Public Granted Access to Evidence of Misrepresentation by Plaintiffs Lawyers in Asbestos Case

I've been covering an asbestos bankruptcy  in which there are major allegations that plaintiffs lawyers misrepresented that their clients were exposed to certain sources of asbestos in the tort system, while indicating something different when seeking payments from opaquely-run trusts formed out of the bankruptcy of companies that made products containing asbestos. Last week, a district court ruled that court proceedings should not have been closed to the public and the press on the issue. I reported on the case for Law.com:

A trial held to estimate the liability of a company undergoing an asbestos-related bankruptcy should not have been closed to the public and press, a federal district court judge, sitting on appeal, has ruled.

U.S. District Judge Max O. Cogburn Jr. of the Western District of North Carolina remanded the case back to a bankruptcy courtroom in order for the lower court to conduct fact-finding about the public's right of access because of the common law or because of the First Amendment.

Senior Bankruptcy Judge George R. Hodges has been presiding over gasketmaker Garlock Sealing Technologies LLC's bankruptcy. During hearings held to estimate Garlock's liability to claimants who allegedly developed fatal mesothelioma because of exposure to asbestos from Garlock products, Hodges closed part of the trial.

Hodges concluded that past settlements Garlock had entered into were not a reliable way to estimate the company's liability. Discovery into 15 of those cases showed a pattern of misrepresentation by plaintiff's lawyers. Plaintiffs' counsel allegedly indicated their clients were exposed to certain sources of asbestos in the tort system, while indicating something different when seeking payments from opaquely-run trusts formed out of the bankruptcy of companies that made products containing asbestos.

Later, Hodges rejected the request to unseal the evidence upon which he concluded that there was a pattern of misrepresentation regarding claims made against Garlock.

Hodges should not have relied upon a confidentiality order alone to close the estimation trial because that “shifted the presumption that favors open courts to a presumption favoring the closure of proceedings based on confidentiality designations by counsel,” the district court found.

Legal Newsline, a business-oriented news outlet owned by the Institute for Legal Reform, an affiliate of the U.S. Chamber of Commerce, was the media outlet that sought access to the Garlock case.

“The court finds that, although done with the best judicial intentions of providing for the efficient administration of justice, Judge Hodges' decision to seal the estimation hearing and maintain the seal as to judicial filings and the transcript of those proceedings after his estimation order was contrary to the requirements of prevailing case law,” Cogburn said.

Separately, Cogburn has ordered that the Garlock's claims. asserting that plaintiffs' lawyers violated the Racketeer Influenced and Corrupt Organizations Act and engaged in fraud, be consolidated in front of one U.S. magistrate judge for pretrial case management, including any motions by the plaintiffs' counsel to transfer venue to their home districts.