Defendants get major NYC asbestos win, also fighting a 'ploy' used by plaintiffs lawyers

By John O'Brien | Dec 7, 2018

Manhattan Supreme Court  

NEW YORK (Legal Newsline) – Defendants are celebrating a rare win in an asbestos case originating from New York City’s controversial asbestos court while also appealing a judge’s order that exposes them to even bigger verdicts there.

It’s all occurring as the City was named a “Judicial Hellhole” by a national tort reform group that claims defendants are not treated fairly in its courts – particularly the asbestos docket known as New York City Asbestos Litigation (NYCAL).

NYCAL “continues to cater to New York personal injury lawyers with its plaintiff-friendly procedures and some of the largest payouts in the country,” American Tort Reform Association president Tiger Joyce said this week as ATRA placed NYC as the No. 3 Judicial Hellhole in the country.

But just a week earlier, the Court of Appeals, the state’s highest court, affirmed a 2017 Appellate Division decision that rejected a theory that every exposure to asbestos – no matter how small - is a substantial factor in asbestos-caused diseases like mesothelioma.

Plaintiffs lawyers have pushed that theory in various jurisdictions to some success, but the Juni decision overturns an $11 million NYCAL verdict. That case alleged a mechanic’s mesothelioma was caused by exposure to asbestos while working for Ford Motor Company.

The short affirmation order says the plaintiffs’ evidence “was insufficient as a matter of law to establish” that Ford’s conduct caused the disease.

One concurring opinion did not address the theory but says plaintiffs lawyers failed to prove a connection to Ford’s products, while a dissent said the $11 million verdict should stand because the evidence showed Ford’s conduct was a substantial cause.

Meanwhile, Tishman Liquidation Corporation recently filed an appeal in the ongoing saga of a case management order that, most notably, allows plaintiffs to seek punitive damages and consolidate cases for trial.

Punitive damages are criticized in asbestos cases because the alleged conduct for which the defendant is being punished occurred decades ago, sometimes by corporate predecessors and individuals no longer affiliated with the defendants.

An appellate court, however, affirmed the CMO earlier this year over appeals by dozens of NYCAL defendants.

The issue taken up by Tishman is not punitive damages. Instead, the company says defendants should be allowed to apportion fault to other companies, specifically those that have already declared bankruptcy because of their asbestos liabilities.

Companies that declared bankruptcy established trusts full of funds set aside to compensate asbestos victims. Lawyers submit claims to these trusts in a process separate from the lawsuits they file against still-solvent companies.

Companies like Tishman facing lawsuits say they should be able entitled to those trust claims in order to see the entirety of the exposure history being alleged by the plaintiff.

The ultimate goal would be, in the event of an adverse jury verdict, to reduce that verdict by the percentage of fault allocated to the bankrupt companies.

Tishman worries that plaintiffs can game this process by filing trust claims after the trial has concluded by saying: “While I anticipated filing a claim, I had no intention to file.”

“This ‘ploy’ serves no societal benefit while undermining a NYCAL defendant’s fundamental apportionment rights. There is no justification that would sanction such a ploy,” the company’s attorneys wrote.

Tishman says the Court of Appeals should be given the chance to review the “intends to file” standard, saying it creates “an opportunity for fraud.”

The issue was taken up by the state legislature before a Republican lawmaker stepped down, creating gridlock in the state Senate.

Sixteen states have passed legislation like the bill that stalled in New York. As a need for reform, defendants point to evidence submitted in Garlock Sealing Technologies' bankruptcy that showed lawyers manipulated the system by delaying trust claims while suing Garlock.

A bankruptcy judge in Charlotte, NC, agreed with Garlock.

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