asbestos

Here's a piece I've written for the National Law Journal:

After a protracted fight, a federal judge has ruled on Thursday that all of the evidence that led him to find misrepresentations by plaintiffs in an asbestos-related bankruptcy must be unsealed.

When U.S. Bankruptcy Judge George Hodges of the Western District of North Carolina estimated the liability of Garlock Sealing Technologies, LLC, in January, he found that Garlock likely owes $125 million to asbestos plaintiffs.

At that time, he rejected the plaintiffs' argument that Garlock's liability is around $1 billion to $1.3 billion after finding that there was evidence of misrepresentation by plaintiffs' lawyers in several cases that Garlock settled in the past or in which Garlock lost jury verdicts.

The judge in January found that some plaintiffs alleged they were exposed to asbestos from different sources in civil court than when they submitted claims to the trusts formed after companies went through bankruptcy because of asbestos-related liability.

During a hearing Thursday, Hodges ruled from the bench that the only information that should be redacted are social security numbers, birth dates, financial account numbers, names of minors and medical information except for diseases related to asbestos.

The judge said he also should not have closed some of the proceedings in January.

The judge said that the First Amendment applies to the records even though the estimation proceeding wasn’t a final adjudication of what Garlock owes to claimants who allege their exposure to Garlock’s products caused them mesothelioma cancer.

“It should have been public,” Hodges said. “This is the type of proceeding that would have been historically open. Public access would have served a positive role in the functioning of the court by enabling the public to evaluate the court’s decision based on all of the evidence rather than on simply part of it.”

Hodges overruled Garlock’s assertion of attorney-product privilege or attorney work-product privilege to keep sealed major expense authorizations forms documenting the approval of settlement decisions and the mental impressions and opinions of in-house and trial counsel. Hodges also unsealed Garlock’s trial evaluation forms with outside counsel’s trial plans and assessment of cases.

U.S. District Judge Max O. Cogburn Jr. of the Western District of North Carolina in July reversed Hodges’ decision to seal the evidence that led to his estimation of Garlock’s liability. Cogburn remanded the case for the lower court to conduct fact-finding about the public's right of access under common law or the First Amendment. 

Asbestos claimants and their law firms, as well as the official committee of asbestos personal injury claimants, moved to seal questionnaires filled out by plaintiffs, information claimants submitted to the trusts formed out of the bankruptcies of other asbestos defendants, and evidence referencing settlements by asbestos claimants, among other information.
                 

The documents were not unsealed immediately because they must still be redacted.

I'm writing several times a day about products liability for Law.com/The National Law Journal. Occasionally I cross-post a blog I find particularly interesting.

Garlock Sealing Technologies LLC and two other related defendants are opposing motions to keep sealed the names of asbestos plaintiffs and the amounts of settlements they have reached with those plaintiffs.

The judge presiding over the Garlock’s bankruptcy proceedings has set up a process to unseal evidence that led him to make findings of alleged misrepresentation by plaintiffs.

Garlock also wants to unseal questionnaires submitted by claimants in its bankruptcy case and submissions made by claimants to trusts formed out of other companies’ asbestos-related bankruptcies.

“A large portion of the asbestos claimants whose names appear in the estimation record have open claims and are therefore the putative creditors (and parties in interest) in this case,” Garlock said. “The [U.S. Court of Appeals for the Fourth Circuit] has held that parties should be allowed to litigate anonymously only in ‘extraordinary circumstances’ justifying a ‘rare dispensation.’”

Claimants’ names are routinely disclosed in asbestos tort litigation and in marketing materials disseminated by the law firms representing them, Garlock said.

In a separate motion , the official committee of asbestos personal injury claimants objected to Garlock’s request to seal some of the bankruptcy filings, including the major expense authorizations that memorialize the reasons Garlock settled mesothelioma cases for the amounts it did and trial evaluation forms completed by Garlock’s outside counsel about cases going to trial.

“Until now, the debtors have been enthusiastic advocates of disclosure, casting themselves as crusaders on the public’s behalf,” the committee said. “Now, without any sense of irony, the debtors maintain that their own documents—critical pieces of the ‘full story’—should remain sealed and shielded from public scrutiny.”

Those documents cannot be shielded by attorney-client or work-product privilege because Garlock had its attorneys testify during the proceeding held to estimate its liability to asbestos plaintiffs about why they settled cases, the committee said.

According to the committee, those “contemporaneous documents” are at odds with why Garlock says it settled its cases.

Last winter, U.S. Bankruptcy Judge George Hodges of the Western District of North Carolina estimated that Garlock likely owes $125 million to asbestos plaintiffs. He rejected the plaintiffs' argument that Garlock's liability is around $1 billion to $1.3 billion after finding evidence of misrepresentation by plaintiffs' lawyers in several cases that Garlock settled in the past or in which Garlock lost jury verdicts.

According to both sides, the parties agree that there should be redactions of most plaintiffs’ Social Security numbers, birth dates, the identities of minors, account numbers and medical information except that related to asbestos exposure.

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.

I'm writing several times a week about products liability for Law.com/The National Law Journal. Occasionally I cross-post a blog I find particularly interesting.

A judge who found widespread misrepresentation by plaintiffs in a gasketmaker’s bankruptcy has granted Ford Motor Co. access to the statements that parties must file to disclose their economic interests in bankruptcies.

U.S. Bankruptcy Judge George Hodges of the Western District of North Carolina said in a hearing on April 17 that Ford may access the Federal Rule of Bankruptcy 2019 statements, which must be filed by anyone participating in bankruptcy cases.

The statements are public records, Hodges said in ruling from the bench, and he did not find any improper purpose behind Ford’s request.

Hodges said his order will not go into effect until two weeks after law firms that the plaintiffs say have not been served with Ford’s request receive that service.

If those firms and their clients object, then the order will not go into effect against them, Hodges said. The order will be implemented “on a no protest basis,” Hodges said.

Hodges is presiding over the bankruptcy of Garlock Sealing Technologies, LLC.

The 2019 statements and other evidence in Garlock’s insolvency proceeding have been sealed after Hodges presided over a hearing to estimate the liabilities of Garlock for asbestos claimants who have mesothelioma cancer.

Hodges has denied access to the sealed transcripts of the estimation proceeding, which led to his findings of misrepresentation. In a prior ruling, Hodges noted that the district court already has an appeal about closing the proceeding to the public before it. He reasoned it would be more efficient for the district court to hear the appeals of Ford, online news outlet Legal Newsline, and others in one proceeding.

Ford’s counsel, K. Elizabeth Sieg of McGuire Woods LLP in Richmond, Va., argued that the names of the asbestos litigants suing Garlock are “at the very heart of the fraud Ford seeks to investigate. Ford suspects it has been defrauded in the settlement of asbestos claims” by plaintiffs who did not disclose they had claims against Garlock.

Rule 2019 statements bear directly on the “integrity and transparency” in bankruptcy proceedings, Sieg argued.

Sieg cited the Company Doe decision in the U.S. Court of Appeals for the Fourth Circuit this week in which the court held that an order sealing a company’s identity throughout an entire litigation violated the public’s right of access under the First Amendment.

Trevor Sweet III, a plaintiffs attorney with Caplin & Drysdale, Chartered in Washington, said disclosing the 2019 statements would expose plaintiffs to identity theft and the disclosure of their asbestos diseases. He also argued that settlement amounts should not be disclosed because they could not be disclosed in the civil tort system.

“In the tort system where Ford hopes to use this information, Ford is not entitled to know the amount of any settlement that a Ford plaintiff has reached with any other person unless and until Ford suffers a judgment in favor of that person and that court has been called upon to mold that judgment,” Swett argued.

The plaintiff’s attorney distinguished the Fourth Circuit decision because it was not a bankruptcy case but “a case in which a district court allowed an entire litigation from filing to judgment [to proceed] behind closed doors.”

The judge also granted Specialty Products Holding Corp. and Bondex International, Inc. access to the 2019 statements Thursday.

Hodges previously ruled that insurer Aetna, Inc., and Rawling Company LLC, a cost containment vendor for insurers, can have to the 2019 statements.

I'm writing several times a day about products liability for Law.com/The National Law Journal. Occasionally I cross-post a blog I find particularly interesting.

A bankruptcy judge, who found “demonstrable misrepresentation” by plaintiffs' lawyers in several asbestos cases, denied the motions of asbestos defendants and a media outlet to access that sealed evidence.

Ford Motor Co., joined by Volkswagen Group of America Inc, Honeywell International Inc. and Crane Co., filed a motion to unseal that evidence. In a separation motion, news outlet Legal Newsline sought to unseal the trial testimony and exhibits on which the judge based his Jan. 10, 2014, order, finding that plaintiffs' lawyers withheld evidence of their clients' exposure to other sources of asbestos in the bankruptcy case of Garlock Sealing Technologies, LLC.

Those cases included two that resulted in a $9 million verdict in California and a $1.35 million verdict in Texas, the judge said.

By denying the motions, U.S. Bankruptcy Judge George Hodges of the Western District of North Carolina said in a hearing on March 27 that he was hoping to “get all of us to an answer as simply as I can” on whether that evidence should be publicly accessible.

By denying the motions on their merits, the judge said he hoped that would get the motions to the U.S. district court on appeal for resolution at the same time.

Legal Newsline already has an appeal pending in the district court on being denied permission by Hodges to attend the hearing during which he heard evidence on the estimated liability Garlock faces for asbestos claims.

“The practical problem I have is this: if I granted the motions to unseal filed by Ford and Volkswagen and Legal Newsline it would essentially moot the appeal,” Hodges said.

Trevor Swett III, a plaintiffs attorney with Caplin & Drysdale, Chartered in Washington, argued that Hodges did not have subject-matter jurisdiction anymore because Legal Newsline has appealed the sealing of the evidence and the closing of the courtroom.

“They mean to unseal the evidence going to the supposed misrepresentation and suppression of evidence,” Swett argued. “That’s the same evidence implicated in their demands on appeal.”

Legal Newsline's attorney, Steven Pflaum, argued that jurisdiction was not divested because the district court only has to decide if the courtroom should have been closed during the estimation hearing.

Unsealing the evidence would allow public understanding of who has been victimized by a pattern of misrepresentation, said Pflaum, of Neal, Gerber & Eisenberg LLP in Chicago.

It is “vitally important that the public understand the courts,” Pflaum said.

Hodges ruled on a separate motion that insurer Aetna, Inc., and Rawling Company LLC, a cost containment vendor for insurers, brought to have access to Federal Rule of Bankruptcy 2019 statements. Those statements must be filed by anyone participating in bankruptcy cases.

Hodges said that social security numbers and the retention agreements law firms enter into with clients can't be disclosed.

“It appears to me ... that the interests of the opposing parties are not superior to the public rights to access and that there is a legitimate interest here on behalf of the movants” to protect their subrogation rights against asbestos defendants and reimbursement rights against members of insurance plans, Hodges said.

Read more: http://www.nationallawjournal.com/id=1202648736269/Judge-Denies-Access-t...

I'm blogging several times a day about products liability for Law.com. Each day I cross-post an excerpt of the day's blog I find most interesting.

Mass torts cases must not be aggregated, and plaintiffs must provide facts to support their claims through expert reports, in order to avoid having nonmeritorious cases clogging the court process, says the federal judge presiding over the federal Asbestos Multidistrict Litigation for 5.5 years.

Asbestos MDL-875 has been the largest MDL in terms of claims and cases, wrote U.S. District Judge Eduardo C. Robreno in an article published in the Widener Law Journal.

The consolidation of large number of cases not only raises due process issues by forcing parties to litigate or settle cases in groups, but incentivizes “the number of cases that can be filed, not the relative merit of the individual case,” Robreno said.

Asbestos litigation has grown to over 186,000 cases and more than 10 million claims. Only 2,979 cases are still in the MDL.During his tenure presiding over the MDL, Robreno reported he decided 528 summary judgment motions, 59 issues of substantive state law, 16 issues of federal substantive law and 16 issues of federal procedural law.

Consolidating cases also did not work to resolve the MDL, Robreno said, adding it was an open question whether a national MDL was necessary to resolve the claims.

One of the reasons aggregations of cases did not work to resolve the cases was that class certification was rejected by the Third Circuit and then the U.S. Supreme Court, Robreno said. The first asbestos MDL judge, Judge Charles R. Weiner, tried to settle the claims of 250,000 to 2 million individuals who had been exposed to asbestos. The settlement was rejected on appeal because of the “Supreme Court's concerns over the manageability of such a mixed and large class, as well as the inability of the class mechanisms to deal with the issue of future claimants,” Robreno said. Federal legislative fixes also failed.And when aggregation failed, the court and the parties did not return to the task of handling the cases on an individual basis, Robreno said. “This stage of litigation led some litigants to refer to MDL875 as a 'black hole,' where cases disappeared forever from the active dockets of the court,” he wrote.

While, “as a matter of judicial culture, remanding cases is viewed as an acknowledgment that the MDL judge has failed to resolve the case, by adjudication or settlement, during the MDL process,” Robreno said he turned away from that mindset and set a “rigorous schedule” for hearing summary judgment motions and issuing decisions.

Due to bankruptcies by the companies that made asbestos, litigation has shifted to bankruptcy courts and to the makers and suppliers of components that contained asbestos, including manufacturers or suppliers of brakes, turbines and packing. “In sum, the time between the filing of motions for summary judgment and the panel's issuing a remand order was 74 days,” he said.

More than 600 cases have been remanded to 59 districts. Most of those cases resolved without the need for a trial on the merits.

There also is an issue of fraud in asbestos fraud, Robreno said, with doctors acting as litigation consultants and making positive findings “often upwards of 50% and in some studies as high as 90%, suggesting that the readings may not be neutral or legitimate.”