Asbestos firm doesn't want N.C. federal court handling racketeering case against it

By Heather Isringhausen Gvillo | Nov 11, 2014

CHARLOTTE, N.C. (Legal Newsline) – In a Nov. 3 motion to abstain, the Simon Greenstone law firm asked the North Carolina federal court to abstain from hearing Garlock Sealing Technologies’ racketeering case against it and require the plaintiff to pursue its claims in the state court where the tort settlements at issue were litigated.

“If Garlock wishes to attack the litigants’ and their counsels’ actions in state court proceedings, it should do so in the state courts where the conduct allegedly occurred,” Simon Greenstone wrote. “Abstention is the vehicle for making this happen.”

Plaintiffs Garlock and Garrison Litigation Management Group assert that the defendants in this case 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.

The RICO claims were filed days before U.S. Bankruptcy Judge George Hodges’ Jan. 10 ruling in favor of Garlock, in which he ordered the gasket manufacturer to put $125 million in its bankruptcy trust, which is roughly $1 billion less than what plaintiffs' attorneys requested as Garlock’s liability.

Hodges found 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 evidence of their clients' exposure to asbestos-containing products manufactured by other companies in order to maximize recovery 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.

As a result, the plaintiffs filed several RICO lawsuits in the North Carolina federal court.  

Simon Greenstone stated that the RICO case is Garlock’s attempt “to attack settlements it agreed to six-to-eight years ago in 14 tort suits that were filed in state courts” in California, Texas and Florida.

More specifically, it claims that the Los Angeles Superior Court of California is a more proper jurisdiction because 12 of the 14 challenged tort suits were filed there.

Simon Greenstone argues that abstention is proper because the cases involve complex issues of state law with respect to litigation privileges, anti-SLAPP statutes, burdens of proof and state court civil procedure.

It adds that if a federal court reviews state court litigation, it would interfere with the state court’s final judgment dismissing Garlock from the case and its jurisdiction to monitor and enforce settlements.

Simon Greenstone notes that Garlock specifically alleges that in three separate cases in which its firm was involved, the plaintiffs prevented Garlock from presenting its alternative exposure defense at trial by denying exposure to asbestos-containing insulation.

However, it alleges in its motion that although the plaintiffs could not recall specific names or manufacturers of the insulation products, they “repeatedly” disclosed exposure to the insulation in their interrogatory responses and depositions.

The firm adds that Garlock’s “real complaint” is that the plaintiffs failed to name specific asbestos-containing products during discovery but then filed trust claims for exposure to those products.

However, Simon Greenstone argues that it is unclear whether Los Angeles County’s standard interrogatories require asbestos plaintiff to identify specific third-party products, especially if the plaintiffs do not know the names of the products.

The motion states that Simon Greenstone did not file any trust claims in the White or Reed cases, and focuses primarily on the Ornstein case in its motion, which involves a mesothelioma claimant.

Despite obtaining evidence supporting the allegation that the claimant was exposure to “multiple other sources of asbestos, including insulation,” Garlock settled the case as part of a 19-case settlement and allegedly agreed to a settlement figure roughly 42 minutes after sending its initial email suggesting settlement.

“Garlock’s desire to settle was not the result, as it now claims, of a dying mesothelioma plaintiff’s suppression of exposure evidence,” the motion states, “rather, it was a decision based on Garlock’s strategy of avoiding defense costs and its assessment of the litigation risk of defending Ornstein and 18 other cases slated for trial.”

Several months after reaching the settlement, Simon Greenstone filed trust claims for exposure to asbestos-containing products during his service in the U.S. Navy.

The firm claims the trust claims were consistent with information disclosed in discovery and information developed in the tort suit as well as site lists maintained by the trusts.

Simon Greenstone argues that the Ornstein case demonstrates that a thorough examination of discovery in each of the tort suits and application of state law is required to resolve the RICO case.

Furthermore, the court must also examine Garlock’s litigation and settlement practices to determine whether it relied on the plaintiffs’ representations, the motion states.

“In short, Garlock asks for an opportunity to re-litigate the tort cases it already settled,” Simon Greenstone argues. “The state courts where those tort cases were litigated are the proper forums for Garlock’s request, and abstention is the appropriate answer form this court.”

“Garlock should not be permitted to reopen discovery in cases it settled years ago,” it adds. “However, any collateral attack on its settlements should proceed in the state courts best equipped to review those cases in the context of applicable state and local procedural rules and substantive law.”

The firm assures the federal court that abstention would not affect Garlock’s bankruptcy proceeding and would serve the interest of judicial economy because neither Simon Greenstone nor the individual defendants are creditors or parties in the Garlock bankruptcy case.

Simon Greenstone also argue that if the federal court were to rule in favor of Garlock, it would call into question the validity of state-court settlements.

“The federal court should not disturb the state-court settlements, particularly when ‘the overwhelming majority of [Garlock} cases were settled in groups without regard to liability and virtually entirely for cost avoidance,’” the motion states.

It explains that Garlock had “ample” opportunity during the claimant’s five-day deposition to ask about his asbestos exposure and allegedly failed to do so. Yet Garlock still chose to settle the cases.

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

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