TRUST CLAIMS LOOPHOLE
As noted above, many former asbestos defendants have gone bankrupt and have established trust funds through which those with injuries can administratively seek compensation, apart from the filing of lawsuits.
Needless to say, plaintiffs’ lawyers pursue both avenues. But some hide evidence of the true sources of their clients’ exposure to asbestos by waiting to file trust claims until after their lawsuits conclude, keeping useful information from defendants and manipulating the value of the civil court cases by only allowing a small portion of a plaintiffs’ total asbestos exposure to be shared with a jury. Recent data, including NYCAL data, make clear that greater transparency is needed to address this costly gamesmanship and suppression of evidence.
As noted in past Judicial Hellholes reports, a North Carolina federal bankruptcy judge in In re Garlock Sealing Technologies, LLC found that a gasket and packing manufacturer’s settlements of mesothelioma claims in the tort system were “infected by the manipulation of exposure evidence by plaintiffs and their lawyers.” The bankruptcy judge noted a NYCAL case Garlock had settled for $250,000. The plaintiff in that case had denied any exposure to insulation products, implying that the bankrupted major producers thereof were not a source of his alleged exposure. But once the case settled, the plaintiff’s lawyers filed 23 claims with trusts set up to pay people exposed to those companies’ products, including eight trust claims filed within 24 hours of completing the settlement with Garlock.
A more recent analysis of the discovery data from Garlock’s bankruptcy case in relation to asbestos defendant Crane Co. showed “a similar pattern of systemic suppression of trust disclosures.” The study discussed a NYCAL case – the Gerald Moors case – as an example. Mr. Moors testified at his deposition that he never worked with asbestos containing products from 11 now-bankrupt companies including Owens Corning. Just before opening statements Mr. Moors’ attorneys successfully moved to prevent defense counsel from mentioning Owens Corning’s asbestos insulation product during the trial, arguing that their client never said he was exposed to the product. But Garlock discovery data showed that the asbestos specialists at Belluck & Fox – the same Belluck & Fox whose top partner now chairs New York’s Commission on Judicial Conduct – led 26 trust claims on Mr. Moors’ behalf, including a claim against Owens Corning, “despite Moors’ sworn testimony that he did not work with the products from those (now bankrupt) companies.”
The trust claims filed in the Moors case also reveal site exposure inconsistencies. In his lawsuit, Moors denied being exposed to asbestos at the Ravenswood Powerhouse. In trust filings, however, Belluck & Fox listed Ravenswood Powerhouse as a site where Moors was exposed to asbestos.
Such “double-dipping” duplicity in NYCAL was made possible by a “loophole” inserted into the old CMO by Justice Heitler. And the loophole survives in Justice Moulton’s new CMO, which again naively assumes that plaintiffs’ lawyers will act in good faith in declaring before an asbestos trial begins whether they “intend” to file additional claims with asbestos trusts after trial. If they do, they’re required to declare those intentions with specificity before a trial begins.
But as Joseph Belluck coyly explained during a June 2014 hearing before the American Bar Association’s Asbestos Litigation Task Force:
[Judge Heitler] put in what is in effect an intent standard into the … filing requirement … . So … even though claims against bankruptcy trusts may be probable, … I only have to file the claims that my client intends to file before the trial. It is incredibly nuanced, and she did it for a reason. I am not going to get into all of the reasons behind it, but she did it for a reason.
The reason was plain enough, Mr. Belluck: she wanted to curry favor with plaintiffs’ lawyers by letting them cheat the system. Because short of performing a Vulcan mind meld, it’s impossible to know what someone intends to do tomorrow, the next day or next month. And that Justice Heitler’s aiding and abetting of the bilking of both civil defendants and asbestos bankruptcy trusts was not stopped in the new CMO is unfathomable. Which is why the previously mentioned amicus brief supporting NYCAL defendants’ pending appeal argues if the appellate court does not vacate the new CMO altogether, it “should, at a minimum, modify the CMO to require plaintiffs to file all eligible asbestos trust claims early in the discovery process and specify that trust claims materials are admissible.”
Of course, if the appeals court won’t step in to demand that NYCAL and other state trial courts deal transparently with all asbestos claims, state lawmakers may finally be ready to step up themselves. In fact, state Sen. John Bonacic, chair of the Senate Judiciary Committee and a former trial lawyer himself, has introduced a bill to address this glaring need. And Assemblymember Aravella Simotas, a rising political star from Queens, is sponsoring an identical bill on her side of the Capitol building. So there may be hope yet.