California slow to stop double-dipping asbestos lawyers

By Derek Dowell | Apr 12, 2016

SACRAMENTO – Despite its reputation as a forward-thinking state, California lags behind eight others in passing legislation to curb asbestos fraud in the form of “double-dipping” lawyers who lodge financial claims against multiple bankruptcy trusts, as well as filing a lawsuit, all in the name of a single client.

Utah was the most recent state to enact a law to curb asbestos fraud, joining Arizona, Ohio, Oklahoma, Tennessee, Texas, West Virginia and Wisconsin as the only states to take a stand against the practice of lawyers finding creative ways to access a big pile of money.

Why has California not led the way with a similar law? It turns out efforts have been underway the past two years.

“California has had a bill last year and has another bill this year that prevents lawyers from pursuing compensation for a single client through multiple bankruptcy trusts and court action in regard to asbestos claims,” Kim Stone, president of the Civil Justice Association of California (CJAC), told the Northern California Record.

Both bills failed to make it out of the Assembly Judiciary Committee.

The topic of asbestos fraud reduction has been an issue able to draw moderate support from both sides of the aisle in Sacramento. 

“Last year, Assembly Bill 597 by Assembly Member Ken Cooley (D-Carmichael) would have created transparency regarding asbestos trusts,” Stone said. “This year, Assembly Bill 2315 by Assembly Member Kristen Olsen (R-Modesto) and Assembly Member Adam Gray (D-Merced) is substantially similar.”

Since federal bankruptcy trusts are sealed by law, it’s difficult to put a hard number on the scope of the problem, but Stone pointed to a noteworthy federal bankruptcy case (Garlock Sealing Technologies) that looked in detail at 15 cases nationwide.

“In Garlock, the court noted that in each and every one of those 15 cases, there had been deception that affected settlement values in a substantial way,” Stone said, making further reference to a Los Angeles case, Tregett v. Alfa Laval Inc. “In that case, the plaintiff’s lawyer tried to keep any other company from being held accountable at trial by claiming plaintiff was exposed only to Garlock’s asbestos. However, at the same time the plaintiff’s attorney had filed a trust claim saying the plaintiff had been exposed to Pittsburgh Corning’s asbestos.”

What do Stone and CJAC hope to accomplish?

“Our mission is to reduce unjustified excessive litigation that leads to an increase in costs of goods and services for all Californians,” Stone said. “We support arbitration. We advocate for reform of abusive ADA access lawsuits. We oppose legislation that will lead to additional unnecessary lawsuits.”

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