THE BLOG
09/17/2014 05:04 pm ET Updated Nov 17, 2014

High-Profile Asbestos Cases Leave Judges Pondering Trust

America's longest-running personal injury litigation arena is approaching full disruption, with high-profile cases and finger-pointing on issues ranging from concealing evidence to judges in the nation's largest trial court feeling "sad" at the disrespect shown by lawyers.

Those were a couple of the key take-aways from the annual "national overview" asbestos summit organized by the Pennsylvania-based Perrin Conferences firm in San Francisco last week. The most recent asbestos litigation disruptions come not from usual issues like evolving science or legislation, but from courts finding that some (and everyone says to stress "some") lawyers, both plaintiff and defendant, may have been seriously concealing evidence.

With "mesothelioma," an asbestos-related cancer, already the most expensive Google search keyword, the litigation is evolving as a national issue. The claims help thousands of victims every year but have also helped send about 100 companies (and counting) into bankruptcy. Those bankrupt entities have created dozens of trusts to meet their liability, in effect creating a second compensation system that operates separately from the courts.

Some (and, again, everyone says to stress "some") plaintiff firms are in hot water for telling one story in the trust claims and another in the court claims. Defense firms point to the high-profile "Garlock" case, where a North Carolina bankruptcy court found in January that some (again... "some") attorneys and their clients were doing just that.

Citing trust information research, the court ruled that the nearly $1.3 billion that plaintiffs felt should be set aside for mesothelioma victims was closer to $125 million.

The case was so significant that Reuters called it a "lifeline" for companies facing asbestos liability. The case has fueled calls for asbestos bankruptcy transparency reform. In fact, "Garlock" was cited as an issue when Wisconsin expanded transparency rules just this year.

But... victims' attorneys have their own recent case illustrating potential hijinks from the defense. A federal appeals court has revived serious fraud allegations regarding defendants hiding evidence.

The Wall Street Journal explains that "... "... the Third U.S. Circuit Court of Appeals has revived a fraud case against a unit of BASF SE BAS.XE -1.73 percent and the New York law firm that defended it for years in asbestos cases, Cahill Gordon & Reindel LLP, overturning a lower court judge who dismissed the purported class action... a group of plaintiffs -- representatives of alleged asbestos victims -- claimed that BASF and Cahill systematically collected and destroyed or hid evidence of asbestos-contaminated products produced by a BASF predecessor, Engelhard, in order to evade liability and forge quick settlements."

Transparency, as some like to say, cuts both ways.

Anyone hoping for clarity amid the finger-pointing likely left San Francisco in a fog, and the panel discussions closed with several California judges pleading for more respect.

Los Angeles Superior Court Judge Emilie H. Elias, the asbestos judge for the nation's largest trial court, had issued a new management order for her court in August, but the document largely sidestepped the trust transparency issue. There was hope she might offer some insight, but Judge Elias was a late scratch from the conference due to a family crisis.

Her colleague and de facto spokesperson, Judge Helen Bendix from the L.A. Settlement Courts, mostly addressed the lack of respect some (and she stressed "some") law firms show her court, which focuses on efforts to avoid jury trials.

"We are sad at the disrespect we get," said Judge Bendix. "There are cases going to trial that should not be going to trial." She said such disrespect is even worse considering the asbestos system was exempted from recent California budget cuts that closed 10 L.A. County courthouses and eliminated hundreds of jobs.

"You still get concierge service from Judge Elias," she said, adding that "... the asbestos department stayed intact."

Judge Bendix even suggested that continued disrespect, like sending junior attorneys, without much authority, to settlement hearings and filing cut-and-paste arguments, might lead to the elimination of her Settlement Court for asbestos cases. Instead, she said, the courts might consider a mediation plan similar to that of federal courts where participants are charged for the service.

With judges apparently hesitant to assume leadership and dueling high-profile cases potentially impacting thousands of American families facing asbestos illness, is there any wonder that the battle over asbestos transparency is likely leaving the courthouse and headed to a statehouse near you?