704-358-5095">
Save Money in this Sunday's paper

comments

Judge sides with company in asbestos fight, cuts liability by more than $1 billion

A federal judge in Charlotte has delivered a startling victory for industries that are part of the country’s long-running asbestos-liability fight, cutting more than $1 billion from what a company owes to current and future victims.

U.S. Bankruptcy Judge George Hodges accepted the $125 million figure proposed by Garlock Sealing Technologies, a Palmyra, N.Y., subsidiary of EnPro Industries of Charlotte.

The amount covers claims for mesothelioma, a rare and deadly cancer of the lining of the lungs and one of a host of diseases linked to asbestos. Attorneys representing current and future mesothelioma victims had asked the court to set liability at $1.3 billion.

But in his 65-page order Friday, Hodges said the attorneys’ dollar figure did not fairly reflect Garlock’s liability. He accused asbestos lawyers and clients of withholding or manipulating evidence, as well as relying on “pseudoscience” to pump up the size of asbestos settlements and jury awards.

In regards to Garlock, Hodges said plaintiff attorneys withheld evidence about their clients’ exposure to company products, “unfairly inflating the recoveries against Garlock” for the decade leading up to the company’s bankruptcy filing.

According to the U.S. Chamber Institute for Legal Reform, an industry advocacy group, Hodges’ ruling marked the first time in more than 80 asbestos bankruptcies stretching back for more than 30 years that a judge refused to accept the plaintiffs’ estimate for future claims.

In a conference call with analysts and reporters Monday morning, Steve Macadam, president of EnPro Industries, said EnPro and Garlock have “reached a gratifying point.”

“Our goal was to free GST from an unfair system,” Macadam said. “In our opinion the deck was unjustly stacked.”

He called Hodges’ ruling “well-reasoned and well-written and will no doubt become an important and, in our view, historic landmark in asbestos litigation.”

New York attorney Elihu Inselbuch, who represented the official Asbestos Claimants’ Committee, called the opinion “disappointing.”

The lower liability estimate “cannot be squared with actual results achieved over ... decades in litigation conducted throughout the country in non-bankruptcy courts,” Inselbuch said in a statement Monday. “The bankruptcy case, however, is far from over, and the Committee looks forward to working through the remaining stages.”

In his ruling, however, Hodges said previous settlements were not an appropriate measurement because they had been inflated by what he called “the impropriety of some law firms.”

Garlock, which makes seals and gaskets for a host of industries, has been a target of asbestos related lawsuits for some 40 years. It filed for Chapter 11 protection in 2010, one of dozens of otherwise solvent businesses that turned to the courts for help in settling thousands of claims of asbestos poisoning.

Asbestos is at the center of the country’s longest running liability case. And Garlock was among the last industrial targets to seek bankruptcy protection. This summer, attorneys from across the country gathered in Hodges’ courtroom for a 17-day trial to argue Garlock’s liability.

Garlock estimates it has paid out more than $1 billion in asbestos claims, most of it in settlements to avoid the risk of much higher jury awards. Several thousand plaintiffs had active lawsuits against the company when it filed for bankruptcy.

Last year, a California jury awarded $48 million to an 86-year-old asbestos plaintiff. And in 1999, Duke Energy set aside $800 million for asbestos claims. Each year, special trust funds set up by the corporate targets of asbestos complaints pay out some $3.5 billion, according to testimony during the Charlotte hearing.

Up until the mid-1980s, asbestos was widely used in insulation and as a fire retardant. But its tiny, jagged particles can lodge in the linings of the lungs and other organs, causing cells to mutate.

Companies have been accused of knowing the risks of asbestos for decades but concealing them from their employees. One well-known Texas anti-asbestos attorney told the Wall Street Journal last year that his clients are victims of the “worst corporate mass genocide in history.”

But in his ruling, Hodges accepted company arguments that Garlock’s liability is highly limited, concluding that the concentrations of asbestos in company products are small and mostly made up of a less dangerous form of the fibers.

The court’s ruling boosted EnPro’s stock. It closed Monday at $71.21, up more than 20 percent.

Gordon: 704-358-5095
Hide Comments

This affects comments on all stories.

Cancel OK

The Charlotte Observer welcomes your comments on news of the day. The more voices engaged in conversation, the better for us all, but do keep it civil. Please refrain from profanity, obscenity, spam, name-calling or attacking others for their views.

Have a news tip? You can send it to a local news editor; email local@charlotteobserver.com to send us your tip - or - consider joining the Public Insight Network and become a source for The Charlotte Observer.

  Read more



Hide Comments

This affects comments on all stories.

Cancel OK

The Charlotte Observer welcomes your comments on news of the day. The more voices engaged in conversation, the better for us all, but do keep it civil. Please refrain from profanity, obscenity, spam, name-calling or attacking others for their views.

Have a news tip? You can send it to a local news editor; email local@charlotteobserver.com to send us your tip - or - consider joining the Public Insight Network and become a source for The Charlotte Observer.

  Read more


Quick Job Search
Salary Databases
Your 2 Cents
Share your opinion with our Partners
Learn More
CharlotteObserver.com