Josh J.T. Byrne ()
Two relatively recent cases involve civil Racketeer Influenced and Corrupt Organizations Act (RICO) claims by asbestos defendants against prominent asbestos plaintiffs lawyers. Both cases involve allegations the lawyers deliberately fabricated false claims.
CSX Transportation v. Gilkison
For years, Robert Peirce & Associates, then known as Peirce, Raimond & Coulter P.C., brought thousands of asbestos claims against CSX Transportation Inc. Then, CSX turned the tables. In 2005, CSX brought a civil RICO, common-law fraud and civil conspiracy action titled CSX Transportation v. Gilkison (Civil Action No. 5:05CV202, Northern District of West Virginia). The action was brought against the firm, one of its employees (Robert Gilkison), the three named partners of the firm and Dr. Ray A. Harron, an expert frequently employed by plaintiffs attorneys in asbestos cases (in a separate case, U.S. District Judge Janis Jack of the Southern District of Texas found Harron falsified X-ray reports, and he lost his license in seven states). The action alleged nine of the lawsuits brought by the Peirce firm against CSX were fraudulent.
In 2009, summary judgment was granted in the firm’s favor, but that ruling was overturned by the U.S. Court of Appeals for the Fourth Circuit. In December 2012, a federal jury in Wheeling, W.Va., found Robert Peirce and Louis Raimond liable for racketeering and conspiring with Harron to fabricate evidence. The jury rendered a verdict against the two lawyers and the radiologist of $429,240. U.S. District Judge Frederick P. Stamp Jr. of the Northern District of West Virginia subsequently tripled the award to about $1.3 million, finding CSX was entitled to treble damages under RICO. Litigation of the action is ongoing.
Garlock Sealing Technologies Bankruptcy
On Jan. 10, U.S. Bankruptcy Judge George Hodges of the Western District of North Carolina entered a 65-page “order estimating aggregate liability” for Garlock Sealing Technologies LLC. (See In re Garlock Sealing Technologies, 10-bk-31607, U.S. Bankruptcy Court, Western District North Carolina (Charlotte).) On the same day Hodges released his opinion, Garlock filed under seal a fraud and RICO complaint against four prominent law firms involved in plaintiffs asbestos litigation.
Garlock manufactured asbestos gaskets, and became a frequent defendant in mesothelioma cases. Hodges noted the gaskets were generally sealed under other asbestos, and “released asbestos only when disturbed, such as by cutting, scraping, wire brushing or grinding—procedures that were done sporadically and then generally only after the removal of the thermal insulation products, which caused a ‘snowstorm’ of asbestos dust.”
The purpose of the order was to “determine Garlock’s responsibility for causing mesothelioma and the aggregate amount of money that is required to satisfy its liability to present claimants and future victims.” Hodges determined that liability to be $125 million. The opinion notes Garlock’s own proposed plan of reorganization included a fund of $270 million for resolution of present and future asbestos-related claims (Garlock was subject to claims by more than 4,000 existing mesothelioma claimants, and was involved as a defendant in 20,000 mesothelioma cases, before entering into bankruptcy). The Asbestos Claims Committee (ACC) created for the bankruptcy action, made up of members of the plaintiffs law firms representing the present mesothelioma claimants, estimated Garlock’s liability at $1 billion to $1.3 billion.
Hodges held a hearing “that took place over 17 trial days and included 29 witnesses and hundreds of exhibits.” Hodges’ opinion discussed: (1) the “science” evidence relating to asbestos and asbestos disease; (2) the “social science” evidence relating to practices in asbestos tort litigation; (3) the case law in asbestos estimation cases; and (4) the resulting estimation of Garlock’s aggregate liability.
Hodges’ opinion includes an 18-page discussion of the science of asbestos exposure and its relationship to mesothelioma. The judge then explored the history of asbestos claims. Hodges noted that as other manufacturers went bankrupt, including those who created the insulation surrounding Garlock’s gaskets, Garlock became a more frequent primary target of lawsuits.
Beginning at page 30 of the opinion, Hodges engages in a lengthy discussion of suppression of evidence in cases against Garlock: “Often the evidence of exposure to those [other] insulation companies’ products also ‘disappeared.’ This occurrence was a result of the effort by some plaintiffs and their lawyers to withhold evidence of exposure to other asbestos products and to delay filing claims against bankrupt defendants’ asbestos trusts until after obtaining recoveries from Garlock (and other viable defendants).”
Hodges detailed the facts of several specific cases in which evidence was suppressed by plaintiffs counsel, including a Philadelphia case: “A Philadelphia case involved a laborer and apprentice pipefitter in the Philadelphia shipyard which Garlock settled for $250,000. The plaintiff did not identify exposure to any bankrupt companies’ asbestos products. In answers to written interrogatories in the tort suit, the plaintiff’s lawyers stated that the plaintiff presently had ‘no personal knowledge’ of such exposure. However, just six weeks earlier, those same lawyers had filed a statement in the Owens Corning bankruptcy case, sworn to by the plaintiff, that stated that he ‘frequently, regularly and proximately breathed asbestos dust emitted from Owens Corning Fiberglas’ Kaylo asbestos-containing pipe covering.’ In total, this plaintiff’s lawyer failed to disclose exposure to 20 different asbestos products for which he made trust claims. Fourteen of these claims were supported by sworn statements, that contradicted the plaintiff’s denials in the tort discovery.”
Hodges noted that in every one of the 15 previously settled cases for which he permitted “full discovery,” the plaintiffs had not disclosed other exposures to asbestos. Garlock “identified 205 additional cases where the plaintiff’s discovery responses conflicted with one of the trust claim processing facilities or balloting in bankruptcy cases.”
Hodges noted: “The limited discovery allowed by the court demonstrated that almost half of those cases involved misrepresentation of exposure evidence. It appears certain that more extensive discovery would show more extensive abuse. But that is not necessary because the startling pattern of misrepresentation that has been shown is sufficiently persuasive.”
Based upon his findings, Hodges found the exposure of Garlock for liability to existing and future claims would be very limited.
Following Hodges’ order in January, Aetna Inc. sought and received access to sealed documents in the Garlock Chapter 11 bankruptcy. Ford Motor Co., Honeywell International, Volkswagen Group of America Inc. and Crane Co. all filed motions seeking access to the documents in the Garlock Chapter 11 bankruptcy. Some unredacted transcripts of the hearings were inadvertently placed on the Internet, causing Hodges to issue an order requiring all who downloaded the transcripts destroy them.
As these recent cases show, an attorney utilizing evidence of questionable authenticity may well face problems down the road. Attorneys relying on evidence of questionable authenticity may find themselves the defendants in RICO or wrongful use of civil proceedings claims. Attorneys also have an ethical obligation not to present false evidence. (See Rule of Professional Conduct 3.3(a)(1), “A lawyer shall not knowingly make a false statement of material fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer.”)
Professional liability avoidance best practices includes assessing the credibility of evidence presented. There can be legitimate reasons for presenting questionable evidence. The evidence may be the best evidence available, or a client may insist it be presented. However, a risk-benefit analysis should be performed before evidence of questionable authenticity is presented.
Josh J.T. Byrne is a partner with Swartz Campbell’s professional liability group. Byrne is the vice chair of the Pennsylvania Bar Association’s professional liability committee. He speaks throughout Pennsylvania on malpractice avoidance. Byrne also regularly contributes blog entries to Swartz Campbell’s professional liability blog.