Garlock: Judge finds no 'misconduct' or 'injustice' that justifies reviewing landmark decision

By Heather Isringhausen Gvillo | Dec 10, 2014

CHARLOTTE, N.C. (Legal Newsline) – During a hearing on Thursday addressing a motion to reopen the Garlock Sealing Technologies estimation record, Judge George Hodges concluded that it none of the arguments raised by a committee representing asbestos personal injury claimants would change the overall outcome of the case or his ultimate decision

“I can’t find any misconduct, any injustice or any new evidence that’s involved that is material in any way,” said Hodges, who estimated Garlock's liability earlier this year to be $125 million - roughly $1 billion less than plaintiffs lawyers wanted.

The hearing addressed the committee's motion to revisit that estimation figure.

According to a transcript from the hearing, Hodges held that there has been no showing that Garlock had a duty to produce documents the committee alleges it failed to provide during the estimation record. He added that the committee did not provide proof that Garock consciously hid any information.  

“The -- I -- you know, most of what we've heard today from both of you has been a reargument of what I've already decided and I won't go into that. I may well be wrong as I can be in my decision,” Hodges said. “I take some comfort in the fact that at least three levels of the federal judiciary depend for their jobs on me being wrong about things like this, but I'm not convinced by any of this that I should change my mind about that stuff.”

During the Dec. 4 hearing, Trevor Swett of Caplin & Drysdale, counsel for the committee, said Garlock’s allegations during the estimation proceeding were “a drastic and unprecedented conclusion that rules out as a yardstick the past claims that most closely resemble those that Garlock would be resolving in non-bankruptcy courts and processes now and for decades to come but for its Chapter 11 filing.”

Swett argued that Garlock suppressed evidence during the estimation proceeding that allegedly would have revealed that Garlock had access to evidence of insulation exposure during a number of tort cases.

“It's quite likely, in my estimation, that if you give us the key to open up the door on the as yet unproduced evidence regarding those 72 RFA cases we will be able to satisfy you that those cases were settled on good, sound, self- interested, well-represented terms by Garlock and opposing counsel, that Garlock was addressing real trial risks as best it could with dwindling resources, and that it was not the victim of any kind of culpable suppression of evidence by plaintiffs' attorneys,” he said.

The committee believed it was Garlock’s burden to gather whatever evidence it found appropriate, relevant and persuasive.

“Given that it is the defendant's burden to make that case against the absent entity … there is no obligation on the plaintiff's lawyer's part to go do research into the massive amount of historical evidence out there, whether in his own firm's files or some other firm's files, for the benefit of the defendant's case,” Swett said.

Swett outlined two reasons why the estimation record was “incomplete and distorted,” saying Garlock failed to produce what information it had about the worksites and present asbestos products and alleging Garlock’s production was insufficient in regards to “unprivileged communications” with opposing counsel.

In support of its request to reopen the proceeding, the committee noted that the final estimated liability was significantly lower than what it felt was proper – the gasket manufacturer was ordered to put $125 million in its bankruptcy trust, roughly $1 billion less than what plaintiffs’ attorneys requested as Garlock’s liability. Because the estimation was so different, the committee urged Hodges to make sure it was appropriate so future claimants will “get their due from this debtor.”

“We are not asking you today to vacate your opinion. We're not asking you to conclude that you were wrong. We are asking you to allow us to supplement the record and come back. Come back to what end can be decided later. We want document discovery. We want it in several categories, then we want to come back and report with the parties having an opportunity to suggest to you what, if any, further steps need to be taken,” Swett said.

Garland Cassada of Robinson Bradshaw & Hinson, counsel for the debtors, followed by saying the committee has only revealed that Garlock had a litigation problem, not a liability problem.

He noted that Swett’s arguments had nothing to do with the alleged suppression of evidence by the plaintiffs attorneys during Garlock’s previous asbestos litigation. Instead, Swett addressed whether Garlock was hurt by the evidence suppression.

“He hasn’t shown, Your Honor, that we committed any fraud or engaged in any misconduct to trick the Court into rejecting the committee's theory about settlements,” Cassada said. “He hasn't shown that there's any newly discovered evidence that would change your opinion at all. In fact, the committee's new evidence is completely consistent with Garlock's case. It supports Garlock's case and supports the evidence we offered at trial.”

Cassada argued that Hodges got it right the first time when he concluded that discovery revealed a “startling pattern of misrepresentation.”

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.

However, Cassada noted that the committee did not challenge these “fundamental” findings, challenging only whether Garlock was injured by any suppression that occurred.

“[T]his is not the place to retry issues unless he can show a basis for reopening the record under the Rules and he hasn't done that. And the newly -- he hasn't come close to doing that,” he added.

Not only did the committee fail to challenge the suppression of evidence, but Cassada stressed that it admitted to withholding evidence in the tort cases, particularly in cases involving insulation containing amphibole asbestos.

Not only would reopening the estimation proceeding be timely, Cassada explained how costly the move could be. So far, the committee alone has spent more than $40 million of Garlock’s money on this bankruptcy case, he said.

During the hearing, Dan Clodfelter of Parker Poe Adams & Bernstein, counsel for Coltec Industries, expressed that if the court were to put the bankruptcy case in “limbo” as it reopens the estimation case, then it could potentially have to do the same with cases during the course of the estimation discovery period.

“And then if that were to happen -- and mind you, I'm not proposing that … I'm sure that I will be here asking for that and we are off on a fishing expedition of unprecedented proportions that would make the huge amounts already expended on this estimation proceeding would dwarf them,” Clodfelter said.

Ultimately, Hodges agreed that the court needed to move forward and denied the Committee’s motion to reopen the estimation proceeding.

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

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