Cross-posted by at “On the Docket”

For almost four decades, lawsuits alleging harm from asbestos have been filed against everyone from the product’s original manufacturers to general retailers like Sears.  Billions of dollars have been paid out from settlements and verdicts.  Scores of companies have been driven into bankruptcy.  Lobbyists for plaintiffs and defendants have put generations of kids through college on fees paid to pursue and oppose federal asbestos liability reform.  Many law review articles and reports have been written arguing how this “elephantine mass” of litigation, as the U.S. Supreme Court called it in 1999, has been largely manufactured through mass x-ray screenings and other tactics directed by a select few mass tort plaintiffs’ law firms.  Some defendants have successfully targeted absestos trial lawyers for their shady behavior (a WLF Web Seminar last April highlighted one example), and victims of asbestos litigation abuse had great hopes for a federal racketeering suit filed by railroad firm CSX in 2007.  Those hopes flagged, however, when in March 2008, a federal trial judge dismissed CSX’s Racketeer Influenced and Corrupt Organizations (RICO) Act and state fraud claims as barred by the limitations periods of those two laws.

This week, the U.S. Court of Appeals for the Fourth Circuit, at the urging of CSX and a score of amici, including WLF (our brief here), vacated the district court’s opinion on the limitations issue and remanded the claims for further proceedings.  In CSX Transportation v. Gilkison, the Fourth Circuit passed no judgment on the merits of CSX’s claim that the plaintiffs’ firm and others:

’embarked upon a calculated and deliberate strategy to participate in and to conduct the affairs of the Peirce firm through a pattern and practice of unlawful conduct, including bribery, fraud, conspiracy, and racketeering’  . . . by ‘orchestrat[ing] a scheme to inundate CSX[] and other entities with thousands of asbestosis cases without regard to their merit.’

Instead, the panel’s opinion focused on how the trial judge misapplied the legal standard for when the statutes of limitations commenced – i.e. when CSX knew or should have known fraudulent, harmful conduct had occurred.  The basic act of asbestos lawsuits being filed against them, the court found, was not enough to put CSX on notice that a fraud was afoot.  As WLF’s brief aptly put it, the firm and its compatriots arguably “carried out their scheme in a manner designed to ensure that a reasonable person would decide not to investigate.”  The developments which led CSX to suspect fraud noted in the Fourth Circuit ruling, such as notorious mass plaintiffs’ “expert” Dr. Ray Harron losing his medical license, occurred well within the limitations periods. Whether those facts are true or amounted to RICO or state fraud violations will, thanks to the Fourth Circuit’s decision, be determined in a public judicial process at the trial court.  Disinfectant sunlight is something all victims of asbestos lawsuit abuse will welcome.

One notable irony in CSX Transportation v. Gilkison: the Fourth Circuit deemed the opinion “unpublished,” which under that circuit’s rules means it is not binding precedent.  Given the reality that the vast majority of civil RICO litigation is brought against businesses, it is rather incongruous that a ruling which allows a RICO case against such lawyers to proceed is unlikely to help plaintiffs’ lawyers in the future.