CHARLOTTE, N.C. (Legal Newsline) — A federal judge closed his courtroom to the public Friday during portions of testimony by a law professor who leveled charges of fraud against some claimants who sued Garlock Sealing Technologies after being exposed to asbestos.
The bankruptcy trial, which began Monday at the U.S. Bankruptcy Court for the Western District of North Carolina and is expected to last three weeks, will determine the estimated liability of the company for current and future asbestos claims.
Lester Brickman, a professor at Benjamin N. Cardozo School of Law at Yeshiva University in New York, said during unsealed portions of his testimony that certain confidentiality provisions enacted for trusts established to pay claimants who came into contact with asbestos caused significant transparency issues preventing Garlock from cost-effectively ferretting out bogus claims. Brickman authored a report on fraudulent asbestos claims and has testified before Congress on the issue.
To date, Garlock has paid out more than $1.3 billion in asbestos claims, Brickman said. Of that amount, about $1 billion had been paid out to claimants who did not develop any malignant cancers, which he labeled as fraudulent claims.
“These settlements as well as others were affected significantly by plaintiffs suppressing evidence,” Brickman said.
“My opinion is that Garlock’s settlement history is not an accurate reflection of Garlock’s liability,” he said.
Brickman said some plaintiff law firms routinely planted false memories into their clients. He cited a memo by the law firm Baron & Budd distributed to claimants that detailed the kinds of information defense attorneys would or would not be privy to. The memo stated Garlock by name and made mention that the company manufactured gaskets.
Judge George Hodges, who earlier this week denied Garlock’s motion to remove confidentiality designations from evidence relating to the trust claims as well as Garlock’s request to keep Brickman’s entire testimony open to the public, closed the courtroom after a brief recess. A Legal Newsline reporter present at the trial objected to the closure requesting that the judge delay Brickman’s testimony until after the company’s lawyers had a chance to argue for full media and public access to all of Brickman’s testimony.
Hodges overruled the request closing the courtroom for the rest of Brickman’s testimony, which continued on for approximately three more hours. Following Brickman’s testimony, the judge reopened the courtroom to the public and media.
One tort reform advocate called the judge’s move “highly unusual.”
“The closure violates the Bankruptcy Code’s provisions for public access, and appears designed to hide public disclosure of evidence of asbestos trust fraud,” said Ted Frank, the president and founder of the Center for Class Action Fairness and a regular contributor to Overlawyered.com.
When the courtroom was reopened, Garlock attorneys called Richard Magee, a senior vice president for EnPro, Garlock’s parent company to testify. Magee was the former general counsel for EnPro and oversaw much of the Garlock asbestos litigation.
Magee said when he first began working on the asbestos litigation for the company, he was “amazed and shocked at how many claims there were how much it cost.”
“My initial reaction was we should’ve been trying more cases,” Magee said. Garlock was a victim of circumstance, he said. Garlock made asbestos products that just happened to “be in the same place with some very dangerous (asbestos) products,” he said.
But Magee said he quickly understood why the company decided to settle a majority of its asbestos cases instead of taking them to trial because the litigation expenses would have been astronomical. On average, the company was paying between $1,000 to $2,500 to non-malignant claimants.
“We couldn’t even pay a lawyer to go to a deposition for $1,000 a claim,” Magee said.
“It was all about cash flow,” he said. “It wasn’t about liability.”