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Asbestos defense attorney on FACT Act: 'Nobody should be against transparency'

By Heather Isringhausen Gvillo | May 19, 2015

EDWARDSVILLE, Ill. (Legal Newsline) - Asbestos defense attorneys in Madison County, Ill., a hotbed for such lawsuits, favor the transparency offered by a legislation recently passed by the U.S. House Judiciary Committee that is designed to target asbestos litigation abuse.

“I would suggest that nobody should be against transparency,” said Raymond Fournie, of Armstrong Teasdale in St. Louis.

The committee voted 19-9 on Thursday in favor of the Furthering Asbestos Claims Transparency Act, or FACT Act. The bill’s sponsor is Rep. Blake Farenthold, R-Texas.

The bill targets asbestos plaintiffs lawyers’ practice of double-dipping – telling one story about a client’s exposure history in the civil courts system while telling another to companies that have set up bankruptcy trusts to pay out asbestos claims.

“The Committee’s passage of the FACT Act is a major step towards helping those asbestos victims who must look to the bankruptcy process to seek redress for their, or their loved ones’, injuries,” said committee chair Bob Goodlatte, R-Va.

“The FACT Act increases transparency in the Bankruptcy Code in order to protect the finite funds available to compensate asbestos victims while still protecting their privacy.”

Lisa LaConte of Heyl Royster in Edwardsville said the transparency established by the bill would shed some light on information that isn’t readily available in asbestos litigation.

“The merits of the FACT Act have been debated over the years but regardless of the mechanism, we are in favor of greater transparency in terms of claims filed, the basis of such claims and any awards made.”

Attorney Brian Huelsmann of Wilson Elser Moskowitz Edelman & Dicker in Edwardsville said the FACT Act would save both time and money by providing defendants with the necessary information to properly assess asbestos claims.

“The FACT Act is a step in the right direction for more transparency in asbestos litigation throughout the country. This will eliminate a great deal of unnecessary pre-trial discovery focused on whether claims have been filed with a bankruptcy trust, plaintiff admissions regarding asbestos exposure from the bankrupt defendant’s products and the application of set-offs in states that allow it,” Huelsmann said.?

“Defendants in this litigation should not be forced to waste their resources on subpoenas and written discovery to uncover this relevant information. The FACT Act will also lessen the time spent by the court in ruling on these issues. Defendants will finally have all the information needed to accurately and fairly assess the claims against them.”?

Fournie said a bill lifting the veil on asbestos bankruptcies is “long overdue.”?

This is the third time the bill has been introduced.

In 2013, the bill passed the House of Representatives on a 221-199 vote that went mostly along party lines, with Republicans favoring the bill.

However, the bill never gained much traction in the Democrat-led Senate. This year, though, Republicans hold a majority in both houses.

LaConte said the bill holds a better chance of passing this time around, but is unsure what to expect.

"With the change of control in the House and Senate, the bill stands a better chance to pass than in prior years. Whether it would pass by a veto-proof margin is uncertain."

Fournie isn’t hopeful that the president will sign the bill into law if it passes through the Senate?.

“My gut reaction is it doesn’t. It should, but it doesn’t,” he said.

Although, as more abuse of the asbestos litigation and bankruptcy system comes to light, he said there is a chance a federal bill could pass.

For example, those in favor of tort reform have used a 2014 ruling in North Carolina bankruptcy court to show why transparency is needed.

U.S. Bankruptcy Judge George Hodges ruled in a landmark decision that asbestos plaintiffs attorneys had been withholding evidence that could have been submitted to bankruptcy trusts while pursuing tort claims against Garlock Sealing Technologies, a gasket manufacturer.

They did so in order to maximize recovery in both systems, he ruled.

Hodges ordered that the amount sufficient to satisfy the company’s asbestos liability was $125 million, more than $1 billion less than what plaintiffs’ representatives felt was proper, because the reliability of its settlement and verdict history in the tort system had been tainted by the actions plaintiffs attorneys.

Garlock later agreed to put more than $350 million in a trust for future claimants. Legal Newsline fought to have the evidence Garlock submitted unsealed, which happened in March.

The American Association for Justice – a national trial lawyers group – strongly opposes the bill.

“Asbestos is still legal in the United States, and with 12,000 to 15,000 Americans suffocating to death every year from asbestos diseases, Congress should act to protect the public by demanding transparency from asbestos corporations,” AAJ CEO Linda Lipsen said.

“Instead, the FACT Act will grant a handout to the very corporations that poisoned and killed hundreds of thousands of Americans, while doing nothing to prevent further exposure to this deadly toxin.”

Fournie, on the other hand, said that if the bill is signed into law, he doesn’t anticipate that parties will have to change their litigation strategies in court because lawsuits will still be filed against solvent companies.

“The FACT Act doesn’t discourage lawsuits by any means,” he said. “It has no impact on plaintiffs filing against non-bankrupt defendants.”?

“It’s intent is to be transparent and to put in proper perspective the amounts that are sought from non-bankrupt litigants in lawsuits.”?

LaConte agreed that a federal transparency law is unlikely to change asbestos litigation strategies, but said it would depend on a case-by-case basis.

“The Act, itself, is not likely to change how the information is used by courts and we don’t anticipate a change in the admissibility of the information in Madison County – this will likely continue to depend on the facts and claims in each case,” she said.

However, Fournie said the FACT Act would change what plaintiffs are entitled to in terms of recovery from an individual defendant.

Neither Fournie nor LaConte anticipates the FACT Act will have a significant effect on the Madison County asbestos docket, also known as the epicenter of asbestos litigation.

“Overall the Act would not do much to change the attractiveness of the various magnet jurisdictions such as Madison County so the impact on cases locally would have to be evaluated based on the end version of the Act,” LaConte said.

Fournie added that Madison County likely takes into account all the defendants that are responsible for causing a plaintiff’s asbestos-related disease more than other jurisdictions.

He attributes this to the county’s record of an overwhelming majority of verdicts entered in favor of defendants in recent years.

“It appears that there is a better understanding on the part of the lawyers involved on what is fair and realistic more so than other jurisdictions,” he said. “Just because a lawsuit is filed, doesn’t mean the jury is going to give the plaintiffs a pass.”?

On that note, Fournie said the state of Illinois could improve its asbestos litigation legislation. He suggests laws requiring parties to reveal who is really involved in a case and how involved they are. For example, he believes any responsible party should be include on a verdict form, providing the jury the opportunity to divide liability between all who are responsible rather than forcing the remaining solvent defendants to bear the weight of liability.

“Ensure as much as possible that there isn’t a double recovery or excessive recovery,” he said.

Fournie recognizes that most plaintiffs have legitimate claims, and he wants to see them compensated for their injuries. But he said it must be done fairly and with transparency, especially considering there is a limited supply of money.

Approximately 100 companies have been forced into bankruptcy due to asbestos-related liabilities, creating an asbestos bankruptcy trust system with between $30 billion and $37 billion reserved for current and future asbestos claimants.

Eventually, that system will run out of money, so the claims need to be legitimate ones. Likewise, there are only so many cases that corporations can absorb before they too are forced into bankruptcy.

“So you are looking for them to be able to absorb the ones that have legitimacy, and properly compensate the victim with a reasonable amount of money,” Fournie said.

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