in courts all over and identified their disease.
Fitzgerald said she didn't know claimants knew their names were on the records.
She said Garlock's purpose was to sue a law firm.
She quoted their charge of lying and she added, "I don't know how much more
scandalous something can be."
Cassada offered "impeach" as a better word.
She said he submitted no evidence they lied.
He said if the public pieced the information together, it would be a public good.
"I still believe it contains private information," Fitzgerald said.
She said they weren't statements by creditors, they were statements by firms.
Garlock standing challenged
Cassada introduced Richard Worf of Charlotte, who carried three binders of exhibits.
One exhibit showed names and addresses of President Obama's campaign contributors.
Fitzgerald asked how it was relevant, and Worf said names and addresses aren't the kind of information that courts protect.
"That's a little different but, okay," she said.
Other exhibits showed an individual bankruptcy petition, an 869 page extract from one of Fitzgerald's cases, an order from bankruptcy court in Pittsburgh, complaints from state
courts, news articles and a letter from a congressman.
The last exhibit showed records from Congoleum's bankruptcy, where a judge posted Rule 2019 statements and exhibits.
Sander Esserman of Dallas, representing asbestos firms, challenged Garlock's standing.
Esserman said they seek information to sue people. He said the purpose of Rule 2019 is to answer whether a lawyer has the right to represent a person.
He said Garlock wasn't a vindicator of public rights, saying it has an agenda.
"Garlock's back in the days of asbestos is good for you," Esserman said. "You should eat it for breakfast."
He said if they search all public cases, they will have what they need.
"They want it all neatly wrapped up so they don't have to go anywhere else," he said.
Fitzgerald said, "Bankruptcy abhors things that are closed. How do I deny public access to a member of the public?"
Esserman said they weren't a creditor and had no standing.
He said Rule 2019 is a rule of agency and a rule of convenience.
For other asbestos firms, Natalie Ramsey of Philadelphia said, "The right to public access is not absolute."
She said some persons on the statements aren't parties and many are evaluating whether they have claims and which defendants they will sue.
"It's a preservation pleading," she said.
She said Garlock's motive was clearly improper.
In rebuttal, Cassada said he doesn't know there are non parties in the records and doesn't know that Ramsey knows.
Fitzgerald said, "I think a medical record is private unless it is voluntarily produced. What's the public right in knowing firm A represents person B?"
She repeated that ballots are public.
Cassada said there is a difference in time.
"When did the firm first have a basis for believing the claim?" he said.
She said the firms needed to review Worf's exhibits before the next hearing.