NewportWhen assessing liability risk, businesses, insurers, and others impacted by America’s free-wheeling civil justice system often ask, “What’s the next asbestos?” Regrettably for defendants still wrapped up in what the Supreme Court once called “the elephantine mass” of asbestos litigation, asbestos is still the next asbestos. In 2014, asbestos defendants continued to struggle against the tide of unfavorable judicial rulings, though one positive development this year did offer a great deal of hope to besieged businesses.

A January 9 ruling by U.S. Bankruptcy Court Judge George Hodges found a “startling pattern of misrepresentation” and withholding of exposure evidence in a ten-case sampling from asbestos actions consolidated in his court as In re Garlock Sealing Technologies, LLC, et al. Judge Hodges ordered full discovery in those cases to determine whether allegedly injured plaintiffs had exaggerated the value of their claims and failed to disclose claims they had made to asbestos bankruptcy trusts. A Fall 2014 WLF Conversations With paper, featuring former Attorney General Dick Thornburgh and former Delaware state court judge Peggy Abelman, addressed the larger concerns with such withholding of bankruptcy claims information. A January 21 Featured Expert Column on the WLF Legal Pulse also discussed In re Garlock in detail.

Developments in the case continued throughout 2014, the most prominent of which was a November 13 decision from a federal magistrate judge overseeing Garlock’s RICO suit against asbestos plaintiffs’ lawyers. The judge ordered that certain discovered documents from In re Garlock be unsealed. A news organization and several asbestos defendants had sought access to the documents.

The negatives still far outweighed the positives, however influential In re Garlock may prove to be. For instance, an already bad locale for asbestos defendants, New York City, got even worse in 2014. First, on April 19, a New York Supreme Court judge lifted the longstanding ban on punitive damages in asbestos lawsuits in New York City. That decision, and the court’s general hostility toward asbestos defendants and their due process rights, led the American Tort Reform Foundation (ATRF) to name New York City the top Judicial Hellhole® in its 2014 Judicial Hellholes® report. Then, on July 3, a New York intermediate appellate court upheld liability for an asbestos defendant even though it disagreed with a New York Supreme Court’s radical instruction to the jury that the defendant could be held liable for failing to warn of unforeseeable risks posed by third-parties‘ products. That decision has cast doubt on a critically important legal theory, and many are calling on the state’s highest court to review the Dummitt v. Crane Co. ruling. An October 10 WLF Legal Opinion Letter lays out the rationale for review by the New York Court of Appeals.

The ATRF report highlights another jurisdiction that posed ongoing trouble for asbestos defendants in 2014. The astonishing success of asbestos lawsuit plaintiffs in Newport News, Virginia earned that area’s courts a spot on ATRF’s “watch list.” From 2004 to 2014, asbestos plaintiffs have won 85% of the cases that have gone to trial there. Such a high winning percentage is due in part to the low causation standard of the maritime laws under which the plaintiffs’ lawyers file suit. The presiding judges make matters worse, the ATRF report explains, by routinely rejecting defendants’ scientific evidence and refusing to allow companies to introduce evidence of the plaintiffs’ employers—most often Newport Shipbuilding & Dry Dock Company and the United States Navy.

We are hopeful that continued exposure to sunshine will eventually reverse asbestos defendants’ fortunes in jurisdictions like New York City and Newport News, and we trust that in 2015, the documents and decisions arising from In re Garlock will allow actually injured claimants to be compensated while halting plaintiffs’ lawyers’ gaming of the system.