July 2014

Note: For more MG&M analysis on Garlock, please see previous post by William Larson and Brian Gross.

The ramifications of the Garlock asbestos bankruptcy are just beginning to be felt across the country.  As new developments continue to play out, it is important to note that in each of the 15 cases in which Garlock was allowed to conduct additional discovery, the bankruptcy court found evidence that alternative exposures to asbestos were withheld.  This groundbreaking case has shed light on extremely valuable areas of discovery previously not pursued in a thorough enough manner.

The case has set in motion a new trend triggering discovery requests for all sources of exposure outlined in prior bankruptcy trust claims. Today, many different entities are seeking additional information regarding any potential withholding of alternative exposure evidence.

For example, Sindhu Sundar, writing for Law 360, reports that the bankruptcy court recently granted Ford Motor Company’s request to file a motion in federal district court seeking sealed evidence relative to other potentially withheld bankruptcy claims.

Meanwhile, the plaintiffs’ bar has pushed back on Garlock, arguing in a recent motion that Garlock knew of alternative exposures while hiding the evidence.  As a result, the Plaintiffs’ committee in the bankruptcy case has asked that the proceedings relating to the Garlock bankruptcy estimation be reopened, claiming that “Garlock has committed a fraud upon the court”—a charge Garlock attorneys argue is baseless.

In Los Angeles, California, Judge Emilie Elias, who has been appointed as the Coordination Trial Judge for all asbestos lawsuits pending in Los Angeles, Orange, and San Diego Counties, has set a hearing on disclosure requirements for bankruptcy trust submissions.  The plaintiffs’ bar has vigorously opposed many of the disclosure requirements, arguing they may file claims simply as “placeholders” to avoid the statute of limitations and such claims should not be discoverable under the attorney work product privilege.

Regardless of future rulings on the case, the proceedings highlight the need to conduct thorough investigation and discovery regarding all sources of exposure.

As Heather Isringhausen Gvillo noted in Legal Newsline “the ruling should do everything from assisting defense attorneys seeking access to asbestos trust claim submissions as well as fueling both jurisdictional and national efforts to require bankruptcy trust transparency through case management orders or even federal laws.”

The lesson learned in Garlock is that companies and insurers involved in asbestos litigation, as well as their attorneys, must insist upon the release of all discoverable bankruptcy trust claims information.  This will sometimes require vigilance and persistence since some plaintiffs’ firms are reluctant or unwilling to provide complete disclosure regarding these sources of exposure.

As always, diligent attention to discovery procedures is essential.

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