CHARLOTTE, N.C. (Legal Newsline) – A New York City asbestos firm will be forced to turn over information on more than 100 of its clients in a racketeering lawsuit filed against it.
On Sept. 3, U.S. District Judge Graham Mullen ruled that the records being sought by plaintiff Garlock Sealing Technologies could help establish a pattern of racketeering on the part of Belluck & Fox.
Mullen’s decision affirmed an earlier ruling by U.S. Magistrate Judge David Cayer. He agreed with Belluck & Fox’s assertion that Garlock’s discovery requests are broad.
“Yet, so is the fraud in which Plaintiffs are alleged to have engaged,” Mullen wrote.
“Garlock has made substantive allegations of complex fraudulent conduct over a number of years, and cites specific examples of this conduct in its complaint. To deny Plaintiffs access to information which may support these claims would run contrary to Rule 26, and to federal courts’ liberal treatment of the rules of discovery.”
Garlock’s Racketeer Influenced and Corrupt Organizations lawsuit is one of four filed days before a landmark ruling in 2014 in its bankruptcy case.
During a 2013 trial that determined how much money Garlock needed to put in a bankruptcy trust to compensate asbestos victims, the company was permitted full discovery into the cases of 15 plaintiffs.
What the company found showed that plaintiffs attorneys routinely delayed submitting claims to bankruptcy trusts while lawsuits against solvent defendants, like Garlock used to be, were pending.
This was done with the intention of pinning more blame on Garlock, the company said.
Judge George Hodges agreed. His January 2014 ruling agreed with the company’s assertions, and he ordered the company to put $125 million in the trust – more than $1 billion less than plaintiffs attorneys had requested.
“These fifteen cases are just a minute portion of the thousands that were resolved by Garlock in the tort system,” Hodges wrote in a passage the company cited in its recent court filing.
“And they are not purported to be a random or representative sample. But the fact that each and every one of them contains such demonstrable misrepresentation is surprising and persuasive.
“More important is the fact that the pattern exposed in those cases appears to have been sufficiently widespread to have a significant impact on Garlock’s settlement practices and results… It appears certain that more extensive discovery would show more extensive abuse.”
Earlier this year, Belluck & Fox moved for a protective order against Garlock’s request for even more information on 157 of its clients’ claims.
“Defendants’ objections are yet another transparent effort to conceal evidence of the scheme and the mechanisms that allowed them to employ it,” Garlock’s attorneys wrote in a response to Belluck & Fox’s objection.
“Considering what Garlock has learned in the context of its bankruptcy case, Defendants’ doggedness in fighting to keep this evidence from seeing the light of day is perhaps the best evidence of its relevance.”
In a May reply brief, Belluck & Fox called the information being sought “irrelevant.”
“Again, to be clear, Plaintiffs are asking the court to allow discovery into cases that it settled in the tort system without even being sued,” the firm wrote.
“Plaintiff’s brazen attempt to gain access to these non-parties’ clearly irrelevant trust claims is astonishing. Defendants respectfully submit that the court must put a stop to Plaintiff’s clearly abusive strategy.”
The reply brief goes on to call Garlock’s previous brief “highly indignant.”
“It is now clear that, while the complaint includes allegations about just 11 cases, Plaintiffs are seeking to expand discovery to include all the trust claims of virtually every Belluck & Fox client that ever brought a claim against Garlock – whether the case was litigated in the tort system or not,” Belluck & Fox wrote.
Other firms sued in RICO cases by Garlock are Dallas firms Simon Greenstone and Waters & Kraus and Philadelphia’s Shein Law Center.
From Legal Newsline: Reach editor John O’Brien at email@example.com.