Calif. Jury Reaches Defense Verdict for John Crane, Oscar E. Erickson Inc. S.C. Jury Awards $14 Million; Reaches Defense Verdict For John Crane

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1 OCTOBER 2015 Raising the Bar in Asbestos Litigation PAGE 4 Los Angeles Superior Court s New Case Management Order Targets Full Disclosure of Asbestos Exposure From Bankrupt Entities A Commentary by Karleen F. Murphy, Esq. of Foley & Mansfield PLLP PAGE 10 Calif. Jury Reaches Defense Verdict for John Crane, Oscar E. Erickson Inc. PAGE 10 S.C. Jury Awards $14 Million; Reaches Defense Verdict For John Crane 12 N.Y. Jury Awards $25 Million To Auto Mechanic in Case Against Brake Defendant 12 Trial Scheduled to Start in NYCAL Cases Involving Pizza Ovens 14 3 rd Circuit Affirms Dismissal Of Attorney s Claims Against Settlement Trusts 21 Ill. Court Denies Motion for Summary Judgment in Case Involving Bendix Brakes 23 Court Says Question of Fact Exists in Component Parts Dispute 24 Calif. Court Enters Judgment, Says No Genuine Issue of Material Fact Exists

2 COLUMNS October 2015 Vol. 15, No. 10 EDITORIAL STAFF Publisher/Editorial Director Jeff Andrus Managing Editor Kate McGovern Ferriola Editor Marcy Kowalchuk BUSINESS STAFF Chief Executive Officer Harry J. Hurley III Conference Director Vicki Gilbreath Circulation Manager Paige O'Malley Marketing Coordinator Emily Grabiak CONTRIBUTING EDITOR Karleen F. Murphy, Esq. Editorial Correspondence Article submissions and news should be forwarded to Kate McGovern Ferriola, Managing Editor, HarrisMartin Publishing. HarrisMartin s COLUMNS Asbestos is published monthly by HarrisMartin Publishing LLC 30 Washington Ave., Ste. D-3 Haddonfield, NJ $975 print & online annual subscription $595 print & online 6-month subscription PERSPECTIVES Los Angeles Superior Court s New Case Management Order Targets 3 Full Disclosure of Asbestos Exposure From Bankrupt Entities A Commentary by Karleen F. Murphy, Esq. of Foley & Mansfield PLLP TABLE OF CASES A Regional Listing of All the Cases Covered in This Issue 8 COURTROOM NEWS Calif. Jury Reaches Defense Verdict for John Crane, Oscar E. Erickson Inc. 10 S.C. Jury Awards $14 Million; Reaches Defense Verdict for John Crane 10 Wash. Jury Finds for Ford Motor at Conclusion of Living Mesothelioma Trial 11 N.C. Court Enters Judgment in Favor of Pneumo Abex, Reddaway After Jury Trial 11 N.Y. Jury Awards $25 Million to Auto Mechanic in Case Against Brake Defendant 12 Trial Scheduled to Start in NYCAL Cases Involving Pizza Ovens 12 Ala. Federal Court Awards $3.5 Million in Take-Home Exposure Bench Trial 13 3 rd Circuit Affirms Dismissal of Attorney s Claims Against Settlement Trusts 14 Wash. Court Awards Summary Judgment on Product Liability Claims 15 Ill. Court Denies Summary Judgment Motions from Ingersoll-Rand, GE, John Crane 16 Wis. Federal Court Awards Summary Judgment to Lone Remaining Defendant 16 9 th Circuit Affirms Award of Summary Judgment to 3 Defendants 17 N.Y. Court Refuses to Rehear Dispute Involving Third-Party Replacement Parts 18 N.C. Court of Appeals Affirms Denial of Workers Compensation Benefits 18 Calif. Court Remands Action, Says Federal Question is Uncertain at Best 19 N.Y. State Court Grants Unopposed Motion for Summary Judgment 20 Ill. Federal Court Weighs in on In Limine Motions in Upcoming Trial 20 Ill. Court Denies Motion for Summary Judgment in Case Involving Bendix Brakes 21 MDL Court: Collateral Estoppel Doesn t Bar Reinstated MARDOC Claims 22 Court Says Question of Fact Exists in Component Parts Dispute 23 Ill. Court Retains Jurisdiction of Case, Says Defendant Established Federal Defense 23 Calif. Court Enters Judgment, Says No Genuine Issue of Material Fact Exists 24 N.Y. Appellate Court Allows Transatlantic s Affirmative Defenses to Stand 25 R&Q Seeks Default Judgment Against St. Paul in $4.4 Million Reinsurance Dispute 26 Counsel for R&Q Says TIG s Pleadings are Defective, Should Have Been Dismissed 27 Court Properly Severed Claims in Reinsurance Dispute, N.Y. Court Rules 28 VERDICT REPORT A Listing of the Last Year of Asbestos Verdicts 30 Questions or subscription requests can be directed to service@harrismartin.com or call (610) Advertising Sales Questions or interest in advertising in COLUMNS Asbestos can be directed to Jeff Andrus at (610) Copyright 2015 by HarrisMartin Publishing LLC. All rights reserved. All stories written by HarrisMartin editorial staff unless otherwise noted. Opinions expressed by contributors are their own and not necessarily those of HarrisMartin Publishing or its editorial staff. No part of this publication may be reproduced by any means, electronic or mechanical, including photocopying, without written permission from HarrisMartin Publishing.

3 Los Angeles Superior Court s New Case Management Order Targets Full Disclosure of Asbestos Exposure From Bankrupt Entities A Commentary by Karleen F. Murphy, Esq. of Foley & Mansfield PLLP Author bio on page 6 I t is well-known that asbestos plaintiffs use two systems that yield significant sources of compensation: Plaintiffs seeking compensation for asbestos-related injury or death may file a tort claim against solvent defendants ( tort defendants ) through litigation in court but they can also file a claim against insolvent entities through asbestos bankruptcy trusts established under United States Code Section 524(g) of the Chapter 11 Bankruptcy Code. To the detriment of the tort defendants, the availability of these two compensation systems historically allowed a widespread pattern of abuse where some plaintiffs, and plaintiff firms, failed to disclose and/or actively concealed evidence of exposure to products of insolvent entities during pending tort litigation, thereby depriving the tort defendants of the complete picture of asbestos exposure. 1 The failure to disclose often involved evidence of high-dose exposure to friable thermal insulation, some of which contained amphibole asbestos, generally recognized as a more potent form of asbestos. Accordingly, the tort defendants were unable to put forth evidence of asbestos exposure from the insolvent defendants as part of their alternative exposure/allocation of fault defense at trial, and in turn, could not enter a share on the verdict form for the bankrupt entity or show that they were entitled to post verdict set-offs. 2 For settlements prior to verdict, the failure to disclose or actively conceal evidence resulted in the payment of higher or inflated settlements because of the inability to point to alternative exposures. As a consequence, this resulted in the exhaustion of funds and new bankruptcy filings, further reducing the pool of remaining viable tort defendants, and perpetuating a trend that continues to the present day. The existence of this practice became readily apparent when, following completion of the tort case by verdict or settlement, a plaintiff firm immediately filed claims to bankruptcy trusts asserting extensive exposure to insolvent entity products previously undisclosed in the tort case. This is the same evidence that would have been critical to the tort defendants allocation of fault defense, payment of a lower settlement, or more importantly, a defense verdict, in the tort case. Over many years, tort defendants strenuously fought to convince courts to compel plaintiffs to disclose all details of exposures to products of bankrupt asbestos companies, whether submitted as completed claims, or saved as placeholder claims. Defendants arguments repeatedly failed as plaintiff attorneys successfully challenged disclosure based on Attorney-Client and Work Product Privileges. However, in January 2014, the tide drastically turned in favor of the defense with the landmark case of In re Garlock Sealing Technologies, LLC, 504 B.R. 71 (W.D. N.C. Bankr. 2014). In Garlock, the U.S. District Bankruptcy Court publicly exposed for the first time a startling pattern of misrepresentation by plaintiff firms. According to the court, plaintiff firms fraudulently concealed alleged exposure to products manufactured by insolvent defendants by delaying the filing of trust claims until completion of the tort case. The court found an average disclosure of two exposures to products of bankrupt companies during the tort case followed by an average of 19 claimed exposures after settlement with the solvent defendants. The opinion 4 COLUMNS

4 fully details the gap between the bankruptcy trust and tort systems and the extent to which plaintiffs and plaintiffs firms have taken advantage of the system. With the Garlock decision in hand, tort defendants nationwide began seeking reform in the transparency of bankruptcy trust claims. In Los Angeles, the Defense Discovery Committee, on behalf of tort defendants, filed a Motion Proposing Disclosure Requirements for Personal Injury Claims Pursuant to 11 U.S.C. Section 525(g) ( Motion ). The Motion targeted disclosure of all documents, witnesses, and facts concerning claims submitted, placeholder claims and any existing documents for claims to be filed, such as signed and unsigned plaintiff affidavits and declarations of asbestos exposure to which plaintiffs had previously withheld by claiming privilege and work product. The Motion sought disclosure of facts and documents of all asbestos exposures for a particular plaintiff and sought to curtail the withholding of exposure from bankrupt entities. The Motion was heard on June 20, 2014 before the Honorable Judge Emile Elias, the presiding judge over the Los Angeles County Superior Court Asbestos Litigation docket. On May 27, 2015, Judge Elias ruled on the Motion by issuing a Case Management Order Requiring Disclosure of Bankruptcy Trust Claims, Claims-Related Materials, and Asbestos Exposure Facts ( CMO ). Through the establishment of a new set of Bankruptcy Trust Standard Interrogatories and accompanying orders mandating the disclosure of all witnesses, facts, and documents for existing and placeholder claims, the new CMO targets information previously not produced by plaintiffs in tort litigation. The CMO is a respectable start in enhancing transparency of bankruptcy trust claims. However, there is still a long way to go before true transparency is actually reached. Prior to the CMO, and consistent with well-established discovery rules, plaintiffs were required to produce claim forms and documents detailing asbestos exposure from the bankrupt entities products, but only if the forms had been submitted to the trust. Before the CMO, the standard interrogatory discovery on bankruptcy claims was contained in Los Angeles General Order Standard Interrogatories Numbers 68 to 72 addressing the identification of claims filed or submitted, claim status, payments from trusts, and whether payments from trusts had been deferred. Pursuant to Judge Elias May 27, 2015 CMO, plaintiffs must now respond to standard interrogatories and produce documents regarding all facts of exposure from insolvent entities, named defendants, or other entities, regardless of whether or not those facts have been, or will be, submitted in a claim to a third-party for compensation for an asbestos-related injury. The CMO adds Bankruptcy Trust Standard Interrogatories Numbers 73 to 78, which more fully addresses disclosure of all facts, witnesses, and documents for submitted and un-submitted trust claims, and all information of asbestos exposure from defendants, insolvent entities, and any other third-party entity. Initial responses are now due at the outset of the case. Plaintiff must update and supplement the responses no later than five days before trial, if new witnesses or documents are discovered. Of critical importance, in responding to the interrogatories, the CMO orders disclosure of all facts relating to the alleged exposure expressly deeming such facts as not privileged and discoverable. The CMO states: Plaintiffs are required to disclose all facts relating to all of their alleged exposures to asbestos, whether to the products or premises attributable to named defendants, or to bankrupt or other entities, and regardless of whether those facts have been, or will ever be, included in a claim to a third party for the purposes of obtaining compensation for an asbestosrelated injury. Plaintiffs may not object or refuse to produce information relating to exposure facts in response to appropriate discovery requests from defendants for the reason that no claims have been or will be made based on such facts or because such facts may also appear in otherwise privileged documents such as signed affidavits or un-submitted bankruptcy trust claim forms. No waiver of attorney-client or work product privileges will result from the disclosures required herein. (CMO, page 2 lines 6-16). 5 ASBESTOS OCTOBER 2015

5 As to document production under the CMO, plaintiffs are required to produce all documents disclosed to any established or pending asbestos trust funds, for any purpose including, but not limited to, supporting a claim for an asbestos-related injury, or providing notice of, or reserving a place for a future placeholder claim. For purposes of the CMO, declarations and/or affidavits that have been circulated to someone other than plaintiff and plaintiff s counsel (including his/her law firm) and set forth facts of an asbestos exposure or asbestos-related injury must be included in the document production. The CMO specifically states that these communications are not privileged and must be produced. In addition to the Bankruptcy Trust Standard Interrogatories and document production orders, plaintiffs must provide executed Bankruptcy Trust Authorizations. The CMO applies to all Los Angeles Asbestos Cases where the initial complaint, or any amendment to the Complaint to assert Wrongful Death and/or Survival Claims, is filed on or after February 1, The CMO remains in effect following a six-month trial period unless amended, vacated, or superseded. In California, Alameda and San Francisco Counties have similar CMOs. Comparable CMOs also now exist in New Castle Superior County in Delaware; Middlesex County Superior Court in Massachusetts; Wayne County in Michigan; the District Court Second Judicial District, Ramsey County in Minnesota; the Circuit Court Twenty- Second Judicial District, City of St. Louis in Missouri; Middlesex County Superior Court in New Jersey; the Supreme Court, Counties of the City of New York in New York; the Court of Common Pleas, Cuyahoga County in Ohio; the First District of Pennsylvania, Court of Common Pleas of Philadelphia County in Pennsylvania; Harris County in Texas; the Circuit Court, Kanawha in West Virginia; and national coordinated multi-district litigation docket (MDL- 875). Karleen F. Murphy is Of Counsel in Foley & Mansfield s Los Angeles office, where she focuses her practice on toxic tort and product liability. With 15 years of civil litigation experience, Karleen manages high volume caseloads from inception to completion, including trial, post-trial and appeal. She has defended high profile corporate clients at trials in state and federal courts in California and other jurisdictions. She has acted as first and second chair trial counsel in 20 cases. In addition, she has resolved high dollar value cases through alternative dispute resolution, including mediation and arbitration, and direct settlement negotiations through well established relationships with opposing counsel. She regularly engages in client development, client retention, and firm marketing. Karleen is skilled at developing and implementing successful litigation strategies, conducting legal research, and preparing complex motions and documents. She has extensive deposition experience, having deposed and defended medical, economic and industrial hygiene experts, and corporate representatives, as well as taken numerous plaintiff and third party witness depositions. Karleen has been a featured speaker at legal conferences on the topic of mass tort litigation and civil litigation in the Los Angeles Courts, and has taught continuing legal education courses on civil litigation topics. She currently serves on court ordered committees to amend Los Angeles local rules and trial procedures. In 2013 she studied international law at the University of London. Practical Effect of the CMO The CMO is a respectable start in enhancing transparency of bankruptcy trust claims. However, there is still a long way to go before true transparency is actually reached. Currently, many plaintiffs continue to file place holder claims containing the barest allegations of exposure from the insolvent entity and do not supplement until well after the closure of the civil matter as the CMO provides no method of enforcement to stop plaintiffs from proceeding in the very manner noted by the Garlock court. While the CMO clearly demonstrates the court s recognition and attempt to address the primary issue presented in Garlock, absent legislative authority that does not currently exist, there is still no mechanism to enforce the necessary disclosure or address the abuse rampant in place holder claims. Legislative reform is necessary to effectively address and end the practice of the plaintiffs bar of withholding sub- 6 COLUMNS

6 stantial exposure evidence from defendants that is subsequently presented to the trusts. In some states outside of California, including Arizona, Georgia, Ohio, Oklahoma, Texas, West Virginia, and Wisconsin, trust transparency issues have been addressed over the last few years through the enactment of legislation. For example, Georgia s statute requires disclosure of bankruptcy trust claim information when the complaint is filed. In states such as California, where no such legislation currently exists, legislative enactments in other jurisdictions are still useful tools in providing persuasive arguments in briefing trust transparency issues. As an interim measure, California defendants must ensure that the bankruptcy information that is provided pursuant to the CMO is obtained prior to plaintiffs depositions and used as effectively as possible in cross-examination. While the plaintiff may not recall the basis for such bankruptcy claim, the Court and juries need to be informed of the obvious discrepancy between what is being claimed and the testimony being presented. Footnotes 1 In re Garlock Sealing Technologies, LLC, 504 B.R. 71 (W.D. N.C. Bankr. 2014) 2 Many jurisdictions have varying rules that allow defendants at trial to attempt to prove fault against nonpresent parties in an effort to have those entities listed on the verdict form. For example, California Civil Code section (Prop. 51) provides: (a) In any action for personal injury, property damage, or wrongful death, based upon principles of comparative fault, the liability of each defendant for non-economic damages shall be several only and shall not be joint. Each defendant shall be liable only for the amount of non-economic damages allocated to that defendant in direct proportion to that defendant s percentage of fault, and a separate judgment shall be rendered against that defendant for that amount. (b)(1) For purposes of this section, the term economic damages means objectively verifiable monetary losses including medical expenses, loss of earnings, burial costs, loss of use of property, costs of repair or replacement, costs of obtaining substitute domestic services, loss of employment and loss of business or employment opportunities. (2) For the purposes of this section, the term non-economic damages means subjective, non-monetary losses including, but not limited to, pain, suffering, inconvenience, mental suffering, emotional distress, loss of society and companionship, loss of consortium, injury to reputation and humiliation. As an interim measure, California defendants must ensure that the bankruptcy information that is provided pursuant to the CMO is obtained prior to plaintiffs depositions and used as effectively as possible in cross-examination. While the plaintiff may not recall the basis for such bankruptcy claim, the Court and juries need to be informed of the obvious discrepancy between what is being claimed and the testimony being presented. 7 ASBESTOS OCTOBER 2015