Editor’s note: This article is part of a series examining evidence submitted in Garlock Sealing Technologies’ bankruptcy proceeding that was recently unsealed as a result of Legal Newsline’s legal challenge.
CHARLOTTE, N.C. – The asbestos plaintiffs firms with the highest settlement averages in claims against Garlock Sealing Technologies achieved that by engaging in discovery abuse in the post-bankruptcy era of the litigation, a law professor told a bankruptcy court during the company’s proceeding.
Lester Brickman, an asbestos litigation scholar and professor at the Benjamin N. Cardozo School of Law who recently testified before a House subcommittee about an asbestos claims transparency bill, submitted a memorandum to Judge George Hodges in April 2013. One of the firms identified in the memo is Shein Law Center of Philadelphia.
The memo, which was recently unsealed, was submitted nine months before Hodges ruled plaintiffs lawyers had been manipulating the asbestos claim recovery system to maximize settlements and verdicts against gasket-maker Garlock.
Attorneys have been withholding evidence of exposure to asbestos products made by companies that have gone bankruptcy and established trusts, Hodges ruled, in order to make Garlock seem more responsible for the client’s injuries than it really is.
“Garlock’s discovery reveals and confirms that plaintiffs’ counsel engaged in practices designed to prevent Garlock from discovering the discrepancies between what plaintiffs testified to in their tort suits against Garlock and the positions of plaintiffs’ counsel in those suits and what plaintiffs and their counsel asserted in trust claims,” Brickman wrote.
“Some of the firms deposed by Garlock were found to have a practice of delaying filing trust claims until after completion of the tort suit against Garlock.
“Even firms that denied such a practice were found to have engaged in doing so.”
Hodges seemed to agree with Brickman when he ordered Garlock to put $125 million in its own bankruptcy trust. The amount was roughly $1 billion less than plaintiffs attorneys had requested.
Garlock has since agreed to put more than $360 million in a trust for future claimants.
Brickman wrote that Garlock has been “especially victimized” by the actions of asbestos attorneys and has not had the opportunity to argue a plaintiff’s disease was caused by exposure to other companies’ products.
Garlock was named as a defendant in more than 600,000 civil lawsuits. In 2000, its average settlement was $2,148, but it was facing nearly 50,000 new cases each year.
After the major asbestos defendants established bankruptcy trusts in the early 2000s, Garlock’s average settlement of a mesothelioma claim jumped to $35,000, while the legal fees and costs also rose.
“This increase in mesothelioma costs had no medical basis,” Brickman wrote.
“Indeed, with billions of dollars that would eventually be paid out for mesothelioma claims by bankruptcy trusts, one might have anticipated that settlement costs would have declined as these funds became available to plaintiffs.
“The litigation strategy embraced by plaintiffs and plaintiffs’ counsels, to suppress evidence of exposure to the thermal insulation and refractory products of the bankrupt companies, instead prevailed.”
Garlock’s expert testified that the company paid more than $1.3 billion to resolve the 600,000 lawsuits. Charles Bates added that Garlock settled 99.9 percent of the claims to avoid defense costs, as opposed to settlements it reached with several hundred claimants that were motivated by a fear of a jury verdict.
To prove that the settlements were inflated, Garlock subpoenaed information on 17 plaintiffs from six law firms – Waters & Kraus of Dallas; Simon Greenstone Panatier & Bartlett of Dallas; Belluck & Fox of New York; The David Law Firm of The Woodlands, Texas; Williams Kherkher Hart & Boundas of Houston; and the Shein Law Center of Philadelphia.
What the company found led it to file four racketeering lawsuits against Waters & Kraus, Simon Greenstone, Belluck & Fox and the Shein Law Center.
Brickman wrote that the Shein Law Center and Waters & Kraus admitted they delayed filing trust claims until after completion of the civil lawsuit.
“The strategy of suppressing evidence of plaintiffs’ exposures to the bankrupts’ products was designed to maximize plaintiffs’ and their counsel’s recoveries by driving up Garlock’s settlement and defense costs and litigation risk, thus compelling Garlock to settle many cases that were lacking in merit – cases which Garlock would have prevailed in if taken to trial prior to the bankruptcy wave,” Brickman concluded.
Reach editor John O’Brien at email@example.com.