EXHIBIT I
Monday, January 17, 2011
3:29 PM
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
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In rc:
ACandS, Inc. Case No.: 02-12687 (JFK)
In re:
Case No.: 10-11780 (JFK)
Specialty Products Holding Corporation
In re:
Case No.: 02-10429 (JFK)
Kaiser Aluminum Corporation
In re: Case No.: 00-03837 (JFK)
Owens Coming
In rc: Case No.: 01-02094 (JFK)
USG Corporation
ACandS AS BESTOS SETfLEMENT TRUST;
KAISER ALUMINUM & CHEMICAL
CORPORATION ASBESTOS PERSONAL INJURY
TRUST; OWENS CORNfNGIFIBREBOARD
ASBESTOS PERSONAL fNJUR Y TRUST; and
UNITED STATES GYPSUM ASBESTOS
PERSONAL fNJUR Y SETfLEMENT TRUST (the
"Trusts")
",d
TRUST ADVISORY COMMITTEE FOR THE
ACandS ASBESTOS SETfLEMENT TRUST;
TRUST ADV ISORY COMMITTEE FOR TIlE
KA ISER ALUMINUM & CHEMICAL
CORPORATION ASBESTOS PERSONAL INJURY
TRUST; TRUST ADVISORY COMMIlTEE FOR
THE OWENS CORNfNGlFlBREBOARD
ASBESTOS PERSONAL INJU R Y TRUST; and
TRUST ADVISORY COMMITr EE FOR THE
OIlS Ea.l: 160793660.9
Unfiled Notes Page 1
UNITED STATES GYPSUM ASBESTOS
PERSONAL INJURY SETTLEMENT TRUST (the
"TACs");
ond
Adv. Pro. No. : 10-53702 (JFK)
HON. DEAN M TRAFELET (RET.), THE LEGAL
REPRESENTATIVE FOR FUTURE CLAlMAI~TS
AGAINST THE UNITED STATES GYPSUM
ASBESTOS PERSONAL INJURY SETfLEMENT
TRUST (the "Futu res Representa tive'')
Plaintiffs,
v.
HARTFORD ACCIDENT AND INDEMNITY CO.,
FIRST STATE INSURANCE CO., NEW ENGLAND
INSURANCE COMPANY, NATIONAL UNION
FIRE COMPANY OF PITISBURGH, PA,
AMERICAN HOME ASSURANCE CO., GARLOCK
SEALING TECHNOLOGIES, LLC., SPECIALTY
PRODUCTS HOLDING CORP., DELAWARE
CLAIMS PROCESSING FACILITY, LLC, AND
VERUS CLAIMS SERVICES, LLC
Defendants
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BRIEF AMICUS CURIAE OF CATERPILLAR INC.. CONTINENTAL
CASUALTY COMPANY. GENERAL ELECTRIC COMPANY. GEORGIA-
PACIFIC LLC. HONEYWELL INT ERI"IATI ONA L INC., s m IS and the TAC's Request Would Thwart Legitimate
Inquiry Into the Opcrdtion of the Trusts ..... ....... ......... 24
III. ANY RULiNG BY THIS COURT WOULD BE CITED AS
AUTHORIl'A"I1VE BY COURTS IN THE TORT SYSTEM. ...25
CONCLUSION............................................................................................ ..... 27
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Unfiled Notes Page 5
TABLE OF' AUTHORITIES
FEDERAL CASES
Baron v Budd. P.C. v Unsecured Asbestos Claimants CQrnm,
321 B.R. 147 (D.N.J. 2(05) .... ........... ...... . .......... ............. 11
Doe v. City of Chicago,
360 F.3d 667 (7th Circuit 2004) ........................................................................ 10
In rc Food Mgmt. Group LLC,
359 B.R. 543 (Bkrtcy. S.D.N.Y. 2007) ............................................ .10
In rc General Media. Inc. ,
335 B.R. 66, 73 (Bank. S.D.N.Y. 2005) .............. .... ...... ............ 26
In re Joint E. & S. Dist. Asbestos Litig.,
129 B.R. 710 (E. & S.D.N.Y. 1991) ......................................................................................... 6
In rc Silica Products Litig.,
398 F. Supp. 2d 563 (S.D.Tex. 2005) ........ ............................................................ 11, 12
Logan v. Zimmennan Brush Co.,
455 U.S. 422 (1982) ......................................................................... .. .......................9,26
Martin v. Wilks,
490 U.S. 755 (1989) ... ............................ .. ...... ... ....................................... 8
Societe Inlemationa1e v. Rogers,
357 U.S. 197 (1958). ......................................... 9
Travelers lndem. Co. v. Bailey,
129 S. Ct. 2195 (2009) .......................................................................................................... 10
Zerand-Bemal Group. Inc. v. Cox,
23 F.3d 159, 164 (7th Cir. 1994) ............................................................................ ................26
STATE CASES
Volkswagen of America. Inc. v. Superior Court ( Rusk)'
43 Cal. Rptr. 723 (Ct. App. 2006)................................................................................... passim
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Unfiled Notes Page 6
DOCKETED CASES
In Re: Asbestos Personal In jury Litig ..
No. 03-C-9600 (Cir.Ct. W.Va. March 3, 2010) ..... ................. .. ............... ... ...........2, IS
In rc Asbestos Prods. Liability Litig.,
MOL No. 875 (E.O.PA. Feb. 24, 2009) ...................................................................... .... ....... 21
In re Asbestos Prods. Liability Litig. (No. VI),
No. MOL 875 (E.O.Pa. September 18, 2009) ..................................................................... ..... 18
Cannella v. Abex.
No. 1037729/07 (N.Y. Sup. Ct. N.Y. County Jan. 24,2007) ................................. ......2. 15, 18
In rc: Garlock Sealing Techs. LLC,
No. 10-31607 (Bankr. Ct. W.O.N.C. Sept. 24,2010) ........................... .................................. 16
Tn re: Motors Liquidation Co.,
No. 09-50026 (Bankr. Ct. S.D.N.Y. November 15,2010) ....................................................22
In re: Motors Liquidation Co.'clk/a General Motors Coro.
No. 09-50026 (Bankr. S.D.N.Y. Aug. 9, 2010). .. .................. passim
Kananian v. Lorillard Tobacco Company,
No. CV 442750 (Ohio Cuyahoga County Com. PI. Jan. 18,2007) ........................................ 14
Negrepont v. A.C. & S, Inc. (In re N.Y. City Asbestos Litig.),
No. 120894/01 (N.Y. Sup. Ct. N.V. County Dec. 11,2003) ........ .. .............................. ..... 2, 16
Thibeault v. Allis Chalmers Com. Product Liability Trust
No. 07-27545 (Pa. Ct. of Com. PI. February 22, 2010).... .. ................................ ................. 16
FEDERAL 8T ATUTES
11 U.S.C. 107 .... ........ ............................... ....... . .. ................. 10
m
Unfiled Notes Page 7
MISCELLANEOUS
Chris Rizo, Congressman Seeks GAO Probe of Asbestos Trusts,
LegaINewsline.com, April 29, 2010, available ru.
http://www.legalnewsline.com/printeriarticle.asp?c=226902 (last accessed
November 18, 2010) .......................... ................. .......................................................... .24
Editorial, Cuyahoga Comeuppance,
Wall St. J., Jan. 22, 2007, at AI4 ..... ................... .......... ............................................... ...... 15
francis E. McGovern, The Evolution of Asbestos Bankruptcy Trust Distribution
Plans, 62 N.Y.U. Ann. SUIV. of Arn.t. 163 (Aug. 2006) ............................. ............................. 8
In re Massachusetts Asbestos Litig.,
(Scptember 25, 2009) .................. ............ ................................................................................ 9
James F. McCarty, Judge BeOIper &. Frock!,
PLLC; Wcin &. Luxenburg; Baron Ii. Budd, P.C.; Kamn, McClain. Abrams. F~ Lyons, Famse &:
Gremwood, P.C.; Goldberg. Persky &: White, P.C.; National Gypsu m: Rose, Klein &. Marias, LLP; Baron
&: Budd, LLP; Stanley, Mandel & lola, LLP. Stt L. Di~on et aI., YA$bestos Bankruptcy Trusts: An
Overview orTrust StruC1ure and Activity with Detailtd Rcporu on the: LargtSI TrustS. ~ RAND: InslilU!e
for Civil Justice (2010), App. B.
Unfiled Notes Page 9
As this Court is well-aware, the infonnation at issue here is straight-forward no
matter how voluminous. Every claimant to every one ofllie 524(g) trusts established is
required to submit information to the trust, ordinarily verified. concerning his or her
exposure to asbestos and medical records supporting his or her claim to have suffered
from a compensable asbestos-related illness. Exposure infonnalion may include the
claimant's own affidavit, his or her work rustory and various worksites, and the specific
asbestos products to which he or she claims exposure. As Illis Court is also aware, the
Trust Distribution Procedures ("TDPs") were intended to a large extent to require
claimants to trusts to produce the same sort of evidence that Ihey would have had to have
produced in the tort system, but for the debtor's reorganization. Not surprisingly, the
claim information submitted to the trusts is frequcntly - perhaps always - of critical
relevance to the tort claims filed by these same claimanl,> in state couns around the
country. It is this infonnation. however, which the adversary proceeding plaintiffs seek
10 shield from disclosure. now and in perpetuity.
Several courts have already considered many of the same arguments raised by
Plaintiffs in this adversary proceeding and have ordered disclosure of trust claims. ~,
£:&. Transcript of Hearing, Tn re Motors Liquidation Co .. flk/a General Motors Corp.
[hcreinafter "Aug. 9 GM Tr."), No. 09-50026 (Bankr. S.D.N.Y. Aug. 9, 2010); Transcri pt
of Proceedings at 44. C'...annella v. Abex. No. 1037729/07 (N.Y. Sup. Ct. N.Y. County Jan.
24.2007); Volkswagen of America, Inc. v. Superior Court, 43 Cal. Rptr. 3d 723, 725 (Cl.
App. 2006); Transcript ofProceooings at 3-4, Ncgrcoont v. A.C. & S. lnc. (In re N.Y.
Citv Asbestos Litig.), No. 120&94/01 (N.Y. Sup. Ct. N. Y. County Dec. ! 1. 2003). Judge
2
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Unfiled Notes Page 10
Gerber of the Bankruptcy Court for the Southern District of New York recentl y noted that
most of the objections fi led by the trusts in opposition to discovery of their databases
were "silly." See Aug. 9 GM Tr. at 100. This adversary proceeding is a similar attempt,
involving many of the same groundless argumcnts, to countennand the clear dictate of
several civil courts that have considcred the issue.
In the Asbestos Personal Injury Litigation proceedings in West Virginia, the
Cireuit Court of Kanawha County entered a Case Management Order ("CMO'') that
included a comprehensive disclos ure regime that was consented to by the plaintiffs'
lawyers with cases in that jurisdiction. The CMO requires that the claimant provide "a
statement of any and all existing claims that may exist against asbestos trusts." ~ Case
Management Order at 1 22, In Re: Asbestos Personal Injury Litigation, No. 03-C-9600
.
(CiT Ct. W.Va. March 3, 2010). For claims already asserted, the claimant must provide
"final executed proofs of claim together with any supporting materials used to support
such a claim ... all trust claims and claims material, and all documcnts or infonnation
relevant or related to such daims asserted against the asbestos trust, incl udi ng but not
limited to, work histories, deposi tions, and the testimony of the claimant and others as
well as medical documentation." I4" Penalties for noncompliance include plaintiff's casc
"being stricken from the trial group and whatever other sanctions the court deems
appropriate." Id. The CMO, again, consented to by plaintiffs, does not limit discovery to
just the plaintiff, either, but explicitly provides, "Defendants in an asbestos action may
also seek discovery from the asbestos trusts." ld.
3
Unfiled Notes Page 11
Courts are not the only ones encouraging disclosure of trus t data; numerous
scholars, jurists, analysts and political figures have raised serious concerns over the
obslaclcs currently preventing solvent, and oftentimes far less culpable, defendants from
knowi ng what other claims and accompanying exposure allegations have already been
submitted to the trusts. These sources recognize such obstacles inhibit appropriate
individual recovery, the compensation of future claimanlS and the fair allocation of both
funds and liabil ity. This disconnect between the mass tort system and the truSIS threatens
to punish defendants with onl y peripheral asbestos involvement and far less
rcsponsibility, if any, for plaintiffs' injuries, while rewardi ng "double-dipping" by
claimants filing inconsistent claims with one or more lruSIS. The fail ure to allocate
properly between solvent and insolvent tort defendants, coupled with the practice of often
contradictory claiming, swallows up the finite pool of assets of the solvent defendants
and of the bankruptcy trusts, threatening thc adcquacy of the remaining funds to fully
compensate future claimants. Several abuses involving trust compensation havc already
been \-vell-documented. Until the veil is lifted between the trusts and the mass IOrts
system ·- and between the trusts themselves .- the goals behind the asbestos bankruptcy
tnlSt model will remai n unrealized and solvent defendants and legitimate future claimants
will suffer unfairly.
INTERESTS OF THE AMICI
Several amici are solvent companies that manufactured or purchased asbestos or
asbestos-containing products, or companies that used asbestos or asbestos-containing
produclS in their premises or operations. Many amici have repeatedly been defendants in
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Unfiled Notes Page 12
tort litigation over asbestos and therefore are familiar with the current lack of
transparency between the trusts and the tort system, as well as the rcpcatcxl attempts by
the plaintiffs' bar to thwart court-ordered disclosure of claims and exposure infonnation.
Addi tio nally, Conti nental Casualty Company is an insurance underwriting company that,
alo ng with many of its underwriti ng affiliates, is regularly involved in the defe nse and
indemnity of asbestos personal injury claims in the tort and bankruptcy systems. Amici
seek a denial of the adversary proceeding Complaint and a rejection of the demand for
injunc ti ve relief for the following reasons: (1) the effort to resolve this issue unilaterally
for current and future court proceedings is defcctive from a d ue process perspective; (2)
there is no demonstrated need for the relief sought as courts necessarily resolve these
issues in the context of the facts and circumstances of particular cases and to do
otherwise as the TACs urge here wo uld be improper: and (3) as will likely be more fu lly
addressed by Respondents, there is no language in the TOPs supporting the TACs
position that only disclosure on a claim-by-elaim basis is pennissible.
Amici appreciate and support the goal of compensating individuals who have
legitimate claims of injury from asbestos. Amici share Plaintiffs' desire to have the trusts
play their appropriate role in an integrated tort system thai recognizes the "primary
obj cctive .. . to distribute money fairly and equitably to all claimants, present and
future." Verified Complaint for Declaratory and Inj unctive Relief ("Verified Comp!.")
at .. 29; Motion for Preliminary Inj unction ("Mol. for Prelim. Injuncl.") at '17. Section
524(g) trusts can only ac hieve this goal of fai r and equitable distribution if they pennit
the mass torts system to be infonned of the nature and factual basis for claims against the
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Unfiled Notes Page 13
trusts as well as disbursements by the trusts. This, in tum, provides security for future
claimants by avoiding contradictory claiming, over-compensation and dou ble-dipping of
current claimants.
BAC KGRO UND
At least sixty-three Section 524(g) trusts have been established or arc proposed.
Lioyd Dixon et aI., Asbestos Bankruptcy Trusts: An Overview of Trust Structure and
Activity with Detailed Reoons on the Largest Trusts, RAND: Institute for Civil Justice
(2010), at 25. Recently, additional trusts have been created with assets exceeding $30
billion. Shelley et aI., The Need for Transparency Between the Tort System and Section
524(g) Asbestos Trusts, 17 Norton J. ofBankr. L. and Pract. 257, 257 (2008). Over
ninety companies, many of them major producers of asbestos, have been forced into
bankruptcy as a result of asbestos liability, leaving more marginal defendants to face the
recent waves of litigation as plaintiffs search for the solvent bystander. See In re Joint E.
& S. Dis!. Asbestos Litig., 129 B.R. 710, 747-48 (E. & S. D.N. Y. 1991); see also Mark A.
Behrens, What's New In Asbestos Litigation? 28 Rev. ofLitig. 50 1, 503 (Spring 2009).
These newly targeted defendants were those "whose involvement with asbestos
was increasingly peripheral with regard to market share andlor the types of product
manufactured (such as products where only minor amounts of asbestos was used or
where any asbestos was completely encapsulated)." Shelley et aI., The Need for
Transparency Between the Tort System and Section 524(8) Asbestos Trusts, 17 Norton J.
of Bankr. L. and Pract. 257, 258 (2008). Many states' joint and scvcralliability rules
have historically held defendants liable for the enti rety of an award despi te thei r minor
6
Unfiled Notes Page 14
share of culpabil ity in comparison to insolvent defendants. While tort reform has
softened this practice in a certain amount of states, it has "by no means disappeared." rd.
Furthennore, even in those states who have undergone tort reform, such changes prove
largely ineffective without access to other exposure information to allow causation
defenses and placement of other respo nsible third parties on verdict forms, or 10 the other
recoveries plaintiffs have received via the trusts to permit offsets.
The natural assumption. in light of the fact that the most culpable defendants have
created trusts, would be that litigation agai nst peripheral defendants and resulting liability
would subside as claimants' injuries were compensated via trust re«lvery. However, the
plaintiffs' bar, through a number of mechanisms, has continually prevented such a
transition from happening.
ARG UMENT
l. THE ACTION REPRESE NTS AN IMPROPER EFFORT TO CREATE A
SYSTEM CLOSE D TO SCRUTINY UNDER THE IMPR IMATUR OF THE
BANKRUPTCY COURT
A. The Identity of 'he TAC Members
An explanation for the resistance of the trusts to disclose claims information
under the current circumstances may lie in thc fact that all but one of the Plaintiffs arc
Trusts and Trust Advisory Committee (rAC) members, charged with the management of
the trusts. A brief review of the underlying membership of the TACs reveals overlapping
affiliation with a number of leading plaintiffs' firms. See Lloyd Dixon et aI., Asbestos
Bankruptcy Trusts: An Overview of Trust Structure and Activity with Detai led Reports
on the Largest Trusts, RAND: Institute for Civil Justice (2010), at 14, 141. Affiliations
inelude the well-known plaintiffs' firms Motley Rice, LLC, Wcitz & Luxcnburg, Baron
7
Unfiled Notes Page 15
& Budd, Cooney & Conway and Campbell & Levine. Indeed, plaintiffs ' oounsel playa
critical role in creating the TOPs and it is plaintiff-counsel-backed participants in the
bankruptcy system who have set up various procedures that make disclosures difficult for
tort defendants to obtain. See Francis E. McGovern, The Evolution of Asbestos
Bankruptcy Trust Distribution Plans, 62 N_V.V. Ann. Surv. of Am. L. 163, 175-176
(Aug. 2006). A compelling example of the power wielded by the plaintiff-controlled
TACs is the recent refusal of the Manville Trust, with a TAC affiliated with Motley Rice,
Baron & Budd and Rose, Klein & Marias and which previously provided trust claims
infonnation to third-parties for a fcc, is now balking at providing that infonnation 1 tort
0
defendants because one of their "constituencies" refused to consent to the licensing and
distribution ohhe data to a debtor's expert in the OM bankruptcy. See Aug. 9 GM Tr. at
97-98.
B. T his Adversary P roceedin &, lmpJicates Serious Due Process Concerns
Plaintiffs "seek to resolve in one jurisdiction, in one action, the proper scope of
discovery of their claimant information ... and the protections that the Trusts may
properly and consistently invoke in the event of future discovery efforts." Verified
Compl. at 1 26 (emphasis added). Such re lief triggers significant due process concerns
for those persons nOI before this Court, including tort defendants and trust claimants, both
present and future. See Martin v. Wilks. 490 U.S. 755, 762, ( 1989) (superseded by
statute on other grounds) ("A j udgment or decree among parties to a lawsuit resolves
issues as among them, but it does not conclude the righ ts of strangers to those
proceedings."). Discovery disputes require a case-by-case fact-specific balancing of
8
Unfiled Notes Page 16
relevance, burden and confidentiality and cannot be done categorically. Ironically, any
attempt by defendants to obtain omnibus d iscovery rulings in the tort system is general ly
met by the plaintiffs' assertion that discovery issues may only be addressed on a case-by-
case basis. See Opposition to Defendants' Motion for Issuance of an Omnibus Letter
Rogatory in All Massachusetts Asbestos Utigation Trial Cases Requiring the Release of
All Bankruptcy Trust Claims Filed by Plaintiffs at 7, filed by 'Jbornton & Naumes, LLP,
The Shepard Law Finn, PC, Waters & Kraus, LLP and the Law Offices of Michael P.
Joyce, In re Massachusetts Asbestos Litig. (September 25, 2009) (wherein plaintiffs'
counsel asserted the need "to address this issue [production of materials from bankruptcy
truslS) on a case-by-case basis, not as an Omnibus Motion that effects every case, even
those that have not yet been filed."), Despite that historical position, in this current
proceeding, Plaintiffs' counsel submits a Proposed Order, attached to their Motion for
Preliminary Injunction, seeking to enjoin.!ill defendants from pursuing the subject
discovery in ~j urisdiction, in present or future proceedings, indefinitely. See Proposed
Order at 4, attached to Mol. for Prelim, Injunct. Amici object to !.he injuncti ve relicf
requested in this adversary proceeding as overbroad and in violation of the rights and
interest of absent persons. See wgan v. Zimmennan Brush Co.. 455 U.s. 422 (1982)
(noting thaI !.he Supreme Court has "read the 'property' component of the Fifth
Amendment's Due Process Clause to impose ' constitutionallimitations upon Ihe power
of courts, even in aid of their own valid processes, to dismiss an action without affording
a party the opportunity fo r a hearing on the merits of his cause"') (quoting Societe
Intemationale v, Rogers, 357 U, S. 197 (1958».
9
Unfiled Notes Page 17
C. T he Relief Requested Is Directly Opposed To The Presumption Of
O penness in Ba nkru ptcv nnd Civ il Court Proeccdin g.~
Extolling the vin ues of financial disclosure, Justice Brandeis once wrote,
"sunlight is said to be the best of disi nfectants." Louis Brandeis, What Publicity Can DQ.
Harper's Weekly, December 20, 1913. This mantra holds true for many facets of the
civil system, and it cenainl y applies to the operation of trusts set up for the purpose of
protecting those Icgitimately seeking financial redress. but which may become riddled
with false claims if not openly monitored. The rel ief the T ACs are seeking directly
contradicts the presumption of openness that applies to both tOrt and bankruptcy
litigation. ~ Doe v. City of Chicago, 360 F.3d 667, 66S (7th Cireuit 20(4) (J. Posner)
("Judicial proceedings are supposed to be open ... in order lo enable the proceedi ngs to
be monitored by the public. The concealment of a party's name impedes public access 10
the facts of the case, which includes the parties' ide ntity."); In rc Food Mgmt . Group
!d£ 359 B.R. 543, 553 (Bkncy. S.D.N.Y. 2007) (recognizing that " (t] he public interest
in openness of coun proceedi ngs is at its zenith when issues conceming the integrity and
lransparcrn::y of bankruptcy coun proc::e~ings are invol v~.j. lbe Bankruptcy Code
itself makes clear thaI openness is the standard. ~ 11 USC 107 ("(a) Except as
provided in subsection (b) of this section, a paper filed in a case under this title and the
dockets of a bankruptcy coun arc public records and open to examination by an entity at
reasonable ti mes without charge:').
Bankruptcy courts previously have held redress was necessary where panies
alleged injury in fact arising from double-dipping through the trust compensalion system.
Informative parallels may be drawn between the c urrent dispute and that arisi ng in the
10
Unfiled Notes Page 18
context o f protecting the rights of the insurers of debtor companies. The Supreme Court
has upheld injunctions barring di rect claims against insurers of debtor companies, which
had been a similar attempt by the plaintiffs' bar to concoct a "second" unfai r recovery for
its clients. ~ Travelers Indem. Co. v. Bailey. 129 S. Ct. 2195 (2009). Cowts have also
entertained disclosure requests by insurers where fundamental fairness required it. ~
Baron v. Budd, P.c. v. Unsecured Asbestos Claimants Comm., 32 1 B.R. 147, 161 ( D.N').
2005) ("It is the unfairness ofa plan which binds [the insurersl contractually and which
directly impacts their financial interests, unfairness which is traceable to conflicts of
interest among Creditors' counsel .... rand is) redres.-.able by the bankruptcy court
through a favorable decision ... made possible after review of the Rule 2019 disclosure
sought "}.
For a bankruptcy court to close the curtain upon the functioning of bankruptcy
trusts seems inimical to this history, particularly in light of the detenninations by other
courts that this infonnation is necessary for the fair treatmenl of numerous other
participants in the trust syslem. To fos ler a shroud of secrecy around the asbestos trusts
also threatens similar future trusts, such as trusts for Chinesc drywall claims or claims
against DP, fu rther undennining the presumption of openness the bankruptcy courts
currentl y endorse.
D. Examination of All n.ecords Can Reveal Patterns of Inconsis tent
C laiming
Patterns of fraudulent trust and tort claims may never come to light if broad
discovery is not pennitted. In 2005, Judge Janis Jack ofthc Southern District of Texas
unearthed a massive fraudulent screening system -- fueled by plaintiffs' attorneys--
L
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Unfiled Notes Page 19
whereby counsel fi led silicosis claims on behalf of scores of their asbestos clients. ~ In
re Silica Products Litig., 398 F. Supp. 2d 563 (S.D.Tex. 2005). Judge Jack ordered
extensive disclosure of!ll of plaintiffs' doctors and medical reports. Id. at 580. In
reviewing plaintiffs' fact sheets listing this information, she discovered "something
remarkable." lsL. lbe more than 9,000 plaimiffs who submiued the sheets were
diagnosed with silicosis by a total of just 12 doctors, many of whom had previously
diagnosed Ihem with asbestosis. Id. Testimony from a number of promi nent physicians
revealed the medical implausibility of a single patient suffering from both asbestosis and
silicosis. li!... at 628-629. Judge Jack detennincd that, far from objective and reasonable
medical determinations, these diagnoses were "manufactured for money." ~ at 635.
The discovery of case-specifi c exposure and senlement information is highly
relevant and disco verable in an individual case, as Plaintiffs agrce,2 see Verified Compl.
at 56, but case·by-case disclosures may not always reveal patterns of bogus claiming.
As In re Silica made clear, access to the information on a broad scale is the onl y means to
uncover trends of misconduct. If Judge Jack had not ordered the mass disclosure of
medical reports fo r all piaimiffs in the MDL, she never ....'Quld have unearthed the
startling fact thai a fraudulen t scheme was at work . ~ Lester Brickman. The Use of
Litigation Screenings in Mass Tons: A FQrmula for Fraud?, 61 SMU L Rev. 122 1, 1344
(2008). Additionally. relying on state courts alone to police discovery - in the tOlal
absence of al10wable trust discovery as to claimed exposure and pay-outs - is insufficient
lOr, at least, Plaintiffs agree for purposes of this advenary proceeding.. The: Ilw flnn ofCampbtll Levine,
appearing in this adversary proceeding.l\as fnquefldy is.s~ gmeric fonn letterS (0 IOCII counsel OOyin&
requescs for cllims inronnation in individual eases. In responding (0 weh I request, Campbell Levine
invokes the tonndentiality elauses wrinen by the TAC member! with claims pending before the truSt.
12
Unfiled Notes Page 20
as it will be virtually impossible to know whether a plaintiff !las plcad inconsistently or
"do uble-dipped" without access to the trust databases. See Verified Compl. at 60.
E. T he C ourt, Claim a nts, T ru sts a nd Tort Defenda nts All Have a n
Interest in a Svstem th at E ns ures Appropria te Pavment a nd
Allocatio n of Liability
Certainly it is not only ton litigants. but also the trusts themselves, who should be
seriously disturbed by such instances of claiming misconduct. As fiduciaries charged
wi th ensuring the equitable distribution of money to present and future claimants, the
prospect of trusts paying claimants mo ney that they do not deserve from a finite pool o f
resources raises a host of concerns. The oul y way to expose misconduct would be
pursuant 10 disclosure of the claims infonnation. It is only by unveiling this infonnation
that the necessary dialogue between the trusts and thc ton system can occur, where those
with legitimate claims remain protected while "double-dippers" and inconsistent claiming
activity are exposed. Otherwise, the rompleteness of discovery responses offered by
plaintiff-claimants remain a mystery and both tort defendants and trusts are powerless to
identify such abuses, often shouldering disproportionate liability as a «:sult.
F. Documented Abuses of tb e Bankrup tcy T rus t Systc m
Despitc the proliferation ofasbcstos trusts, solvent defendants have not been ablc
to receive and verify claims data to ascertain how many trusts a particular litigant is
claiming from, the potentially varyi ng and often contradictory exposure assertions made
to support their claims, nor the amount that litigant has received from the trusts. See
Lloyd Dixon et aI., Asbestos Bankruptcy T rusts: An Overview of Trust Structure and
Activity with Detai lcd Reports on the Largest Trusts, RAND: Institute for Civil Justice
13
Unfiled Notes Page 21
(20 I0), at xvii. Such information directly impacts issues of exposure and recovery, as
well as the corresponding liability, if any, of salven! defendants. Trusts typically do not
share claimant information with each other, so there is no check on inconsistent claim
information. See id. at 19. This means claimants are potentially able to file contradictory
claims with multiple trusts, as well as simultaneously pursue alternative recovery via the
tort system, entirely unchecked. Cases like Kananian v. Lerillard Tobacco Company,
No. CV 442750 (Ohio Cuyahoga County Com. PI. Jan. 18. 2007) and Volkswagen of
America, Inc. v. Superior Court (Rusk), 43 Cal. Rptr. 723, 731 (Ct. App. 2006), have
demonstmted all too clearly the serious potential for abuse posed by the opacity of the
trust system.
Harry Kananian dicd of mesothelioma in 2000 and his attorneys proceedcd to
submit inconsistent claims to several trusts to inflale the recoveries paid out by each.
Kananian v. LeriHard Tobacco Company, No. CV 442750 (Ohio Cuyahoga County Com.
P!. Jan. 18.2007), at 5. In defending a tort claim by Kananian in Ohio state courl,
LoriHard Tobacco pressed for discovery of the trust claims, which Kananian's lawyers
vigorously opposed . .!..!t at 5-6, 9. The court's discovery order unearthed "a Pandora's
box of deceit .... Documents from the six other compensation claims revealed that
[plaintiff's lawyers] presented confl icting versions of how Kananian acquired his
cancer." Mark A. Behrens, What's New In AsbestQS Litigation?, 28 Rev. of Litig. 501,
551-52 (Spring 2009) (quoting James F. McCany, Judge Becomes National Legal Star,
Bars Firm from Court over Deceit, Clev. Plain Dealer, Jan. 25, 2007, at BI). Ultim!ltcly,
it was revealed that Kananian's estate had already recovered approximately $700,000 as a
14
Unfiled Notes Page 22
result of the contradictory claims, including for products to which he was ncvcr cxposed.
Shelley et al., The Need for Transparency Between the Tort System and Section 524(g)
Asbestos Trusts, 17 Norton 1. ofBankr. L. and Pract., 257, 264 (200&). In addition to
barring the plaintiffs' attorneys from practicing in his coun, Judge Harry Hanna
suggested his willingness to permit cvidcnce oftrus inconsistent claiming before the jury.
Id. The Wall Street JournaJ recommended that Judge Hanna's opinion be "required
reading for other judges" to encourage "more scrutiny of 'double dipping' and the
rampant fraud inhcrent in asbestos trusts." Mark A. Behrens, Whal's New In Asbestos
Litigation?, 2& Rev. of Litig. SOl, 552 (Spring 2009) (quoting Editorial, Cuyahoga
Comeuppance, Wall St. 1., Jan. 22,2007, at AI4); Transcript of Proceedi ngs at 45,
Cannella v. Abex, No. 1037729107 (N.Y. Sup. Ct. N.Y. County Jan. 24, 2007) (in
response to plaintifrs refusal to disclose current and potential future trust claims, Justice
Shirley Kornreich termed plaintiff's dilatory filing behavior "gamesmanship").
Volkswagen of America. Inc. v. Superior Court (Rusk), demonstrated the need 10
permit discovery of not only documents submitted to the trusts by plaintiff themselves,
but also any documents submitted by their attorneys. ~ 43 Cal. Rptr. 723 (CI. App.
2006). In that case, plaintiff refused to disclose documents that his attorney had
submitted to the trust on his behalf, claiming, inter alia, that such documents were
confidentiaL Id. at 724. The court disagreed, findi ng "no reason to provide heightened
protection for information concerning Rusk's work history, which plainly is relevan t and
not confidential, or concerning his medica l condition which is directly at issue and
undoubtedly substantially disclosed in materials that have already been produced." Id. at
15
Unfiled Notes Page 23
729; ~ also Case Managemem Order at 22, In Re: Asbestos Personal Injury
Litigation, No. 03-C·9600 (Cir. Ct. W.Va. March 3, 201 0) (providing that tort defendants
may seek discovery of trust claims from the asbestos trusts); Case Management Order at
10, Thibeault v. Allis Chalmers Com. Product Liability Trust, No. 07·27545 (Pa. Ct. of
Com. PI. February 22, 20 I 0) ("[P]rior to trial, each plaintiff shall have filed any and all
Asbestos Bankruptcy Trust claims available to him or her ... [and] shall provide
complete and accurate copies of all such filings ... to all Defendants."); Transcript of
Proceedings at 3-4, Negrepom v. A.C. & S, Inc. (In re N.Y. City Asbestos Litig.), No.
120894/01 (N.Y. Sup. Ct. N.Y. County Dec. 11,2003) (noting "my factual statements
[including those made by his lawyer] made in the proofs o f claim about allegoo asbestos
exposure of the plaintiff to one of the bankrupt' s products should be made available to
the defendants'') (emphasis added).
Rusk recognized the reali ty of the trust claimant system, where claimants
typically do not know several elements required for their claim, and which attorneys with
huge databases may fil l in and submit on their behalf. See In re: Garlock Sealing Techs.
LLC, Memorandum of the Official Commi ttee of Personal Injury Claimants] (I) In
Opposition to the Debtors' Motion for (A) Establishment of Asbestos Claims Bar Date,
(B) Approval of Asbestos Proof of Claim Form, (C) Approval of Form and Manner of
Notice, (D) Estimation of Asbestos Claims, and (E) Approval of Initial Case
Management Schedule; and (2) In Further Support of Its Motion for Emry of a
) As of June 6, 20 10, the asbestos pel'$OnDl injury comminee for the Garlock bankruptcy consi$1$ of: Steve
Kazan of Kazan McClain, Robert Phillips of Simmons Browder, Peter Kraus ofWateT$ & Kraus; John
Lipsitz of Lipsitz & Pon!trio, Garren Bradley ofThomton & Naurnes, David Greenstone of Simon Eddins
& Greenswne, [unnamed] of Cooney & Con way, Bob Paul of Pau l Reich & Myers, John Badan of Motley
Rice, Lisa Busch of Weitz & Luxenberg and Brian Fitzpatrick of Belluck & Fox.
16
Unfiled Notes Page 24
Schcduling Order for Plan Formulation Purposes at 22, No. 10-31607 (Bankr. Ct.
W.D.N.C. Sept. 24,2010) ("It is simply unrealistic to expect that claimants wi ll have all
of [the information requested in a claims fonn] available."). In fact, "claimants often do
not know the names of the products to which they were exposed onjobsites, but rely
upon third-party depositions, shipping manifests, and other sources to find out." Jd. This
is where plaintiffs' attorney come to the rescue, drawing upon immense databases to try
to link a plaintiff's exposure to a particular product andlor company.
The infonnation posted on Brayton Purcell's website boasts a "massive collection
[of] ... over 100,000 volumes of depositions and transcripts and more than six million
pages of data to maximize the value of an asbestos case." Brayton Purcell Firm Website,
available at http://www.braytonlaw.com /choosinglchoosing-an-asbestos-anomey.htm
(last visited on November 18, 20 10).4 Cooney & Conway's website states:
An essential element in your case or claim for asbestos
disease is finding and proving which asbestos companies'
products you were personally exposed to. This part of your
case is the most complicated to document and prove, and
this is an area where we have done, 8l1d will continue to do,
a great amount of investigation and research. . .. We are
continually researching and uncovering new information
about the specific manufacturers, suppliers, and installers
of asbestos products ... and this additional information
• Walen; & Kraus' website reads, "[W}e build comprel1ensive ex hibit lists that set the foundation for
extremely strong cases for plaintiffs seeking asbestos and SJS ff:l ief. The Litigation $uppon team currently
manages 1llOff: than 70,000 liability doelaware Avenue, Sui te 11 30
Wilmington, DE 19801
(302) 656-5935
Counsel for the Amici for the limited
purpose of this submission
28
Unfiled Notes Page 36