LOS ANGELES (Legal Newsline) - A Dallas asbestos firm facing a racketeering lawsuit has given up on its own case against John Crane Inc., with a California federal judge dismissing the firm’s suit in an order last week.
Judge Consuelo B. Marshall for the U.S. District Court for the Central District of California, in her two-page order Thursday, said the plaintiff, Simon Greenstone Panatier Bartlett PC, failed to file an amended complaint.
Mark Behrens -- a partner at Washington, D.C., law firm Shook Hardy & Bacon who is co-chair of the firm’s public policy group -- said Simon Greenstone’s filing in the Los Angeles federal court was nothing but an attempt at forum-shopping.
“The court rejected it,” Behrens said in an email to Legal Newsline. “Now the firm will have to defend the RICO claim against it in Illinois district court.”
He noted, “Any appeal by the firm would be heard by a potentially less favorable federal appellate court.”
On Aug. 26, Marshall issued an order granting JCI's motion to dismiss, dismissing without leave to amend Simon Greenstone’s claims under the Declaratory Judgment Act and dismissing with leave to amend its breach-of-contract claim. Simon Greenstone did not amend that claim.
On Oct. 11, the parties filed a joint request for judgment, requesting Marshall enter judgment. She denied the request because there was no final decision on the merits, and issued an Order to Show Cause why the action should not be dismissed for failure to prosecute.
On Nov. 2, Simon Greenstone notified her that it did not intend to amend their complaint.
“Consistent with the Court’s Order referenced above, and Plaintiffs’ formal notice of their intent not to amend, this action is dismissed with prejudice and judgment hereby entered in favor of Defendants,” the judge concluded.
In February, the plaintiffs firm filed a breach of contract lawsuit against JCI in Los Angeles federal court. The firm, which has an office in that city, also asked the judge to rule that JCI is breaching previous asbestos settlement agreements.
The complaint was filed in response to JCI’s January motion that sought approval to join a Racketeer Influenced and Corrupt Organizations lawsuit against Simon Greenstone. JCI wanted to make its own racketeering claims in addition to those already stated by Garlock Sealing Technologies.
Ultimately, Garlock settled, and JCI filed its own lawsuits against Simon Greenstone and Philadelphia's Shein Law Center in June.
In its response to Marshall’s Oct. 24 order to show cause, Simon Greenstone argued the judge should not dismiss the action for failure to obey court orders “for the straightforward reason that Simon Greenstone has not failed to obey any of this Court’s orders.”
The firm argued that the court’s Aug. 26 order did not require it to amend its complaint; it only permitted it to do so.
“The Court’s August 26 Order is explicit that although the Court was permitting Simon Greenstone to amend its complaint to re-assert Count 3, it was not requiring it to do so,” the plaintiffs wrote in their Nov. 2 response. “The Order tells Simon Greenstone what it must allege to sufficiently state a breach-of-contract claim ‘should [it] choose to file an amended complaint.’”
Simon Greenstone asked that the court, instead of dismissing the action, enter a final judgment dismissing its claims in the form set out in the proposed judgment jointly submitted by the parties and attached to the joint request for entry of judgment.
The firm also made it clear it would not amend its complaint.
“Here, Simon Greenstone indicated to the Court its intention not to amend its complaint to re-assert its breach-of-contract claim by proposing to the Court, joined by JCI, that the breach-of-contract claim be dismissed with prejudice,” the plaintiffs wrote.
JCI declined to comment on Marshall’s order last week.
In early June, JCI filed lawsuits against Shein Law Center, a Philadelphia firm, and Simon Greenstone under the RICO Act. The basis of the claims is evidence uncovered by Garlock Sealing Technologies three years ago during its bankruptcy proceeding.
“The defendants devised and implemented a scheme to defraud JCI and others, and to obstruct justice,” the JCI complaints state.
“The defendants fabricated false asbestos ‘exposure histories’ for their clients in asbestos litigation against JCI and others and systematically concealed evidence of their clients’ exposure to other sources of asbestos.”
Now, Simon Greenstone wants JCI’s racketeering complaint against it dismissed for lack of subject matter jurisdiction and failure to state a claim.
“... This Court lacks personal jurisdiction over Simon Greenstone because JCI’s Complaint is based solely on litigation conduct allegedly engaged in by Simon Greenstone in lawsuits litigated out of state, in California, Texas, and Pennsylvania,” attorneys for the firm wrote in a Sept. 7 motion, filed in the U.S. District Court for the Northern District of Illinois.
“For similar reasons, even if personal jurisdiction existed, this Court would be an improper venue for JCI’s suit, because, among other reasons, the events or omissions giving rise to the claim occurred in the states in which the underlying litigation occurred, and not in this district.”
Last week, JCI filed its opposition to the firm’s motions to dismiss.
JCI argues in the opposition, filed in the Northern District of Illinois Thursday, that Simon Greenstone’s suggestion that the firm has had no meaningful connection with Illinois “is not remotely credible.”
Not to mention the company’s claims have been validated by other federal courts, JCI argues.
“JCI has properly pled an actionable RICO claim,” it wrote. “The conduct at issue here by these same actors has already been condemned as a ‘startling pattern of misrepresentation’ by Judge Hodges in In re Garlock Sealing Techs., LLC. That same pattern of misconduct by these Defendants has been found actionable under RICO by another federal district court.”
JCI argues all of the firm’s motions should be denied, saying the defendants have identified “no sound basis” for the court to dismiss the company’s complaint.
“Although Defendants seek to characterize this lawsuit as an effort to relitigate old judgments, JCI is not trying to overturn prior litigation results; rather, what JCI seeks is compensation for losses suffered as a result of Defendants’ pattern of fraud,” it wrote in the 48-page opposition.
According to minutes from a September status hearing before Judge Amy J. St. Eve, replies are due by Dec. 2.
JCI argues that both of its lawsuits -- against Simon Greenstone and Shein -- seek “redress” for what the U.S. Bankruptcy Judge George Hodges, of the U.S. District Court for the Western District of North Carolina, has referred to as “wide-ranging, systematic and well-concealed fraud” against asbestos defendants such as itself.
In 2014, Garlock used the evidence from its 2013 bankruptcy estimation trial to file lawsuits against five firms -- Shein, Simon Greenstone, Belluck & Fox of New York City, and Dallas firms Waters & Kraus and Stanley-Iola.
The Garlock lawsuits alleged the five firms told different stories about their clients’ exposures to asbestos in civil lawsuits than they did in the bankruptcy trust system.
Hodges agreed in a landmark 2014 decision.
The firms delayed the submission of their clients’ claims to trusts that were established by bankrupt former asbestos defendants. This was done so Garlock could not assign blame for the plaintiff’s disease to the companies in the trust system, the judge ruled.
The bankrupt companies were forced to establish 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.
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,” 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.”
Garlock’s evidence, which was originally sealed but eventually uncovered by a successful legal challenge from Legal Newsline, showed that after several dozen asbestos defendants established bankruptcy trusts, its own liabilities increased. The company’s average mesothelioma settlement rose from almost $10,000 in 1999 to nearly $80,000 by 2010.
Garlock’s allegations were part of a strategy to limit the amount it would need to put in the trust it is establishing to resolve its asbestos liabilities. Hodges ruled Garlock needed to only put $125 million in its trust, more than $1 billion less than plaintiffs attorneys had requested.
A recent proposed settlement put a stay on Garlock’s RICO lawsuits. They apparently will be dismissed when the settlement, which requires the establishment of a $480 million trust, is finalized.
Before the stay, JCI sought to intervene. Now it has filed its own complaints instead.
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.