THE BLOG
11/12/2014 04:20 pm ET Updated Jan 11, 2015

CSX Civil Lawsuit, Midterm Victories Are Tort Reform Victories (Update)

Correction (11/13/2014 12:00pm EST): Due to an editing error, an earlier version of this post identified CSX as an affiliate of Koch Industries. It is not. I apologize for the error. - Sara Warner.

Don't look now, but the midterm elections are not the only huge November win for the politically conservative tort reform movement, and likely not even the most relevant. The CSX Transportation company has also scored a high-profile civil court victory with a federal appeals decision out of Virginia.

The case is part of a national trend of companies suing people who sued them, and the railroad trumpeted its success in a press release:

"CSX Transportation today announced that it has resolved the final stages of its racketeering and fraud lawsuit against asbestos attorneys Robert N. Peirce Jr. and Louis A. Raimond, and radiologist Dr. Ray Harron. As part of the settlement, the West Virginia jury's verdict stands and CSX will be paid $7.3 million to satisfy the trial court judgment entered against the lawyers and doctor on September 25, 2013, and in resolution of disputed motions for attorney fees and costs."

Forbes magazine explained the case: ".... CSX took the unusual step of suing the people suing it in 2007, accusing the lawyers and Harron of engaging in a RICO [Racketeer Influenced and Corrupt Organizations Act] conspiracy to file fraudulent asbestos claims. The company identified hundreds of cases where Harron had initially found the patients clear of asbestosis, then switched his diagnosis. It presented 11 of those cases at trial, along with testimony of physicians that the plaintiffs had no evidence of asbestosis."

Under RICO, damages can be tripled and legal fees awarded.

The Pittsburgh Post-Gazette newspaper quoted Deborah R. Hensler, a professor of dispute resolution for Stanford Law School, saying that the litigation was "sending a bracing message to plaintiffs' lawyers," adding that the message was "... we're going to challenge you. We're going to make it more expensive for you. We're going to make it more risky for you."

News from the CSX case sent a ripple through the asbestos civil litigation world last week, and business leaders suggested it signals a trend, with Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform, saying that "... we commend CSX Transportation for pushing back against the endemic fraud and abuse in asbestos litigation... this settlement illuminates a path for unjustly-targeted companies to fight back."

Examples of that path might include a California case that has recently gained national attention. Michael Lampe, who heads a four-lawyer firm in Visalia, California, said last Friday that his legal team was meeting, in the wake of the CSX case, to consider adding RICO claims to his lawsuit against a prominent California-based firm. He explained that a major RICO advantage might be legal fees accumulated over years of litigation.

The Lampe Case has been underway for six years, but has recently gained attention as it survives appeals and nears trial. An example of that attention is a recent story in the Legal Newsline, a news site owned by the U.S. Chamber of Commerce, which outlined that "... Plaintiff Tulare Sag, Inc., a California corporation doing business as Lampe Dodge-Chrysler-Jeep, filed the lawsuit in the Superior Court of the State of California for the County of Tulare against the Keller, Fishback & Jackson law firm, Stephen M. Fishback, Diran H. Tashjian, J. Bruce Jackson, and Does 1 through 25."

In that Newsline report, Lampe had harsh words for his opponent. "They make a living victimizing the public by way of being shakedown artists," Lampe told the Legal Newsline, adding that he felt the actions might rise to the level of "criminality."

After the Newsline story, Lampe confirmed, he has fielded questions from those interested in similar cases.

The Lampe case and the CSX RICO do not exist in a vacuum.

In a North Carolina bankruptcy case involving a company called Garlock, the defendants also "sued those suing them" after a federal judge found that evidence was withheld in several cases. That litigation includes RICO allegations.

It is worth noting that the "lawyers blaming the lawyers" trend is not mutually exclusive.

In Garlock, plaintiff's firms have filed their own counter-suit and promise corporate revelations during discovery; the entire trial is about to become public in a new transparency phase ordered by an appeals court. In another case, in the federal 3rd Circuit out of Philadelphia, the courts in September reinstated an asbestos case against BASF based on defense-side attorneys concealing evidence.

The Lampe case is headed for likely mediation in January and some are calling it "Garlock West."

Political implications are clear. The GOP, fresh from midterm victory, will push "tort reform" and at least one of the likely Republican presidential candidates has already embraced transparency: Wisconsin Gov. Scott Walker signed trust fund transparency legislation into law earlier this year.

Ironically, the real issue here isn't "tort reform" or asbestos litigation any more than the problem with burglary is home construction. If lawyers are getting caught with their hand in the proverbial cookie jar, or withholding required evidence, or engaging in any other bad behaviours, it's just that - "lawyers gone wild" so to speak.

The problem, if there is one, has more to do with consumers - the clients - who are sooner or later going to be stuck in the middle of all this.

And neither side will claim victory then.