Courts

Asbestos Ruling Boosts Transparency—and Threatens Plaintiffs' Attorneys


The story of an obscure gasket manufacturer, Garlock Sealing Technologies, continues to illuminate the through-the-looking-glass nature of the asbestos-litigation wars. The latest development—a blow for openness in court—offers rare reason for cheer in an otherwise grim realm.

Some necessary background (repurposed from an earlier dispatch on Garlock):

“After decades of industry denial, plaintiffs’ lawyers revealed in the 1980s the now well-known deleterious effects of exposure to building materials containing asbestos. When Congress failed to forge an administrative process that might have fairly and efficiently compensated suffering workers, asbestos litigation ballooned, with the arbitrary results courtroom combat often produces: overcompensation of some victims, underpayment of others, huge legal fees, and endless delays. Dozens of companies were forced into debilitating bankruptcy proceedings even though their continuing operation could have benefited the very sort of blue-collar individuals hurt by asbestos-laden products. And the plaintiffs’ lawyers who marshaled the largest pools of alleged victims enjoyed windfall profits that paid for private jets and luxury vacation homes rather than doctors’ appointments for former pipe fitters.

“In the 1990s, as asbestos defendants retreated to bankruptcy court or disappeared altogether, making recoveries from them much more difficult, some plaintiffs’ lawyers stepped up their offensive against the remaining companies, regardless of whether the live targets had been the most venal or plaintiffs’ ailments could be traced to their particular products. Such was the fate of Garlock, which faced increasing pressure until it, too, succumbed to bankruptcy in 2010.

“Filing for Chapter 11 protection from creditors doesn’t entirely eliminate an insolvent company’s debts, of course. Garlock remained on the hook for what plaintiffs’ lawyers estimated at $1.4 billion for present and potential future victims of mesothelioma, a fatal cancer caused by exposure to asbestos.

“In a potentially important ruling released late on Jan. 10, U.S. Bankruptcy Judge George Hodges of North Carolina reduced Garlock’s liability by 90 percent, to $125 million, finding that the larger amount had been based on various forms of deceit by plaintiffs’ lawyers and their clients. Hodges cited, for example, what he called widespread evidence that many plaintiffs’ attorneys had for years concealed evidence that victims were exposed to potential carcinogens other than Garlock’s asbestos-lined gaskets. The judge said that over the past decade, Garlock’s “participation in the tort system was infected by the manipulation of exposure evidence by plaintiffs and their lawyers.”

As happens too often in the civil justice system, Judge Hodges kept much of the evidence of fraud secret because it was covered by “protective orders,” a mechanism of officially sanctioned concealment that I’ve argued against in other contexts. Citing First Amendment interests in the openness of court proceedings, the online publication Legal Newsline appealed the secrecy order. So did Ford Motor (F), Honeywell (HON), Volkswagen (VOW:GR), and other companies eager to learn about plaintiffs-lawyer fraud because they’re facing potential asbestos liability.

U.S. District Judge Max Cogburn ruled Wednesday that Hodges erred when he kept evidence in the Garlock case out of public view. ”While a court may seal any number of documents, proceedings, or applications for appropriate reasons, it simply cannot delegate that responsibility to the litigants by giving deference to protective orders,” Cogburn wrote in a 12-page opinion that deserves a wide and respectful readership. “As a gatekeeper, a judge must consider sealing as the exception not the rule,” Cogburn continued. “The reason is simple: The public and the press have a co-extensive right to view and consider documents tendered to a judge and/or jury when a dispute is brought in the ultimate public forum, a courtroom.”

Praise the Lord. Can Judge Cogburn get an amen?

Often it’s the corporate target of litigation that uses protective orders and secret settlements to cover its sins (looking at you and your defective ignition switches, General Motors (GM)). In decades past, companies that manufactured asbestos-laden products partook in the protective-order habit to thwart public scrutiny and seek to postpone days of reckoning.

Now, sadly, it’s the plaintiffs’ bar that deserves skeptical public attention for its methods in late-stage asbestos litigation. The Cogburn ruling enables that attention and the hard truths it will reveal.

Barrett_190
Barrett is an assistant managing editor and senior writer at Bloomberg Businessweek. His new book, Law of the Jungle, tells the story of the Chevron oil pollution case in Ecuador.

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    (Honeywell International Inc)
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