Toxic Tort Newsletter February 2011

Transcription

1 An Overview Of The 9/11 Toxic Tort Litigation By John Flannery and Allyson Avila ENVIRONMENTAL AND ENERGY REGULATORY AND COMPLIANCE GROUP Wilson Elser s Environmental and Energy Regulatory and Compliance Group is committed to providing its clients with a consistently high level of service across a broad range of areas. These include: Brownfield cleanups and redevelopment of contaminated properties The impact of environmental laws on real estate business and lending transactions Identifying and pursuing financing programs available to redevelopers of contaminated property in need of remediation Transaction-triggered environmental laws Due diligence and contractual allocation of environmental risk in transactions Disclosure laws and obligations concerning environmental conditions on real property Contractual allocations of environmental risks in transactions Securing environmental insurance products to protect the firm s clients against cleanup cost overruns and pollution legal liability Compliance with state and federal environmental laws and regulatory requirements concerning use, pollution and cleanups of land, air, water and wetlands, including federal and state Superfund laws, clean air and clean water acts, waste generation and disposal laws Permit requirements under state and federal regulatory schemes We also have considerable experience in the handling of energy and infrastructure projects, and climate change and sustainability matters. In that regard, we have the ability to represent clients engaged in or considering business ventures in emerging green energy fields such as solar, wind, geothermal, cogeneration, biofuels and biomass. Finally, we can tap into a wealth of experience in helping our clients with most every aspect of energy management. We can interface with consultants involved in energy efficiency analysis, energy matter planning, and procurement of energy and alternative energy sources. Also, as a subset of our environmental permitting services, we can assist with consultants and engineers in the performance evaluations of a facility s greenhouse gas ( GHG ) profile. The Litigation The devastation that occurred at the World Trade Center (commonly referred to as Ground Zero ) from the Al Qaeda terrorist attacks on September 11, 2001 has resulted in massive litigation that continues despite the passing of the 9th anniversary of the attacks. There have been over 10,000 individual personal injury and wrongful death cases filed against over 300 individual defendants in the federal court for the Southern District of New York. The plaintiffs in these actions include New York City firefighters, police officers, demolition workers, Department of Sanitation workers, and volunteers who dug by their sides hoping to find survivors. (Read more.) Asbestos Personal Injury Trusts: Discovery and Offsets By Jason Waters and Kathryn Grace During the recent economic downturn, several common defendants in asbestos litigation, such as Garlock and Bondex, have filed for protection under the bankruptcy code. These recent filings make a discussion of how courts handle payments from asbestos personal injury trusts particularly timely. For years, defendants have encountered difficulties in their efforts to obtain discovery about asbestos trust payments to plaintiffs and to reduce their exposure by the amounts of such payments. The lack of transparency concerning asbestos personal injury trust payments has permitted double recoveries at the expense of solvent defendants. Recent developments, however, may signal improving conditions for defendants in this area. (Read more.) DiMarco Wins Summary Judgment in Government Contractor Case Erik DiMarco, a partner in Wilson Elser s New York office, obtained summary judgment on behalf of a government contractor in an asbestos case. Judge Eduardo Robreno, presiding judge over the Multi-District Asbestos Litigation, ruled in Boston, et al. v. Eastern Refractories Company, Inc., et al. that Wilson Elser s client was immune from suit under the government contractor defense for the construction of U.S. submarines. This decision presents the first such ruling in the federal asbestos multidistrict litigation. The plaintiff/ decedent Gail Boston filed suit against numerous defendants, including Wilson Elser s client, claiming that he developed lung cancer as a result of exposure to asbestos fibers during the course of his employment at the Portsmouth Naval Shipyard in connection with work he performed on U.S. submarines undergoing overhaul and repair. (Read more.) Higgins Obtains Dismissal of 85 Asbestos Cases Sean Higgins, a Wilson Elser partner in the Houston office, recently obtained the dismissal of 85 asbestos cases pending against two of Wilson Elser s clients in the federal asbestos multidistrict litigation (MDL). These cases were governed by Texas law, and the judge presiding over the MDL granted Wilson Elser s motion to dismiss these cases because the plaintiffs failed to comply with the diagnostic and impairment requirements of Chapter 90 of the Texas Civil Practice & Remedies Code. The court held, contrary to the plaintiff s argument, that this criteria is a substantive legal rule that must be applied in a federal action governed by Texas law. (Read more.) Evans, Squitieri Win Summary Judgment in Asbestos Case Julie Evans (Partner New York) and Associate Virginia Squitieri were successful in obtaining summary judgment on behalf of a client that manufactured ceiling tiles, shortly before the start of a four-to-six week trial before Judge Andrew McCarthy in an asbestos case in Syracuse, New York. The plaintiff alleged he was exposed to asbestos from ceiling tiles and several brands of joint compound when he accompanied his father to work sites, purportedly starting at the age of 2 or 3. As a result of this alleged asbestos exposure, plaintiff was diagnosed with mesothelioma and ultimately died at the age of 40, leaving behind a wife and three small children, including an infant. The lost wages claim was very substantial, as plaintiff, a gym owner, planned to open a second gym, if not for the mesothelioma diagnosis. (Read more.)

2 2 An Overview Of The 9/11 Toxic Tort Litigation By John Flannery and Allyson Avila The Litigation The devastation that occurred at the World Trade Center (commonly referred to as Ground Zero ) from the Al Qaeda terrorist attacks on September 11, 2001, has resulted in massive litigation that continues despite the passing of the 9th anniversary of the attacks. There have been over 10,000 individual personal injury and wrongful death cases filed against over 300 individual defendants in the federal court for the Southern District of New York. The plaintiffs in these actions include New York City firefighters, police officers, demolition workers, Department of Sanitation workers, and volunteers who dug by their sides hoping to find survivors. The plaintiffs also include rescue workers and individuals employed by various contractors, subcontractors, building owners and/or tenants who were responsible for the cleanup of the site and surrounding buildings after the attack. The plaintiffs allege that they suffered injuries by breathing the air fouled by toxins and contaminants from the fires and dust because they were not given proper respiratory masks and protective equipment while working at Ground Zero as well as at over 160 buildings in the vicinity of Ground Zero. They also allege violations of the World Trade Center Environmental Health and Safety Plan(s), New York State Labor Law, New York State Industrial Code, General Municipal Law and the Occupational Safety and Health Act. The plaintiffs sued the City of New York ( City ), alleging that it took control of the site, engaged contractors, and supervised the cleanup operations, but failed to provide adequately for the safety of workers engaged in the clean up operations. As early as September 12, the City was asked to provide respirators for workers at the disaster site, however, the numbers requested far exceeded the numbers the City could supply. The plaintiffs also sued the contractors for whom they worked as well as other contractors involved in the cleanup. The Port Authority of New York and New Jersey, as the owner of the site, was also sued, as were many other defendants who are building owners, and/or contractors engaged in asbestos removal and cleaning of the debris inside the affected buildings and surrounding area. Because of pollution/ toxin exclusions in many of the defendants insurance policies, insurance companies have either disclaimed coverage or are defending the claims under a reservation of rights. The litigation has been separated into three (3) distinct dockets. The 21 MC 100 docket consists of mostly firefighters, police and rescue workers who responded to the area of Ground Zero. The 21 MC 102 docket consists of mostly cleaners, asbestos workers and other remedial workers who responded to buildings outside the immediate vicinity of Ground Zero. A third docket, 21 MC 103, is a hybrid of plaintiffs who worked at Ground Zero as well as an off-site location. There are approximately 1,700 plaintiffs in the 21 MC 102 and 21 MC 103 dockets combined. Why Isn t This A Class Action? The 9/11 litigation is considered a mass tort rather than a class action because the cases were too varied to meet the class certification requirements of Federal Rules of Civil Procedure Rule 23, which requires commonality, typicality and adequate representation of the case by the named plaintiff. In the 9/11 litigation, each case contemplates a variety of factors relevant to both liability and remedy, such as varying risks at different job sites; the level of harm potentially incurred in individual work activity; the mitigation or exacerbation of harm by varying supervision; the level of exposure to a wide variety of toxic substances; and personal factors such as medical and smoking histories. The Plaintiffs Claimed Injuries The plaintiffs allege that they were exposed to various toxins including asbestos, lead and benzene, pulverized building materials, volatile organic compounds, dioxins, PCBs, and heavy metals. As a result of these exposures, plaintiffs claim that they suffer from chronic rhinitis/ rhinosinusitis, GERD, gastritis, persistent throat irritation, shortness of breath, nightmares, fear of cancer or various forms of cancer including, but not limited to, skin, lung, lymphoma, prostate, liver, colon, thyroid, testicular, leukemia, melanoma, brain, kidney, bone, throat, breast, stomach, laryngeal, tongue, rectal, esophageal, myeloma, pancreatic, sinus, gallbladder, eye, cervical, neurological, digestive/gastrointestinal, mesothelioma, ovarian, small interstitial, bladder, endocrine, gynecological, lymphoma, nasopharyngeal, vaginal and vulvar. Obtaining medical records to substantiate the various claims has been extremely difficult due to the enormous amount of plaintiffs. In an attempt to determine the validity of the claims, Judge Hellerstein, the Southern District Court judge who has presided over these cases since their inception, appointed Special Masters to prepare a matrix of the injuries experienced by the plaintiffs. In reviewing over 10,000 responses, the Special Masters determined that only 8.9% of the plaintiff population was actually suffering from cancer. The Special Masters reasonably assumed that a plaintiff s exposure to the site, both when it occurred and how long it lasted, would significantly affect both the likelihood and severity of injury. Surprisingly, the data did not support their thesis. It appeared that the dates on which plaintiffs were exposed (early only, early and late, and late only) and the total lengths of exposure (20 hours or 2,000 hours) did not correlate significantly with the seriousness of the injury. Despite the lack of correlation between the exposure time and claimed injury, Judge Hellerstein has been pushing to have the claims settled, rather than face the prospect of having thousands of jury trials. Why is Jurisdiction in Federal Court if the Claims Involve New York State Labor Law Violations? Although the claims being litigated in these cases involve allegations of violations of New York state Labor Law, all cases involving injury as a result of the 9/11 terrorist attacks have been filed in the Southern District of New York federal court pursuant to The Air Transportation and Stabilization Act ( the ATSSSA ). The ATSSSA was enacted within months of the September 11 attack and provides that [t]he United States District Court for the Southern District of New York shall have original and exclusive jurisdiction over all actions brought for any claim (including any claim for loss of property, personal injury, or death) resulting from or relating to the terrorist-related aircraft crashes of September 11, (Continued)

3 An Overview Of The 9/11 Toxic Tort Litigation (Continued) 3 Issues Relating to New York State Substantive Law The fact that state substantive law governs these actions has created certain obstacles for the plaintiffs. In particular, pursuant to New York State General Municipal Law 50-e, a plaintiff is required to serve a Notice of Claim on a municipality within ninety (90) days of when the claim accrued as a precondition to filing suit. However, the plaintiffs who filed cases against the City of New York and other public entities did not serve a Notice of Claim because they argued that since the cases are considered a federal cause of action pursuant to the ATSSSA, state Notice of Claim requirements did not apply. Extensive motion practice regarding this issue ensued. See Felder v. The City of New York., 53 A.D.3d 401, 402, 862 N.Y.S.2d 36, 37 (1st Dep t 2008). Ultimately, the Appellate Division, First Department, held that although the ATSSSA created a federal cause of action and gave exclusive jurisdiction over the 9/11 cases to the Southern District of New York federal court, an application to serve a late notice of claim is a special proceeding separate from the personal injury lawsuit, which cannot be maintained without leave of state court and that Congress did not intend the ATSSSA to preempt General Municipal Law 50-e. Based upon the Felder decision, the municipal entities and other public benefit corporations whose enabling statutes required that they be served with a Notice of Claim prior to commencing suit, filed motions to dismiss all complaints where a Notice of Claim had not been served. These motions were successful and hundreds of cases were dismissed. This victory for municipal defendants, however, was short-lived. New Legislation As a Result of the 9/11 Claims In response to the dismissal of hundreds of plaintiffs cases for failing to serve a Notice of Claim, a new law was enacted. On September 16, 2009, Gov. David A. Paterson signed into law an amendment to General Municipal Law 50-i that extended a one-year time period for the filing of claims by plaintiffs who allege to have suffered injuries as a result of the rescue, recovery and clean up efforts after the September 11 terrorist attack, which would otherwise be barred by statute of limitations. Any plaintiff who claimed to have been injured as a result of the rescue, recovery and clean up operations after September 11, 2001, was given until September 16, 2010, to serve a Notice of Claim. The law is commonly referred to as Jimmy Nolan s Law. Jimmy Nolan is a carpenter from Yonkers, New York, and father of three who claimed to have wood and skin allergies, as well as respiratory problems, after sleeping at the World Trade Center site for three (3) weeks assisting in the recovery, but who did not serve a Notice of Claim on the City. Significantly, Jimmy Nolan s Law permitted the revival of all of the complaints that had been previously dismissed, as well as granted all other potential claimants the right to file a claim within a one-year period from September 16, 2009, through September 16, 2010, despite whether they knew about their injury years earlier and simply failed to serve the Notice of Claim. Discovery Discovery in the 21 MC 100 docket and the 21 MC 102/103 dockets has proceeded on different schedules. In the 21 MC 100 docket, a representative sampling of plaintiffs was selected for depositions and thousands of plaintiffs submitted medical records via an online repository that enabled all parties who were signatories to the online repository to review plaintiffs medical records. There have been no depositions held in the 21 MC 102/103 dockets and there have been continuous discovery disputes among the parties due to the plaintiffs failure to provide substantially complete interrogatory responses. Judge Hellerstein initially advised the parties that he was overly burdened with the 21 MC 100 docket and since the parties could not resolve the discovery disputes, either a Special Master would be appointed or he would revisit the issue as to whether he had jurisdiction over these dockets since he believed that these cases were too attenuated from the terrorist attacks. Ultimately a Special Master was chosen by the court. However, after meeting with the Special Master on several occasions, the plaintiffs objected to the appointment, citing exorbitant costs, and Judge Hellerstein revoked his order appointing the Special Master. Many of the plaintiffs in these dockets began uploading medical records to the online repository, and the parties were in the process of developing a deposition plan when all of the cases were stayed due to the City s settlement as discussed below. Future of the Litigation Since a majority of the lawsuits in the 21 MC 100 docket were filed against the City and the contractors it represents, the City has entered into a Settlement Process Agreement ( SPA ) with the plaintiffs. The SPA originally provided for $657,500, in total compensation. However, Judge Hellerstein held a fairness hearing on the issue, during which he entertained comment from plaintiffs both for and against the settlement. At the end of the hearing, Judge Hellerstein rejected the SPA, stating that he did not believe it provided sufficient compensation to the plaintiffs, and ordered parties to refrain from entering into the agreement. Both the City and the plaintiffs counsel filed a Notice of Appeal to the United States Court of Appeals for the 2 nd Circuit questioning Judge Hellerstein s authority to reject the SPA. In the interim, however, an amended SPA was negotiated, which provided that the plaintiffs would receive additional compensation of up to $712.5 million. The plaintiffs attorneys will cap fees at 25%, reducing fees by over $50 million, and certain workers compensation liens against settlement recovery will be waived. Judge Hellerstein approved the amended SPA and held a town hall meeting to advocate for the plaintiffs to sign up for the settlement. The SPA is contingent upon 95% of the plaintiffs approving the settlement. On November 18, 2010, the deadline set by Judge Hellerstein, 95% of the plaintiffs did approve the settlement. (Continued)

4 An Overview Of The 9/11 Toxic Tort Litigation (Continued) The money for the settlement comes from the $1 billion WTC Captive Fund that contained federal funds set aside for the purpose of this litigation. The settlement funds will be divided among five (5) categories. The amount of money allocated to each of these categories was not defined. However, the first category will be the largest and will allocate money to the plaintiffs based upon an injury matrix that was developed by the court, the Special Masters, the WTC captive, the defense counsel for the City and the lead plaintiffs counsel. There will be an allocation master and a panel of physicians who will evaluate each of the plaintiffs to determine if a settlement amount allocated to a plaintiff is fair and appropriate. This allocation master and panel of physicians will also distribute the funds in the subsequent categories. The second category will create a permanent disability fund for those plaintiffs who have already been designated as disabled and would provide funds to those plaintiffs who are currently sick, but become disabled in the future as a result of their work at the WTC. The third category will provide money to those plaintiffs who have undergone surgery to their lungs or sinuses. The fourth category will provide money to those plaintiffs who have undergone orthopedic surgeries. The final category will be to provide a cancer insurance policy for those plaintiffs who may develop respiratory and/or blood cancers in the future. This insurance policy will be issued through MetLife and will provide $100,000 in coverage to every plaintiff who has not already been diagnosed with such a cancer. Moreover, for every 1% of additional plaintiffs that agree to the settlement, the settlement amount will be increased by 2%, up to a maximum of $712.5 million. The remaining funds in the WTC captive will be held in reserve to address any future claims. If all of the funds are not paid out by 2029, the monies revert to the federal government. Since the City s SPA, Judge Hellerstein has been pushing the remaining parties to work on a global settlement, due to the volume of the claims. To date, global settlement efforts have been futile, but it is anticipated that Judge Hellerstein will continue his quest toward resolving these cases. 4 DiMarco Wins Summary Judgment in Government Contractor Case Erik DiMarco, a partner in Wilson Elser s New York office, obtained summary judgment on behalf of a government contractor in an asbestos case. Judge Eduardo Robreno, presiding judge over the Multi-District Asbestos Litigation, ruled in Boston, et al. v. Eastern Refractories Company, Inc., et al. that Wilson Elser s client was immune from suit under the government contractor defense for the construction of U.S. submarines. This decision presents the first such ruling in the federal asbestos multidistrict litigation. The plaintiff/decedent Gail Boston filed suit against numerous defendants, including Wilson Elser s client, claiming that he developed lung cancer as a result of exposure to asbestos fibers during the course of his employment at the Portsmouth Naval Shipyard in connection with work he performed on U.S. submarines undergoing overhaul and repair. Many of the submarines upon which Mr. Boston worked were constructed by Wilson Elser s client. Following discovery, Erik filed a motion for summary judgment, arguing, in part, that the client was immune from liability as a government contractor. In holding that the government contractor was immune from tort liability for Mr. Boston s injuries, Judge Robreno found that the contractor had successfully established the elements for a government contractor defense in accordance with the U.S. Supreme Court decision in Boyle v. United Technologies Corporation, 487 U.S. 500, 512 (1988). In the court s analysis, the contractor established that (1) the United States approved reasonably precise specifications for the product at issue; (2) the equipment conformed to those specifications; and (3) warnings regarding asbestos were not required as the government, specifically the U.S. Navy, knew of the hazards of asbestos. This decision presents a significant ruling for defendants in asbestos litigation who manufactured products as government contractors. The complexities presented in the analysis of the government contractor defense often require a detailed assessment as to the specifications required by the U.S. government in the performance of the contract at issue, as well as the state of knowledge of the government regarding the hazards at issue. Higgins Obtains Dismissal of 85 Asbestos Cases Sean Higgins, a Wilson Elser partner in the Houston office, recently obtained the dismissal of 85 asbestos cases pending against two of Wilson Elser s clients in the federal asbestos multidistrict litigation (MDL). These cases were governed by Texas law, and the judge presiding over the MDL granted Wilson Elser s motion to dismiss these cases because the plaintiffs failed to comply with the diagnostic and impairment requirements of Chapter 90 of the Texas Civil Practice & Remedies Code. The court held, contrary to the plaintiff s argument, that this criteria is a substantive legal rule that must be applied in a federal action governed by Texas law. This ruling carries significance beyond Chapter 90 and the federal asbestos MDL. Other states, such as Ohio, Florida, Kansas, South Carolina, Georgia, Maryland and New York, have enacted variations of impairment criteria or an inactive docket system. This decision may be useful in urging the MDL Court to dismiss cases governed by the laws of those states. Bankruptcy defendants may also cite this decision to urge denial of claims by plaintiffs who do not meet state impairment criteria. Additionally, this decision should be persuasive in urging state courts outside Texas to apply Chapter 90 in cases governed by Texas law.

5 Asbestos Personal Injury Trusts: Discovery and Offsets By Jason Waters and Kathryn Grace 5 During the recent economic downturn, several common defendants in asbestos litigation, such as Garlock and Bondex, have filed for protection under the bankruptcy code. These recent filings make a discussion of how courts handle payments from asbestos personal injury trusts particularly timely. For years, defendants have encountered difficulties in their efforts to obtain discovery about asbestos trust payments to plaintiffs and to reduce their exposure by the amounts of such payments. The lack of transparency concerning asbestos personal injury trust payments has permitted double recoveries at the expense of solvent defendants. Recent developments, however, may signal improving conditions for defendants in this area. The purpose of an asbestos personal injury trust, under 11 U.S.C. 524(g), is to compensate claimants who are, or may become ill, with an asbestos-related disease. See Lloyd Dixon, Geoffrey McGovern, Amy Coombe, Asbestos Bankruptcy Trusts: An Overview of Trust Structure and Activity with Detailed Reports on the Largest Trusts, RAND Institute for Civil Justice, 3 (2010). An asbestos personal injury trust may be created when a defendant facing significant litigation liabilities files for bankruptcy protection. The bankruptcy petition stays pending litigation while the defendant negotiates with creditors and submits a reorganization plan. As part of the plan, the defendant may propose to fund an independent asbestos personal injury trust under Section 524(g), which will pay the claims of individuals meeting certain medical criteria. Once the asbestos personal injury trust is established, the reorganized defendant is immune from pending and future asbestos claims. Id. at 3. Although the trust protects a bankrupt defendant from future asbestos litigation, the remaining solvent defendants have encountered difficulties obtaining discovery about trust payments or setoffs against their exposure to reflect a trust s contribution on behalf of a bankrupt defendant. In Maryland, for example, the Court of Special Appeals recently held that it was not appropriate to reduce a judgment for payments received from certain bankruptcy settlement trusts. See Crane v. Linkus, 190 Md. App. 217 (Feb. 1, 2010). The trial court credited payments from asbestos trusts when the documents creating the trust provided that a judgment defendant was entitled to a reduction equal to the amount paid by the trust. In the absence of proof that the bankrupt defendant was a joint tortfeasor, the court declined to award an offset for payments received from an asbestos trust that was not created with a similar requirement. See Crane, 190 Md. App. at See also Scapa Dryer Fabrics, Inc. v. Saville, 190 Md. App. 331 (Feb. 2, 2010). Nevertheless, other courts have made minor strides in this area by enforcing a defendant s right to discover information about asbestos personal injury trust claims. For example, a New York court held that factual statements made in documents submitted to bankruptcy trusts should be discoverable despite the fact that the documents may be considered settlement documents. See Transcript of Proceedings at 3 4, Negrepont v. A.C. & S., Inc. (In re N.Y. City Asbestos Litig.), No /01 (N.Y. Sup. Ct., N.Y. County Dec. 11, 2003). Similarly, a California appellate court in 2006 issued a writ of mandate ordering the lower court to correct an overly restrictive order concerning the discovery of documents submitted to an asbestos trust even though the documents were submitted in furtherance of a settlement with the trust. Volkswagen of America, Inc. v. Superior Court, 43 Cal. Rptr. 3d 723, 725 (Ct. App. 2006). In Texas, trial courts have granted motions to compel responses regarding settlements made or expected to be made with bankruptcy trusts. William P. Shelley, Jacob C. Cohn & Joseph A. Arnold, The Need for Transparency Between the Tort System and Section 524(g) Asbestos Trusts, 17 Norton J. Bankr. L. & Prac. 257, 281 (2008). A Superior Court judge in Seattle not only allowed offsets for actual payments, but also permitted setoffs for amounts that plaintiffs could receive from trusts. Coulter v. Asten Group, Inc., No (Mar. 2009). The Court of Appeals reversed and held that the trial court erred by offsetting possible future settlements against the judgment. Coulter v. Asten Group, Inc., 155 Wn. App. 1 (Wash. Ct. App. 2010). On remand, however, the trial court stated that the defendant was at least entitled to setoffs for amounts received to date from settling defendants and bankruptcy trusts, for amounts agreed to and to be received from settling defendants and bankruptcy trusts, for amounts that can be obtained by application to existing bankruptcy trusts, and for amounts that can be obtained from bankruptcy trusts expected to soon become available. In early 2007, the Ohio Court of Common Pleas identified the potential for double recovery by plaintiffs recovering damages in civil litigation while simultaneously obtaining payments from asbestos personal injury trusts under different theories of liability. The plaintiff sued Lorillard Tobacco Company for exposure to asbestos through Kent asbestosfiltered cigarettes. The plaintiff also asserted numerous theories of causation to various asbestos trusts, which resulted in the recovery of as much as $700,000. As a result, the Ohio trial judge admonished the plaintiff s counsel and revoked the firm s admission to the court. In a subsequent interview, the judge stated, In my 45 years of practicing law, I never expected to see lawyers lie like this... it was lies upon lies upon lies. See James F. McCarty, Judge becomes National Legal Star, Bars Firm from Court Over Deceit, Clev. Plain Dealer, Jan. 25, 2007, at B1. The Ohio Supreme Court did not accept the appeal for review. Kananian v. Lorillard Tobacco Co., 878 N.E.2d 34 (2007). Since 2007, other jurisdictions appear to have taken a more sensible approach, requiring asbestos trust disclosure early in the litigation and, in some instances, ordering direct offsets. A New York trial court ordered the plaintiff to disclose trust claim forms within 90 days of trial, warning that failure to do so would result in the court vacating any verdict against the defendant. See Transcript of Proceedings at 44, Cannella v. Abex, No /07 (N.Y. Sup. Ct. N.Y. County Jan. 24, 2007). Earlier this year, two state courts in West Virginia and Pennsylvania issued case management orders requiring plaintiffs to disclose all bankruptcy trust claims at least 120 days prior to trial, and one of these orders specifically stated that defendants will be entitled to offsets for liquidated amounts paid by trusts if a judgment is rendered against them. Courts in other jurisdictions, such as Delaware, Texas, Kentucky, Ohio and Massachusetts, have also begun to require disclosure of certain bankruptcy-related information. See In re Asbestos Litig., No. 77C-ASB-2, Standing Order No. 1, 7(1) (Del. Newcastle County Super. Ct.); Texas Rules of Civil Procedure 192.3(g) and 194.2(h); In re Asbestos Pers. Injury Litig., March 6, 2002, Master Order (Ky. Jefferson County Cir. Ct.); In re All Asbestos Cases, Case Management Order, CV (Ohio Cuyahoga County Com. Pl. May 8, 2007); In re Mass. State Court Asbestos Litig., Special Master Order of April (Continued)

6 Asbestos Personal Injury Trusts: Discovery and Offsets (Continued) 6 Other jurisdictions have attempted to address issues concerning asbestos personal injury trusts through legislation. Georgia enacted a statute requiring asbestos plaintiffs filing claims to include a sworn statement containing the identity of any bankruptcy trust to which a claim had been submitted along with a complaint. See O.C.G.A In February and March 2010, Louisiana and West Virginia proposed similar legislation. See 2010 Bill Text LA H.B. 358 (Louisiana); H.B (West Virginia). West Virginia followed the lead of the American Legislative Exchange Council by calling its proposal the Asbestos Transparency Claims Act. H.B. 4420, Article 7E. Federal action may also be on the horizon. The House Judiciary Committee wrote a letter to the Government Accountability Office requesting a review of the transparency of so-called asbestos bankruptcy trusts under 11 U.S.C. 524(g). Representative Lamar Smith stated, I believe that this principle of openness is no longer being fully implemented for 524(g) trusts, undermining both the tort system and the asbestos trust system. The Committee s letter observed that many 524(g) trusts are specifically structured and operated to thwart attempts to obtain information regarding trust claimants who are also making claims of other 524(g) trusts or who are suing solvent defendants in the tort system. Representative Smith believed the lack of transparency appears to foster dishonest claims practices and encourage claimants and their attorneys to seek duplicative payments by concealing trust recoveries. And he observed that duplicative recoveries increase the financial burden on solvent tort defendants. Although several jurisdictions are addressing asbestos trust issues in ways that improve defendants opportunities to obtain discovery and reduce their exposure, defendants will continue to face significant obstacles in the foreseeable future. The continued lack of transparency in connection with asbestos trust claims results in solvent defendants being named with increasing frequency and being forced to pay the several share of their reorganizing defendants. Charles Bates, Charles Mullin, Marc Scarcell, The Naming Game, Mealey s Litig. Rep.: Asbestos 24, no. 15 (2009). And this dual compensation system will continue to result in solvent defendants paying well above their historical liability share while plaintiffs double collect, once from tort settlements and then again from the asbestos trust settlements. Charles Bates, Charles Mullin, Marc Scarcell, The Claiming Game, Mealey s Litig. Rep.: Asbestos 25, no. 1 (2010). Barring any federal revisions to Section 524(g), therefore, a solvent defendant s best strategy is to pursue trust payment information aggressively through the discovery process, independent investigation, and early motion practice. Evans, Squitieri Win Summary Judgment in Asbestos Case Julie Evans (Partner New York) and Associate Virginia Squitieri were successful in obtaining summary judgment on behalf of a client that manufactured ceiling tiles, shortly before the start of a four-to-six week trial before Judge Andrew McCarthy in an asbestos case in Syracuse, New York. The plaintiff alleged that he was exposed to asbestos from ceiling tiles and several brands of joint compound when he accompanied his father to work sites, purportedly starting at the age of 2 or 3. As a result of this alleged asbestos exposure, the plaintiff was diagnosed with mesothelioma and ultimately died at the age of 40, leaving behind a wife and three small children, including an infant. The lost wages claim was very substantial, as the plaintiff, a gym owner, planned to open a second gym, if not for the mesothelioma diagnosis. Julie and Virginia prepared a motion for summary judgment that argued there was no admissible evidence that the plaintiff worked around asbestos-containing ceiling tiles, as they provided exhibits from the defendant that showed it sold both asbestos and nonasbestos ceiling tiles during the entire relevant time frame. Further, one of the documents attached to the motion for summary judgment proved that the client manufactured asbestos-free ceramic ceiling tiles that matched the description of the ceiling tiles that the plaintiff s father testified to having worked with on a handful of occasions when the plaintiff was a toddler. The plaintiff, in opposition to Wilson Elser s motion, proffered two affidavits (one from an industrial hygiene expert and one from plaintiff s father) suggesting that the asbestos-free ceramic ceiling tiles were not utilized by the plaintiff s father, based upon building codes, and the description of the tiles used as fibrous and fire rated. Judge McCarthy did not find that the plaintiff s arguments created a question of fact and granted Wilson s Elser s summary judgment. Significantly, Judge McCarthy advised that he usually does not grant summary judgment when there are issues of product identification that he believes are factual questions for a jury to resolve. Julie R. Evans Co-Chairperson Toxic Tort Group John R. Henderson Co-Chairperson Toxic Tort Group Julie Evans and John Henderson, Co-Chairpersons of Wilson Elser s Toxic Tort Group, can assist you with any and all legal requirements relative to environmental and energy regulations and compliance. Contact: Julie Evans Partner Wilson Elser New York julie.evans@wilsonelser.com John Henderson Partner Wilson Elser Dallas john.henderson@wilsonelser.com Editor: Anthony M. Goldner Partner, Chicago Wilson Elser is a full-service law firm with nearly 800 attorneys, representing 20 practice areas, in 21 offices throughout the United States. Founded in 1979, it ranks among the top law firms identified by The American Lawyer and is listed in the Top 50 by The National Law Journal. Wilson Elser serves its loyal and expanding global client base with unmatched experience across a full breadth of disciplines, innovative thinking and a keen understanding of their respective businesses. For more information, visit Wilson Elser Moskowitz Edelman & Dicker LLP. All rights reserved.