Defense Counsel Journal

The More Things Change: Bankruptcy Trust Reform and the Status Quo in Asbestos Litigation

January 27, 2020

John J. Hare

John J. Hare

John J. Hare is a Shareholder and Chair, Appellate Advocacy and Post-Trial Practice Group, in the Philadelphia office of Marshall Dennehey Warner Coleman & Goggin.

Daniel J. Ryan, Jr.

Daniel J. Ryan, Jr.

Daniel J. Ryan, Jr. is a Shareholder and Chair, Asbestos and Mass Tort Litigation Practice Group, in the Philadelphia office of Marshall Dennehey Warner Coleman & Goggin. Any commentary or opinions do not reflect the opinions of Marshall Dennehey Warner Coleman & Goggin or the International Defense Counsel.

IT IS well-known that asbestos plaintiffs’ lawyers routinely pursue full compensation from each of two sources—bankruptcy trusts and tort litigation—for the same harm. The success of this practice, which Forbes has called “one of the longest-running and most lucrative schemes in the American litigation business,”¹1 Daniel Fisher, A Stubborn Manufacturer Exposes The Asbestos Blame Game, Forbes, Apr. 13, 2015; see also Daniel Fisher, Manufacturer's Lonely Quest To Open Asbestos Files Gains Strength, Forbes.com, Mar. 27, 2014.  Other national media outlets also covered the “scam” and “racket” uncovered in the Garlock bankruptcy proceedings. See e.g., Opinion, Busting the Asbestos Racket, Wall St. J., Feb. 8-9, 2014, at A16; Michael Tomsic, Case Sheds Light On The Murky World Of Asbestos Litigation, NPR (Feb. 4, 2014, 4:00 PM), available at http://www.npr.org/2014/02/04/271542406/case-sheds-light-on-the-murky-world-of-asbestos-litigation; Joe Nocera, The Asbestos Scam, Part 2, N.Y. Times, N.Y. ed., Jan. 13, 2014, at A27. requires the concealment of trust exposure allegations and payments from disclosure in civil litigation.²2 See Mark A. Behrens, Asbestos Trust Transparency, 87 Fordham L. Rev. 108, 109 (2018) (“[M]any plaintiffs intentionally delay their asbestos trust claims until their tort cases are resolved. This tactic allows plaintiffs to suppress evidence of trust-related exposures that defendants could use to impeach plaintiffs, apportion fault to bankrupt nonparties, or prove that bankrupt entities were the sole cause of a plaintiff’s harm.”). This method of securing double compensation for the same harm drew particular scrutiny in the wake of the 2010 bankruptcy filing of a gasket and packing manufacturer, Garlock Sealing Technologies, LLC. In Garlock, U.S. Bankruptcy Judge George Hodges reviewed voluminous trust filings and uncovered a “startling pattern of misrepresentation” so pervasive that it helped to drive Garlock into Chapter 11 bankruptcy.³3 In re Garlock Sealing Techs., LLC, 504 B.R. 71, 86 (W.D.N.C. Bankr. 2014).

Although the problem was widely known before Garlock, Judge Hodges’ remarkable findings shed new light on the disconnect between the asbestos trust and tort systems. Across the country, courts, commentators, and other interested parties took note.⁴4 See e.g., Mt. McKinley Ins. Co. v. Pittsburgh Corning Corp., No. 13-1639, 2015 WL 4773425, at *5 (W.D. Pa. Aug. 12, 2015) (“The evidence uncovered in the Garlock case arguably demonstrates that asbestos plaintiffs’ law firms acted fraudulently or at least unethically in pursuing asbestos claims in the tort system and the asbestos trust system.”); Peggy L. Ableman, The Garlock Decision Should Be Required Reading for All Trial Court Judges in Asbestos Cases, 37 Am. J. Trial. Advoc. 479, 488 (2014) (“We are now past the time when [the case examples in Garlock] can be referred to as mere anomalies or when we can view Garlock as the sole asbestos defendant which has been prejudiced by these practices.”); Lester Brickman, Fraud and Abuse in Mesothelioma Litigation, 88 Tul. L. Rev. 1071, 1088 (2014) (“In cases where defendants have been able to overcome the attempts to suppress evidence of other exposures, it has become apparent that the product exposures set forth in multiple trust claims differ markedly from, and are inconsistent with, the exposures being asserted by plaintiffs in the tort system.”). Most recently, on September 13, 2018, the United States Department of Justice took the extraordinary step of filing a Statement of Interest in an asbestos manufacturer’s bankruptcy proceeding. In urging the court to create a fair and transparent trust for the bankrupt manufacturer, the Department stated:

In recent years, both courts and researchers have noted a growing number of concerns with the operations of many of these trusts, particularly as they relate to fraudulent claims filed both within and outside the bankruptcy system.

Although the Garlock decision directly addressed only the issue of whether the debtors’ historic liability in the state tort system was tainted by fraud, its findings also raise troubling concerns about the lack of oversight and operation of the trusts themselves.  

A common factor in many of these abuses has been the secrecy with which many trust claims are submitted, allowed, and paid, which has made it nearly impossible to detect when plaintiffs are seeking recovery based on factual representations that may be incompatible with other representations previously made in other litigation or before other trusts.⁵5 See Statement of Interest on Behalf of the United States of America Regarding Plans of Reorganization for Kaiser Gypsum Company, Inc. and Hanson Permanente Cement, Inc., at 6-8, In re Kaiser Gypsum Co., Inc., Case No 16-31602 (JCW), (Bankr. W.D.N.C. Sept 13, 2018); see also Alex Wolf, Asbestos Trusts Come Under DOJ Civil Investigation, Law360, Oct. 5, 2018 (stating that the Justice Department has been investigating asbestos trusts for potential violations of the False Claims Act for failure to reimburse Medicare for claimants’ medical treatments); see generally Anthony Grossi, A Potential Path for the DOJ’s U.S. Trustee Program to Challenge Fraud in Asbestos Bankruptcy Trusts, Legal Opinion Letter, Vol. 26 No. 26 (Wash. Legal Found. Dec. 8, 2017) (“The most common type of fraud occurs when parties who assert claims alleging a particular harm or injury in one forum – either in state court or against an established bankruptcy trust – turn around and file an additional claim in another forum alleging a different, often conflicting, set of facts.”); Glenn G. Lammi, Cleaning Up the Asbestos Litigation Mess:  A Role for the Department of Justice?, Forbes.com, Apr. 2, 2018, available at https://www.forbes.com/sites/‌wlf/2018/04/02/‌cleaning-‌up-the-‌asbestos-‌litigation-‌mess-a-‌role-for-the-‌department-of-justice/#7dcec7ba48aa.

In a public announcement regarding the Statement of Interest, the Justice Department said that it seeks “to increase the transparency and accountability of asbestos trusts” and will “investigate conduct related to asbestos trusts that is illegal under federal law.”⁶6 U.S. Dept. of Justice, Office of Public Affairs, Press Release 18-1187, Justice Department Files Statement of Interest in New Asbestos Trust Proposal, at 1 (Sept. 13, 2018). DOJ explained that these steps are necessary because “alarming evidence has emerged of fraud and mismanagement” regarding asbestos trusts.⁷7 Id.   

The abuses noted by the DOJ and many others have spawned reforms. In the past five years, fifteen states have enacted trust transparency laws.⁸8 See Ariz. Rev. Stat. § 12-782 (2018); Iowa Code §§ 686A.1–.9 (2018); Mich. Code Ann. § 600.3010–.3016 (2018); Miss. Code §§ 11-67-1 to -15 (2018); N.D. Cent. Code §§ 32-46.1-01 to-05 (2018); Ohio Rev. Code Ann. §§ 2307.951–.954 (West 2018); Okla. Stat. tit. 76, §§ 81–89 (2018); S.D. Codified Laws §§ 21-66-1 to -11 (2018); Tenn. Code §§ 29-34-601 to -609 (2018); Tex. Civ. Prac. & Rem. Code Ann. §§ 90.051–.058 (West 2018); Utah Code §§ 78B-6-2001 to -2010 (2018); W. Va. Code §§ 55-7F-1 to -11 (2018); Wis. Stat. § 802.025 (2018); N.C. Gen. Stat. Ann. Sess. § 1A-1, Rule 26(b); Kan. Stat. Ann. §§ 60-4912–4918 (2018). With some variations, these measures require an asbestos plaintiff to file all viable trust claims and disclose the exposure allegations and trust payments before a civil action may proceed to trial.  Some courts have adopted reforms through case management orders. These reforms help to ensure that jurors receive appropriate information about the entirety of a plaintiff’s claimed exposures and compensation as they determine the true causes of the alleged harm and apportion fault accordingly.

In response to the reform effort, plaintiffs’ lawyers first denied that any problem existed, dismissing the experiences of Garlock and other asbestos defendants as anecdotal and unrepresentative. As the evidence mounted, plaintiffs’ attorneys changed their strategy and developed more targeted and nuanced opposition to reform. Primary among the opposition talking points has been that mandating trust disclosures before a civil trial begins delays compensation to needy plaintiffs and gives defendants too much control over the pace and extent of compensation.⁹9 See e.g., Sarah Cwiek, Critics Say Bill Would “Delay and Deny” Justice for Asbestos Cancer Victims, Mich. Radio (Feb. 12, 2019), available at http://michiganradio.org/post/critics-say-bill-would-delay-and-deny-justice-asbestos-cancer-victims. To dramatize their concerns about delay, plaintiffs’ lawyers have highlighted the plight of living mesothelioma plaintiffs, who are most urgently in need of compensation prior to death.¹⁰10 For instance, emphasizing concerns over alleged delays and the needs of plaintiffs with mesothelioma, the Wisconsin Laborer’s District Council argued that the proposal created “an unnecessary step designed to delay the process and run out the clock on the most aggrieved asbestos victims.”  Eric D. Carlson et al., Wisconsin Asbestos Bankruptcy Trust Legislation, Int’l Ass’n of Def. Counsel, Civil Justice Response Comm. Newsletter (Oct. 2018), at 3, available at https://www.iadclaw.org/securedocument.aspx?file=1/19/Civil_Justice_Response_October_2018.pdf.

This article tests the accuracy of claims that trust transparency reforms delay litigation and divest plaintiffs of control over the trust and tort systems. With these reforms now several years old in many jurisdictions, there is sufficient information available to assess their impact. The data reveals that trust disclosures do not delay civil litigation and that defendants have not wrested procedural or substantive control of the trust or tort systems away from plaintiffs. Indeed, civil litigation has continued unabated, plaintiffs’ lawyers continue to control its pace, and those lawyers continue to exercise significant influence over the decision-making of asbestos trusts. Thus, while the reforms have engendered more communication and fairness in the dual system of asbestos compensation, the timing and control of that system have not changed, despite the dire predictions of reform opponents. In this sense, although the reforms have generated needed change, much remains the same.

I. The Myth of Delay

In opposing reform, plaintiffs’ lawyers have argued that requiring them to file and disclose trust claims, allegations, and compensation before a civil case proceeds is designed to “force asbestos victims to jump through a number of expensive and time-consuming legal hoops” before they can move forward with a state court claim.¹¹11 Statement of the Consumer Attorneys of California, available at https://www.caoc.org/‌ca/‌index.cfm?pg=issjustice. Similarly, Forbes quoted unnamed “plaintiff lawyers” arguing that Ohio’s trust transparency law would “shut out the lights and close the courthouse door” to asbestos plaintiffs.¹²12 Daniel Fisher, No Double Dipping, Forbes.com, Oct. 17, 2006, available at http://www.forbes.com/‌2006/10/17/‌asbestos-double-dipping-biz-cz_df_1017asbestos.html.

Given these claims, it is useful to first consider Ohio’s experience with asbestos bankruptcy trust reform. Ohio became the first state to enact a trust transparency statute, which became effective on March 27, 2013 (“the Ohio Act”).¹³13 Ohio Rev. Code, §§ 2307.951 – 2307.954.

The Ohio Act seeks to ensure that asbestos plaintiffs file and disclose all viable trust claims early in civil litigation. In support of this goal, the Ohio Act requires the plaintiff to submit a sworn statement identifying all trust claims within thirty days after the commencement of discovery and a supplemental statement within thirty days after the filing of additional trust claims. Trial may not proceed until all viable trust claims are filed. Finally, if a plaintiff recovers on a trust claim that was submitted after a judgment was entered in the tort action, the court may reopen the judgment and adjust it by the amount of the trust recovery or award other appropriate relief.

The consequences of the Ohio Act were reviewed in a 2017 study entitled Watching it Work; The Impact of Ohio’s Asbestos Trust Transparency Law on Tort Litigation in the State.¹⁴14 Maryellen K. Corbett and Matthew M. Mendoza, U.S. Chamber Inst. for Legal Reform, Watching It Work: The Impact of Ohio’s Asbestos Trust Transparency Law on Tort Litigation in the State (May 2017), available at http://www.instituteforlegal reform.com/‌uploads/‌sites/1/‌WatchingIt Workpaper_‌Web.pdf. The study focused on the length of time it takes for Ohio civil actions commenced by living mesothelioma plaintiffs to proceed to trial or otherwise reach resolution.  In particular, the study compared cases filed in Ohio’s busiest asbestos docket, the Cuyahoga County Court of Common Pleas in Cleveland, in 2010 and 2012, shortly before the Ohio Act was passed, with cases filed in 2014, the year after the Ohio Act was passed. The study concluded that plaintiffs who comply with the Ohio Act experience no delay in the adjudication of their cases.¹⁵15 Id. at 12.

In reaching this conclusion, the study emphasized that, unlike the Ohio Act’s trust filing and disclosure requirements, plaintiffs’ trial strategies are the most likely cause of delay when it occurs. Under Ohio law, asbestos plaintiffs’ lawyers are responsible for “grouping” the cases they want to proceed to trial. Although grouping is based on medical criteria and other factors, plaintiffs’ counsel alone determines how and when cases are grouped for trial. Unless and until a case is grouped, no case management order is issued and discovery cannot begin. The Ohio Act’s filing and disclosure provisions do not trigger until discovery begins. Once grouping occurs, Cuyahoga County’s goal is to have the case tried or otherwise resolved within one year.¹⁶16 Id. at 11; see also Case Management Order Implementing LexisNexis Fileandserve, section C, e-filed by Judges Harry A. Hanna and Leo M. Spellacy on July 11, 2003, on fileandservexpress.com, master case number MC CV-073958, transaction number 2140172.

Because grouping is a prerequisite to the Act’s application, the Ohio study analyzed grouped cases only. The study further limited its focus to living mesothelioma plaintiffs, who are most ill and most frequently highlighted by reform opponents as potential victims of delay. Among the thousands of cases pending on Cuyahoga County’s docket, 103 cases were grouped for trial in 2010, 96 were grouped in 2012, and 59 were grouped in 2014. Twenty-seven of the cases grouped for trial in 2010 were living mesotheliomas, 14 of the cases grouped in 2012 were living mesotheliomas, and 17 of the cases grouped in 2014 were living mesotheliomas.¹⁷17 Watching it Work, supra note 14, at 9-10.

Analyzing these grouped living mesothelioma cases, the Ohio study looked at how often they met Cuyahoga’s one-year resolution goal. The findings are charted as follows:

As these results show, 56% of the 2010 subject cases met the one-year resolution goal, 50% did so in 2012, and 53% did so in 2014.  While this sample size is limited, and while some of the unresolved 2012 cases ultimately became subject to the Ohio Act, the data simply does not suggest that the Ohio Act has delayed case resolutions. The data certainly does not support the dire predictions of reform opponents that the Ohio Act would deprive living mesothelioma plaintiffs of timely compensation. Thus, as the Ohio study concluded, the evidence shows that the Ohio Act “is not slowing the progression of cases.”¹⁹19 Id. at 12; see also Behrens, supra note 2, at 119 (“When Ohio’s 2012 first-of-its-kind asbestos trust transparency legislation was being debated, opponents claimed that the legislation would result in endless delays and deny living plaintiffs their opportunity to be heard in court. These arguments have proven to be unfounded. The Ohio law has resulted in ‘no appreciable delay in the prosecution of cases.’”) (citations omitted).

Additional findings in the study indicate that, to the extent delay occurs, it has resulted from the strategic decisions of plaintiffs’ lawyers. Grouping has perhaps the biggest impact on the timing of case resolution. As noted, grouping must occur before a case management order is issued and discovery proceeds. Yet the same cases are often regrouped multiple times, and the case management schedule is reset each time. In 2010, 18 of the 27 cases charted above were grouped more than once; in 2012, 8 of the 14 cases were grouped more than once, and; in 2014, 12 of the 17 cases were grouped more than once. Overall, 38 of the 58 cases studied, or 66%, were grouped more than once. Such regrouping can cause significant delays. One case referenced in the Ohio study was grouped seven different times, which delayed the case at least five and a half years, from March 2010 until November 2015, when the Ohio study ceased its review.²⁰20 Watching it Work, supra note 14, at 12. Because grouping is determined solely by plaintiffs’ lawyers, the most salient finding of the study is that strategic decisions by plaintiffs’ lawyers are more likely than trust disclosure requirements to delay civil litigation.

Ohio’s experience with asbestos trust transparency legislation is similar to that of other states. In 2015, Texas enacted a transparency statute (“the Texas Act”).²¹21 Texas Civil Prac. & Rem. Code, Chap. 90, §§ 90.051-.058. The Texas Act requires asbestos plaintiffs to file all trust claims at least 150 days before trial, unless the court approves an exception on the basis that the cost of filing the claim would exceed the reasonably anticipated recovery. Plaintiffs must then serve on each party “notice of, and trust claim material relating to, each trust claim” not later than one hundred and twenty days before trial unless the court modifies that deadline. If a plaintiff later files an additional claim, he or she must disclose that filing and the other required information within fifteen days after the filing or on the trial date, whichever is earlier.

Trial may not begin until all of the required disclosures are made. Trust claim materials are deemed relevant and admissible at trial, notwithstanding claims of confidentiality or privilege.

Opposing the Texas Act’s passage before the Texas legislature, one plaintiffs’ lawyer argued that it “would force the plaintiff to file a claim form with a trust and until they do that the court won’t allow them to proceed with trial . . . it will prevent dying mesothelioma victims from having their day in  court.”²²22 See Edward M. Slaughter et al., Two Years of Asbestos Trust Transparency in Texas, Int’l Ass’n of Def. Counsel, Civil Justice Response Comm. Newsletter (Feb. 2018) at 2 (quoting Bryan Blevins, Jr., a partner with the asbestos plaintiffs’ law firm Provost Umphrey Law Firm LLP in Beaumont, Texas) available at http://www.hptylaw.com/media-publications-two-years-of-asbestos-trust-transparency-in-texas.html. However, a recent article assessing the Texas Act’s impact concluded that “no cases of significant delays have been noted.”²³23 Id. The article also quoted a Texas asbestos plaintiffs’ lawyer who stated the following at a conference in September of 2017:

It doesn’t really bother me that the act exists. . .  The [law] is supposed to correct a perceived flaw in not having to disclose bankruptcy filings at the same time you file your tort claim—we do that as a matter of course. I think any conscientious plaintiffs’ lawyer does it…. I’m ok with [the legislation].²⁴24 Id. (quoting Charles Siegal, a partner in the Dallas office of asbestos plaintiffs’ firm Waters Kraus & Paul).

Although more anecdotal than the Ohio study, the evidence supports the article’s conclusion that “[t]wo years of trust transparency in Texas has ensured a smooth and fair process for both plaintiffs and defendants in asbestos-related personal injury litigation.”²⁵25 Id.

Similar conclusions have been reached elsewhere. In 2014, Wisconsin became the third state to enact a trust transparency statute (“the Wisconsin Act”). That law requires asbestos plaintiffs to disclose trust filings and compensation within 60 days after filing a civil action and imposes a continuing duty to file and disclose additional viable trust claims.²⁶26 Wis. Stat. § 802.025. In the four years since its passage, the Wisconsin Act has not diminished the number of asbestos lawsuits filed in the state, and it has not delayed their resolution.  One recent review concluded:

Since Wisconsin’s asbestos trust transparency law took effect in 2014, it has not prejudiced a plaintiff’s ability to bring a claim or delayed the time it takes for asbestos cases to proceed from filing to trial. Arguments raised by opponents during debate that the bill would negatively impact plaintiffs have proven to be untrue.²⁷27 See Carlson et al., supra note 10, at 4.

Finally, a recent three-year retrospective on West Virginia’s trust transparency statute, passed in 2015,²⁸28 W. Va. Code § 55-7F-1 et seq. concluded:

Pre-enactment criticisms of the Transparency Act by opponents centered on whether the Act would result in delays or prevent plaintiffs from having their day in court. Those concerns have proven to be unfounded. Over the past three years, we have not seen a single delay of a mesothelioma case reaching trial because of the Transparency Act. In the instances where trust claim information has not been provided, a simple referral to the Act typically spurs compliance.²⁹29 Jon B. Orndorff et al., A Three Year Retrospective on West Virginia’s 2015 Asbestos Litigation Reform, Int’l Ass’n of Def. Counsel Prod. Liab. Comm. Newsletter (Sept. 2018), at 4, available at https://www.iadclaw.org/securedocument.aspx?file=1/19/Product_Liability_September_2018.pdf

These reviews indicate that asbestos trust transparency laws do not delay civil trials or deprive deserving plaintiffs of compensation. Even putting that evidence aside, simple logic suggests that the reforms expedite, rather than delay, compensation because they promote the timely filing and payment of trust claims. In particular, by requiring the filing and disclosure of all viable trust claims before trial, transparency laws ensure compensation more quickly than the pre-reform system in which plaintiffs’ counsel delayed the filing of trust claims to prevent their disclosure in tort lawsuits. Clearly, the prompt filing of trust claims helps rather than hurts victims of asbestos exposure by putting money in their pockets more quickly than delaying the trust claims until after trial.³⁰30 See John J. Hare and Daniel J. Ryan, Uncloaking Bankruptcy Trust Filings in Asbestos Litigation: Refuting the Myths About Transparency, 15 Mealey’s Asbestos Bankr. Rep., Apr. 2016, at 1, 2 (“The expeditious filing of trust claims helps, not hurts, people suffering from asbestos disease because it puts money in their pockets more quickly than delaying the claims until after trial.”). For this reason as well, the reforms simply cannot be criticized on the ground that they delay compensation to needy plaintiffs.

Finally, trust transparency laws have not “closed the courthouse doors” to asbestos plaintiffs. Instead, as indicated by the experiences of Ohio, Texas, Wisconsin, and West Virginia, asbestos lawsuits continue to be filed, and they are not delayed by the disclosure requirements. Indeed, the transparency laws specifically recognize plaintiffs’ rights to seek compensation in the tort system. They simply prevent the concealment of relevant information and thus promote honesty and full disclosure that afford juries a complete and fair picture of a plaintiff’s total exposure and compensation. In this regard, transparency requirements address a key inequity that has long plagued asbestos litigation—heaping the liability of large and sophisticated companies that have gone bankrupt on innocent or less culpable solvent companies, many of which are small businesses that should bear only their fair share of responsibility and no more. 

The evidence clearly shows that, where reforms have been enacted, this goal of fair apportionment is being accomplished without delaying or denying just compensation to deserving plaintiffs.

II. The Myth of Diminished Control

In addition to arguing that trust transparency laws delay tort litigation, reform opponents maintain that the laws diminish the plaintiffs’ traditional control over the method and pace of their trust and tort claims. This is not accurate.

As Ohio’s experience demonstrates, strategic decisions by plaintiffs’ lawyers remain primarily responsible for how and when asbestos claims are compensated. Far from undermining that control, transparency laws have codified it by allowing plaintiffs to dictate when, which, and how trust claims are filed and disclosed. Under those laws, once the trust claims are filed and disclosed, the tort litigation proceeds. Thus, plaintiffs remain in charge of both their trust and tort claims, and it is only when they default that the court or defendants may intervene. Transparency laws have done nothing to diminish this control.   

The level of continued control is best exemplified by the influence of plaintiffs’ lawyers within bankruptcy trusts. In the past four decades, more than 120 companies have filed for bankruptcy protection due at least in part to asbestos litigation. More than 60 of those companies have established bankruptcy trusts that collectively hold billions of dollars in assets to pay claimants.

The formation of each trust under Section 524(g) of the U.S. Bankruptcy Code involved negotiations between numerous stakeholders, including the debtor, lawyers for current claimants, the legal representative for future claimants (‘‘FCR’’), and other potential creditors.  Customarily, following confirmation of the trust plan, current claimants’ lawyers have assumed leadership roles in providing advice to trust management about assets and distribution of payments. This body of advisors for each trust is called the Trust Advisory Committee (‘‘TAC’’).  Once a trust becomes operational, it is jointly administered by the trustees, the TAC, and the FCR. The trustees may not amend trust operating procedures and policies without the consent of the TAC and FCR.³¹31 Marc C. Scarcella and Peter R. Kelso, Asbestos Bankruptcy Trusts: A 2013 Overview of Trust Assets, Compensation & Governance, 12 Mealey’s Asbestos Bankr. Rep., June 2013, at 11. Thus, the TACs play a crucial role in determine how and when the trusts compensate asbestos claimants.

Not surprisingly, TAC membership has long been dominated by the nation’s leading asbestos plaintiffs’ firms. As noted by the Department of Justice in its September 2018 Statement of Interest:

The trusts are managed by trustees, who often must secure support for major decisions from a “trust advisory committee” (TAC), whose members are often the same attorneys who represented asbestos claimants during the bankruptcy.³²32 See DOJ Statement of Interest, supra note 5, at 6.

Statistics bear out this conclusion. The top five firms over the past decade have been Kazan, McClain, Satterly & Greenwood, PLC; Cooney & Conway; Weitz & Luxenberg, PC; Baron & Budd; and Motley Rice, LLC.  The following chart shows the number of TACs on which lawyers at each firm sat in 2012, the year before the Ohio Act was passed and trust transparency reform began in earnest.

By 2018, these five firms had significantly increased their TAC memberships.

As this comparison shows, the leading firms increased their TAC memberships by 42%, from 74 to 105, in the five years since trust transparency reforms began. While the reforms did not cause the increase, it is clear that they have not diminished plaintiffs’ traditional control over the trust process.

III. Conclusion

Given the startling revelations that emerged from the Garlock bankruptcy, asbestos plaintiffs’ lawyers could no longer deny that their concealment of trust filings and payments from disclosure in tort litigation was a widespread and significant problem. No longer able to rely on flat denials, they have developed more nuanced arguments that trust transparency reforms would delay litigation, deny compensation to the most sympathetic of plaintiffs, and divest plaintiffs of their traditional control over the trust and tort systems. These claims have proved no more credible than the flat denials. As shown above, trust transparency reforms have not delayed litigation; in fact, they speed compensation from the asbestos trusts. Plaintiffs remain in primary control of both the trust and tort systems.  Where reforms have been enacted, they have achieved their purpose of fostering communication within the two-tiered system of asbestos compensation so that juries can properly account for all of a plaintiff’s exposures to asbestos. This has been accomplished with none of the pitfalls predicted by plaintiffs’ lawyers. The reform effort has been successful and should be replicated in other jurisdictions.

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