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Federal judge agrees to stay RICO cases against asbestos plaintiffs firms

By Jessica Karmasek | Mar 29, 2016

CHARLOTTE, N.C. (Legal Newsline) - A federal judge has agreed to stay four racketeering lawsuits filed against asbestos plaintiffs firms by Garlock Sealing Technologies.

On Monday, Judge Graham Mullen, for the U.S. District Court for the Western District of North Carolina, Charlotte Division, granted the gasket-maker’s motion for stay, filed last week.

Mullen, in his single-page order, granted Garlock’s motion based on the parties’ “consent and for good cause shown.”

All proceedings in the cases are stayed pending consideration of the company’s consensual plan of reorganization by a federal bankruptcy court.

Garlock, in its motion, explained that it reached an agreement with representatives for all current and future asbestos claimants on the principal terms of a consensual plan of reorganization March 17. The agreement will resolve its nearly six-year-old bankruptcy case.

Under the plan, Garlock and its parent, Coltec Industries Inc., and ultimate parent, EnPro Industries Inc., will fund a $480 million trust that will assume sole responsibility for paying all current and future asbestos claims. In exchange, the plan will provide for injunctions that will prohibit all current and future asbestos claimants from pursuing their claims against Garlock, Coltec, their affiliates and certain other protected parties.

“The plan will thus permanently resolve all current and future asbestos claims against Garlock and Coltec,” the gasket-maker wrote in its eight-page motion, filed March 21.

Garlock said it believes confirmation of the plan is “highly likely,” noting that it “enjoys the support of all relevant constituencies,” including the Official Committee of Asbestos Personal Injury Claimants, the law firms that represent claimants on the committee, the representative for future asbestos claimants in Garlock’s bankruptcy case, and representatives for Coltec asbestos claimants.

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

The four RICO actions will be settled in connection with the plan, contingent upon a final order. Under the plan, the actions will be dismissed with prejudice, upon exchange of agreements that include “broad mutual releases,” according to Garlock’s motion.

The claims center on evidence submitted by Garlock in 2013 during its bankruptcy proceeding. That evidence showed the 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 firms 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.

Also Monday, attorneys for John Crane Inc. withdrew its motion to intervene in the action against Dallas firm Simon Greenstone Panatier Bartlett PC. Simon Greenstone was one of five plaintiffs firms facing racketeering lawsuits from Garlock.

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

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

In its filing this week, JCI pointed to Simon Greenstone’s settlement agreement with Garlock.

“In reliance on the Plaintiffs’ and Defendants’ representation that their claims are resolved and will be dismissed upon confirmation of Garlock’s bankruptcy plan, JCI hereby withdraws its Motion to Intervene,” JCI’s attorneys wrote.

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

Simon Greenstone argued in a filing this month that JCI’s motion was moot.

“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,” the firm wrote in its March 17 motion for leave to submit notice of settlement.

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.

From Legal Newsline: Reach Jessica Karmasek by email at

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Organizations in this Story

John Crane Inc. Simon Greenstone Panatier Bartlett PC

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