‘Outlier’: Garlock Case Gives Traction to Asbestos Fraud Claims

Originally featured in the Huffington Post. 

Even if all you know (or ever want to know) about the world of asbestos litigation business comes from those unavoidable “if you or a loved one has been diagnosed with mesothelioma” commercials, you still ought to know that big changes are coming to what is called the longest-running personal injury litigation in the United States; some estimates (okay, mine) say it does about $10 billion a year, making it as big as the “industry” of pro football, the NFL.

Multiple defense lawyers have been alleging institutional and operational fraud for years, but lately those charges are gaining some credence. From North Carolina to New York, cases that were initially discredited by victims’ attorneys as mere “outliers” are gaining traction as federal courts allow lawsuits to advance.

For example, politically savvy New Yorkers are likely aware that Manhattan’s Sheldon Silver resigned his longtime post as State Assembly Speaker earlier this year after he was indicted on fraud and extortion charges in a $4 million influence-peddling scheme. However, they may not have made the connection that his fraud charges stemmed from how victims of mesothelioma, the “asbestos cancer,” found legal help. Prosecutors allege Speaker Silver steered taxpayer money to a clinic in exchange for the clinic steering victims to his law firm, in turn receiving millions of dollars in referral payments from a prominent asbestos litigation firm. Such referral fees are common, but the taxpayer implications are not.

Meanwhile, on a key civil litigation front, a North Carolina bankruptcy case initially branded as an “outlier” is gaining credibility. An NPR report noted that “Garlock” offered a look inside the “murky world” of asbestos litigation and a key issues was telling one story in civil cases and another story to any of some 60 to 100 “trust funds,” which were set up when companies declared bankruptcy over asbestos liability.

Judge George Hodges, in the Garlock case, identified significant issues in 15 of 15 cases. In his decision, Judge Hodges said that more research would no doubt have found more problems, although he stopped well short of what the lawyers call “the F bomb,” which to them is “fraud.” But Garlock has brought a civil RICO suit against several asbestos victim’s firms, alleging a pattern of misrepresentation over many years.

At first, the whole Garlock case, and its ancillary issues, were more or less dismissed by the plaintiff’s bar. The talking point was that the judge was new to the litigation and the allegations against the firms would dissolve upon contact with appeals courts. But the opposite has happened so far: Garlock has been upheld through multiple appeals, getting victories even from Democratic-appointed judges – it’s worth noting that asbestos litigation is so political that which party appointed your judge can be a big deal.

Just this month, U.S. District Judge Graham Mullen (a President George H. W. Bush appointee) upheld a lower court ruling that Trust Fund records being sought by Garlock Sealing Technologies should be produced. He also agreed with the complaint that the “requests are broad” but added: “Yet, so is the fraud in which plaintiffs are alleged to have engaged.”

The firm in that case — New York’s Belluck & Fox — made an argument that no doubt illustrates the strategy for those making cases of the Garlock discoveries, stating:

It is now clear that, while the complaint includes allegations about just 11 cases, plaintiffs are seeking to expand discovery to include all the trust claims of virtually every Belluck & Fox client that ever brought a claim against Garlock – whether the case was litigated in the tort system or not.

Belluck & Fox is not alone. Big national firms, like Dallas-based Simon Greenstone and Waters & Kraus and Philadelphia’s Shein Law Center, are also targets and no doubt will face similar discovery efforts.

Those court victories are likely to play a huge role as the U.S. House of Representatives takes up debate on what’s called the “FACT Act,” for “Fairness in in Asbestos Claims Trust,” later this month. That legislation has little chance that President Obama will ever sign it into law, but it does offer a platform and rallying point for those who would change how victims sue over asbestos. The FACT movement may be for “show” in Washington, but six states – Oklahoma, Wisconsin, West Virginia, Texas and Ohio – have passed some form of the legislation.

In what might be a “first use” in Texas, a judge in Harris County has granted a “stay” motion based on that state’s FACT Act legislation. The case involves a Navy veteran with mesothelioma and the judge has agreed that claims against bankruptcy trusts must be considered, even if those concerns are NOT part of the current trial.

Whatever asbestos “scandal” there is may be a slow-motion crisis, but I’ve made the argument that it’s about to exit the litigation world to involve hundreds or even thousands of innocent victims’ families. Some lawyers have turned their clients intoperjury pawns. Others may discover they might owe Uncle Sam some of their hard-won settlement and judgment money. And I truly believe that Democrats, who benefit from the plaintiff bar’s donations, are being slow to realize the gravity of the situation.

The common theme is that focus needs to shift to what it all means to victims.

I’m not the only one who thinks so. The journalist Paul Johnson, best known as a Washington correspondent for Canada’s Global TV and his documentary reporting from Afghanistan, is making asbestos litigation the topic of his next U.S.-based film. He says the project so far has been eye-opening.

“Our story begins with a small car dealership in central California getting sued for what seems to be no good reason,” says Johnson. “We follow that 7-year battle involving all kinds of twists and some serious allegations against a major firm; I will say that it shows that sometimes you might need a lawyer to keep an eye on your lawyer.”

Johnson said the movie, slated for 2016, is “… most unsettling when you find yourself sitting in a New York conference room at one of the more liberal universities on earth, and a professor is assuring you that this [asbestos litigation] scandal will one day be seen as bigger than Teapot Dome or Enron, but it’s what you want as a reporter to find a huge scandal that almost nobody outside the trade press is covering.”

We are anxiously awaiting the release of this film for the topic that “nobody is covering” could very well be the one “everyone is watching” in 2016.

(Sara Warner is publisher of the National Courts Monitor and California Courts Monitor. Disclosure: Although Ms. Warner has not participated in the Paul Johnson film mentioned, some Courts Monitor contract researchers and contributing editors have contributed to the documentary and the National Courts Monitor is in discussions to host the Washington, D.C. premier of the movie.)

Prop. 8 Lawyer Addressing State v. Fed Court Jurisdictions

Remember Charles Cooper, the big-time Washington attorney who argued against same-sex marriage when California’s Prop. 8 went before the U.S. Supreme Court? Well, he is a longtime states-right advocate who is now making a case for moving some lawsuits out of state courts and into federal courts. Our sister website, the National Courts Monitor, has original reporting from Randy Wyrick, a Colorado-based journalist and NCM contributing editor.
Read it here.


California Considers Raising Famous Med-Mal Cap

After failing in the Democrat-controlled legislature several times, advocates of raising the California medical malpractice damages from $250,000 to $1 million are going directly to voters. “Proposition 46,” explains public radio station KPVR, which also explains that the proposition “… is actually three measures in one. It would require drug testing of doctors. It would require physicians to check a database before prescribing patients addictive substances. And it would raise the limit on damages awarded in medical malpractice suits…”
The NPR affiliate reports that the current cap “… was set in 1975 under MICRA – The Medical Injury Compensation Reform Act.  Prop 46 would raise the cap to over a million dollars. Dr. Haskins says that would make medical liability premiums go up.”
Read both sides of the debate, and what it might mean to medical practice in the Golden State, here: Proposition 46 Has Physicians and Attorneys At Odds

California Tops Controversial Civil ‘Hellhole” List

Heralded by pro-business “tort reform” groups and blasted by left-leaning organizations, an annual “Judicial Hellholes” ranking is out today and California tops the list. The list has been compiled for the past decade as a project of the American Tort Reform Association, or ATRA, which campaigns on behalf of business interests; while widely known and frequently cited among the nation’s civil litigation community, it typically receives little mainstream media attention.
The tort-reform side of the argument is stated fairly well by Daniel Fisher at Forbes who writes: “News flash: Madison, County, Ill. is no longer the nation’s worst place for corporations to find themselves in court. California took top honors in the American Tort Reform’s annual “Judicial Hellholes” list, an unashamedly pro-defendant look at the nation’s judicial system. The Golden State won for the welcoming stance its courts take toward consumer class actions – particularly against food companies – and rampant lawsuits targeting small businesses over disability-access rules.” 
But the left-leaning Media Matters blog report dismisses the report, writing that it “… annually lists states that have court systems ATRA [the American Tort Reform Association] considers to be the most ‘unfair and unbalanced’ to defendants in the civil justice system, has been previously discredited for having no valid methodology and relying on unverified anecdotes drawn from press accounts. The Center for Justice & Democracy at New York Law School describes the ATRA’s members as being ‘largely Fortune 500 companies with a direct financial stake in restricting lawsuits.’ It is unsurprising, therefore, that the ‘Hellholes’ reports regularly feature jurisdictions that corporate defendants feel are not favorable to their interests. In fact, the report describes its methodology as largely based on vaguely described ‘feedback’ from ATRA members.”
The report gained coverage in the Wall Street Journal editorial pages, which we should note are considered much more conservative than the newspaper’s news sections. So it’s worth noting that the report is widely seen by business leaders and even critics acknowledge that, at minimum, it indicates what “largely Fortune 500 companies” think about the state.
You can see the entire report and much more, including a cool flaming gavel logo here.
Here’s a good argument totally debunking the study from Sergio Munoz at Media Matters.
The Forbes piece written by staffer Daniel Fisher that explains why the report matters is here.
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Courts Praised For Decisions On Prop. 65 Cases

It’s not every day you get a significant insurance recovery firm singing the praises of California’s justice system. Yet firms like Proskauer Rose LLP are doing just that in the wake of some judicial decisions. In a web-posted story headlined “California Judiciary, Not Governor, Leading Effort To Reign In Proposition 65 Abuse,” the firm established that “… Governor Brown had called for sweeping changes to the Proposition 65 regime to reduce the potential for ‘frivolous shake-down lawsuits’ under the statute.”
However, the report added, “facing pressure from the plaintiffs’ bar, the Governor’s office recently released a much more modest proposal to amend Proposition 65. The proposal would expand slightly the statute’s exemption for small businesses; permit the relevant state agency greater flexibility in determining safe-exposure levels; and subject payments made in lieu of civil penalties to greater scrutiny.” But then the firm outlined leadership from the civil judiciary, including decisions on real-world testing for lead content in common foods.
Wait. Are we not told that the California courts are anti-business? Well, for an example of California civil decisions being pro-business check out the post here.