With Michigan’s 2018 adoption of its Asbestos Bankruptcy Trust Claims Transparency Act, fourteen states now have asbestos claims transparency laws on the books. These laws ensure defendants are not kept in the dark when asbestos claimants seek recovery from asbestos bankruptcy trust funds. This stands in stark contrast to the landscape as of just three years ago, when only three states had such asbestos claims transparency laws on the books. Why the shift? In short, it can be attributed to “the Garlock effect.”
In 2014, evidence was unearthed during the Garlock Sealing Technologies bankruptcy proceeding in North Carolina1 that highlighted the practice of “double dipping.” The Garlock case demonstrated that some plaintiffs in asbestos litigation sought recovery for 100 percent of their injuries in a personal injury lawsuit while simultaneously—if not subsequently—sought to recover substantial additional compensation from bankruptcy trusts for the same injury.
Asbestos litigation has persisted in this country for more than four decades. In that span, more than 100 companies which manufactured asbestos-containing products have filed for bankruptcy protection as a result of asbestos-related personal injury litigation. More than 50 of these companies have used Section 524(g) of the U.S. bankruptcy code to reorganize and establish a bankruptcy trust to pay current and future asbestos claimants. Asbestos plaintiffs need not identify bankrupt entities in their lawsuits as a prerequisite to submit claims against their trusts. One litigation tactic in asbestos litigation, therefore, has been to withhold and/or delay filing of trust claims to prevent defendants from discovering those alleged exposures during litigation.
The Garlock order from 2014 illustrated how a lack of governance with respect to trust disclosures can lead to exploitation of the litigation system. Garlock was a manufacturer of asbestos gaskets and sheet gasket material used in industrial and other applications and was widely sued in asbestos personal injury cases, particularly during the 2000s. During the proceedings to set Garlock’s liability for present and future asbestos claimants following its 2010 bankruptcy filing, the judge permitted Garlock to have full discovery to assess 15 prior lawsuits it had settled for large sums. The evidence uncovered was illuminating. Garlock demonstrated to the court that exposure evidence had been withheld during each and every one of those 15 prior cases.
The upshot of the practice publicized during Garlock is that, without trust transparency laws, defendants in asbestos litigation have an uphill battle to identify all of plaintiffs’ asbestos exposure sources. This hinders defendants’ ability to properly allocate fault against responsible parties. In response to Garlock and to prevent double recovery by plaintiffs, 14 states now have passed statutes that require plaintiffs to disclose during litigation any claims against bankruptcy trusts, with Missouri on the cusp of becoming state number 15, and several other states considering similar measures.
The following is a breakdown of the key requirements imposed by the various asbestos claims transparency laws:
Georgia (Enacted in 2007)
Requires plaintiffs to provide a sworn statement with the complaint identifying trusts to which claims have been submitted. Plaintiffs are further required to identify additional trusts that may be responsible for the injury, even if no claims have been made. Defendants may move to dismiss the complaint if plaintiffs provide incomplete trust information.
Ohio (Enacted in 2013)
Requires plaintiffs to provide a sworn statement within 30 days of discovery commencing that identifies trust claims. Plaintiffs are under a continuing obligation to supplement the disclosure if additional claims are filed.
Oklahoma (Enacted in 2013)
Requires plaintiffs to disclose within 90 days of filing the lawsuit any claims that have been filed or that the plaintiff anticipates filing. Plaintiffs are under a continuing obligation to supplement the disclosure if additional claims are filed. The statute further establishes that defendants are entitled to setoffs for payments made by the trusts.
Wisconsin (Enacted in 2014)
Requires plaintiffs to provide a sworn statement within 45 days of filing the lawsuit identifying each claim they have filed or reasonably anticipates filing against an asbestos trust and the disposition of the claim. Defendants are authorizedto bring a motion identifying additional asbestos trusts not named by plaintiffs against which defendants reasonably believe plaintiffs should file a claim. The statute further establishes that materials submitted to a trust in support of plaintiffs’ claim with the trust may be sufficient to support a jury finding that plaintiffs were exposed to asbestos from that trust’s products.
West Virginia (Enacted in 2015)
Requires plaintiffs to provide a sworn statement at least 120 days before trial of trust claims that have been filed or may be filed. Plaintiffs are under a continuing obligation to supplement the disclosure if additional claims are filed. Defendants may file a motion to stay the case 90 days before trial if there are additional trusts where claims can be made. The statute further establishes that defendants are entitled to setoffs for payments made by the trusts.
Arizona (Enacted in 2015)
Requires plaintiffs to provide a sworn statement within 45 days of a filed answer disclosing anticipated and filed trust claims and to produce the trust documents within 60 days of a filed answer. A court may not set a trial date until 180 days after plaintiffs make the trust disclosures. The statute further establishes that defendants are entitled to setoffs for payments made by the trusts.
Texas (Enacted in 2015)
Requires plaintiffs to make trust claims no later than 150 days before trial unless the fees and expenses associated with making the claim outweigh the recovery. Then, plaintiffs are required to disclose the claims and produce the claims materials no later than 120 days before trial or a date established by the court. The statute requires a duty to supplement the claims disclosures and allows a case to be stayed if the claims are not made.
Tennessee (Enacted in 2016)
Requires plaintiffs to provide a sworn statement no later than 120 days before trial disclosing all trust claims made and all claims anticipated and producing the claim documents. Plaintiffs are under an ongoing duty to supplement the disclosures. The statute allows for a case to be stayed if plaintiffs fail to make the trust claims or disclose their existence.
Utah (Enacted in 2016)
Requires plaintiffs to provide a sworn statement no later than 120 days before trial disclosing all trust claims made, all potential claims, and the claim documents. Plaintiffs have a continuing obligation to supplement their disclosures. The statute authorizes a case to be stayed if plaintiffs fail to disclose trust claims.
Iowa (Enacted in 2017)
Requires plaintiffs to disclose trust claims within 90 days after their asbestos action is filed. If plaintiffs fail to comply with this statute, the court may dismiss their action.
North Dakota (Enacted in 2017)
Requires plaintiffs to provide a sworn statement within 30 days of filing their action indicating that they investigated any potential asbestos trust claims and have filed claims with any applicable trusts. Plaintiffs must further disclose various trust claims materials within the same allotted 30 days. If plaintiffs fail to comply with this statute, the court may dismiss their action.
South Dakota (Enacted in 2017)
Requires plaintiffs to file within 120 days of the date set for trial a sworn statement identifying any asbestos trust claim filed by plaintiffs. Plaintiffs have a continuing duty to supplement their disclosures if they file additional trust claims or supporting information. Plaintiffs’ failure to comply with this statute may lead to an extension of the trial date.
Mississippi (Enacted in 2017)
Requires plaintiffs to provide a sworn statement within 30 days after filing the asbestos action identifying trust claims made. Plaintiffs must also provide defendants with the related trust materials. Plaintiffs have a continuing duty to supplement any disclosed information. If plaintiffs fail to comply with this statute, the court may dismiss their action.
Michigan (Enacted in 2018)
Requires plaintiffs to provide a sworn statement to the court and other parties no later than 180 days before the initial date set for trial. Plaintiffs must further provide all parties with related trust claim materials.
If you have any questions regarding this content or other asbestos litigation trends, please contact the authors or one of the other attorneys in HAWS-KM’s Toxic Tort Litigation Group at (651) 227-9411.
