With Obama's veto threat gone, asbestos 'double-dipping' bill reintroduced

WASHINGTON (Legal Newsline) — A bill that targets the country’s current asbestos injury compensation system has been quietly reintroduced by a Texas federal lawmaker who is hoping President Trump is more receptive than his predecessor.

U.S. Rep. Blake Farenthold, a Republican who serves on the House Judiciary Committee and the House Committee on Oversight and Government Reform, re-submitted the GOP-backed bill last week. Reps. Bob Goodlatte, R-Va., and Tom Marino, R-Pa., are listed as cosponsors.

The Furthering Asbestos Claim Transparency Act of 2017, or H.R. 906, would increase transparency in the asbestos trust system, in which about 100 companies that were targeted frequently by asbestos lawsuits declared bankruptcy to establish trusts to compensate victims without having to use the civil courts system.

Elizabeth Peace, a spokeswoman for Farenthold, told Legal Newsline in an email that H.R. 906 is the same version that was introduced last Congress.

The 2017 version has not been folded into the Fairness in Class Action Litigation Act or any other legislation, or at least not yet, Peace noted.

The class action bill was introduced in April 2015 and merged with the FACT Act in January 2016.

The House passed last year’s Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act, or H.R. 1927, by a vote of 211-188. Additional hearings were held by the Senate, but ultimately it failed to move on the legislation.

Former President Barack Obama would have vetoed the bill had it passed the Senate.

Farenthold’s previous bill, H.R. 526 or the Furthering Asbestos Claim Transparency Act of 2015, stalled in committee.

The initial version of the bill passed the House in 2013; Farenthold was the sponsor.

“When attorneys and their clients bring false or exaggerated claims to trusts, they take assets from deserving victims,” Farenthold, now a four-term Congressman, said at the time. “The FACT Act will discourage this kind of abuse by shining light on the trust system, as sunlight is often the best disinfectant.”

Like previous versions, this bill would require quarterly reports on claims made to the trusts while taking measures to protect claimants’ personal information.

It also would require trusts to respond to information sought from them by defendants in asbestos lawsuits. Defendants in those lawsuits want to ensure that plaintiffs attorneys aren’t fully blaming their products while also blaming the products of companies that established trusts.

It is a practice that was brought to light in Garlock Sealing Technologies’ bankruptcy proceeding.

Tort reform advocates are hopeful Farenthold’s legislation will move forward this time around, with a Republican majority in both houses and a GOP president in place.

President Trump, as a real estate developer, has praised asbestos.

He tweeted in 2012 that asbestos could have prevented the World Trade Center towers from collapsing on 9-11.

He told a Senate subcommittee on federal financial management, government information and international security in 2005 that asbestos is a far more superior fire-retardant than the material now used in its place. He said comparing the two is like “a heavyweight champion against a lightweight from high school.”

“But in your great wisdom, you folks have said asbestos is a horrible material, so it has to be removed,” he told the subcommittee.

In his 1997 book, “The Art of the Comeback,” he went as far as claim the anti-asbestos movement is the work of the mob.

“I believe that the movement against asbestos was led by the mob, because it was often mob-related companies that would do the asbestos removal. Great pressure was put on politicians, and as usual, the politicians relented,” he wrote in the book.

Trump, in his book, argued the material, used in the past because of its insulating and fire-resistant properties, was better at “limiting the ravages of fire” compared to its replacements.

According to the National Cancer Institute at the National Institutes of Health, asbestos is the name given to a group of minerals that occur naturally in the environment as bundles of fibers that can be separated into thin, durable threads. These fibers are resistant to heat, fire and chemicals and do not conduct electricity.

Asbestos has been classified as a known human carcinogen — a substance that causes cancer — by the U.S. Department of Health and Human Services, the Environmental Protection Agency, and the International Agency for Research on Cancer.

According to the National Cancer Institute, studies have shown that exposure to asbestos may increase the risk of lung cancer and mesothelioma, a relatively rare cancer of the thin membranes that line the chest and abdomen. While rare, mesothelioma is the most common form of cancer associated with asbestos exposure.

It has a latency period of several decades but is often quickly fatal once symptoms begin.

The FACT Act targets conduct by plaintiffs attorneys and their claimants uncovered by Garlock Sealing Technologies during its bankruptcy process. The information was unsealed by a Legal Newsline lawsuit.

In January 2014, U.S. Bankruptcy Judge George Hodges ruled in a landmark decision that plaintiffs attorneys had been withholding evidence that could have been submitted to trusts while pursuing lawsuits against Garlock.

They did so in order to maximize recovery in both systems, he ruled. Companies targeted by lawsuits could not point to claims made by the same individuals to the bankruptcy trusts as proof that they weren’t fully responsible for illnesses caused by exposure.

Garlock had been permitted full discovery into the claims of 15 individuals and eventually filed racketeering lawsuits against the law firms that represented them.

“It appears certain that more extensive discovery would show more extensive abuse,” Hodges wrote. “But that is not necessary because the startling pattern of misrepresentation that has been shown is sufficiently persuasive.”

Ultimately, Hodges ordered Garlock to put $125 million in its trust — more than $1 billion less than plaintiffs attorneys had requested. Hodges ruled that Garlock’s past record of verdicts and settlements was not an indicator of future liabilities because of the actions of plaintiffs attorneys.

Garlock eventually agreed to put more than $350 million in its trust and dropped its racketeering lawsuits.

Despite the settlement, John Crane Inc. — a company that frequently finds itself targeted by asbestos attorneys — has gone on to file lawsuits against various asbestos law firms under the Racketeer Influenced and Corrupt Organizations Act.

The company, in its racketeering claims, has pointed to the evidence uncovered by Garlock during its bankruptcy proceeding.

In September, Dallas asbestos firm Simon Greenstone Panatier Bartlett PC asked that JCI’s complaint against it be dismissed for lack of subject matter jurisdiction and failure to state a claim.

In a reply filed in the U.S. District Court for the Northern District of Illinois, the firm further argues that JCI cannot combine insufficient allegations of general jurisdiction with insufficient allegations of specific jurisdiction and “create personal jurisdiction over the defendant from the mixture.”

“JCI abandons any argument that general jurisdiction exists, and instead argues that this Court can exercise specific jurisdiction over this case — which is premised on seven specific asbestos cases litigated in California, Texas and Pennsylvania — based on entirely unrelated suits filed by Simon Greenstone against JCI,” the firm wrote in its Dec. 2 reply.

JCI, in a more recent sur-reply, described Simon Greenstone’s arguments as an “erroneous characterization of facts and law.”

“The Defendants withheld evidence of exposure to bankrupt companies’ products in litigation with JCI. The Defendants then received payment from bankruptcy trusts for the same injuries involved in litigation with JCI,” the company wrote in its Dec. 13 filing. “But JCI and others had already compensated the plaintiffs for those same injuries, and JCI had a right to seek contribution from these bankruptcy trusts, which claims the Defendants prevented by hiding evidence of their clients’ exposure.

“JCI’s claims do not require undoing state judgments — in fact, those judgments are taken as a given for purposes of JCI’s contribution claims. Instead, Defendants’ fraud, not the judgments, foreclosed JCI’s contribution claims.”

Judge Amy St. Eve, in a Feb. 8 minute entry, changed a status hearing set for this week to March 27.

The defendant in another lawsuit filed by JCI, Philadelphia-based Shein Law Center, has made similar jurisdictional arguments.

“JCI’s claims are both factually unsupported and legally unsupportable and, more critically, Defendants Benjamin P. Shein and Shein Law Center Ltd. have no contacts with Illinois to justify the exercise of personal jurisdiction over them by this Court,” the firm wrote in a Dec. 16 filing, also in the Northern District of Illinois.

“This case should be dismissed forthwith due to lack of jurisdiction or, alternatively, due to failure to state a claim upon which relief can be granted.”

Judge John J. Tharp Jr. has set a status hearing for March 2.

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