Laster
WILMINGTON, Del. – Evidence that companies say is needed to root out fraud by lawyers won’t be destroyed, as a Delaware judge has kept a lawsuit challenging its deletion alive.
J. Travis Laster, a vice chancellor on the Delaware Chancery Court, last month refused to dismiss a lawsuit brought by some of the most-targeted companies in asbestos litigation. They include Johnson & Johnson, J-M Manufacturing and Dow Chemical, who went to court earlier this year after finding out older asbestos claims were set to be deleted.
There are two avenues for asbestos victims – sue companies in court and/or submit claims to companies that have already established bankruptcy trusts to compensate them. There are dozens of these trusts.
Exposure evidence is key in court. Should someone sue J&J or others, those defendants want to be able to show whether the plaintiff also blamed other products in claims with bankruptcy trusts.
It's called "double-dipping," and in 2014 evidence of plaintiff lawyers manipulating the system by blaming different companies at different times for the same injuries was uncovered during the bankruptcy of Garlock Sealing Technologies.
Ten trusts were sued after planning to destroy bankruptcy claims that had been settled or withdrawn. It caught the attention of South Carolina Attorney General Alan Wilson and 14 other AGs who issued a letter to the trusts and the Delaware Claims Processing Facility warning destruction of documents would jeopardize fairness in their states’ courts.
The trusts, which are operated by boards that are aided by trust advisory committees often featuring plaintiffs lawyers, claim destruction of old records is key to protecting the privacy of claimants.
Laster refused all arguments for dismissal on Oct. 24.
“It is reasonably conceivable that without access to the claims data, the repeat litigants will lose more cases and settle more claims for larger payouts,” he wrote.
A group of companies had accused plaintiff lawyers of an ulterior motive – destroying the records to help their lawsuits against solvent companies. Laster noted that without the claims data, plaintiff lawyers could still tap their own records to provide records to defendants but have resisted.
“For solvent defendants, the settlement trusts constitute the only realistic source of information about other potential exposures and their severity,” Laster wrote.
Before Garlock Sealing Technologies convinced a judge in 2014 that double-dipping by plaintiff lawyers was happening, companies facing lawsuits had no way to prove the same clients were telling different exposure histories in claims made to bankruptcy trusts and in lawsuits filed in various courts.
After the Garlock ruling, which came after the company showed exposure history contradictions in the 15 cases it was permitted to investigate, 16 states passed laws requiring automatic disclosure of trust claims to civil defendants so they could find out who was being blamed for what.
The trusts planning destruction are Armstrong World Industries, Babcock & Wilcox, Celotex, Federal-Mogul, Flinkote, Owens Corning, Pittsburgh Corning, Quigley, United States Gypsum and WRG.
