Asbestos firm seeks to transfer racketeering case against it to New York

By Heather Isringhausen Gvillo | Oct 31, 2014

CHARLOTTE, N.C. (Legal Newsline) – An asbestos plaintiffs firm sued by Garlock Sealing Technologies in a RICO lawsuit alleging evidence was withheld while in the asbestos tort system is seeking to transfer its case to a New York federal court.

Plaintiffs Garlock and Garrison Litigation Management Group assert that the defendants committed fraud and engaged in a pattern of racketeering activity by allegedly failing to disclose certain information in discovery when representing clients in asbestos personal injury lawsuits, thus inflating settlements.

As a result, the plaintiffs filed several RICO lawsuits in the US District Court for the Western District of North Carolina.

Belluck & Fox filed the motion to transfer the case to the U.S. District Court for the Southern District of New York on Monday.

Defendants in the RICO claim include Belluck & Fox, Joseph W. Belluck and Jordan Fox. They claim that New York is a more proper jurisdiction, arguing that the case concerns “the conduct of New York attorneys representing clients in lawsuits in New York courts against a company with its principal place of business in New York, which was also represented by its own New York lawyers.”

The action arises out of Bankruptcy Judge George Hodges’ Jan. 10 ruling in favor of Garlock in the United States Bankruptcy Court for the Western District of North Carolina, ordering the gasket manufacturer to put $125 million in an asbestos trust – roughly $1 billion less than what plaintiffs’ representatives felt was proper. In his decision, Hodges noted how attorneys had been withholding evidence while pursuing claims against Garlock.

While evaluating Garlock’s proper liability, allegations surfaced that plaintiffs attorneys had engaged in “fraud, deceit and other activities prohibited by the Racketeer Influenced and Corrupt Organizations Act (RICO)” when settling asbestos plaintiffs’ claims with Garlock."

However, the defendants claim the purported misconduct allegedly occurred in New York where the litigation took place.

“Indeed, virtually all of the conduct alleged in the complaint occurred in New York, and not a single allegation concerns any events in North Carolina,” the defendants wrote.

In other words, they claim that apart from Garlock’s bankruptcy proceeding, the case has no connection to North Carolina and should be transferred to New York.

They note convenience, stating that all parties in the case are located in New York.

While the complaint alleges that Garlock is a North Carolina limited liability company, it “conspicuously omits any allegations as to Garlock’s principal place of business,” the defendants argue. They add that Garlock’s website shows the plaintiff’s headquarters and principal place of business is in New York.

The defendants deny the assertions in the lawsuit and believe critical evidence to prove their allegations include documents including at least three New York law firms – meaning the necessary evidence is located in New York.

Additionally, the defendants note that 10 of the 11 cases identified in the complaint were filed in the same New York court.

Furthermore, the defendants allege a number of key individuals – including Garlock’s attorneys in the underlying litigation, Garrison employees and expert witnesses – are all located or work in New York.

Because most of the witnesses could not be compelled to appear at a trial in North Carolina, they claim that if the case was transferred to New York, subpoena power would be available.

“The inability to compel the testimony of some of these key witnesses – including, among others, the attorneys for Garlock who negotiated the settlements at issue in this RICO case and who can testify to what Garlock knew about the plaintiffs’ exposures – would severely prejudice defendants’ case,” they wrote.

The defendants allege that may of the non-party witnesses are hostile towards them and that it would be prejudicial to try the case in North Carolina.

They allege that transfer to New York could reduce the expenses of all parties.

 “In sum, every single one of the factors courts weigh when considering whether to transfer a case for the convenience of the parties strongly supports transferring this action to the Southern District of New York,” the defendants wrote.

 “The presumption that cases ‘related to,’ a bankruptcy proceeding ought to be litigated in the bankruptcy’s ‘home’ forum is simply not enough in this case to counterbalance the overwhelming weight of the factors above, all of which support transfer,” they added.

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

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