Delaware Supreme Court in Dover
DOVER, Del. – Asbestos lawyers are orchestrating the destruction of evidence to leave defendants unable to mount a full defense, companies like Johnson & Johnson and Dow Chemical are telling the Delaware Supreme Court.
The dispute began last year when those in control of asbestos trusts – which are funded by companies that faced bankruptcy from lawsuits – announced they were planning to destroy evidence gathered in resolved claims.
But companies who fight these cases in court often use that information to show whether plaintiffs blame some companies in their lawsuits while naming others that established trusts. A Delaware judge last year stopped the deletion of records, and the trusts have appealed to the state Supreme Court.
“After multiple unsuccessful discovery of the Claims Data, Defendants (and the plaintiff law firms that control them) tried a new tactic: Destroy the Claims Data to ensure there is nothing left to subpoena,” companies wrote in a brief filed last week.
“The result, if permitted, would be an unprecedented spoliation of evidence.”
There are two avenues for asbestos victims to be compensated – sue companies in court and/or submit claims to companies that have already established bankruptcy trusts. 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Ten trusts were sued after planning to destroy bankruptcy claims that had been settled or withdrawn.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 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.
Companies argued in their recent brief that asbestos lawyers often conceal trust claims so that solvent companies are found more at fault in lawsuits. J&J, which tried to settle thousands of claims through bankruptcy court but was stopped thanks to the efforts of the firm Beasley Allen, anticipates fighting cases in court “for decades to come.”
“But, as alleged in the complaint and as the Court of Chancery found, the claimants and their tort counsel who submitted the claims data in the first instance are not reliable sources for obtaining it,” the companies wrote.
“Claimants suing manufacturers will deny exposure to other products and conceal that they have asserted the same exposure when submitting claims to trusts.”
Vice chancellor J. Travis Laster ruled last year that without the claims data, defendants will lose more cases and settle more claims for larger amounts.
“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.
