In a case of first impression, a North Carolina bankruptcy judge overseeing a gasket maker’s insolvency proceeding found that some plaintiffs lawyers have had a practice “to withhold evidence of exposure to other asbestos products and to delay filing claims against bankrupt defendants’ asbestos trusts until after obtaining recoveries” from the defendant.
That course of conduct included cases that resulted in a $9 million verdict in California and a $1.35 million verdict in Texas, the judge said.
U.S. Bankruptcy Judge George R. Hodges of the Western District of North Carolina said in an opinion filed last month that plaintiffs’ lawyers turned to Garlock Sealing Technologies as a “remaining solvent defendant” when in the early 2000s defendants who had made and sold large thermal insulation filed bankruptcy.
As a result, “evidence of plaintiffs’ exposure to other asbestos products often disappeared,” Hodges said. “Certain plaintiffs’ law firms used this control over the evidence to drive up the settlements demanded of Garlock. And, Garlock suffered a few large jury verdicts hewn such evidence was not available.”
Garlock, under the judge’s authorization, took discovery in 15 cases and demonstrated that evidence of the plaintiffs’ exposure to other products was withheld in every one of those cases, according to the opinion.
The judge also cited that one plaintiffs’ law firm published a 23-page set of directions to instruct client on how to testify.
In the case of the $9 million verdict, Hodges recounted that the plaintiff denied during the trial that he had been exposed to insulation made by Pittsburgh Corning. But the same plaintiff had certified in the Pittsburgh Corning bankruptcy that the plaintiff had been exposed that very insulation.
Garlock filed for bankruptcy in June 2010 after its insurance money ran out, and Garlock had negotiated settlements in over 99 percent of the 20,000 mesothelioma cases in which it was a defendant, the judge said.
The products of Garlock, which made and sold asbestos gaskets and sheet gasket material used in pipes and valves that conveyed hot fluids in “maritime, refinery, and other industrial applications,” only released asbestos when disturbed when the gaskets were removed from flanges, Hodges said.
Garlock’s liability to claimants who developed mesothelioma, a fatal cancer in the lining of the lungs, is “relatively small,” he said.
Hodges wrote his opinion after he held a hearing to estimate Garlock’s remaining liability for mesothelioma claims. The court concluded Garlock faces liability of $125 million, which was what the defendant estimated its liability to be. In contrast, plaintiff lawyers estimated that Garlock’s aggregate liability would be $1 billion to $1.3 billion.