Asbestos transparency legislation set for committee vote next week

By W.J. Kennedy | Apr 20, 2017

SACRAMENTO - Legislation that would help prevent doubling up on awards by trial lawyers and their clients, allegedly injured through exposure to asbestos, is scheduled for a vote in the Judiciary Committee of the California Assembly on April 25.  

The legislation, AB 1056, would require lawyers to reveal that they have filed for awards with asbestos bankruptcy trusts, established to compensate victims of exposure, before receiving “preference” when filing a separate action in a civil court. Absent preference, a civil action in California’s  overburdened courts can take three years for a case to come to trial, legal experts say.  

Nothing under current California law requires a lawyer to reveal to a court that a separate action for compensation has been filed with a trust, resulting in documented cases of lawyers and their clients receiving awards both from the trusts and the courts. The so-called “double dipping” leaves trusts with fewer funds for those with legitimate exposure claims, critics of the practice say.

California has been particularly hard hit by double dipping. The Civil Justice Association of California (CJAC) conducted a study on case migration between January 2010 and May 2016 just in Los Angeles and San Francisco and found that out of a total of 25,503 plaintiffs, only 10.1 percent or 2,568 were from California.

“The influx of cases being filed by out-of-state plaintiffs in California is making our already over-burdened court systems less available to Californians,” said John Doherty, president of CJAC.

“AB 1056 is an important step in bringing necessary transparency to the asbestos trust system,” he continued. “It protects the rights of those harmed by asbestos exposure while shining a light on the double-dipping and inconsistent claims between trusts and courts.”

Approval of the legislation is even more urgent in light of a December state Supreme Court decision that the duty for compensating victims of exposure extends to household members.

The ruling stemmed from two lawsuits.

One was brought by Johnny Blaine Kesner Jr., who was diagnosed with mesothelioma, a lethal disease caused by asbestos exposure, in February 2011 and died at the age of 53 in 2014.

He sued Pneumo Abex LLC, a brake manufacturer where his uncle worked. From 1973 to 1979, Kesner spent at least three nights a week at his uncle’s home.

Lynne Haver, who was diagnosed with mesothelioma in March 2008 and died in April 2009, filed the other action. It was alleged that she was exposed to asbestos from her former husband’s clothing.

“This (decision) could potentially create a whole new generation of actions,” said one attorney familiar with the rulings. “The trusts were not established to handle this kind of load.”

In the past, the California Legislature has been resistant to asbestos transparency legislation. Supporters of the AB 1056 say that the bill’s chances are improved by getting military veterans behind it –if the asbestos victim is a veteran the case moves to the top of the civil court calendar (a “super” preference) if the lawyer reveals that a filing has been made with one of the bankruptcy trusts.

The business community has long claimed that secrecy surrounding the trusts has led to rampant abuse. In double dipping, lawyers and their alleged victims receive awards, and the lawyers’ fees, from the bankruptcy trusts, then turn around and sue down-the-line solvent companies who may have had little, or even no connection to the original, alleged exposure. In California and most other states, the lawyers are under no obligation to tell judges or juries about the awards from the trusts.

A 2014 case involving Garlock Sealing Technologies exposed the nature of the double-dipping.

A North Carolina federal bankruptcy judge found that gasket and packing manufacturer Garlock’s settlements of mesothelioma claims in the tort system were “infected by the manipulation of exposure evidence by plaintiffs and their lawyers.” The judge described an effort by plaintiffs and their lawyers to “withhold evidence of exposure to other asbestos products and to delay filing claims against bankrupt defendants’ asbestos trusts until after obtaining recoveries from Garlock (and other viable defendants).”

In short, the judge said that the alleged victims had different stories for different venues. The lawyers first targeted Garlock in court, coaching their clients to tell one story of exposure. They then told a different story to the trusts, one that linked the manufacturers with the exposure.

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