Toxic Newsletter February 2011

An Overview Of The 9/11 Toxic Tort Litigation By John Flannery and Allyson Avila The Litigation The devastation that occurred at the World Trade Center (commonly referred to as “Ground Zero”) from the Al Qaeda terrorist attacks on September 11, 2001 has resulted in massive litigation that continues despite the passing of the 9th anniversary of the attacks. There have been over 10,000 individual personal injury and wrongful death cases filed against over 300 individual defendants in the federal court for the Southern District of New York. The plaintiffs in these actions include New York City firefighters, police officers, de- molition workers, Department of Sanitation workers, and volunteers who dug by their sides hoping to find survivors. (Read more.) ENVIRONMENTAL AND ENERGY REGULATORY AND COMPLIANCE Personal Injury Trusts: Discovery and Offsets GROUP By Jason Waters and Kathryn Grace Wilson Elser’s Environmental and Energy During the recent economic downturn, several common defendants in asbestos litigation, such as Garlock Regulatory and Compliance Group is and Bondex, have filed for protection under the bankruptcy code. These recent filings make a discussion of committed to providing its clients with a consistently high level of service across a how courts handle payments from asbestos personal injury trusts particularly timely. For years, defendants broad range of areas. These include: have encountered difficulties in their efforts to obtain discovery about asbestos trust payments to plaintiffs • Brownfield cleanups and redevelopment of and to reduce their exposure by the amounts of such payments. The lack of transparency concerning asbes- contaminated properties tos personal injury trust payments has permitted double recoveries at the expense of solvent defendants. • The impact of environmental laws on real Recent developments, however, may signal improving conditions for defendants in this area. (Read more.) estate business and lending transactions • Identifying and pursuing financing programs available to redevelopers of contaminated DiMarco Wins Summary Judgment in Government property in need of remediation • Transaction-triggered environmental laws Contractor Case • Due diligence and contractual allocation of Erik DiMarco, a partner in Wilson Elser’s New York office, obtained summary judgment on behalf of a gov- environmental risk in transactions ernment contractor in an asbestos case. Judge Eduardo Robreno, presiding judge over the Multi-District • Disclosure laws and obligations concerning Asbestos Litigation, ruled in Boston, et al. v. Eastern Refractories Company, Inc., et al. that Wilson Elser’s environmental conditions on real property client was immune from suit under the government contractor defense for the construction of U.S. subma- • Contractual allocations of environmental rines. This decision presents the first such ruling in the federal asbestos multidistrict litigation. The plaintiff/ risks in transactions decedent Gail Boston filed suit against numerous defendants, including Wilson Elser’s client, claiming that • Securing environmental insurance products he developed lung cancer as a result of exposure to asbestos fibers during the course of his employment to protect the firm’s clients against cleanup at the Portsmouth Naval Shipyard in connection with work he performed on U.S. submarines undergoing cost overruns and pollution legal liability overhaul and repair. (Read more.) • Compliance with state and federal environmental laws and regulatory requirements concerning use, pollution and cleanups of land, air, water and wetlands, Higgins Obtains Dismissal of 85 Asbestos Cases including federal and state “Superfund” laws, clean air and clean water acts, waste Sean Higgins, a Wilson Elser partner in the Houston office, recently obtained the dismissal of 85 asbestos generation and disposal laws cases pending against two of Wilson Elser’s clients in the federal asbestos multidistrict litigation (MDL). • Permit requirements under state and federal These cases were governed by Texas law, and the judge presiding over the MDL granted Wilson Elser’s regulatory schemes motion to dismiss these cases because the plaintiffs failed to comply with the diagnostic and impairment We also have considerable experience in the requirements of Chapter 90 of the Texas Civil Practice & Remedies Code. The court held, contrary to the handling of energy and infrastructure projects, plaintiff’s argument, that this criteria is a substantive legal rule that must be applied in a federal action gov- and climate change and sustainability erned by Texas law. (Read more.) matters. In that regard, we have the ability to represent clients engaged in or considering business ventures in emerging green energy fields such as solar, wind, geothermal, Evans, Squitieri Win Summary Judgment cogeneration, biofuels and biomass. Finally, we can tap into a wealth of in Asbestos Case experience in helping our clients with most Julie Evans (Partner–New York) and Associate Virginia Squitieri were successful in obtaining summary every aspect of energy management. We can interface with consultants involved in judgment on behalf of a client that manufactured ceiling tiles, shortly before the start of a four-to-six week energy efficiency analysis, energy matter trial before Judge Andrew McCarthy in an asbestos case in Syracuse, New York. The plaintiff alleged he planning, and procurement of energy and was exposed to asbestos from ceiling tiles and several brands of joint compound when he accompanied alternative energy sources. Also, as a subset his father to work sites, purportedly starting at the age of 2 or 3. of our environmental permitting services, we can assist with consultants and engineers As a result of this alleged asbestos exposure, plaintiff was diagnosed with and ultimately in the performance evaluations of a facility’s died at the age of 40, leaving behind a wife and three small children, including an infant. The lost wages greenhouse gas (“GHG”) profile. claim was very substantial, as plaintiff, a gym owner, planned to open a second gym, if not for the mesothelioma diagnosis. (Read more.) 2 Toxic Tort Newsletter February 2011

An Overview Of The 9/11 Toxic Tort Litigation By John Flannery and Allyson Avila

The Litigation named plaintiff. In the 9/11 litigation, each case contemplates a variety The devastation that occurred at the World Trade Center (commonly of factors relevant to both liability and remedy, such as varying risks referred to as “Ground Zero”) from the Al Qaeda terrorist attacks on Sep- at different job sites; the level of harm potentially incurred in individual tember 11, 2001, has resulted in massive litigation that continues despite work activity; the mitigation or exacerbation of harm by varying supervi- the passing of the 9th anniversary of the attacks. There have been over sion; the level of exposure to a wide variety of toxic substances; and 10,000 individual personal injury and wrongful death cases filed against personal factors such as medical and smoking histories. over 300 individual defendants in the federal court for the Southern District of New York. The plaintiffs in these actions include New York City The Plaintiffs’ Claimed Injuries firefighters, police officers, demolition workers, Department of Sanitation The plaintiffs allege that they were exposed to various includ- workers, and volunteers who dug by their sides hoping to find survivors. ing asbestos, lead and , pulverized building materials, volatile The plaintiffs also include rescue workers and individuals employed by organic compounds, dioxins, PCBs, and heavy metals. As a result of various contractors, subcontractors, building owners and/or tenants who these exposures, plaintiffs claim that they suffer from chronic rhinitis/ were responsible for the cleanup of the site and surrounding buildings rhinosinusitis, GERD, gastritis, persistent throat irritation, shortness of after the attack. The plaintiffs allege that they suffered injuries by breath- breath, nightmares, fear of cancer or various forms of cancer including, ing the air fouled by toxins and contaminants from the fires and dust but not limited to, skin, lung, , prostate, liver, colon, thyroid, because they were not given proper respiratory masks and protective testicular, , melanoma, brain, kidney, bone, throat, breast, equipment while working at Ground Zero as well as at over 160 buildings stomach, laryngeal, tongue, rectal, esophageal, myeloma, pancreatic, in the vicinity of Ground Zero. They also allege violations of the World sinus, gallbladder, eye, cervical, neurological, digestive/gastrointestinal, Trade Center and Safety Plan(s), New York State mesothelioma, ovarian, small interstitial, bladder, endocrine, gyneco- Labor Law, New York State Industrial Code, General Municipal Law and logical, lymphoma, nasopharyngeal, vaginal and vulvar. the Occupational Safety and Health Act. Obtaining medical records to substantiate the various claims has been The plaintiffs sued the City of New York (“City”), alleging that it took extremely difficult due to the enormous amount of plaintiffs. In an control of the site, engaged contractors, and supervised the cleanup attempt to determine the validity of the claims, Judge Hellerstein, the operations, but failed to provide adequately for the safety of workers Southern District Court judge who has presided over these cases since engaged in the clean up operations. As early as September 12, the their inception, appointed Special Masters to prepare a matrix of the City was asked to provide respirators for workers at the disaster site, injuries experienced by the plaintiffs. In reviewing over 10,000 re- however, the numbers requested far exceeded the numbers the City sponses, the Special Masters determined that only 8.9% of the plaintiff could supply. population was actually suffering from cancer. The Special Masters reasonably assumed that a plaintiff’s exposure to the site, both when The plaintiffs also sued the contractors for whom they worked as well it occurred and how long it lasted, would significantly affect both the as other contractors involved in the cleanup. The Port Authority of likelihood and severity of injury. Surprisingly, the data did not support New York and New Jersey, as the owner of the site, was also sued, as their thesis. It appeared that the dates on which plaintiffs were exposed were many other defendants who are building owners, and/or contrac- (early only, early and late, and late only) and the total lengths of expo- tors engaged in asbestos removal and cleaning of the debris inside sure (20 hours or 2,000 hours) did not correlate significantly with the the affected buildings and surrounding area. Because of pollution/ seriousness of the injury. Despite the lack of correlation between the exclusions in many of the defendants’ insurance policies, insur- exposure time and claimed injury, Judge Hellerstein has been push- ance companies have either disclaimed coverage or are defending the ing to have the claims settled, rather than face the prospect of having claims under a reservation of rights. thousands of jury trials. The litigation has been separated into three (3) distinct dockets. The 21 MC 100 docket consists of mostly firefighters, police and rescue work- Why is Jurisdiction in Federal Court if the Claims ers who responded to the area of Ground Zero. The 21 MC 102 docket Involve New York State Labor Law Violations? consists of mostly cleaners, asbestos workers and other remedial work- Although the claims being litigated in these cases involve allegations ers who responded to buildings outside the immediate vicinity of Ground of violations of New York state Labor Law, all cases involving injury as Zero. A third docket, 21 MC 103, is a hybrid of plaintiffs who worked at a result of the 9/11 terrorist attacks have been filed in the Southern District Ground Zero as well as an off-site location. There are approximately of New York federal court pursuant to The Air Transportation and Stabi- 1,700 plaintiffs in the 21 MC 102 and 21 MC 103 dockets combined. lization Act (“the ATSSSA”). The ATSSSA was enacted within months of the September 11 attack and provides that “[t]he United States District Why Isn’t This A Class Action? Court for the Southern District of New York shall have original and exclu- The 9/11 litigation is considered a mass tort rather than a class action sive jurisdiction over all actions brought for any claim (including any claim because the cases were too varied to meet the class certification re- for loss of property, personal injury, or death) resulting from or relating to quirements of Federal Rules of Civil Procedure Rule 23, which requires the terrorist-related aircraft crashes of September 11, 2001.” commonality, typicality and adequate representation of the case by the (Continued) 3 Toxic Tort Newsletter February 2011

An Overview Of The 9/11 Toxic Tort Litigation (Continued)

Issues Relating to New York State Substantive Law Discovery The fact that state substantive law governs these actions has created Discovery in the 21 MC 100 docket and the 21 MC 102/103 dockets certain obstacles for the plaintiffs. In particular, pursuant to New York has proceeded on different schedules. In the 21 MC 100 docket, a State General Municipal Law § 50-e, a plaintiff is required to serve a representative sampling of plaintiffs was selected for depositions and Notice of Claim on a municipality within ninety (90) days of when the thousands of plaintiffs’ submitted medical records via an online reposi- claim accrued as a precondition to filing suit. However, the plaintiffs tory that enabled all parties who were signatories to the online reposito- who filed cases against the City of New York and other public entities ry to review plaintiffs’ medical records. There have been no depositions did not serve a Notice of Claim because they argued that since the held in the 21 MC 102/103 dockets and there have been continuous cases are considered a federal cause of action pursuant to the discovery disputes among the parties due to the plaintiffs’ failure to pro- ATSSSA, state Notice of Claim requirements did not apply. Extensive vide substantially complete interrogatory responses. Judge Hellerstein motion practice regarding this issue ensued. See Felder v. The City of initially advised the parties that he was overly burdened with the 21 MC New York., 53 A.D.3d 401, 402, 862 N.Y.S.2d 36, 37 (1st Dep’t 2008). 100 docket and since the parties could not resolve the discovery dis- Ultimately, the Appellate Division, First Department, held that although putes, either a Special Master would be appointed or he would revisit the ATSSSA created a “federal cause of action” and gave exclusive the issue as to whether he had jurisdiction over these dockets since he jurisdiction over the 9/11 cases to the Southern District of New York believed that these cases were too attenuated from the terrorist attacks. federal court, “an application to serve a late notice of claim is a special Ultimately a Special Master was chosen by the court. However, after proceeding separate from the personal injury lawsuit, which cannot meeting with the Special Master on several occasions, the plaintiffs ob- be maintained without leave of state court” and that “Congress did not jected to the appointment, citing exorbitant costs, and Judge Hellerstein intend the ATSSSA to preempt General Municipal Law § 50-e.” Based revoked his order appointing the Special Master. Many of the plaintiffs upon the Felder decision, the municipal entities and other public benefit in these dockets began uploading medical records to the online reposi- corporations whose enabling statutes required that they be served with tory, and the parties were in the process of developing a deposition a Notice of Claim prior to commencing suit, filed motions to dismiss all plan when all of the cases were stayed due to the City’s settlement as complaints where a Notice of Claim had not been served. These mo- discussed below. tions were successful and hundreds of cases were dismissed. This victory for municipal defendants, however, was short-lived. Future of the Litigation Since a majority of the lawsuits in the 21 MC 100 docket were filed New Legislation As a Result of the 9/11 Claims against the City and the contractors it represents, the City has entered In response to the dismissal of hundreds of plaintiffs’ cases for failing into a Settlement Process Agreement (“SPA”) with the plaintiffs. The to serve a Notice of Claim, a new law was enacted. On September 16, SPA originally provided for $657,500,000.00 in total compensation. 2009, Gov. David A. Paterson signed into law an amendment to Gener- However, Judge Hellerstein held a fairness hearing on the issue, during al Municipal Law § 50-i that extended a one-year time period for the fil- which he entertained comment from plaintiffs both for and against the ing of claims by plaintiffs who allege to have suffered injuries as a result settlement. At the end of the hearing, Judge Hellerstein rejected the of the rescue, recovery and clean up efforts after the September 11 ter- SPA, stating that he did not believe it provided sufficient compensa- rorist attack, which would otherwise be barred by statute of limitations. tion to the plaintiffs, and ordered parties to refrain from entering into Any plaintiff who claimed to have been injured as a result of the rescue, the agreement. Both the City and the plaintiffs’ counsel filed a Notice of recovery and clean up operations after September 11, 2001, was given Appeal to the United States Court of Appeals for the 2nd Circuit ques- until September 16, 2010, to serve a Notice of Claim. The law is com- tioning Judge Hellerstein’s authority to reject the SPA. In the interim, monly referred to as Jimmy Nolan’s Law. Jimmy Nolan is a carpenter however, an amended SPA was negotiated, which provided that the from Yonkers, New York, and father of three who claimed to have wood plaintiffs would receive additional compensation of up to $712.5 mil- and skin allergies, as well as respiratory problems, after sleeping at the lion. The plaintiffs’ attorneys will cap fees at 25%, reducing fees by over World Trade Center site for three (3) weeks assisting in the recovery, $50 million, and certain workers’ compensation liens against settlement but who did not serve a Notice of Claim on the City. Significantly, Jimmy recovery will be waived. Judge Hellerstein approved the amended SPA Nolan’s Law permitted the revival of all of the complaints that had been and held a town hall meeting to advocate for the plaintiffs to sign up for previously dismissed, as well as granted all other potential claimants the settlement. The SPA is contingent upon 95% of the plaintiffs approv- the right to file a claim within a one-year period from September 16, ing the settlement. On November 18, 2010, the deadline set by Judge 2009, through September 16, 2010, despite whether they knew about Hellerstein, 95% of the plaintiffs did approve the settlement. their injury years earlier and simply failed to serve the Notice of Claim. (Continued) 4 Toxic Tort Newsletter February 2011

An Overview Of The 9/11 Toxic Tort Litigation (Continued) The money for the settlement comes from the $1 billion WTC Captive surgery to their lungs or sinuses. The fourth category will provide Fund that contained federal funds set aside for the purpose of this liti- money to those plaintiffs who have undergone orthopedic surgeries. gation. The settlement funds will be divided among five (5) categories. The final category will be to provide a cancer insurance policy for those The amount of money allocated to each of these categories was not plaintiffs who may develop respiratory and/or blood cancers in the defined. However, the first category will be the largest and will allocate future. This insurance policy will be issued through MetLife and will pro- money to the plaintiffs based upon an injury matrix that was developed vide $100,000 in coverage to every plaintiff who has not already been by the court, the Special Masters, the WTC captive, the defense coun- diagnosed with such a cancer. sel for the City and the lead plaintiffs’ counsel. There will be an “alloca- Moreover, for every 1% of additional plaintiffs that agree to the settle- tion” master and a panel of physicians who will evaluate each of the ment, the settlement amount will be increased by 2%, up to a maximum plaintiffs to determine if a settlement amount allocated to a plaintiff is of $712.5 million. The remaining funds in the WTC captive will be held fair and appropriate. This “allocation” master and panel of physicians in reserve to address any future claims. If all of the funds are not paid will also distribute the funds in the subsequent categories. out by 2029, the monies revert to the federal government. The second category will create a permanent disability fund for those Since the City’s SPA, Judge Hellerstein has been pushing the remain- plaintiffs who have already been designated as disabled and would ing parties to work on a global settlement, due to the volume of the provide funds to those plaintiffs who are currently sick, but become claims. To date, global settlement efforts have been futile, but it is an- disabled in the future as a result of their work at the WTC. The third ticipated that Judge Hellerstein will continue his quest toward resolving category will provide money to those plaintiffs who have undergone these cases.

DiMarco Wins Summary Judgment in Government Contractor Case Erik DiMarco, a partner in Wilson Elser’s New York office, obtained In holding that the government contractor was immune from tort liabil- summary judgment on behalf of a government contractor in an asbestos ity for Mr. Boston’s injuries, Judge Robreno found that the contractor case. Judge Eduardo Robreno, presiding judge over the Multi-District had successfully established the elements for a government contractor Asbestos Litigation, ruled in Boston, et al. v. Eastern Refractories Com- defense in accordance with the U.S. Supreme Court decision in Boyle pany, Inc., et al. that Wilson Elser’s client was immune from suit under v. United Technologies Corporation, 487 U.S. 500, 512 (1988). In the the government contractor defense for the construction of U.S. subma- court’s analysis, the contractor established that (1) the United States rines. This decision presents the first such ruling in the federal asbestos approved reasonably precise specifications for the product at issue; multidistrict litigation. The plaintiff/decedent Gail Boston filed suit against (2) the equipment conformed to those specifications; and (3) warnings numerous defendants, including Wilson Elser’s client, claiming that he regarding asbestos were not required as the government, specifically the developed lung cancer as a result of exposure to asbestos fibers during U.S. Navy, knew of the of asbestos. the course of his employment at the Portsmouth Naval Shipyard in con- This decision presents a significant ruling for defendants in asbestos litiga- nection with work he performed on U.S. submarines undergoing overhaul tion who manufactured products as government contractors. The com- and repair. Many of the submarines upon which Mr. Boston worked were plexities presented in the analysis of the government contractor defense constructed by Wilson Elser’s client. Following discovery, Erik filed a mo- often require a detailed assessment as to the specifications required by the tion for summary judgment, arguing, in part, that the client was immune U.S. government in the performance of the contract at issue, as well as the from liability as a government contractor. state of knowledge of the government regarding the hazards at issue.

Higgins Obtains Dismissal of 85 Asbestos Cases Sean Higgins, a Wilson Elser partner in the Houston office, recently ob- This ruling carries significance beyond Chapter 90 and the federal tained the dismissal of 85 asbestos cases pending against two of Wil- asbestos MDL. Other states, such as Ohio, Florida, Kansas, South son Elser’s clients in the federal asbestos multidistrict litigation (MDL). Carolina, Georgia, Maryland and New York, have enacted variations of These cases were governed by Texas law, and the judge presiding over impairment criteria or an inactive docket system. This decision may be the MDL granted Wilson Elser’s motion to dismiss these cases because useful in urging the MDL Court to dismiss cases governed by the laws the plaintiffs failed to comply with the diagnostic and impairment re- of those states. Bankruptcy defendants may also cite this decision to quirements of Chapter 90 of the Texas Civil Practice & Remedies Code. urge denial of claims by plaintiffs who do not meet state impairment The court held, contrary to the plaintiff’s argument, that this criteria is a criteria. Additionally, this decision should be persuasive in urging substantive legal rule that must be applied in a federal action governed state courts outside Texas to apply Chapter 90 in cases governed by by Texas law. Texas law. 5 Toxic Tort Newsletter February 2011

Asbestos Personal Injury Trusts: Discovery and Offsets By Jason Waters and Kathryn Grace During the recent economic downturn, several common defendants in In Texas, trial courts have granted motions to compel responses regard- asbestos litigation, such as Garlock and Bondex, have filed for protec- ing settlements made or expected to be made with bankruptcy trusts. tion under the bankruptcy code. These recent filings make a discussion William P. Shelley, Jacob C. Cohn & Joseph A. Arnold, The Need for of how courts handle payments from asbestos personal injury trusts Transparency Between the Tort System and Section 524(g) Asbestos particularly timely. For years, defendants have encountered difficulties Trusts, 17 Norton J. Bankr. L. & Prac. 257, 281 (2008). A Superior Court in their efforts to obtain discovery about asbestos trust payments to judge in Seattle not only allowed offsets for actual payments, but also plaintiffs and to reduce their exposure by the amounts of such pay- permitted setoffs for amounts that plaintiffs could receive from trusts. ments. The lack of transparency concerning asbestos personal injury Coulter v. Asten Group, Inc., No. 01-2-34675-0 (Mar. 2009). The Court of trust payments has permitted double recoveries at the expense of sol- Appeals reversed and held that the trial court erred by offsetting pos- vent defendants. Recent developments, however, may signal improving sible future settlements against the judgment. Coulter v. Asten Group, conditions for defendants in this area. Inc., 155 Wn. App. 1 (Wash. Ct. App. 2010). On remand, however, the The purpose of an asbestos personal injury trust, under 11 U.S.C. § trial court stated that the defendant was at least entitled to setoffs for 524(g), is to compensate claimants who are, or may become ill, with an amounts received to date “from settling defendants and bankruptcy asbestos-related disease. See Lloyd Dixon, Geoffrey McGovern, Amy trusts, for amounts agreed to and to be received from settling defendants Coombe, Asbestos Bankruptcy Trusts: An Overview of Trust Structure and bankruptcy trusts, for amounts that can be obtained by application and Activity with Detailed Reports on the Largest Trusts, RAND Insti- to existing bankruptcy trusts, and for amounts that can be obtained from tute for Civil Justice, 3 (2010). An asbestos personal injury trust may be bankruptcy trusts expected to soon become available.” created when a defendant facing significant litigation liabilities files for In early 2007, the Ohio Court of Common Pleas identified the potential bankruptcy protection. The bankruptcy petition stays pending litigation for double recovery by plaintiffs recovering damages in civil litigation while the defendant negotiates with creditors and submits a reorga- while simultaneously obtaining payments from asbestos personal injury nization plan. As part of the plan, the defendant may propose to fund trusts under different theories of liability. The plaintiff sued Lorillard an independent asbestos personal injury trust under Section 524(g), Tobacco Company for exposure to asbestos through Kent asbestos- which will pay the claims of individuals meeting certain medical criteria. filtered cigarettes. The plaintiff also asserted numerous theories of Once the asbestos personal injury trust is established, the reorganized causation to various asbestos trusts, which resulted in the recovery of defendant is immune from pending and future asbestos claims. Id. at 3. as much as $700,000. As a result, the Ohio trial judge admonished the Although the trust protects a bankrupt defendant from future asbestos plaintiff’s counsel and revoked the firm’s admission to the court. In a litigation, the remaining solvent defendants have encountered dif- subsequent interview, the judge stated, “In my 45 years of practicing ficulties obtaining discovery about trust payments or setoffs against law, I never expected to see lawyers lie like this . . . it was lies upon lies their exposure to reflect a trust’s contribution on behalf of a bankrupt upon lies.” See James F. McCarty, Judge becomes National Legal Star, defendant. In Maryland, for example, the Court of Special Appeals Bars Firm from Court Over Deceit, Clev. Plain Dealer, Jan. 25, 2007, recently held that it was not appropriate to reduce a judgment for pay- at B1. The Ohio Supreme Court did not accept the appeal for review. ments received from certain bankruptcy settlement trusts. See Crane Kananian v. Lorillard Tobacco Co., 878 N.E.2d 34 (2007). v. Linkus, 190 Md. App. 217 (Feb. 1, 2010). The trial court credited Since 2007, other jurisdictions appear to have taken a more sensible payments from asbestos trusts when the documents creating the trust approach, requiring asbestos trust disclosure early in the litigation provided that a judgment defendant was entitled to a reduction equal to the amount paid by the trust. In the absence of proof that the bankrupt and, in some instances, ordering direct offsets. A New York trial court defendant was a joint tortfeasor, the court declined to award an offset ordered the plaintiff to disclose trust claim forms within 90 days of trial, for payments received from an asbestos trust that was not created with warning that failure to do so would result in the court vacating any a similar requirement. See Crane, 190 Md. App. at 33-34. See also verdict against the defendant. See Transcript of Proceedings at 44, Scapa Dryer Fabrics, Inc. v. Saville, 190 Md. App. 331 (Feb. 2, 2010). Cannella v. Abex, No. 1037729/07 (N.Y. Sup. Ct. N.Y. County Jan. 24, 2007). Earlier this year, two state courts in West Virginia and Pennsyl- Nevertheless, other courts have made minor strides in this area by vania issued case management orders requiring plaintiffs to disclose all enforcing a defendant’s right to discover information about asbestos bankruptcy trust claims at least 120 days prior to trial, and one of these personal injury trust claims. For example, a New York court held that orders specifically stated that defendants will be entitled to offsets for factual statements made in documents submitted to bankruptcy trusts liquidated amounts paid by trusts if a judgment is rendered against should be discoverable despite the fact that the documents may be them. Courts in other jurisdictions, such as Delaware, Texas, Ken- considered “settlement” documents. See Transcript of Proceedings tucky, Ohio and Massachusetts, have also begun to require disclosure at 3–4, Negrepont v. A.C. & S., Inc. (In re N.Y. City Asbestos Litig.), of certain bankruptcy-related information. See In re Asbestos Litig., No. 120894/01 (N.Y. Sup. Ct., N.Y. County Dec. 11, 2003). Similarly, No. 77C-ASB-2, Standing Order No. 1, ¶ 7(1) (Del. Newcastle County a California appellate court in 2006 issued a writ of mandate order- Super. Ct.); Texas Rules of Civil Procedure 192.3(g) and 194.2(h); In re ing the lower court to correct an overly restrictive order concerning the Asbestos Pers. Injury Litig., March 6, 2002, Master Order (Ky. Jefferson discovery of documents submitted to an asbestos trust even though the County Cir. Ct.); In re All Asbestos Cases, Case Management Order, documents were submitted in furtherance of a settlement with the trust. CV-073958 (Ohio Cuyahoga County Com. Pl. May 8, 2007); In re Volkswagen of America, Inc. v. Superior Court, 43 Cal. Rptr. 3d 723, Mass. State Court Asbestos Litig., Special Master Order of April 1994. 725 (Ct. App. 2006). (Continued) 6 Toxic Tort Newsletter February 2011

Asbestos Personal Injury Trusts: Discovery and Offsets (Continued) Other jurisdictions have attempted to address issues concerning appears to foster dishonest claims practices and encourage claimants asbestos personal injury trusts through legislation. Georgia enacted and their attorneys to seek duplicative payments by concealing trust a statute requiring asbestos plaintiffs filing claims to include a sworn recoveries.” And he observed that duplicative recoveries “increase the statement containing the identity of any bankruptcy trust to which a financial burden on solvent tort defendants.” claim had been submitted along with a complaint. See O.C.G.A. § Although several jurisdictions are addressing asbestos trust issues in 51-14-7. In February and March 2010, Louisiana and West Virginia pro- ways that improve defendants’ opportunities to obtain discovery and posed similar legislation. See 2010 Bill Text LA H.B. 358 (Louisiana); reduce their exposure, defendants will continue to face significant H.B. 4420 (West Virginia). West Virginia followed the lead of the Ameri- obstacles in the foreseeable future. The continued lack of transparency can Legislative Exchange Council by calling its proposal the “Asbestos in connection with asbestos trust claims results in solvent defendants Transparency Claims Act.” H.B. 4420, Article 7E. being named with “increasing frequency” and being “forced to pay the Federal action may also be on the horizon. The House Judiciary Com- several share of their reorganizing defendants.” Charles Bates, Charles mittee wrote a letter to the Government Accountability Office request- Mullin, Marc Scarcell, The Naming Game, Mealey’s Litig. Rep.: Asbes- ing a review of the “transparency of so-called asbestos bankruptcy tos 24, no. 15 (2009). And this dual compensation system will continue trusts under 11 U.S.C. § 524(g).” Representative Lamar Smith stated, to result in solvent defendants paying “well above their historical li- “I believe that this principle of openness is no longer being fully imple- ability share while plaintiffs double collect, once from tort settlements mented for 524(g) trusts, undermining both the tort system and the and then again from the asbestos trust settlements.” Charles Bates, asbestos trust system.” The Committee’s letter observed that “many Charles Mullin, Marc Scarcell, The Claiming Game, Mealey’s Litig. 524(g) trusts are specifically structured and operated to thwart attempts Rep.: Asbestos 25, no. 1 (2010). Barring any federal revisions to Sec- to obtain information regarding trust claimants who are also making tion 524(g), therefore, a solvent defendant’s best strategy is to pursue claims of other 524(g) trusts or who are suing solvent defendants in the trust payment information aggressively through the discovery process, tort system.” Representative Smith believed the “lack of transparency independent investigation, and early motion practice.

Evans, Squitieri Win Summary Judgment in Asbestos Case Julie Evans (Partner–New York) and Associate Virginia Squitieri were during the entire relevant time frame. Further, one of the documents successful in obtaining summary judgment on behalf of a client that attached to the motion for summary judgment proved that the client manufactured ceiling tiles, shortly before the start of a four-to-six week manufactured asbestos-free ceramic ceiling tiles that matched the trial before Judge Andrew McCarthy in an asbestos case in Syracuse, description of the ceiling tiles that the plaintiff’s father testified to having New York. The plaintiff alleged that he was exposed to asbestos from worked with on a handful of occasions when the plaintiff was a toddler. ceiling tiles and several brands of joint compound when he accompa- The plaintiff, in opposition to Wilson Elser’s motion, proffered two af- nied his father to work sites, purportedly starting at the age of 2 or 3. fidavits (one from an industrial hygiene expert and one from plaintiff’s As a result of this alleged asbestos exposure, the plaintiff was diag- father) suggesting that the asbestos-free ceramic ceiling tiles were not nosed with mesothelioma and ultimately died at the age of 40, leav- utilized by the plaintiff’s father, based upon building codes, and the ing behind a wife and three small children, including an infant. The description of the tiles used as “fibrous” and “fire rated.” lost wages claim was very substantial, as the plaintiff, a gym owner, Judge McCarthy did not find that the plaintiff’s arguments created a planned to open a second gym, if not for the mesothelioma diagnosis. question of fact and granted Wilson’s Elser’s summary judgment. Julie and Virginia prepared a motion for summary judgment that ar- Significantly, Judge McCarthy advised that he usually does not grant gued there was no admissible evidence that the plaintiff worked around summary judgment when there are issues of product identification that asbestos-containing ceiling tiles, as they provided exhibits from the de- he believes are factual questions for a jury to resolve. fendant that showed it sold both asbestos and nonasbestos ceiling tiles

Julie Evans and John Henderson, Editor:  Anthony M. Goldner Partner, Chicago Co-Chairpersons of Wilson Elser’s Toxic Tort Group, can assist you with any and all legal Wilson Elser is a full-service law firm with nearly 800 attor- requirements relative to environmental and neys, representing 20 practice areas, in 21 offices throughout energy regulations and compliance. the United States. Founded in 1979, it ranks among the top law firms identified by The American Lawyer and is listed in Contact: the “Top 50” by The National Law Journal. Wilson Elser serves Julie Evans – Partner its loyal and expanding global client base with unmatched Wilson Elser New York [email protected] experience across a full breadth of disciplines, innovative think- ing and a keen understanding of their respective businesses. John Henderson – Partner For more information, visit www.wilsonelser.com. Julie R. Evans John R. Henderson Wilson Elser Dallas Co-Chairperson Toxic Tort Group Co-Chairperson Toxic Tort Group [email protected] © 2011 Wilson Elser Moskowitz Edelman & Dicker LLP. All rights reserved.