Asbestos firm says it has settled with Garlock in RICO suit

By Jessica Karmasek | Mar 24, 2016

Jeffrey Simon of Dallas asbestos law firm Simon Greenstone Panatier Bartlett PC.  

CHARLOTTE, N.C. (Legal Newsline) - A Dallas asbestos firm being sued for racketeering said in a court filing last week that it has settled with its accuser, though it is unclear what will become of claims possibly being asserted by another company the firm targeted with lawsuits.

Simon Greenstone Panatier Bartlett PC, one of five plaintiffs firms facing racketeering lawsuits from Garlock Sealing Technologies, filed on March 17 a motion for leave to submit notice of settlement.

According to the two-page motion, filed in the U.S. District Court for the Western District of North Carolina, Charlotte Division, “all claims and counterclaims between Simon Greenstone and (Garlock) have been settled for mutual waivers of costs, subject to confirmation of the Bankruptcy Court as part of the Plan of Reorganization for Garlock.”

Further details of the settlement were not included in Simon Greenstone’s motion, which was filed in opposition to a motion to intervene filed by John Crane Inc.

JCI filed its motion in January, seeking approval to join the Racketeer Influenced and Corrupt Organizations, or RICO, lawsuit against Simon Greenstone. JCI wants to make its own racketeering claims in addition to those already stated by Garlock.

The claims center on evidence submitted by Garlock in 2013 during its bankruptcy proceeding. That evidence showed Simon Greenstone and other asbestos plaintiffs firms were manipulating the recovery system in order to drive up the value of settlements with and verdicts against solvent asbestos defendants, a bankruptcy judge ruled in 2014. 

The Texas firm, and four others, did this by delaying the submission of its clients’ claims to trusts that were established by bankrupt former asbestos defendants, the judge ruled.

These companies were forced to establish bankruptcy trusts because they could not afford to pay their asbestos liabilities. Asbestos victims submit claims to trusts in a process separate from the victims’ civil lawsuits against companies that are not bankrupt.

JCI and Garlock claimed asbestos firms delayed filing these trust claims so more blame could be pinned on them in civil lawsuits.

A federal bankruptcy judge agreed in 2014 during the same week Garlock filed its racketeering lawsuits against the firms. Garlock had submitted evidence in 15 cases during a trial to determine how much it would need to place in its trust.

“These fifteen cases are just a minute portion of the thousands that were resolved by Garlock in the tort system,” Judge George Hodges wrote.

“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.”

Hodges eventually ordered Garlock to put $125 million in its trust -- more than $1 billion less than plaintiffs attorneys requested. However, the company agreed last week to put $480 million in the trust.

Garlock’s RICO cases echo the claims it made in its bankruptcy proceeding. The other defendants are Belluck & Fox in New York City, Stanley-Iola of Dallas, Shein Law Center of Philadelphia and Waters & Kraus of Dallas.

Garland Cassada, counsel for Garlock, couldn’t be reached for comment as to whether the settlement includes the other firms.

Last month, Simon Greenstone filed a breach of contract lawsuit against JCI in Los Angeles federal court. The firm, which has an office in that city, is asking a judge to rule that JCI is breaching previous settlement agreements by asking to intervene in the Garlock RICO case.

The firm’s complaint was filed in response to JCI’s January motion.

“The settlement of this lawsuit renders the Motion to Intervene moot as there will no longer be any suit in which JCI can intervene,” Simon Greenstone wrote in last week’s motion.

“Further, JCI will have every opportunity to litigate its claims in the already pending California Action and should not be permitted to disrupt this complex, global resolution of the Garlock bankruptcy.”

Simon Greenstone noted that its counsel has sought to confer with JCI on the firm’s motion via email, and “JCI opposes this motion.”

Late Monday, Magistrate Judge David Cayer granted the firm’s motion for leave to submit notice of settlement. Attorneys for JCI could not immediately be reached for comment on what the action means for their client’s claims.

The case against Simon Greenstone saw much more activity than Garlock's other RICO cases.

Last year, the firm filed a counterclaim in the case, maintaining that Garlock was the one that engaged in racketeering.

Simon Greenstone alleged in its November filing that the gasket-maker made fraudulent misrepresentations and withheld evidence of the dangers of its products in order to lower the costs of verdicts and settlements.

Simon Greenstone filed its counterclaim and answer to Garlock’s complaint more than two months after a federal judge refused to dismiss Garlock’s complaint. The firm has appealed that decision to the U.S. Court of Appeals for the Fourth Circuit in Richmond, Va.

Garlock recently issued subpoenas to 29 law firms, seeking information on hundreds of more asbestos claimants.

It was reported Friday that Garlock and its parent companies reached an agreement with a representative for future asbestos claimants.

EnPro will establish a $480 million trust fund to settle all current and future asbestos claims against subsidiary Garlock. The deal still needs to be approved by the federal bankruptcy court, federal court and 75 percent of current claimants.

EnPro President and CEO Steve Macadam says he expects the agreement to be finalized in summer 2017.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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