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New York’s Weitz & Luxenberg and other major players in the asbestos plaintiffs’ bar have been sued for threatening to sabotage pending settlements with a company that pressed for federal legislation aimed at capping recoveries and fees. The racketeering complaint, filed Wednesday in the Southern District of New York, charges that firm partners Perry Weitz and Robert Gordon — along with principals at Dallas-based Baron & Budd, and Barnwell, S.C.-based Ness, Motley, Loadholt, Richardson & Poole — threatened G-I Holdings Inc. Chairman Samuel J. Heyman with a “nuclear response,” if he persisted in supporting the now-stalled Fairness in Asbestos Compensation Act (FACA). Weitz called the suit “desperate” and without merit. G-I Holdings, the successor to the Wayne, N.J.-based GAF Corporation, is a defendant in thousands of asbestos-related cases. The company, of which Heyman is by far the largest shareholder, filed for bankruptcy in New Jersey on Jan. 5. The company’s complaint, filed under the Racketeer Influenced and Corrupt Organizations Act, 18 USC �1964(c), charges the plaintiffs’ bar opposed the FACA because it would “defer the claims of unimpaired individuals” (those who have yet to become sick) and would also cap contingency fees at 25 percent. “Defendants have, therefore, targeted GAF, its chairman, Samuel J. Heyman, and other supporters of the act, unleashing a barrage of extortionate and retaliatory activity against those who have publicly supported the legislation,” the complaint states. “Since GAF and its chairman have refused to back down, defendants are now trying to make them pay the price through a ruthless campaign of personal and corporate litigation.” The campaign to win passage of the FACA was promoted by an industry group called the Coalition for Asbestos Resolution. According to the complaint, pressure exerted by the plaintiffs’ bar in April, 1999, forced several companies, including Kaiser Aluminum and Westinghouse, to withdraw from the coalition. At a meeting on April 8, 1999, Weitz allegedly told asbestos defendants that he and his colleagues “were not prepared to have discussions with anyone endorsing the legislation,” and that they “needed to know which defendants stood on which side of the river.” On April 12, 1999, Weitz and Gordon met with GAF’s general counsel and allegedly said that if GAF continued to support the act there would be a “full-fledged war” and the asbestos plaintiffs’ bar would have a “nuclear response.” BLACKBALLED The complaint also alleged that the plaintiffs’ bar was the prime force in having GAF blackballed from the Center for Claims Resolution (CCR), the vehicle for a global settlement of all asbestos-related claims in what is commonly referred to as the Georgine case. Although the settlement was initially approved by a judge in the Eastern District of Pennsylvania, that approval was overturned by the U.S. Supreme Court in 1997. The defendants, the complaint states, threatened CCR that they “would stop settling cases with the CCR and/or extract a premium for settling cases as long as GAF continued its support of the act and remained a member of the CCR.” On Dec. 17, 1999, CCR expelled GAF, the complaint said. “Stripped of the protections afforded by being a member of the CCR, GAF has become an easier target for defendants, who have sharply escalated their settlement demands in connection with pending cases against GAF,” it said. The complaint also states that the plaintiffs’ bar went after Heyman personally in a suit filed last year in the Southern District of New York. In Nettles v. Heyman, 00 Civ. 00035, Heyman is accused of violating New York Creditor and Debtor Law to set aside the “fraudulent transfer” of a massive block of GAF shares to a subsidiary — a move that was allegedly calculated to place hundreds of millions of dollars “beyond the reach of GAF’s asbestos victims.” Weitz yesterday called Heyman’s lawsuit “a desperate act by a desperate man.” “He was trying to get legislation passed and we fought him,” Weitz said. “Then he declared bankruptcy and there was an effort to negotiate a pre-packaged bankruptcy.” (A prepackaged bankruptcy is one that moves smoothly through the courts because of prior agreements.) “Heyman wanted a serious piece of equity and the plaintiffs’ bar would not agree to it,” Weitz said. “Then he retaliated with this.” Weitz said that the discussions with Heyman also involved two other defendants named in Wednesday’s lawsuit — Frederick Baron, current head of the Association of Trial Lawyers of America and name partner at the Texas-based Baron & Budd — and Joseph Rice, senior partner at Ness Motley in South Carolina. Neither Baron nor Rice could be reached for comment. Representing G-I is Friedman, Wang & Bleiberg, an 11-member New York firm. Name partner Peter N. Wang declined comment yesterday, saying only that “the complaint speaks for itself.” SMOKING GUN MEMO Among other things, the lawsuit charges that all the defendants interfered with GAF’s right to petition Congress as well as being part of a racketeering enterprise. Baron & Budd is named as a separate racketeering enterprise through the commission of several acts, including “intentionally generating false testimony” to support claims against former asbestos manufacturers and “induce inflated settlements of such claims.” At the heart of this claim is the so-called “Baron & Budd Memorandum,” which instructs clients what facts to testify to in depositions, including such statements as “DO NOT mention product names that are not listed on your work history sheets.” The memorandum, the complaint alleges, also “instructs clients falsely to claim equal exposure to all products,” and directs that “clients should deny that they ever saw warnings or had any knowledge concerning the harmful effects of asbestos.” The result of such tactics, the suit charges, is that companies have been forced to pay outrageous amounts of money to settle cases with little regard to their merit. In the case of GAF, which to date has paid over $1.5 billion in claims, the complaint states that “approximately two-thirds of that money has been absorbed by wasteful transaction costs and exorbitant contingency fees.” Weitz & Luxenberg is accused of breaching an agreement covering “future claims” with GAF and other members of CCR by “failing to recommend to its non-sick clients that they defer filing asbestos claims until they met the medical criteria” set forth in the agreement. “Instead, Weitz & Luxenberg has filed tens of thousands of lawsuits on behalf of individuals who do not satisfy the agreement’s criteria,” the suit contends. A similar claim was made against Ness Motley. And both Ness Motley and Weitz & Luxenberg are accused of reneging on assurances they made to GAF that they would recommend clients abide by the terms of the agreements that served as a corollary to the Georgine settlement. Those assurances, the lawsuit states, induced GAF to pay $200 million toward a $750 million settlement payment to resolve pending asbestos claims. GAF would not have paid that money, the complaint states, had it known the assurances were false.

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