Insurers Join in Efforts to Unseal Asbestos 'Misrepresentation' Evidence

Insurers Join in Efforts to Unseal Asbestos 'Misrepresentation' Evidence Jay Mallin Sealed court documents.

Two insurance companies are joining Ford Motor Company’s effort to unseal the evidence that led a bankruptcy judge to find “demonstrable misrepresentation” in several asbestos cases.

Mt. McKinley Insurance Company and Everest Reinsurance Company said in a filing in the U.S. Bankruptcy court for the Western District of North Carolina that they also want access to the sealed testimony and exhibits that led to the court finding misconduct by asbestos plaintiffs and their lawyers.

U.S. Bankruptcy Judge George R. Hodges made the finding in the insolvency proceeding of gasket-maker Garlock Sealing Technologies LLC.

Mt. McKinley said it issues excess insurance policies to PPG Industries, Inc., and Corning Incorporated, the parent companies of Pittsburgh Corning Corporation (PCC).

PCC has a bankruptcy case pending in the Western District of Pennsylvania. Mt. McKinley is appealing the plan in that bankruptcy case and the insurer says that evidence of misrepresentation could be pertinent to its appeal.

“For example, the overwhelming majority of votes in favor of the PCC plan whose confirmation ruling Mt. McKinley is presently appealing were cast by master ballots signed under penalty of perjury by asbestos plaintiffs’ lawyers,” McKinley said in court papers. “Early in its own case, Garlock presented evidence at a 2010 hearing in the PCC case that some of those same law firms were engaged in misconduct, misrepresentation, and/or similar to that described in this court’s estimation ruling. While the Pittsburgh Corning bankruptcy court did not find that evidence of bad faith to be material, it now appears Garlock was only scratching the surface in 2010. This court’s opinion suggests pervasive fraud on the part of asbestos claimants and their counsel.”

Two of the law firms, who voted in favor of the PCC plan on behalf of more than 1,300 claimants and who assert claims of almost $100 million, have been sued by Garlock in sealed complaints, McKinley said in its court filing. Those law firms are Waters & Kraus LLP and Shein Law Center, Ltd., McKinley said.

During a hearing last month, Hodges declined to unseal the evidence with the intent that the denial of the motions be rolled into online news outlet, Legal Newsline, pending appeal with the District Court to have access to the case.

Separately, Ford has asked for further proceedings on Hodges’ ruling that he was not going to make any findings on whether to grant or deny Ford’s right of access to the sealed evidence.

Hodges said it would be better for the District Court to handle the decision on unsealing the evidence because that court already is hearing Newsline’s appeal of Hodges’ decision to close his courtroom during the estimation proceeding of Garlock’s liability to asbestos claimants.

No party ever filed a motion to seal the estimation trial, and the court entered a confidentiality order closing the courtroom to the public, subject to any party’s right to seek access to such testimony, Ford said.

Ford’s motion triggered the burden of the parties seeking to keep documents under seal to come forward with evidence sufficient to overcome Ford’s presumptive right of access, but “the bankruptcy court affirmatively stated that it will not make any findings and conclusions with respect to the Ford motion,” the carmaker said.

Ford asked for permissive withdrawal of the “reference” of bankruptcy jurisdiction in this case in order to promote judicial economy.

“Judicial economy will not be served if, as a result of the pendency of the Legal Newsline appeal in the District Court, the Bankruptcy Court simply denies the Ford motion without due process and without developing a factual record sufficient to enable meaningful appellate review,” Ford said.

Amaris Elliott-Engel contributes to law.com.

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