I'm writing several times a week about products liability for Law.com/The National Law Journal. Occasionally I cross-post a blog I find particularly interesting.
A judge who found widespread misrepresentation by plaintiffs in a gasketmaker’s bankruptcy has granted Ford Motor Co. access to the statements that parties must file to disclose their economic interests in bankruptcies.
U.S. Bankruptcy Judge George Hodges of the Western District of North Carolina said in a hearing on April 17 that Ford may access the Federal Rule of Bankruptcy 2019 statements, which must be filed by anyone participating in bankruptcy cases.
The statements are public records, Hodges said in ruling from the bench, and he did not find any improper purpose behind Ford’s request.
Hodges said his order will not go into effect until two weeks after law firms that the plaintiffs say have not been served with Ford’s request receive that service.
If those firms and their clients object, then the order will not go into effect against them, Hodges said. The order will be implemented “on a no protest basis,” Hodges said.
Hodges is presiding over the bankruptcy of Garlock Sealing Technologies, LLC.
The 2019 statements and other evidence in Garlock’s insolvency proceeding have been sealed after Hodges presided over a hearing to estimate the liabilities of Garlock for asbestos claimants who have mesothelioma cancer.
Hodges has denied access to the sealed transcripts of the estimation proceeding, which led to his findings of misrepresentation. In a prior ruling, Hodges noted that the district court already has an appeal about closing the proceeding to the public before it. He reasoned it would be more efficient for the district court to hear the appeals of Ford, online news outlet Legal Newsline, and others in one proceeding.
Ford’s counsel, K. Elizabeth Sieg of McGuire Woods LLP in Richmond, Va., argued that the names of the asbestos litigants suing Garlock are “at the very heart of the fraud Ford seeks to investigate. Ford suspects it has been defrauded in the settlement of asbestos claims” by plaintiffs who did not disclose they had claims against Garlock.
Rule 2019 statements bear directly on the “integrity and transparency” in bankruptcy proceedings, Sieg argued.
Sieg cited the Company Doe decision in the U.S. Court of Appeals for the Fourth Circuit this week in which the court held that an order sealing a company’s identity throughout an entire litigation violated the public’s right of access under the First Amendment.
Trevor Sweet III, a plaintiffs attorney with Caplin & Drysdale, Chartered in Washington, said disclosing the 2019 statements would expose plaintiffs to identity theft and the disclosure of their asbestos diseases. He also argued that settlement amounts should not be disclosed because they could not be disclosed in the civil tort system.
“In the tort system where Ford hopes to use this information, Ford is not entitled to know the amount of any settlement that a Ford plaintiff has reached with any other person unless and until Ford suffers a judgment in favor of that person and that court has been called upon to mold that judgment,” Swett argued.
The plaintiff’s attorney distinguished the Fourth Circuit decision because it was not a bankruptcy case but “a case in which a district court allowed an entire litigation from filing to judgment [to proceed] behind closed doors.”
The judge also granted Specialty Products Holding Corp. and Bondex International, Inc. access to the 2019 statements Thursday.
Hodges previously ruled that insurer Aetna, Inc., and Rawling Company LLC, a cost containment vendor for insurers, can have to the 2019 statements.
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