PHILADELPHIA (Legal Newsline) – Bestwall recently scored a major victory in its effort to show asbestos lawyers are manipulating their clients’ claims in order to score bigger paydays than they are entitled to.
On Aug. 24, the U.S. Court of Appeals for the Third Circuit ordered 10 other trusts from which Bestwall seeks information to comply, which can allow the company to see if lawyers are telling different stories about their clients’ asbestos exposure histories to different trusts.
The trusts, who fought subpoenas issued by the company by seeking relief in Delaware federal court (where a claims processing facility is located), received support from a judge there, but Bestwall appealed with the argument its bankruptcy court in North Carolina had already ordered the trusts to comply.
(T)he North Carolina Bankruptcy Court proceedings included appropriate protections for the Trusts’ due process rights. We have observed that ‘prior notice’ to a nonparty ‘greatly strengthens any argument for preclusion,’” the Third Circuit ruled.
“The Trusts were given advance notice of the Rule 2004 Motion and had ample opportunity to present their arguments directly, rather than through the Facility. They knew that Bestwall sought subpoenas for their claimant data, and that those subpoenas might well be directed at them.
“The Trusts could have raised all their objections in the North Carolina Bankruptcy Court, just as they later did in the District Court. They are thus not ill-used by the recognition that their interests were adequately represented by the Facility before the Bankruptcy Court. In short, they were in privity with the Facility.”
Bestwall is one of dozens of companies to enter the bankruptcy system to resolve its asbestos liability. Bankruptcy trusts allow companies and victims to process claims for compensation without having to endure the costs associated with civil lawsuits.
Bestwall is currently sorting out how much it needs to place in its trust and wants to show past settlements from the civil justice system are no indication of future responsibilities because those settlements were inflated by the business practices of plaintiffs lawyers.
The argument – one that has been successful before – is that asbestos lawyers target some companies with civil lawsuits while blaming others that have had to set up bankruptcy trusts to pay asbestos claims.
Before Garlock Sealing Technologies convinced a judge this was happening, companies facing lawsuits had no way to prove the same clients were telling different exposure histories in claims made to bankruptcy trusts.
After the Garlock ruling, which came after the company showed exposure history contradictions in the 15 cases it was permitted to investigate, 17 states passed laws requiring automatic disclosure of trust claims to civil defendants so they could find out who was being blamed for what.
Bestwall has also subpoenaed a few asbestos firms and gained a ruling earlier this year that enforced one of them. The trusts ordered to comply with subpoenas are the Armstrong World Industries, Inc. Asbestos Personal Injury Settlement Trust; the Celotex Asbestos Settlement Trust; the DII Industries, LLC Asbestos PI Trust; the Flintkote Asbestos Trust; the Pittsburgh Corning Corporation Personal Injury Settlement Trust; the WRG Asbestos PI Trust; the Federal-Mogul Asbestos Personal Injury Trust; the Babcock & Wilcox Company Asbestos PI Trust; the United States Gypsum Asbestos Personal Injury Settlement Trust; and the Owens Corning / Fibreboard Asbestos Personal Injury Trust.
Bestwall is taking the hit for all asbestos liabilities for Georgia-Pacific, which has argued through the years with lawyers over whether its joint compound contained asbestos.