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Friday, February 21, 2020

FACT Act testimony begins in House subcommittee

By John O'Brien | Feb 4, 2015

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WASHINGTON (Legal Newsline) – A bill that aims to promote transparency in the asbestos recovery system was the subject of a U.S. House of Representatives subcommittee hearing on Wednesday.

The House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law spent two hours discussing the bill, which was introduced 10 days earlier.

The bill would require asbestos bankruptcy trusts, which were created by companies seeking to survive their asbestos liabilities by placing funds for victims in a trust rather than fight claims in civil courts, to release information on those seeking compensation in quarterly reports.

Rep. Blake Farenthold, a Republican from Texas who introduced the bill, said one of its benefits is that it will ensure sufficient funds are kept in the trusts by rooting out fraudulent claims.

 “The bill is designed to protect future victims of asbestos, or victims who have not yet discovered their injury,” he said.

Democrat members of the subcommittee disagreed, with Rep. John Conyers, D-Mich., taking issue with the publication of claimants’ information.

“This means asbestos victims will be revictimized by allowing this highly personal and sensitive health information to be irretrievably released into the public domain,” he said.

Providing testimony in support of the bill were K&L Gates attorney Nick Vari, Bates White economic consultant Marc Scarcella and Yeshiva University law professor Lester Brickman.

Opposing the legislation was Elihu Inselbuch of Caplin & Drysdale. Their submitted written testimonies can be found here.

It is the third time the bill has been introduced, but it may have a better shot of getting through Congress this year.

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.

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.

At the hearing, much was made of a 2014 ruling in North Carolina bankruptcy court.

That January, 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, roughly $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 will occur in the coming weeks.

The company also filed four racketeering lawsuits that were recently unsealed against plaintiffs firms.

At one point, the hearing devolved into a loud argument between Marino and Rep. Hank Johnson, D-Ga.

Johnson was upset that Vari was allowed to expand on an answer to a question about confidential settlements, rather than giving a "yes" or "no" answer, as Johnson had requested.

Johnson felt Vari's time in answering the question cut into the five minutes he was allowed to ask questions.

"What just happened to me, with the chair trying to extract testimony beyond the scope of my question and apply our rigorous time schedule to my time, what that does is prevent me from moving forward," Johnson interjected as Marino was attempting to begin another lawmaker's five-minute question-and-answer time.

When Marino responded that Johnson could submit additional questions in writing, Johnson asked for a parlimamentary inquiry regarding "the power of the chairman to take over the questioning."

Marino angrily responded that he gave Johnson more than a minute to submit documents into the official record without timing him, and that Johnson had tried something similar the day before.

"You did this yesterday during a hearing, and we're not going to allow it," Marino said.

The argument continued for a few more exchanges before Marino cut it off. At the end of questioning, he allowed Johnson extra time to ask his remaining questions.

From Legal Newsline: Reach editor John O’Brien at

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